from the Porter Superior Court The Honorable William E.
Alexa, Judge Trial Court Cause No. 64D02-1109-PL-9151
Attorneys for Appellant Robert A. Welsh Connor H. Nolan
Harris Welsh & Lukmann Chesterton, Indiana
Attorney for Appellee Benjamen W. Murphy Law Office of Ben
Murphy Griffith, Indiana
Cheng Song planned to purchase land from Thomas and Theresa
Iatarola until he discovered that the land was zoned for
agricultural use, rather than for industrial use, as had been
represented to him. After terminating the purchase agreement,
Song sued the Iatarolas for the $150, 000 he had placed in
escrow. A jury verdict awarded him the return of his money.
He now appeals the trial court's denial of his petition
for attorney fees and prejudgment interest. The Iatarolas
cross-appeal, arguing that the trial court erred in denying
their motion for summary judgment and motion to correct
errors. Finding that the trial court did not err in denying
the Iatarolas' motions, but that it did err in denying
Song's motions, we affirm in part, reverse in part, and
In 1998, the Iatarolas purchased thirty-four acres of land
that was zoned for agricultural use. Thomas built several
structures on the property to warehouse equipment and
inventory from his telecommunications and classic car sales
The land, which was adjacent to the Porter County Airport,
was mortgaged. The Iatarolas decided to try to sell ten acres
of their land to reduce or repay their debt to the bank.
Thomas and Theresa agreed between themselves that Thomas
would take charge of arranging for the sale of their land,
and he acted as an agent on behalf of his wife from September
2010 through September 2011. On September 14, 2010, Thomas
retained Robert Macmahon as their exclusive real estate agent
for the sale of the ten acres.
On September 14, 2010, Macmahon showed Thomas a listing
agreement for the real estate sale. The form was entitled
"Listing Contract (Exclusive Right to Sell)
Commercial-Industrial Real Estate"; under the section
entitled "Seller's Representations, " the
property is stated to be zoned I-2 Industrial.
Appellant's App. Vol. II p. 90-91. Macmahon asked Thomas
to review the listing to ensure its accuracy and asked both
Thomas and Theresa to initial each page of the listing
agreement to verify that they read it and that it was
accurate. Thomas did so, but Theresa refused to sign her
initials because the listing inaccurately stated that the
zoning was I-2 Industrial rather than Agricultural. Theresa
told Thomas that her reason for not initialing the listing
and told him to have Macmahon correct the listing error.
A few days later, Thomas told Theresa that he had spoken with
Macmahon and that the listing had been corrected. Theresa did
not see or initial a corrected listing. On or around
September 14, 2010, Macmahon began advertising the real
estate online. The advertisements stated that the land was
zoned I-2 Industrial and that it was suitable for warehousing
and other light industrial uses.
In December 2010, Song saw online the advertisement for the
sale of the ten acres of land. At this time, Song was a New
Jersey resident who wanted to buy industrial real estate in
northwest Indiana to use for an imported tool business he
wanted to start. Song arranged a meeting with Macmahon to
take place on December 31, 2010, to visit two industrially
zoned properties, one of which was the Iatarolas' land.
During their meeting, Song told Macmahon that he wanted to
buy property that had buildings suitable for warehousing for
an imported tool business, and they discussed Song's
ability to expand and build additional industrial warehousing
on the property. In an internet advertisement that has
Macmahon's handwriting on it, the property's type is
described as "Industrial For Sale"; the property
overview states that the land is "in an established
industrial area." Appellant's App. Vol II p. 87.
Also on December 31, 2010, Song told the Iatarolas of his
intended use of the property he wanted to purchase. That same
day, Song signed a purchase agreement with the Iatarolas to
buy their ten acres for $600, 000. The contract was entitled
"Purchase Agreement Commercial-Industrial Real
Estate." Appellees' App. Vol. II p. 97.
Sometime before the signing, the Porter County Airport had
stated that it might impose a runway protection zone in this
property to comply with Federal Aviation Administration
("FAA") requirements. The purchase agreement
included a contingency clause that stated, "This
agreement is contingent upon the Buyer's agreement with
the final approval of FAA regarding land use."
Id. After reviewing the airport's proposal, Song
worried that the runway protection zone could lead to a
governmental taking of part of the property that he was
purchasing, the removal of some of the warehousing buildings,
or a restriction on the height of future construction. On
January 6, 2011, he exercised his contingency right and
terminated the purchase agreement.
For the next two and one-half months, Song and Thomas
negotiated a new sale of a different part of the
Iatarolas' land. On March 21, 2011, they signed a second
purchase agreement for sixteen acres, which included most of
the original ten acres with the warehousing buildings plus
additional acres of land outside the potential runway
protection zone. This second purchase agreement was entitled
"Purchase Agreement Commercial-Industrial Real
Estate." Appellant's App. Vol. II p. 35. It required
$150, 000 in earnest money and included a provision for
liquidated damages of $150, 000 if either party breached the
contract. Song and Thomas signed an addendum to the second
purchase agreement that provided:
Closing date will be predicated on the Seller's ability
to vacate and exit the subject property. A maximum of 180
days ("Due Diligence Period") from the day of
acceptance of this contract, has been agreed by both parties.
When the seller advises the Buyer in writing, that the exit
is complete, the Buyer will have 30 days, from that date, to
Id. at 40. Song deposited the $150, 000 earnest
money in the bank.
In early June 2011, Thomas called Macmahon to say
that while reviewing the transaction paperwork, he saw that
the September 14, 2010, listing inaccurately stated that the
property for sale was zoned I-2 Industrial instead of
Agricultural. Macmahon acknowledged the error and made a note
to his file of the date and subject of their phone call. That
same day, Macmahon corrected the zoning represented in his
advertisements online so that they showed the property to be
zoned Agricultural. Neither Macmahon nor Thomas told Song
about this error.
On August 7, 2011, Thomas and Song met on the property for a
final inspection, and Thomas told Song that the property was
zoned Agricultural. Thomas told Song that Agricultural zoning
was preferred over Industrial zoning because the tax rate was
lower; he also stated that Agricultural zoning allowed for
the land to be used for the industrial warehousing and import
tool business that Song wanted to start. Song told Thomas
that he needed to consult an attorney to determine whether
the Agricultural zoning would suit his needs. Later that day,
Song saw that the online listing for the property had been
updated to show that it was zoned Agricultural.
On August 12, 2011, Lee Lane, Song's attorney, wrote to
Macmahon to advise him that the Porter County zoning
regulations did not permit the use of warehousing for
industrial purposes on agriculturally-zoned property. Lane
stated that Song would not continue with his purchase unless
the Iatarolas secured I-2 Industrial zoning and demanded a
price reduction in order to compensate Song for the increase
in real estate tax that would result from the change from
agricultural to industrial zoning.
The Iatarolas refused to obtain the I-2 Industrial zoning or
consider a price reduction. Song subsequently exercised his
due diligence contingency rights under the contract,
terminated the purchase agreement within the 180-day due
diligence period provided in the addendum, and demanded the
return of his $150, 000 earnest money deposit, which was
being held in escrow at Horizon Bank. The Iatarolas refused
to return Song's escrow deposit.
On September 19, 2011, Song filed a complaint against the
Iatarolas, alleging actual fraud, constructive fraud, breach
of contract, and contract rescission. The Iatarolas filed a
counterclaim, also alleging actual and constructive fraud. On
January 22, 2014, both parties filed motions for summary
judgment; the trial court denied both. A jury trial took
place from May 16-19, 2016. On May 19, 2016, Song filed a
motion for judgment on the evidence, which the trial court
denied. The jury returned a verdict for Song, and the trial
court entered judgment on the jury's verdict in
Song's favor for $150, 000. On June 20, 2016, the
Iatarolas filed a motion to correct errors. On June 23, 2016,
Song filed a motion for an award of attorney fees,
prejudgment interest, and postjudgment interest. On August
12, 2016, Song filed a motion for an award of his post-trial
On August 12, 2016, the trial court held a joint hearing for
the Iatarolas' motion to correct errors and Song's
motions for attorney fees, prejudgment interest, and
postjudgment interest. The trial court denied all motions.
Song now appeals, and the Iatarolas cross-appeal.
On cross-appeal, the Iatarolas argue that the trial court
erred when it denied their motion for summary judgment. In
their motion for summary judgment, the Iatarolas argued that
there were no genuine issues of material fact regarding
Song's breach of the purchase agreement because nothing
in the four corners of the contract allowed him to terminate
it for zoning and because any representations regarding
zoning could not establish the defenses or claims of fraud,
constructive fraud, or mutual mistake.
Our standard of review on summary judgment ...