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U.S. Research Consultants, Inc. v. The County of Lake, Indiana

Court of Appeals of Indiana

December 11, 2017

U.S. Research Consultants, Inc., Appellant-Plaintiff,
v.
The County of Lake, Indiana; Board of Commissioners of the County of Lake, Indiana, in their official capacities; and the Lake County Treasurer, in his official capacity, Appellees-Defendants

         Appeal from the Lake Superior Court Trial Court Cause No. 45D01-1602-CC-20 The Honorable John M. Sedia, Judge

          Attorneys for Appellant Kevin W.Vanderground Church, Church, Hittle & Antrim Merrillville, Indiana Rick C. Gikas Merrillville, Indiana

          Attorneys for Appellees John E. Hughes Kevin G. Kerr Hoeppner Wagner & Evans LLP Valparaiso, Indiana

          Crone, Judge.

         Case Summary

         [¶1] U.S. Research Consultants, Inc. ("USRC"), entered into a contract ("the Contract") with the County of Lake, Indiana; Board of Commissioners of the County of Lake, Indiana, in their official capacities; and the Lake County Treasurer, in his official capacity (collectively "the County"), pursuant to which USRC agreed to provide collection services for delinquent real property taxes on behalf of the County and the County agreed to pay USRC a commission based on a percentage of the delinquent monies paid to the County on the cases for which USRC provided collection services. After the County terminated the Contract, USRC filed a claim for breach of contract against the County alleging that USRC was owed over $200, 000 in unpaid commissions. The trial court granted summary judgment in favor of USRC, and the County appealed. Another panel of this Court reversed the trial court's order and remanded. Cty. of Lake v. U.S. Research Consultants, Inc., 27 N.E.3d 1154 (Ind.Ct.App. 2015), trans. denied ("Lake County I"). After remand, the parties filed cross-motions for summary judgment. The trial court interpreted Lake County I as requiring USRC to file its claims for commissions with the County when the delinquent monies were paid to the County and found that USRC failed to prove that it had filed such claims. Therefore, the trial court denied USRC's summary judgment motion and granted the County's motion. The trial court entered final judgment against USRC and in favor of the County.

         [¶2] USRC appeals the grant of the County's summary judgment motion. USRC argues that Lake County I does not require USRC to prove that it filed its claims for commissions within a specific time period. USRC also asserts that the County is not entitled to summary judgment on the basis that USRC failed to timely file its claims for commissions. Finally, USRC argues that it is entitled to prejudgment interest if it establishes that it is entitled to unpaid commissions. We agree on all three counts. Therefore, we reverse the grant of summary judgment in favor of the County and remand for a determination as to whether USRC performed the collection services required under the Contract entitling it to unpaid commissions and, if so, the amount of damages due USRC.

         Facts and Procedural History

         [¶3] The facts necessary for the determination of the issues in this appeal follow.[1] Between 2000 and 2006, USRC and the County were parties to a series of contracts. Appellant's App. Vol. 3 at 15-20. For simplicity, we refer and cite to the Contract, effective January 1, 2005, to December 31, 2006, because the relevant language is the same in all of the contracts and most, if not all, of the remaining unpaid commissions at issue appear to be based on the Contract. Pursuant to the Contract, the County agreed to assign to USRC all of Lake County's real property tax collection cases. USRC "agreed to report directly to the Lake County Treasurer for all instructions if necessary to carry out its responsibilities" and to "[c]ollect the delinquent monies through an organized procedure to include filing lawsuits to collect if necessary." Id. at 15. The Contract provides that taxes paid to the County prior to filing suit will be paid directly to the Lake County Treasurer and "[USRC] will then file a claim with the County of Lake for fees which should be paid from the funds established." Id. at 16. The Contract further provides that USRC is entitled to a commission of 20% on taxes collected from all cases begun before June 4, 2003, and 15% of taxes collected thereafter. Id. at 17. Also, the Contract provides that the "services to be performed hereunder by [USRC] shall be undertaken and completed in such sequence as to assure their expeditious completion." Id.

         [¶4] "The 'organized procedure' for collecting delinquent monies was for the County to periodically send a disc to [USRC] containing information about properties with delinquent taxes." Lake County I, 27 N.E.3d at 1157. Although "the taxes were divided into 'last year taxes, ' or taxes delinquent for less than one year, and 'prior year taxes, ' or taxes delinquent for a year or more", the treasurer instructed USRC to collect only on prior year taxes. Id. (emphases added). "To initiate the collection process, [USRC] sent a collection letter to taxpayers with delinquent prior year taxes." Id. "[USRC] was not entitled to a commission on paid taxes unless a collection letter had first been sent." Id. "Every few months, [USRC] would compare the letters it sent to the County's tax payment records and submit a claim for commissions." Id. at 1157-58. After the claim was submitted, USRC and the County met and agreed on the amounts that USRC was collecting. Id. at 1158.

         [¶5] The County terminated the Contract in November 2006.[2] In March 2007, USRC submitted a claim to the County for payment of commissions, which the County paid. In May 2008, USRC filed its complaint against the County for breach of contract alleging that USRC was owed over $200, 000 in unpaid commissions. The County filed an answer meeting the substantive allegations of the complaint but asserting no affirmative defenses.

         [¶6] In June 2011, USRC employee Clara Castro and Lake County Treasurer employee Marsha DeMure met and prepared Plaintiff's Exhibit 4, a listing of collection letters, taxes collected, and alleged unpaid commissions. Exhibit 4 included payments for "last year taxes" and "prior year taxes" and would serve as a major basis for USRC's allegations of unpaid commissions in Lake County I. In the current appeal, Exhibit 4 continues to be significant because USRC alleges that Exhibit 4 supports its current demand for unpaid commissions based on payments for "prior year taxes" for which USRC had not previously submitted claims to the County.[3]

         [¶7] In June 2012, the parties filed a pretrial order, in which USRC alleged that it was owed over $1, 000, 000 in commissions and the County argued that USRC had "not supplied any information showing that letters or other follow-up procedures were conducted by [USRC].[4] In other words, [the County is] alleging that [USRC] did absolutely no work to collect any of the taxes." Appellant's Supp. App. Vol. 2 at 4-5.

         [¶8] In December 2012, USRC filed a motion for partial summary judgment. The County filed a response and cross-motion for partial summary judgment. In brief, the parties disputed the meaning of "delinquent monies, " as used in the Contract provision wherein USRC agreed to "[c]ollect the delinquent monies through an organized procedure to include filing lawsuits to collect if necessary." Lake County I, 27 N.E.3d at 1156. USRC contended that delinquent monies unambiguously referred to all delinquent taxes, i.e., both "last year taxes" and "prior year taxes" that were collected by the County. The County argued that delinquent monies meant only the tax cases the treasurer instructed USRC to pursue, which had included only prior year taxes. Following a hearing, on June 18, 2013, the trial court issued an order ("June 18, 2013 order") granting USRC's motion for partial summary judgment "as it relates to the definition of 'delinquent'" and denying the County's motion. Appellant's App. Vol. 5 at 10.

         [¶9] In September 2013, the County filed a motion for leave to amend its answer to assert the affirmative defenses of laches, estoppel, waiver, and accord and satisfaction. In October 2013, USRC filed a motion for summary judgment asserting that it was entitled to final judgment as a matter of law. In December 2013, the County filed a motion for leave to amend the pretrial order and a response to USRC's summary judgment motion.[5]

         [¶10] In December 2013, following a hearing on all outstanding motions, the trial court entered an order denying the County's motion for leave to amend its answer and motion to amend the pretrial order and granting USRC's motion for summary judgment. The trial court entered final judgment in favor of USRC and awarded damages of $1, 076, 896.92 and prejudgment interest in the amount of $393, 000. Id. at 8.

         [¶11] The County appealed and challenged the trial court's grant of USRC's partial summary judgment motion, the denial of the County's partial summary judgment motion, the denials of the County's motion for leave to amend its answer and its motion to amend the pretrial order, and the grant of USRC's summary judgment motion. Appellees' App. Vol. 2 at 22-23. Although the County raised numerous issues, the Lake County I court found the following issue dispositive: "whether the trial court properly interpreted the collection contracts as a matter of law and therefore properly granted partial summary judgment to [USRC] and denied partial summary judgment to the County." 27 N.E.3d at 1155-56. In explaining the precise question of interpretation raised in the cross-motions for partial summary judgment, the Lake County I court stated,

The specific question presented by the cross[-]motions for [partial] summary judgment was what [USRC] was hired to collect pursuant to the contract provision that [USRC] was to "[c]ollect the delinquent monies." [USRC] took the position that it was to collect all delinquent taxes and was entitled to commissions on the total amount, whereas the County took the position that [USRC] was only to collect the [prior] year delinquent taxes as directed by the Treasurer and was only entitled to commissions on that amount even if additional delinquent taxes were paid.

Id. at 1161 (citation omitted).

         [¶12] The Lake County I court concluded that the trial court erred in interpreting the Contract based on the following analysis:

All the clauses are given meaning when the contracts as a whole are construed to mean that [USRC] is to collect "the delinquent monies" associated with the real property tax collection cases assigned to it at the Treasurer's instruction and that [USRC] earns commissions on those amounts. That the contracts require [USRC] to be assigned one-hundred percent of the real property tax collection cases means only that no tax collection cases will be assigned to any other entity for collection, not that [USRC] will be assigned all delinquent tax accounts. In other words, the contracts allow the Treasurer to decide which cases are tax collection cases, assign those to [USRC] and instruct [USRC] to carry out its collection responsibilities with respect to those cases. The contracts ...

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