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Alexander v. Linkmeyer Development II, LLC

Court of Appeals of Indiana

February 8, 2019

Bryan Alexander, Karl Cameron, William Love, Charlie Lovins, Kevin McMurray and Matt Oelker, on behalf of themselves and all others similarly situated, Appellants/Cross Appellees-Plaintiffs,
v.
Linkmeyer Development II, LLC, Steven Linkmeyer, and Brian Bischoff, Appellees/Cross Appellants -Defendants,

          Appeal from the Dearborn Circuit Court The Honorable James D. Humphrey, Judge Trial Court Cause No. 15C01-1307-PL-49

          ATTORNEYS FOR APPELLANTS Eric S. Pavlack Colin E. Flora Pavlack Law, LLC Indianapolis, Indiana Fred Schultz Greene & Schultz Bloomington, Indiana

          ATTORNEYS FOR APPELLEES Thomas W.Vander Luitgaren Matthew S. Schoettmer Van Valer Law Firm, LLP Greenwood, Indiana

          ROBB, JUDGE.

         Case Summary and Issues

         [¶1] This case comes before this court as an interlocutory appeal from the parties' respective cross-motions for summary judgment. Specifically, a class of laborers ("the Class") formerly employed by Linkmeyer Development II, LLC, and its members Steve Linkmeyer and Brian Bischoff (collectively, "the Defendants"), appeal the trial court's denial of their motion for summary judgment and the granting, in part, of the Defendants' motion for summary judgment. The Defendants appeal the remaining issues for which their motion for summary judgment was denied. The parties now present several issues for our review which we consolidate and restate as two: (1) whether the trial court erred in denying the parties' motions for summary judgment on the issue of breach of contract, and (2) whether the trial court erred in denying the Defendants' motion for summary judgment regarding the Indiana Wage Payment Statutes. Concluding the trial court did not err, we affirm.

         Facts and Procedural History

         [¶2] Around June of 2009, Steve Linkmeyer approached the City of Lawrenceburg requesting a $3, 000, 000 loan to facilitate a development project on behalf of his company, Linkmeyer Development. On November 30, 2009, Linkmeyer, along with another member of Linkmeyer Development, Brian Bishoff, signed a document entitled "Development Agreement Between the City of Lawrenceburg, Indiana, and Linkmeyer Development II, LLC" ("the Development Agreement"). Appellants' Appendix, Volume II at 103. The City of Lawrenceburg's city manager, Tom Steidel, and mayor, William Cunningham, also signed the contract.

         [¶3] The Development Agreement involved three properties: the Ellis property, the Walters property, and the Tanners Creek property. According to its terms, the City of Lawrenceburg would provide a $3, 000, 000 line of credit to Linkmeyer Development in return for the excavation and filling of the properties. Linkmeyer Development was required to purchase the Ellis property and the Walters property. The Lawrenceburg Redevelopment Commission would then convey the Tanners Creek property to Linkmeyer Development, some 21.5 acres of land which ran adjacent to Tanners Creek Drive, free of charge. Dirt was to be moved from the Ellis property to both the Walters property and the Tanners Creek property in order for the properties to be elevated out of the flood plain. In so doing, all three previously-undevelopable properties would become developable. Linkmeyer Development also agreed to petition the City of Lawrenceburg for the annexation of the Ellis property at the completion of the project.

         [¶4] The loan itself was to be paid in three installments, with the first $1, 000, 000 to be paid at the completion of the work on the east side of Tanners Creek, the second $1, 000, 000 to be paid at the completion of the project, and the third $1, 000, 000 to be paid when the Ellis property was successfully annexed. The $3, 000, 000 was loaned for a maximum of five years with an annual interest rate of 2%. Steidel prepared the Development Agreement using a form document that he generally used in connection with loans made by the City of Lawrenceburg.

         [¶5] Under "Section II" entitled "Responsibilities of the Developer" the Development Agreement stated:

The Developer must begin the project on or before August l, 2009 and complete the project by October 1, 2010. Developer shall comply with all appropriate codes, laws and ordinances including the payment of prevailing wages for labor as required by the State of Indiana and the City of Lawrenceburg. The Developer shall provide a final set of engineering plans and a final project construction cost estimate that shall be attached to, and become a part of, this agreement.
The Developer(s) and their spouses must agree to sign personal guarantees for the amount borrowed as well as provide first mortgages for both the Ellis Properties and any city owned land that is conveyed to the Developer as part of this agreement. In, addition, they must agree to sign any other documents that may be appropriate to ensure that the City investment is secure.

         Appellants' App., Vol. II at 46-47.[1]

         [¶6] Consistent with the Development Agreement, the parties executed several additional documents, including a Promissory Note and a Mortgage in favor of the City of Lawrenceburg on the Tanners Creek and Ellis properties. Additionally, Bischoff, Linkmeyer, and both of their spouses, executed a personal guaranty. The guaranty stated:

In consideration of the extension of credit by The City of Lawrenceburg, Indiana . . . ("Lender") to Linkmeyer Development . . . ("Debtor") and other good and valuable consideration, the receipt of which is acknowledged [by] the undersigned, jointly and severally if more than one, hereby guarantee to Lender the prompt performance and payment of all indebtedness, interest, principal, liabilities and obligations of Debtor to Lender pursuant to Debtor's Note . . . in the principal amount of $3, 000.000.00, Mortgage of Real Property ("Mortgage"); and Development Agreement ("Development Agreement") . . . . This is a Guaranty of payment and performance, including all collection efforts. Without limiting the foregoing, the undersigned, absolutely, irrevocably and unconditionally indemnifies and saves Lender harmless from and against all liabilities, suits, proceedings, actions, claims, assertions, charges, demands, delays, injuries, expenses (including reasonable attorney fees and disbursements) which are incurred by Lender as a result of any allegation determination or that the Obligations involve a fraudulent conveyance, transfer or obligation under federal or state law.

Id. at 116.

         [¶7] At the completion of the project, Linkmeyer Development made the first few payments on the loan but eventually defaulted. On July 3, 2013, the six individuals now composing the Class, [2] filed a complaint in Dearborn County Circuit Court alleging that a Lawrenceburg City Ordinance was incorporated by the Development Agreement and that the ordinance required the payment of prevailing wages. Entitled "Contractors Required to Pay Prevailing Wages," Lawrenceburg Code Section 33.02 provides:

On any construction project approved by the Lawrenceburg Development Corporation and financed in whole or in part by proceeds from sale of economic development bonds, grants or approved by or financed through any city agency, board, committee or commission, pursuant to an Investment Incentive Program, contractors retained to complete the project shall be required to pay the employed on the project wages equal to the prevailing wage customarily paid to each class of worker engaged in similar work in Lawrenceburg and surrounding areas.
('94 Code, § 33.02) (Ord. 1-1986, passed 4-7-86).

         Pursuant thereto, the Class brought the following claims:

Count I: Breach of Contract
Count II: Violation of the Indiana Common Construction Wage Act
Count III: Violations of Indiana Wage Statutes
Count IV: Request for Declaratory Relief

Count V: (Pleaded in the Alternative) Unjust Enrichment/Quantum Meruit

         Appellants' App., Vol. II at 37-41. The Defendants answered, arguing that neither the Development Agreement nor Section 33.02 required the payment of prevailing wages.

         [¶8] During a telephonic pre-trial conference on May 15, 2017, the trial court agreed with the parties' joint request that liability be addressed by way of cross-motions for summary judgment, rather than a bench trial. On June 5, the Class filed its motion for partial summary judgment along with a brief and designation of evidence in support thereof, requesting summary judgment in its favor on Count I: Breach of Contract. See id. at 71-96. On July 13, the Defendants filed their reply in opposition to the Class's motion for partial summary judgment and their cross-motion for summary judgment, requesting that the trial court deny the Class's partial motion for summary judgment and grant the Defendants' summary judgment as to all claims. The Class then filed a combined reply and response and the Defendants filed a reply.

         [¶9] On September 12, the trial court held a hearing on the parties' respective motions for summary judgment and took the matter under advisement. Soon thereafter, the trial court issued an order denying the Class's motion for partial summary judgment and granting the Defendants' cross-motion for summary judgment in part and denying in part. The order provided:

The Court hereby denies [the Class's] Motion for Summary Judgement [sic] as to Count I - Breach of Contract and Count III - Violations of Indiana Wage Statutes. The Court grants Defendant's [sic] Motion for Summary Judgment as to the Count V - Unjust Enrichment/Quantum Meruit. In all other respects, Defendant's [sic] Cross Motion for Summary Judgment is denied.

         Appealed Order at 1-2.[3]

         [¶10] Agreeing this matter was suited for summary disposition, the parties jointly sought and obtained certification for interlocutory appeal from the trial court and we granted the parties' joint interlocutory appeal request on March 16, 2018.[4]

         Discussion and Decision

         I. Motion to Strike

         [¶11] Before preceding to the merits of this appeal, we must first address the Class's motion to strike portions of the Defendants' Reply Brief. Indiana Appellate Rule 42 provides:

Upon motion made by a party within the time to respond to a document, or if there is no response permitted, within thirty (30) days after the service of the document upon it, or at any time upon the court's own motion, the court may order stricken from any document any redundant, immaterial, impertinent, scandalous, or other inappropriate matter.

         [¶12] The Class begins by asking that we strike four portions of the Reply Brief in which the Defendants assert that the Class raised a new argument "that prevailing-wage statutes are remedial and are to be construed liberally." Appellants/Cross-Appellees' Motion to Strike Portions of Appellees/Cross-Appellants' Reply Brief at 1. This argument centers around the following paragraphs in the Class's reply brief on appeal:

In construing Section 33.02, it is important to recognize that "[a] prevailing-wage statute is remedial in nature and should be applied liberally to carry out its purpose. Exceptions to prevailing-wage statutes must be narrowly construed." 51B C.J.S. § 1331 (2010). Further, the purpose of prevailing-wage laws is to "safeguard workers' efficiency and general well-being and to protect them as well as their employers from the effects of serious and unfair competition resulting from wage levels detrimental to efficiency and well-being." 64 AM. JUR. 2d Public Works and Contracts § 214 (footnote omitted).
Should any doubt remain, it should be resolved in favor of the Class as "[a] prevailing-wage statute is remedial in nature and should be applied liberally to carry out its purpose." 51B C.J.S. § 1331. And the purpose of prevailing-wage laws is to "safeguard workers' efficiency and general well-being and to protect them as well as their employers from the effects of serious and unfair competition resulting from wage levels detrimental to efficiency and well-being." 64 AM. JUR. 2d Public Works and Contracts § 214 (footnote omitted).

         Appellants' Reply and Cross-Appellees' Br. at 29-30, 35-36.

         [¶13] The Class argues that it raised this argument in its reply brief on summary judgment. Indeed, our review of the record reveals that the Class presented the first of the two paragraphs verbatim and the second paragraph is merely a derivative thereof. See Appellants' App., Vol. III at 144-45; Spudich v. Northern Ind. Public Serv. Co., 745 N.E.2d 281, 285-87 (Ind.Ct.App. 2001) (holding new arguments can be raised in a reply brief on summary judgment), trans. denied. In response, the Defendants concede that the Class made such an argument in its reply brief on summary judgment but nevertheless maintain:

When the Class mentioned 51B C.J.S. § 1331 in their summary judgment reply brief, they cited to it as a general standard of review when interpreting a prevailing wage ordinance in general. On the other hand, in their final appellate submission, they cited to it twice and argued it for the first time relative to their argument on the application of the Investment Incentive Plan.

         Response in Opposition to Appellants/Cross-Appellees' Motion to Strike Portions of Appellees/Cross-Appellants' Reply Br. at 2, ¶ 4.

         [¶14] As the Defendants now acknowledge, the Class presented 51B C.J.S. § 1331 as a "general standard of review when interpreting a prevailing wage ordinance in general." Id. It is entirely consistent then, and well within the perimeters of their previously raised argument, for the Class to apply this general standard to a specific issue within the ordinance-such as the application of the investment incentive plan. That being said, we also recognize the nuance of the Defendants' argument, however inartfully presented. Because the Defendants presented a good faith argument and never expressly alleged that the Class's argument was waived, we decline to strike the relevant portions of the Appellees/Cross-Appellants' Reply Brief.

         [¶15] Next, the Class asks that we strike several of the Defendants' statements regarding the Class's construction of Section 33.02 of the Code of Lawrenceburg. Specifically, the Class takes issue with the following paragraphs of the Defendants' argument:

[The Class] included words and punctuation in their diagram of §33.02 during the summary judgment proceedings which were not present in the ordinance. In doing so, they advanced an argument that completely defeated their construction of §33.02 as the proper one because it would result in the payment of prevailing wages on "all" construction projects approved by the city. When confronted with the erroneously broad interpretation of ...

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