Bobick's Pro Shop, Inc. v. 1st Source Bank
84 N.E.3d 1238
| Ind. Ct. App. | 2017Background
- In September 2009 BPS, 1st Source Bank, and Donna Bobick executed an Agreement titled "Agreement for Deed in Lieu of Foreclosure."
- The Agreement conveyed BPS’s entire right, title, and interest in the property to 1st Source by deed in lieu and released a junior mortgage held by Bobick.
- The Agreement expressly gave 1st Source “sole and absolute discretion” to dispose of the property and defined how sale proceeds would be applied (Amount Payable to Bank first, then percentages to Bobick and BPS after certain distributions).
- 1st Source moved the property to OREO, attempted sale efforts for several years, received a $2.9 million third‑party offer in 2012, declined that offer, and instead sold the property to itself for $2.9 million.
- The sale produced insufficient proceeds for any distribution to BPS; BPS sued for breach of contract and alleged criminal fraud; the trial court granted summary judgment for 1st Source.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 1st Source breached the Agreement by selling the property to itself | The Agreement limited 1st Source’s discretion in disposal; parties intended to share any excess value, so a self‑sale that eliminated BPS’s distribution was a breach | The Agreement granted 1st Source sole and absolute discretion to dispose of the property; BPS conveyed all interest and accepted contingent, residual distributions | Court: No breach — unambiguous language gave 1st Source sole and absolute discretion to dispose; BPS received the bargained‑for release of obligations |
| Whether 1st Source committed criminal fraud in selling the property to itself | The self‑sale was an act of criminal fraud (intended to defraud BPS of its distribution) | No intent to defraud because 1st Source acted within its contractual rights and suffered economic loss by taking property OREO | Court: No criminal fraud — essential intent element lacking because conduct was authorized by the Agreement |
Key Cases Cited
- Hughley v. State, 15 N.E.3d 1000 (Ind. 2014) (summary judgment standards and caution against short‑circuiting disputed factual cases)
- Holiday Hospitality Franchising, Inc. v. AMCO Ins. Co., 983 N.E.2d 574 (Ind. 2013) (contract interpretation is a question of law suitable for de novo review)
- Warrick County ex rel. Conner v. Hill, 973 N.E.2d 1138 (Ind. Ct. App. 2012) (contracts may be construed on summary judgment if not ambiguous)
- Tate v. Secura Ins., 587 N.E.2d 665 (Ind. 1992) (contract meaning is for factfinder only when extrinsic evidence is needed to resolve ambiguity)
- Mid‑America Sound Corp. v. Ind. State Fair Comm’n (In re Ind. State Fair Litigation), 49 N.E.3d 545 (Ind. 2016) (standards for reviewing cross‑motions for summary judgment)
- SCI Propane, LLC v. Frederick, 39 N.E.3d 675 (Ind. 2015) (consider each summary judgment motion separately)
- Reed v. Reid, 980 N.E.2d 277 (Ind. 2012) (procedural guidance on cross‑motions for summary judgment)