120 N.E.3d 1110
Ind. Ct. App.2019Background
- Thomas and Theresa Iatarola listed 10–16 acres adjacent to an airport; listing and sale materials incorrectly represented the land as I-2 industrial rather than agricultural.
- Cheng Song, seeking industrial-zoned property for his business, entered a purchase agreement (March 21, 2011) with a 180-day due-diligence addendum and deposited $150,000 earnest money.
- During the due-diligence period Song learned the property was agriculturally zoned, requested the seller obtain industrial zoning or a price reduction, and terminated under the contract’s due-diligence contingency.
- The Iatarolas refused to return the earnest money; Song sued alleging fraud and breach and sought return of the deposit, prejudgment interest, and attorney’s fees under the contract provision entitling the prevailing party to fees.
- A jury awarded Song the $150,000 earnest money. On initial appeal the court held the trial court erred by declining to consider Song’s fee request and remanded for consideration of fees; on remand the trial court denied fees, finding Song had repudiated the contract.
- On this appeal the Court of Appeals reversed: it held Song terminated pursuant to the contractual due-diligence right (not repudiation), was the prevailing party, and remanded for a hearing to determine reasonable attorneys’ fees (including appellate fees) and costs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Song is barred from contractual attorneys’ fees because he repudiated the purchase agreement | Song terminated under an express 180-day due-diligence contingency, not a repudiation, so he remains the prevailing party entitled to fees | Song’s termination amounted to repudiation/rescission of the contract, which disqualifies him from enforcing the contract’s fee provision | Reversed trial court: termination was a contractual exercise of due-diligence rights, not repudiation; Song was the prevailing party and entitled to fees under the agreement |
| Whether the trial court erred by declining to consider post-trial fee request because no jury finding on fees was made | Fees are for the court to decide after the jury verdict; petition after verdict was timely | Trial court previously declined to consider fees because jury did not decide them | Court of Appeals earlier held (and reiterates) fee issues are for the trial court post-verdict; remand required hearing to determine reasonable fees |
Key Cases Cited
- Song v. Iatarola, 76 N.E.3d 926 (Ind. Ct. App. 2017) (prior opinion addressing prejudgment interest and remand to consider attorneys’ fees)
- Song v. Iatarola, 83 N.E.3d 80 (Ind. Ct. App. 2017) (clarification of prior opinion)
- Anderson v. Wayne Post 64, Am. Legion Corp., 4 N.E.3d 1200 (Ind. Ct. App. 2014) (de novo review when trial court decision based on paper record)
- Hartig v. Stratman, 760 N.E.2d 668 (Ind. Ct. App. 2002) (definition and role of due diligence in real estate transactions)
- Metro Holdings One, LLC v. Flynn Creek Partner, LLC, 25 N.E.3d 141 (Ind. Ct. App. 2014) (discussing repudiation/anticipatory breach concepts)
- Scott-Reitz Ltd. v. Rein Warsaw Assoc., 658 N.E.2d 98 (Ind. Ct. App. 1995) (remedies available when one party repudiates a contract)
- Horton v. State, 51 N.E.3d 1154 (Ind. 2016) (permitting judicial notice of state court records)
- Stevens v. Olsen, 713 N.E.2d 889 (Ind. Ct. App. 1999) (rescission is an equitable remedy to be tried by the court)