DSA Property, LLC, and HJA Property, LLC v. Old National Bank (mem. dec.), 41A01-1610-PL-2252

Background

Daniel and Sandra Alyea and H. Joan Alyea entered a Development Agreement with Wilderness Development, Inc. under which Wilderness would develop property and receive 50% of gross sale proceeds to pay development costs and indemnify the Alyeas for developer-incurred debts.
The Alyeas assigned their interests in the Development Agreement to DSA Property, LLC (DSA) and HJA Property, LLC (HJA). Wilderness borrowed from Old National Bank (the Bank) and, to secure the loan, assigned its rights under the Development Agreement (including its 50% share) to the Bank; DSA and HJA signed a Consent acknowledging the Assignment.
Wilderness defaulted on the loan; the Bank foreclosed HJA’s mortgaged property and sued to collect Wilderness’s assigned 50% share of proceeds from DSA’s lot sales.
DSA and HJA counterclaimed, alleging Wilderness breached the Development Agreement and seeking indemnity/setoff from Wilderness’s 50% proceeds (now assigned to the Bank) for attorney fees and HJA’s loss of property.
The trial court granted summary judgment to the Bank, holding the Bank (as assignee) was not liable to DSA/HJA for Wilderness’s obligations and was entitled to Wilderness’s 50% of net sale proceeds; the appeals court affirmed that judgment but remanded to recalculate amounts owed to the Bank.

Issues

Issue	Plaintiff's Argument (Bank)	Defendant's Argument (DSA/HJA)	Held
Whether the Bank (assignee) is liable to DSA/HJA for Wilderness’s indemnity obligations or subject to DSA/HJA’s damages/setoff against the assigned proceeds	Assignment is enforceable; as assignee, Bank is not liable for Wilderness’s pre-assignment breaches under UCC § 26-1-9.1-404	DSA/HJA assert Wilderness breached and thus neither Wilderness nor its assignee (Bank) is entitled to assigned proceeds; they seek setoff/indemnity from those proceeds	Court held the Agreements and Consent bar DSA/HJA from withholding Wilderness’s assigned 50% proceeds; Bank entitled to those proceeds and not liable for Wilderness’s obligations
Whether the Development Agreement’s indemnity language allows DSA/HJA to recover attorney fees and foreclosure losses from Wilderness’s share (assigned to Bank)	Bank: indemnity, where applicable, was limited to debts incurred by Wilderness and payable from Wilderness’s share; assignment transfers those rights to Bank	DSA/HJA: indemnity provisions entitle them to recover their legal costs and losses from Wilderness’s development share	Court held indemnity provisions did not permit reimbursement of DSA/HJA’s attorney fees or HJA’s foreclosure loss from Wilderness’s 50% proceeds assigned to the Bank
Effect of DSA/HJA’s Consent Agreement to the Assignment	Consent acknowledged Bank’s rights to proceeds and precludes later withholding	DSA/HJA argued consent did not negate contractual indemnity or setoff rights arising from Wilderness’s breach	Court held the Consent Agreement confirmed Bank’s rights and did not allow DSA/HJA to retain assigned proceeds for indemnity
Whether remand is required for calculation of amounts owed to the Bank	Bank noted trial court’s numerical calculation was incorrect and requested remand to correct amounts and accrue additional fees	DSA/HJA did not contest need for recalculation on appeal	Court reversed in part and remanded solely to recalculate the amount owed to Bank

Key Cases Cited

Schoettmer v. Wright, 992 N.E.2d 702 (Ind. 2013) (summary-judgment standard and construing evidence in favor of nonmoving party)
The Winterton, LLC v. Winterton Inv’rs, LLC, 900 N.E.2d 754 (Ind. Ct. App. 2009) (contract construction is a question of law; interpret unambiguous contract from four corners)
Four Seasons Mfg., Inc. v. 1001 Coliseum, LLC, 870 N.E.2d 494 (Ind. Ct. App. 2007) (principles of contract interpretation)
Troxel v. Troxel, 737 N.E.2d 745 (Ind. 2000) (issue preservation; may not raise new issues for first time on appeal)