JPMCC 2006-CIBC14 Eads Parkway, LLC v. DBL Axel, LLC
2012 Ind. App. LEXIS 395
| Ind. Ct. App. | 2012Background
- JPMCC 2006-CIBC14 Eads Parkway, LLC sued DBL Axel, LLC and related parties in Indiana for declaratory judgment, tort claims, and breach of guaranty claims arising from a City condemnation and nuisance award distributions.
- DBL secured the loan with a Mortgage on the Dearborn Plaza property; Richman held 10% and the Hartunian Family Trust held 90% of DBL; Richman later assigned his DBL interest to Korkmaz.
- In 2009 the City condemned part of the Property; a nuisance award of $1,725,600 and a condemnation award of $224,600 were involved; DBL ultimately received the nuisance award in installments and deposited funds pending dispute resolution; a receiver was appointed for the Property.
- Section 3.4 of the Mortgage designated JPMCC as the attorney-in-fact to receive condemnation awards and permitted application of such awards to the debt, with expenses of collection deductible by the lender; JPMCC argued this language unambiguously transferred awards to JPMCC.
- The trial court denied JPMCC’s summary judgment on some issues and granted summary judgment for others; on appeal, the court reversed in part and remanded for further proceedings.
- The issues included the declaratory judgment interpretation of the Mortgage, the sufficiency of JPMCC’s tort claims independent of contract, and JPMCC’s breach of guaranty claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Declaratory judgment on award application | JPMCC: Section 3.4 transfers condemnation proceeds to JPMCC and allows application to the debt | DBL: 3.4 does not require JPMCC to defend DBL; funds net of collection costs belong to lender | JPMCC entitled to summary judgment; court reversed and entered judgment for JPMCC on the declaratory judgment claim. |
| Tort claims vs. contract | JPMCC: Tort claims arise independently from contract for misappropriation of awards | DBL: Tort claims are simply misstyled contract claims; no independent tort identified | Court affirmed summary judgment for DBL; tort claims not independent of contract. |
| Guaranty liability for balance of debt | JPMCC: Guarantors liable for full balance due to misapplication of awards | Guarantors liable only if full recourse conditions are satisfied; misapplication alone insufficient | Guarantors not liable for the balance of the debt, but liable for the first two misapplied nuisance installments; remanded for amounts. |
Key Cases Cited
- Murray v. City of Lawrenceburg, 925 N.E.2d 728 (Ind.2010) (inverse condemnation as remedy for government damage, retroactive application considerations)
- French-Tex Cleaners, Inc. v. Cafaro Co., 893 N.E.2d 1156 (Ind.Ct.App.2008) (court disallows tort claims arising from bona fide contract disputes)
- Greg Allen Constr. Co. v. Estelle, 798 N.E.2d 171 (Ind.Ct.App.2003) (tort remedy not available where contract governs duties)
- Coffel v. Perry, 452 N.E.2d 1066 (Ind.Ct.App.1983) (conduct in bona fide contract disputes does not prove torts)
- Midtown Chiropractic v. Ill. Farmers Ins. Co., 847 N.E.2d 942 (Ind.2006) (pursuit of punitive damages; assignability principles for contract vs. tort claims)
- Erie Ins. Co. v. Hickman, 622 N.E.2d 515 (Ind.1993) (contract-based duties not converted into independent torts)