L.H. Controls, Inc. v. Custom Conveyor, Inc.
2012 Ind. App. LEXIS 464
| Ind. Ct. App. | 2012Background
- LH Controls, Inc. (LH) and Custom Conveyor, Inc. (CCI) engaged on a Honda Greensburg project under a Honda Master Construction Agreement incorporated into the LH-CCI subcontract.
- CCI hired LH to provide programming and control boxes for four conveyor lines for $685,754.30, later increased to $788,582.30 after two LH change orders.
- LH’s performance fell behind schedule; LH failed to provide timely progress reports and milestone schedules, and its programming for the door line was late, causing downstream costs for CCI.
- Honda began withholding progress payments due to delays, and after project completion Honda negotiated over cost overruns, with CCI ultimately accepting a settlement of $975,000 to resolve issues unrelated to LH’s performance.
- LH filed a mechanic’s lien and Honda PLN against Honda for non-payment; CCI withheld $82,184.10 in chargebacks from LH’s final invoices; LH sued Honda and CCI, and CCI asserted indemnity and other counterclaims against LH.
- The trial court awarded CCI $1,409,896.97 in damages, plus later attorney-fee adjustments, totaling $1,467,587.61; LH appealed challenging lost profits, indemnity, and chargebacks conclusions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether LH’s breaches support lost profits for CCI | LH argues no causal link; lost profits unsupported | CCI contends breaches caused compensable lost profits | Lost profits reversed; no evidence of causation or foreseeability |
| Whether LH must indemnify CCI for attorney fees and costs | Indemnity clause does not clearly cover first-party claims | Indemnity clause covers all costs | Indemnity limited to third-party costs; attorney fees reversed; third-party costs affirmed |
| Whether chargebacks were recoverable and properly calculated | Chargebacks valid to offset LH’s final payment | Chargebacks overstated and improper offset; waiver of conditions precedent | Waiver established; double recovery avoided; remand for corrections; partial affirmances |
Key Cases Cited
- Fresh Cut, Inc. v. Fazli, 650 N.E.2d 1126 (Ind. 1995) (indemnity terms construed strictly; first-party implications)
- Eden United, Inc. v. Short, 653 N.E.2d 126 (Ind. Ct. App. 1995) (lost profits require concrete basis; no implied after-the-fact profits)
- Sawmill Creek, LLC v. Marion County Auditor, 964 N.E.2d 213 (Ind. 2012) (two-tiered review for findings; defer to trial court on facts; de novo on law)
- Berkeley & Co. Contractors v. Palm & Associates, 814 N.E.2d 649 (Ind. Ct. App. 2004) (consequential damages must be foreseeable; lost profits require certainty)
- Clark’s Pork Farms v. Sand Livestock Systems, Inc., 563 N.E.2d 1292 (Ind. Ct. App. 1990) (consequential damages may be awarded if loss flows naturally and is contemplated)