Larry J. Jernas and R & R Horse Haven, Inc. v. Kevin J. Gumz
2016 Ind. App. LEXIS 101
| Ind. Ct. App. | 2016Background
- In December 2009 R & R Horse Haven, Inc. (R & R) (through its president Mary Wodrich) delivered a $25,000 earnest-money check from Larry Jernas to Kevin Gumz after signing a pre-printed form Agreement to Sell Real Estate for property at 7491 S 100 W, North Judson.
- The form agreement contained handwritten entries: it named R & R in the space for seller (a scrivener’s error), listed $800,000 as the purchase price, and included a financing contingency with zeros filled into financing blanks.
- No signature by Gumz appears on the form; Wodrich signed near the top of the first page. Parties dispute whether the agreed price had been $500,000 (plaintiffs’ position) or $800,000 and whether the financing contingency applied.
- R & R failed to close; Gumz later sold the property to a third party for $400,000 and kept the $25,000 deposit. R & R and Jernas sued for return of the deposit (counts including debt due and unjust enrichment); Gumz counterclaimed for breach and damages.
- At bench trial the court found an enforceable contract existed, that the deposit was earnest money and, under the contract terms, Gumz was entitled to retain it; the court declined to impose a constructive trust or award plaintiffs attorney fees.
- R & R and Jernas appealed, arguing the contract failed the statute of frauds, was ambiguous/defective (wrong party listed, no legal description, improper execution), and that the financing contingency should have required return of the deposit.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a binding, reasonably certain real-estate contract existed | Contract invalid: wrong party listed, no legal description, not signed by Gumz, and R & R’s bylaws required additional signatures | Agreement is enforceable: parties manifested mutual assent, Wodrich had apparent/actual authority, and form plus extrinsic evidence furnished means of identification | Court: Contract enforceable; findings supported by testimony and documents |
| Whether statute of frauds bars enforcement | Statute requires fully written contract signed by party to be charged; plaintiffs contend defect renders agreement unenforceable | Statute of Frauds is an affirmative defense (waived if not properly pled) and only requires signature of the party to be charged; Gumz’s counterclaim relied on the signed writing | Court: Statute of Frauds did not defeat Gumz’s counterclaim; writing signed by R & R’s agent sufficed and defense was not effectively asserted |
| Whether financing contingency required return of earnest money | Plaintiffs: contingency required buyer to obtain financing; failure to obtain financing entitles refund of deposit | Gumz: blanks were filled with zeros and parties agreed financing was unnecessary; specific filled-in terms negate pre-printed contingency language | Court: Specific ‘‘0’’ entries and testimony showed financing contingency was inapplicable; deposit properly retained by Gumz |
| Whether equitable relief (constructive trust / attorney fees) was warranted | Plaintiffs: refusal to disclose changed price and retain deposit unjust; constructive trust required and fees appropriate | Gumz: acted pursuant to the contract; no wrongful acquisition or unjust enrichment warranting trust or fees | Court: No wrongful conduct or unjust enrichment shown; no constructive trust or fee award |
Key Cases Cited
- Yanoff v. Muncy, 688 N.E.2d 1259 (Ind. 1997) (standard of review for bench findings and conclusions)
- Fox Dev., Inc. v. England, 837 N.E.2d 161 (Ind. Ct. App. 2005) (statute of frauds affects enforceability, not formation; oral agreements are voidable)
- Schuler v. Graf, 862 N.E.2d 708 (Ind. Ct. App. 2007) (writing need only furnish means of identification for land; parol evidence can complete legal description)
- Conwell v. Gray Loon Outdoor Mktg. Grp., Inc., 906 N.E.2d 805 (Ind. 2009) (contract must be reasonably definite and certain as to essential terms)
- Grabill Cabinet Co., Inc. v. Sullivan, 919 N.E.2d 1162 (Ind. Ct. App. 2010) (only the party to be charged need sign under statute of frauds)
- Ryan v. Lawyers Title Ins. Corp., 959 N.E.2d 870 (Ind. Ct. App. 2011) (specific, filled-in contract terms control over conflicting pre-printed language)