Lily, Inc. d/b/a Weinbach Cafeteria and Fernando Tudela v. Silco, LLC., 997 N.E.2d 1055

Background

Silco (landlord) leased shopping-center premises to Four O Three, Inc.; Tudela acquired the Weinbach Cafeteria and the lease was assigned to him in 2004; Tudela executed a mortgage to Silco the same day securing lease obligations.
Tudela fell behind on rent beginning July 2006; negotiated partial rent-reduction and performed some work around the center, but arrearage continued.
Silco leased nearby space to a blood-plasma center in Oct. 2006; Tudela complained that the new tenant reduced his business.
Silco locked Tudela out in Sept. 2008, took possession, had equipment appraised and consigned/auctioned by Sohn & Associates (net ≈ $43,173).
Silco sued (breach of lease, ejectment, foreclosure, conversion); the trial court granted Silco summary judgment and foreclosed the mortgage, awarding a personal judgment and directing sale; court reserved calculation of some fees and advances.
On appeal the court affirmed in part, reversed in part, and remanded limited issues (attorney fees calculation, mitigation of damages, and accounting).

Issues

Issue	Plaintiff's Argument (Silco)	Defendant's Argument (Tudela/Lily)	Held
Breach of contract / "contractual sabotage" (leasing to plasma center)	No contractual duty to control tenant mix; Tudela waived nuisance claim and was in default so had no right to quiet enjoyment.	Silco breached by leasing to blood-plasma center that created a nuisance and impaired cafeteria business.	Court: Issue waived (not pled); even on merits, no lease provision forbade such leasing; Tudela was already in rent default so not entitled to quiet enjoyment — summary judgment for Silco.
Validity / consideration for Mortgage; right to foreclose	Mortgage was executed contemporaneously with assignment/consent and secured lease obligations; admitted in pleadings; adequate consideration exists; estoppel applies.	Mortgage void for lack of consideration or because Tudela lacked clear title when he signed; inequitable conduct bars foreclosure.	Court: Mortgage valid (documents construed together); Tudela estopped by mortgage warranties and admissions; summary judgment for Silco on foreclosure.
Surrender of tenancy / acceptance / conversion (possession & operation by Silco)	Landlord had contractual right to re-enter, seize and sell tenant property on default; re-entry did not necessarily terminate lease and Landlord could operate to mitigate.	Tudela contends Silco’s takeover and representations (and silence) amounted to acceptance of surrender, estoppel, termination of lease, and conversion of assets.	Court: No written landlord authorization; Tudela had not proved landlord agreed to terminate; lease preserves landlord’s remedies after re-entry — summary judgment for Silco on surrender/termination; but factual dispute remains on mitigation/accounting.
Late fees and interest (scope and compounding)	Lease authorizes interest on past due sums and $50 per month late charge for each month or part thereof.	Claimed the court awarded impermissible perpetually compounding $50/month and compound interest beyond lease terms.	Court: Trial order aligned with lease language (late charges and interest authorized); no reversible error on this ground.
Attorneys’ fees (amount & contractual limits)	Fees recoverable under Lease and Mortgage; foreclosure-related fees not capped by Lease cap on litigation fees.	Lease caps recovery in litigation to the lesser of actual fees or $2,000; trial court awarded ~ $38,000 without clear breakdown.	Court: Award cannot be reviewed from order as written; remanded to specify and apply Lease/Mortgage provisions to fee award.
Duty to mitigate damages (re-letting / credit for landlord’s use)	Landlord had right to re-enter and operate to mitigate; no designated evidence of failure to mitigate.	Landlord failed to make reasonable efforts to re-let and operated the restaurant itself without crediting benefits to tenant; genuine issue of fact.	Court: Genuine issue exists whether Silco failed to mitigate — reversed and remanded on mitigation.
Accounting for cafeteria assets and inventory	Silco produced auction and sale records; no adequate accounting needed to support judgment per record.	Tudela designated deposition exhibits showing food, liquor, and cash inventory and sought accounting; disputed proceeds and conversion.	Court: There is a factual dispute regarding inventory, cash and accounting; summary judgment on the accounting claim was erroneous — reversed and remanded for accounting.

Key Cases Cited

Mangold ex rel. Mangold v. Ind. Dep’t of Natural Res., 756 N.E.2d 970 (Ind. 2001) (summary judgment standard and construal of facts in favor of nonmovant)
Dunn v. Meridian Mut. Ins. Co., 836 N.E.2d 249 (Ind. 2005) (contract interpretation reviewed de novo)
Johnson v. Johnson, 920 N.E.2d 253 (Ind. 2010) (use of extrinsic evidence and when contract construction is for fact-finder)
Pinkowski v. Calumet Twp. of Lake Cnty., 852 N.E.2d 971 (Ind. Ct. App. 2006) (ambiguity and summary judgment in contract construction)
Nylen v. Park Doral Apartments, 535 N.E.2d 178 (Ind. Ct. App. 1989) (lessee liability may continue despite eviction where lease saves liability)
Grueninger Travel Serv. of Ft. Wayne, Ind., Inc. v. Lake Cnty. Trust Co., 413 N.E.2d 1034 (Ind. Ct. App. 1980) (lessor resuming possession can work surrender unless lease preserves lessee liability)
Huntingburg Prod. Credit Ass’n v. Griese, 456 N.E.2d 448 (Ind. Ct. App. 1983) (requirement of consideration for mortgage; broad view of what suffices)
Bruno v. Wells Fargo Bank, N.A., 850 N.E.2d 940 (Ind. Ct. App. 2006) (nonbreaching party’s duty to mitigate and burden on breaching party to show failure to mitigate)
Atwood v. Prairie Vill., Inc., 401 N.E.2d 97 (Ind. Ct. App. 1980) (actions for accounting lie in equity; discretionary relief)
Anacomp, Inc. v. Wright, 449 N.E.2d 610 (Ind. Ct. App. 1983) (purpose of accounting is to adjudicate accounts and render complete justice)