112 N.E.3d 716
Ind. Ct. App.2018Background
- In May 2013 Katrina Carter and Quentin Lintner signed a "rent-to-buy" Purchase Agreement with Rainbow Realty for a derelict Indianapolis house; the Agreement called monthly payments "rent," required repairs by the buyers, disclaimed warranties, and promised execution of a conditional sales (land) contract after 24 payments.
- The Agreement did not set a definite term nor provide for reversion of the property to Rainbow; the Declaration expressly stated the parties’ intent that the buyer was required to buy and the seller required to sell.
- The Lintners missed numerous payments; Rainbow pursued eviction and in June 2015 filed to terminate the Agreement and obtain possession.
- The Lintners counterclaimed, moved for partial summary judgment asserting the Agreement was a lease subject to the Landlord–Tenant Act (including the implied warranty of habitability) and that Rainbow committed fraud/made deceptive statements.
- The trial court granted partial summary judgment for the Lintners, found Rainbow breached the warranty of habitability and committed fraud, awarded damages and attorney’s fees; Rainbow appealed.
- The Court of Appeals reversed: it held the Agreement was not a lease (no definite term, no reversion), vacated the fraud finding and attorney’s fees award, and remanded with instruction to enter judgment for Rainbow for eviction/possession.
Issues
| Issue | Plaintiff's Argument (Lintners) | Defendant's Argument (Rainbow) | Held |
|---|---|---|---|
| Whether the Agreement is a lease governed by the Landlord–Tenant Act | Agreement functionally was a lease: monthly payments called "rent," eviction remedy, and lease-like restrictions; thus warranty of habitability applies | Agreement is a purchase-contract hybrid; it lacks essential lease elements (definite term and reversion), so Act does not apply | Not a lease; Act does not apply because Indiana law requires a definite term and reversion for a lease |
| Whether the Agreement was created to avoid the Landlord–Tenant Act exception for sale-contract occupancy | Arrangement was designed to evade tenant protections; should be treated as a rental | No record evidence of an avoidance scheme; issue not preserved below | Avoidance argument waived on appeal; no evidence in record to support it |
| Whether Rainbow committed actual fraud by misrepresenting the Agreement’s nature | Rainbow falsely represented it could disclaim habitability warranty and misled buyers about rights | Because Agreement is not a lease and Act does not apply, those representations were not false | Fraud finding reversed: element of falsity fails because representations were accurate as to contract form |
| Whether Lintners were entitled to attorney’s fees under the Landlord–Tenant Act | They prevailed below and submitted ~$35,000 in fees; trial court abused discretion by awarding only $3,000 | Fees not recoverable if Landlord–Tenant Act does not apply or Lintners are not prevailing party | Reversed: Lintners are not prevailing parties under the Act on appeal, so no fee recovery |
Key Cases Cited
- Munson v. Wray, 7 Blackf. 403 (Ind. 1845) (lease recognized where parties intend possession for a definite time)
- New York, Chicago & St. Louis Ry. Co. v. Randall, 102 Ind. 453, 26 N.E. 122 (Ind. 1885) (lease requires a definite term)
- Haywood v. Fulmer, 158 Ind. 658, 32 N.E. 574 (Ind. 1892) (lease at common law requires reversion to grantor)
- Mendenhall v. 1st New Church Soc’y of Indpls., 177 Ind. 336, 98 N.E. 57 (Ind. 1912) (lease contemplates property will revert to lessor)
- Smyrniotis v. Marshall, 744 N.E.2d 532 (Ind. Ct. App. 2001) (reciting long-standing requirement that leases have definite term)
- Ruse v. Bleeke, 914 N.E.2d 1 (Ind. Ct. App. 2009) (elements of actual fraud)