Timothy French v. Stephen R. Elkin and Vanessa G. Elkin, and Greg Harmon and 21st Century Floor Covering, LLC (mem. dec.)
22A05-1601-PL-213
| Ind. Ct. App. | Oct 5, 2016Background
- In 2011 French purchased Elkin’s interest in a flooring company via a Purchase Agreement, agreeing to assume liabilities listed on Schedule C and to secure Elkin’s release from personal guarantees tied to an SBA loan.
- Two versions of the Purchase Agreement exist in the record; the operative one for the mediation pertains to the Company and lists an SBA loan balance of $93,448.07 on Schedule C.
- The Company later defaulted on the SBA loan; French negotiated separately with the SBA and paid $11,750 to release his personal guaranty and SBA lien on his residence.
- In 2014 the parties executed a Mediation Settlement Agreement in which Harmon, French, and the Company warranted that liabilities on Schedule C were satisfied, paid, or refinanced to release the Elkins’ personal guarantees, and agreed to pay the Elkins $11,000 in full settlement.
- After the SBA pursued collection from the Elkins post-mediation, the Elkins moved to enforce the settlement; the trial court found Harmon and French breached the warranty and ordered them to reimburse the Elkins (including $16,750 the Elkins paid to mitigate) and pay attorney fees.
- French sought relief arguing vagueness, mutual mistake/surprise, and that the settlement did not authorize indemnification or fee awards; the trial court denied relief and this appeal followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the mediated settlement agreement is enforceable (vagueness) | Elkins: Agreement and Schedule C identify debts; Harmon/French warranted Schedule C liabilities satisfied, so settlement is enforceable | French: Agreement is vague because multiple Purchase Agreement versions exist and schedule authenticity is unclear | Court: Enforceable; French waived challenge to contract authenticity and the mediation agreement clearly referenced Schedule C for the Company version, identifying the SBA loan |
| Whether Trial Rule 60(B)(1) relief (mistake/surprise) was warranted | Elkins: No sufficient evidence French was misled; bank did not release Elkins’ guaranty | French: He was misled by bank and Elkin into believing Elkins were released from liability when he agreed to the settlement | Court: Denied relief; no abuse of discretion — evidence showed SBA declined to release Elkins’ guaranty and French bore burden to prove mistake |
| Whether trial court exceeded parties’ intent by ordering reimbursement/indemnification | Elkins: Warranty in settlement made Harmon and French financially responsible for Schedule C liabilities; Elkins mitigated damages and are entitled to reimbursement and fees for enforcement | French: Settlement disclaims indemnification and provides each party pay own fees; court lacked authority to order payment of $16,750 and $2,100 attorneys’ fees | Court: Warranty made Harmon and French responsible; reimbursement for mitigation supported by evidence; fee award upheld as enforcement-related (court declined to fully address fee issue on appeal due to briefing defects) |
| Whether appellate court should strike statements about attachments to the mediation agreement | Elkins: Exhibits (Purchase Agreement and Schedule C) were part of the enforcement motion record and references are proper | French: Elkins falsely claimed Schedule C was attached to the mediation agreement and statements should be struck | Court: Denied motion to strike; mediation agreement referenced Schedule C and exhibits were submitted with the enforcement motion, so references not impertinent |
Key Cases Cited
- Zukerman v. Montgomery, 945 N.E.2d 813 (Ind. Ct. App. 2011) (settlement agreements governed by general contract principles; unambiguous contract language controls)
- Merrillville 2548, Inc. v. BMO Harris Bank N.A., 39 N.E.3d 382 (Ind. Ct. App. 2015) (issues not raised in trial court are generally waived on appeal)
- GKC Ind. Theatres, Inc. v. Elk Retail Investors, LLC, 764 N.E.2d 647 (Ind. Ct. App. 2002) (appellate courts are not the forum for initial fact-finding; preserves trial court’s role)
- Trustcorp Mortg. Co. v. Metro Mortg. Co., 867 N.E.2d 203 (Ind. Ct. App. 2007) (primary task in contract construction is to determine intent from four corners when language is unambiguous)
- Rissler v. Lynch, 744 N.E.2d 1030 (Ind. Ct. App. 2001) (Trial Rule 60(B)(1) relief for mistake or surprise is reviewed for abuse of discretion)