Lead Opinion
OPINION
Dоnald L. Fields and Virginia L. Fields (collectively, the “Fieldses”) and Raymond Marlow appeal the trial court’s judgment in favor of Carla Conforti. The Fieldses
I. Whether the trial court’s judgment awarding back rent to Con-forti from the Fieldses is clearly erroneous;
II. Whether the trial court’s judgment awarding back rent to Con-forti from Marlow is clearly erroneous;
III. Whether the trial court’s judgment awarding attorney fees to Conforti from Marlow is clearly erroneous; and
IV. Whether the trial court’s judgment awarding attornеy fees to Conforti from the Fieldses is clearly erroneous.
We affirm in part, reverse in part, and remand.
Although we are unanimous in our decision as to Issues I, II, and III, we differ on Issue IV. Judge Sharpnack writes for the panel on Issues I, II, and III. Judge Kirsch writes for the panel on Issue IV with the concurrence of Judge Mathias and a dissent by Judge Sharpnack.
Before addressing the arguments raised by the Fieldses and Marlow, we note that they did not submit a transcript of the bench trial upon which the trial court’s findings of fact and conclusions thereon are based. Ind. Appellate Rule 9(F)(4) provides:
The Notice of Appeаl shall designate all portions of the Transcript necessary to present fairly and decide the issues on appeal. If the appellant intends to urge on appeal that a finding of fact or conclusion thereon is unsupported by the evidence or is contrary to the evidence, the Notice of Appeal shall request a Transcript of all the evidence.
The Indiana Supreme Court addressed a similar situation in Pabey v. Pastrick,
The court also relied upon its opinion in In re Walker,
We now set out the relevant facts as stated in the trial court’s findings of fact. In 2002, Marlow learned that Conforti was interested in selling her residence and approached Conforti about acquiring the property by means of an installment land sale contract for his mother and stepfather, the Fieldses. Conforti learned from her mortgage company that she сould not sell her home by using a land contract because it violated the terms of her mortgage loan. Marlow then suggested to Conforti that a lease with an option to purchase be used and provided the forms to Conforti.
On August 30, 2002, Conforti and Mar-low entered into a Residential Lease with Option to Purchase (“Lease”). In the Lease, Conforti agreed to lease residential property to Marlow from September 1, 2002, to August 31, 2004. The Lease contained an option to purchase the property if exercised within the two-year term of the Lease. The Lease also contained a provision regarding holding over after the expiration of the Lease and provided: “Any holding over after expiration of the term of this lease, with the consent of the Lessor, shall be construed as a month-to-month tenancy in accordance with the terms hereof, as applicable.” Appellants’ Appendix at 76. The Lease also provided: “The prevailing party shall be entitled to all costs incurred in connection with any legal action brought by either party to enforcе the terms hereof or relating to the demised premises, including reasonable attorneys’ fees.” Id. The Lease specified a monthly rent of $636.00, which was the amount of Conforti’s mortgage payment. The rent was later increased to $649.00 when Conforti’s mortgage payment increased.
Marlow and Conforti also signed a “Permission to Sublet” form, in which Conforti granted Marlow the right to sublet the residence to the Fieldses. The Permission to Sublet also provided: “This permission to sublet in no way releases [Marlow] from any obligation, responsibility or duty of [Marlow] as set forth in the аbove-described lease.” Id. at 78. The Permission to Sublet also provided: “In the event legal action is required to enforce any provision of this agreement, the prevailing party shall be entitled to recover reasonable attorney fees and costs.” Id. The trial court found that Conforti and Marlow agreed “[t]hat the Fieldsfes] were to occupy the Property under the Lease and make the payments under the Lease.” Id. at 14. However, the trial court also found that “Conforti testified that she never discussed the terms of the lease with the Fields prior to signing it.” Id. at 13.
Marlow gave oral permission to the Fieldses to move into the residence. Mar-low did not execute a written assignment or sublease of the Lease to the Fieldses. The Fieldses moved into the residence on September 1, 2002, and made rental payments directly to Conforti. On August 30, 2004, Conforti received notice from the Fieldses indicating their desire to exercise the option to purchase the property under the Lease. Although the Fieldses scheduled a closing, Conforti did not appear at the closing, and the Fieldses “failеd to
On November 1, 2004, Conforti provided Marlow and the Fieldses with written notice that the Lease had expired on August 31, 2004, and that Marlow and the Fieldses were holdover tenants. The notice indicated that the amount owed for rent would be increased to $850.00 per month effective on December 1, 2004. The Fieldses responded by filing a complaint against Con-forti for specific performance. The Fields-es also informed Conforti that they would not pay the increased amount of rent. On December 21, 2004, Conforti provided Marlow and the Fieldses with notice that they were in default for failing to pay the increased rent. The Fieldses did not vacate the property and, as of December 31, 2005, owed $2,613.00 to Conforti.
In response to the Fieldses’ complaint, Conforti filed a counterclaim against the Fieldses for breach of the Lease. Conforti also filed a third-party complaint against Mаrlow for breach of the Lease and fraud. After a bench trial, the trial court entered findings of fact and conclusions thereon. The trial court concluded that: (1) the Fieldses were not entitled to specific performance because they were not parties to the Lease and option to purchase the real estate and because any assignment had to be in writing; (2) the Fieldses occupied the property as sublessees pursuant to an oral agreement with Marlow; (3) both the Fieldses and Marlow were in default on the rent payments and were liable to Con-forti for $2,613.00; (4) the Fieldses were liable for Conforti’s attorney fees in the amount of $31,125.58 because the Fieldses “continued to litigate the action for specific performance after it should have become clear to them that they had no right to exercise the option to purchase under the Lease”; and (5) Marlow was liable for Conforti’s attorney fees in the amount of $31,125.58 because of the prevailing party clause in the Lease. Appellants’ Appendix at 10-23.
The trial court apparently entered findings of fact and conclusions thereon pursuant to Ind. Trial Rule 52(A). In general, we may not set aside the findings or judgment unless they are clearly erroneous. Menard, Inc. v. Dage-MTI, Inc.,
We give due regard to the trial court’s ability to assеss the credibility of witnesses. Id. While we defer substantially to findings of fact, we do not do so to conclusions of law. Id. We do not reweigh the evidence; rather we consider the evidence most favorable to the judgment with all reasonable inferences drawn in favor of the judgment. Yoon v. Yoon,
I.
The first issue is whether thе trial court’s judgment awarding back rent to
“[A] party’s obligation to pay rent may rest separately on either of two reasons, one by privity of contract and the other by privity of estate.” Powell v. Jones,
“A sublease ... does not transfer a lessee’s rights or obligations under the lease.” Id. “The original lessee remains liable to the landlord for the payment of rent.” Shadeland Dev. Corp. v. Meek,
Conforti concedes that, in general, neither privity of estate nor privity of contract exists between a lessor and a sub-lessee. However, Conforti argues that privity of estate exists based upon the conduct and relationship of the parties. In support of her argument, Conforti cites Klein v. Niezer & Co.,
Although the trial court’s findings indicate that Conforti and Marlow agreed that the Fieldses would pay the rent directly to Conforti, the trial court’s findings indicate that Conforti did not discuss the lease with the Fieldses. Consequently, as a matter of- law, the Fieldses were not directly liable to Conforti for the rent. The trial court’s conclusion that the Fields-es were liable to Conforti for $2,613.00 is сlearly erroneous.
II.
The next issue is whether the trial court’s judgment awarding back rent to Conforti from Marlow is clearly erroneous. The trial court found:
After Marlow and the Fields received notice of default of the Lease, the Fields became hold over month-to-month renters. Since Conforti never released Mar-low from the Lease (see paragraph 5 of the Permission to Sublet), both Marlow and the Fields are in default in rental payments due in the amount of $201.00 per month for 13 months to the date of this order for a total of $2,613.00.
Appellants’ Appеndix at 19. According to Marlow, the trial court’s finding is clearly erroneous because the failure to pay the full rental payments occurred after the term of his Lease with Conforti expired.
As noted above, “[a] sublease ... does not transfer a lessee’s rights or obligations under the lease.” Id. “The original lessee remains liable to the landlord for the payment of rent.” Shadeland Dev. Corp. v. Meek,
Indiana courts have not considered a tenant’s liability for a sublessee’s holding over. However, Conforti cites Young v. Dist. of Columbia,
The “Permission to Sublet” signed by Marlow and Conforti provided that the permission to sublet “in no way release[d]” Marlow from “any obligation, responsibility or duty of [Marlow] as set forth in the
Marlow also argues that, even if he could be held liable for breaches during the holdover period, he could not be held liable for damages resulting from the Con-forti’s unilateral increase in the rent during the holdоver period. According to Marlow, Conforti did not have the right to increase the rent during the holdover period. Marlow relies in part upon Houston v. Booher,
According to Marlow, because the original Lease was for one year, Con-forti was required to continue the Fieldses’ tenancy for another year under the same rental terms as the Lease. We disagree. The Lease specifically provided that any holdover tenancy would be construed as a “month-to-month tenancy in accordance with the terms hereof, as applicable.” Appellants’ Appendix at 76. A month-to-month tenancy may be terminated or the rent may be changed by the landlord giving a one-month notice to the tenant. Speiser v. Addis,
III.
The next issue is whether the trial court’s judgment awarding attorney fees to Conforti from Marlow is clearly erroneous. The Lease, which was signed by Marlow and Conforti, provided that “[t]he prevailing party shall be entitled to all costs incurred in connection with any legal action brought by either party to enforce the terms hereof or relating to the demised premises, including reasonable attorneys’ fees.” Appellants’ Appendix at 76. Further, the Permission to Sublet provided: “In the event legal action is required to enforce any provision of this agreement, the prevailing party shall be entitled to recover reasonable attorney fees and costs.” Id. at 78. The trial court ordered that Marlow and the Fieldses pay Confor-ti’s attorney fees in the amount of $31,125.58. On appeal, Marlow argues
We addressed this same argument above. See supra Part II. The “Permission to Sublet” signed by Marlow and Con-forti provided that the permission to sublet “in no way release[d]” Marlow from “any obligation, responsibility or duty of [Mar-low] as set forth in the above-described lease.” Appellants’ Appendix at 78. It was Marlow’s duty as tenant to see that the Fieldses vacated the property in a timely manner, and Marlow is liable for any damages during the holdover period. Consequently, the trial court’s conclusion that Marlow was liable for Conforti’s attorney fees is not cleаrly erroneous.
IV.
Notes
,. Conforti also relies upon Riverbend Investors v. Progressive Surface Preparation, L.L.C., 255
. Marlow also argues that he should be the prevailing party and requests reimbursement of his attorney fees. Having found that Mar-low breached the Lease, see supra Part II, we must disagree with Marlow’s request for attorney fees.
Concurrence Opinion
concurring.
The final issue is whether the trial court’s judgment awarding attorney fees to Conforti from the Fieldses is clearly erroneous. The trial court concluded that the Fieldses were liable for Conforti’s attorney fees under Ind.Code § 34 — 52—1—1(b), which provides:
In any civil action, the court may award attorney fees as part of the cost to the prevailing party, if the court finds that either party:
(1) brought the action or defense on a claim or defense that is frivolous, unreasonable, or groundless;
(2) continued to litigate the action or defense after the party’s claim or defense became frivolous, unreasonable, or groundless; or
(3)litigated the action in bad faith.
The trial court concluded that the Fieldses “continued to litigate the action for specific performance after it should have become clear to them that they had no right to exercise the option to purchase under the Lease. They were not parties to the Lease and no written assignment was made to them whereby they legally stepped into Marlow’s shoes.” Appellants’ Appendix at 20-21.
The trial court does not identify at what point “it should have become clear to [the Fieldses] that they had no right to exercise the option to purchase under the lease.” This matter was decided by a trial on the merits. It was not until the trial court entered its judgment that it was clear that the Fieldses had no right to exercise the option. If it had been clear earlier, this matter could have been terminated much less expensively by a motion to dismiss, a motion for summary judgment or, at the least, a motion for judgment on the evidence at trial. Rather, the parties took two days litigating this matter, and the trial court took six weeks deciding it. In deciding this case, the trial court did not find that the parties to the contract did not have the intent that the Fieldses would have an option to purchase the property, but rather concluded that any such option was unenforceable due to the Indiana Statute of Frauds. The vagaries of the statute and its numerous exceptions do not provide fertile ground for concluding that a lawsuit seeking to give effect to the parties’ intent is frivolous. The fact that the Fieldses did not prevail on their claim at trial does not make their claim frivоlous. Something more is required and that something is not present here.
In summary, all judges on the panel concur in reversing on Issue I аnd affirming on Issues II and III. Judge Kirsch and Judge Mathias concur in reversing on Issue IV.
Affirmed in part, reversed in part, and remanded.
MATHIAS, J., concurs.
Dissenting Opinion
dissenting.
I am unable to concur in the conclusion that the trial court erred by awarding attorney fees to Conforti from the Fields-es. The trial court concluded that the Fieldses were liable for Conforti’s attorney fees under Ind.Code § 34 — 52—1—1(b), which provides:
In any civil action, the court may award attorney’s fees as part of the cost to the prevailing party, if the court finds that either party:
(1) brought the action or defense on a claim or defense that is frivolous, unreasonable, or groundless;
(2) continued to litigate the action or defense after the party’s claim or defense clearly became frivolous, unreasonable, or groundless; or
(3) litigated the action in bad faith.
The trial court concluded that the Fieldses “continued to litigate the action for specific performance after it should have become clear to them that they had no right to exercise the option to purchase under the Lease. They were not parties to the Lease and no written assignment was made to them whereby they legally stepped into Marlow’s shoes.” Appellants’ Appendix at 20-21.
On appeal, the Fieldses argue that the assignment was not required to be in writing. Further, the Fieldses contend that the argument that they were Marlow’s assignees rather than sublessees was reasonable. In response, Conforti argues that it is not possible to consider the Fieldses’ argument in light of their failure to provide this court with a transcript of the evidence. In their reply brief, the Fields-es contend that we are able to review this issue despite their failure to provide the transcript based upon the findings of fact viewed in conjunction with the definition of assignment and established caselaw.
The Fieldses make much of the fact that the trial court’s finding that any assignment had to be in writing because the Lease contained an option to purchase the property. However, I conclude that even if we assume that the Fieldses are correct and an assignment was not required to be in writing, the Fieldses’ argument fails. “An assignment is the transfer by a lessee of one’s entire leasehold interest, while a sublessor transfers less than his entire leasehold interest so that he retains an interest in the leasehold.” Lions Delaware County Fair,
