ATTORNEYS FOR APPELLANTS: ATTORNEY FOR APPELLEE,
SCHILLING BROTHERS LUMBER
AND HARDWARE, INC.
ANTHONY DeBONIS, JR. THOMAS L. KIRSCH
DAVID S. GLADISH Munster, Indiana
Smith & DeBonis
Highland, Indiana ATTORNEY FOR APPELLEE, FIRST
BUILDERS OF INDIANA, INC.
FRED M. CUPPY
KATHERYN D. SCHMIDT
KEVIN E. STEELE
Burke Costanza & Cuppy, LLP
COURT OF APPEALS OF INDIANA
MERCANTILE NATIONAL BANK OF )
INDIANA, as Trustee for Trust #5840, and )
HORST and MARIANNE THOMPSON, )
vs. ) No. 45A03-9904-CV-132
FIRST BUILDERS OF INDIANA, INC., and )
SCHILLING BROTHERS LUMBER AND )
HARDWARE, INC., )
APPEAL FROM THE LAKE CIRCUIT COURT
The Honorable Lorenzo Arredondo, Special Judge
Cause No. 45D01-9504-CP-389
August 15, 2000
OPINION FOR PUBLICATION
Mercantile National Bank of Indiana
and Horst and Marianne Thompson (collectively, the Thompsons)
appeal a trial court judgment in favor of Schilling Brothers Lumber and Hardware,
The Thompsons raise two issues on appeal, which we restate
1. Whether the trial court erred when it determined Schilling was entitled to a
judgment against the Thompsons and a mechanics lien on the Thompsons property after
the Thompsons had been granted a summary judgment on Schillings action to foreclose
a mechanics lien; and
2. Whether the trial court erred when it determined Schilling was entitled to recover
from the Thompsons after the Thompsons had set off all money due under
their contract with FBOI.
FACTS AND PROCEDURAL HISTORY
In spring 1994, the Thompsons and FBOI entered into a contract for the
construction of a home in Dyer, Indiana. FBOI opened an account with
Schilling for the purchase of lumber and other building materials to be used
in the project. The Thompsons were aware the account had been opened
and had, with FBOIs knowledge and permission, chosen items at Schilling that were
to be charged to the account.
By July 1994, the Thompsons had noticed a number of construction deficiencies on
the part of FBOI and its subcontractors, unauthorized structural changes, and variations from
the agreed design. They brought these concerns to FBOIs supervisor on several
occasions, and were told the problems would be remedied. In September and
December 1994, the Thompsons paid FBOI the first two draws called for under
the contract, and Schilling received funds from those draws for materials it had
provided. On December 22, 1994, the Thompsons again asked FBOI to address
the deficiencies. When FBOI did not timely respond, they refused to pay
the third draw. FBOI then discontinued work on the house.
While FBOI was still working on the house, the Thompsons personally selected and
ordered some materials from Schilling. For example, Schilling drew up plans for
a cabinet layout and the Thompsons ordered the cabinets. After FBOI stopped
work on the house, the Thompsons ordered a counter top from Schilling and
guaranteed payment with a note that
stated I am responsible for payment OK to order (R. at 465)
and was signed by Marianne Thompson. The cost of the cabinets and
counter top represents more than half of the amount of Schillings claim against
the Thompsons. The Thompsons also directly selected and bought certain materials for
the construction of the house both while FBOI was working on the project
and after FBOI discontinued its work.
FBOI sued the Thompsons after they failed to pay the third draw.
Schilling intervened and brought against FBOI and the Thompsons a Counterclaim for Foreclosure
of Mechanics Lien. Schilling sought relief in the form of 1) a
judgment against the Thompsons and FBOI for the value of the materials it
had provided for the construction of the house and for which it had
not been paid, and 2) foreclosure of its mechanics lien in that amount.
The Thompsons moved for partial summary judgment asserting the invalidity of Schillings
mechanics lien and their motion was granted.
After the Thompsons moved for partial summary judgment on the mechanics lien issue
but before the summary judgment was granted, Schilling sent to the Thompsons a
Notice of Intent to Hold Owner Personally Liable under Ind. Code § 32-8-3-9
in the amount of $36,775.76. This sum represents the balance due for
material Schilling provided for the construction of the house. The trial court
entered judgment in favor of Schilling and against the Thompsons and stated, [s]aid
judgment constitutes a mechanics lien upon the Thompsons [sic] house.
DISCUSSION AND DECISION
Standard of Review
When findings of fact and conclusions of law are entered by the trial
court pursuant to Ind. Trial Rule 52(A), as occurred here, the reviewing court
may affirm the judgment on any legal theory supported by the findings.
In re Paternity of Winkler, 725 N.E.2d 124, 126 (Ind. Ct. App. 2000).
Before affirming on a legal theory supported by the findings but not
espoused by the trial court, the reviewing court should be confident that its
affirmance is consistent with all of the trial court's findings of fact and
inferences drawn from the findings. Id. In reviewing the judgment, we
first must determine whether the evidence supports the findings and second, whether the
findings support the judgment. Id. The judgment will be reversed only
when clearly erroneous. Id. Findings of fact are clearly erroneous when
the record lacks any evidence or reasonable inferences from the evidence to support
them. Id. To determine whether the findings or judgment is clearly
erroneous, we consider only the evidence favorable to the judgment and all reasonable
inferences flowing therefrom, and we will not reweigh the evidence or assess witness
credibility. Id. A judgment is clearly erroneous even though there is
evidence to support it if the reviewing court's examination of the record leaves
it with the firm conviction that a mistake has been made. Id.
1. The Schilling-Thompson Cause of Action
The Thompsons assert the trial courts finding that Schilling was entitled to recover
from them was clearly erroneous because no cause of action existed between Schilling
and the Thompsons. We disagree. While the trial courts statement that
the judgment constitutes a mechanics lien was incorrect, its judgment may properly be
affirmed on at least one alternative legal theory and we thus cannot say
the judgment in favor of Schilling and against the Thompsons was clearly erroneous.
Prior to trial, Schilling, FBOI, and the Thompsons submitted their lists of witnesses,
contentions, and exhibits.
One of Schillings listed exhibits was its notice that
it intended to hold the Thompsons personally liable. Its list of contentions
did not mention a mechanics lien, but rather indicated that it was entitled
to recover some $30,000 from FBOI as a result of the Thompsons failure
to pay FBOI for the materials Schilling supplied. Schilling contended it 1)
was entitled to recover the money it was due, plus interest, from FBOI,
and 2) was entitled to recover the same amount from the Thompsons to
the extent [the Thompsons] are found to be indebted to [FBOI]. (R.
at 114.) The Thompsons undoubtedly knew Schilling intended to pursue a claim
against them even after the Thompsons were granted a partial summary judgment on
the mechanics lien count.
Furthermore, Schilling did pursue at trial its alternative claims against the Thompsons. Its
counsel fully participated in the trial, and Schilling elicited testimony and offered evidence
sufficient to support a judgment in its favor. The issues in a
case are generally established by the evidence introduced at trial rather than by
Curtis v. Clem, 689 N.E.2d 1261, 1264 (Ind. Ct. App.
1997). Issues not raised by the pleadings may be tried by the
implied consent of the parties if the party who is charged with such
implied consent has received some notice of the issue. Id.; Ind. Trial
Rule 15(B). The Thompsons had ample notice that Schilling would seek to
hold them personally liable for the value of the materials Schilling provided but
for which it had not been paid.
We therefore decline to adopt the Thompsons apparent position that a plaintiff who
1) names a party as a defendant; 2) notifies the defendant that it
intends to hold the defendant personally liable; 3) notifies the trial court of
its contention that it is entitled to recover from the defendant; and 4)
presents evidence at trial as to the defendants liability has, by doing those
four things, clearly demonstrate[d] (Br. of Appellants at 14) that it was not
asserting a cause of action against that defendant.
2. The Schilling - FBOI Set-Off
The Thompsons next argue that even if Schilling has asserted a claim under
the personal liability statute, it cannot recover from the Thompsons because under that
statute a subcontractors right to recover is limited to the amount the owner
owes the contractor.
Ind. Code § 32-8-3-9 states in pertinent part:
Any subcontractor . . . may give to the owner . . .
notice in writing particularly setting forth the amount of his claim and services
rendered, for which his employer or lessee is indebted to him, and that
he holds the owner responsible for the same; and the owner shall be
liable for such claim, but not to exceed the amount which may be
due, and may thereafter become due, from him to the employer or lessee,
which may be recovered in an action whenever an amount equal to such
claim . . . shall be due from such owner to the employer
The personal liability provision is designed to protect a subcontractor from the consequences
of the contractors absconding or going broke or otherwise defaulting by providing to
the subcontractor a means of shifting from himself to the owner the burden
of the general contractors financial difficulties. McCorry, 636 N.E.2d at 1278, (quoting
Coplay Cement Co. v. Willis & Paul Group, 983 F.2d 1435, 1437 (7th
Cir. 1993)). The purpose of the statute is thus to prevent the
inequity of an owner enjoying the fruits of a subcontractors labor and materials
without paying for them. McCrorry, 636 N.E.2d at 1279.
The Thompsons note that an owner is liable to a subcontractor under the
personal liability statute only up to the amount the owner owes the contractor,
and that the trial court found [t]he Thompsons costs to repair and replace
the defective work done by [FBOI] far exceed the amount the Thompsons owe
to [FBOI]. (R. at 171.) Thus, the Thompsons argue, they can
have no liability to Schilling. We believe the Thompsons characterization of the
effect of the statute is inconsistent with its purpose as we interpreted it
McCorry, when the owner received the notice of personal responsibility from a
subcontractor, the owner had paid about $108,000 of the $170,000 contract amount.
He argued that because the contractor had breached his contract by that point,
nothing more was owed to the contractor and thus no recovery was available
to the subcontractor. We noted that under the owners interpretation of the
statute, no subcontractor could ever recover after a contractor defaulted and the purpose
of the statute would be defeated. We held that the amount due
means the amount unpaid on the original contract, which amount would have been
available for payment of subcontractors had the contractor not defaulted. McCrorry, 636
N.E.2d at 1279. We relied on Adamson v. Shaner, 3 Ind. App.
448, 452, 29 N.E. 944, 945 (1892), where we found a bona fide
indebtedness to a subcontractor after the contractors default even though the owner, like
the Thompsons, was forced to pay out more to have the building completed
than he would have owed had the contractor completed the contract.
There was evidence before the trial court that the Thompsons spent far more
than the contract price to complete the house, and the trial court so
found. However, there was also evidence that much of the amount the
Thompsons ultimately paid was for items not included in the original contract, for
items the Thompsons provided or completed themselves and for which they were credited
by FBOI, and for upgrades not provided in the contract. Taking those
payments into account, the evidence in the record would support a finding that
the Thompsons had paid to FBOI some $70,000 less than the contract price
and thus could be liable to Schilling for the amount of nearly $43,000
determined by the trial court.
Schillings cause of action against the Thompsons survived the grant of partial summary
judgment on the mechanics lien issue, and the trial courts determination that the
Thompsons were liable to Schilling was not clearly erroneous.
BAILEY, J., and BROOK, J., concur.
Mercantile National Bank (the Bank), as trustee, that holds title to
the real estate at issue, with the Thompsons as beneficiaries.
First Builders of Indiana (FBOI) and Schilling were plaintiffs below.
FBOI is listed as an appellee and filed an appellees brief, even though
the trial court entered judgment against FBOI on all of its claims against
the Thompsons. On appeal FBOI acknowledges the judgment was not clearly erroneous
and urges us to affirm it or, in the alternative, to modify it
so that Schilling would have a judgment against FBOI for those materials Schilling
had contracted with FBOI to provide, and a judgment against the Thompsons for
materials they ordered from Schilling. We agree with FBOI that such a
modification would not change the effect of the judgment or the contractual relationship
of the parties, and we note that the Thompsons do not argue on
appeal for such a modification. We thus decline to order a modification
of the judgment.
The trial courts judgment provided that each party was to be
responsible for its own attorney fees and litigation costs, and none of the
parties argue on appeal that the trial court erred when it so ordered.
We note that attorney fees are generally recoverable in actions to enforce
a mechanics lien, Ind. Code § 32-8-3-14, but are generally not available in
an action brought under the personal responsibility provisions of the mechanics lien statute.
McCorry v. G. Cowser Const., Inc., 636 N.E.2d 1273, 1279 (Ind. Ct.
App. 1994), affd and adopted, 644 N.E.2d 550 (Ind. 1994). As we
find the Thompsons liability to Schilling is not premised on the foreclosure of
Schillings mechanics lien, we cannot say the trial court erred when it ordered
that each party would be responsible for its own attorney fees.
Schilling refers in its brief to a Pre-Trial Order agreed upon
by all parties and entered by the Court. (Br. of Appellee Schilling
Brothers Lumber and Hardware, Inc. at 7.) However, Schilling does not favor
us with any indication where in the two-volume record or the eight-volume supplemental
record such an order might be found.
The Thompsons support this argument by noting that in their own
pre-trial List of Contentions, Witnesses, and Exhibits that they filed with the trial
court, the Thompsons stated that Schillings claim was now exclusively against [FBOI].
(R. at 128.) We must also decline to adopt the Thompsons position
that a defendant may, by means of its own assertions in a pre-trial
List of Contentions, determine that one of the co-plaintiffs no longer has a
cause of action against it.