ATTORNEYS FOR APPELLANT
: ATTORNEYS FOR APPELLEE:
E. SCOTT TREADWAY CHRISTOPHER S. ROBERGE
STEVEN L. JONES ELIZABETH A. ROBERGE
Lowe Gray Steele & Darko Roberge & Roberge
Indianapolis, Indiana Indianapolis, Indiana
COURT OF APPEALS OF INDIANA
INDIANAPOLIS PUBLIC HOUSING AGENCY, )
vs. ) No. 49A02-0101-CV-25
AEGEAN CONSTRUCTION SERVICES, INC., )
APPEAL FROM THE MARION SUPERIOR COURT
The Honorable David Dreyer, Judge
Cause No. 49D10-9703-CP-339
September 17, 2001
OPINION - FOR PUBLICATION
STATEMENT OF THE CASE
Aegean Construction Services, Inc. (Aegean) filed suit against the Indianapolis Public Housing Agency
(IPHA), seeking payment of escrowed principal and interest. IPHA filed a counterclaim
against Aegean, seeking liquidated damages for breach of contract. The trial court
entered summary judgment in favor of Aegean on both its complaint and IPHAs
counterclaim, and the court denied IPHAs motion for partial summary judgment. IPHA
appeals those findings.
We affirm in part, reverse in part, and remand for further proceedings.
FACTS AND PROCEDURAL HISTORY
IPHA hired Aegean, a general contractor, to renovate the John Barton Apartments (project),
which consist of 126 units in an eight-story building. Under the parties
contract, Aegean was to complete the project within 455 calendar days. IPHA
issued a Notice to Proceed on January 17, 1995, so the project was
to be completed by April 29, 1996. The parties subsequently agreed to
postpone the date of completion until May 29, 1996. The contract allowed
for liquidated damages based on the number of units per day that could
not be occupied due to Aegeans failure to complete the work by the
The parties contract also provided that IPHA would retain funds out of progress
payments made to Aegean. Pursuant to a separate retainage agreement, IPHA was
to place the retained funds into an escrow account. When the project
was substantially completed, IPHA authorized the release of the funds held in the
escrow account to Aegean with the exception of $61,603.00. A part of
that sum represented the interest accrued throughout the life of the escrow account,
which IPHA claimed as its own, and IPHA retained the remainder of that
sum to pay for items on a punch list. Aegean filed suit
against IPHA, seeking recovery of the entire balance in the escrow account.
IPHA filed a counterclaim, seeking actual and liquidated damages for breach of contract.
Aegean moved for summary judgment on its complaint and on IPHAs counterclaim,
and IPHA moved for partial summary judgment on the issue of which party
was entitled to the interest on the escrow account. The trial court
entered summary judgment in favor of Aegean and denied IPHAs motion for partial
DISCUSSION AND DECISION
Standard of Review
Our analysis proceeds from the premise that summary judgment is a lethal weapon
and that courts must be ever mindful of its aims and targets and
beware of overkill in its use. Rogier v. American Testing & Engg
Corp., 734 N.E.2d 606, 613 (Ind. Ct. App. 2000), trans. denied. Summary
judgment is appropriate only when there are no genuine issues of material fact
and the moving party is entitled to a judgment as a matter of
law. Id.; Ind. Trial Rule 56(C). When reviewing an entry of
summary judgment, we stand in the shoes of the trial court. Rogier,
734 N.E.2d at 613. We do not weigh the evidence but will
consider the facts in the light most favorable to the nonmoving party.
Id. All doubts as to a factual issue must be resolved in
the nonmovants favor. Id. A trial courts grant of summary judgment
is clothed with a presumption of validity, and the appellant has the burden
of demonstrating that the grant of summary judgment was erroneous. Id.
Nevertheless, we must carefully assess the trial courts decision to ensure the nonmovant
was not improperly denied his day in court. Id. If the
trial courts entry of summary judgment can be sustained on any theory or
basis in the record, we must affirm. Ledbetter v. Ball Meml Hosp.,
724 N.E.2d 1113, 1116 (Ind. Ct. App. 2000), trans. denied.
Issue One: Breach of Contract
IPHA first contends that the trial court erred when it entered summary judgment
in favor of Aegean on IPHAs counterclaim. Specifically, IPHA maintains that questions
of fact exist regarding whether Aegean completed the project in a timely and
workmanlike manner and whether IPHA is owed actual and liquidated damages. We
IPHAs designation of evidence in opposition to Aegeans motion for summary judgment consists
of affidavits from IPHA employees Don Bievenour and Jeff Thompson, as well as
the affidavit of Steven Jones, an employee of the Sherman R. Smoot Company
of Indiana (Smoot) and project engineer/manager on the project. Thompson stated in
that Aegeans poor workmanship delayed the completion of the Project and
its occupancy. Appellants App. at 230. Jones stated in his affidavit
that Aegean did not complete the project by May 29, 1996. Appellants
App. at 160. This evidence establishes questions of fact regarding whether Aegean
completed the project in a timely and workmanlike manner.
In addition, Aegeans own designation of evidence establishes questions of fact regarding whether
some of the projects units were not ready for occupancy on the date
of completion due to Aegeans failure to timely complete its work on the
project. Aegean designated the affidavit of M. Lee Lamb, Aegeans President, and
attached an October 25, 1996, letter to Lamb from Edward Jagnandan of IPHA,
in which Jagnandan stated that, as of that date, four units could not
be occupied due to water damage. Aegean also designated IPHAs responses to
interrogatories, including a response indicating [t]he development was not completed as required under
the contract. It was not ready for residential occupancy. Appellants App.
We conclude that questions of fact exist regarding whether Aegean completed the project
in a timely and workmanlike manner and whether IPHA is owed actual or
liquidated damages under its contract with Aegean. Accordingly, the trial court erred
when it entered summary judgment in favor of Aegean on IPHAs counterclaim.
We reverse and remand to the trial court for further proceedings.
Issue Two: Retainage Agreement
IPHA contends that the trial court erred when it entered summary judgment in
favor of Aegean on Aegeans complaint and denied IPHAs motion for partial summary
judgment. Specifically, IPHA maintains that the parties retainage agreement entitles IPHA to
all of the interest accrued on the escrow account as a matter of
law. Generally, construction of a written contract is a question of law
for the trial court for which summary judgment is particularly appropriate. Rogier,
734 N.E.2d at 613. However, if the terms of a written contract
are ambiguous, it is the responsibility of the trier of fact to ascertain
the facts necessary to construe the contract. Id. Consequently, whenever summary
judgment is granted based upon the construction of a written contract, the trial
court has either determined as a matter of law that the contract is
not ambiguous or uncertain, or that the contract ambiguity, if one exists, can
be resolved without the aid of a factual determination. Id.
Here, the parties retainage agreement provides that interest on the escrow account shall
be held in the account. Appellants App. at 151. The agreement
also provides that the Escrow Agent shall pay over the net sum held
by it . . . 1. to [IPHA] in any manner directed by
[IPHA] . . . 2. to [Aegean] upon satisfactory completion of the project
and the written authorization of [IPHA]. Appellants App. at 151-152. Citing
to that provision, IPHA contends that it is entitled to direct that the
interest be paid to itself. We cannot agree. Such an interpretation
would mean that the net sum would be paid both as IPHA directs
and to Aegean upon completion of the project. We find that provision
ambiguous but conclude that the ambiguity can be resolved without the aid of
a factual determination.
We note that the general purpose underlying retainage agreements is to create a
temporary fund to insure all the better the payment of claims against the
work, and to enable better the owner, or the surety, in the event
of necessity, to complete the undertaking. Blade Corp. v. American Drywall, Inc.,
400 N.E.2d 1183, 1186 (Ind. Ct. App. 1980) (quoting Hanson v. Liberty Const.
Co., 172 La. 298, 134 So. 98, 99 (1931)). In other words,
the money belongs to the general contractor but is retained as needed to
ensure that the work is completed and that subcontractors are paid. Absent
a retainage agreement, the payments would be made directly to the general contractor,
who would have the immediate use and benefit of the money.
It is well settled that interest follows principal, or as the maxim has
been often stated, interest goes with the principal as the fruit with the
tree. Reese v. Reese, 696 N.E.2d 460, 463 (Ind. Ct. App. 1998)
(quoting Northern Indiana Pub. Serv. Co. v. Citizens Action Coalition of Ind., Inc.,
548 N.E.2d 153, 159 (Ind. 1989)), trans. denied. In the absence of
an express agreement to the contrary, this rule controls. Interest represents the
time value of money. Reese, 696 N.E.2d at 463. Interest is
compensation to a property owner for the loss of the use of his
Here, the retainage withheld from progress payments owed to Aegean and placed in
escrow was Aegeans property, subject to completion of the work. Accordingly, Aegean
is entitled to the retainage on completed work and the interest attributable to
it. If, for example, Aegean completed all the work as agreed, it
would receive all the retainage and interest in the escrow account. Likewise,
to the extent that IPHA prevails on its claim against the escrow account,
IPHA would be entitled to that part of the retainage required to complete
the work and the interest attributable to it. Because IPHA released all
of the retainage in the escrow account to Aegean except for a small
sum for punch list items, Aegean is entitled to the interest on the
amount of retainage released.
Thus, the trial court did not err when
it denied IPHAs motion for partial summary judgment.
The trial courts entry of summary judgment in favor of Aegean, however, entailed
more than just a determination that Aegean was entitled to the interest in
the escrow account. In its complaint, Aegean sought recovery of the entire
balance remaining in escrow, including principal and interest, based upon Indiana Code Section
36-1-12-14. That statute provides in relevant part that a contractor hired on
a public works project shall be paid in full, including all escrowed principal
and escrowed income . . . within sixty-one (61) days after the date
of substantial completion[.] Id. However, as IPHA points out, public housing
authorities are not subject to the provisions of Indiana Code Section 36-1-12-14 if
federal money is used to finance a housing project. See Ind.Code §
36-7-18-23(a). Because the designated evidence here establishes that the project was fully
funded by the federal government, Indiana Code Section 36-1-12-14 does not apply, and
the trial court erred when it entered summary judgment in favor of Aegean
on its complaint.
In sum, questions of fact exist regarding whether Aegean completed the project in
a timely and workmanlike manner. Accordingly, we conclude the trial court erred
when it entered summary judgment in favor of Aegean both on its complaint
and on IPHAs counterclaim. The trial court did not err when it
denied IPHAs motion for partial summary judgment. On remand, once factual determinations
have been made whether Aegean breached the contract and, if so, whether IPHA
incurred damages from the breach, then the trial court can allocate the balance
retained in the escrow account between the parties accordingly, including principal and the
interest attributable to it.
Affirmed in part, reversed in part, and remanded for further proceedings.
DARDEN, J., and BARNES, J., concur.
Aegean moved to strike Thompsons affidavit, alleging that Thompson could not
show that he had any personal knowledge to support his statements. The
trial court denied that motion. On appeal, Aegean does not specifically challenge
the trial courts denial of its motion to strike, but Aegean does suggest
that this court disregard Thompsons conclusory affidavit. Brief of Appellee at 26.
A trial court has broad discretion in refusing to grant a motion
Rausch v. Reinhold, 716 N.E.2d 993, 999 (Ind. Ct. App.
1999), trans. denied. The courts decision will not be reversed unless prejudicial
error is clearly shown. Id. at 999-1000. Aegean has not shown
prejudicial error here.
Aegean makes much of the fact that in its August, 1997,
answers to interrogatories, IPHA stated that At or around the time of answering
these interrogatories, we have discovered that the remaining conditions precedent [to payment under
the contract] have been completed. Appellants App. at 92. According to
Aegean, this answer constitutes an admission by IPHA that Aegean completed its work
under the contract and should be paid in full. Aegean does not
address, however, the fact that IPHA, in another interrogatory answer also designated as
evidence, stated that the job was not completed by the required date.
Appellants App. at 95.
According to Aegeans interrogatory responses, IPHA delivered all of the principal
held in escrow to Aegean, with the exception of $20,519.15. Appellants App.
at 65. As of February 17, 1998, the balance of the escrow
account, including interest, was $63,698.00, which means that $43,178.85 of that sum was
interest accrued over the life of the account, including interest on retainage IPHA
delivered to Aegean.