ATTORNEYS FOR APPELLANT: ATTORNEYS FOR APPELLEE:
JULIA BLACKWELL GELINAS JOHN S. MERCER
THOMAS F. BEDSOLE JENNIFER R. GORDON
ALLISON S. AVERY
Wood Tuohy Gleason Mercer & Herrin
Locke Reynolds, LLP Indianapolis, Indiana
COURT OF APPEALS OF INDIANA
CIRCUIT CITY STORES, INC., )
vs. ) No. 49A02-0204-CV-299
AMERICAN NATIONAL INSURANCE )
APPEAL FROM THE MARION SUPERIOR COURT
The Honorable Patrick McCarty, Judge
Cause No. 49D03-9910-CP-1524
November 22, 2002
OPINION FOR PUBLICATION
Circuit City Stores, Inc. (Circuit City) appeals the trial courts grant of summary
judgment in favor of American National Insurance Company (American National). Circuit City
raises one issue on appeal, which we restate as whether the trial court
improperly determined that substantial completion of a project did not occur until a
tenant provided a certificate of substantial completion and compliance, when the contract between
the landlord and tenant required no such document and instead required a certificate
of occupancy that could not be obtained because such certificates were not being
issued at the time by the city where the building was located.
We reverse and remand.
FACTS AND PROCEDURAL HISTORY
On April 15, 1997, Circuit City and American National entered into a contract
whereby Circuit City would renovate a building owned by American National to create
a new store. Pursuant to the contract, American National was to pay
Circuit City a tenant improvement allowance (TIA) within thirty days after substantial completion
of the project. In the contract, substantial completion was defined as:
Substantial completion of the Tenant Work (Substantial Completion) shall be deemed to occur
when a certificate of occupancy, whether temporary and subject to minor items to
be completed, or permanent, as the case may be, has been issued by
the applicable governmental authority and Tenants in-house architect or construction supervisor delivers to
Landlord a certificate of substantial completion certifying that the Tenant Work has been
substantially completed in accordance with the Plans and Specifications approved by Landlord.
(Appellants App. at 75.) In addition, the contract provided:
If Landlord fails to pay the [TIA] in full within thirty (30) days
after Substantial Completion and receipt of [certificates of insurance], [an indemnity form for
possible mechanics liens] and [confirmation that landlord holds title to the Improvements], Landlord
shall be in default thereunder, no Ground Rent, Base Rent or Cam Charges
shall be due or owing to Landlord until the same is paid to
Tenant, and interest shall accrue on the unpaid [TIA] at the Default Rate
commencing on the thirty-first (31st) day following Substantial Completion until the date of
payment of the [TIA].
(Id. at 76.)
On October 7, 1997, Roger Sautter, an independent contractor working as Circuit Citys
project manager, completed a Certificate of Completion and Compliance, which builders must submit
to the City of Indianapolis to certify that construction is completed on a
job for which a building permit was previously acquired. (Appellees App. at
34.) Sautter did not submit that document to the City of Indianapolis
at that time.
On November 11, 1997, Bruce Lucas, Circuit Citys in-house architect, determined that the
project was substantially complete. On that day, Circuit City submitted a TIA
application (the application) to American National. The application included a certificate of
insurance, an executed indemnification agreement, an executed bill of sale, a certification from
Lucas that the premises were substantially completed according to the plans and specifications,
and an As Built Survey. (Appellants App. at 128.) The application
did not include a certificate of occupancy. Circuit City believed that it
had met the requirements for the TIA on November 11, 1997.
At some point in October or November, Circuit City began occupying the store
and stocking it with merchandise. On November 24, 1997, the store opened
for business. On January 28, 1998, American National paid the TIA.
On February 12, 1998, James DeStefano, an architect with Graycor Construction Co., LLC
who worked on the project, filed a Statement of Substantial Completion and Request
for Inspection with the Indiana State Building Commissioner. Also on February 12,
1998, Sautter sent to the Indianapolis Division of Permits the Certificate of Completion
and Compliance, which he had filled out on October 7, 1997. (Appellees
App. at 34.)
On March 31, 1998, Circuit City notified American National that it would not
pay rent for the time that it believed American National had been in
default, from December 11, 1997 to January 28, 1998. In addition, Circuit
City notified American National that it intended to set off $40,199.00 in default
interest against the amounts due for unpaid rent.
On October 21, 1999, American National filed a complaint claiming that Circuit City
had breached its contract by refusing to pay rent and by setting off
the default interest. Circuit City filed an answer. The parties filed
cross-motions for summary judgment. The trial court granted summary judgment for American
National. In ordering summary judgment for American National, the trial court made
the following findings:
1. The undisputed facts as shown by the pleadings submitted by Plaintiff
and Defendant, the depositions and the Memorandums of Law in Support of the
Plaintiffs Motion for Summary Judgment and in Response to Defendants Cross-Motion for Summary
Judgment, and Defendants Cross-Motion for Summary Judgment and in Opposition to Plaintiffs Motion
for Summary Judgment show that there are no genuine issues of material facts
and Plaintiff is entitled to judgment as a matter of law.
2. Circuit City breached the Lease Agreement by offsetting ground rent due
and owing to [American National] after [American National] had timely paid the TIA
pursuant to Circuit Citys Substantial Completion of the project; Circuit Citys breach was
the first breach of the Lease Agreement.
3. The language of the Lease Agreement required that Circuit City comply
with the requirements of the Indiana Administrative Code 675 IAC 12-1-24 and the
Indianapolis Municipal Code § 8-50 with regard to determining the point of Substantial
4. Even after [American National] paid the TIA to Circuit City, Circuit
City still failed to render payment of ground rent to [American National].
Circuit City was not entitled to offset the charges of ground rent against
the TIA unless the TIA was not paid within 30 days of substantial
5. Ground rent is due and owing to [American National] by Circuit
City for December 11, 1997 through [January] 28, 1998 because [American National] paid
the TIA within the allowable time frame according to the provisions of the
6. [American National] was not obligated to remit the [TIA] until thirty
(30) days after February 12, 1998, the date that Circuit City submitted the
Certificate of Completion and Compliance and the Statement of Substantial Completion to the
proper governmental authorities.
7. Substantial Completion occurred on February 12, 1998, after Circuit City had
complied with the Indiana Administrative Code and the Indianapolis Municipal Code provisions.
8. [American National] paid the [TIA] on January 28, 1998, fifteen (15)
days prior to the date of Substantial Completion. Circuit City is in
breach of the Lease Agreement for failing to timely pay rent due [American
National] in the sum of $55,211.84 plus prejudgment interest at the rate of
15% (as specified in paragraph 4(a)(iv), paragraph 9(b) and Exhibit C, paragraph (1)(P))
and reasonable attorney fees to be determined by the Court.
9. No material issue of disputed fact exists, the matter may be
decided as a matter of law and summary judgment is entered in favor
of [American National].
(Appellants App. at 3-4.) This appeal ensued.
DISCUSSION AND DECISION
The sole issue on appeal is whether, for purposes of the contractual TIA
provision, the substantial completion of this project could not have occurred until Circuit
City provided a certificate of substantial completion and compliance, when the contract required
no such document and instead required a certificate of occupancy that Circuit City
could not obtain because the City of Indianapolis did not issue such certificates
at that time. On appeal from a grant of summary judgment, we
apply the same standard applied by the trial court. Ind. Farmers Mut.
Ins. Group v. Blaskie, 727 N.E.2d 13, 15 (Ind. Ct. App. 2000).
Summary judgment is appropriate if the designated evidentiary matter shows that there is
no genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law. T.R. 56(C).
In our review, we do not reweigh the evidence, and we consider
the facts in the light most favorable to the nonmovant. Blaskie, 727
N.E.2d at 15. The appellant has the burden to prove that the
trial court erred when it determined that there were no issues of material
fact and that the appellee was entitled to judgment as a matter of
Where, as here, the trial court entered findings of fact in its summary
judgment order, those findings do not control us. City of Gary v.
Ind. Bell Telephone Co., 732 N.E.2d 149, 153 (Ind. 2000), rehg denied.
Rather, we may use those findings to aid our interpretation of the trial
courts decision. Id. In addition, where, as here, the parties filed
cross-motions for summary judgment, our standard of review is not altered. Id.
We merely consider each motion separately to determine whether the moving party
is entitled to judgment as a matter of law. Id.
Circuit City claims that the trial court improperly interpreted the clear, unambiguous language
of the contract between the parties. Interpretation of the language in a
contract is a question of law especially suited for summary judgment proceedings.
Art Country Squire, L.L.C. v. Inland Mortgage. Corp., 745 N.E.2d 885, 889 (Ind.
Ct. App. 2001). We review questions of law de novo, and therefore
we give no deference to the trial courts interpretation. Id. We
determine the meaning of a contract from an examination of all of its
provisions, without giving special emphasis to any word, phrase or paragraph. Id.
Our goal is to give effect to the intent of the parties
as expressed within the four corners of the document. Id. We
may not construe unambiguous language to give it anything other than its clear,
obvious meaning, and we may not add provisions to a contract that were
not placed there by the parties. Id.
The dispute in this case centers around when the project was substantially completed
such that the thirty-day time limit began to run on American Nationals obligation
to pay the TIA to Circuit City. Under the contract, American National
was required to pay the TIA within thirty (30) days after Substantial Completion
and receipt of [three] items by American National. (Appellants App. at 76.)
The three items at issue were a certificate of insurance, an indemnity
form for possible mechanics liens, and a confirmation that American National holds title
to the improvements that had been made by Circuit City. The designated
evidence indicates that those documents were attached to the application submitted on November
11, 1997. Consequently, we must determine when Substantial Completion occurred.
Under the contract, Substantial Completion occurred when a certificate of occupancy has been
issued by the applicable governmental authority and [Circuit Citys] in-house architect or construction
supervisor delivers to [American National] a certificate of substantial completion. (Id. at
75.) Although the TIA application included a certification from Circuit Citys in-house
architect that the project was substantially complete, a certificate of occupancy was not
submitted with the application.
Circuit City asserts that it was impossible to obtain a certificate of occupancy.
Both parties acknowledge that Indianapolis did not issue certificates of occupancy at
the time that Circuit City submitted its TIA application to American National.
Consequently, we must agree with Circuit Citys claim that it was impossible to
obtain a certificate of occupancy. The question becomes what effect that has
upon the requirements for the TIA application.
Because a certificate of occupancy was impossible to obtain, Circuit City argues, its
application was complete when on November 11, 1997 it had filed all other
required items with American National. American National claims, and the trial court
held, that Circuit Citys TIA application was not complete until February 12, 1998.
On that date, Circuit City filed with the City of Indianapolis, pursuant
to Indianapolis Municipal Code § 8-50, a Certificate of Completion and Compliance.
That same day, Circuit City also filed with the Indiana State Building Commissioner,
pursuant to 675 Ind. Admin. Code 12-1-24, a Statement of Substantial Completion.
Section 8-50 of the Indianapolis Municipal Code provides that when a builder has
completed construction for which a building permit had been issued and prior to
occupying the building, the builder shall submit a certificate of completion and compliance.
675 IAC 12-1-24 provides that for the purposes of [the Fire Prevention
and Building Safety] rules, when local ordinances do not require the issuance of
certificates of occupancy, a builder should submit a statement of substantial completion to
the owner of the building and to the state building commissioner in lieu
of a certificate of occupancy.
We do not believe that the certificate required by Indianapolis Municipal Code §
8-50 is a substitute for or interchangeable with the certificate of occupancy called
for in the contract. That code section refers to what the builder
must file when construction is
completed. The term substantial completion clearly refers
to some point prior to final completion. Further, even if it had
submitted a certificate of completion and compliance pursuant to this section of the
Indianapolis Municipal Code, Circuit City would not have received a Certificate of Occupancy,
which document American National claims was necessary to obtain substantial completion. Consequently,
the trial court in effect imposed a requirement on Circuit City that was
not imposed by the contract i.e., that Circuit City file a certificate
of completion and compliance. As trial courts may not read into a
contract requirements that were not agreed to by the parties, the trial court
erred when it determined the filing of that document determined the date of
substantial completion. See Colonial Penn Ins. Co. v. Guzorek, 690 N.E.2d 664,
669-670 (Ind. 1997) (trial court erred when it granted summary judgment because its
ruling changed the requirements provided by the contract).
Further, 675 IAC 12-1-24 permits a builders statement of substantial completion as a
substitute for a certificate of occupancy for the purposes of these [Fire Prevention
and Building Safety] rules (emphasis supplied). It does not provide, or even
suggest, that such a document will substitute for a certificate of occupancy in
any other context. If American National and Circuit City had contemplated that
another document might substitute for a certificate of occupancy, then the contract could
have been written to include such language.
Because the contract did not contain such language, the trial court erred when
it determined The language of the Lease Agreement required that Circuit City comply
with the requirements of the Indiana Administrative Code 675 IAC 12-1-24 and the
Indianapolis Municipal Code § 8-50 with regard to determining the point of Substantial
Completion. See Guzorek, 690 N.E.2d at 669-670. Consequently, the dates upon
which Circuit City filed those documents do not determine when Circuit Citys TIA
application was complete. The parties do not dispute that it was impossible
for Circuit City to obtain a certificate of occupancy. Therefore, Circuit Citys
TIA application was complete on November 11, 1997 when Circuit City submitted to
American National all of the other required documents called for in the contract.
American National offers two additional arguments that the trial courts grant of summary
judgment was not erroneous. First, American National notes that Circuit City drafted
the contract provision at issue and argues Circuit City therefore may not assert
that production of a certificate of occupancy was impossible. Second, American National
claims that Circuit City is obliged to fulfill the requirements of 675 IAC
12-1-24 and Indianapolis Municipal Code § 8-50 because its contract required the parties
to comply with all lawful requirements of local, county, state . . .
and any other governmental authorities with jurisdiction over the Improvements. (Appellants App.
1. The Impossibility Defense
American Nationals argument that Circuit City may not assert impossibility is premised on
Ludlow v. Free, 222 Ind. 568, 574-75, 55 N.E.2d 318, 321 (Ind. 1944):
When a promisor stipulates in a contract for the performance of a condition
which he then knows can not be performed, and the impossibility of performance
is unknown to the other party to the contract, the promisor must be
held to have intended to make himself absolutely liable without regard to the
performance of the condition.
Based upon this authority, American National asserts that Circuit City should be absolutely
liable for the issuance of a certificate of occupancy. (Br. of Appellee
at 7.) Circuit City replies that there is no evidence that Circuit
City knew that it would be impossible to obtain a certificate of occupancy
at the time the Agreement was signed. (Reply Br. of Appellant at
5.) We find no designated evidence to suggest that Circuit City, a
Virginia corporation, knew it would be impossible to obtain a certificate of occupancy.
In addition, the facts in this case are distinguishable from those in Ludlow,
wherein the party claiming impossibility was responsible for creating a fact situation under
which performance was impossible. Ludlow, 222 Ind. at 574, 55 N.E.2d at
321. Here, there were no steps that Circuit City could have taken
that would have caused Indianapolis to issue a certificate of occupancy, and there
is no evidence Circuit City knew such a document could not be obtained.
Strict application of the rule from Ludlow in this situation would mean that
Circuit City could never achieve substantial completion and therefore could never receive the
TIA. That would grant an inequitable windfall to American National, who would
never have to pay Circuit City for the improvements that were made to
American Nationals property. For all these reasons, we decline to hold that
Circuit City is absolutely liable for obtaining the certificate of occupancy.
2. Compliance with Other Contractual Language
Regarding American Nationals second argument, the language in Paragraph 33 of the contract
requires Circuit City to comply with any lawful requirements placed by governmental authorities
upon persons making improvements. In addition, that paragraph provides that either Circuit
City or American National has thirty days to become compliant after being given
notice by any governmental authority or the other party that it is not
The paragraph provides a remedy in the event that a party does not
become compliant within thirty days. If the non-compliant party fails to perform
or diligently commence performance of same with reasonable promptness, the other party may
perform said work and either deduct from or add to the next installment
or installments of Base Rent the reasonable cost thereof plus interest at the
Default Rate. (Appellants App. at 45.)
American National is correct that Circuit City was required to comply with all
lawful requirements, including that of submitting a Certificate of Completion and Compliance under
Indianapolis Municipal Code § 8-50. However, the fact that Paragraph 33 of
the contract required Circuit City to submit that document does not mean that
Circuit City was required to submit that certificate to fulfill its application for
As explained above, the contract provision that defined substantial completion and set forth
the requirements for receiving the TIA made reference only to a certificate of
occupancy. A certificate of occupancy, as referred to in the contract, does
not require total completion of construction; it requires only substantial completion. We
decline to read into the language agreed upon by the parties an additional
requirement of total completion of construction.
See, e.g., Guzorek, 690 N.E.2d at
669-670 (holding trial court erred when it removed requirements provided by the contract).
Moreover, Paragraph 33 provides a remedy for a partys failure to abide
by legal requirements. It therefore does not serve as a basis for
withholding the TIA until the tenant becomes compliant.
For the foregoing reasons, we reverse the trial courts entry of summary judgment
for American National. We remand with instructions that the trial court enter
summary judgment for Circuit City with respect to the date of substantial completion,
and for further proceedings consistent with this opinion.
Reversed and remanded.
ROBB, J., and RILEY, J., concur.
The contract did not define certificate of occupancy. Blacks Law Dictionary
defines a certificate of occupancy as [a] paper certifying that premises complied with
provisions of zoning ordinance. Blacks Law Dictionary 286 (4th ed. rev. 1968).
Footnote: The summary judgment addressed only the question of the date of substantial
completion. It did not address, nor do the parties on appeal, the
effect on the remainder of the agreement of the breach of or impossibility
to perform the contractual requirement that a certificate of occupancy be obtained.
Accordingly, we do not address whether the impossibility of performance of that provision
might obviate the other requirements of the TIA provision of the contract.
We note generally, however, that where, as here, the failure to obtain a
proper permit appears to be an oversight and there is no evidence the
building is not, in fact, in compliance with the applicable code provisions, the
failure to obtain a permit is not a sufficient basis to declare void
the remainder of the contract.
See Ethyl Corp. v. Forcum-Lannom Assocs., 433
N.E.2d 1214, 1221 n.7 (Ind. Ct. App. 1982), rehg denied.
American National did not offer any alternate theory of recovery in its
complaint, motion for summary judgment, memorandum of law in support of motion for
summary judgment, or appellees brief. As a result, we do not address
whether American National was injured by Circuit Citys failure to comply with lawful