ATTORNEY FOR APPELLANT: ATTORNEY FOR APPELLEES:
ROGER A. YOUNG LORI A. TORRES
Young and Young Smart Kessler & Torres
Franklin, Indiana Greenwood, Indiana
4-D BUILDINGS, INC., ) ) Appellant-Plaintiff ) ) vs. ) No. 41A01-9707-CV-205 ) JAMES L. PALMORE and ) DURENE L. PALMORE ) d/b/a THE GOLDEN POST, INC., ) ) Appellees-Defendants )
All issues were tried to the bench. In its findings entered in conjunction with the
present judgment, the trial court found that payment into court constituted a proper tender.
With respect to Builder's claim on its mechanic's lien, the trial court entered judgment in the
amount of $5,561.24 -- an amount higher than the amount paid into court which apparently
reflects additional attorney fees. (See footnote 1 infra).
With respect to Kennel's counterclaim, the trial court found in favor of Kennel and awarded $10,500.00 in damages representing the "cost of cure" with respect to the alleged construction defects. The trial court offset the two judgments, ordered the $4,933.56 held by the Clerk to be returned to Kennel, and entered judgment in favor of Kennel for $4,938.76. This appeal ensued.
erroneous. Williams v. Rogier, 611 N.E.2d 189, 196 (Ind. Ct. App. 1993), trans. denied;
Donavan v. Ivy Knolls Apartments Partnership, 537 N.E.2d 47, 52 (Ind. Ct. App. 1989).
In the present case, Builder's claim on its mechanic's lien was not disputed, nor was
its claim to prejudgment interest as a part of its damages. See Eden United, Inc. v. Short, 653
N.E.2d 126, 133 (Ind. Ct. App. 1995) (An award of prejudgment interest is appropriate where
the damages are complete and ascertainable), trans. denied. Builder argues that Kennel's
payment into court was not a proper tender which served to cut off the accumulation of its
undisputed entitlement to prejudgment interest. Builder argues that the money should have
been paid directly to it in order that it could benefit from the money. We agree.
The award of prejudgment interest is based on the rationale that there has been a deprivation of the plaintiff's use of money or its equivalent and that unless interest is added, the plaintiff cannot be fully compensated. Wayne Township v. Lutheran Hospital of Fort Wayne, Inc., 590 N.E.2d 1130, 1134 (Ind. Ct. App. 1992), trans. denied. It is well-settled that a proper tender will serve to discharge the obligation to pay additional interest. See Ind.Code 26-1-3.1-603(c); I.C. 34-2-24-1. A proper tender generally requires full payment of a debt due, and if refused, the tender must be kept open by paying the full amount into court. Maddox v. Wright, 489 N.E.2d 133, 138 (Ind. Ct. App. 1986); I.C. 34-2-24-1.
In the present case, Builder agreed that it would accept a certain amount and release Kennel from any further obligation to pay prejudgment interest. However, Kennel did not
pay the money to Builder, but instead, paid the money into court. After Builder objected, the
trial court would not permit Builder to withdraw the "tendered" amount. Thus, Builder
received no benefit from the "tender" and no compensation for the deprivation of the use of
the money. On the contrary, the "tender" benefitted Kennel by securing partial payment of
its hotly disputed, unliquidated counterclaim against Builder.
Accordingly, Kennel's payment into court did not constitute a proper tender which served to cut off the further accumulation of prejudgment interest.See footnote 1 Therefore, we reverse and remand with instructions that the trial court award Builder an appropriate amount of additional prejudgment interest.
Builder conducts an analysis of the evidence in support of its argument that the damages awarded Kennel on its counterclaim were excessive. Builder points out that the estimates submitted by Kennel's contractors included additional materials and services not contemplated in the original contract. Specifically, Builder argues that Kennel's recovery cannot include amounts for concrete sealer because the original contract excluded concrete sealer. Similarly, Builder argues that Kennel's award cannot appropriately contain an amount for the provision of a heat source to the contractors while they performed their work.
Thus, Builder argues that the trial court's award is erroneous because it places Kennel in a
better position than it would have been but for the breach.
As stated in Fowler v. Campbell, 612 N.E.2d 596 (Ind. Ct. App. 1993):
An appeal of a damage award as excessive is governed by a strict standard of review. We will neither reweigh the evidence nor judge the credibility of witnesses, and will consider only the evidence favorable to the award. A judgment is not excessive unless the amount cannot be explained upon any basis other than prejudice, passion, partiality, corruption, or some other improper element. A damage award must be supported by probative evidence and cannot be based on mere speculation, conjecture, or surmise. Thus, a damage award will be reversed only when it is not within the scope of the evidence before the finder of fact.
It is a fundamental rule of damages that a party injured by a breach of contract may recover the benefit of his bargain but is limited in his recovery to the loss actually suffered. When a contractor breaches an agreement, the injured party may not be placed in a better position than he would have enjoyed if the breach had not occurred. A damage award must be referenced to some fairly defined standard, such as cost of repair, market value, established experience, rental value, loss of use, loss of profits or direct inference from known circumstances. ... Where, as here, the construction contract has been completed and the owner has paid the contract price in full and taken possession, one measure of damages is the reasonable cost of altering the defective parts to make them conform to the plans and specifications.
Id. at 603.
In the present case, the evidence supports the conclusion that simply pouring additional concrete or cement on the old would not rectify the defect because the new material would not properly and permanently adhere to the old without also using concrete sealer. Moreover, the evidence supported the award of a heat source for the contractors because the remedial work would have be done during the winter, during Kennel's off- season, to avoid disrupting the Kennel's business, and the area to be altered would have to
be heated to 65 degrees Fahrenheit in order for the process to take. The evidence submitted
on the cost of bringing the Kennel up to the specifications required by the original contract
ranged between a few thousand dollars to almost $16,000.00. As noted above, the trial court
awarded $10,500.00. As the award was within the scope of the evidence, we find no error.
Judgment reversed in part as outlined under Issue I. In all other respects, we affirm.
RUCKER, J., concurs.
BAKER, J., concurs in result with separate opinion.
COURT OF APPEALS OF INDIANA
4-D BUILDINGS, INC., )
vs. ) No. 41A01-9707-CV-205
JAMES L. PALMORE and )
DUREEN L. PALMORE )
d/b/a THE GOLDEN POST, INC., )
BAKER, Judge, concurring in result
Although I agree with the majority's conclusion that the trial court must recalculate the amount of prejudgment interest, I write separately to note that, had the clerk deposited Kennel's check into an interest-bearing account, the trial court would not have erred in calculating the prejudgment interest. In the present case, the majority concludes that Kennel's payment to the clerk was not a proper tender, and therefore did not serve to cut off the accumulation of prejudgment interest, because the Builder was not permitted to withdraw the funds. Thus, the majority concludes that Builder was entitled to receive additional compensation, in the form of prejudgment interest, for the deprivation of the use of its
money. However, had the clerk deposited Kennel's payment into an interest-bearing account, Builder would have received compensation for its lost use of the funds. Under such circumstances, Kennel would not be liable for additional prejudgment interest. Nevertheless, because nothing in the record indicates that the clerk deposited Kennel's payment into such an account, I am compelled to concur in the result.
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