CADDNAR
Ritter v. Stephens d/b/a Stephens Timber, 16 CADDNAR 3
Administrative Cause Number: 19-142F
Administrative Law Judge: Dawn Wilson
Petitioner Non-Attorney Rep: Ed Cambra
Respondent Counsel: Marcus Henderson
Date: May 19, 2021
[See Editor’s note at end of this document regarding change in the decision’s original format.]
FINDINGS OF FACT AND CONCLUSIONS OF LAW
WITH FINAL ADMINISTRATIVE JUDGMENT
FINAL ADMINISTRATIVE JUDGMENT
1. Petitioner, Julia Ritter (Ritter), is granted administrative judgment against Respondent, Kimmitt Earl Stephens d/b/a Stephens Timber (Stephens) in the amount of $10,995.
2. Stephens shall receive credit to the extent of any payment to Ritter made by its surety, Western Surety Company.
3. The compensation to which Ritter is entitled under this judgment shall not exceed the total amount of $10,995.
4. The issuance of this administrative judgment shall not be interpreted to preclude a claim for subrogation initiated by Western Surety Company.
5. This administrative judgment addresses all issues of damage and responsibility over which the Natural Resources Commission has jurisdiction under IC 25-36.5-1-3.2(j) and after completion of the opportunity for judicial review under IC 4-21.5 may be enforced in a civil proceeding as a judgment.
Procedural Background and Jurisdiction
1. On November 23, 2019, Julia Ritter (Ritter) filed correspondence (Petition) with the Natural Resources Commission (Commission) alleging that Respondent, Kimmitt Earl Stephens d/b/a Stephens Timber (Stephens), as a timber cutter or timber buyer, “severely damaged my residential property and violated Indiana law and the Department of Natural Resources’ administrative code. In addition, the actions of his son and their subcontractor (Brown Tree Service) have left me open to potential legal action, since they left logs and debris on property owned by neighboring landowners.” Petition.
2. Ritter’s Petition seeks damages from Stephens totaling $29, 364.50[1], “in compensation for damage actually resulting from the wrongful activities of [Stephens]” in the amount of $11,840, plus $17,524.50, representing three times $5,841.50, the stumpage value of harvested timber. Id. at pg. 2.
3. The Petition filed by Ritter initiated a proceeding governed by Ind. Code 4-21.5-3, sometimes referred to as the “Administrative Orders and Procedures Act” (AOPA) and the administrative rules adopted by the Commission at 312 IAC 3-1 to assist with the implementation of AOPA. IC 4-21.5-3-1, et seq.
4. Ritter is identified as the Petitioner in this proceeding and Stephens is identified as the Respondent.
5. Administrative Law Judge (ALJ) Dawn Wilson was appointed under IC 14-10-2-2 to conduct this proceeding.
6. Following notice to the parties, during the Prehearing Conference conducted on December 19, 2019, Petitioner Ritter appeared but Respondent Stephens did not.
7. On December 20, 2019, the ALJ issued a “Notice of Proposed Default” within which Stephens was provided an opportunity to object by a specified deadline. No response was timely filed by Stephens. By final order dated February 6, 2020, the interests of Stephens were defaulted.
8. On December 30, 2019, Ritter filed a “Designation of Non-Attorney Representative” identifying Edward Cambra (Cambra) as her non-attorney representative.
9. On January 30, 2020, Ritter requested the joinder of Western Surety Company. By order dated May 4, 2020, the ALJ granted Ritter’s motion.
10. On November 17, 2020, Ritter, referencing settlement between Ritter and Western Surety, filed a request to dismiss Western Surety Company as a party to this proceeding. By order dated November 19, 2020, the ALJ granted Ritter’s request.
11. Upon notice, multiple status conferences were held in the proceeding at which Ritter appeared by her non-attorney representative and Stephens failed to appear.
12. The ALJ scheduled an administrative hearing for July 16, 2020. The ALJ vacated the scheduled hearing upon Ritter’s request for an opportunity to file a dispositive motion. No dispositive motion was filed.
13. The ALJ rescheduled the administrative hearing for November 19, 2020. The ALJ vacated the rescheduled hearing upon Ritter’s request for additional time to participate in settlement discussions with Stephens.
14. The ALJ again rescheduled the administrative hearing for March 18, 2021, and virtually conducted the hearing on that date. Ritter appeared by Cambra, her non-attorney representative. Stephens did not appear.
15. At the hearing, Cambra, Steve Cousins, and Michael Warner, provided testimony. Exhibits 1 through 8 were offered by Ritter and admitted for consideration in this matter.
16. The Commission is the ultimate authority, as that term is defined at IC 4-21.5-1-15, with respect to adjudicatory proceedings initiated under IC 25-36.5. 312 IAC 14-1-2(d).
17. Pursuant to IC 25-36.5-1-3.2(c), a timber grower may initiate this proceeding.
18. The Commission possesses jurisdiction over the subject matter and over the persons of the parties.
Findings of Fact[2]
19. Ritter has possessed a residence in Zionsville, Indiana for over 50 years. Ritter maintains standing timber at her residence. See testimony of Cambra.
20. Ritter was contacted by Craig Stephens concerning timber cutting services by Stephens Timber. Ex. 5.
21. Ritter and Cambra met with Craig Stephens and discussed Stephens’ removal of four desirable walnut and seven red oaks in exchange for Stephens’ removal of a maple, pine, and dead oak tree, that Ritter wanted to have removed because the trees appeared to her to be “leaning more and more”. Id.at pg. 1.
22. Ritter, Cambra and Stephens discussed that Ritter should net “a few hundred dollars” following the harvest. Ex. 5. No evidence was submitted to identify any specific future event that would trigger Ritter’s receipt of money. Ex. 1.
23. Craig Stephens informed Ritter and Cambra that treetops and minor branches would remain after the harvest. The understanding of Ritter and Cambra was that remaining debris would be of a size that would be removed by the homeowner. Ex. 5.
24. Craig Stephens presented Ritter with a “Contractors Invoice” that included a description of work and Ritter determined that she had “no real alternative to get things accomplished”. Id.
25. Craig Stephens and Ritter signed the following “Contractors Invoice”:
Ex. 2.
26. The harvest by Stephens’ contractor, Brown’s Tree Service, occurred in July of 2019. Ex. 5.
27. All of the trees listed in the Contractors Invoice were cut. No trees, other than the trees listed in the Contractors Invoice, were cut. See testimony of Cambra.
28. Cambra contacted Stephens’s contractor about remaining logs and debris. Stephens contacted Cambra and offered to send a crew to Ritter’s residence with “chipper/shredders” to clean up the logs and debris and to shoot the resulting material into the stands of trees. Ex. 5.
29. Stephens was informed that Ritter did not want Brown’s Tree Service to handle any clean-up on her property. Stephens did not complete restoration of the Ritter property. Cambra.
30. Michael Warner (Warner) performs forestry management, planning, inventory, appraisals, and timber sale administration. Warner has performed these duties for ArborTerra Consulting Inc. since 1988. Prior to his work with ArborTerra Consulting, Warner worked as a USDA Forester for 13 years. See testimony of Warner.
31. Warner conducted a site visit to Ritter’s residence and conducted an appraisal and assessment on or about November 5, 2019. Warner observed tree stumps and scattered treetops and minor debris from harvested trees. Cambra showed Warner treetops that were located on an adjoining property. Warner observed that the marketable portions of harvested trees had been removed. Warner opined that removal of the treetops and minor debris would require equipment not normally possessed by the average homeowner. Warner and Ex. 7.
32. Warner prepared a report estimating the stumpage value of four black walnut and seven red oak trees that had been recently harvested from the Ritter property. The estimate, totaling $5,841.50, did not include any reduction for harvesting costs or the cost to deliver the trees to a mill. Ex. 4.
33. Warner’s report does not include the value, or the cost to harvest or transport, the maple, pine, and dead oak tree that were included in the Contractors Invoice. Id.
34. Steve Cousins (Cousins) performs residential landscaping and maintenance, including tree pruning and the removal of downed trees. He currently performs these duties for Nature’s Choice Landscaping. Cousins has attained approximately 15 years of experience in general landscaping. See testimony of Cousins.
35. On behalf of Nature’s Choice Landscaping, Bridget Donovan, Horticulturist and Arborist, prepared an assessment of costs, in the amount of $10,995, for the clean-up and removal of felled trees on Ritter’s property. In addition, Donovan’s assessment included a cost of $325 to check “for any damage to [the] drain coming off of the house and replacing [sic] new drain. There was [sic] portion of drain under [sic] area that the equipment was driving over.” Ex. 3. In addition, a cost of $520 was includes for the removal and replacement of damaged treated timbers and to reset timbers that had been knocked over. Id.
36. Cousins conducted a site visit in November of 2019 and observed treetops from harvested trees and four large hanging limbs. In one area, Ritter and Cambra showed Cousins treetops that extended beyond Ritter’s property line. Cousins opined that removal of the treetops he observed would require proper tools and equipment that an average homeowner would not possess. Ex. 3, 7 and 8.
Conclusions of Law
37. The instant proceeding was initiated under the Timber Buyers Act, pursuant to the authority of IC 25-36.5-1-3.2, which states:
Sec. 3.2. (a) This section refers to an adjudicative proceeding against:
(1) a timber buyer; or
(2) a person who cuts timber but is not a timber buyer (referred to as a "timber cutter" in this section).
(b) The department may under IC 4-21.5-3-8 commence a proceeding against a timber buyer or a timber cutter if there is reason to believe that:
(1) the timber buyer or timber cutter has acquired timber from a timber grower under a written contract for the sale of the timber without payment having been made to the timber grower as specified in the contract; or
(2) if:
(A) there is no written contract for the sale of the timber; or
(B) there is a written contract for the sale of the timber but the contract does not set forth the purchase price for the timber;
the timber buyer or timber cutter has cut timber or acquired timber from the timber grower without payment having been made to the timber grower equal to the value of the timber as determined under IC 26-1-2.
(c) A proceeding may be commenced under this section at the request of a timber grower.
(d) The necessary parties to a proceeding initiated under this section are:
(1) the timber grower; and
(2) the timber buyer or timber cutter.
(e) After the commencement of a proceeding under this section through the service of a complaint under IC 4-21.5-3-8, a party to the proceeding may move for the joinder of any of the following persons having a relationship to the site or subject of the complaint:
(1) The surety of the timber buyer.
(2) A timber buyer.
(3) A timber cutter.
(4) A landowner.
(5) An owner of land adjacent to the land from which the timber was cut.
(6) A consultant receiving a fee for services related to the timber.
(7) A professional surveyor performing an American Land Title Association and American Congress on Surveying and Mapping (ALTA/ACSM) land title survey.
(8) The department of natural resources, if the department has a relationship to the site or subject of the complaint as a landowner or owner of adjacent land.
(f) The complaint served under IC 4-21.5-3-8 to commence a proceeding under this section may seek the following:
(1) Damages in compensation for damage actually resulting from the wrongful activities of a timber buyer or timber cutter.
(2) Damages equal to three (3) times the stumpage value of any timber that is wrongfully cut or appropriated without payment.
(g) Notwithstanding subsection (f), the liability on the surety bond of a timber cutter is limited to the value of any timber wrongfully cut or appropriated.
(h) A proceeding under this section is governed by IC 4-21.5. Before a hearing is convened in the proceeding, a prehearing conference shall be conducted to provide the parties with an opportunity for settlement, including an opportunity for mediation.
(i) In determining the site for a hearing in a proceeding under this section, the administrative law judge shall consider the convenience of the parties.
(j) A final agency action in a proceeding under this section must address all issues of damage and responsibility and, after the completion of the opportunity for judicial review, may be enforced in a civil proceeding as a judgment.
IC 25-36.5-1-3.2.
Timber Buyer & Timber Grower
38. A “Timber buyer” is “a person engaged in the business of buying timber from timber growers for sawing into lumber, processing, or resale, but does not include a person who occasionally purchases timber for sawing or processing for his own use and not for resale.” IC 25-36.5-1-1.
39. Stephens, through Craig Stephens, presented a business card to Ritter to elicit a timber harvest agreement and presented himself as Stephens’ representative.
40. Stephens is a timber buyer.
41. A “Timber grower” is “the owner, tenant, or operator of land in this state who has an interest in, or is entitled to receive any part of the proceeds from, the sale of timber grown in this state and includes persons exercising lawful authority to sell timber for a timber grower.” 312 IAC 14-2-12.
42. Ritter’s residence is the location of the timber harvest by Stephens.
43. Ritter is a timber grower.
Petitioners’ Right to Damages: IC 25-36.5-1-3.2(f)(1)
44. A timber grower may seek “[d]amages in compensation for damage actually resulting from the wrongful activities of a timber buyer or timber cutter.” IC 25-36.5-1-3.2(f)(1).
45. The Commission has previously determined that, the primary goal of the Timber Buyers Act is to ensure a landowner is compensated for the harvest of standing timber. The secondary goal is to protect the landowner “from damage to his land resulting from improper logging methods.” O’Neal v Bowers and Spurgeon, 13 CADDNAR 64, 68 (2012). See also Roberts v. Voorhees, 453 N.E.2d 342, 343 (Ind. App. 1983).
46. The Timber Buyers Act does not define what constitutes “damage resulting from wrongful activities”. However, the Indiana Court of Appeals has provided insight into interpreting the phrase. The wrongful activities of a timber buyer could result in the assessment of costs for repairing fences and repairing ruts. Also, removing felled but unharvested trees and debris might appropriately be included. The costs for replacing felled trees would not. Wright v. Reuss, 434 N.E.2d 925, 930 (Ind App 1982).
47. “Industry standards are significant in determining whether a timber buyer conducted a timber harvest properly.” See O’Neal at 68, citing Goldasich v Hites, et al. 11 CADDNAR 165 (2007).
48. The Commission has previously evaluated industry standards for a proper harvest. The Commission has authorized compensation for repairs to damaged fencing and to repair ruts. Rose Acre Farms, Inc. v. Ault and Curry, 8 CADDNAR 138 (1999). The Commission previously found the costs of equipment rental (including a backhoe) to repair ruts, to restore the contour of a swale, to reseed the swale and to remove debris to be compensable. Zwahlen v. McDurmon and Ohio Casualty Insurance Company, 7 CADDNAR 45 (1994).
49. Industry standards would not anticipate that treetops and debris resulting from a harvest would encroach upon an adjoining property. The cost to remove treetops and debris from an adjacent property following a harvest would be compensable.
50. The Commission has specifically addressed felled trees and debris on a timber buyers’ property and determined that the removal of felled trees left in a waterway was a compensable expense but treetops that were not left in a waterway should be “left in place to avoid further damage to the land.” Rose Acre, at 144, citing Kreuzman Farms v. Jones and Pike Lumber, 7 CADDNAR 122, 124 (1995). See also Stell v Allen, d/b/a A&S Logging, 12 CADDNAR 124 (2009).
51. Industry standards for a harvest would necessarily consider the ongoing use of the property. There is no indication that the Commission decisions referenced in the paragraph immediately above involved any harvest at a residential property. A harvest that occurs on a residential property may require reclamation that includes the removal of treetops and debris.
52. Industry standards following the harvest at Ritter’s residential property would have required the removal of treetops and debris by Stephens.
53. The measure of permanent damage to real property is the “diminution in the value of the property before and after the logging” and the measure of temporary damage to real property is the “cost of repair.” Dow v Midwest Logging and Veneer, 146 N.E.3rd 990, 1000 (Ind App 2020), citing Sheek v Morin Logging, Inc., 993 N.E.2d 280, 288 (Ind App 2013).
54. Ritter does not allege permanent damage to her property. The costs to repair the temporary damage to the Ritter property would be the appropriate measure. Damages in an amount attributable to costs necessary to remove treetops and debris and other appropriate repairs would be compensable.
55. The Commission has previously denied recovery for damages when no estimates were provided by the Petitioner for “costs associated with site restoration.” O’Neal, at 68.
56. Similar to the cases before the Court of Appeals in Dow and Sheek, Ritter provided estimates for the costs of remediation to repair her property.
57. Evidence presented at the administrative hearing supports the damages for costs to clean-up logs, treetops, and debris at $10,995.
58. Cousins supported the observation by Donovan that Ritter’s drain was driven over by equipment. The evidence presented included a cost to check the drain for damage and to replace it. The weight of the evidence presented does not support a conclusion that, following inspection, the drain was determined to be damaged by Stephens during the harvest. Ritter is not entitled to an award of damages for drainpipe repair or replacement in the amount of $325.
59. Cousins supported the observation by Donovan that Ritter’s treated timbers were damaged or knocked over. Evidence presented by Ritter failed to show that the timbers were damaged during the harvest by Stephens. Ritter is not entitled to an award of damages to replace and reset landscape timbers.
60. Pursuant to IC 25-36.5-1-3.2(f)(1), Ritter is entitled to a total damage award in the amount of $10,995.
Petitioner’s Right to Damages: IC 25-36.5-1-3.2(f)(2)
61. Ritter’s Petition requests damages in the amount of three times the stumpage value of timber wrongfully cut or appropriated without payment. Petition.
62. A timber grower may commence a proceeding against a timber buyer in some circumstances. upon reason to believe “the timber buyer has acquired timber from a timber grower under a written contract for the sale of the timber…or…there is no written contract.” IC 25-36.5-1-3.2(b) and (c).
63. A petition may seek “[d]amages equal to three (3) times the stumpage value of any timber that is wrongfully cut or appropriated without payment.” This remedy is sometimes referred to as the “treble-damages” clause. IC 25-36.5-1-3.2(f)(2).
64. A tree wrongfully cut would include a tree that was cut and not marked or otherwise listed for harvest. Ewbank & Bishop v Eastridge, et al, 14 CADDNAR 160, 162 (2019).
65. There is no dispute that Stephens cut all of the trees listed in the Contractors Invoice, and that he cut no other trees. Therefore, the Petitioner is not entitled to damages for timber wrongfully cut.
66. The Commission has determined timber was appropriated without payment when a timber grower was not compensated in accordance with an executed contract. Ewbank, supra; Davies v Powers d/b/a Powers Logging & Hanover Ins. Co., 12 CADDNAR 297 (2011).
67. To determine if a justification for damages has been presented in this proceeding by the Petitioner, it is necessary to determine if Ritter’s timber was appropriated by Stephens without payment.
68. The Uniform Commercial Code (UCC) applies to transactions in goods. IC 26-1-2- 102.
69. “A contract for the sale…of timber to be cut is a contract for the sale of goods within IC 26-1-2…even though it forms part of the realty at the time of contracting. ….” IC 26-1-2-107(2). The Commission has previously applied the UCC in its evaluation of timber disputes. Trisler v Minor and Hartmen Logging, 12 CADDNAR 305 (2011); Henze v. Powers Logging & Timber, 12 CADDNAR 188, 190, (2009), citing Schneider v. Grosnickle and Cincinnati Ins. Co., 9 CADDNAR 180, 184 (2004) and Maloney v. Grant and Southern Indiana Timber, Inc. and DNR, 6 CADDNAR 83 (1992).
70. A valid contract requires “mutuality of obligations”, a doctrine that requires “both parties to a contract to be bound to perform.” OVRS Acquisition Corp. v. Community Health Services., Inc., 657 N.E.2d 117, 127 (Ind. App. 1995), reh’g denied, trans. denied. See also Rogier v. Am. Testing and Eng’g Corp., 734 N.E.2d 606, 618 (Ind. App. 2000), reh’g denied, trans. denied.
71. No exchange of money is necessary to form a contract. A price can be payable in money or goods. IC 26-1-2-304.
72. Ritter, as a timber grower, and Stephens, as a timber buyer, mutually agreed to the harvest of standing timber at Ritter’s residence, as identified within the Contractors Invoice. Stephens offered to harvest specific trees in exchange for the opportunity to harvest designated trees having a higher value. Ritter offered her more valuable trees in exchange for Stephens’ removal of trees that she believed could endanger her residence. Ex. 2.
73. The weight of the evidence admitted in this proceeding supports a reasonable conclusion that Ritter and Stephens had an agreement whereby each accepted the offer of the other, representing a mutuality of obligation.
74. If intended, parties may contract for an open price term if nothing is said as to price, the price is left to be agreed by the parties or the price is to be fixed upon a market value or other standard recorded by a third person or agency that is not set or recorded. IC 26-1-2-305.
75. During contract negotiations, Stephens stated that Ritter, potentially, would receive some money after the harvest.
76. The terms of the written contract are unambiguous as to any monetary compensation. The agreement anticipates no monetary compensation would be paid to Ritter or Stephens. In fact, the section that states “…for the agreed upon sum of _____ Dollars ($______)” includes a handwritten line through the portion designated for a dollar amount.
77. Ritter failed to present sufficient evidence to support a reasonable conclusion that Ritter was entitled to receive a cash payment from Stephens.
78. By cutting the trees identified in the document, Stephens did not appropriate timber without payment.
79. Ritter did not meet her burden to show entitlement to damages pursuant to IC 25-36.5-1-3.2(f)(2).
80. In support of her claim pursuant to IC 25-36.5-1-3.2, Ritter’s closing argument identifies potentially unlawful criminal violations of IC 25-36.5-1-4 and IC 35-43-4-1(b) by Stephens.
81. Consideration of any allegation of a criminal violation is found to be beyond the scope of this administrative review proceeding and is not addressed in this decision.
EDITOR’S NOTE: The original format of the Administrative Law Judge’s Findings of Fact, Conclusions of Law, and Final Order has been modified to correspond with CADDNAR format. The Final Order has been relocated to the “Final Administrative Judgment” section at the beginning of this document.