LLC v. LLC (2025)

MEMORANDUM DECISION

Statement of the Case

[1] Johnson Management, LLC (“Johnson”) leased a commercial property to Crasian Brewing Company, LLC (“Crasian”). Four months after the lease term had expired and after Crasian had vacated the property, Johnson filed a complaint alleging Crasian had breached certain terms of the lease. Following a bench trial, the trial court entered judgment in favor of Crasian. Johnson appeals and presents one issue for our review: Whether the trial court's judgment was clearly erroneous.

[2] We affirm.

Facts and Procedural History

[3] On November 1, 2017, Johnson entered a five-year lease agreement with Crasian for a commercial property located in Brookston, Indiana. The property was an unfinished space that Crasian planned to convert into a microbrewery and tasting room. The lease agreement established that Crasian would take the property “as-is” and that Crasian agreed to not alter the property without Johnson's prior written approval. Any improvements or alterations made or installed to the property would be deemed attached to the property and remain for Johnson's benefit at the end of the lease.

[4] After taking possession of the property, Crasian made significant improvements, converting it from a vacant space to a fully functioning microbrewery. Crasian often discussed renovations with Robert Johnson—the owner of Johnson. Robert regularly visited the property while alterations were being done, visibly saw the improvements, and did not object to any of the renovations. These renovations included a new HVAC system, a new sump pump, new window casings, and new drywall as well as doors. Additionally, Crasian furnished the space with multiple custom wood pieces, including a bar, tabletops, and shelves.

[5] Crasian vacated the property on October 30, 2022, and the lease expired on November 1, 2022. A month later, on December 12, 2022, Tom Bulington, Crasian's owner, visited the property and discovered that the new tenant had already made improvements, including the addition of a new service counter and bathroom repairs. On February 12, 2023, Bulington conducted a walkthrough of the property with Robert. On March 7, 2023, Johnson filed a complaint against Crasian, alleging that Crasian “breached the terms, covenants and conditions of the Lease by failing to maintain the Premises in good, clean and safe condition.” Appellant's App. Vol. II at 8.

[6] At trial, Johnson argued that Crasian's alleged failure to keep the property in good condition resulted in damages, including HVAC, plumbing, and drywall repairs. Robert testified that Crasian improperly installed their HVAC system which led to water damage throughout the building. Additionally, Johnson provided a photo showing a hole in one of the bathroom floors. Robert testified that this hole was the result of leaking caused by improper installation of the toilet by Crasian, and he indicated that he discovered the hole because he fell through it while inspecting the property after the lease had ended. Johnson also argued that Crasian breached the lease by taking the custom wood bar and shelving when it vacated the premises, which Johnson claimed were fixtures that should have remained with the property.

[7] Crasian offered a different account of how the damages occurred. Notably, Crasian provided a Before-After-Construction (“BAC”) video purporting to show that the cause of the alleged water damage was leakage from the roof, which was Johnson's responsibility per the terms of the lease. This BAC video also provided footage from October 30, 2022, where Bulington was standing in front of the toilet where Crasian had allegedly caused a hole. Bulington testified that during his December 2022 visit to the property he discovered the toilet had been damaged, but this damage was not present when he vacated the property; he believed this damage caused the toilet to leak and the floor to deteriorate. Additionally, Bulington testified that the bar was modular and not attached to the floor while the shelving was decorative and only attached by a tack.

[8] The trial court ruled in favor of Crasian, issuing the following relevant findings:

11. That Johnson filed his complaint for damages ․ with an estimate of damages to cost $31,000.00. Johnson supported the damages with an estimate from John Vanderkolk Construction, Inc, without specificity to cost of repair of each item of work identified, and was a general estimate, as if to acquire a large sum of money from Crasian.

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16. That Crasian chose not to use the baseboard heat system already in place on the property and instead elected to install a new furnace, at their own expense. Crasian installed the furnace, by owner Tom Bulington. Mr. Bulington, holds a universal certification in refrigeration, does not hold a license to install HVAC systems, but did have the assistance and supervision of Tony Huff, who is a certified HVAC system installer. Crasian installed the furnace exhaust to an existing ventilation unit in the ceiling. This ventilation unit did not run through the building's exterior wall and therefore the attic area accumulated moisture. Crasian notified Johnson of drywall with moisture, who then inspected the attic and informed Crasian the ventilation pipe did not extend through the exterior of the building, and informed Crasian it needed to extend the ventilation through the exterior of the building. Crasian then installed a flue/ventilation pipe through the exterior of the building.

17. That Crasian installed a flat-bottomed discharge sump-pump resting on the floor, which then pumped the drainage/excess water from the HVAC unit to a drainpipe in to [sic] an adjacent bathroom sink drain. See Exh. E-3. This is contrary to the picture depicted in Exh. D-1, which was taken after Crasian vacated the property. Crasian placed the small plastic container to catch any water/moisture until Johnson decided what to do with the building and HVAC system after Crasian vacated. Johnson contends upon Crasian vacating the property the exterior drain/flue caused moisture problems of which resulted in water/mold on the old brick wall. See Exh. I. With further damage to the exterior of the brick wall. After reviewing Defendant's Exh. 1, portions of this video shows that there is an excessive amount of water running against the exterior brick wall, from faulty roof gutters and water runoff areas, during heavy rain periods. Per the Agreement, Johnson is responsible for maintaining, repairing and or replacing the roof over the property, which would include proper gutters and downspouts to get water away from the building foundation.

18. That Crasian asserts Johnson was present during the installation of the HVAC furnace, provided some guidance over the ventilation system, and therefore should have foreseen any problems that might have occurred. Johnson asserts to the contrary, that during all the times he visited the property during the months of Crasian remodeling and installing the HVAC system he never saw the activities. This Court is unable to believe Johnson's testimony pertaining to his alleged blind eye.

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20. That it appears to this Court from [Robert] Johnson's testimony, demeanor, and actions, he is attempting to get upgrades to his facility at the expense of others. In addition, that he is attempting to get an instant flush of cash from Crasian for items that Johnson claims he did not see with his blind eye tactics, nor his inability or unwillingness to speak up during the remodel.

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23. That Johnson noticed after Crasian vacated the property there was a soft, spongy spot in front of the toilet in the bathroom. Crasian attempted to remedy this by using some boarding materials and asserts this was caused by the same exterior massive water leaks that caused the dark staining on the exterior brick wall. Johnson asserts otherwise, and that the damage is once again from an action of Crasian, merely installing the toilet. See Exh. H and Defendant's Exh. 1 footage.

24. That the furnace system has not been ran by [the new tenant], and was last run in April 2022, but the exterior brick wall and parts of the interior brick wall is still wet to touch.

Appellant's App. Vol. II at 74–77 (emphases added). The trial court concluded that Johnson failed to present sufficient evidence to prove its breach of contract claim, entering judgment in favor of Crasian. This appeal ensued.

Discussion and Decision

The Trial Court Did Not Err in Its Judgment

[9] Johnson claims that the trial court erred by entering judgment in favor of Crasian. Here, the trial court issued special findings and conclusions pursuant to Indiana Trial Rule 52(A). Thus, “we apply a two-tiered standard of review—we consider whether the evidence supports the court's findings and, if so, whether those findings support the judgment.” S.D. v. G.D., 211 N.E.3d 494, 497 (Ind. 2023) (citing Ind. Trial Rule 52(A)). “Issues not covered by the findings are reviewed under the general judgment standard, which means that, as a reviewing court, we should affirm based on any legal theory that is supported by the evidence.” Boucher v. Doyle, 228 N.E.3d 520, 524 (Ind. Ct. App. 2024) (citing Kakollu v. Vadlamudi, 175 N.E.3d 287, 295 (Ind. Ct. App. 2021)).

[10] We also note that it was Johnson's burden to prove his breach of contract claim, so it is appealing from a negative judgment. See Johnson v. Shanehsaz, 152 N.E.3d 7, 19 (Ind. Ct. App. 2020). We have described our standard for challenging a negative judgment:

A party challenging a negative judgment generally must show on appeal that the evidence as a whole leads to a decision opposite that reached by the trial court. Town of Brownsburg v. Fight Against Brownsburg Annexation, 124 N.E.3d 597, 601 (Ind. 2019). Hence, we may reverse only when the evidence is uncontradicted and leads unerringly to a result different than the trial court reached. Walters v. Dean, 497 N.E.2d 247, 255 n.2 (Ind. Ct. App. 1986).

Johnson, 152 N.E.3d at 7.

[11] Here, Johnson alleged that Crasian breached the terms of the lease agreement. “The essential elements of a breach of contract action are the existence of a contract, the defendant's breach thereof, and damages.” Berg v. Berg, 170 N.E.3d 224, 231 (Ind. 2021) (quoting Fowler v. Campbell, 612 N.E.2d 596, 600 (Ind. Ct. App. 1993)). Johnson argues that the trial court erred by concluding that it failed to prove its breach of contract claim. We cannot agree.

[12] On appeal, Johnson has failed to show that the evidence as a whole leads to a decision opposite from the trial court's decision. We initially note that Johnson does not challenge any of the trial court's findings, so we accept them as true, see R.M. v. Ind. Dep't of Child Servs., 203 N.E.3d 559, 564 (Ind. Ct. App. 2023) (citing Madlem v. Arko, 592 N.E.2d 686, 687 (Ind. 1992)), trans. not sought. The unchallenged findings show that there was conflicting evidence about the alleged damages to the property and the alleged fixtures that should have remained with the property. Here, it was the trial court's role to weigh this conflicting evidence. See Franciscan All., Inc. v. Padgett, 180 N.E.3d 944, 953 (Ind. Ct. App. 2021). Ultimately, the trial court was unconvinced by Johnson's evidence, and we will not second guess the trial court's credibility determinations. Casillas v. State, 190 N.E.3d 1005, 1014 (Ind. Ct. App. 2022) (citing State v. Washington, 898 N.E.2d 1200, 1203 (Ind. 2008)).

[13] Johnson argues that Crasian failed to meet its burden to succeed at trial. Johnson focuses on the following conclusion made by the trial court: “34. That Johnson was first guilty of breaching the contract/Agreement, as [it] did not give written notice of Crasian's alleged violations of any of the terms, conditions and covenants of the Agreement.” Appellant's App. Vol. II at 78 (emphasis in original). Johnson contends that the trial court erred in its judgment because: Crasian failed to plead the affirmative defense of prior breach of contract in its response to Johnson's complaint; and Crasian failed to meet their burden in proving this affirmative defense. Even if that was error, it does not change the fact that the plaintiff carries the burden of proof in a breach of contract claim. See Richard I. Spiece Sales Co. v. Levi Strauss N. Am., 19 N.E.3d 345, 354 (Ind. Ct. App. 2014). The trial court found the BAC video significant, and clearly did not believe Robert's testimony that Crasian caused the damage which resulted in the lawsuit.

[14] Because the trial court weighed the conflicting evidence and determined that Johnson failed to prove its claim, we conclude that the trial court did not clearly err in entering its judgment.

[15] Affirmed.

Felix, Judge.

Judges Pyle and Weissmann concur. Pyle, J., and Weissmann, J., concur.