Brian K. Tussey and Kevin S. Tussey, Appellants-Defendants/Counterclaim Plaintiffs v. LLC (2025)

MEMORANDUM DECISION

Case Summary

[1] Following a series of three transactions, Rex Alton and his wife Rita Alton (the Altons) and Alton, LLC (collectively, the Alton Parties), filed a six-count complaint against brothers Brian K. Tussey and Kevin S. Tussey (the Tussey Brothers).¹ The Tussey Brothers filed a two-count counterclaim against the Alton Parties. The Alton Parties filed a motion for partial judgment on the pleadings as to four counts of their complaint and one count of the Tussey Brothers’ counterclaim. The Tussey Brothers filed a motion to convert the Alton Parties’ motion to a motion for summary judgment and designated evidence in support of their motion. The Alton Parties filed a motion to strike that evidence. The trial court denied the Tussey Brothers’ motion to convert and granted the Alton Parties’ motion to strike and motion for partial judgment on the pleadings. The Tussey Brothers now appeal, arguing that the trial court's rulings are erroneous. We affirm in part, reverse in part, and remand.

Facts and Procedural History

[2] In June 2011, the Altons and one of their business entities, 6th St. Development Corporation, executed a “Purchase Agreement With Contingencies” (the 6th Street Purchase Agreement) with the Tussey Brothers’ parents, Gary Tussey and Barbara Tussey. Appellants’ App. Vol. 2 at 31. The agreement provided, “Seller [i.e., the Altons] agrees to sell and Buyer [i.e., Gary and Barbara] agrees to purchase the real estate (Real Estate) pursuant to the terms, conditions, contingencies, and covenants hereinafter. The Real Estate [two lots in the City of Vincennes] is currently owned by 6th St. Development Corporation.” Appellants’ App. Vol. 2 at 31.

[3] The agreement contained the following contingencies:

4.1. Subsequent Buyer Offer To Purchase: The parties must be in agreement to accept an offer to purchase the Real Estate from a subsequent buyer, said agreement not to be unreasonably withheld.

4.2. First 12 Month Option. Notwithstanding any other terms and conditions, SELLER has the Option to buy-back the property for the purchase price of $385,000 plus 7% accrued interest on $335,000 from twelve months from the date of this closing.

4.3. If the Real Estate sells within thirty-six (36) months of this Closing (Subsequent Closing), proceeds of that sale shall be distributed as follows:

4.3.1. If the sale price can cover $335,000 plus 7% accrued interest on the $335,000 to the date of the Subsequent Closing, then Buyer shall receive $335,000 plus the dollar amount representing the accrued interest. If there are remaining proceeds of the sale, Buyer shall receive 25% of those remaining proceeds with Seller receiving 75% of those proceeds. In the event Seller receives any proceeds, Seller shall be responsible for all costs of the Subsequent Closing not to exceed any proceeds received by Seller. In the event Seller receives no proceeds from the Subsequent Closing, Buyer shall be responsible for all costs of the Subsequent Closing.

4.3.2. Additional Security. Seller grants a second mortgage (Second Mortgage) on the property that is the collateral for a mortgage with First Bank of Carmi (Additional Collateral). If Buyer receives a written bone fide offer of purchase in an arm's length transaction that is less than $335,000, then Seller shall have the right of refusal for 10 days from the date of the offer. If Seller does not exercise the right of first refusal and the offer is dated within the thirty-six (36) months of the date of this Closing, the Second Mortgage remains in full force and effect until such time as the Seller pays to Buyer the difference between the 1) offer and 2) $335,000 plus 7% accrued interest. During these thirty-six (36) months from the date of this Closing, Seller agrees that Buyer has the option to pay off the first mortgage on the Additional Collateral and assume the position of First Bank of Carmi on the Additional Collateral. Seller shall execute any documents required to effectuate this assumption in the event Seller chooses to exercise this option during the stated period.

4.3.3. Sale of Part of the Real Estate. If within thirty-six (36) months of this first closing, any partial sale of less than the total acreage shall be at the sole discretion of the Buyer. If Buyer agrees to sell less than the total acreage (estimated to be 4 acres) the proceeds shall be first applied against any accrued interest, then against the $335,000 balance. The remaining acreage shall be Buyer's until it is sold or the 36 month period lapses, whichever occurs first. If the remaining acreage is sold within 36 months of the first closing, the proceeds from this or any later sale within 36 months shall be applied against interest accrued on the $335,000 balance still owing at that time, then on the remaining $335,000 balance owed, if any, plus 25% of the total amount over $335,000 cumulatively collected from all partial sales, including interest paid. Any remaining proceeds after these payments shall be Seller's.

4.3. [sic] If the Real Estate sells after thirty-six (36) months of this Closing, all contingencies of this sale expires and Seller shall neither take nor be responsible for any conditions of the Subsequent Closing. Buyer assumes all risks and responsibilities of this Subsequent Closing. The Second Mortgage on the Collateral for a mortgage with First Bank of Carmi shall be released.

4.4. Buyer approving this contract within five (5) days after the execution of this Agreement by Seller.

4.5. Real Estate Taxes. Seller shall pay all applicable property taxes for a maximum of thirty-six (36) months from the date of closing or to the date of the Subsequent Closing, whichever is the shortest period of time.

4.6. Closing. Closing must take place by 7th of June, 2011.

Id. at 33-35 (underlining omitted).

[4] In August 2018, a promissory note (the 2018 Note) was executed, pursuant to which the Alton Parties agreed to pay Gary or his successor $164,140 in thirty-six monthly installments of $5,068.17 each, with a seven-percent annual interest rate. The obligation was secured by a mortgage (the 2018 Mortgage) on 196 acres of farmland in Knox County (the Knox County 196 Acres). We refer to the 2018 Note and the 2018 Mortgage collectively as the 2018 Transaction Documents.

[5] The 2018 Note authorized Gary to demand full or partial payment at any time and authorized the Alton Parties to make early payments. It also provided for the imposition of so-called penalties prior to the maturity date. See id. at 53 (“Borrower's [sic] agree that if the entire balance is not paid in full on or before August 22, 2019, Borrower's will incur a $20,000 penalty which shall then be added to the then balance of this note. If the entire balance is not paid in full after August 22, 2019 but on or before August 22, 2020, Borrower's will incur an additional $20,000 penalty which shall then be added to the then balance of this note. If the entire balance is paid by the time the final payment is due [i.e., August 22, 2021], Borrower's will be liable incur [sic] another additional $20,000 penalty which shall then be added to the then balance of this note.”).

[6] The 2018 Note also contained the following cognovit clause:²

[T]o secure the payment of this note, the undersigned hereby irrevocably authorizes and empowers any attorney at law of any court of record to appear for them in any court at any time and where and to the extent the laws of the State so permit, to confess a judgment without process against them, in favor of the legal holder, for such sum as may appear to be unpaid, with interest, costs, and reasonable attorney's fees, and to waive and release all errors and consent to immediate execution, hereby confirming that all that said attorney may do by virtue hereof, and hereby waive all right of appeal from said judgment.

Id. Finally, the 2018 Note authorized Gary to take a simultaneously executed quitclaim deed to the Knox County 196 Acres in lieu of foreclosure in the event of default. Id. at 54.

[7] Gary died in July 2021, and the Tussey Brothers informed Rex that they were Gary's successors in interest under the 6th Street Purchase Agreement and the 2018 Transaction Documents. Barbara assigned her interests in the 6th Street Purchase Agreement to the Tussey Brothers. In December 2021, a promissory note (the 2021 Note) was executed, pursuant to which the Alton Parties agreed to pay the Tussey Brothers $626,673, with a seven-percent annual interest rate, by July 1, 2022. The obligation was secured by a mortgage (the 2021 Mortgage) on the Knox County 196 Acres. We refer to the 2021 Note and the 2021 Mortgage collectively as the 2021 Transaction Documents. The 2021 Note authorized the Tussey Brothers to take a simultaneously executed quitclaim deed (the Quitclaim Deed) to the Knox County 196 Acres in lieu of foreclosure in the event of default, which they recorded in July 2022. The 2021 Note also contained a cognovit clause identical to the one in the 2018 Note.

[8] In September 2022, the Alton Parties filed a six-count complaint against the Tussey Brothers. Count I alleged that the Tussey Brothers fraudulently induced the Alton Parties to execute the 2021 Note by, among other things, misrepresenting that the Altons “remained liable under the 6th Street Purchase Agreement for a portion of the principal and all of the interest” and “characterizing it as a loan rather than a purchase of the 6th Street Property.” Id. at 21. Count II alleged that the Tussey Brothers engaged in constructive fraud with respect to the 2018 Transaction Documents and the 2021 Transaction Documents by, among other things, exerting “undue influence over Rex Alton who, due to his age and health conditions, suffered from decreased mental status.” Id. at 23. Count III sought a declaratory judgment that the forfeiture provisions in the 2018 Transaction Documents and the 2021 Transaction Documents are unenforceable. Count IV alleged that the 2021 Transaction Documents are illegal and invalid and should be rescinded because they require forfeiture of mortgaged property, and it further alleged that the Quitclaim Deed is also invalid. Count V alleged that the Tussey Brothers converted, i.e., knowingly or intentionally exerted unauthorized control over, the Knox County 196 Acres by recording the Quitclaim Deed in lieu of foreclosure. And Count VI sought to quiet title in the Knox County 196 Acres in the Alton Parties’ favor as against the Tussey Brothers based on the alleged illegality and invalidity of the Quitclaim Deed. The Alton Parties attached to their complaint copies of the 6th Street Purchase Agreement, the 2018 Transaction Documents, the 2021 Transaction Documents, and the Quitclaim Deed. They did not attach a copy of the Second Mortgage mentioned in the 6th Street Purchase Agreement.

[9] In November 2022, the Tussey Brothers filed an answer to the complaint and a two-count counterclaim. Count I was captioned as a complaint on promissory notes and alleged that the 6th Street Purchase Agreement was a loan, which the Altons failed to pay in full; that the Alton Parties had paid nothing on the 2018 Note; that the foregoing obligations were consolidated into the 2021 Note “as part of an agreement to extend the time for payment of the unpaid balance[s]”; and that the Alton Parties had failed to pay the 2021 Note. Id. at 111. Count II was captioned as a complaint to foreclose mortgage and alleged that the 2018 and 2021 Notes and Mortgages were subject to satisfaction through foreclosure and transfer of title to the Knox County 196 Acres.

[10] In December 2022, the Alton Parties filed their answer and affirmative defenses to the Tussey Brothers’ counterclaims. In their answer, the Alton Parties denied that they had “failed to repay the 2011 loan in full and are in default thereon” and admitted that they had “paid nothing on the 2018 loan” and had “failed to pay the 2021 Note.” Id. at 110, 111. Rex died in June 2023, and Avery Alton, as personal representative of his estate, was substituted as a party.

[11] In February 2024, the Alton Parties filed a motion for partial judgment on the pleadings on Counts III through VI of their complaint and Count I of the Tussey Brothers’ counterclaim. The conclusion of their supporting brief stated,

The 6th Street Purchase Agreement is, pursuant to its unambiguous terms, a real estate sales agreement, and not a promissory note. Accordingly, judgment as a matter of law should be entered in favor of the Alton Parties and against the Tussey Brothers on that portion of Count I of the Counterclaim that erroneously asserts a cause of action for breach of a promissory note in the amount of $335,000.00, which is the Purchase Price under the terms of the 6th Street Purchase Agreement.

The Alton Parties are further entitled to a declaratory judgment under Count III of their Complaint that the penalty provisions contained in the 2018 Note are unenforceable penalties and not enforceable liquidated damages provisions.

The Alton Parties are additionally entitled to a declaratory judgment that the Forfeiture Provisions and Quitclaim Deed are void as a matter of well-established law. This ruling additionally entitles the entry of judgment in favor of the Alton Parties and against the Tussey Brothers on Count IV (Illegality), [Count V (Conversion)], and Count VI (Quiet Title) of the Alton Parties’ Complaint.

Id. at 142-43.

[12] In March 2024, the Tussey Brothers filed a response in opposition to the Alton Parties’ motion for partial judgment on the pleadings, as well as a motion to convert that motion to a motion for summary judgment. In their response, the Tussey Brothers argued that a material issue of fact existed as to whether the 6th Street Purchase Agreement was a real estate sales contract or a promissory note, that the penalty provisions in the 2018 Note were enforceable, that the deed-in-lieu-of-foreclosure provisions in the 2018 and 2021 Notes were valid because the Alton Parties were already in default when they signed the Notes, and that there was no proof of the Tussey Brothers’ mens rea with respect to the conversion claim.

[13] In their motion to convert, the Tussey Brothers asserted that “several matters outside the pleadings ․ are necessary for the court to consider in order to understand the extensive and complex business dealings between the parties.” Id. at 231. In support, the Tussey Brothers designated their answers to the Alton Parties’ interrogatories and the affidavit of Tussey Oil Company administrative assistant and bookkeeper Cindy Hasler, to which they attached exhibits. Among the exhibits was what Hasler averred to be a copy of the Second Mortgage mentioned in the 6th Street Purchase Agreement, which was signed by the Altons in September 2011. The mortgage covers the Knox County 196 Acres, refers to the Altons as “Borrower” and to Gary and Barbara as “Lender,” and defines the obligation described in the 6th Street Purchase Agreement as a “Loan.” Appellants’ App. Vol. 3 at 153.

[14] In May 2024, the Alton Parties filed a response to the Tussey Brothers’ motion to convert and a motion to strike their designated evidence, which asserted that the evidence was inadmissible under Indiana's Dead Man's Statute, the parol evidence rule, and/or the hearsay rule. Later that month, the trial court issued orders denying the Tussey Brothers’ motion to convert and granting the Alton Parties’ motion to strike and motion for partial judgment on the pleadings. The order on the motion to convert is a summary ruling, and the order on the motion to strike states, “consideration of this extrinsic evidence is both substantively improper under Indiana's Dead Man's Statute and Parol Evidence Rule, in addition to being procedurally improper at this stage of the proceedings[.]” Appealed Orders at 1.

[15] The Tussey Brothers filed a motion to reconsider on the basis that the court's rulings had been made without considering their response to the motion to strike, which was filed on the same day that the rulings were issued. The trial court granted the motion to reconsider and then re-issued its prior order granting partial judgment on the pleadings, which reads in pertinent part as follows:³

[T]he Court holds and declares as follows: (i) the 6th Street Purchase Agreement is a conditional real estate contract, and not a promissory note as erroneously maintained by [the Tussey Brothers]; (ii) the Liquidated Damages provision contained within the 2018 Note constitutes an unenforceable penalty, and is thus unenforceable under Indiana law; [(iii)] the Forfeiture Provisions contained within the 2018 Note and 2021 Note are unenforceable as a matter of law, as the Forfeiture Provisions constitute impermissible pre-default waivers of the statutory right of redemption and cognovit agreements which attempt to allow a confession of judgment depriving the mortgagors of their statutory right of redemption; [(iv)] the Quitclaim Deed dated on or about December 3, 2021 and recorded with the Office of the Recorder of Knox County on July 6, 2022 ․ is void as a matter of law; [(v)] neither the [Tussey Brothers], nor their predecessors Gary Tussey and Barbara Tussey, have any ownership interest in the Knox County 196 Acres, other than as alleged mortgagees; [(vi)] quieting title to the Knox County 196 Acres; and [(vii)] declaring Alton, LLC, Rex Alton and Rita Alton, as husband and wife, as fee simple title to the Knox [County] 196 Acres.

Based on the Court's holdings and declarations, it is further ORDERED ADJUDGED and DECREED that Judgment be, and hereby is entered in favor of [the Alton Parties] and against [the Tussey Brothers], as to liability only with respect to Count V (Conversion) of [the Alton Parties’] Complaint. [The Alton Parties] may petition the Court for a damages hearing at a later date.

Based on the Court's holdings and declarations, it is further ORDERED ADJUDGED and DECREED that Judgment be, and hereby is entered in favor of [the Alton Parties] and against [the Tussey Brothers], as to Count I (Promissory Note) of the Counterclaim. Accordingly, [the Tussey Brothers] shall take nothing by way of Count I of their Counterclaim.

IT IS FURTHER ORDERED, ADJUDGED and DECREED that there is no just reason for delay and this Court expressly direct[s] the entry of judgment in favor of [the Alton Parties] and against [the Tussey Brothers] on Count III, Count IV, Count V, and Count VI of the Complaint and Count I of the Counterclaim in accordance with Rule 54(B) of the Indiana Rules of Trial Procedure.

Appealed Orders at 6-8 (footnote omitted). The trial court made no further rulings on either the motion to strike or the motion to convert.

[16] The Tussey Brothers now appeal. Additional facts will be provided below.

Discussion and Decision

Section 1 – The Tussey Brothers have failed to establish that the trial court abused its discretion in granting the Alton Parties’ motion to strike matters outside the pleadings, and thus they have failed to establish that the trial court should have treated the motion for partial judgment on the pleadings as a motion for summary judgment.

[17] Motions for judgment on the pleadings are governed by Indiana Trial Rule 12(C), which states,

After the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings. If, on a motion for judgment on the pleadings, matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.

“Pleadings consist of a complaint and an answer, a reply to any counterclaim, an answer to a cross-claim, a third-party complaint, an answer to a third-party complaint, and any written instruments attached to a pleading.” Davey Tree Expert Co. v. City of Indianapolis, 147 N.E.3d 354, 356 (Ind. Ct. App. 2020). “ ‘Matters outside the pleadings’ are those materials that would be admissible for summary judgment purposes, such as depositions, answers to interrogatories, admissions, and affidavits.” Holmes v. Celadon Trucking Servs. of Ind., Inc., 936 N.E.2d 1254, 1256 (Ind. Ct. App. 2010).

[18] Here, the Tussey Brothers presented matters outside the pleadings to the trial court, which excluded them pursuant to the Alton Parties’ motion to strike. The Tussey Brothers argue that the trial court erred in granting the motion to strike and in denying their motion to convert the Alton Parties’ motion for partial judgment on the pleadings into a motion for summary judgment. We review a trial court's ruling on a motion to strike for an abuse of discretion. Halterman v. Adams Cnty. Bd. of Comm'rs, 991 N.E.2d 987, 989 (Ind. Ct. App. 2013). “We will reverse only when the decision is clearly against the logic and effect of the facts and circumstances.” Id.

[19] We first observe that the Tussey Brothers make no discernible argument in their initial brief regarding the trial court's striking of their answers to the Alton Parties’ interrogatories. Accordingly, that issue is waived. D.H. v. A.M.J. v. Whipple, 103 N.E.3d 1119, 1129 (Ind. Ct. App. 2018), trans. denied.⁴ Also, the Tussey Brothers make only a passing reference to Cindy Hasler's affidavit, with no citation to authority to support their contention that the trial court should have “taken note” of it. Appellants’ Br. at 27. That issue is waived as well. See Shields v. Town of Perrysville, 136 N.E.3d 309, 312 n.2 (Ind. Ct. App. 2019) (citing Ind. Appellate Rule 46(A)(8)(a), which requires that each contention be supported by cogent reasoning and citation to authority). And because the Tussey Brothers have waived that argument, we conclude that they have also waived their argument regarding the Second Mortgage mentioned in the 6th Street Purchase Agreement, which was attached as an exhibit to sponsoring witness Hasler's affidavit.

[20] In sum, the Tussey Brothers have failed to establish that the trial court abused its discretion in granting the Alton Parties’ motion to strike matters outside the pleadings, and thus they have failed to establish that the trial court should have treated the motion for partial judgment on the pleadings as a motion for summary judgment. We therefore affirm the trial court on those points.

Section 2 – In most respects, the trial court erred in granting the Alton Parties’ motion for partial judgment on the pleadings.

[21] We now address the Tussey Brothers’ argument that the trial court erred in granting the Alton Parties’ motion for judgment on the pleadings. “Judgment on the pleadings is available where it is clear from the face of the pleadings that one party is entitled to prevail as a matter of law.” Davey, 147 N.E.3d at 356 (citing, inter alia, Ind. Trial Rule 12(C)). “We review the trial court's ruling on a motion for judgment on the pleadings de novo.” Id.⁵

[22] “When reviewing a Trial Rule 12(C) motion, we may look only at the pleadings and any facts of which we may take judicial notice[.]” Hendricks Cnty. v. Green, 120 N.E.3d 1118, 1122 (Ind. Ct. App. 2019), trans. denied. “[W]e deem the moving party to have admitted ‘all facts well pleaded, and the untruth of his own allegations which have been denied.’ ” Shepherd v. Truex, 823 N.E.2d 320, 324 (Ind. Ct. App. 2005) (quoting New Trend Beauty Sch., Inc. v. Ind. State Bd. of Beauty Culturist Exam'rs, 518 N.E.2d 1101, 1103 (Ind. Ct. App. 1988)). “[A] moving party, for the purpose of the motion, concedes only the accuracy of the factual allegations in his adversary's pleadings; he does not admit assertions which constitute conclusions of law.” Eskew v. Cornett, 744 N.E.2d 954, 957 (Ind. Ct. App. 2001), trans. denied. “[W]here allegations of a pleading are inconsistent with terms of a written contract attached as an exhibit, the terms of the contract, fairly construed, must prevail over an averment differing therefrom.” Id. “All reasonable inferences are drawn in favor of the nonmoving party and against the movant.” Shepherd, 823 N.E.2d at 324. “A judgment on the pleadings is proper only when there are no genuine issues of material fact and when the facts shown by the pleadings clearly entitle the moving party to judgment.” Circle Centre Dev. Co. v. Y/G Ind., L.P., 762 N.E.2d 176, 178 (Ind. Ct. App. 2002), trans. denied.⁶

[23] A notable wrinkle in this case is that a motion for judgment on the pleadings is typically filed by the defendant in an action, rather than the plaintiff. And here, the Tussey Brothers denied most of the allegations in the Alton Parties’ complaint, whereas the Alton Parties admitted many of the allegations in Count I of the Tussey Brothers’ counterclaim. With the allegations denied by the Tussey Brothers redacted, the Alton Parties’ complaint reads in pertinent part as follows:⁷

3. This Complaint is based upon certain transactions relating to [the Knox County 196 Acres].

․.

5. On June 7, 2011, [Gary and Barbara entered into the 6th Street Purchase Agreement].

․.

15. Gary K. Tussey passed away on July 29, 2021.․ Gary Tussey's spouse Barbara Tussey is still living.

․.

19. On December 3, 2021, [the Alton Parties] ․ executed a promissory note and mortgage in favor of [the Tussey Brothers] in the principal amount of Six Hundred Twenty-Six Thousand Six Hundred and Seventy-Three Dollars ($626,673.00).․

․.

21. The 2018 Transaction Documents and the 2021 Transaction Documents contain provisions that required [the Alton Parties] to execute a quitclaim deed in favor of the lender at the time the mortgage was executed, and permitted the recording of said deed without the respective lender following the mortgage foreclosure proceedings required by Indiana law.

․.

23. On July 6, 2022, [the Tussey Brothers] recorded a quitclaim deed to the Knox County 196 Acres (hereafter “Quitclaim Deed”) that had been executed by [the Alton Parties] as part of the 2021 transaction.․

24. [The Tussey Brothers] have not filed foreclosure proceedings to foreclose on the Knox County 196 Acres.

․.

56. The 2021 Transaction Documents included the following provision:

In the event of default, Borrower agrees that Lender may choose to take the property described in Exhibit A, attached hereto, in lieu of foreclosure, for complete satisfaction of Borrowers indebtedness, solely at Lenders option.

Appellants’ App. Vol. 2 at 17-26.

[24] The Alton Parties admitted the following allegations set forth in Count I of the Tussey Brothers’ counterclaim:

1. [The Tussey Brothers] are the children of Gary and Barbara Tussey.

2. Gary Tussey passed away on July 29, 2021.

․.

7. [O]n August 29, 2018, Gary K. Tussey loaned [the Alton Parties] the principal sum of $164,140.00, with interest at 7% per annum, pursuant to a Promissory Note ․.

8. Pursuant to the 2018 Promissory Note, [the Alton Parties] were to pay $5,068.17 in 36 monthly installments, beginning September 22, 2018, with final payment of all unpaid principal, interests and costs due on August 22, 2021.

9. [The Alton Parties] have paid nothing on the 2018 loan.

․.

11. [The Alton Parties] did not pay the 2018 loan on or before August 22, 2019.

․.

13. [The Alton Parties] did not pay the 2018 loan on or before August 22, 2020.

․.

15. [The Alton Parties] did not pay the 2018 loan by the due date of August 22, 2021.

․.

18. [The Alton Parties] owe the entire principal balance [and] interest [on] the 2018 loan.

․.

21. [The Alton Parties] have failed to pay the 2021 Note.

Id. at 109-11.

[25] With all of this in mind, we now address the counts for which the Alton Parties sought judgment on the pleadings.

Count III of complaint

[26] In their motion for partial judgment on the pleadings, the Alton Parties argued that they are entitled to a declaratory judgment that the forfeiture provisions in the 2018 and the 2021 Transaction Documents and the Quitclaim Deed are void. On appeal, the Alton Parties argue, and the Tussey Brothers do not dispute, that the cognovit clauses are void as a matter of law. For their part, the Tussey Brothers point out that the forfeiture provisions in the 2018 Transaction Documents were never enforced. They also argue that the Alton Parties were in default on the 2018 Note when the 2021 Transaction Documents were executed, and thus a genuine issue of material fact exists regarding whether the parties could agree to a deed-in-lieu of foreclosure provision at that point. See GMAC Mortg., LLC v. Dyer, 965 N.E.2d 762, 764 (Ind. Ct. App. 2012) (quoting 4 Powell on Real Property § 37.44[1] (Michael Allan Wolf ed., 1997) (“The parties cannot promise in the original note and mortgage documents to resolve a default in this manner [i.e., via a deed in lieu of foreclosure]. Any such provision would be an unacceptable clog on the mortgagor's equity of redemption. After default occurs, however, the parties are permitted to resolve their relationship by means of a deed in lieu of foreclosure.”)). We agree. Consequently, a genuine issue of material fact exists regarding the validity of the Quitclaim Deed.

[27] In their motion, the Alton Parties also argued that they are entitled to a declaratory judgment that the penalty provision in the 2018 Note is unenforceable. The Tussey Brothers observe that the Alton Parties did not seek relief from the provision in their complaint, and they argue that the Alton Parties “are not now entitled to judgment on the pleadings on a claim that they never pled.” Appellants’ Br. at 22.⁸ But the Tussey Brothers did not raise this argument before the trial court, and they clearly litigated the issue by consent.

[28] “Whether a contract provision providing for liquidated damages is an unenforceable penalty is a question of law for the court to decide.” Am. Consulting, Inc. v. Hannum Wagle & Cline Eng'g, Inc., 136 N.E.3d 208, 211 (Ind. 2019). As this Court explained in Weinreb v. Fannie Mae,

A liquidated damages clause provides for the forfeiture of a stated sum of money upon a breach of contract without proof of damages. Liquidated damages clauses are generally enforceable where the nature of the agreement is such that damages for breach would be uncertain, difficult, or impossible to ascertain. While liquidated damages clauses are ordinarily enforceable, contractual provisions constituting penalties are not. The distinction between a penalty provision and one for liquidated damages is that a penalty is imposed to secure performance of the contract and liquidated damages are to be paid in lieu of performance. To determine whether a stipulated sum payable upon breach of contract constitutes liquidated damages or a penalty, the facts, the intention of the parties, and the reasonableness of the stipulation under the circumstances of the case are all to be considered. The use of the words “damages,” “penalty,” “forfeiture,” and “liquidated damages” are not conclusive, but should be considered in connection with other provisions in the contract to determine the nature of the provisions. However, despite the plethora of abstract tests and criteria for the determination of whether a provision is one for a penalty or liquidated damages, there are no hard and fast guidelines to follow.

993 N.E.2d 223, 232-33 (Ind. Ct. App. 2013) (citations omitted), trans. denied.

[29] Here, the Alton Parties and the Tussey Brothers were parties to an installment contract, and thus damages would have been easy to determine.⁹ Moreover, the provision clearly penalized the Alton Parties for not paying off the loan before the maturity date. The use of the word “penalty” is not alone conclusive, but the term accurately describes the nature of the sums stipulated in the 2018 Note. Therefore, we agree with the trial court that the penalty provision is unenforceable.

Counts IV through VI of complaint

[30] Based on the foregoing, we conclude that the Alton Parties are not entitled to judgment on the pleadings on Counts IV through VI of their complaint regarding the alleged illegality of the 2021 Transaction Documents and the Quitclaim Deed, the Tussey Brothers’ alleged conversion of the Knox County 196 Acres, and the Alton Parties’ request to quiet title to that property.

Count I of counterclaim

[31] The crux of the parties’ dispute regarding Count I of the Tussey Brothers’ counterclaim is whether a genuine issue of material fact exists regarding the nature of the 6th Street Purchase Agreement, i.e., whether it is a promissory note evidencing a loan, as the Tussey Brothers allege, or a real estate sales contract, as the Alton Parties claim. “A promissory note is a written promise by one person to pay another person, absolutely and unconditionally, a certain sum of money at a specific time.” Smith v. Union State Bank, 452 N.E.2d 1059, 1062 (Ind. Ct. App. 1983). And a real estate sales contract is exactly what it sounds like: a contract for the sale of real estate. E.g., Ebersold v. Wise, 412 N.E.2d 802, 805-06 (Ind. Ct. App. 1980).

[32] We have already determined that the Tussey Brothers failed to establish that the trial court abused its discretion in striking the Second Mortgage mentioned in the agreement, which was the primary basis for their position that the 6th Street Purchase Agreement is a promissory note. But they also claim that the agreement is ambiguous on its face as to whether it is a promissory note or a real estate contract. “Whether contract terms are ambiguous is a question of law for the determination of the court.” Crowe v. Boofter, 790 N.E.2d 608, 610-11 (Ind. Ct. App. 2003). “[A] contract is not considered ambiguous merely because a controversy exists; rather, ambiguity will be found when a contract is susceptible to more than one interpretation as measured by the standard of whether reasonable minds could differ as to its meaning.” Id. at 611.

[33] The Tussey Brothers pose a series of rhetorical questions about the terms of the 6th Street Purchase Agreement, which they characterize as ambiguities regarding the nature of the agreement. See Reply Br. at 7 (“If, for instance, it is merely a sale of real estate from a seller to a buyer, why are there contingencies? Why are the parties required to resell the property to a ‘subsequent buyer’ on whom they must agree? Why does the Seller receive 75% of any subsequent sale proceeds that exceed the purchase price and 7% interest? Why is additional security granted by way of a second mortgage on other real property? Why does Seller continue to pay the property taxes? Why does Seller agree to continue mowing and to do debris removal, to pay all fees and costs associated with the property, to keep the property insured? And why is Seller able to receive the rents and fees on property supposedly sold to Buyer?”).

[34] Contingencies in real estate sales contracts are not uncommon, as even unsophisticated residential home buyers could attest. But reasonable minds could view some of the foregoing terms as inconsistent with an intent to transfer fee simple ownership of the real estate at issue in exchange for an agreed-upon price.¹⁰ Consequently, we reverse the trial court's ruling in favor of the Alton Parties on this count and remand for further proceedings.

Conclusion

[35] We affirm the trial court's rulings on the Alton Parties’ motion to strike and the Tussey Brothers’ motion to convert. We also affirm the trial court's determination that the penalty provision of the 2018 Note and the cognovit provisions of the 2018 Note and the 2021 Note are unenforceable. In all other respects, we reverse the trial court's ruling on the Alton Parties’ motion for partial judgment on the pleadings and remand for further proceedings.

[36] Affirmed in part, reversed in part, and remanded.

FOOTNOTES

1.   For ease of reference, we refer to the parties and others by first name where appropriate below.

2.   A cognovit clause is “[a] contractual provision by which a debtor agrees to jurisdiction in certain courts, waives notice requirements, and authorizes the entry of an adverse judgment in the event of a default or breach.” Cognovit Clause, Black's Law Dictionary (12th ed. 2024). “Cognovit clauses are outlawed or restricted in most states.” Id. This includes Indiana. See Ind. Code § 34-6-2-22, Ind. Code chs. 34-54-3, -4.

3.   The Tussey Brothers assert, and the Alton Parties do not dispute, that the order is a verbatim adoption of the Alton Parties’ proposed order. Although this practice is not prohibited, it “weakens our confidence as an appellate court that the findings are the result of considered judgment by the trial court.” Safety Nat'l Cas. Co. v. Cinergy Corp., 829 N.E.2d 986, 993 n.6 (Ind. Ct. App. 2005), trans. denied.

4.   The Tussey Brothers do address the issue in their reply brief in response to the Alton Parties’ discussion of the issue in their appellees’ brief, but we have stated that “any argument an appellant fails to adequately raise in their initial brief is waived for appeal.” D.H., 103 N.E.3d at 1129 (citing Felsher v. Univ. of Evansville, 755 N.E.2d 589, 593 n.6 (Ind. 2001)).

5.   Consequently, we disagree with the Alton Parties’ assertion that the Tussey Brothers were required to state the facts in the light most favorable to the judgment. See Ind. Appellate Rule 46(A)(6)(b) (providing that appellant shall state facts “in accordance with the standard of review appropriate to the judgment or order being appealed”) (emphasis added); Sam & Mac, Inc. v. Treat, 783 N.E.2d 760, 763 n.4 (Ind. Ct. App. 2003) (stating that under de novo standard of review for summary judgment rulings, “we must look at all of the facts designated to the trial court, not just the facts most favorable to the judgment”) (citing Ind. Appellate Rule 46(A)(6)(b)).

6.   The Tussey Brothers did not mention the “untruth” and “material fact” concepts in their trial court filings, and the Alton Parties contend that they have waived any consideration of them by mentioning them for the first time on appeal. We decline to find waiver in this instance because those concepts are essential to a proper application of our standard of review. See Jenkins v. Jenkins, 17 N.E.3d 350, 352 (Ind. Ct. App. 2014) (stating that when prima facie error rule applies because appellee failed to file brief, “we are obligated to correctly apply the law to the facts in the record to determine whether reversal is required”).

7.   The Alton Brothers have not challenged the validity of the Tussey Brothers’ denials, and vice versa.

8.   The Tussey Brothers do not argue that they did not enforce this provision against the Alton Parties.

9.   Citing Hasler's affidavit, the Tussey Brothers focus on Gary's purported “lost opportunity cost” for lending money to the Alton Parties at a comparatively low interest rate. Appellants’ Br. at 22-23. But the Tussey Brothers failed to establish that the trial court abused its discretion in striking the affidavit, and they cite no authority for the proposition that lost opportunity cost is a valid measure of contract damages.

10.   Alluding to paragraph 8 of their complaint, the Alton Parties assert, “Consistent with the unambiguous terms of the parties’ sale agreement, a deed transferring the real estate to the Tusseys was recorded after the execution of the [6th Street] Purchase Agreement.” Appellees’ Br. at 23 (citing, inter alia, Appellants’ App. Vol. 2 at 18). But the Tussey Brothers denied this allegation in their answer to the complaint, Appellants’ App. Vol. 2 at 104, and the Alton Parties do not point to any written instrument attached to their complaint that contradicts this denial.

Crone, Senior Judge.

Chief Judge Altice and Judge Vaidik concur. Altice, C.J., and Vaidik, J., concur.