Real Estate Network, Inc., Appellant-Plaintiff v. << (2025)

MEMORANDUM DECISION

Case Summary

[1] Real Estate Network, Inc. (“REN”), and Charity Tabernacle Apostolic Church, Inc. (“the Church”), entered into a land contract pursuant to which the Church agreed to purchase land from REN by making set payments over 180 months, with a balloon payment due at the end of the contract term. After the term ended, REN filed a breach-of-contract complaint against the Church and alleged that the Church had failed to make all the payments due under the contract. Following a bench trial, the court applied a down payment of $17,500, which represented both a $12,500 payment and a $5,000 credit provided for under a prior contract; reduced the purchase price by the amount of the down payment; and concluded that the Church had overpaid by approximately $600.

[2] REN appealed, and this Court held that the trial court had properly applied $10,000 of the $12,500 as a down payment to reduce the outstanding balance of the contract, and we instructed the court to apply the other $2,500 of the $12,500 as a prepayment. This Court also held that the court had erred when it applied the $5,000 credit as a down payment. As such, this Court remanded with instructions for the court to recalculate the payments the Church had made. On remand, the court subtracted the overpayment from the $5,000 and determined that the Church owed REN approximately $4,400. REN filed a motion to correct error, which the trial court denied. REN now appeals the court's amended order. We reverse and remand with instructions.

Facts and Procedural History

[3] On August 28, 2003, REN and the Church entered into a “Lease with Option to Purchase” (the “First Contract”), pursuant to which the Church would lease property from REN.¹ Real Estate Network, Inc. v. Charity Tabernacle Apostolic Church, Inc., No. 23A-CC-569, 2024 WL 1110231 at *1 (Ind. Ct. App. Mar. 14, 2024) (mem.) (“REN 1”). That agreement provided that, in exchange for $12,500, the Church would have the option to purchase the property for $175,000. See id. The contract also included a clause titled “Other provisions,” and stated that a credit of $5,000 would be given to the Church if certain financing conditions were met. Id. at *2.

[4] Then, on September 1, the parties entered into another contract, which was a “Land Contract” (the “Second Contract”). Id. Pursuant to that contract, the parties agreed that the Church would purchase the property for $135,000 and that the Church would make a down payment of $10,000, leaving a balance of $125,000. The Second Contract also “(1) established an interest rate, (2) called for monthly payments of principal and interest, and (3) obligated [the Church] to make one final balloon payment to [REN], specifying that the ‘the unpaid balance of the [p]urchase [p]rice [was] due on August 31, 2018[.]’ ” Id. (some alterations in original, record citations omitted). The Second Contract also allowed the Church to prepay any or all of the purchase price. And the Second Contract provided that there would be a closing at which the Church would pay the unpaid balance, and, in exchange, REN would deliver a warranty deed.

[5] On April 7, 2020, REN filed a complaint against the Church. In Count 1, REN alleged that the Church was in breach of the First Contract when it failed to make certain monthly payments and, as a result, that REN was entitled to possession of the property. In Count 2, REN alleged that the Church had breached the terms of the Second Contract when it failed to make certain payments and that REN was entitled to foreclose on the property. The Church filed its answer and, as an affirmative defense, alleged that it “had satisfied the terms of the contract.” Id. at *3.

[6] REN filed a motion for summary judgment and argued that the Church had failed to pay the balance of the purchase price that was due on August 31, 2018. The Church responded that it had paid more than was required under the Second Contract. The court denied REN's motion. At a subsequent bench trial, REN again argued that the Church had failed to make the balloon payment and that it was in breach of the contracts. After the bench trial, the court entered its findings of fact and conclusions thereon. In those findings, the court found that the Second Contract controlled the parties’ respective interests in the property. The court then found for the Church on REN's breach of contract and foreclosure claim based on its determination that the Church had paid REN in full.

In so determining, the trial court referred to the purchase price of $135,000 set forth in the Second Contract. The trial court provided a calculation indicating that the outstanding balance was reduced by $12,500, which the court referred to as a “[p]ayment made to exercise [the] option to purchase” under the First Contract. The trial court also indicated that the balance was reduced by a $5,000 “[c]redit provided in ‘Other Provisions’ ” in the First Contract. The trial court subtracted these amounts—a total of $17,500—from the purchase price, thus regarding the “[b]alance due in installment payments” as a balance of $117,500. Regarding the $117,500, the trial court stated that it “accept[ed] the amortization schedule submitted by [Church]” and that, based on that amortization schedule, [Church] had actually overpaid [REN] by $617.74.

Id. at *4 (alterations in original, record citations omitted).

[7] REN appealed the court's judgment. This Court noted that neither party had challenged the court's conclusion that the Second Contract applied and concluded that

the payment and purchase price provisions [of the Second Contract] are clear and unambiguous. That is, [the Church] was to pay [REN] a total of $135,000. The contract contemplated an initial down payment of $10,000. Thereafter, Buyer would pay monthly installments until a balloon payment was due on August 31, 2018. That payment would consist of “[t]he unpaid [p]urchase [p]rice, accrued interest, and all other amounts due” under the Second Contract. The Second Contract specifically allowed [the Church] to make prepayments toward the outstanding balance: “[the Church] may prepay the outstanding principal balance of the [p]urchase [p]rice, in whole or in part, at any time without premium or penalty.” Id. Regarding prepayment, the Second Contract specified that any partial prepayment “shall be applied to the reduction of the principal installments due and payable ․, in the inverse order of maturity.” Id.

Id. at *6 (some alterations in original, record citations omitted).

[8] This Court determined that the Church had paid $12,500 to REN at the time the Second Contract was made effective, which the trial court had applied to the purchase price. This Court held that that was not in error. However, this Court held that the trial court had erred when it applied the $5,000 credit toward the purchase price because it was a credit that was discussed in the First Contract and was “outside the four corners of the Second Contract.” Id. at *7. Accordingly, this Court held that the “trial court's determination that [the Church] overpaid [REN] by $617.74 was based upon the erroneous application of the $5,000 credit” and reversed the court's order. Id. This Court then remanded with instructions for

the trial court to recalculate the payments made by [the Church] under the Second Contract by applying the $12,500 payment as follows: (1) a $10,000 down payment under Section 2 of the Second Contract and (2) a $2,500 prepayment of principal under Section 3(d). To the extent that the recalculation of payments affects other aspects of the judgment, such as [the Church's] claim of satisfaction and [REN's] request for costs and attorney's fees, we instruct the trial court to address all ancillary issues—through holding additional hearings, as necessary—and issue an amended judgment consistent with this opinion.

Id. (record citation omitted).

[9] On remand, the trial court entered its amended findings of fact, conclusions thereon, and order. The court stated that, “[p]er the Court of Appeals’ decision, the $5,000 credit in the lease with option contract cannot be used toward the purchase price established in the land contract.” Appellant's App. Vol. 2 at 19. As such, the court concluded that “there is a shortage due to [REN] in the amount of $4,385.26,” which the court calculated by subtracting the $614.74 ² overpayment from the $5,000 credit. Id. The court further concluded that “both parties have had a long history of misunderstanding and mistake” and, accordingly, did not grant the foreclosure. Id. The court ordered the Church to pay the balance due to REN, at which time REN “is to deliver to [the Church] a Warranty Deed[.]” Id. And the court concluded that, “due to the lack of any default by either party, neither party is entitled to any costs, expenses, or attorney's fees.” Id.

[10] Thereafter, REN filed a motion to correct error and alleged that the court's order on remand was “not consistent with” this Court's opinion. Id. at 59. In particular, REN asserted that this Court had concluded that re-amortization was necessary but that the trial court “failed to re-amortize the debt due to REN[.]” Id. REN argued that, per the Second Contract, the payments should have been as follows: the first twenty-four payments at $1,000 and the next 156 payments at $12,500, which results in “a balloon payment due in August 2018 in the amount of $35,159.82 plus interest” from which the court should subtract the $2,500 prepayment, for a total amount owed of $32,659.82. Id. at 60. REN asserted that, because the Church owed that money, it was in breach of the contract and the court should enter a judgment of foreclosure and award REN attorney's fees.

[11] Following a hearing at which the parties presented oral argument, the court issued its order denying REN's motion to correct error. The court found that the Church “made tender of the amount due” and ordered REN to deliver a warranty deed to the Church. Id. at 23. The court also found that, “due to the lack of default of either party, the foreclosure demanded by [REN] is denied and neither party is entitled to any costs, expenses, or attorney fees.” Id. This appeal ensued.

Discussion and Decision

[12] REN appeals the trial court's amended order. Here, on remand, the trial court issued amended findings of fact and conclusions thereon. In such cases, we employ a two-tiered standard of review:

[W]e determine whether the evidence supports the trial court's findings, and we determine whether the findings support the judgment. We will not disturb the trial court's findings or judgment unless they are clearly erroneous. Findings of fact are clearly erroneous when the record lacks any reasonable inference from the evidence to support them, and the trial court's judgment is clearly erroneous if it is unsupported by the findings and the conclusions which rely upon those findings. In determining whether the findings or judgment are clearly erroneous, we consider only the evidence favorable to the judgment and all reasonable inferences to be drawn therefrom.

Infinity Prods., Inc. v. Quandt, 810 N.E.2d 1028, 1031-32 (Ind. 2004) (quoting Bussing v. Ind. Dep't. of Transp., 779 N.E.2d 98, 102 (Ind. Ct. App. 2002) (citations omitted), trans. denied.).

[13] REN contends that the court clearly erred when it issued its amended findings and conclusions because those findings “fails to conform” to this Court's opinion in REN 1. Appellant's Br. At 10. In particular, REN asserts that, contrary to this Court's opinion, the trial court on remand wrongly applied the $2,500 prepayment at the beginning of the principal payments as opposed to the end as required by the Second Contract, “failed to re-amortize the debt,” “ignored the principles of amortization,” and, “merely added the $5,000 to the incorrectly calculated ‘overpayment.’ ” Id. And REN maintains that “adding the $5,000 to the amount financed at 9.5% at the beginning of the debt results in an accumulated debt” different than $4,000 as found by the trial court. Id. We agree.

[14] In the court's original order, the trial court found that the Church had made a down payment in the amount of $17,500. Accordingly, the court found that the amount to be financed was $117,500, which equates to the purchase price of $135,000 minus the $17,500 down payment. The court then amortized the $117,500 pursuant to the terms provided for in the Second Contract and concluded that the Church had overpaid by approximately $600. Then, in REN 1, this Court both found that the court had erred when it applied the $5,000 credit to the down payment and specifically instructed the court to recalculate the payments by applying a $10,000 down payment and then adding the $2,500 prepayment under Section 3(d) of the Second Contract. And Section 3(d) clearly states that any prepayments “shall” be applied “in the inverse order of maturity,” meaning that the prepayment should have been credited to the final installment of the principal not the initial one. Appellant's App. Vol. 2 at 30. As a result, the court should have amortized a loan amount of $125,000 ($135,000 purchase price minus the $10,000 down payment), determined the amount owed under the balloon payment, and then subtracted the $2,500 from that amount.

[15] However, on remand, the court did not re-amortize the debt based on a financed amount of $125,000 and then subtract the $2,500. Instead, it kept the same amortization schedule that was calculated with a $117,500 loan and then simply subtracted the $5,000 credit from the end amount. By doing so, the court failed to account for the interest that the extra financed amount would have accrued over 180 payments. Stated differently, a loan of $125,000 amortized at 9.5% interest over 180 payments will accrue more in interest than a loan of $117,500 amortized over the same terms. Indeed, in REN 1, this Court recognized that the $17,500 “down payment” as found by the trial court “reduced the purchase price, thus resulting in the accrual of less interest.” REN 1, 2024 WL 1110231, at * 1 (emphasis added).

[16] Had the court amortized the loan with the proper financed amount and then subtracted the prepayment from the amount owed under the balloon payment, the amount owed by the Church would change. We therefore agree with REN that the court's order on remand is inconsistent with this Court's opinion in REN 1, and we reverse that order. However, as both parties presented the trial court with amortization calculations that result in different amounts owed, we cannot, as REN asks, determine the amount that the Church owes. It will be the responsibility of the trial court, as fact-finder, to determine which, if either, amortization calculation is correct. As such, we remand with instructions for the court to re-amortize a $125,000 loan consistent with the payments and interest as provided in the Second Contract and then subtract $2,500 from the final balloon payment and determine how much, if any, the Church may owe.³ The court may then decide whether to award attorney's fees or grant the foreclosure.

Conclusion

[17] The trial court erred when it failed to re-amortize the loan based on the correct loan amount. We therefore reverse the court's order and remand with instructions to re-amortize the loan, subtract the $2,500 prepayment from the final balloon payment, and calculate how much the Church has paid to REN.

[18] Reversed and remanded with instructions.

FOOTNOTES

1.   James Chalfant originally entered into the contract with the Church. Chalfant owned the property at that time. However, shortly after signing the contract, he transferred the property to REN, which is a corporation owned by Chalfant. Chalfant does not participate in this appeal in his personal capacity.

2.   This Court's opinion in REN 1 stated that the original trial court order found that the Church had overpaid by $617.74, but the court on remand subtracted $614.74 instead of $617.74.

3.   REN also contends that the court erred when it did not enter a decree of foreclosure or award attorney's fees. Since we are remanding with instructions for the court to re-amortize the debt and determine the exact amount, if any, that the Church owes, we are not able to determine whether or to what extent the Church may be in default. As such, we decline to address these arguments at this time.

Bailey, Judge.

Judges Brown and Weissmann concur. Brown, J., and Weissmann, J., concur.