WATERS v. FLEMING (2025)

MEMORANDUM DECISION

Case Summary

[1] In April of 2023, Jacob and Angela Waters (collectively, the “Waterses”) sold a residence to Todd and Judy Fleming (collectively with the Fleming Family Trust, the “Flemings”). The Waterses knew the septic system was defective prior to listing the residence for sale and disclosed as much in the listing. Further, a hearing had been scheduled for two days after the closing, at which Hartford City (the “City”) was to consider whether to extend the City's sewage hookup to the residence. As part of the purchase agreement, the parties agreed that the Waterses would place $15,000.00 in escrow (the “Escrow Funds”), of which the Flemings would receive either $3500.00, if required to hook up to the City's sewage system, or the full $15,000.00, if required to repair or replace the existing septic system. After the City failed to make a decision as to whether it would extend sewage hookup to the residence, the Flemings contracted to replace the septic system. The Waterses, however, failed to approve disbursement of the Escrow Funds to the Flemings.

[2] On May 15, 2024, the Flemings filed the underlying lawsuit, alleging that the Waterses had breached the purchase agreement. On August 29, 2024, the Flemings moved for partial summary judgment. Following a hearing, the trial court granted the Flemings’ request for partial summary judgment, ordered release of the Escrow Funds to the Flemings, and awarded the Flemings $1500.00 in additional damages and $15,004.00 in attorney's fees. The Waterses contend that the trial court erred in granting partial summary judgment to the Flemings. Because we disagree, we affirm. We also conclude that pursuant to the terms of the parties’ purchase agreement, the Flemings are entitled to an award of appellate attorney's fees and remand the matter to the trial court for the calculation of said fees.

Facts and Procedural History

[3] Prior to April of 2023, the Waterses owned a residence in Hartford City. In early April, they listed the residence for sale. On April 5, 2023, the Waterses disclosed that the septic system was defective and that a purchaser “would more than likely have to upgrade the septic” if the City did not move forward with a potential sewage-hookup project. Appellants’ App. Vol. II p. 68. In the disclosure, the Waterses stated that the septic system “does not have proper leach field per [B]lackford [C]ounty ordinance.” Appellants’ App. Vol. II p. 68. The Waterses further stated that

We currently are in litigation with former owner pertaining to the septic system. They did not disclose the info to us about the septic prior. However, the [C]ity is potentially connecting [C]ity sewage here and there is a vote in [sic] April 26th to decide if that will happen. If they do you will have to hook into that. If they don't you would more than likely have to upgrade the septic.

We have never had any issues with the septic, it just does not meet [B]lackford [C]ounty ordinance.

We are willing to negotiate with buyer on price, or potentially offer money back at closing for [C]ity hookup or for septic system upgrade.

Appellants’ App. Vol. II p. 68.

[4] On or about April 8, 2023, the parties entered into a purchase agreement for the residence. As part of the purchase agreement, the parties agreed to Amendment #1, which provides as follows: “If [C]ity sewage hookup is required seller to pay $3,500 at closing in form of cashier's check. If septic system update is required instead of the [C]ity hookup then seller to pay $15,000 at closing in form of cashier's check.” Appellants’ App. Vol. II p. 71. Given that the City was scheduled to decide whether it would offer sewage hookup to the residence two days after closing, the parties agreed that the $15,000.00 would be held in escrow. For reasons that are unclear in the record, the City did not make a decision regarding sewage hookup on April 26, 2023.

[5] In mid-November, a representative of the title company asked the parties and their representatives about when the Escrow Funds should be disbursed. On November 17, 2023, Jacob responded with an acknowledgment that the City had not made a decision on extending sewage hookup to the residence and had no timetable to do so. Jacob indicated that he “would be willing to split the $15,000 50/50[,]” an offer that was rejected by the Flemings. Appellants’ App. Vol. II p. 87. After the Flemings rejected Jacob's offer, the Waterses sent a letter to the Flemings’ representative stating that “[s]ince your clients declined options favorable to them we will not negotiate the matter further, nor will we release any funds until work is completed and is appropriately verified.” Appellants’ App. Vol. II p. 92.

[6] On January 22, 2024, the Flemings received a quote to replace the septic system for $16,500.00. On January 31, 2024, the Blackford County Health Department issued a “septic permit” for the replacement of the septic system. Appellants’ App. Vol. II p. 93. The septic system replacement was completed in the summer of 2024.

[7] On May 15, 2024, the Flemings filed the underlying lawsuit against the Waterses, alleging breach of contract and conversion. On August 29, 2024, the Flemings moved for partial summary judgment. In support of their motion, the Flemings designated the seller's disclosure form; the purchase agreement, including Amendment #1; title documents showing that the $15,000.00 had been placed in escrow; email messages relating to the disbursement of the Escrow Funds; and a quote and permit to replace the septic system. In opposing the Flemings’ request, the Waterses argued that because it was still possible that the City would, at some point, require that the residence be hooked up to the City's sewage system, the Escrow Funds should not be disbursed.

[8] On May 6, 2025, the trial court granted the Flemings partial summary judgment on the breach-of-contract claim and ordered that “[t]he Flemings are entitled to the release of the Escrow Funds, along with damages in the amount of One Thousand Five Hundred Dollars ($1,500).”¹ Appellants’ App. Vol. II p. 14. The trial court further ordered that, pursuant to the terms of the parties’ contract, the Flemings were entitled to an award of reasonable attorney's fees and awarded the Flemings $15,004.00 in said fees.

Discussion and Decision

[9] Summary judgment is a tool which allows a trial court to dispose of cases where only legal issues exist. Hughley v. State, 15 N.E.3d 1000, 1003 (Ind. 2014). The moving party has the initial burden to show the absence of any genuine issue of material fact as to a determinative issue. Id. An issue is “genuine” if a trier of fact is required to resolve the truth of the matter; a fact is “material” if its resolution affects the outcome of the case. Id. As opposed to the federal standard which permits the moving party to merely show the party carrying the burden of proof lacks evidence on a necessary element, Indiana law requires the moving party to “affirmatively negate an opponent's claim.” Id. (quotation omitted). The burden then shifts to the non-moving party to come forward with contrary evidence showing an issue to be determined by the trier of fact. Id. Although this contrary evidence may consist of as little as a non-movant's designation of a self-serving affidavit, summary judgment may not be defeated by an affidavit which creates only an issue of law—the non-movant must establish that material facts are in dispute. AM Gen. LLC v. Armour, 46 N.E.3d 436, 441–42 (Ind. 2015).

We review a summary judgment order with the same standard applied by the trial court. City of Lawrence Util. Serv. Bd. v. Curry, 68 N.E.3d 581, 585 (Ind. 2017). Summary judgment is appropriate only when “the designated evidentiary matter shows that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Ind. Trial Rule 56(C). As our supreme court has cautioned, however, summary judgment is a “blunt instrument” by which the non-prevailing party is prevented from resolving its case at trial and therefore we must carefully “assess the trial court's decision to ensure [a party] was not improperly denied [their] day in court.” Hughley, 15 N.E.3d at 1003–04 (citations omitted). “Indiana consciously errs on the side of letting marginal cases proceed to trial on the merits, rather than risk short-circuiting meritorious claims.” Id. at 1004 ․ “[E]ven if the facts are undisputed, summary judgment is inappropriate where the evidence reveals a good faith dispute as to the inferences to be drawn from those facts.” Boczar v. Reuben, 742 N.E.2d 1010, 1017 (Ind. Ct. App. 2001).

Alexander v. Linkmeyer Dev. II, LLC, 119 N.E.3d 603, 611–12 (Ind. Ct. App. 2019) (brackets in original, ellipsis added).

[10] At the heart of this appeal is the interpretation and construction of a contract, which presents questions of law. See id. at 612 (citing John M. Abbott, LLC v. Lake City Bank, 14 N.E.3d 53, 56 (Ind. Ct. App. 2014)).

As such, cases involving contract interpretation are particularly suitable for summary judgment. [Lake City Bank, 14 N.E.3d at 56]. And because the interpretation of a contract presents a question of law, it is reviewed de novo. Jenkins v. S. Bend Cmty. Sch. Corp., 982 N.E.2d 343, 347 (Ind. Ct. App. 2013), trans. denied. When summary judgment is granted based on the construction of a written contract, the trial court has either determined that the contract is not ambiguous or uncertain, or that any contract ambiguity can be resolved without the aid of a factual determination. Cmty. Anesthesia & Pain Treatment, L.L.C. v. St. Mary Med. Ctr., Inc., 26 N.E.3d 70, 77 (Ind. Ct. App. 2015), trans. denied.

We review the contract as a whole, attempting to ascertain the parties’ intent and making every attempt to construe the language of the contract “so as not to render any words, phrases, or terms ineffective or meaningless.” Four Seasons Mfg., Inc. v. 1001 Coliseum, LLC, 870 N.E.2d 494, 501 (Ind. Ct. App. 2007). We assign a contract's clear and unambiguous terms their plain and ordinary meaning. Dunn v. Meridian Mut. Ins. Co., 836 N.E.2d 249, 251 (Ind. 2005). When the terms of a contract are ambiguous or uncertain, however, and its interpretation requires extrinsic evidence, its construction is left to the factfinder. Johnson v. Johnson, 920 N.E.2d 253, 256 (Ind. 2010). A contract is ambiguous if reasonable people would disagree as to the meaning of its terms, Beam v. Wausau Ins. Co., 765 N.E.2d 524, 528 (Ind. 2002), and we construe any ambiguity against the drafter, MPACT Constr. Grp., LLC v. Superior Concrete Constructors, Inc., 802 N.E.2d 901, 910 (Ind. 2004).

Id.

[11] The Flemings assert that the parties had agreed that the Waters would pay either $3500.00 for City sewage hookup or $15,000.00 for replacement of the existing septic system and that the agreement “was the binding agreement of the parties to perform in either case.” Appellees’ Br. pp. 15–16. The designated evidence supports this assertion. It is undisputed that the Waterses had known prior to the sale of the home that the septic system was defective and would require replacement if the City did not require sewage hookup. The Waterses’ disclosure indicated that the City was scheduled to hold a vote to decide whether to extend City sewer hookup to the residence on April 26, 2023, which was two days after the closing on the sale of the residence. Amendment #1 to the purchase agreement referenced the looming decision on whether the City would extend sewage hookup to the residence, stating that “[i]f [C]ity sewage hookup is required seller to pay $3,500 at closing in form of cashier's check. If septic system update is required instead of the [C]ity hookup then seller to pay $15,000 at closing in form of cashier's check.” Appellants’ App. Vol. II p. 71. Given that the vote on whether the City would extend sewage hookup to the residence was expected to come within days of closing, the parties agreed that the $15,000.00 would be placed in escrow.

[12] The Waterses designated Jacob's affidavit in which he averred that Amendment #1 “was based on the sewer district meeting that was to be held by IDEM[² ] on April 26, 2023. At this meeting, it was believed that IDEM was supposed to vote on whether the septic system at the [residence] could be tied into a [C]ity hookup.” Appellants’ App. Vol. II p. 110 (bracketed material altered or added). Jacob further averred that “[b]ecause the closing date was to occur before the sewer district meeting, we and the Flemings verbally agreed to escrow $15,000.00 at Closing” and “[t]he sewer district meeting was canceled by IDEM. At the time of this statement [on October 29, 2024,] and to the best of my knowledge, it has not yet been rescheduled.” Appellants’ App. Vol. II p. 110 (bracketed material altered or added). Rather than creating an issue of material fact, Jacob's affidavit supports the inference that the parties had intended the decision of whether it would cost $3500.00 or $15,000.00 to rectify the septic issue was to be made shortly after closing.

[13] The designated evidence supports the trial court's determination that the parties had agreed that either the septic system would have to be replaced or the residence would have to hook up to the City's sewage system. Hookup to the City's sewage system was contingent on a decision by the City that was never made. Thus, the Flemings moved forward with replacement. Amendment #1 to the parties’ purchase agreement, i.e., the contract, provided that the Flemings would receive the Escrow Funds if they were required to replace the septic system. The record indicates that the septic system was replaced in the summer of 2024 at a cost of $16,500.00. To the extent that the Waterses attempt to circumvent their contractual obligations by arguing that the contract required some proof of enforcement by a governmental agency requiring the Flemings to hook up to the City's sewage system or replace the septic system, we agree with the Flemings that “[w]hether a third party enforces codes is irrelevant when parties have agreed to correct a defect by contract.” Appellees’ Br. p. 21. Given that the designated evidence does not create an issue of material fact as to the parties’ intention under the contract, we cannot say that the trial court erred in granting partial summary judgment to the Flemings.

[14] As an additional matter, the Flemings argue that they should be awarded appellate attorney's fees, citing the parties’ purchase agreement which provides that “[a]ny party to this Agreement who is the prevailing party in any legal or equitable proceeding against any other party brought under or with relation to the Agreement or transaction shall be additionally entitled to recover court costs and reasonable attorney's fees from the non-prevailing party.” Appellants’ App. Vol. II p. 78. We have previously held that “when a contract provision provides that attorney fees are recoverable, appellate attorney fees may also be awarded.” Cavallo v. Allied Physicians of Michiana, LLC, 42 N.E.3d 995, 1010 (Ind. Ct. App. 2015); see also Humphries v. Ables, 789 N.E.2d 1025, 1036 (Ind. Ct. App. 2003). Because the Flemings are the prevailing party, we conclude that they are entitled to an award of appellate attorney's fees pursuant to the express language of the parties’ purchase agreement. We therefore remand the matter to the trial court for a calculation of appropriate appellate attorney's fees.

[15] The judgment of the trial court is affirmed, and the matter is remanded with instructions for a calculation of appropriate appellate attorney's fees.

FOOTNOTES

1.   The Waterses do not challenge the award of $1500.00 in damages on appeal.

2.   IDEM stands for the Indiana Department of Environmental Management.

Bradford, Judge.

May, J., and Mathias, J., concur.