SCOLARO v. PAVILION PROPERTIES MANAGEMENT LLC (2025)

MEMORANDUM DECISION

[1] Jack Scolaro appeals the small claims court's order awarding him $329.70 plus court costs. We affirm.

Facts and Procedural History

[2] On December 20, 2022, Scolaro and Pavilion Properties Management LLC (“Pavilion”) entered into a Lease Agreement (the “Lease”) with respect to an apartment in Bloomington which specified a term beginning on July 26, 2023, and expiring on July 16, 2024, with a monthly rent of $859.¹ On January 30, 2023, Scolaro and Pavilion entered into a Lease Modification in which the parties agreed to a “unit transfer” from Unit 38 to Unit 6. Exhibits Volume III at 30.

[3] On July 26, 2023, Scolaro arrived at the apartment, unloaded his belongings, and noticed roaches and “sticky pest traps that had live bugs inside of them.” Transcript Volume II at 6. Scolaro communicated with Pavilion, “put in a maintenance request,” and went to Lowe's to obtain “pest control stuff.” Id. Scolaro slept in the apartment that night, left the next morning, and “didn't sleep there again.” Id. at 7. After that night, Scolaro had “orders through the National Guard, had a hotel through them that was paid for,” and “after [his] orders were up,” he stayed with his girlfriend in Indianapolis for about a week and commuted to Bloomington until he was able to find a new place. Id. at 8. Pavilion offered Scolaro alternative apartment units.

[4] Scolaro contacted the City of Bloomington regarding the “health hazard.” Id. In a Complaint Inspection Report dated August 8, 2023, the City of Bloomington Housing and Neighborhood Development indicated Christina Hayes inspected Unit 6 on August 8, 2023, and wrote that “[a] multiple occupancy or a rooming house shall be responsible for extermination of pests. BMC 16.04.090(a)(d)[.] Work must be completed by a licensed professional and documentation provided. (Roaches).” Exhibits Volume III at 41.

[5] In a letter dated August 18, 2023, and addressed to Pavilion, Legal Intern Celia Henein of the Indiana University Student Legal Services informed Pavilion that Scolaro was terminating the Lease due to Pavilion's breach of contract and breach of landlord-tenant statutory duties.

[6] On August 17, 2023, Scolaro and GC Echo Park Apartments LLC (“Echo Park”) entered into a Lease Contract for an apartment in Bloomington beginning on August 23, 2023, and ending on August 22, 2024, that specified rent of $1,229 per month.²

[7] On November 27, 2023, Scolaro filed a complaint against Pavilion in the Small Claims Division of the Monroe Circuit Court alleging breach of contract and breach of landlord statutory duties under Ind. Code § 32-31-8-5. On November 20, 2024, the court held a hearing at which it heard testimony from Scolaro and Mark Hoffman, one of the members and owners of Pavilion, and admitted multiple exhibits. Scolaro submitted a Summary of Damages that included the costs for pest control materials, a storage unit rental, a U-Haul rental, payments to Pavilion for Unit 6, one-time fees for a new apartment, prorated rent for August 2023, and increased monthly fixed costs. The Summary of Damages admitted as Plaintiff's Exhibit 18 indicated that these costs totaled $5,305.70 after deducting a payment from Pavilion of $3,092.

[8] On February 6, 2025, the court entered an order which found that Pavilion refunded all of the payments Scolaro made and offered several different options for alternative housing including an apartment at Poolside. It found that Scolaro did not take reasonable efforts to mitigate damages. It also found that Pavilion breached the Lease and the statutory duty to provide the premises in a clean, safe and habitable condition at the beginning of the Lease. It further found that Pavilion remedied the breach within a reasonable time by its efforts to address the infestation and efforts to find Scolaro a new unit, and denied Scolaro's request for attorneys fees. The court found for Scolaro “and issue[d] a judgment in the amount of $329.70 plus court costs.” Appellant's Appendix Volume II at 14. On March 7, 2025, Scolaro filed a motion to correct error, which was deemed denied on April 21, 2025.

Discussion

[9] Scolaro challenges Findings 3 and 9 of the court's order. He asserts that “[i]t appears the trial court erroneously conflated not sleeping in the apartment with never again being present in the apartment.” Appellant's Brief at 14. He argues that Finding 13 that Pavilion remedied its breach of the Lease and its statutory duties within a reasonable time was clear error. He also argues the court erred in determining his recoverable damages under Ind. Code § 32-31-8-6 and under breach of contract principles.

[10] We review facts from a bench trial under the clearly erroneous standard with due deference paid to the trial court's opportunity to assess witness credibility. Branham v. Varble, 952 N.E.2d 744, 746 (Ind. 2011) (citing Morton v. Ivacic, 898 N.E.2d 1196 (Ind. 2008)). “This deferential standard of review is particularly important in small claims actions, where trials are informal, ‘with the sole objective of dispensing speedy justice’ between parties according to the rules of substantive law.” Id. (quoting Morton, 898 N.E.2d at 1199 (quoting City of Dunkirk Water & Sewage Dep't v. Hall, 657 N.E.2d 115, 116 (Ind. 1995))).

[11] To the extent the parties and the court discuss the breach of the Lease,³ a lease is interpreted in the same way as any other contract. Ind. Port Comm'n v. Consol. Grain and Barge Co., 701 N.E.2d 882, 887 (Ind. Ct. App. 1998), trans. denied. Generally, a nonbreaching party must mitigate damages. Lily, Inc. v. Silco, LLC, 997 N.E.2d 1055, 1075 (Ind. Ct. App. 2013), reh'g denied, trans. denied. The breaching party has the burden of proving that the nonbreaching party has failed to use reasonable diligence to mitigate damages. Id. Generally, consequential damages may be awarded on a breach of contract claim when the non-breaching party's loss flows naturally and probably from the breach and was contemplated by the parties when the contract was made. Johnson v. Scandia Assocs., Inc., 717 N.E.2d 24, 31 (Ind. 1999). The party seeking damages must prove by a preponderance of the evidence that the breach was the cause in fact of its loss. Rockford Mut. Ins. Co. v. Pirtle, 911 N.E.2d 60, 67 (Ind. Ct. App. 2009), reh'g denied, trans. denied.

[12] As for a landlord's statutory duties, Ind. Code § 32-31-8-5 is titled “Duties of landlord at commencement of and during occupancy” and provides that a landlord shall do the following: “(1) Deliver the rental premises to a tenant in compliance with the rental agreement, and in a safe, clean, and habitable condition”; “(2) Comply with all health and housing codes applicable to the rental premises”; and “(3) Make all reasonable efforts to keep common areas of a rental premises in a clean and proper condition.”

[13] With respect to attorney fees, the general rule in Indiana is “that each party pays its own attorney's fees; and a party has no right to recover them from the opposition unless it first shows they are authorized.” Welch v. 1106 Traub Tr., 204 N.E.3d 243, 251 (Ind. Ct. App. 2023) (quoting River Ridge Dev. Auth. v. Outfront Media, LLC, 146 N.E.3d 906, 912 (Ind. 2020)), reh'g denied. However, “[s]tatutes can authorize courts to award attorney's fees, and courts have carved out exceptions to the American Rule using their inherent equitable powers.” Id. (quoting River Ridge Dev. Auth., 146 N.E.3d at 912).

[14] Ind. Code § 32-31-8-6 is titled “Enforcement of obligations; remedies” and provides:

(b) A tenant may not bring an action under this chapter unless the following conditions are met:

(1) The tenant gives the landlord notice of the landlord's noncompliance with a provision of this chapter.

(2) The landlord has been given a reasonable amount of time to make repairs or provide a remedy of the condition described in the tenant's notice. The tenant may not prevent the landlord from having access to the rental premises to make repairs or provide a remedy to the condition described in the tenant's notice.

(3) The landlord fails or refuses to repair or remedy the condition described in the tenant's notice.

(c) This section may not be construed to limit a tenant's rights under IC 32-31-3, IC 32-31-5, or IC 32-31-6.

(d) If the tenant is the prevailing party in an action under this section, the tenant may obtain any of the following, if appropriate under the circumstances:

(1) Recovery of the following:

(A) Actual damages and consequential damages.

(B) Attorney's fees and court costs.

(2) Injunctive relief.

(3) Any other remedy appropriate under the circumstances.

(e) A landlord's liability for damages under subsection (d) begins when:

(1) the landlord has notice or actual knowledge of noncompliance; and

(2) the landlord has:

(A) refused to remedy the noncompliance; or

(B) failed to remedy the noncompliance within a reasonable amount of time following the notice or actual knowledge;

whichever occurs first.

[15] “We acknowledge that ‘the purpose of Section 32-31-8-6 and similar statutes authorizing the recovery of attorney's fees is to “serve [the] public policy of equal access to courts despite [the] relative financial conditions of parties.’ ”” Welch, 204 N.E.3d at 251 (quoting Husainy v. Granite Mgmt., LLC, 132 N.E.3d 486, 499 (Ind. Ct. App. 2019) (citing Pinnacle Props. v. Saulka, 693 N.E.2d 101, 105 (Ind. Ct. App. 1998), trans. denied)). The Indiana Supreme Court has held: “Prevailing parties under the residential landlord-tenant statutes are eligible to recoup their fees. An award of fees, however, is discretionary.” Rainbow Realty Grp., Inc. v. Carter, 131 N.E.3d 168, 178 (Ind. 2019). The Court also observed that Ind. Code § 32-31-8-6(d)(1)(B) provides that “[i]f the tenant is the prevailing party in an action under this section, the tenant may obtain any of the following, if appropriate under the circumstances: ․ Attorney's fees and court costs.” Id. (emphasis added in Rainbow Realty Grp., Inc.). “The relevant statute provides that the tenant ‘may obtain’ an award of attorney fees; the statute does not provide that the tenant ‘shall obtain’ an award of attorney fees.” Welch, 204 N.E.3d at 251. “It is axiomatic that use of the permissive word ‘may’ in a statute indicates a trial court is not required to act, but may do so within its discretion.” Id. (quoting Wolfe v. Eagle Ridge Holding Co., LLC., 869 N.E.2d 521, 529 (Ind. Ct. App. 2007)). “Given the lack of language indicating that an award of attorney fees is mandatory, the award of attorney fees is left to the trial court's discretion.” Id.

[16] While Scolaro discovered live roaches in Unit 6 on the first day specified in the Lease, the record reveals that Hoffman testified that Pavilion contacted Yes Pest professionals to treat the unit immediately after receiving Scolaro's complaint and that “they were out the next day to treat it.” Transcript Volume II at 37. While Scolaro challenges the court's statement in Finding 3 that he “stayed in the unit that first night but did not return to the unit after that,” and statements in Finding 9 that his complaint alleged “that Pavilion failed to cure the alleged breach of failing to deliver the premises in a clean, safe and habitable condition in a reasonable amount of time,” he “never returned to the unit to see whether these efforts by Pavilion were effective,” and, “[g]iven that Scolaro never returned to the unit, it is impossible for him to make this determination,” Appellant's Appendix Volume II at 11-12. We cannot say that these findings warrant reversal.

[17] Scolaro asserts that he “kept personal belongings in Apt. 6 until August 15, 2023, and that [he] personally observed roaches in Apt. 6 after the City of Bloomington's August 8, inspection.” Appellant's Brief at 14 (citing Transcript Volume II at 11-12; Exhibits Volume III at 43-44, 47-49). In the portion of the transcript cited by Scolaro, when asked when he moved his items out of the apartment, he answered: “I would say, I think it was sometime early August, it was after the uh, health inspector came and inspected the apartment.” Transcript Volume II at 11. When asked what he observed when he “went back to get [his] stuff,” Scolaro answered “there was roaches inside the boxes, um, that I had my stuff stored in.” Id. at 12. He also indicated that Plaintiff's Exhibits 8-1 and 8-2, revealed “a roach that [he] found inside of the cardboard box that had some of [his] belongings” and he “found that while [he] was cleaning everything out and moving into plastic bins.” Id. To the extent Scolaro cites pages 43, 44 and 47 through 49 of Exhibits Volume III, pages 43 and 44 contain the photographs in Plaintiff's Exhibits 8-1 and 8-2 and pages 47 through 49 contain order details from Amazon regarding orders placed on August 10, 2023. On August 16, 2023, a representative from Yes Pest emailed a representative of Pavilion and wrote that a technician inspected Unit 6 on August 15, 2023, and found “dead roaches” but “did not see a single live roach during the time he was there.” Exhibits Volume III at 121. When asked if it was Pavilion's position that Scolaro did not remain “long enough to see if what [Pavilion] attempted to do worked,” Hoffman answered affirmatively. Transcript Volume II at 21.

[18] The record also reveals that Pavilion refunded the money Scolaro paid. With respect to Pavilion's offer of alternative housing, Scolaro does not challenge the court's finding that Pavilion offered him different options for alternative housing. As for the offer of an apartment at Poolside, Hoffman indicated that that option was a better quality unit, which Pavilion offered to Scolaro at a discounted rate to match the same price as the Hilltop property.⁴

[19] With respect to the Hilltop property, Hoffman indicated that there was “free parking there on site in the surface parking lot” but that there was “no assigned parking or guaranteed parking.” Id. at 33. He explained that the parking options at Poolside included covered garage parking for $65 per month as well as free parking on certain streets with no permit required as well as other street parking via a permit that costs $50 or $60 for the year. When asked if there was “free parking available” at Poolside, Hoffman answered affirmatively and stated, “Yes. Directly in front of the building.” Id. at 22.

[20] The small claims court awarded Scolaro certain consequential damages including the cost of the storage unit and the cost of the U-Haul which it found to be “necessary costs” and “due to the actions of Pavilion in breaking the lease, and regardless of what unit Scolaro chose, whether Poolside or any other[ ] unit.” Appellant's Appendix Volume II at 13. In light of the record, including Pavilion's refund of Scolaro's payments and its offer of alternative housing, we cannot say that reversal for an award of additional damages is warranted.

[21] With respect to attorney fees, Pavilion's counsel asked Scolaro: “[Y]ou're not paying any attorney fees to the office of Indiana Student Legal Services, are you?” Transcript Volume II at 15. Scolaro answered: “No.” Id. Under the circumstances the trial court did not abuse its discretion.

[22] For the foregoing reasons, we affirm the small claims court's order.

[23] Affirmed.

FOOTNOTES

1.   The Lease specified a monthly total of $907.50 consisting of $9.50 for “Liability to Landlord Insurance,” $2.00 for “Admin Fee – Liability to Landlord Insurance,” $859 for rent, and $37 for “Water & Sanitation.” Exhibits Volume III at 4.

2.   The Lease Contract provided that Scolaro would also be responsible for paying utilities such as water, gas, electricity, wastewater, trash, and cable TV. A Utility Addendum specified that certain utilities would be billed directly to Echo Park and then allocated to Scolaro based upon certain formulas.

3.   Scolaro does not point to which provisions of the Lease that Pavilion breached or which governed damages. Pavilion does not argue it did not breach the Lease and asks that we affirm the small claims court.

4.   The parties referred to the apartment specified in the Lease as the Hilltop property.

Brown, Judge.

Felix, J., and Scheele, J., concur.