French Lake Auto Parts, Inc., Appellant-Defendant v. Tawana Perkins, Appellee-Plaintiff (2026)

MEMORANDUM DECISION

Judges May and Mathias concur.

Statement of the Case

[1] Tawana Perkins bought a 45-year-old used engine from French Lake Auto Parts, Inc. (“French Lake”) for use in her vehicle. Less than two months after it was delivered, Perkins notified French Lake of an issue with the engine. Rather than pay to return the engine as French Lake instructed, Perkins stored it in her backyard and sued French Lake in small claims court. After a bench trial, the small claims court entered judgment in favor of Perkins. French Lake now appeals, raising two issues for our review that we revise and restate as the following single issue: Whether the small claims court erred by entering judgment in favor of Perkins.

[2] We affirm in part, reverse in part, and remand with instructions.

Facts and Procedural History

[3] In late April 2023, Perkins bought a 1978 Buick LeSabre engine assembly from French Lake, paying a total of $785, which included $450 for the engine and $335 for shipping. Before Perkins bought the engine, a French Lake employee told her that “if the engine didn't work[, she] could have [her] money back for shipping and the engine.” Tr. Vol. II at 7. French Lake tested the engine prior to the sale and confirmed that it was in working order, before shipping it to Perkins's mechanic at her request. Perkins's mechanic inspected the engine, and he recommended that Perkins not install the engine in her 1978 Buick LeSabre (the “LeSabre”). Perkins's mechanic also told Perkins that a bolt had broken off in the engine and he “would have to take th[e] top part of the engine off” and charge an “additional” $750 before the engine would be usable in her vehicle. Tr. Vol. II at 18. The engine was not installed in the LeSabre.

[4] In June, Perkins called French Lake to return the engine for a refund; however, employee “Kody” disputed her claim that the engine did not work. Tr. Vol. II at 7. Kody nevertheless told Perkins that she could “pay to ship the engine back” to receive a refund for the engine. Id. at 15. Also in June, Perkins emailed French Lake saying, “Bolt broke on engine.” Appellant's App. Vol. II at 32. Rather than pay to ship the engine back to French Lake, Perkins towed her car, her old engine, and the engine she had purchased from French Lake to her backyard for storage. Perkins made no further attempts to contact French Lake, and French Lake did not attempt to recover the engine from Perkins.

[5] Later, Perkins filed a notice of claim in the small claims court, claiming that French Lake owed her $3,000, including damages for the cost of the engine, her mechanic's fee, and “pain and suffering.” Appellant's App. Vol. II at 60. During the ensuing bench trial, Perkins refined her damages request: $795 for the original purchase and shipping cost;¹ $500 that she paid to her mechanic in anticipation of his replacing her old engine with the French Lake engine; and $200 to tow her car to and from the mechanic's shop. Perkins also testified that the estimated cost to ship the engine back to French Lake was $350.

[6] The small claims court entered judgment in favor of Perkins and awarded her $1,845; it also ordered Perkins to return the engine to French Lake “upon payment of the judgment.” Appellant's App. Vol. II at 12. French Lake then filed a motion to correct error, arguing the Indiana Uniform Commercial Code (the “UCC”) precluded judgment in Perkins's favor. In its Chronological Case Summary (“CCS”) entry denying French Lake's motion, the small claims court wrote, “Court has judged the credibility of the witness, that [Perkins] immediately sought refund of the inoperable part. [French Lake] delayed the return and refund by not paying for the shipping cost in obtaining the property.” Appellant's App. Vol. II at 5. This appeal ensued.

Discussion and Decision

The Small Claims Court Did Not Err by Entering Judgment in Favor of Perkins But Did Err in Calculating Damages

[7] French Lake argues the small claims court's judgment in favor of Perkins is “contrary to Indiana law.” Appellant's Br. at 12. Judgments rendered by a small claims court are “subject to review as prescribed by relevant Indiana rules and statutes.” Ind. Small Claims Rule 11(A). “We generally review small claims judgments for clear error, giving considerable deference to the small claims court and its assessment of witness credibility.” Piccadilly Mgmt. v. Abney, 215 N.E.3d 1078, 1079 (Ind. Ct. App. 2023) (citing Muldowney v. Lincoln Park, LLC, 83 N.E.3d 130, 132 (Ind. Ct. App. 2017)). “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.” Branham v. Varble, 952 N.E.2d 744, 746 (Ind. 2011) (citing Morton v. Ivacic, 898 N.E.2d 1196, 1199 (Ind. 2008)).

We consider the evidence most favorable to the judgment and all reasonable inferences to be drawn from that evidence. [Berryhill v. Parkview Hosp., 962 N.E.2d 685, 689 (Ind. Ct. App. 2012).] However, we still review issues of substantive law de novo. Id. The burdens of proof are the same in a small claims suit as they would have been if suit had been filed in a trial court of general jurisdiction. Martin v. Ramos, 120 N.E.3d 244, 249 (Ind. Ct. App. 2019).

N. Ind. Pub. Serv. Co. v. Josh's Lawn & Snow, LLC, 130 N.E.3d 1191, 1193 (Ind. Ct. App. 2019). Additionally, “[w]hen, as here, the court conducts a bench trial, we presume the trial court knows and properly applies the law and considers only evidence properly before the court as the court reaches a decision.” Brown v. State, 222 N.E.3d 362, 371 (Ind. Ct. App. 2023) (citing Conley v. State, 972 N.E.2d 864, 873 (Ind. 2012)), reh'g denied (Jan. 2, 2024), trans. denied, 232 N.E.3d 642 (Ind. 2024).

[8] Before addressing the merits, we note that Perkins did not file an appellee's brief, so we will reverse the small claims court's judgment if French Lake's brief presents a case of prima facie error. See Salyer v. Washington Regular Baptist Church Cemetery, 141 N.E.3d 384, 386 (Ind. 2020) (quoting Front Row Motors, LLC v. Jones, 5 N.E.3d 753, 758 (Ind. 2014)). “Prima facie error in this context means ‘at first sight, on first appearance, or on the face of it.’ ” Id. (quoting Front Row Motors, 5 N.E.3d at 758).

[9] French Lake specifically argues that Perkins (a) neither rejected the engine nor revoked her acceptance thereof, and (b) was therefore not entitled to the damages awarded. We address each argument in turn.

a. Perkins Rejected the Engine

[10] French Lake contends that Perkins accepted the engine because she did not “clearly and unambiguously” communicate her rejection to French Lake and she “kept the Engine in her possession for nearly two years.” Appellant's Br. at 20. This dispute arises from a transaction in goods which is governed by the UCC. See Kenworth of Indianapolis, Inc. v. Seventy-Seven Ltd., 134 N.E.3d 370, 373 (Ind. 2019); Ind. Code § 26-1-2-102. Under the UCC, a buyer accepts a good if after “the buyer has had a reasonable opportunity to inspect” it, she “fails to make an effective rejection,” I.C. § 26-1-2-606(b). Following an inspection, “if the goods ․ fail in any respect to conform to the contract, the buyer may ․ reject the whole.” Id. § 26-1-2-601(a).

[11] Here, the parties contracted for the sale of a “good running engine”; however, Perkins determined the engine was not usable. Appellant's App. Vol. II at 25 (emphasis removed). At trial, the parties disputed whether Perkins rejected the engine. In its CCS entry following a hearing on French Lake's motion to correct errors, the small claims court specifically found Perkins's testimony to be credible and that she had “immediately sought refund of the inoperable part”—in other words, that Perkins rightfully rejected the engine. Appellant's App. Vol. II at 5 (emphasis added). Perkins's testimony was that her mechanic told her the engine was “trash” and “no good” and didn't work. Tr. Vol. II at 6. Perkins's mechanic also told her that a “bolt broke inside the engine.” Id. at 18. After these discussions with her mechanic, Perkins contacted French Lake to return the engine. French Lake instructed her to pay to return the engine to it before it would issue a refund. The probative evidence and reasonable inferences in support of the judgment show that Perkins rejected the engine, communicated that rejection to French Lake, and French Lake responded to that rejection by instructing Perkins to return the engine. French Lake's arguments to the contrary are nothing more than requests for us to reweigh the evidence and reassess witness credibility, which we will not do. See Piccadilly Mgmt., 215 N.E.3d at 1079 (citing Muldowney, 83 N.E.3d at 132).

[12] French Lake next argues that even if Perkins initially rejected the engine, her failure to return the engine was an act that was “fundamentally inconsistent with [French Lake's] ownership.” Appellant's Br. at 20. A proper rejection can become an acceptance if a buyer “does any act inconsistent with the seller's ownership.” I.C. § 26-1-2-606(1)(c). Once a buyer accepts a good, she may only revoke her acceptance if, among other things, the good has a “nonconformity [that] substantially impairs its value.” Id. § 26-1-2-608(1). Upon an effective revocation, a buyer “has the same rights and duties with regard to the goods involved as if he had rejected them.” Id. § 26-1-2-608(3).

[13] In McClure Oil Corp. v. Murray Equipment, Inc., a buyer sent a letter to a seller detailing problems the buyer was having with purchased goods, but it continued to use the goods for weeks before it replaced the goods with products from another seller. 515 N.E.2d 546, 552 (Ind. Ct. App. 1987). This court held that even if the letter had been an effective rejection, the buyer nevertheless accepted the goods because the buyer both continued to use the goods and failed to return them. Id.

[14] In T & S Brass & Bronze Works, Inc. v. Pic-Air, Inc., a buyer purchased faucet handles from a seller on an installment contract. 790 F.2d 1098, 1101 (4th Cir. 1986). Of the 20,000 handles delivered in the third installment, approximately 40% were unacceptably scratched, so the buyer notified the seller that it was rejecting those handles, and it offered to sort and return the defective handles to the seller if the seller agreed to pay for the cost of sorting. Id. The seller refused; after the buyer sorted the handles, the seller instructed the buyer to return the defective handles to it, but the buyer refused. Id.

[15] At trial, the seller argued in relevant part that the buyer's failure to return the handles meant the buyer had accepted them. Pic-Air, 790 F.2d at 1103. The United States Court of Appeals for the Fourth Circuit disagreed. Id. at 1104. After concluding that the buyer had a security interest in the handles for its inspection costs, which the seller refused to reimburse, id. at 1103, the court held that the instruction to return the handles “with no assurance of reimbursement” was “unreasonable as a matter of law,” id. at 1104. Thus, the buyer's continued possession of the handles did not constitute acceptance or render its rejection ineffective. Id.

[16] French Lake cites to Agrarian Grain Co., Inc. v. Meeker, 526 N.E.2d 1189, 1191 (Ind. Ct. App. 1988), in support of its claim that Perkins had to return the engine to French Lake before she could receive a refund. Appellant's Br. at 20 (citing Meeker, 526 N.E.2d at 1191). In that case, a buyer contracted with a seller for “rings of height” to be added to the buyer's existing grain bins. Meeker, 526 N.E.2d at 1191. Under the terms of the contract, the buyer agreed to rent the added space from seller for four years and held a purchase option. Id. Less than a week after the rings were installed, they began to collapse. Id. The buyer notified the seller of the issue and withheld rental payments, which this court held was ineffective notice of revocation. Id. In so holding, this court considered that “[r]evocation has the effect of permitting the buyer to avoid his obligation to pay for the previously accepted goods (or to have his payment returned) if he returns the goods to the seller.” Id. The Meeker court did not analyze (1) when the buyer must return the goods, (2) whether the buyer's retention of the goods was an act inconsistent with the seller's ownership, or (3) the impact of a security interest on returning goods to the seller.

[17] We have already concluded that Perkins rightfully rejected the engine. See supra ¶ 11. Upon rightful rejection and in the absence of a seller's instructions, a buyer is permitted to store, reship, or resell rejected goods “with reimbursement,” I.C. § 26-1-2-604, but she is under no obligation to do so, id. § 26-1-2-602(2)(c). Such actions do not constitute acceptance. Id. § 26-1-2-604. Although Indiana Code section 26-1-2-603 applies only to merchant buyers, it is instructive with respect to a seller's instructions upon rejection; the seller's instructions must be reasonable. Id. § 26-1-2-603(1). “Instructions are not reasonable if on demand indemnity for expenses is not forthcoming.” Id. Thus, a buyer is obligated to follow a seller's reasonable instructions, but “has no further obligations with regard to goods rightfully rejected.” Id. § 26-1-2-602(2)(c); see also Pic-Air, 790 F.2d at 1104.

[18] On the facts of this case, the UCC did not require Perkins to physically return the engine before being entitled to a refund. Cf. Art Hill, Inc. v. Heckler, 457 N.E.2d 242, 245 (Ind. Ct. App. 1983) (citing I.C. § 26-1-2-711(3) (applying to both rightful rejection and justifiable revocation of acceptance)) (concluding the UCC clearly permits “a buyer to revoke his acceptance of goods without physically returning them to the seller”); see also Huntsville Hosp. v. Martara Instrument, 57 F.3d 1043, 1046 (11th Cir. 1995) (concluding that the seller was not required to return the goods rejected before being entitled to a refund). Here, unlike the buyer in McClure Oil Corp. who continued to use the goods for weeks, Perkins did not continue using the engine after communicating her rejection to French Lake; in fact, Perkins never installed the engine in her vehicle. To the extent French Lake argues that its instruction to Perkins was to ship the engine back to it, this is not a reasonable instruction without “on demand” reimbursement for expenses. See I.C. § 26-1-2-603(1). There is evidence in the record that French Lake refused to reimburse Perkins for return shipping. Perkins's refusal to follow this unreasonable instruction did not convert her rejection into an acceptance. See Pic-Air, 790 F.2d at 1104. For the foregoing reasons, the small claims court's judgment in favor of Perkins is supported by the evidence.²

b. French Lake Has Shown Prima Facie Error in the Small Claims Court's Damages Award

[19] French Lake challenges the small claims court's damages award. In total, the small claims court awarded Perkins $1,845 in damages, which breaks down as follows:

Purchase Price $ 795 Mechanic's Fee $ 500 Engine and Vehicle Towing $ 200 Return Shipping Estimate $ 350 TOTAL $ 1,845

[20] “[I]t is well settled that the UCC limits a nonbreaching party's damages to those that are proximately caused by the breach.” Alexin, LLC v. Olympic Metals, LLC, 53 N.E.3d 1184, 1196 (Ind. Ct. App. 2016). Under the UCC, remedies are intended to put “the aggrieved party ․ in as good a position as if the other party had fully performed.” I.C. § 26-1-1-106(1).

[21] When a buyer “rightfully rejects” goods, “the buyer may cancel,” I.C. § 26-1-2-711(1), and thereafter have “a security interest in goods in his possession or control for any payments made on their price and any expenses reasonably incurred in their inspection, receipt, transportation, care, and custody,” id. § 26-1-2-711(3). Such expenses are recoverable as incidental damages. Id. § 26-1-2-715(1). Notably, a buyer who rightfully rejects goods is not entitled to consequential or special damages, id. § 26-1-1-106, unless the seller knows of a buyer's particular needs at the time of contracting, the loss of which “could not reasonably be prevented by cover,” id. § 26-1-2-715.³

[22] With that in mind, we turn to the breakdown of the damages award. Considering the evidence most favorable to the judgment, Perkins is clearly entitled to the purchase price, amended to reflect the correct amount of $785. Regarding incidental damages, the mechanic's fee encompasses the charge for removing Perkins's old engine and replacing it with the French Lake engine. The record is silent on what portion of this service charge—if any—is related to inspecting the French Lake engine. Accordingly, the mechanic's fee award is not supported by the evidence and awarding it was error. As to the engine and vehicle towing, Perkins testified that she paid $100 to have her car towed to the mechanic's shop and another $100 to have her car and the two engines towed back to her house. The first towing was not proximately caused by the breach and therefore not recoverable. See Alexin, 53 N.E.3d at 1196. The second towing is sufficiently related to the breach and recoverable as a transportation cost. As to the return shipping estimate, that is a transportation expense to which Perkins is also entitled. Given Perkins's security interest in the engine she rightfully rejected, it was not error to require French Lake to pay for that return shipping before requiring Perkins to return the engine. See I.C § 26-1-2-602. Based on the foregoing, French Lake has made a prima facie showing of reversible error; Perkins is entitled to recover only those damages permitted by the UCC—$1,235.

Conclusion

[23] In sum, we affirm the small claims court's judgment in favor of Perkins, but we reverse the damages award to the extent it allows Perkins to recover damages not permitted by the UCC and remand with instructions for the small claims court to enter a new damages award in the amount of $1,235.

[24] Affirmed in part, reversed in part, and remanded with instructions.

FOOTNOTES

1.   The testimony describes the purchase price as $795; however, the purchase order reflects $785.

2.   Because we have concluded that Perkins rejected the engine, we do not address French Lake's arguments that Perkins failed to revoke her acceptance thereof or that French Lake did not breach any warranty.

3.   Here, there is no evidence that Perkins attempted to “cover” by purchasing a replacement engine, nor is there evidence that it was not reasonably possible to do so. See I.C. § 26-1-2-712. Accordingly, Perkins is not entitled to consequential or special damages.

Felix, Judge.

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