The opinion
MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be FILED
regarded as precedent or cited before any Oct 31 2019, 6:33 am
court except for the purpose of establishing CLERK
the defense of res judicata, collateral Indiana Supreme Court
Court of Appeals
and Tax Court
estoppel, or the law of the case.
ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE
ANTHONY L. ELROD RAYMOND C. BAUMAN
Michael F. Vertesch Jeffrey J. Jinks
Greenwood, Indiana Elizabeth R. McAleese
Carmel, Indiana
ATTORNEY FOR APPELLANT
NANCY DAVIS
Andrew B. Arnett
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Anthony L. Elrod, et al., October 31, 2019
Appellants-Defendants, Court of Appeals Case No.
18A-PL-3020
v. Appeal from the Marion Superior
Court
Raymond C. Bauman, The Honorable Patrick J. Dietrick,
Appellee-Plaintiff. Judge
Trial Court Cause No.
49D12-1604-PL-11727
Bailey, Judge.
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 1 of 30
Case Summary
[1] Anthony L. Elrod (“Elrod”) and Nancy Davis (“Davis”) (at times, collectively
referred to as “Elrod”) appeal an order, entered upon remand from this Court,
enforcing Elrod’s mediated settlement agreement with Raymond C. Bauman
(“Bauman”) (“the Mediated Settlement Agreement”). Determining that Elrod
did not show a constitutional deprivation of due process, and the trial court did
not err in interpreting the unambiguous provisions of the settlement agreement,
but that questions of fact pertinent to enforcement of certain ambiguous
provisions of the settlement agreement remain, we affirm in part, reverse in
part, and remand with instructions to hold an evidentiary hearing.
Issues
[2] Elrod presents for our review the following restated issues:
I. Whether he was denied due process when the trial court
restricted the evidence on remand to exclude witness
testimony;
II. Whether the trial court erroneously interpreted the
Mediated Settlement Agreement when it concluded:
(a) Bauman could execute a quitclaim deed, rather than a
warranty deed, to transfer his interest in property at
1041 High Street;
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 2 of 30
(b) The assumption of mortgage payments by Elrod was to
be effective August 1, 2016, with formal refinancing to
follow;
(c) Certain claimed expenses including management fees,
storage fees, and repair costs were not authorized in the
agreement;
(d) Elrod must relinquish a claimed interest in an
easement;
(e) Elrod must transfer any interest in Lot 22/1030 High
Street to Bauman; and
III. Whether the trial court erroneously disposed of a potential
claim as to South East Neighborhood Development
(“SEND”).
Davis presents the additional issue of whether the trial court erroneously
ordered that she execute a quitclaim deed to Elrod, her brother, transferring her
interest in 1041 High Street.
Facts and Procedural History
[3] The relevant facts were recited in the prior appeal, which gave rise to the order
of remand underlying this appeal:
For over thirty years, Bauman and Elrod were engaged in an
ongoing business venture of buying, developing, and selling real
estate in Indianapolis. Bauman and Elrod were also the owners
of Madison Avenue Athletic Club, Inc. and M.A.C.C.
Properties, LLC. Bauman contributed capital to the venture, and
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 3 of 30
Elrod managed the real estate. When the business venture
sustained a loss, Bauman contributed additional capital.
Bauman eventually decided to end the venture with Elrod due to
ongoing losses and Elrod’s failure to provide Bauman with an
accounting of how he managed the venture.
Accordingly, on April 4, 2016, Bauman filed a complaint seeking
to appoint a receiver and for declaratory judgment to determine
the rights and interests of the parties to the property and assets of
the venture. On June 13, 2016, the parties began court-ordered
mediation. After a full day of mediation, the parties signed the
Mediated Settlement Agreement, which provides in relevant part:
Raymond Bauman (Ray) and Anthony Elrod (Tony) hereby
stipulate and agree as follows:
1. [Elrod] will receive all right, title and interest to lots 1033-
1035, 1037, 1039, 1041, 1045, 1047, 1049, and 1055 which are
all lots bordered by High Street on the west and Prospect
Street on the south. [Elrod] will also receive all right, title and
interest to the vacated alley due north of parcel 1033-35.
[Elrod] will assume and be responsible for all debts,
mortgages and other expenses of those parcels. The mortgage
on lot 1045 was executed by [Bauman]. [Elrod] will assume
and pay that mortgage and indemnify and hold [Bauman]
harmless from any nonpayment.
2. [Bauman] will receive all right, title, and interest to lots 330,
332, 336, and 340 as well as the four-plex and garage which
are 1046-1048 and 1042. Such properties are titled either in
the name of [Bauman] and/or [Elrod] and MAAC[ ]
Properties, Inc. [Bauman] will assume and be responsible for
debts, mortgages and other expenses owing with respect to
these parcels. [Bauman] will indemnify and hold [Elrod]
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 4 of 30
harmless for any nonpayment. [Bauman] will receive all
shares equaling 100% of MAAC Properties, Inc.
3. The vacated alley that is due west of lot 330 shall remain in
[Elrod]’s name unless it is purchased by the purchaser of the
gym in which case [Elrod] will transfer his interest at no
additional cost to Madison Avenue Athletic Club, Inc. If the
gym purchaser does not purchase the vacated alley, upon
closing of that sale, [Elrod] will deed the vacated alley to
[Bauman] so long as [Bauman] remains the owner of the
parcels 336 and 340 Prospect set over to him in paragraph 2
above.
4. Madison Avenue Athletic Club, Inc. owns all right, title, and
interest to the gym property located at 306 E. Prospect. Such
property is currently listed for sale with Ray Stuck. Each
party agrees to cooperate with Ray Stuck in an effort to sell
the property. Upon a sale of the gym, [Bauman] will receive
the fixed sum of $175,000. Madison Avenue Athletic Club,
Inc. shall execute a mortgage against the gym to memorialize
this obligation, and the remaining proceeds shall be split on
an equal basis. It is anticipated that payments will be made to
Madison Avenue Athletic Club, Inc. and the parties will
receive their share as distributions pursuant to the terms of
this paragraph. Both parties agree that their respective
ownership interest is 50/50. * * *
6. The parties agree that there [are] only 2 mortgages against the
gym. Copies of each are attached hereto. Both mortgages
shall be released of record by [Bauman].
7. The liquor license associated with the gym is held in the name
Madison Avenue Athletic Club, Inc. In the event it is not
required as part of the sale [of] the gym, [Bauman] and
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 5 of 30
[Elrod] will market the liquor license and split any net
proceeds on an equal basis.
8. The gym and the apartments operate on a long-term lease for
parking spaces on the south side of Prospect Street. That area
referred to as the parking lot is to be retained by the parties,
MAAC Properties, Inc. and/or Madison Avenue Athletic
Club, Inc. In order to be fully marketable, the parking lot
requires the installation of an additional parking lot directly
east of the existing parking spaces. If either party invests that
sum of money to install the parking lot in order to make the
entire parcel marketable, the party who incurred such expense
shall be refunded that amount of their investment from any
sale proceeds. Remaining sale proceeds will be split on an
equal basis.
9. [Elrod] has building materials, tools and supplies located in
the basement of both of the apartment buildings and the
second and third floor of 336 Prospect set over to [Bauman]
by this agreement. He shall have all materials and personal
property removed from the apartment buildings no later than
October 15, 2016. He shall remove any and all personal
property building materials or tools from the four-plex located
at 1046-1048 no later than August 15, 2016. All coin
operated laundry machines in the laundry rooms and
appliances in use in the individual apartments shall remain
and are not property of [Elrod]. If not removed by the due
date, such property shall become [Bauman]’s property.
10. [Bauman] shall receive, as his sole property and free of any
claims by [Elrod], the real estate located at 6427 Canna Court
in Indianapolis. There is currently a judgment lien in Cause
No. 49D07-1208-MF-031117 against [Elrod] which is lodged
as a lien against this parcel. Upon a sale of the gym, an
amount of money equal to the unpaid balance of that
judgment shall be deducted from [Elrod]’s proceeds and
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 6 of 30
placed into escrow. [Elrod] shall have 10 months from the
date hereof to obtain a release of the lien and if he does so,
there will be no deduction from his gym proceeds and any
escrow will be released. If he is unable to obtain a release
within such time, [Bauman] shall satisfy the judgment from
such escrowed funds. [Bauman] shall assume and agree to
pay the mortgage that is in [Elrod]’s name and indemnify and
hold [Elrod] harmless. [Bauman] shall satisfy the mortgage
upon the sale of this property or any interest therein.
11. [Bauman] will also receive all right title and interest to 1027
East Raymond St. in Indianapolis, 2191 Wakeland Road in
Paragon, 3711 Farrington Dr. in Bloomington and 2236-2238
Shelby St. in Indianapolis.
12. [Elrod] should receive all right title and interest to 3272
Clover Dr. in Plainfield. Such parcel is subject to a mortgage
for which [Elrod] is solely obligated. [Elrod] will be
responsible and assume the obligation to pay such mortgage
and to indemnify and hold [Bauman] harmless with respect to
such mortgage.
13. [Elrod] shall manage and operate the gym until it is sold and
properly account for all income and expense. In the event
either party contributes to such expenses, that party shall be
given a note by Madison Avenue Athletic Club, Inc. for such
loan plus interest at 4%.
14. The parties, either directly or through their various entities,
shall ensure the proper transfer deeds are prepared
transferring title to properties as set forth herein and to
execute any and all documents deemed reasonably necessary
to effectuate the terms of this mediated agreement.
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 7 of 30
15. Both parties agree to share the expenses of mediation on an
equal basis[.]
16. [Bauman]’s attorney shall prepare the definitive settlement
agreement encompassing and incorporating the terms of this
agreement to be reviewed and executed by the parties. Upon
its execution, the parties agree to dismiss this litigation as to
all parties.
Appellant’s App., Vol. 3, pp. 13-17 (emphases added).
On June 23, 2016, the mediator filed a report with the trial court
indicating that mediation had been successful and that the parties
had reached an agreement on the disputed issues. Bauman and
Elrod subsequently took steps to implement the Mediated
Settlement Agreement. For example: Elrod surrendered the
keys of the apartment complex to Bauman; Elrod surrendered
control and management of the apartments to Bauman; Elrod
worked with Bauman to transfer all utilities at the apartments to
Bauman; Elrod surrendered the rents received from tenants of the
apartments to Bauman, which had previously been tendered to
Elrod; Elrod filed the necessary documents with the Indiana
Secretary of State to reinstate the status of the Madison Avenue
Athletic Club, in order to facilitate the sale of the gym as called
for in the Mediated Settlement Agreement; Elrod began
removing building materials, tools, and supplies from both the
Apartments and the four-plex; Elrod listed for sale the property
located at 1045 High Street; Nancy Davis (“Davis”), the owner
of record of the property at 1041 High Street, listed this property
for sale; Elrod paid at least one month’s mortgage on the Clover
property; and Elrod obtained satisfaction of the judgment lien.
Pursuant to the terms of the Mediated Settlement Agreement,
Bauman’s counsel prepared a document titled “Confidential
Settlement Agreement and Mutual Release” (“Agreement and
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 8 of 30
Release”) along with the related deeds and other documents
necessary to complete the distribution of the assets as agreed to
under the Mediated Settlement Agreement. Bauman’s counsel
sent the documents, including the definitive settlement agreement
draft to be signed. Elrod refused to sign the drafted agreement.
Elrod v. Bauman, No. 49A02-1703-PL-657, slip op. at 1 – 3 (Ind. Ct. App. Jan.
25, 2018).
[4] Bauman filed an emergency motion to enforce the Mediated Settlement
Agreement and the trial court ordered the parties to participate in a second
mediation session. The second session was unsuccessful. Bauman filed a
motion for summary judgment and a designation of evidence. Elrod did not
respond. See id. at 4. However, counsel for Davis entered an appearance and
requested an enlargement of time to respond to Bauman’s motion. Ultimately,
she filed no response. On January 6, 2017, the trial court held a hearing on
Bauman’s motion to enforce. The trial court considered briefs and affidavits
submitted by the parties, with Elrod arguing that the parties had reached only
an unenforceable agreement to agree. On February 28, 2017, the trial court
granted summary judgment to Bauman and ordered Elrod to execute the
Agreement and Release. See id. Elrod appealed.1
1
Bauman, Davis, Madison Avenue Athletic Club, M.A.A.C., and SEND each received notice of the appeal,
but only Elrod and Bauman were active parties on appeal.
By the time the Elrod opinion was handed down, the gym had been sold. On July 12, 2017, the closing for
the sale took place. Chicago Title Company, LLC, Madison Avenue Athletic Club, Inc. (as the seller),
Elrod, and Bauman executed an agreement to escrow the net sale funds of $811,742.83. The gym buyer
granted M.A.A.C. and Elrod each a written easement to use an alley at 328 Prospect Street.
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 9 of 30
[5] On appeal, this Court considered whether the Mediated Settlement Agreement
was an enforceable contract and whether the trial court had properly ordered
Elrod to execute the Agreement and Release. We concluded:
[T]he trial court erred to the extent that it ordered Elrod to
comply with the terms of the Agreement and Release, as that
document was not agreed to by the parties. However, Elrod is
bound by the terms of the Mediated Settlement Agreement,
which was the result of an hours-long mediation at which he was
represented by counsel and which was signed by both parties.
Accordingly, we reverse the order of the trial court enforcing the
terms of the Agreement and Release and remand with
instructions that the trial court enforce the terms of the Mediated
Settlement Agreement.
Id. at 7.
[6] Bauman filed a motion to appoint a commissioner to enforce the Mediated
Settlement Agreement. On May 23, 2018, Elrod filed a motion for
interpretation and determination of rights, asking for a four-hour evidentiary
hearing to address reimbursement for financial contributions, the date of
assumption of mortgage obligations, and what type of deed would be required
to transfer the property at 1041 High Street. On July 2, 2018, the trial court set
the matter for a one-hour hearing and instructed the parties to “submit evidence
and legal arguments in writing on these issues by July 27, 2018.” (Appellee’s
App. Vol. II, pg. 47.) The hearing order was subsequently amended to permit
an exchange of proposed evidence between the parties and to schedule two
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 10 of 30
hours for the hearing. Bauman made submissions to the court; Elrod provided
proposed submissions to Bauman’s attorney; and Davis made no submission.
[7] At the hearing on August 3, 2018, attorneys for Davis, Bauman, and Elrod
presented arguments. Elrod’s attorney attempted to call a witness to testify to
the value of Elrod’s labor contributions, but the trial court disallowed
testimony, clarifying that the proceeding before the bench was not a trial but a
hearing on remand.
[8] On October 4, 2018, the trial court entered its order of enforcement,
accompanied by sua sponte findings of fact and conclusions of law.2 On
November 5, 2018, Elrod and Davis filed motions to correct error. On
November 21, 2018, the trial court entered an order amending the October 4,
2018 order to require that Bauman formally assume a mortgage obligation as to
property at 6427 Canna Court. Elrod and Davis each initiated an appeal, and
the appeals were subsequently consolidated for review.
Discussion and Decision
Standard of Review
[9] This Court instructed the trial court to enforce the terms of the Mediated
Settlement Agreement. Settlement agreements are governed by the same
2
The findings and conclusions were not requested in writing by a party pursuant to Indiana Trial Rule 52(A).
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 11 of 30
general principles of contract law as any other agreement. Fackler v. Powell, 891
N.E.2d 1091, 1095 (Ind. Ct. App. 2008), trans. denied. The interpretation and
construction of a contract is a function for the courts. Id. at 1095-96. If the
contract language is unambiguous and the intent of the parties is discernible
from the written contract, the court is to give effect to the terms of the contract.
Id. at 1096. A contract is ambiguous if a reasonable person would find the
contract subject to more than one interpretation; however, the terms of a
contract are not ambiguous merely because the parties disagree as to their
interpretation. Id. When the contract terms are clear and unambiguous, the
terms are conclusive and we do not construe the contract or look to extrinsic
evidence, but will merely apply the contractual provisions. Id.
[10] Here, one settlement term contemplated future conduct of the parties and future
expenditures to accomplish renovation of the gym. In enforcing the terms of
the Mediated Settlement Agreement, the trial court was required to determine
whether reimbursable expenditures had been made by a party. Thus, the trial
court acted as a fact-finder. The court did not hear witness testimony but heard
argument and examined documentary submissions. The trial court sua sponte
entered findings of fact and conclusions thereon. Sua sponte findings and
conclusions control only as to the issues they cover, and a general judgment
standard applies to any issue upon which the court has not found. Nelson v.
Marchand, 691 N.E.2d 1264, 1267 (Ind. Ct. App. 1998). In reviewing findings
and conclusions, we first determine whether the evidence supports the findings
and then whether findings support the judgment. K.I. ex rel J.I. v. J.H., 903
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 12 of 30
N.E.2d 453, 457 (Ind. 2009). We will not set aside the judgment unless it is
clearly erroneous. Id. A judgment is clearly erroneous when there is no
evidence supporting the findings or the findings fail to support the judgment.
Id. A judgment is also clearly erroneous when the trial court applies the wrong
legal standard to properly found facts. Id.
Summary Proceedings on Remand
[11] At the hearing upon remand, Elrod’s counsel requested the opportunity to
present witness testimony. The trial court denied the request, on grounds that
there was no need “to try a case settled two years ago” and the parties had been
ordered to submit evidence in documentary form. (Tr. Vol. II, pg. 105.) On
appeal, Elrod contends “the trial court’s ruling that no witnesses were allowed
by any party to be called deprived him of his constitutionally-protected right to
due process under U.S. Const. Amend. XIV § 1 and IN. Const. Art 1 § 12.”
Appellant’s Brief at 16. The “opportunity to be heard” is a fundamental
requirement of due process under the Fourteenth Amendment to the United
States Constitution. Podgor v. Indiana University, 381 N.E.2d 1274, 1281 (Ind.
Ct. App. 1978). Also, Article 1, Section 12 of the Indiana Constitution provides
for the right to be heard in court:
All courts shall be open; and every person, for injury done to him
in his person, property, or reputation, shall have remedy by due
course of law. Justice shall be administered freely, and without
purchase; completely, and without denial; speedily, and without
delay.
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 13 of 30
[12] In Elrod, this Court remanded the matter for enforcement of the Mediated
Settlement Agreement. We did not order the trial court to conduct further
evidentiary proceedings and thus, Elrod had no such entitlement. The trial
court, having been advised that the parties disagreed as to how several
provisions of their agreement should be enforced, ordered that the parties make
written evidentiary submissions. The trial court subsequently amended its order
to permit exchange of materials between the parties. Elrod did not comply with
the order for written submissions to the court. Rather, after his written requests
for an evidentiary hearing had been denied, he appeared on the day of hearing
prepared to elicit testimony from an expert witness. Elrod was constrained to
making an offer of proof regarding the value of his work. Even so, he did not
raise any constitutional objection. He does not fully develop constitutional
arguments on appeal.
[13] Elrod was not deprived of his opportunity to be heard. He was afforded the
opportunity to make written submissions to the trial court and present argument
thereon. We acknowledge that, in light of factual determinations to be made,
the better practice may have been to allow witness testimony. This concept will
be more fully addressed as we discuss the issues on appeal; however, Elrod has
not shown that the exclusion of witness testimony rises to the level of
constitutional deprivation.
Quitclaim
[14] Elrod contends that the trial court erred in ordering Bauman to execute a
quitclaim deed to Elrod transferring any interest Bauman might have in 1041
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 14 of 30
High Street. According to Elrod, because Davis is the sole legal owner of 1041
High Street, a quitclaim deed would transfer “no interest whatsoever” to Elrod
and this is inconsistent with the intent of the Mediated Settlement Agreement.
Elrod’s Brief at 19, Davis’s Brief at 15. Elrod argues that Bauman must obtain
and transfer interest in 1041 High Street via a warranty deed, to avoid breach of
the Mediated Settlement Agreement. Id. at 20 (emphasis added).
[15] Indisputably, both parties knew when they negotiated the Mediated Settlement
Agreement that Davis, who is Elrod’s sister, was the owner of record and the
occupant of 1041 High Street. Elrod bargained for – and received – the right to
have Bauman relinquish any claim to 1041 High Street. But Bauman and Elrod
inserted no language in their agreement requiring, or even suggesting, that
Bauman would be required to purchase 1041 High Street from Davis so that he
could in turn execute a warranty deed for that property to Elrod. The value of
the bargain to Elrod may consist of the intrinsic value derived from providing
for his sister or it may be that he has an expectation of ultimately receiving a
financial benefit. Regardless, the Mediated Settlement Agreement did not
specify that Bauman would execute a warranty deed; a quitclaim deed –
conveying Bauman’s interest, if any – is sufficient to satisfy Bauman’s
obligation.
Assumption of Mortgage Payments/Refinancing
[16] At the time of the execution of the Mediated Settlement Agreement, Bauman
was liable for mortgage payments on certain properties that were to be allocated
to Elrod. The parties agreed to the assumption of liabilities corresponding to
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 15 of 30
ownership but did not specify a particular date or method. The trial court
found that the parties intended immediate assumption of mortgage payments,
to be followed by formal refinancing.3 Specifically, the order stated:
66. A plain language reading of the Agreement clearly indicates
that the parties intended Mr. Elrod to assume the mortgages and
indemnify Mr. Bauman effective from the date of the Agreement.
67. Mr. Elrod is required to assume the mortgage on 1045 High
Street and indemnify Mr. Bauman thereon effective August 1,
2016.
68. Mr. Elrod is required to assume the mortgage on Clover
Drive and indemnify Mr. Bauman thereon effective August 1,
2016.
(App. Vo. II, pg. 26).
[17] Elrod contends that the parties intended the assumption of liabilities to take
place on the date of the real estate closing as to a respective property.
[W]here no time for performance is specified in the contract the
law will imply that it must be performed within a reasonable
time. Marion Trucking, Inc. v. Harwood Trucking, Inc. (1954), 125
Ind. App. 1, 116 N.E.2d 636. Moreover, what constitutes a
reasonable time within which an act is to be performed depends
3
Recognizing that the mortgagees might not consider Elrod qualified to assume the mortgages, the trial court
ordered that, if Elrod was unsuccessful in obtaining his own financing, the mortgages would be satisfied from
the gym proceeds.
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 16 of 30
on the subject matter of the contract, the situation of the parties
and the circumstances attending the performance.
Jay Clutter Custom Digging v. English, 393 N.E.2d 230, 232 (Ind. Ct. App. 1979).
[18] The Mediated Settlement Agreement distributed multiple properties, several of
which were mortgaged. The trial court concluded that the parties intended an
allocation of responsibility for debt contemporaneous with the allocation of
ownership. An immediate assumption by Elrod of the obligation to pay for his
own individual properties is reasonable where he had ownership rights to those
properties and no further responsibility to manage Bauman’s individual
properties.
[19] Additionally, the trial court concluded that the parties intended that Elrod
refinance the indebtedness for his own properties in his own name. Elrod
argues that the language obligating Elrod to pay “that” mortgage held by
Bauman means that the particular mortgage “would have to remain in force as
agreed by Bauman and the lender.” Appellant’s Brief at 23. The complaint
was filed to end the business venture and the business relationship between the
parties. This was more efficiently accomplished if the parties held respective
properties and respective debts and were not co-obligors on debt. The trial
court did not err in concluding that the parties intended a formalization of the
division as opposed to continuation of long term obligation by a non-owner
with an expectation of indemnification by the other party.
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 17 of 30
Reimbursements
[20] During the thirty plus years of their joint venture, Bauman provided capital and
Elrod provided sweat equity. Profits were divided equally. If there was a
monthly loss, Elrod would meet with Bauman and report the aggregate amount
of the shortfall, and Bauman would provide additional funding. This course of
conduct ended on June 13, 2016, when the parties executed the Mediated
Settlement Agreement and defined their future course of conduct. Paragraph
13, employing prospective language, decrees that Elrod will manage the gym
and account for the income and expenses from its operation. In the event that
income does not exceed expenses and a party contributes to expenses described
in Paragraph 13, he is to be given a corporate note.
[Elrod] shall manage and operate the gym until it is sold and
properly account for all income and expenses. In the event either
party contributes to such expenses, that party shall be given a
note by Madison Avenue Athletic Club, Inc. for such loan plus
interest at 4%.
[21] (App. Vol. II, pg. 71.) The plain language of Paragraph 13 contemplates a
contribution that is (1) in the future (2) before sale of the gym and (3) for which
a proper accounting has been made.
[22] At the time the agreement was executed, there may have been ongoing work to
remediate public health violations at the gym. On August 22, 2014, four
months after Bauman filed his complaint, the Indiana Board of Health filed a
complaint against the Madison Avenue Athletic Club, as the owner of the
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 18 of 30
gym.4 The potential penalty for continued violation was $2,500 per day. The
parties agreed that remediation was necessary to effectuate a sale and cure the
violation. The Board of Health conducted an inspection of the gym on August
29, 2016 and, on September 23, 2016, the Board of Health complaint was
dismissed. On December 29, 2016, Elrod filed a mechanic’s lien against the
gym property, in the amount of $83,302.00.5
[23] At the remand hearing, Elrod argued that he was entitled to payment for his
services and reimbursement of expenses related to two primary events, the
remediation of health code violations at the gym and the move out upon the
sale of the gym. Elrod also sought reimbursement for leasing a property after
the sale of the gym (where he had reportedly stored gym property not taken by
the gym buyer). Finally, he requested payment for time spent negotiating for
parking access and sale of a liquor license.
[24] Elrod submitted photographs to show before and after conditions at the gym.
He claimed he was due: $112,195.85 for work, labor, and materials to complete
Board-of-Health complaint renovations, $31,005.27 for cash advances for gym
operating shortfalls, and $62,000.37 for cleaning, storage, and interest. He
provided a copy of a contractor agreement between ALE and Madison Avenue
4
Allegedly, there had been deterioration of exterior trim, eaves, and window frames; there were exposed
surfaces with lead-based paint; exterior masonry was loose; an exterior stairway had a loose or missing
handrail; exterior steps were unsafe; gutters were missing; the roof needed repair; panes of glass were missing
or broken; and some exterior bricks were loose.
5
Elrod executed a limited release of the lien to permit the sale of the gym to close, agreeing that the issue of
reimbursement would be determined before distribution of the escrowed sales proceeds.
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 19 of 30
Athletic Club, reciting that ALE would be paid $75.00 per hour for removal of
debris. Elrod had signed the agreement as the President of Madison Avenue
Athletic Club, and his wife, Jan Elrod, had signed as the secretary of ALE. 6
Elrod also submitted bills from ALE, albeit lacking descriptions of work
performed. For example, a “total bill for work completed at Madison Avenue
Athletic Club from 5/13/2016 – 8/30/16” aggregating to $84,072.00,
contained only summaries of amounts, such as a “5/13/16 bill of $6,000.00.”7
Exhibit L.
[25] The trial court found that Bauman contributed $30,000.00 to “making repairs to
bring the Gym into compliance as ordered by the Board of Health” and that
Elrod had not properly accounted for the use of those funds. Appealed Order at
10. As for Elrod’s claims for reimbursement, the trial court disallowed the
claimed expenses as unsubstantiated, unnecessary, or conflict of interest
transactions that were a breach of Elrod’s fiduciary duty. Ultimately, the trial
court concluded that Elrod had breached his fiduciary duty under Indiana Code
Section 23-1-35-2.
[26] That statute defines a “conflict of interest transaction” and provides in relevant
part:
6
Elrod is the President and owner of ALE.
7
There is a handwritten notation that this $6,000 charge was paid in full by check #4847 on July 13, 2016.
Elrod claimed to have paid this from his personal funds, as a loan to the corporation.
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 20 of 30
A conflict of interest transaction is a transaction with the
corporation in which a director of the corporation has a direct or
indirect interest. A conflict of interest transaction is not voidable
by the corporation solely because of the director’s interest in the
transaction if any one (1) of the following is true:
(1) The material facts of the transaction and the director’s interest
were disclosed or known to the board of directors or a
committee of the board of directors and the board of directors
or committee authorized, approved, or ratified the
transaction.
(2) The material facts of the transaction and the director’s interest
were disclosed or known to the shareholders entitled to vote
and they authorized, approved, or ratified the transaction.
(3) The transaction was fair to the corporation.
[27] The trial court considered whether transactions were conflict-of-interest
transactions but did not address whether any were ultimately fair to the
corporation. Elrod contends that each of the transactions for which he claimed
reimbursement was a transaction “fair to the corporation.” See id. He also
contends that the remediation of health and safety violations had not been
completed when the Mediated Settlement Agreement was executed. The
record before us, consisting of documents and the transcript of argument of
counsel, does not permit meaningful appellate review of these contentions.
Although the trial court had not been specifically ordered on remand to conduct
an evidentiary hearing at which witness testimony would be heard, the better
practice would have been to do so.
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 21 of 30
[28] The Mediated Settlement Agreement did not entitle Elrod to payment for his
subsequent sweat equity or management services. Bauman had in the past
infused capital into the venture and continued to do so. Elrod was to continue
to manage the gym with an expectation of a share of the profits upon sale.
Nonetheless, Bauman and Elrod agree that remediation work was necessary
and it in fact occurred; the record indicates that the Board of Health complaint
was dismissed approximately three months after the Mediated Settlement
Agreement was executed. But it is unclear what remediation expenses, if any,
were post-agreement expenses not covered by Bauman’s $30,000.00
contribution.
[29] Beyond denying Elrod’s claims for compensation for services, the trial court
excluded the entirety of Elrod’s claims for reimbursement. The trial court
expressed concerns about inadequacy of billing, lack of documentation,
unilateral decision-making and self-dealing, and our review of the woefully
inadequate documents causes us to share the trial court’s concerns. That said,
however, we simply cannot ascertain, as a matter of law, that the trial court did
not clearly err in its blanket denial. With further factual development,
testimony, and determinations of credibility, the trial court is in a position to
determine whether the expenses claimed by Elrod are each outside the
parameters of Paragraph 13 and not “fair to the corporation.” I.C. § 23-1-35-2.
We are not in a position to do so. Nor can we make a factual determination
that Elrod did, or did not, make a legitimate loan of $6,000.00 to Madison
Avenue Athletic Club after the execution of the Mediated Settlement
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 22 of 30
Agreement.8 We therefore remand with instructions to the trial court to
conduct an evidentiary hearing on this issue.9
Claim to Lot 22/1030 High Street
[30] Paragraphs 1 and 2 of the Mediated Settlement Agreement allocated the
properties bordered by High Street. Elrod was to receive lots 1033, 1034, 1035,
1037, 1039, 1041, 1045, 1047, 1049, and 1055. Bauman was to receive lots 330,
332, 336, 340, 1042, 1046, 1047 and 1048. These were properties that were
“titled either in the name of [Bauman] and/or [Elrod] and MAAC, Properties,
Inc.” (Exhibit A, pg. 1.) Bauman was to “receive all shares equaling 100% of
MAAC Properties, Inc.” See id.
[31] After the Mediated Settlement Agreement was reached, Elrod requested that
the Marion County Assessor designate certain property as a separate parcel for
taxation. On July 26, 2018, Elrod paid $133.06 in real estate taxes for property
identified as “Nobles Sub L22” or 1030 High Street. (Appellee’s App. Vol. II,
pg. 42.) At the remand hearing, Elrod asserted that this parcel was his separate
property, not distributed by the Mediated Settlement Agreement.
8
The trial court observed that Elrod claimed to have loaned $23,183.75 to Madison Avenue Athletic Club,
but submitted a sole supporting document, one check in the amount of $6,000.00.
9
To the extent that Elrod suggests the trial court was required to conduct a hearing on the quantum meruit
value of Elrod’s services, we disagree. The equitable theory of quantum meruit, or unjust enrichment, may
be raised where a measurable benefit has been conferred upon a defendant under circumstances where
retention of the benefit would be unjust. King v. Terry, 805 N.E.2d 397, 400 (Ind. Ct. App. 2004). Where, as
here, there is a contract, the equitable remedy is inapplicable. See id.
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 23 of 30
[32] Bauman argued that this property had been part of a larger parcel obtained at a
sheriff’s sale and the agreement had contemplated that Bauman receive the
entirety of the sheriff’s sale property. The trial court observed that Paragraph 2
of the Agreement granted Bauman property inclusive of lots 330, 332, 336, and
340 on Prospect Street. Having examined the documentary evidence, the trial
court entered findings in pertinent part as follows:
167. The Sheriff’s Deed dated December 28, 2001 and recorded
with the Marion County Recorder’s Office as instrument number
2002-0093948 includes the entirety of Lot Numbered 22 in its
legal description of the properties “more commonly known as
330, 332, 336, & 340 Prospect.”
168. The quitclaim deed recorded with the Marion County
Recorder’s Office as instrument number A201700086957
purporting to transfer real estate known as Lot 22 or 1030 High
Street to Mr. Elrod was not executed until July 19, 2017, more
than a year after the Agreement was signed.
169. The quitclaim deed recorded with the Marion County
Recorder’s Office as instrument number A201700086955
purporting to transfer real estate known as 330 Prospect Street to
Mr. Elrod was not executed until July 19, 2017, more than a year
after the Agreement was signed.
170. A property allegedly located at 1050 High Street does not
appear anywhere in legal records until the Marion County
Assessor’s Office was asked to split Parcel Number 1026014
(1046 High Street) on July 8, 2016 by the owner of the property.
Mr. Elrod is the purported owner who asked the Assessor’s
Office to split the property without Mr. Bauman’s knowledge or
consent.
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 24 of 30
171. The current titleholder of 1046 High Street is Mr. Elrod,
though Paragraph 2 of the Agreement grants 1046 High Street to
Mr. Bauman.
172. Mr. Elrod never raised the contention that he was entitled
to Lot 22 or the alleged properties at 1030 High Street or 1050
High Street at the time of the Agreement, trial or appellate court
level .. [or] contended that any portion or interest in the
Apartment Land or Four-plex Land were to be reserved to him
and has waived those claims.
(Appealed Order at 19-20.) (Emphasis in original.)
[33] The trial court concluded that Elrod had agreed to transfer to Bauman
“Apartment Land and Four-plex Land” and Elrod’s post-agreement attempt to
enlarge the property distributed to him was contrary to the parties’ agreement
and Elrod’s claims were “denied.” Id. at 21. At the same time, however, the
trial court ordered Bauman to procure a survey to “clearly define the
modernized legal descriptions of the Apartment Land and the Four-plex Land
as well as the street addresses to which they relate.” Id.
[34] A survey describing metes and bounds may be utilized to settle boundary
disputes. See, e.g., Lane Alan Schrader Trust v. Gilbert, 974 N.E.2d 516, 517 (Ind.
Ct. App. 2012). Here, there is no boundary dispute; rather, there are competing
claims of ownership of certain property. It appears that Elrod attempted to
claim more property than the Mediated Settlement Agreement allowed but,
absent additional factual development, we cannot determine as a matter of law
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 25 of 30
the parties’ respective ownership rights. We remand for an evidentiary hearing
on this issue.
Easement to Alley at Prospect Street
[35] Elrod owned a vacant alley on the east side of the gym. Regarding this alley,
Paragraph 3 of the Mediated Settlement Agreement provides:
The vacated alley that is due west of lot 330 shall remain in
[Elrod]’s name unless it is purchased by the purchaser of the gym
in which case [Elrod] will transfer his interest at no additional
cost to Madison Avenue Athletic Club, Inc. If the gym purchaser
does not purchase the vacated alley, upon closing of that sale,
[Elrod] will deed the vacated alley to [Bauman] so long as
[Bauman] remains the owner of the parcels 336 and 340 Prospect
set over to him in paragraph 2 above.
(Exhibit A at 1-2.) To effectuate the sale of the gym, Elrod deeded the alley to
the gym purchaser. In turn, the gym purchaser granted M.A.A.C. and Elrod a
written easement to use the alley. According to Bauman, Elrod was likely
granted an easement because he was at the time exercising management duties
on behalf of M.A.A.C.
[36] The trial court concluded that the Mediated Settlement Agreement reserved to
Elrod no interest in the alley and ordered that Elrod execute a deed transferring
his interest in the easement to Bauman or M.A.A.C., as owner of the dominant
land. Elrod argues that he should not have been required to relinquish an
easement granted to him by the purchasers of the gym.
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 26 of 30
[37] Paragraph 3 sets forth alternatives, but neither scenario contemplates that Elrod
would have an interest in the alley after consummation of the gym sale. Either
the gym purchaser could purchase the vacated alley or, if the gym purchase did
not include the alley, Elrod would execute a deed so that ownership of the alley
would correspond to ownership of certain parcels retained by Bauman. A third
scenario actually transpired – the gym buyer purchased the alley and granted
Elrod an easement. The gym buyer was not a party to the Mediated Settlement
Agreement and could grant an interest not contemplated therein. The trial
court’s order that Elrod relinquish a property interest granted to him by a third
party is not an order in enforcement of the Mediated Settlement Agreement.
Purported Dismissal of SEND Claim
[38] Finally, Elrod argues that the trial court erred by purportedly dismissing with
prejudice any claim with respect to SEND. In 2008, SEND and M.A.A.C.
executed two leases with options to purchase related to portions of Prospect
Street. Contingent upon M.A.A.C. making improvements to a parking lot,
Madison Avenue Athletic Club would have the right to use the parking spaces.
The specified time passed without improvements being made and, by the time
of the remand hearing, there was no active agreement between SEND and
Bauman, Elrod, Madison Avenue Athletic Club, or M.A.A.C. Despite the
failure of the contingency, Elrod may have engaged in negotiations or provided
other management services with respect to parking availability.
[39] The trial court made the following entry denominated as finding of fact 142:
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 27 of 30
The court dismisses with prejudice any claims that either party
might raise regarding the SEND property. The issues with them
are moot and the parties no longer have a colorable claim to the
SEND property or lease options.
(Appealed Order at 16.) The trial court need only have enforced the Mediated
Settlement Agreement on remand. Regardless of whether Elrod negotiated
with SEND representatives or expended other efforts to obtain parking near the
gym, the Mediated Settlement Agreement does not provide for payment for his
management services.10 The trial court could provide the parties with no relief
on a SEND related claim. The order purportedly dismissing a moot claim is
superfluous.
Order to Davis to Execute Deed
[40] Davis was named as a defendant to answer as to any interest she might have in
1041 High Street. Bauman asserted, and Elrod has not disputed, that
$16,500.00 of venture funds were provided to Davis to purchase that property at
a tax sale in 2013. Apparently, Davis resided in and had improved the
property, and no deed had ever issued to Bauman, Elrod, or either of the
companies in which they were shareholders. However, 1041 High Street was a
property included within the Mediated Settlement Agreement, thereby
excluding a future equitable claim by either party to the agreement.
10
As the trial court observed, Elrod was paid for his services via his receipt of a share in the profits. Bauman
had provided capital for his 50% share and Elrod had provided services for his 50% share. At times, despite
the contributions of the parties, there had been shared losses.
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 28 of 30
[41] On remand, the trial court was tasked with enforcing the Mediated Settlement
Agreement, to which Davis is not a party. Elrod was given that which he
bargained for – Bauman will make no claim that he holds an equitable interest
in 1041 High Street or that he is entitled to reimbursement of any portion of
venture funds expended to acquire that property. Elrod’s subjective expectation
that his sister would later relinquish a claim to that property, or Davis’s
expectation that she would retain the property free and clear, is irrelevant to
enforcement of the Mediated Settlement Agreement. Davis simply is not
bound by an agreement to which she was not a party. The trial court’s order to
Davis that she execute a quitclaim deed to Elrod goes beyond enforcement of
the Mediated Settlement Agreement and is thus clearly erroneous.
Conclusion
[42] Elrod has not established that he was denied due process under the United
States Constitution or the Indiana Constitution. We affirm the order that
Bauman execute a quitclaim deed for 1041 High Street and the order regarding
mortgage assumption. We reverse the orders that are not enforcing the
Mediated Settlement Agreement, specifically, the order that Davis execute a
quitclaim deed to 1041 High Street, the order that Elrod execute a quitclaim
deed to an easement pertaining to an alley, and an order purportedly dismissing
a potential SEND claim. We remand for an evidentiary hearing upon the
remaining issues.
[43] Affirmed in part, reversed in part, and remanded for an evidentiary hearing.
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 29 of 30
Najam, J., and May, J., concur.
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3020 | October 31, 2019 Page 30 of 30