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FOR PUBLICATION

FILED
Mar 30 2012, 9:30 am
of the supreme court, court of appeals and tax court

CLERK

ATTORNEY FOR APPELLANT: A. DAVID HUTSON Smith Carpenter Thompson Fondrisi Cummins & Lewis, LLC Jeffersonville, Indiana

IN THE COURT OF APPEALS OF INDIANA
IMPERIAL INSURANCE RESTORATION & REMODELING, INC., Appellant-Plaintiff, vs. JAMES COSTELLO, Appellee-Defendant. ) ) ) ) ) ) ) ) ) )

No. 10A05-1109-SC-478

APPEAL FROM THE CLARK SUPERIOR COURT The Honorable Joseph P. Weber, Judge The Honorable Kenneth R. Abbott, Magistrate Cause No. 10D03-1103-SC-444

March 30, 2012

OPINION - FOR PUBLICATION

BAILEY, Judge

Case Summary Imperial Insurance Restoration & Remodeling, Inc. ("Imperial") appeals the trial courts order granting judgment in favor of James Costello ("Costello") on its small claims action for breach of contract. Imperial raises three issues for our review, which we consolidate and restate as the following single issue: whether the trial court erred by granting judgment in favor of Costello. We reverse and remand. Facts and Procedural History Imperial is in the business of repairing and restoring residential and commercial property after it has been damaged by fire, water, wind, or other causes. It receives business referrals from insurance companies or from other intermediaries when insurance policyholders file property damage claims. James Costello lives with his wife, Lisa Costello ("Lisa"), (collectively, "the Costellos") in a house in Charlestown, Indiana that is owned by Lisa and covered by an insurance policy in her name. On November 21, 2010 or November 22, 2010, a pipe in the Costellos house burst and released large amounts of water. When Costello returned from work that day, he turned the water line off and he and Lisa placed fans and a dehumidifier in their basement to control the water damage. Lisa contacted the insurance company, who then contacted Imperial and provided the Costellos contact information. Imperial called the Costellos and scheduled a time to go to their house and perform emergency services. Imperial arrived at the Costellos home to make repairs on November 26, 2010. Before Imperial began work, Costello signed a "Work Authorization" contract authorizing

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Imperial to make repairs to the Costellos home. Exhibit A. The Work Authorization contained the following clauses: Customer understands that Contractor has no connection with customers insurance company or its adjuster and that the customer alone agrees that customer is solely responsible for payment of the total cost, including contractors fee for stated repairs. *** Final payment of the total cost is due to contractor upon completion of project. I (we), the customer(s) receive the check from the insurance company; I (we) hereby agree to promptly endorse said payment to [Imperial] for disbursement. Customer agrees that any payments not made in accordance with this agreement when due shall be considered delinquent after ten (10) days and agrees to pay interest thereon to contractor at 2% per month (or the maximum rate allowed by law) until contractor is paid in full. It is the intent of the parties signing the agreement that the contractor be a third party beneficiary of any and all insurance contracts covering this job. Exhibit A. The back of the Work Authorization also contained several terms and conditions, but the agreement did not describe the proposed home improvements, completion dates, contingencies, or price. Although Costello signed the document, he testified that he did not read it, and that it was presented to him as merely an authorization to let Imperial into his house to begin work. On November 26, 2010, Imperial workers checked the water damage, removed a section of the basement ceiling, set out two air movers and a dehumidifier, and sprayed mold and mildew neutralizer. The next day, Imperial sent a crew to do a moisture check, which entailed measuring indoor and outdoor temperatures and humidity. The parties had an

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appointment scheduled for November 28, 2010, but neither of the Costellos were at the appointment. Imperial sent a crew to the Costellos house for a final time on December 2, 2010, and determined that the house was dry. Before Imperial removed its equipment, Costello signed a "Certificate of Satisfaction" stating that Imperials repairs were fully completed to his absolute satisfaction as stated in the contractual agreement and that he authorized payment to be made, in full, directly to Imperial. Exhibit B. Costello testified that he did not read this document either. It was his understanding that, by signing the form, he was merely authorizing Imperial to remove its equipment. The total charge for Imperials work was $669.86. The Costellos insurance company sent, and the Costellos received, a check for the money due to Imperial for its work. The Costellos cashed the check shortly before Christmas of 2010. After numerous attempts to collect from the Costellos, Imperial filed a small claims action on March 17, 2011, seeking the money for services it provided, plus interest, as well as court costs and attorney fees. A small claims hearing was held on August 1, 2011. After receiving testimony from Imperials owner and Costello, the trial court made the following statement from the bench to Costello: My perspective is you know how to read. You have an obligation under the law to read what you sign before you sign it because youre going to be responsible for what it says you agreed to do. It says you agree to pay them money. It says youre satisfied with the work that was done...You got the money for the work that was done. Tr. 49-50.

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The trial court then made the following statement to Imperial: Youre responsible for[,] uh[,] providing a contract that implies [sic] with Indiana State law regardless whether you knew about it or not. Uh[,] my understanding of Indiana law is if there is no contract up front that specifies whats going to be charged then a reasonable fee is determined by a fact finder is [sic] what youre entitled to. Im the fact finder...Now I will give your attorney five minutes if you want to present some evidence to me as to[,] um[,] how this is reasonable since there wasnt an agreement up front. Uh[,] then I will make a ruling as to whats reasonable. Tr. 50. The trial court adjourned the hearing without issuing an order and offered the parties the opportunity to submit briefs on the applicability of the Indiana Home Improvement Contracts Act (HICA). After both parties submitted briefs, the court issued an order on August 30, 2011 granting judgment for Costello. Imperial now appeals. Discussion and Decision Standard of Review "Our standard of review is particularly deferential in small claims actions, where ,,the trial shall be informal, with the sole objective of dispensing speedy justice between the parties according to the rules of substantive law." Mayflower Transit, Inc. v. Davenport, 714 N.E.2d 794, 797 (Ind. Ct. App. 1999) (quoting Ind. Small Claims Rule 8(A)). Imperial had the burden of proof at trial on its small claims action, and accordingly we apply a negative judgment standard of review. LTL Truck Service, LLC v. Safeguard, Inc., 817 N.E.2d 664, 667 (Ind. Ct. App. 2004). On appeal, we will not reverse a negative judgment unless it is contrary to law. Id. To determine whether a judgment is contrary to law, we 5

consider the ",,evidence in the light most favorable to the appellee, together with all the reasonable inferences to be drawn therefrom." Id. (quoting Hinojosa v. Board of Public Works & Safety for Hammond, Ind., 789 N.E.2d 533, 542 (Ind. Ct. App. 2003)). We also observe that Costello has not filed an appellees brief. When the appellee has failed to submit a brief we need not undertake the burden of developing arguments on the appellees behalf. Trinity Homes, LLC v. Fang, 848 N.E.2d 1065, 1068 (Ind. 2006). Rather, we will reverse the trial courts judgment if the appellants brief presents a case of prima facie error. Id. Prima facie error in this context is defined as ",,at first sight, on first appearance, or on the face of it." Id. (quoting Santana v. Santana, 708 N.E.2d 886, 887 (Ind. Ct. App. 1999)). Where the appellant is unable to meet this burden, we will affirm. Id. Home Improvement Contracts Act Crucial to resolving Imperials appeal is the application of the Indiana HICA,1 the purpose of which is to protect consumers by placing specific minimum requirements on the contents of home improvement contracts...[because] few consumers are knowledgeable about the home improvement industry or of the techniques that must be employed to produce a sound structure. The consumers reliance on the contractor coupled with well-known abuses found in the home improvement industry, served as an impetus for the passage of [HICA], and contractors are therefore held to a strict standard. Hayes v. Chapman, 894 N.E.2d 1047, 1052 (Ind. Ct. App. 2008) (quoting Benge v. Miller, 855 N.E.2d 716, 720 (Ind. Ct. App. 2006)), trans. denied.
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One of the terms of the Work Authorization is that Kentucky law governs the contract and that its terms will be enforced pursuant to Kentucky law. However, neither party raised a choice of law issue for the trial court, and Imperial makes no such argument on appeal and cites exclusively to Indiana authority in its brief. We therefore surmise that the parties agree that Indiana law governs their contract and resolve Imperials appeal accordingly.

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HICA therefore requires home improvement suppliers2 performing any alteration, repair, or modification to the residential property of a consumer3 for an amount greater than $150 to provide the consumer with a written home improvement contract. I.C.

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