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Pursuant to Ind.Appellate Rule 65(D), this Memorandum Decision shall not be regarded as precedent or cited before any court except for the purpose of establishing the defense of res judicata, collateral estoppel, or the law of the case. ATTORNEYS FOR APPELLANTS: Steven E. Jahn: ROBERT E. KABISCH ANDREW S. WILLIAMS Hunt Suedhoff Kalamaros, LLP Fort Wayne, Indiana Greg and Cindy Tucker: KAREN T. MOSES SHANNON K. REED Baker & Daniels LLP Fort Wayne, Indiana ATTORNEY FOR APPELLEES: ROGER W. HULTQUIST Fort Wayne, Indiana

IN THE COURT OF APPEALS OF INDIANA
STEVEN E. JAHN, GREG TUCKER, and CINDY TUCKER, Appellants-Defendants, vs. PATRICK HOGAN and CYNTHIA HOGAN, Appellees-Plaintiffs. ) ) ) ) ) ) ) ) ) )

No. 02A04-0604-CV-210

APPEAL FROM THE ALLEN SUPERIOR COURT The Honorable Daniel G. Heath, Judge Cause No. 02D01-0107-CP-1357

September 28, 2007

MEMORANDUM DECISION - NOT FOR PUBLICATION BAILEY, Judge

Case Summary Appellants Greg and Cindy Tucker (collectively, "the Tuckers") and Steven Jahn ("Jahn") appeal an order of the Allen Superior Court providing that Jahn is liable for damages and punitive damages attributable to his fraud in a real estate transaction, and also liable for contract-based attorney's fees, and the Tuckers are liable for nuisance and for interference with an easement possessed by Patrick and Cynthia Hogan (collectively, "the Hogans") across a pond touching the Tucker and Hogan properties. We affirm in part, reverse in part, and remand for further proceedings with respect to damages. Issues Jahn raises the following issues: I. Whether there is sufficient evidence to establish that he committed fraud or fraudulent inducement; Whether there is sufficient evidence to establish that he breached a contract with the Hogans to support the award of attorney's fees; and Whether the award of compensatory and punitive damages is erroneous.

II.

III.

The Tuckers raise the following additional issues: I. II. Whether the grant of an easement to benefit the Hogans is erroneous; Whether the trial court erred by permitting the Hogans to change their election of remedies; Whether the award of compensatory damages against them is erroneous; and 2

III.

IV.

Whether the trial court erroneously failed to award the Tuckers damages on their counterclaim for the Hogans' removal of dirt from the Tucker property. Facts and Procedural History

During September of 1998, the Hogans were looking for unimproved real property on which to build a house. They located a parcel of property on Hollopeter Road in Allen County, listed with Mike Thomas & Associates for $35,000.00 (hereinafter, "Lot 1"). An existing pond was visible but arguably not touching Lot 1 on the south side of the parcel. Lot 1 was in proximity to, but not a part of, The Preserves of Cedar Canyons subdivision, which featured a series of manmade ponds connecting to form a large pond or small lake. The multiple listing indicated that Jahn was the listing agent and stated "Developer will provided [sic] excavation for a small lake and daylite [sic] basement." (Pl. Ex. 4.) The Steven E. Jahn Development Corporation, of which Jahn was President, had entered into an agreement on March 24, 1998 to purchase Lot 1 from the TLC Living Trust. Jahn's development company had tendered the purchase price but had not taken the deed to the property. Patrick Hogan contacted Jahn, and he and Cynthia Hogan met with Jahn on September 7th or 8th. Jahn represented to Hogan that he had acquired Lot 1 from the TLC Living Trust and was offering it for sale for a firm price of $35,000.00. Jahn indicated that the buyer would have access to the pond visible from Lot 1, could "take a boat on the pond, ... fish in the pond [and] put a beach on the pond." (Trial Tr. 70.) Jahn informed the Hogans that they would be responsible for a portion of the insurance and maintenance for the pond, together

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with other lot owners in the Preserves of Cedar Canyons. Jahn advised the Hogans to call Cheryl Rogers, the Treasurer of the Preserves' Association, to ask about their portion of the fees. Jahn informed Hogan that some lots he had for sale near Lot 1 would be sold for slightly less than Lot 1, because the other lots would have access to a smaller pond. One of the Hogans asked Jahn about properties for sale on the other side of the pond, and Jahn stated "they were almost twice as expensive because they were bigger lots and they were in the Association, in the Preserves of Cedar Canyon." (Trial Tr. 41.) 1 The Hogans were not interested in the more expensive lots, but asked that the original lot size of Lot 1 be increased from 2.65 acres to 3 acres. Jahn agreed to survey and deed a 3 acre lot to the Hogans. After the increase of the parcel to 3 acres, a small portion of the pond touched Lot 1. Jahn completed an Agreement to Purchase Unimproved Real Estate, dated September 8, 1998, for the sale of Lot 1 as a 3-acre lot ("the Agreement"). Jahn inserted an expiration date of September 9, 1998. On the 9th of September, Patrick Hogan telephoned Jahn to set up a meeting to make on offer to purchase Lot 1. On the 10th of September, Patrick and Cynthia met with Jahn. Jahn produced the substantially completed and technically expired Agreement, which he had signed to acknowledge his capacity as broker/associate for both the listing and selling entities. He had checked a box indicating he was representing both Buyer and Seller. Jahn also had handwritten in the words: "Buyer to be Granted Easement Rights to Lake at South of Track [sic]." (Jahn App. 51.) Jahn did not sign the line provided for "Unconditional Acceptance by

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Seller" or the line provided for "Conditional Acceptance by Seller." (Trial Tr. 79.) Patrick signed the Agreement. Cynthia tendered a $500.00 earnest money check, but did not sign the Agreement. Jahn later denied accepting the offer in that "he didn't agree to the easement." (Trial Tr. 225.) However, he acknowledged that he drafted no counter-offer. The parties proceeded as if an agreement for sale had been reached. Jahn procured a survey of Lot 1, which included no reference to an easement to a lake or pond. Jahn also contacted a title company to conduct a title search and prepare a deed.2 In so doing, Jahn faxed a request form but he did not recall providing the title company with a copy of the Agreement. Patrick Hogan obtained financing through Grabill Bank, and the closing took place there, with Jahn and Hogan appearing at separate times to execute documents. On October 28, 1998, the Steven E. Jahn Development Corp. executed a Corporate Deed for Lot 1 to Hogan. The deed did not include any reference to an easement to the pond, but referenced an ingress and egress easement on the northeast corner of the property. Additionally, the deed described the property as being subject to all "easements of record." (Jahn App. 181.) However, there were no such recorded easements. The Hogans built a house on the deeded property in 2000. They installed a geothermal home heating and cooling system with discharge lines going into the pond. Jahn dug an additional small pond between Lots 2 and 3, but that pond did not touch Lot 1. On October 7, 2000, and again on January 19, 2001, the TLC Living Trust conveyed
1

Plaintiffs' Exhibit 1, a marketing brochure for the Preserves of Cedar Canyons, listed the lots at $49,000.00 to $97,375.00. 2 Lot 1 was originally deeded to Patrick Hogan, who later quitclaimed the property to Patrick and Cynthia

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land to the Tuckers (Lot 16 and Lot 17) so that the Tuckers became neighbors of the Hogans. During 2001, Greg Tucker lowered the water level of the pond between the Hogan and Tucker properties. During August of 2002, the Tuckers purchased Lot 18 from Pam and Brad Baker. Following their purchase of Lot 18, the Tuckers excavated the pond to a deeper level and placed the excavated dirt in an area approximately 20 feet inside the Tuckers' property line and parallel to the Hogan's property line. The Tuckers constructed a large earthen mound (several stories high and approximately 300 feet long) across the northern portion of their property so that the Hogans' small portion of the pond was separated from the large portion of the pond on the Tuckers' property. On July 18, 2001, the Hogans filed a complaint for breach of contract against Jahn, and for violation of easement rights and riparian rights against the Tuckers. The Hogans subsequently filed amended complaints in which they added claims for violation of subjacent support rights, nuisance and conversion against the Tuckers and fraudulent misrepresentation and breach of agent duty against Jahn. Finally, the Hogans sought preliminary and permanent injunctions to prevent the Tuckers from obstructing the Hogans' use of the pond. The Tuckers cross-claimed against the Hogans alleging that they trespassed and illegally removed dirt from Lot 18 when it belonged to the Bakers. On November 20, 2002, and December 12, 2002, the trial court held an evidentiary hearing on the Hogans' motion for a preliminary injunction. Jahn testified and, in response to questioning from the trial court, admitted that he "represented to the Hogans that they'll have an easement access to the lake at the south of tract." (Hogan App. 527.) However, Jahn

Hogan, as husband and wife.

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contended that the Deed was the "controlling document." (Hogan App. 524.) On January 15, 2003, the trial court issued its findings of fact, conclusions of law, and order on the request for a preliminary injunction. The trial court concluded that the Hogans "have reparian [sic] rights in the pond at the Preserves of Cedar Canyons." (Jahn App. 124.) However, the trial court also concluded that the Hogans had not shown that their remedies at law were inadequate and thus were not entitled to a preliminary injunction. On March 13, 2003, the Tuckers moved for summary judgment. Jahn filed a motion for summary judgment on April 22, 2003. On July 14, 2003, the trial court denied the motions for summary judgment and entered partial summary judgment in favor of the Hogans on their claim against the Tuckers for interference with riparian rights. The court ordered the Tuckers to remove the large mound of dirt parallel to the Hogans' property and to "restore the original bank of the pond without further delay." (Tuckers' App. 42.) As to the Hogans' claims against Jahn, the trial court found that a genuine issue of material fact concerning reasonable reliance precluded the entry of summary judgment. On November 26, 2003, the trial court entered the following order: WHEREFORE, the Court now Orders Defendants Greg and Cindy Tucker to remove a portion of the dirt wall they have constructed on their property which prevents the Hogans from the quiet enjoyment of their riparian rights. The portion of the dirt wall that shall be removed must be sufficient to permit water of the pond in question to intersect the Hogans' property line at a point commencing 200 feet west of the southeastern most point of the Hogans' property and running 160 feet in a westerly direction permitting a continuous portion of water of the pond to intersect and cross the Hogans' southern property line. Sufficient water of the pond shall be made to flow over the Hogans' southern property line to fill in the Hogans' shoreline that existed prior to the lowering of the pond which permitted the Tuckers to build the dirt wall. The Tuckers shall have until the close of the Court of [sic] January 5, 2004 in which to remove the aforementioned portion of their dirt wall. 7

(Tuckers' App. 47.) On June 24, 2004, after viewing the subject property and conducting an additional hearing, the trial court issued an order "reaffirm[ing] that the Hogans have a riparian interest in the pond" and ordering the Tuckers to "recommence the excavation and removal of dirt interfering with the Hogans' peaceful enjoyment of their riparian rights." (Hogans' App. 130-32.) The Tuckers were given thirty days in which to remove the dirt. The matter proceeded in a bifurcated bench trial. On July 21, 2004, the trial court heard evidence of liability on the fraud and nuisance claims and on the Tucker's counterclaim for trespass. Patrick Hogan and another prospective purchaser of Lot 1 testified that Jahn held out Lot 1 as a parcel of property having access to the large pond rather than the small pond for Lots 2 and 3. Jahn testified that it was his duty to place the easement language in the Agreement upon the Hogans' request, but he never had any intention of giving the Hogans an easement and risking lawsuits from the landowners in the Preserves of Cedar Canyons. During the trial, the parties stipulated that the Purchase Agreement was not a valid written agreement because of the expiration date and the lack of Jahn's acceptance signature. Nevertheless, the trial court found no lack of enforceability due to the Statute of Frauds because Jahn had otherwise signed the document and the parties had performed their respective obligations of tendering the purchase price and tendering the deed. 3

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Ind. Code

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