FOR PUBLICATION
ATTORNEYS FOR APPELLANTS: ATTORNEY FOR APPELLEES:
WILLIAM L. WILSON SHAWN P. RYAN
BERNARD E. EDWARDS, JR. South Bend, Indiana
Anderson, Agostino & Keller, P.C.
South Bend, Indiana
IN THE
COURT OF APPEALS OF INDIANA
PATRICK J. MCGRAW, P.J. MAC, INC. )
and JAMISON INN PARTNERSHIP, )
)
Appellants-Defendants, )
)
vs. ) No. 71A04-0312-CV-635
)
LOUIS MARCHIOLI, SUSANNA )
MARCHIOLI, and EDWARD )
KISSCORNI on behalf of themselves )
and all others similarly situated as )
Members of the Jamison Residential )
Condominium Association, Inc., )
)
Appellees-Plaintiffs. )
APPEAL FROM THE ST. JOSEPH SUPERIOR COURT
The Honorable Jenny Pitts Manier, Judge
Cause No. 71D09-9809-CP-01116
August 10, 2004
OPINION - FOR PUBLICATION
VAIDIK, Judge
Case Summary
Patrick J. McGraw, P.J. Mac, Inc., and Jamison Inn Partnership (collectively, McGraw) appeal
the trial courts Order Approving Compromise and Settlement of Class Action. In
particular, McGraw claims that the trial court erroneously enforced the settlement agreement because
a condition contained within the mediated settlement agreement had not been satisfied.
Because McGraw elected to go forward with the agreement even after realizing that
the condition contained therein would not be satisfied, we find that McGraw waived
the condition and cannot now attempt to avoid any obligation under the settlement
agreement because the condition was not satisfied. Consequently, we affirm.
Facts and Procedural History
This case arises out of a dispute regarding the placement and acquisition of
easements. Louis Marchioli, Susanna Marchioli, and Edward Kisscorni (collectively, the Class Members)
are owners of units in the Jamison Residential Condominiums complex, which is situated
on what we will refer to as the Residential Property. McGraw is
developing the real estate physically adjacent to the north of the Residential Property,
which we will refer to as the 615 Property. At one time,
the Residential Property and the 615 Property comprised a single tract of land,
which was owned by Francis Smith. Smith conveyed the Residential Property to
the Jamison Inn Partnership in 1987. The deed conveying the Residential Property
reserved an easement for ingress and egress over the Residential Property and specified
that the reason for reserving the easement was to prevent the 615 Property
from becoming landlocked.
See footnote
The location of this easement, however, was not specifically
designated.
See footnote
Eventually, McGraw began developing Jamison House, a seven-unit condominium building, on the 615
Property. During the course of developing the 615 Property, construction vehicles accessed
the 615 Property by driving through the grassy, landscaped common area located at
the northern portion of the Residential Property. McGraw made known his intent
to pave this path as a means of egress and ingress for the
Jamison House Development.
Susanna Marchioli was not pleased with this turn of events because the traffic
to and from the 615 Property invaded her quiet enjoyment of the common
areas adjacent to her condominium, of which she owned an undivided interest.
Thus, the Class Members filed a verified complaint to enjoin McGraw from further
developing, paving, using, or otherwise improving any of the common areas in the
Residential Property. Appellants App. p. 13. Subsequently, the parties agreed to
submit their dispute to mediation.
As a result of settlement negotiations, the parties entered into a settlement agreement
by which the Class Members agreed to grant McGraw three easements along the
Residential Property: the Western Easement, the Eastern Easement, and the Northern Easement.
The Class Members also agreed to cooperate with McGraw in obtaining an
easement from the owners of an adjacent lotthe Turtle Creek Easement.
See footnote
In
exchange for the three easements on the Residential Property and the Class Members
cooperation in obtaining the Turtle Creek Easement, McGraw agreed to pay the Class
Members one lump sum of $15,000. Additionally, the settlement agreement expressly provided:
This settlement is contingent on the parties securing the Turtle Creek Easement
within a period of ninety (90) days from the date of this Agreement
and obtaining any necessary approval from the Court. Appellants App. p. 205,
215. The parties executed the Settlement Agreement on June 14, 2001.
The Class Members cooperated with McGraw in his attempt to obtain the Turtle
Creek Easement. Due to what McGraw perceived as an exorbitant asking price
for the Turtle Creek Easement,
See footnote
however, McGraw decided to forgo it as a
means of access to the Jamison House Development. Nonetheless, shortly after the
ninety-day time period for obtaining the Turtle Creek Easement expired, McGraw elected to
partially pave the Western Easement described in the Settlement Agreement. Additionally, at
some point before September 2003, Jamison House residents began using the Northern Easement.
Although McGraw was using at least two of the three easements the
Class Members had agreed to grant McGraw, McGraw had not yet paid the
Class Members the $15,000 specified in the Settlement Agreement for use of the
easements. Consequently, the Class Members moved the trial court to enforce the
Settlement Agreement.
After a hearing on the matter, the trial court determined that the Plaintiffs
have complied with the gravamen of the settlement agreement, that defendants have taken
advantage of and have benefitted [sic] from the easements contemplated to be given
by plaintiffs under the Settlement Agreement, and that the Settlement Agreement should be
enforced. Appellants App. p. 7-8. McGraw now appeals.
Discussion and Decision
McGraw contends that the trial court erred when it enforced the Settlement Agreement
because one of the conditions necessary to make the agreement enforceable had not
been satisfied. In particular, McGraw argues that because the Turtle Creek Easement
was not obtained, the Settlement Agreement was rendered legally defunct and should not
have been enforced. The Class Members counter that because McGraw used at
least one or more of the easements specified in the Settlement Agreementand even
paved the Western EasementMcGraw waived the condition that the Turtle Creek Easement be
obtained. Having waived this condition, the Class Members continue, McGraw cannot now
try to avoid his obligation to pay the Class Members for use of
the easements.
At the outset we note that it is well settled that the construction
of settlement agreements is governed by contract law. Ind. State Highway Commn
v. Curtis, 704 N.E.2d 1015, 1018 (Ind. 1998); see also 5 I.L.E. Compromise
& Settlement § 21 (1958). Construction of the terms of a written
contract is a pure question of law for the court, and we conduct
a de novo review of the trial courts conclusions in that regard.
Park Hoover Village Condo. Assn, Inc. v. Ardsley/Park Hoover Ltd. Pship, 766 N.E.2d
13, 17 (Ind. Ct. App. 2002), rehg denied.
The parties agree that the obtaining of the Turtle Creek Easement was a
condition precedent explicitly set forth in the Settlement Agreement. Under contract law,
a condition precedent is a condition that must be performed before the agreement
of the parties becomes a binding contract or that must be fulfilled before
the duty to perform a specific obligation arises. Curtis, 704 N.E.2d at
1018; see also Restatement (Second) of Contracts § 224 (1981) (a condition is
an event that must occur before performance under a contract becomes due); 13
Richard A. Lord, Williston on Contracts § 38.7 (4th ed. 2000) (a condition
precedent is either an act of a party that must be performed or
a certain event that must happen before a contractual right accrues or contractual
duty arises).
As a general rule, an express condition must be fulfilled or no liability
can arise on the promise that the condition qualifies. 13 Williston on
Contracts § 38.7; Restatement (Second) of Contracts § 225 (1981) (if a condition
does not occur, performance of a duty subject to a condition cannot become
due and if the condition can no longer occur, the duty is discharged).
Indiana courts have consistently recognized this rule. See, e.g., Blakley v.
Currence, 172 Ind. App. 668, 361 N.E.2d 921, 923 (1977) (holding that an
agreement containing the clause subject to loan approval did not become a binding
contract because approval was not obtained); Wetzel v. Andrews, 136 Ind. App. 117,
198 N.E.2d 19, 21 (1964) (holding that a lease was not valid where
the condition precedent of statutorily required approval by the governmental entity was not
met). Performance of a condition, however, may be excused by waiver.
Curtis, 704 N.E.2d at 1019.
Waiver is an intentional relinquishment of a known right involving both knowledge of
the existence of the right and the intention to relinquish it. Intl
Health & Racquet Club, Inc. v. Scott, 789 N.E.2d 62, 66 (Ind. Ct.
App. 2003) (quoting van de Leuv v. Methodist Hosp. of Ind., Inc., 642
N.E.2d 531, 533 (Ind. Ct. App. 1994), rehg denied). A condition in
a contract may be waived by the conduct of a party. Id.
A waiver of a condition that occurs after the time for performance
of the condition becomes due is referred to as an election:
[A] party that has waived a condition after the time for occurrence of
the condition has expired is subject to a dramatically different rule, one that
has been influenced by the concept of election. The word election signifies
a choice, one that is often binding on the party that makes it.
. . . When the time for occurrence of a condition has
expired, the party whose duty is conditional has such a choice. That
party can take advantage of the nonoccurrence of the condition and treat the
duty as discharged or can disregard the nonoccurrence of the condition and treat
the duty as unconditional. Courts often hold that a party that chooses
to disregard the nonoccurrence of a condition is bound by an election to
treat the duty as unconditional; that party cannot reinstate the condition even if
the other party has not relied on this choice.
II E. Allen Farnsworth, Farnsworth on Contracts § 8.5 (3d ed. 2004) (emphasis
in original).
The Settlement Agreement was expressly conditioned upon McGraw obtaining the Turtle Creek Easement
within ninety days. McGraw could have obtained the Turtle Creek Easement within
the allotted time, but he was unwilling to pay the premium associated with
the use of this easement. Instead, McGraw elected to wait until after
the ninety days expired and thenknowing that the condition precedent had not been
satisfiedbegan using at least two of the other easements specified in the Settlement
Agreement. By using the easements specified in the Settlement Agreement, McGraw evinced
an intent to elect to go forward with the Settlement Agreement despite the
fact that the condition precedent had not been satisfied. McGraw is bound
by his election to use at least two of the easements specified in
the Settlement Agreement and cannot now attempt to rely on that condition to
avoid having to satisfy his end of the bargain.
McGraw asserts that by paving the Western Easement, he was merely asserting the
reserved easement rights from the Smith Deed, not waiving any rights or ratifying
the Settlement Agreement. We reject this self-serving assertion for varied reasons.
First, Jamison House residents are using at least two easements, not just one
as was specified in the Smith Deed. Second, the easements being used
are located in the same general area as the easements specified in the
Settlement Agreement. Third, the easement reserved by the Smith Deed was not
specifically located, but Smith averred that the easement he used when he retained
possession of the 615 Property was located on the northeastern portion of the
Residential Property. Fourth, the purpose of the reserved easement was to assure
that the 615 Property would not become landlocked, which is not a concern
because the 615 Property can be accessed by public alleys. In light
of the foregoing, we cannot say that the trial court erred by enforcing
the Settlement Agreement.
Affirmed.
SULLIVAN J., and MAY, J., concur.
Footnote:
Because the 615 Property is accessible from public alleys, it was
not actually in danger of being landlocked.
Footnote:
Based on an affidavit filed by Smith, we know that he
would traverse the panhandle portion of the Residential Property, which was located in
the northeast portion of the parcel along the eastern border of the 615
Property.
Footnote:
McGraw was responsible for paying any premium for the Turtle Creek
Easement.
Footnote:
Turtle Creek wanted to charge McGraw $3000 per year for use
of the Turtle Creek Easement.