Court reduces $1.4M judgment in dispute over work done at Honda plant

The Indiana Court of Appeals has found that Greensburg-based Custom Conveyor Inc. is only entitled to recover about a tenth of the original $1.4 million awarded to it on breach of contract and warranty claims the company made against a subcontractor regarding work on the Indiana Honda plant.

Honda hired CCI, which specializes in installing conveyor systems in factories, to install the necessary systems in the plant it was building in Greensburg. CCI subcontracted computer programming and electrical control box work to L.H. Controls Inc. There were issues with L.H. completing work on time. The delays resulted in pushing the conveyor installation back three months, but that did not affect the opening of the factory.

L.H. sought payment for unpaid invoices from CCI, which it did not pay, so L.H. filed a mechanic’s lien against the Honda plant as well as a personal liability notice against Honda. CCI eventually paid a portion of the invoices, withholding more than $80,000 in chargebacks. L.H. sued Honda and CCI in 2009 for breach of contract and to enforce the personal liability notice against Honda and foreclose the mechanic’s lien. Honda was eventually dismissed and CCI counterclaimed for breach of contract and warranty and indemnification.

The trial court found L.H. breached its contract with CCI in 12 ways, had a contractual obligation to indemnify CCI, and breached warranties. It ultimately awarded CCI damages against L.H. in the amount of $1,409,896.97, which later went up to $1,467,587.61 after factoring in attorney fees and costs.

In L.H. Controls, Inc. v. Custom Conveyor, Inc., 16A05-1111-PL-606, the Court of Appeals reversed the lost profit damages of $1,144,470 awarded to CCI, the $133,328.53 in attorney fees, and the award of damages of $82,184.10 for CCI’s chargebacks, as well as $5,259.38 in set-off for L.H. the court allowed against the chargebacks amount.

Judge Michael Barnes wrote the appellate court could not discern any conceivable basis upon which to affirm the award of lost profit damages against L.H. in any amount. CCI is entitled to seek to make a profit on projects it completes, but there is nothing in the trial court’s findings or the record that would support shifting that expectation onto the back of L.H., he continued.

There is no plain language in the master construction agreement’s indemnity provision that clearly and unambiguously states L.H. would be required to indemnify CCI for all costs associated with any cause of action asserted even by parties to the agreement in a breach of contract action between the parties, the judges held. L.H. would not be required to pay CCI’s attorney fees.

The trial court also erred in including the $82,000 in chargebacks.

The judges did affirm $8,005.86 in costs related to CCI’s removal of the mechanic’s lien against Honda’s property. That amount combined with the damages L.H. did not challenge on appeal – which totaled $104,858.60 – means CCI is only entitled to $112,864.46.