Divided COA upholds summary judgment denial in contract dispute between developer, laborers

A divided panel of the Indiana Court of Appeals has upheld the denial of cross-motions for summary judgment in a Lawrenceburg contract dispute, finding genuine issues of material fact as to whether a land developer breached its contract with the city and whether a class of laborers was entitled to prevailing wages under Indiana’s wage laws.

The competing summary judgment motions were filed in the case of Bryan Alexander, Karl Cameron, William Love, Charlie Lovins, Kevin McMurray and Matt Oelker, on behalf of themselves and all others similarly situated v. Linkmeyer Development II, LLC, et al., 18A-PL-311. The case began in November 2009, when Linkmeyer Development II, LLC, along with its representatives, Steve Linkmeyer and Brian Bischoff, entered into a development contract with the city of Lawrenceburg.

The agreement called for the city to provide Linkmeyer Development with a $3 million line of credit to be used to excavate and fill three local properties. The parties executed a promissory note, a mortgage and personal guarantees, but Linkmeyer Development defaulted on the loan soon after the project ended.

A class of Linkmeyer Development laborers responded by filing suit, arguing a city ordinance, Lawrenceburg Code Section 33.02, required payment of prevailing wages and was incorporated into the development contract. Thus, the laborers asserted claims for breach of contract, unjust enrichment and violations of Indiana wage laws and sought declaratory relief.

The class eventually moved for partial summary judgment in its favor on the breach claim, while the defendants – including Linkmeyer Development, Linkmeyer and Bischoff – moved for summary judgment on all the claims against them. The Dearborn Circuit Court ultimately denied the class’ motion and partially granted summary judgment to the defendants on the unjust enrichment count.

The parties were certified to proceed on interlocutory appeal, with both sides challenging the denial of their summary judgment motions. The grant of summary judgment on the unjust enrichment claim, however, was not challenged on appeal.

The majority of the appellate court wholly affirmed on Friday, with Judge Margret Robb writing that although the language of the contract “unambiguously required that Linkmeyer Development ‘shall comply with all appropriate codes…including the payment of prevailing wages for labor…,’” the loan to Linkmeyer Development was not made “pursuant to an Investment Incentive Program,” as is required under the ordinance.

“One such investment incentive program in place at the time of the Development Agreement can be found in Indiana Code section 5-28-24-2,” Robb wrote. “…At this juncture, the Class has yet to designate evidence that the Development Agreement was approved or financed pursuant to Indiana Code section 5-28-24-2.”

Further, in an affidavit, Lawrenceburg Mayor William Cunningham, a signatory to the agreement, stated he was “unaware of any project approved or financed…pursuant to an ‘Investment Incentive Program’ while I served as Mayor or as Council Member.”

“Although Mayor Cunningham’s affidavit did not ‘affirmatively negate’ the Class’s claim and thus it did not satisfy the Defendants’ burden on their own motion for summary judgment,…it was sufficient to demonstrate the existence of a genuine issue of material fact,” Robb wrote. “Accordingly, we conclude the trial court correctly denied both parties motions’ for summary judgment regarding breach of contract.”

The court likewise upheld the denial of the defendants’ summary judgment motion on the claims brought under the Wage Payment and Wage Claims statutes. In order to proceed under the Wage Claims Statute, the laborers would have to have been involuntary terminated from their employment, Robb said, and they would have been required to exhaust their administrative remedies before filing a complaint with a trial court.

“On appeal, the Defendants argue that because the Class failed to exhaust their administrative remedies before filing their complaint, the Defendants are therefore entitled to summary judgment,” the judge wrote. “However, the Defendants fail to argue – and the record is entirely absent of evidence – that the employees composing the Class were involuntarily separated from their employment.

“Therefore,” Robb continued, “we conclude the Defendants failed to establish they were entitled to summary judgment on this issue and the trial court did not err in denying such motion accordingly.”

But in a partial dissent, Judge John Baker disagreed with the majority – joined by Judge Melissa May – that there is a genuine issue of material fact as to whether the class of laborers is entitled to payment of prevailing wages.

“Neither party offered evidence of a formal ‘Investment Incentive Program’ in the City of Lawrenceburg,” Baker wrote. “Thus, I can only conclude that Section 33.02 refers generally to investment incentive programs that benefit the area, not to any one specific of official program.

“And, simply put, the Development Agreement acted as an investment incentive program for the City of Lawrenceburg,” Baker continued. “Specifically, the City of Lawrenceburg incentivized this development – the investment – by agreeing to finance it. The Defendants then performed work that benefitted the City of Lawrenceburg. If that does not constitution an investment incentive, I do not know what does.”

Thus, Baker said he would find that the only issue of material facts is whether the class did the work to qualify for the prevailing wage – to which he believes the laborers are entitled as a matter of law – and what the prevailing wage would be.