COA affirms breach of contract, reverses malicious prosecution rulings

The Indiana Court of Appeals has partially affirmed a ruling against an automotive maintenance company in a breach of contract dispute with its landlord, while reversing in the company’s favor on its malicious prosecution claims.

After a decade of legal battles initiated by its landlords, AOX, Inc. and AOX President Brian Piunti in 2008 sued the Lake County Trust Company, Trust 4210 and Trust 5061, and Alex Emmanoilidis for breach of contract and abuse of the judicial process. Issues between the parties began not long after AOX entered into a 10-year lease agreement in 1998 with Trust 4210 for property in Portage. AOX sought to use the property to open a preventative automotive maintenance center, but delays resulted in the lease term starting four months behind schedule.

But before its lease began, AOX was threatened with eviction by the trust for failure to pay its first rental installment, despite rent not yet being due. Ten days later, Emmanoilidis, who served as the beneficiary of the trust, directed the Lake County trust to convey the leased property from Trust Number 4210 to Trust Number 5061, with no notice to Piunti.

Two months after that, the trust demanded payment for utility bills and repairs made to damaged water pipes, again under the threat of eviction, even though the expenses occurred prior to AOX’s occupancy.

By 2008, Emmanoilidis had failed to correct numerous defects alerted to by Piunti and filed several lawsuits seeking to evict AOX and claim damages. By the end of the 10-year term, Piunti notified Emmanoilidis that AOX was exercising its option to extend the lease for another five years.

Piunti won its first breach-of-contract suit against the landlords and received an award of damages in the amount of $179,322, as well as $5,950 in damages on its malicious prosecution claim. Soon after, Piunti again filed suit against the landlords, alleging their breaches of contract had continued since the judgment three months earlier.

AOX also alleged the landlords’ filing of a 2012 Porter County lawsuit against it constituted malicious prosecution for being “legally and factually frivolous, unreasonable and groundless from its inception, manifested bad faith both substantively and procedurally, and was filed and prosecuted without probable cause and with malice.” But the Lake Superior Court granted summary judgment for the landlords on that claim, concluding AOX’s breach-of-contract claim was barred by the by the doctrine of res judicata, and that there was no evidence the landlords were operating with ill will in filing their Porter County lawsuit.

The Indiana Court of Appeals affirmed the trial court’s judgment regarding the breach of contract issue in AOX, Inc. and Brian Piunti v. Lake County Trust Company, Trust 4210 and Trust 5061, and Alex Emmanoilidis, 18A-PL-2383,  noting that if AOX was concerned the landlords would refuse to cure the breaches even if it lost in the 2008 litigation, it could have asked the trial court to order the landlords to cure the breaches.

“For whatever reason, AOX did not make such a request,” Chief Judge Nancy Vaidik wrote. “Instead, it waited until 2012 to file a new breach-of-contract claim based on the same breaches it was aware of in 1999. That claim is plainly barred by the ten-year limitation period established by (Indiana Code) Section 34-11-2-11… .”

But the appellate panel agreed with AOX on its malicious prosecution claim, solely reversing the Lake Superior Court on that issue. The panel found that the landlords made a counterclaim against AOX relating to a broken window in its first litigation in Lake County, lost by directed verdict, then moved to Porter County and filed a new lawsuit regarding the same broken window.

“The Porter County action was obviously res judicata and was destined to fail,” Vaidik wrote. “Whether the Landlords acted with malice when they filed that hopeless lawsuit is an issue that should be decided by the trier of fact, especially given the Landlords’ history of filing lawsuits to harass AOX.”