COA affirms judgment for Indy car dealership in sale dispute

A consulting company could not convince the Indiana Court of Appeals that it was entitled to judgment as a matter of law in an Indianapolis car dealership dispute that it lost.

Following the death of her husband, Christine Burd Tanner acquired all of his assets in 2009 and became the sole shareholder and member of Burd Automotive and CB Holdings. Burd Automotive owned the personal property and assets of the former Burd Ford car dealership on Pendleton Pike, while CB Holdings owned the property on which the dealership was located.

Hoping to sell the dealership, Christine met with Harold Hurst of HLH Consulting to find a buyer, and both signed two agreements. First, the asset retention agreement stated that HLH would “solicit buyers and arrange for the sale of

your auto related dealerships by an asset or stock sale”. The second agreement, called the real estate retention agreement, stated that HLH would “obtain a lease or sale of the real estate owned personally by you or your company and used in the operation of your auto related businesses”.

Before closing a deal with a potential buyer, Ford exercised its right of first refusal with respect to the proposed sale and entered into a similar asset, lease, and consulting agreement with Burd Automotive, CB Holdings, and Christine. In connection with the closing, HLH was paid $68,025.25 in commission for the asset sale and Christine of CB Holdings paid HLH $1,440 every month for its commission on the lease agreement.

When Christine stopped making payments a few years later, HLH filed sued Burd Automotive, CB Holdings, and Christine alleging breach of contract and unjust enrichment. But the Marion Superior Court dismissed the complaint after the defendants asserted the retention agreements were void and unenforceable because HLH failed to allege that it was a licensed real estate broker as required by statute.

The trial court later granted summary judgment to the defendants after finding that HLH was not entitled to recover any additional commissions. It ordered that all commission previously received by HLH must be forfeited and returned to the defendants under the retention agreement.

On appeal, HLH argued that the retention agreements were two separate contracts. But while it conceded that the real estate retention agreement was void, HLH contended it could still recover under the asset retention agreement.

HLH further argued, among other things, that under the contemporaneous document doctrine, the two retention agreements are “not intertwined or related to one another and they cannot be construed as one contract” because the asset retention agreement was executed for the purpose of selling the dealership’s assets and the real estate retention agreement was executed for the purpose of obtaining a lease or sale of the real estate.

But an Indiana Court of Appeals panel rejected HLH’s assertion in HLH Consulting, LLC v. Burd Automotive, Inc., et al., 19A-PL-0126. The panel agreed with the trial court’s interpretation that both documents constituted a single agreement. It likewise found that judgment was properly granted to the defendants under the Indiana Broker Licensing Act.

“Here, the Retention Agreement involved the sale or lease of the real estate upon which the dealership was located and therefore, pursuant to statute, HLH was required to have a real estate broker license,” Judge Margret Robb wrote for the appellate panel. “There is no dispute that HLH did not allege or prove its compliance with the statute and was in violation of the statute as it did not have the requisite license when it entered into the Retention Agreement and cannot recover commission. Therefore, the Retention Agreement purporting to entitle HLH to a certain percent of commission which it is prohibited from receiving is void.”

Lastly, the appellate court shot down HLH’s assertion that it was legally entitled to equitable relief under the theory of unjust enrichment, calling its argument “illogical and contrary to the purpose of the (Indiana Broker Licensing) Act.”

“In sum, the Retention Agreement violated Indiana law and is void and unenforceable as against public policy; therefore, HLH must forfeit any commission Defendants already paid and is not entitled to equitable relief. Because no genuine issue of material fact exists and Defendants are entitled to judgment as a matter of law, the trial court properly granted Defendants’ motion for summary judgment,” the appellate court concluded.