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A home construction company that won a $58,500 verdict against a former client is also entitled to prejudgment interest and attorney fees, the Court of Appeals of Indiana has ruled, overturning a trial court’s denial.
The case of R.K.W. Homes, Inc. v. Aaron Hutchison and Melissa Burns, 21A-CC-2767, began in September 2018, when Aaron Hutchison and Melissa Burns hired RKW Homes to build a house in Franklin for $624,891.74. Their contract provided that if litigation occurred between the parties, the prevailing party would recover attorney fees and expenses.
When the house was completed in October 2019, the total cost had reached $745,148.78. Hutchison and Burns paid $612,725.36, and a dispute ensued over the amount remaining.
RKW first filed a mechanic’s lien against the property for $132,423.42, then filed a civil suit for breach of contract, foreclosure on the lien and, later, unjust enrichment. Hutchison and Burns responded with a counterclaim for fraud, breach and slander of title. RKW also sought prejudgment interest and attorney fees.
First Federal Savings Bank also intervened and filed suit against all three parties, alleging the couple was in default on their construction loan. RKW was named as a defendant to allow it to assert any interest it had against the property.
After a three-day trial in October 2021, the jury returned a $58,500 verdict in RKW’s favor and also ruled in its favor on the counterclaims. After the verdict, RKW filed motions to assess prejudgment interest and for attorney fees and expenses.
Hutchison and Burns paid the amount of the verdict plus the filing fee and costs, but argued RKW was not entitled to prejudgment interest or attorney fees. They filed a notice of satisfaction of judgment, and the trial court issued a notice of release of judgment allowing Hutchison and Burns to resolve the bank action.
Then, without a hearing, the trial court denied RKW’s post-trial motions, ruling, “Plaintiff’s action for prejudgment interest on the actions for breach of contract and quantum merit (sic) and attorney fees on the action for breach of contract merged into the judgment. The satisfaction of the judgment extinguished the cause of action. In short, there is no action on which to award prejudgment interest.”
On appeal, RKW argued the doctrines of merger and satisfaction of judgment did not bar its post-trial motions. The Court of Appeals agreed.
“The trial court found the issues of prejudgment interest and attorney fees were before the court at trial because the claims were not bifurcated from the issues to be resolved at trial,” Judge Melissa May wrote in a Friday opinion. “However, as RKW notes, ‘undersigned counsel is unaware of any Indiana case law or procedural rule that requires a party to notify the Court of the potential for a post-trial motion seeking an award of attorney fees and/or prejudgment interest in the event a party prevails at trial.’ We also are unaware of any such case law, and neither the trial court nor the appellees cite to any such authority.”
May then pointed to the parties’ contract, which provided for the recovery of attorney fees and expenses by the prevailing party. Because RKW did not prevail until the jury rendered its verdict, she said, RKW’s “right to recover attorney fees could not merge into the judgment because it did not become ripe until after the judgment.”
“Moreover, we note that calculating prejudgment interest is predicated on the amount awarded by the jury, and the parties are not aware of the jury’s award until after the jury has rendered its verdict,” May continued. “Therefore, it seems to make practical sense to pursue prejudgment interest by means of a post-trial motion. That is what RKW did here, and therefore, the trial court erred when it determined RKW’s claim for prejudgment interest merged into the judgment.”
Turning to the satisfaction-of-judgment question, the COA noted the notice of satisfaction filed by Hutchison and Burns “did not mention the post-trial motions filed by RKW.” Thus, like in the case of RJH of Florida, Inc. v. Summit Account and Computer Services, Inc., 725 N.E.2d 972 (Ind. Ct. App. 2000), the notice “did not extend to the pending motions for attorney fees and prejudgment interest, and the trial court erred in denying those motions on the basis of satisfaction.”
Further, the appellate court rejected Hutchison and Burns’ argument that RKW was not entitled to prejudgment interest because “the judgment amount was very much subject to the discretion of the trier of fact.”
“While the jury awarded RKW far less than what the company asked for in damages, the jury was able to calculate the amount of money Hutchison and Burns owed RKW,” May wrote. “Thus, the damages were readily ascertainable at a particular time and RKW is entitled to prejudgment interest. The trial court shall calculate the prejudgment interest award on remand.”
The COA also remanded for the trial court “to exercise its discretion to assess an appropriate attorney fee award.”
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