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Court finds fax to be a contract

October 24, 2008

The Indiana Court of Appeals affirmed summary judgment in favor of a landlord in his breach of lease claims against the Indiana Bureau of Motor Vehicles, finding a faxed agreement amending the original terms of the lease constituted a contract.

In Indiana Bureau of Motor Vehicles c/o Joel L. Silverman, commissioner v. Ash, Inc., No. 74A01-0711-CV-518, the BMV appealed the grant of summary judgment and damages award of $95,854.40 plus interest at 8 percent per annum to Ash, Inc. The BMV argued a fax sent to Ash modifying the terms of the original lease didn't constitute a contract, so the BMV wasn't bound by it.

The BMV leased two buildings from Ash in southern Indiana. Under the terms of the lease agreement, the BMV could terminate the lease with a 60-day notice to Ash and any modifications of the lease must be written and signed by both the BMV and Ash.

In January 2003, the BMV's leasing director faxed to Ash's owner, George "Butch" Crone, proposed modifications of the lease asking Crone to create parking spaces and an ADA-compliant ramped walkway at its Mount Vernon location, and make other improvements to the Mount Vernon and Rockport locations. The modification also said after the work was completed the cancellation term in the original lease would be removed.

Crone faxed the document to the leasing director, writing "I accept the above conditions" and signed his name. Crone completed the work and two years later, the BMV notified him they would be terminating the leases under the original cancellation term in the contract.

The BMV argued the January 2003 fax between the leasing director and Ash didn't constitute a contract, so it could cancel its lease with 60-days notice as under the original contract. The Court of Appeals ruled the fax was binding because it was in writing, both the BMV's leasing agent and Crone signed the fax, and the Statute of Frauds doesn't apply in this case, wrote Judge Carr Darden. As such, the cancellation term was no longer available to the BMV.

Even if the fax wasn't considered a contract, Ash would still be entitled to summary judgment under the doctrine of promissory estoppel, the judge continued.

The appellate court also affirmed the trial court denial of future damages to Ash because Crone failed to prove at trial what his future damages would be. The Court of Appeals remanded to the trial court to reduce the interest on the judgment from 8 percent to 6 percent pursuant to Indiana statute.

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