Trial court incorrectly determined company could collect all delinquent taxes

March 12, 2015

The Indiana Court of Appeals reversed a $1.4 million judgment in favor of a company hired by Lake County to collect delinquent real property taxes, finding the lower court improperly interpreted the collections contracts as a matter of law.

Lake County hired U.S. Research Consultants Inc. through a series of contracts to collect those delinquent taxes on behalf of the county in exchange for a commission. Key to the dispute between the parties is that the contracts said that the consultants would be assigned 100 percent of the real property tax collection cases by the Lake County treasurer. The consultants were to collect the back taxes at the direction of the treasurer, who ordered the consultants to only pursue taxes that were at least two years behind.

When the agreement between the county and consultants ended, the consultants sued, alleging breach of contract and seeking owed commissions. The trial court granted partial summary judgment in favor of the consultants on the definition of delinquent, and later final judgment in favor of the consultants in more than $1 million commissions owed and nearly $400,000 in prejudgment interest.

The consultants took the position that the company was to collect all delinquent taxes and was entitled to commissions on the total amount, whereas the county took the position that the consultants were only to collect the past year delinquent taxes as directed by the treasurer and were only entitled to commissions on that amount even if additional delinquent taxes were paid.

When the contract is read as a whole, all the clauses in it are construed to mean that the consultants are to collect “the delinquent monies” associated with the real property tax collection cases assigned to it at the treasurer’s instruction and that the company earns commission on those amounts, Judge Margret Robb wrote. That the contracts require the company be assigned 100 percent of the cases means only that no tax collection cases will be assigned to any other entity for collection, not that the business will be assigned all delinquent tax accounts, she continued.

The judges reversed partial summary judgment in The County of Lake, Ind.; Board of Commissioners of the County of Lake (Ind.), in their official capacities; and the Lake County Treasurer, in his official capacity v. U.S. Research Consultants, Inc., 45A03-1401-CC-42, and remanded with instructions to enter partial summary judgment in favor of the county on the issue of the interpretation of the contracts. The lower court also must conduct further proceedings on the company’s complaint regarding whether it is owed any unpaid commission on prior year taxes collected, and if so, the amount of those unpaid commissions.


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