Although a couple alleging they were third-party beneficiaries to two contracts did not plead the existence of written contracts, the allegations were based on an oral contract and were sufficient to carry their case, the Indiana Court of Appeals ruled Thursday.
The case of Ardis W. Tucker, Sr. and Sandra D. Tucker v. Tom Raper, Inc. and Clarke Power Services, Inc., 89A01-1702-CC-463, began in August 2012, when the RV owned by Ardis and Sandra Tucker was damaged by lightning. The Tuckers reported the damage to American Family Insurance, which in turn contacted Tom Raper Inc. to discuss repairs.
The RV was delivered to Raper’s facility, where it was inspected for damages. Raper also delivered the RV to Clarke Power Services Inc. to address damage to the transmission. Both Raper and Clarke submitted repair estimates to American Family, which accepted both estimates.
Then, while under Clarke’s care and control in 2014, the RV was damaged in a vehicle collision. Raper agreed to repair the damage, but when the RV was returned to the Tuckers, they discovered there were still existing electrical issues.
The couple returned the RV to Raper, which discovered the batteries had been hooked up backwards, causing additional electrical damage that the RV dealer agreed to fix. However, Raper had failed to repair the electrical issues by July 2015, causing American Family to declare it a total loss.
The Tuckers then filed a complaint against Raper and Clarke in June 2016, alleging the couple was a third-party beneficiary to contracts between American Family and Raper, and American Family or Raper and Clark, and that Raper and Clark had each breached those contracts. The couple also alleged gross negligence against Raper.
Both Clarke and Raper moved to dismiss, asserting the Tuckers’ allegations of third-party beneficiaries must be founded in a written contract, which was not attached to the complaint. The Wayne Circuit Court ordered the Tuckers to file an amended complaint that included a contract, but when the couple filed its amended complaint adding additional counts, it did not attach the written contract.
The trial court dismissed their lawsuit and denied a motion to correct error, prompting the instant appeal. In a Thursday opinion, the Indiana Court of Appeals reversed the dismissal, disagreeing with the defendants' argument that the case of Cain v. Griffin, 849 N.E.2d 507, 514 (Ind. 2006) requires a written contract to bestow rights upon a third party.
“The language from Cain cited by Raper and Clarke directs a court, where there is a written contract, to focus on the parties’ intent and whether the contract manifests a clear intent to impose an obligation on a contracting party for the benefit of a third party,” Judge Margret Robb wrote. “…But nothing from Cain or this language, or other authorities cited by Raper or Clarke, forecloses the possibility that two or more parties may orally contract with the intent to benefit a third party.”
Although the Tuckers did not plead the existence of a written contract, their allegations “can be reasonably construed as based on oral contracts,” Robb continued. Thus, the trial court’s dismissal of their complaint was reversed and the case was remanded for further proceedings.