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COA: Would-be land purchaser from New Jersey entitled to attorney fees

March 19, 2019

A Porter County land-deal-gone-bad has reappeared before the Indiana Court of Appeals for a second time, with the appellate panel finding the would-be purchaser is entitled to attorney fees because he did not repudiate the sales contract.

Cheng Song of New Jersey signed a purchase agreement in 2011 with Thomas and Theresa Iatarola to buy 10 acres near the Porter County Airport for $600,000. However, Song exercised his contingency right and terminated the agreement over worries that the airport would take part of the property as part of its potential plans to impose a runway protection zone. 

A few months later, Song and Thomas negotiated a new sale for a different portion of the Iatarolas’ land. Song then deposited $150,000 earnest money into the bank.

Later, Song learned the property had been incorrectly listed as being zoned I-2 Industrial instead of Agricultural. Consulting his attorney, he learned Porter County zoning regulations would not permit the use of warehousing for industrial purposes on agriculturally-zoned property.

Again, exercising his due diligence contingency rights under the contract, Song terminated the purchase agreement and demanded the return of his $150,000. When the Iatarolas refused, Song filed a complaint against them, alleging fraud, constructive fraud, breach of contract and contract rescission. The Iatarolas responded with a counterclaim alleging actual and constructive fraud.

A Porter County jury found for Song and that he was entitled to the return of the $150,000 earnest money. Subsequently, the Porter Superior Court denied the Iatarolas’ motion to correct error and Song’s motions for attorney fees, as well as pre- and post-judgment interest.

Both parties then appealed. In Song I, the Court of Appeals held the trial court did not err in denying the Iatarolas’ motion, but did err in denying Song’s motion for prejudgment interest and when it declined to consider his request for attorney fees.

On remand, the Iatarolas reiterated their contention that Song had repudiated the purchase agreement and, therefore, could not seek attorney fees. The Porter Superior Court then awarded prejudgment interest to Song but denied his request for attorney fees.

Back before the Court of Appeals, the appellate panel reversed in Cheng Song v. Thomas Iatarola and Theresa Iatarola, 18A-PL-2134. The panel also remanded with instructions for the trial court to conduct a hearing to determine the amount of reasonable attorney fees incurred by Song, including appellate fees, and to award those plus court costs to Song.

The Court of Appeals rejected the Iatarolas’ arguments that Song’s termination of the purchase agreement constituted a repudiation. Specifically, the trial transcript did not reveal any argument or jury instructions addressing the alleged repudiation, and the Iatarolas did not provide any evidence.

“Rather, the Iatarolas categorically assert that Song’s acknowledgment that he terminated the agreement meant that he had repudiated or rescinded the contract,” Judge Edward Najam wrote for the court. “Both in their argument to the trial court and in their brief on appeal, the Iatarolas conflate and confuse the terms termination, repudiation, and rescission. But those terms have distinct meanings in the law, and, on these facts and this record, the Iatarolas’ contention that Song’s termination was equivalent to a repudiation or rescission is not well taken.”

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