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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowA sale of property in Munster that was subsequently transferred from the buyer to the town for redevelopment purposes was not a sale triggering a payment provision for the original owner, but an equitable mortgage, the Court of Appeals of Indiana has ruled.
In 2011 Munster Steel Co., Inc. entered into a real estate sale contract with developers CPV Partners, LLC and Centennial Village, LLC for some property Munster Steel owned. It officially sold the property to the developers in 2014.
The parties agreed in a subsequent sale provision of the real estate contract that if the developers sold “all or one or more portions” of the property within two years of the sale from Munster Steel, that the developers would pay Munster Steel a subsequent fee “based upon the gross sales price no matter when paid to the Buyer.”
Before the sale was finalized between Munster Steel and the developers, the Munster Redevelopment Commission, Munster Development Commission, and the town in 2013 determined that a redevelopment project would be in the best interest of Munster residents.
They then created the Ridge Road Calumet Avenue Economic Development Area, including a portion of the property originally sold by Munster Steel.
The town parties entered into an agreement with the developers to redevelop the Economic Development Area into Centennial Village. The redevelopment would consist of retail, commercial, residential spaces as well as a parking garage.
Munster Steel sued the developers in 2017, pointing back to the subsequent sale provision in their agreement. It argued that the transfer of the property between the developers and the town parties constituted a sale and triggered the provision.
The Lake Superior Court disagreed, granting summary judgment in favor of the developers after finding that the transfer of property between the developers and the town parties was an equitable mortgage, not a sale.
A panel of the Court of Appeals of Indiana affirmed in Munster Steel Co., Inc. v. CPV Partners, LLC and Centennial Village, LLC, 21A-PL-1154, agreeing that the transfer was not a sale.
It also found that by admitting that the development agreement was unambiguous and making distinct arguments that did not allege as such, Munster Steel had waived that argument for review.
“Further, Munster Steel argues that the trial court erred in granting the Developer’s motion for summary judgment because the intent of the parties was a question of fact properly reserved for the fact finder,” Chief Judge Cale Bradford wrote in a footnote. “While it is true that ‘the parties’ intention is a question of fact for the jury or court to determine[,]’ it is clear that waiver of the argument that there was any ambiguity in the Development Agreement also confines our review of the intent of the parties to the four corners of the document.”
Turning to the equitable mortgage issue, the COA concluded that the trial court correctly found that the transfer of property at issue “did not possess a gross sales price[,]” and that the structure of the developers’ transfer of the property “was not listed as a possible example of a subsequent sale under the Real Estate Contract.”
“The trial court was correct in concluding that according to ‘the language of the Real Estate Contract, the language of the Development Agreement, and decades of case law[,]’ the transfer of the Property at issue was ‘not a sale but an equitable mortgage in property,” the COA concluded.
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