COA remands breach suit to Indiana court in dispute with Florida business

A breach of contract dispute between a company based in Indiana and one based in Florida will continue in Indiana trial court after the Indiana Court of Appeals reversed a dismissal order that was based on a too-narrow reading of a statute.

In the case of The Sullivan Corporation v. Rabco Enterprises LLC, 20A-PL-1444, Sullivan Corp. and Florida-based Rabco Enterprises executed a contract in 2017 for a self-storage construction project along 146th Street in Noblesville. Under the contract, Sullivan would pay $1,143,940 if Rabco “agreed to provide timely plans for the project, appropriate materials for the project, and appropriate equipment to complete the work.”

The agreement also included a forum-selection clause, which held that “(t)his contract shall be deemed to have been executed in and performable in the state of Florida and shall be construed under Florida law, without regard to said state’s conflicts of law rules (except that the lien laws of the state in which the job site is situated shall apply to the Rabco’s lien rights). It is agreed that the exclusive venue for any litigation arising hereunder shall be in the state or federal courts in Orange County, Florida.”

About two years later, Sullivan filed suit in Hamilton Superior Court, alleging Rabco had breached the contract. Rabco moved to dismiss based on the forum-selection clause, but Sullivan argued the clause was unenforceable pursuant to Indiana Code § 32-28-3-17.

The Hamilton Superior Court ruled in favor of Rabco and granted the motion to dismiss. Specifically, the trial court held that because I.C. 32-28-3-17 “’is a part of Indiana’s statutes governing mechanic’s liens,’ … it would be ‘inappropriate for the Plaintiff to utilize the mechanic lien statute as a sword to achieve its own objective.’”

The Indiana Court of Appeals, however, agreed with Sullivan that the trial court erred in holding that the statute only applies in the context of mechanics liens.

The panel found Sullivan’s reliance on Pirson Contractors, Inc. v. Scheuerle Fahrzeugfabrik GmbH, 2:07-cv-123, 2008 WL 927645 (N.D. Ind. Apr. 3, 2008), to be persuasive, though not binding. Pirson held that “there is no basis to require a plaintiff to first assert a mechanic’s lien as a prerequisite to the enforcement of [Indiana Code section] 32-28-3-17.”

“Furthermore, a reading of various sections that fall under Indiana Code chapter 32-28-3 reveals that the General Assembly had the ability and forethought to use language limiting the various sections of Indiana Code chapter 32-28-3 to the protection/enforcement of liens when the General Assembly intended that result,” Chief Judge Cale Bradford wrote in a Monday opinion. “…The General Assembly, however, did not reference liens or use any language limiting application of the statute to situations involving liens in codifying Indiana Code section 32-28-3-17. The General Assembly could easily have included such limiting language had that been its intent.”

Thus, the appellate panel concluded that “the statute should be read broadly to apply to all contracts for the improvement of real estate in Indiana. As such, we further conclude that the trial court erred in finding both that Indiana Code section 32-28-3-17 did not apply to the parties’ contract and that the forum-selection clause was valid and enforceable.”

The dismissal order was thus dismissed, and the case was remanded for further proceedings.

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