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Note: As part of its development of the Austin Hills subdivision in the City of Portage, Indiana, Hiller & Sons (Developer) agreed to complete all six phases of the project with the sixth phase being the completion of all public improvements, primarily road surfacing. To secure its performance, Developer/Applicant obtained a USD 41,500 letter of credit in favor of the City of Portage (City/Beneficiary), with the LC value based on approved estimates provided by Developer/Applicant to City/Beneficiary. When Developer/Applicant failed to timely complete the sixth phase of the project, City/Beneficiary solicited bids from other contractors and, after accepting a bid to complete the project for USD 146,921, made a full demand on the LC, which was honored.

Subsequently, City/Beneficiary sued Contractor/Applicant forthe costs in finishing the project minus the LC proceeds and moved for summary judgment. In response, Contractor/Applicant filed a motion for judgment on the pleadings arguing that City/Beneficiary had failed to state a claim and, in any event, that such claim was time-barred. The trial court treated Contractor/Applicant’s motion as a responsive summary judgment motion and entered partial summary judgment in favor of City/Beneficiary. Contractor/Applicant appealed. The Court of Appeals of Indiana, Friedlander, Bailey and Plye, JJ., affirmed in part and reversed in part.

As to the issue of City/Beneficiary’s complaint being untimely filed, the appellate court noted that the claim “appears to be based on an oral contract” which, under Indiana law, carries a six-year limitations period. That period beings to run “when a claimant knows or in the exercise of ordinary due diligence should have known of the injury.” Here, the appellate court noted that when the limitations period began was unclear as the “evidence is in conflict.” While Contractor/Applicant argued that the period began when the LC was issued, City/Beneficiary argued that it could not have been aware of any injury until the final road surfacing was complete. Accordingly, as the issue could not be resolved by summary judgment, the appellate court reversed judgment on that issue but affirmed denial of Contractor/Applicant’s motion for judgment on the pleadings.

As to the primary issue of breach of contract, the appellate court again noted the absence of a written agreement and that, based on claims surrounding the existence of the oral agreement, there was no clear “evidence outlining the parties’ obligations or duties under the agreement, such as a time period within which [Contractor/Applicant] was to have completed the final layering.” As such, genuine issues of material fact had yet to be resolved by a fact-finder and thus City/Beneficiary was not entitled to judgment as a matter of law.

[MJK]

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