Date: 01-11-2002

Case Style: Greg Allen Construction, et al v. Daniel Estelle, et al.

Case Number: 54A01-0009-CV-300

Judge: Bailey

Court: In The Court of Appeals of Indiana

Plaintiff's Attorney: James E. Ayers, Gwyneth Ayers, Wernle, Ristine & Ayers, Crawfordsville, Indiana. Todd H. Belanger, S. Bryan Donaldson, Crawfordsville, Indiana.

Defendant's Attorney: Harry A. Siamas, Collier, Homann & Siamas, Crawfordsville, Indiana. Jennifer D. McNair, Wood Tuohy Gleason Mercer & Herrin, Indianapolis, Indiana.

Description: In 1996, the Estelles decided to renovate a home they owned in Ladoga, Indiana. In August of that year, they went to the Bank One branch office in Crawfordsville to secure financing for the project. They spoke with BOMC employee Chris McGaughey, whose office was located within the bank, and on October 18, 1996, they completed an application for a $70,000 loan, to be secured by the real estate. The Estelles then contacted Allen Construction for an estimate, and on October 22, 1996, Allen furnished a document denoted “Quote #1101,” which projected that the work would cost $53,982.16. On October 25, 1996, Allen presented Sondra Estelle with a document entitled “Work Order #207,” which provided that Allen Construction would perform the work outlined in Quote # 1101. The work order further stated that “unless other arrangements are made,” the Estelles would pay Allen Construction one-third of the quoted amount of $53,982.16 before Allen Construction began work, one-third when half of the work was completed, and the remaining third when the job was finished. Sondra Estelle expressed her concern that the documents did not fully describe the work she and Allen had discussed. Allen assured her that all of the work was covered under the contract, and Sondra Estelle signed the document. The Estelles, however, had apparently not secured financing, and Allen Construction agreed to accept a down payment of $1,000.00 to begin work. The Estelles paid this amount on November 5, 1996. Allen Construction then provided the Estelles with a document dated November 6, 1996, which referenced Work Order #207 and further detailed the work to be done at the house.

The Estelles subsequently presented McGaughey of BOMC with a copy of Quote #1101 and Work Order #207 along with its November 6 attachment. McGaughey advised the Estelles that they would not qualify for the loan unless the appraised value of the home including the proposed renovations was at least $100,000.00, and McGaughey arranged for an appraisal. McGaughey also told the Estelles that BOMC would not finance the project under the terms set out in the documents prepared by Allen Construction. Instead, McGaughey gave the Estelles a document entitled Contract for Rehabilitation of Dwelling House and advised that the Estelles and Allen Construction needed to execute the document as part of the loan application and approval process. The document recited that it was a contract between the Estelles and Allen Construction, but contained different terms than Work Order #207. For example, rather than providing for three payments with the first due prior to commencement of the work, the BOMC contract stated that Allen Construction would be paid following the completion of an inspection report specifying that the work had been satisfactorily completed. The agreement further provided that periodic partial payment draws might be allowed, again subject to satisfactory inspection reports. (McGaughey advised the Estelles to secure Allen Construction’s agreement to accept five equal payments, with each payment to be made as the project progressed an additional twenty percent. At some point, McGaughey gave the Estelles several blank documents entitled “Construction Loan Disbursement Request” and told the Estelles to have Allen Construction fill them out and fax them to McGaughey to request payment. McGaughey told the Estelles that the bank would arrange for inspections to confirm that the work had progressed at least twenty percent before releasing each payment to the Estelles to pay Allen Construction. The BOMC contract also provided that Allen Construction would waive any rights it might have to a lien on the property in connection with its work. McGaughey gave the Estelles documents entitled “Waiver of Lien,” which reiterated that Allen Construction agreed to waive its lien rights. McGaughey advised the Estelles to give the forms to Allen Construction for completion and submission to McGaughey along with the loan disbursement forms.

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Click the case caption above for the full text of the Court's opinion.

Outcome: Affirmed in part and reversed in part.

Plaintiff's Experts: Unknown

Defendant's Experts: Unknown

Comments: C.L.