Breeding v. Kye's Inc.
831 N.E.2d 188, 2005 Ind. App. LEXIS 1275, 2005 WL 1683611 (2005)
Rule of Law:
When a contract's clear and unambiguous terms extensively specify an exclusive third-party service, including its pricing and payment, the provision of that service goes to the basis of the bargain, and the failure to provide it constitutes a breach of contract.
Facts:
- In mid-January 2001, Allyson Breeding contacted Kye's Inc., a special events facility, to inquire about reserving its venue for her June 2002 wedding reception.
- Breeding and her parents were family friends with the owners of Sounds Unlimited Productions, LLP, an exclusive disc jockey service for Kye's, and Breeding selected Kye's due to her desire for Sounds Unlimited to perform.
- On January 30, 2001, Breeding visited Kye's, discussed reception details, and a Kye's representative noted 'S.U.P. requests Brent and Chris' for entertainment on an information sheet.
- On January 31, 2001, Breeding returned to Kye's and signed a contract that explicitly stated Sounds Unlimited Productions, LLC had an exclusive agreement with Kye's to provide disc jockey services if requested, and that the price of these services was part of the agreement.
- Pursuant to the contract, Breeding paid Kye's a $750 advance deposit, representing half of the minimum agreed fee for the facility and disc jockey services.
- In March 2002, Kye's owner, Kye Hoehn, sent Breeding a letter explaining that Kye's had terminated its agreement with Sounds Unlimited and that the company would no longer perform at the facility.
- Breeding contacted Hoehn, expressing her continued desire for Sounds Unlimited, but Hoehn informed her that Sounds Unlimited was no longer allowed to provide services at Kye's.
- Breeding and her mother subsequently met with Hoehn, who reiterated that Sounds Unlimited was not permitted and offered Breeding the choice of Kye's new sound equipment and disc jockeys.
Procedural Posture:
- Allyson Breeding filed a complaint in the trial court seeking the return of her $750 advance deposit from Kye's Inc.
- Kye's Inc. filed a motion for summary judgment in July 2004.
- Allyson Breeding filed a motion for summary judgment in August 2004.
- The trial court granted Kye's Inc.'s motion for summary judgment.
- Breeding appealed the trial court's grant of summary judgment in favor of Kye's Inc. to the Indiana Court of Appeals.
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Issue:
Did Kye's Inc. breach its contract with Allyson Breeding by refusing to allow Sounds Unlimited Productions, LLP to perform disc jockey services at her wedding reception, thereby entitling Breeding to the return of her advance deposit?
Opinions:
Majority - Kirsch, Chief Judge
Yes, Kye's Inc. breached its contract with Allyson Breeding by refusing to allow Sounds Unlimited Productions, LLP to perform disc jockey services, entitling Breeding to the return of her advance deposit. The court determined that the contract was clear and unambiguous regarding disc jockey services. It noted that the contract made seven references to disc jockey services, with four substantive sections outlining their charges and payment arrangements, specifically identifying Sounds Unlimited as the exclusive provider. The court reasoned that these explicit provisions, including the statement, 'The price of the disc jockey services is a part of this agreement and shall be paid for in accordance with the Event Payment provision of this contract,' demonstrated that the disc jockey services to be provided by Sounds Unlimited were fundamental to the 'basis of the bargain' struck between Kye's and Breeding. Therefore, Kye's refusal to permit Sounds Unlimited to perform constituted a breach of its contractual obligations.
Dissenting - Barnes, Judge
No, Kye's Inc. did not breach its contract with Allyson Breeding. The dissenting judge argued that the contract's primary purpose was for the rental of Kye's facility, as indicated by the initial clause confirming the reservation 'for the use of this facility' and the focus on the minimum facility fee. The dissent contended that the entertainment clause, which began by stating, 'Entertainment, if desired, is to be arranged by the client with the exception of disc jockey services,' merely served to limit the client's choices for disc jockey and other entertainment rather than constituting an affirmative promise from Kye's to provide Sounds Unlimited. It further stated that Kye's retained the right to approve all entertainment and that the subjective intent of Breeding (her friendship with Sounds Unlimited) was irrelevant; only her outward manifestation of intent, which was to contract for the facility, mattered. Since Kye's had no obligation to provide Sounds Unlimited, offering alternative disc jockeys was not a breach.
Analysis:
This case highlights the importance of clear and unambiguous contract language in defining the 'basis of the bargain.' It demonstrates that even if a service is provided by a third-party vendor with an 'exclusive' agreement, if the contract explicitly incorporates that service with specific terms and costs, it can be deemed a material part of the agreement. The majority's emphasis on reading the contract as a whole and preventing any terms from becoming 'meaningless' provides guidance for contract interpretation. Future cases will likely cite this ruling when determining whether a seemingly ancillary service, if sufficiently integrated into the contract, can form a material element whose breach warrants remedies.
