Hanover Logansport, Inc. v. Robert C. Anderson, Inc.
1987 Ind. App. LEXIS 3059, 512 N.E.2d 465 (1987)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
To reserve a claim or issue for future litigation after accepting an offer of judgment under Indiana Trial Rule 68, the reservation must be explicitly incorporated into the offer of judgment itself, and the reserved claim must have been originally pleaded in the complaint.
Facts:
- On February 23, 1984, Hanover Logansport, Inc. (Hanover) leased a business premises in a K-Mart Shopping Center to Robert C. Anderson, Inc. (Anderson) for a term of nine years and eleven months, beginning May 1, 1984.
- As part of the lease agreement, Hanover agreed to remove the current tenant, Discount Liquors, from the premises before the start of Anderson's lease.
- Hanover failed to remove Discount Liquors by the May 1, 1984 deadline, and the tenant still occupied the space as of July 18, 1984.
- Instead of removing the tenant, Hanover renewed the lease with Discount Liquors.
- Anderson had informed Hanover that the existing tenant had to be removed before Anderson's liquor license could be transferred to the new location, and failure to do so could result in a one-year ban on reapplying for the transfer.
- As a result of Hanover's breach, Anderson relinquished its rights to occupy a different store in a similar location.
Procedural Posture:
- Robert C. Anderson, Inc. (plaintiff) filed a complaint for breach of contract against Hanover Logansport, Inc. (defendant) in the St. Joseph Superior Court, a state trial court.
- Prior to trial, Hanover served Anderson with an offer of judgment pursuant to T.R. 68, offering to tender the leased premises.
- Anderson served a written 'conditional acceptance,' stating the offer was accepted for mitigation of damages but not in settlement of its damages claim.
- The parties filed an agreed entry to have the judgment for possession of the property recorded.
- After Anderson took possession, Hanover filed a T.R. 12(B)(6) motion to dismiss the remainder of Anderson's action.
- The trial court denied Hanover's motion to dismiss.
- Hanover (appellant) appealed the trial court's denial of its motion to the Court of Appeals of Indiana (appellee Anderson).
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a plaintiff who accepts an offer of judgment for specific performance, one of two alternative remedies sought in the complaint, preserve a claim for additional damages by unilaterally stating in its acceptance that the claim for damages is not settled?
Opinions:
Majority - Staton, J.
No. A plaintiff who accepts an offer of judgment does not preserve a claim for additional damages unless the reservation is part of the offer itself and the claim was part of the original complaint. Adopting the 'consent-as-contract' theory, the court held that the preclusive effect of a consent judgment is determined by the mutual intent of the parties. To prevent ambiguity and ensure mutual agreement, a unilateral statement of reservation in an acceptance is insufficient. The court established a two-part test: for a reservation to be valid, (1) it must be incorporated into the offer of judgment, and (2) the claim being reserved must have been set out on the face of the original complaint. Here, Anderson's complaint sought either specific performance or lost profits for the full lease term, not damages for delay. Because Hanover's offer did not contain a reservation and Anderson's complaint did not specifically plead for delay damages, Anderson's acceptance of the property extinguished all related claims.
Concurring - Hoffman, J.
Judge Hoffman concurred with the majority opinion without providing a separate written explanation.
Analysis:
This case establishes a significant bright-line rule for offers of judgment under Indiana Trial Rule 68, prioritizing clarity and mutual assent in settlements. By requiring any reservation of claims to be in the offer itself and tethered to the original complaint, the court curtails a party's ability to unilaterally modify a settlement's scope. This decision forces plaintiffs to plead all potential claims with specificity from the outset and places the burden on both parties to explicitly define the terms of a partial settlement. The ruling promotes finality in litigation and encourages more precise settlement negotiations, as parties will know exactly what is being resolved versus what remains for trial.
