MALL AT POTOMAC MILLS, LLC v. CONTROL BUILDING SERVICES, INC.

Filing 35

ORDER granting 33 Motion for Summary Judgment in favor of Potomac Mills and against CBS on the claims for equitable relief. CBS is ORDERED to pay Potomac Mills an award of damages in the amount of $305,947.88. Potomac Mills is ORDERED to file an accounting of its reasonable attorney fees and costs within 14 days of the date of this order. Thereafter, a separate and final judgment will be entered. Signed by Judge Tanya Walton Pratt on 1/22/2015 (dist made) (CBU)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
MALL AT POTOMAC MILLS, LLC,
Plaintiff,
v.
CONTROL BUILDING SERVICES, INC.,
Defendant.

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Case No. 1:14-cv-00099-TWP-TAB

ENTRY ON PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
This matter is before the Court on Plaintiff Mall at Potomac Mills, LLC’s (“Potomac
Mills”) Motion for Summary Judgment (Filing No. 33). After validly terminating its service
agreement with Control Building Services, Inc. (“CBS”), Potomac Mills inadvertently paid CBS
unearned payments totaling $305,947.88, to which CBS was not entitled. Potomac Mills requested
return of the inadvertent, unearned payments, and CBS refused. Potomac Mills then initiated this
lawsuit and moved for summary judgment, asserting that there is no dispute that CBS is not entitled
to retain the $305,947.88, and Potomac Mills is entitled to recoup the payments. For the following
reasons, Potomac Mills’s Motion for Summary Judgment is GRANTED.
I.

BACKGROUND

Potomac Mills and CBS entered into a contract effective March 1, 2009, whereby CBS was
to provide janitorial services to Potomac Mills at its mall in Virginia through the end of 2009. For
providing the janitorial services, CBS was to be paid $805,738.10, payable in ten monthly
installments of $80,573.81. CBS paid Potomac Mills $4,086.84 each month as rent for the use of
physical space at the mall in Virginia. The parties referred to this rent as “Minimum Rent,” and
the amount of rent was subtracted from the monthly payments made by Potomac Mills to CBS.

Because of this rent payment reduction, the net monthly payment from Potomac Mills to CBS was
$76,486.97.
Pursuant to a renewal provision in the parties’ contract, the contract for janitorial services
was automatically renewed on the same terms through August 31, 2012. Potomac Mills exercised
its contractual right to terminate the contract by giving a thirty-day written notice to CBS. This
written termination notice was given on August 1, 2012, and the termination was effective August
31, 2012. Because of the termination, CBS stopped providing janitorial services to Potomac Mills
on August 31, 2012.
Even though CBS had stopped providing janitorial services to Potomac Mills in August, it
received and retained payments from Potomac Mills for the months of September, October,
November, and December 2012, in the amount of $76,486.97 per month, totaling $305,947.88.
Potomac Mills was unaware that these inadvertent and unearned payments were being made to
CBS. When it discovered the erroneous payments, Potomac Mills ceased further payments and
demanded that CBS return the funds. Despite Potomac Mills’s requests, CBS refused to return the
unearned payments.
The contract specified that CBS was “entitled to receive payment only for services
approved and agreed upon by [Potomac Mills] in writing, in advance, and actually performed and
rendered according to the terms and conditions herein provided.” (Filing No. 1-1 at 12, paragraph
9.) The contract was properly terminated in August 2012. No services were approved and agreed
upon by Potomac Mills in writing for the months of September, October, November, and
December 2012. CBS did not actually perform or render any services to Potomac Mills during
these four months. Thus, CBS was not entitled to receive any payments during the four months.

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The contract between the parties also provided for an award of attorney fees and costs to
Potomac Mills in the event of a dispute arising out of the contract. “If [Potomac Mills] is required
to bring or defend any action arising out of this Agreement, or to enforce or defend the provisions
hereof, [Potomac Mills] shall recover its reasonable attorney’s fees and costs from [CBS].” (Filing
No. 1-1 at 12, paragraph 11.)
Because of CBS’s refusal to return the unearned payments, on December 2, 2013, Potomac
Mills filed a complaint against CBS in the Marion Superior Court (Indiana). The complaint asserts
claims for breach of contract, restitution for payments made under a mistake of fact, “money had
and received,” and unjust enrichment. CBS was served on December 23, 2013. CBS then removed
the action to this Court on January 21, 2014, based on diversity jurisdiction.
On February 14, 2014, CBS filed its answer to Potomac Mills’s complaint, and the parties
filed their joint Case Management Plan on April 15, 2014. Shortly thereafter, counsel to CBS filed
a motion to withdraw its attorney appearance on behalf of CBS (Filing No. 26). The Court granted
the motion to withdraw and ordered CBS to secure new counsel by July 17, 2014 (Filing No. 27).
As a corporation, CBS cannot represent itself in federal court. CBS did not secure new counsel
by July 17, 2014, as required by the Court, and still has not retained counsel. Additionally, CBS
failed to file its preliminary witness and exhibit lists as required by the Case Management Plan
and failed to appear for the Court’s August 11, 2014 status conference. CBS also failed to file a
response brief or designate evidence in opposition to Potomac Mills’s Motion for Summary
Judgment.
II.

SUMMARY JUDGMENT STANDARD

Federal Rule of Civil Procedure 56 provides that summary judgment is appropriate if “the
pleadings, depositions, answers to interrogatories, and admissions on file, together with the

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affidavits, if any, show that there is no genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law.” Hemsworth v. Quotesmith.com, Inc., 476 F.3d
487, 489–90 (7th Cir. 2007). In ruling on a motion for summary judgment, the court reviews “the
record in the light most favorable to the non-moving party and draw[s] all reasonable inferences
in that party’s favor.” Zerante v. DeLuca, 555 F.3d 582, 584 (7th Cir. 2009) (citation omitted).
However, “[a] party who bears the burden of proof on a particular issue may not rest on its
pleadings, but must affirmatively demonstrate, by specific factual allegations, that there is a
genuine issue of material fact that requires trial.” Hemsworth, 476 F.3d at 490 (citation omitted).
“In much the same way that a court is not required to scour the record in search of evidence
to defeat a motion for summary judgment, nor is it permitted to conduct a paper trial on the merits
of [the] claim.” Ritchie v. Glidden Co., 242 F.3d 713, 723 (7th Cir. 2001) (internal citations and
quotation marks omitted). “[N]either the mere existence of some alleged factual dispute between
the parties nor the existence of some metaphysical doubt as to the material facts is sufficient to
defeat a motion for summary judgment.” Chiaramonte v. Fashion Bed Grp., Inc., 129 F.3d 391,
395 (7th Cir. 1997) (internal citations and quotation marks omitted).
Furthermore, Local Rule 56-1(b) requires the non-movant to include a “Statement of
Material Facts in Dispute” that “identifies the potentially determinative facts and factual disputes
that the party contends demonstrate a dispute of fact precluding summary judgment.” Local Rule
56-1(f)(1)(A) states that the Court will assume that the “facts as claimed and supported by
admissible evidence by the movant are admitted without controversy except to the extent
that . . . the non-movant specifically controverts the facts in that party’s ‘Statement of Material
Facts in Dispute’ with admissible evidence[.]”

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Additional legal principles guide the Court’s decision to grant Potomac Mills’s Motion for
Summary Judgment. “[C]orporations are ‘legally incapable of appearing in court unless
represented by counsel.’” Gilman v. Hamilton Accounts Servs., 2013 U.S. Dist. LEXIS 147263, at
*1 (S.D. Ind. Oct. 11, 2013) (quoting Philos Techs., Inc. v. Philos & D, Inc., 645 F.3d 851, 858
(7th Cir. 2011)). “Therefore, ‘corporations must appear by counsel or not at all.’” Id. “[I]t is wellestablished that a non-lawyer cannot represent or appear on behalf of a corporation in federal court
. . . even when the person seeking to represent the corporation is its president.” Gilman, 2013 U.S.
Dist. LEXIS 147263, at *1 (quoting Lewis v. Lenc-Smith Mfg. Co., 784 F.2d 829, 830 n.4 (7th Cir.
1986)).
“The usual course when a litigant not entitled to litigate pro se loses its lawyer in the midst
of the case is to give it a reasonable opportunity to find a new one, and, if it fails, either to dismiss
the case or enter a default judgment.” United States v. Hagerman, 549 F.3d 536, 538 (7th Cir.
2008) (internal citations omitted). CBS was ordered and given time to obtain new counsel, but it
has failed to do so nearly seven months later.
III. DISCUSSION
As an initial matter, because this action is brought under the Court’s diversity jurisdiction,
the Court applies the substantive law of Indiana, the forum state, in deciding this Motion for
Summary Judgment. See Allstate Ins. Co. v. Menards, Inc., 285 F.2d 630, 634 (7th Cir. 2001).
The most likely jurisdictions for this case based on the “most intimate contacts” are Indiana (where
much of Potomac’s contract execution occurred), Virginia (where much of CBS’s contract
execution occurred), and New Jersey (where CBS is operated). See Eby v. York-Division, BorgWarner, 455 N.E.2d 623, 626 (Ind. Ct. App. 1983) (Indiana’s choice of law rule applies the “most
intimate contacts” approach). Among these three potential forums, there are no conflicts in the

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basic principles for resolving contract disputes as each state uses the same standards and applies
the “four corners doctrine” to contract disputes. Compare Rogier v. Am. Testing & Eng’g Corp.,
734 N.E.2d 606, 613–14 (Ind. Ct. App. 2000); with PMA Capital Ins. Co. v. US Airways, Inc., 626
S.E.2d 369, 372–73 (Va. 2006); and Farrell v. Janik, 542 A.2d 59, 62 (N.J. Super. Ct. Law Div.
1988).
Regarding the choice of law to apply in deciding the claims for equitable relief, the Court
first must determine if there is a conflict among the states’ laws regarding the equitable claims. If
there is a conflict that could affect the outcome of the litigation, then the Court will apply “the
substantive laws of the state where the last event necessary to make an actor liable for the alleged
wrong takes place.” Simon v. United States, 805 N.E.2d 798, 805 (Ind. 2004). If there is no
conflict, the law of the forum state will be applied. Id. at 804–05; Loos, 738 F. Supp. at 324. The
laws governing the equitable claims in this case are substantially similar in Indiana, Virginia, and
New Jersey. Compare Huff v. Biomet, 654 N.E.2d 830, 837 (Ind. Ct. App. 1995) (money had and
received); Time Warner Entm’t Co., L.P. v. Whiteman, 802 N.E.2d 886, 890 (Ind. 2004) (payment
under mistake of fact); Inlow v. Inlow, 797 N.E.2d 810, 816 (Ind. Ct. App. 2003) (unjust
enrichment); with Rivanna Solid Waste Auth. v. Van Der Linde, 78 Va. Cir. 418, 424–25 (Va. Cir.
Ct. 2009) (money had and received); Mayor of Richmond v. Judah, 32 Va. 305, 318 (Va. 1834)
(payment under mistake of fact); R.M. Harrison Mech. Corp. v. Decker Indus., Inc., 75 Va. Cir.
404, 407 (Va. Cir. Ct. 2008) (unjust enrichment); and Franklin v. Jones, 90 A. 1010, 1011 (N.J.
1914) (money had and received); New Jersey Hosp. Ass’n v. Fishman, 661 A.2d 842, 849 (N.J.
Super. Ct. App. Div. 1995) (payment under mistake of fact); County of Essex v. First Union Nat.
Bank, 862 A.2d 1168, 1172 (N.J. Super. Ct. App. Div. 2004) (unjust enrichment). Because the
states’ laws are substantially similar, the Court will apply Indiana law to the equitable claims.

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A.

Breach of Contract Claim
Potomac Mills bases its breach of contract claim on its inadvertent payment of $76,486.97

to CBS in September, October, November, and December 2012, totaling $305,947.88, and CBS’s
refusal to return the funds despite not performing any services for the payments and the lack of
advance written approval of any services by Potomac Mills. As stated earlier, CBS provided
janitorial services to Potomac Mills from March 1, 2009 to August 31, 2012 pursuant to a contract
entered into by the parties, in exchange Potomac Mills paid CBS $76,486.97 each month. The
parties’ contract specified that CBS was “entitled to receive payment only for services approved
and agreed upon by [Potomac Mills] in writing, in advance, and actually performed and rendered
according to the terms and conditions herein provided.” (Filing No. 1-1 at 12, paragraph 9.) The
contract was terminated by Potomac Mills by its August 1, 2012 letter to CBS. The termination
was effective August 31, 2012. Thereafter, Potomac Mills did not agree upon or approve any
services of CBS, and CBS did not actually perform or render any services to Potomac Mills after
August 31, 2012.
The breach of contract claim fails as a matter of law because Potomac Mills terminated the
contract, effective August 31, 2012, thereby relieving CBS of any obligations under the contract
after that date. “The termination or cancellation of a contract differs from a breach of contract.
When a contract is terminated, neither party owes any further duties or obligations to the other.”
Orthodontic Affiliates, P.C. v. Long, 841 N.E.2d 219, 222 (Ind. Ct. App. 2006) (citing Mortgage
Credit Serv., Inc. v. Equifax Credit Info. Serv., Inc., 766 N.E.2d 810, 813 (Ind. Ct. App. 2002)).
After August 31, Potomac Mills was not obligated to pay CBS, and CBS was not obligated to
provide services or seek prior written approval for services.

Because of Potomac Mills’s

termination of the contract, CBS could not breach the contract after August 31, 2012.

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Potomac Mills asserts that CBS “was not entitled to any payment for September, October,
November, and December of 2012, and its refusal to return the Payments is a breach of the
Contract.” Potomac Mills relies on Highhouse v. Midwest Orthopedic Inst., P.C., 807 N.E.2d 737,
739 (Ind. 2004), and explains that there, the court held that because compensation rights vest when
services are rendered, compensation terms in a contract survive the termination of the contract
absent unambiguous intent to the contrary. (Filing No. 34 at 7.)
But the holding in Highhouse is not helpful to Potomac Mills because the opposite
situation—payments made even though no services were rendered—does not necessarily lead to
the same result—a breach of contract.

There, the employee provided services during his

employment. The employer was to pay a bonus to the employee when the employer collected on
his services. The employee resigned his position with the employer, and after the resignation, the
employer continued to collect on the employee’s previously provided services. The employer
refused to pay the contractually-owed bonus when it collected on the employee’s services after his
resignation.
The court determined that “when an employer makes an agreement to provide
compensation for services, the employee’s right to compensation vests when the employee renders
the services.” Highhouse, 807 N.E.2d at 739. The employer was required to pay the bonus even
after the employee’s resignation because the right to the bonus vested when the employee rendered
the service. This simply means that if compensation is owed after the termination of the contract,
the ending of the contract does not relieve the payor of the obligation to make payments. That
court’s holding does not demand, as Potomac Mills suggests, that all compensation terms in a
contract survive the termination of the contract.

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While CBS did not have a right to the payments made after August 2012, its receipt and
refusal to return the payments was not a “breach” of the “contract”. CBS could not breach the
compensation and services provisions of the contract after August 31, 2012 because Potomac Mills
had terminated the contract.
B.

Equitable Claims
As an alternative to its breach of contract claim, Potomac Mills also requested the return

of the inadvertent, unearned payments under three equitable claims: “money had and received,”
payment under a mistake of fact, and unjust enrichment. While each of these equitable remedies
is a distinct claim, they are similar in nature, and each claim results in awarding Potomac Mills the
return of the unearned payments made to CBS.
Under Indiana law, a claim for “money had and received” is an
equitable remedy that lies in favor of one person against another, when that other
person has received money either from the plaintiff himself or third persons, under
such circumstances that in equity and good conscience he ought not to retain the
same, and which money, ex aequo et bono, belongs to the plaintiff, and where
money has been received by mistake of facts, or without consideration, or upon a
consideration that has failed, it may be recovered back.
Huff, 654 N.E.2d at 837 (quoting Pufahl v. Nat. Bank of Logansport, 154 N.E.2d 119, 120 (Ind.
Ct. App. 1958)). Similarly, a claim of payment under a mistake of fact entitles the payor to recover
the money paid when the payment was made under a mistake of fact, and which the payor was
under no legal obligation to make, “notwithstanding a failure to employ the means of knowledge
which would disclose a mistake.” Time Warner Entm’t Co., 802 N.E.2d at 890.
“To prevail on a claim of unjust enrichment, a plaintiff must establish that a measurable
benefit has been conferred on the defendant under such circumstances that the defendant’s
retention of the benefit without payment would be unjust.” Inlow, 797 N.E.2d at 816 (quoting
Bayh v. Sonnenburg, 573 N.E.2d 398, 408 (Ind. 1991)).
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Under each of these claims for equitable relief, the undisputed facts in this case
unequivocally show that Potomac Mills is entitled to recover the payments it made to CBS in
September, October, November, and December 2012.

Potomac Mills mistakenly paid the

unearned payments to CBS after the contract was terminated and after CBS had ceased providing
janitorial services to Potomac Mills. With the termination of the contract, Potomac Mills was not
legally obligated to provide payments to CBS after August 2012. CBS, which admittedly had not
provided any services to Potomac Mills in consideration of the payments, retained the unearned
payments after Potomac Mills requested their return. CBS knew that it had not provided any
services to Potomac Mills to earn the payments, and it knew that the contract had been terminated.
CBS’s conduct was inequitable. CBS retained the payments, money that belonged to Potomac
Mills, money that CBS received because of Potomac Mills’s mistake of fact, for no consideration.
CBS received a measurable benefit under such circumstances that CBS’s retention of the benefit
without payment would be unjust. Equity demands the return of the inadvertent, unearned
payments to Potomac Mills under each of the equitable claims.
C.

Pre-judgment Interest, Post-judgment Interest, and Attorney Fees and Costs
Potomac Mills requested pre-judgment and post-judgment interest on its damages award.

Post-judgment interest is granted to Potomac Mills consistent with 28 U.S.C. § 1961. An award
of pre-judgment interest is a separate consideration.
In diversity actions, federal courts must look to state law to determine the propriety
of awarding prejudgment interest. In Indiana, prejudgment interest is available
when damages are ascertainable in accordance with fixed rules of evidence and
accepted standards of valuation at the time damages accrue, but is not appropriate
when the trier of fact must use its best judgment to assess the amount of damages.
The underlying purpose of awarding prejudgment interest on compensatory
damages is to make the wronged party whole by compensating that party for being
deprived of the money prior to judgment.

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Dale R. Horning Co. v. Falconer Glass Industries, Inc., 730 F. Supp. 962, 969 (S.D. Ind. 1990)
(internal citations omitted). The damages sustained by Potomac Mills in this case are readily
ascertainable and do not require a trier of fact to use its best judgment in assessing the amount of
damages. The amount of damages sustained by Potomac Mills is $305,947.88, the amount it
inadvertently paid to CBS, which CBS refused to return. Thus, an award of pre-judgment interest
is appropriate in this case. Pre-judgment interest will be awarded at the same rate as post-judgment
interest, which is set by 28 U.S.C. § 1961.
Potomac Mills also requested its attorney fees and costs pursuant to the parties’ contract.
“Indiana law governs the issue [of attorney fees] in this diversity case. Under Indiana law, . . . as
‘a general rule, a contract for attorneys’ fees is enforceable according to its terms unless contrary
to law or public policy.’” Allied Enters., Inc. v. Exide Corp., 2002 U.S. Dist. LEXIS 4553, at *2–
3 (S.D. Ind. Jan. 15, 2002) (quoting Exide Corp. v. Millwright Riggers, Inc., 727 N.E.2d 473, 481
(Ind. App. 2000)). The plain language of the contract between the parties states, “If [Potomac
Mills] is required to bring or defend any action arising out of this Agreement, or to enforce or
defend the provisions hereof, [Potomac Mills] shall recover its reasonable attorney’s fees and costs
from [CBS].” (Filing No. 1-1 at 12, paragraph 11.) This action “arises out of” the contract between
the parties. Therefore, an award of attorney fees and costs is appropriate in this case.
IV. CONCLUSION
Potomac Mills designated evidence and pleadings that show there is no genuine issue as to
any material fact and that it is entitled to a judgment as a matter of law on its claim for equitable
relief to recoup the inadvertent, unearned payments made to CBS. As such, summary judgment is
appropriate as a matter of law.

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Potomac Mills’s Motion for Summary Judgment (Filing No. 33) is GRANTED in favor
of Potomac Mills and against CBS on the claims for equitable relief.
CBS is ORDERED to pay Potomac Mills an award of damages in the amount of
$305,947.88. Potomac Mills is granted pre-judgment and post-judgment interest on its damages
award. Pursuant to the parties’ contract, Potomac Mills also is awarded its attorney fees and costs
incurred in this action. Potomac Mills is ORDERED to file an accounting of its reasonable
attorney fees and costs within fourteen (14) days of the date of this Order. Thereafter, a separate
and final judgment will be entered.
SO ORDERED.
01/22/2015
Date: _______________

DISTRIBUTION:
Alex E. Gude
BINGHAM GREENEBAUM DOLL LLP
[e-mail]
Carl A. Hayes
BINGHAM GREENEBAUM DOLL LLP
[e-mail]
Edward Turen, Chairman
Control Building Services, Inc.
333 Meadowlands Parkway, Suite 100
Secaucus, New Jersey 07094
Corporation Service Company
Registered Agent for
Control Building Services, Inc.
830 Bear Tavern Rd.
West Trenton, New Jersey 08628

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