## Facts

- Piece of America (POA), operated by Dennis Conwell and Frank Splittorff, sold novelty “one-square-inch parcels” of land and sought a marketing website in 2003.
- POA hired Gray Loon Outdoor Marketing Group, Inc. (Gray Loon), a web design and communications firm, after receiving a written proposal estimating $8,080 and stating Gray Loon’s philosophy that clients inherently own purchased “goods and services.”
- POA paid a 50% deposit; Gray Loon designed and launched the site in December 2003 for about $8,500, and POA paid in full in early 2004.
- In April 2004, POA requested substantial modifications, including functionality allowing customers to make two payments; the modification agreement was oral and did not include a price term.
- Gray Loon performed the requested changes and later invoiced POA; POA did not pay the additional invoices.
- After nonpayment, Gray Loon took the website offline and retained the related digital files.
- Gray Loon sued to recover payment for the additional work; POA counterclaimed for conversion, alleging it owned the website and that Gray Loon wrongfully deprived it of that property.

## Issues

1. Whether U.C.C. Article 2 governs a contract for custom website design, modification, and related services as a “transaction in goods.”
2. Whether POA could recover for conversion based on alleged ownership of the website and Gray Loon’s removal of the site and retention of files.

## Decision

- The Indiana Supreme Court affirmed judgment for Gray Loon.
- The court held U.C.C. Article 2 did not apply because the transaction was predominantly for services rather than goods.
- The court upheld Gray Loon’s recovery under common-law contract principles for the reasonable value of requested and provided services despite the absence of an agreed price for the modifications.
- The court rejected POA’s conversion counterclaim, concluding POA lacked a superior ownership interest in the copyrighted website components created by Gray Loon.

## Legal Principles

- U.C.C. Article 2 applies only to “transactions in goods”; hybrid contracts are governed by Article 2 only when the predominant purpose is the sale of goods.
- Custom website creation and programming are predominantly service transactions; the intangible website product and any incidental tangible media do not convert the deal into a goods sale.
- Under common-law contract, an agreement for services may be enforceable even without a stated price; a reasonable price may be implied from the parties’ conduct and the services rendered.
- Copyright in original website design/code generally remains with the creator absent a written assignment or a valid “work made for hire” arrangement.
- A conversion claim fails where the claimant cannot show a superior right to possession of the property allegedly converted; interference with intangible, copyright-owned material does not establish conversion in favor of a commissioning client.

## Conclusion

The court treated custom website design and modification as a services contract outside U.C.C. Article 2, permitted the designer to recover a reasonable charge for requested work under common-law contract, and denied the client’s conversion claim because the designer retained copyright ownership in the created website components absent an express transfer.


Conwell v. Gray Loon Outdoor Mktg. Grp., Inc., 906 N.E.2d 805 (Ind. 2009)