## Facts

- Mike Hawa, a property owner, contracted with Gerald Moore, a contractor, to install a rough base for a parking lot at Hawa’s facility using recycled concrete.
- The written payment schedule required: $5,000 due immediately, another $5,000 when half the work was completed, and the remaining balance when approximately 75% was completed.
- The parties reduced the overall contract price from about $13,500 to $12,000.
- Hawa paid the initial $5,000, and Moore arranged delivery of nine piles of recycled concrete to the site.
- Hawa observed wire mixed in with the recycled material and told Moore he would not make the second $5,000 payment.
- Moore explained that the wire would be separated during processing with a power-rake blender and proceeded to spread six of the nine piles on the property.
- When Moore again asked about the second payment, Hawa stated he would pay only after 80% of the work was completed, rather than at the halfway point stated in the contract.
- Hawa later told Moore that Hawa’s bank needed to see the power-rake blender before the bank would release funds for the second payment.
- Moore moved the power-rake blender to the front of the property and made himself available to meet Hawa and a bank representative, but no representative appeared.
- After about five days without the second payment or a satisfactory assurance that payment would be made under the contract terms, Moore left the job site.
- Hawa sued Moore in small claims court for breach of contract; Moore counterclaimed for breach, seeking compensation for labor, materials, and trucking/hauling.
- After a bench trial, the small claims court entered judgment for Moore on his counterclaim and awarded Moore $4,745 in damages. Hawa appealed.

## Issues

1. Whether the evidence supported the small claims court’s determination that Hawa repudiated the contract by failing to provide adequate assurance of payment, justifying Moore’s decision to stop work and supporting judgment for Moore on the counterclaim.
2. Whether the small claims court clearly erred in calculating damages by including hauling/transportation costs incurred after the lawsuit was filed, given the duty to mitigate damages.
3. Whether Hawa was denied due process in small claims court based on his claim that he lacked a fair chance to respond to Moore’s counterclaim or rebut Moore’s testimony.

## Decision

- The Court of Appeals of Indiana affirmed the small claims court’s liability determination, concluding that Hawa repudiated the contract by failing to give Moore adequate assurance that Hawa would pay according to the agreed schedule.
- The court held that Moore was entitled to recover damages tied to work performed and costs incurred before the repudiation, and the small claims court did not clearly err by entering judgment for Moore on the counterclaim.
- The court reversed in part the damages award, ruling that certain post-suit hauling/transportation expenses should not have been included because Moore was required to use reasonable efforts to limit avoidable losses.
- The court rejected Hawa’s due process argument because the record showed the trial court offered an opportunity to continue or reschedule for additional evidence, and Hawa declined.
- The judgment was affirmed in part, reversed in part, and remanded with instructions to reduce the damage award.

## Legal Principles

- When a party has reasonable grounds to doubt the other party’s performance, the concerned party may demand adequate assurance; failure to provide adequate assurance can amount to anticipatory repudiation.
- A party’s refusal to pay under agreed milestones, coupled with shifting conditions for payment, can support a finding that the party will not perform as promised.
- Upon repudiation by the other party, the non-breaching party may treat the contract as breached and may stop further performance without being liable for breach.
- Damages may include reasonable costs and expenses from partial performance before repudiation, but recovery is limited to losses that were not reasonably avoidable.
- An injured party must use reasonable diligence to mitigate damages; costs incurred after litigation begins may be disallowed if they could have been avoided with reasonable action.
- In small claims proceedings, due process is satisfied when a party is given a meaningful chance to present evidence; declining an offered continuance defeats a later claim of unfairness.

## Conclusion

In *Hawa v. Moore*, the Indiana Court of Appeals held that Hawa repudiated his contract with Moore by refusing to make the second payment under the agreed schedule and failing to provide adequate assurance that he would pay, which justified Moore’s decision to stop work and supported judgment for Moore on his counterclaim. The court, however, required a reduction of the damages because the award included certain hauling costs incurred after suit was filed that Moore should have avoided through reasonable mitigation, and it found no due process violation where Hawa declined the trial court’s offer to reschedule to present more evidence.


Hawa v. Moore, 947 N.E.2d 421 (2011)