It’s been a bad few weeks for the Dean V. Kruse Foundation, after a foreclosure on the property brought days of media attention.
But on Tuesday, the Indiana Court of Appeals issued a ruling in the foundation’s favor in a long-pending case that could bring in a bit of needed cash down the road.
The foundation operates a World War II museum as well as the Kruse Automotive and Carriage Museum in Auburn, and like the man who heads the board and whose name is on the foundation, has struggled financially in recent years.
Tuesday’s appellate court ruling overturns a ruling by an Orange County special judge and could award a damage settlement to the museum for a deal gone bad more about six years ago.
The case – Dean V. Kruse Foundation and Dean V. Kruse v. Jerry Gates – involved the sale of a piece of West Baden property donated to the museum in 2003.
The nearly 43-acre plot of land initially became a burden to the foundation, according to court documents, so the foundation tried to sell it in 2005.
Eventually, Dean Kruse, then an auctioneer, held an auction for the property in July 2006 and it was sold to Jerry Gates for $4.2 million.
Kruse asked for $100,000 in earnest money until the sale was final, but in August 2006, Gates declined to go through with the deal. Kruse later sold the property for $2.35 million, according to court documents.
Gates sued for breach of contract, and the Dean V. Kruse Foundation countersued for damages.
In December 2009, the Orange County court ruled in Gates’ favor and ordered the foundation and Kruse to return the earnest money with interest, according to court documents.
Kruse appealed, and the appellate court reversed the lower court in 2010, ordering the judge to find in favor of Kruse and the foundation. The appeals court also ordered the lower court to conduct a hearing on the damages, which the foundation said totaled nearly $2.5 million, according to court documents.
The Orange County court conducted a hearing, and while it found in favor of Kruse, held the damages to $100,000 – the original amount of money paid to Kruse as earnest money, ruling that the damage amount was uncertain, according to court documents.
Kruse appealed again, and once again the appellate court overturned the lower court’s order, saying the earnest money forfeited wasn’t damages but rather a penalty that Gates paid for breaching the contract.
The new ruling orders the Orange County court to calculate the measure of damages as a result of Gates’ breach of contract, according to court documents.
Attorneys for the foundation in the appellate case said it is possible the case could be appealed again, this time by Gates, to the Indiana Supreme Court.
Last month, a DeKalb Superior Court judge awarded a $2.9 million foreclosure judgment to a LaGrange bank, ordering the land and buildings of the museum sold at sheriff’s sale.
Museum officials were optimistic they would be able to work out the matter with the bank, having struggled financially as Kruse personally has struggled financially and been unable to inject cash into the non-profit foundation as he once had.
Thompson Smith, the Auburn-based attorney representing the foundation, said Tuesday the appellate ruling is a good thing and could provide much needed cash.