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Court finds man abandoned shareholder derivative claim

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Because a man “expressly and unambiguously” abandoned his shareholder derivative claim when responding to a court demand to specify his legal claims, he cannot now assert that claim on appeal, the Indiana Court of Appeals ruled.

Don Morris and Randy Coakes sued BioSafe Engineering in March 2010 arguing they had equitable interests and contractual rights in BioSafe and they could bring a shareholder derivative action. Morris claimed he helped create and owned BioSafe, but the articles of organization for the company filed with the secretary of state indicate that Brad Crain and Richard Redpath were the sole members.

The trial court ordered Morris and Coakes to file with the court a document stating the legal theories they assert against the defendants; the document indicated that their theories of recovery were breach of contract, unjust enrichment and estoppel. The trial court granted summary judgment in favor of BioSafe and other defendants.

The case made it to the Court of Appeals in 2012 and the judges reversed summary judgment, rejecting the procedure employed by the trial court. BioSafe filed another motion for summary judgment, which was granted, leading to the instant appeal.

Morris argued that his claims against the company include a shareholder derivative action, but the Court of Appeals rejected his argument.

“In sum, Morris expressly and unambiguously abandoned his shareholder derivative claim in August of 2011 when, in response to the trial court’s demand that he specify his legal claims, Morris admitted to the court that his claims were for breach of contract, unjust enrichment, and equitable estoppel. This court acknowledged Morris’ abandonment of his shareholder derivative claim in Morris I, and nothing in our prior opinion nullified Morris’ express admission to the trial court. Both the trial court and BioSafe relied on and had the right to rely on Morris’ admission,” Judge Edward Najam wrote in Don Morris v. Biosafe Engineering, LLC, 32A04-1306-PL-321.

“Morris was, therefore, estopped from asserting a claim he had abandoned. Thus, Morris’ exclusive theory on appeal — that the trial court erred when it entered summary judgment because he has a legitimate shareholder derivative claim against BioSafe — is not grounds to deny
BioSafe’s motion for summary judgment.”

 

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  1. Why in the world would someone need a person to correct a transcript when a realtime court reporter could provide them with a transcript (rough draft) immediately?

  2. If the end result is to simply record the spoke word, then perhaps some day digital recording may eventually be the status quo. However, it is a shallow view to believe the professional court reporter's function is to simply report the spoken word and nothing else. There are many aspects to being a professional court reporter, and many aspects involved in producing a professional and accurate transcript. A properly trained professional steno court reporter has achieved a skill set in a field where the average dropout rate in court reporting schools across the nation is 80% due to the difficulty of mastering the necessary skills. To name just a few "extras" that a court reporter with proper training brings into a courtroom or a deposition suite; an understanding of legal procedure, technology specific to the legal profession, and an understanding of what is being said by the attorneys and litigants (which makes a huge difference in the quality of the transcript). As to contracting, or anti-contracting the argument is simple. The court reporter as governed by our ethical standards is to be the independent, unbiased individual in a deposition or courtroom setting. When one has entered into a contract with any party, insurance carrier, etc., then that reporter is no longer unbiased. I have been a court reporter for over 30 years and I echo Mr. Richardson's remarks that I too am here to serve.

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