ILNews

Court: Records inspection needs testimony

Jennifer Nelson
January 1, 2008
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The Indiana Court of Appeals reversed a trial court decision to allow a couple to inspect a company's financial statements, finding the trial court relied only on an affidavit - and not testimony - to allow the inspection.

In Bacompt Systems, Inc. v. Angelina Peck and David C. Peck, No. 29A02-0708-CV-646, the Pecks made separate written requests to view Bacompt's financial documents. The Pecks, who lived in Pennsylvania, owned approximately 25 percent of the company's stock. Prior to David C. Peck's termination as president of Bacompt in May 2006, Angelina filed for divorce in Pennsylvania.

David C. Peck made his request to Bacompt for the financial documents to see if Buddy C. Stanley, the principal shareholder of Bacompt, had misappropriated funds. Stanley had filed a suit in federal court accusing David of writing unauthorized Bacompt checks for his and Angelina's personal use. Angelina requested Bacompt's financial documents to try to value her stock holdings in the company.

Initially, Bacompt refused to hand over the documents, citing David didn't specify his purpose for the documents in his written request and the company's belief that Angelina's request was untimely. Later, the company agreed to hand over certain documents, but would not turn over the KSM report, which is prepared by the company's outside accountant and included an analysis relating to the checks that are of issue in the federal lawsuit as well as a review of expenses charged to Bacompt from 2003 through 2005.

The Pecks then filed a petition for inspection of corporate records, which the trial court granted based on an affidavit submitted from Angelina with the pre-hearing brief that stated she needed to inspect the records to value her stock in her pending divorce.

Bacompt appealed, stating the Pecks didn't prove under Indiana Code 23-1-52-2 that their demand for inspection was in good faith and for a proper purpose, as well as the trial court erred in allowing the KSM report in the inspection of documents.

The Court of Appeals found no abuse of discretion when the trial court accepted Angelina's affidavit after a motion was filed. However, the appellate court did find the trial court erred in relying on Angelina's affidavit to enter its judgment.

Pursuant to Trial Rule 43(A), testimony was required to be given in open court in order to allow Bacompt the right to cross-examine and to observe witnesses' demeanor and determine credibility, wrote Judge Cale Bradford.

"In that Angelina's affidavit was introduced into evidence in lieu of her testimony for purposes of establishing - as a matter of fact - the Pecks's purpose in seeking to inspect Bacompt's corporate records, we conclude this was an error," he wrote.

In regards to Bacompt's appeal, the KSM report should not be included for inspection; the appellate court ruled the trial court should determine that on remand. Since there was no factual record in this case demonstrating a proper purpose, Judge Bradford wrote it was unnecessary for the appellate court to address this issue.
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  1. Can I get this form on line,if not where can I obtain one. I am eligible.

  2. What a fine example of the best of the Hoosier tradition! How sad that the AP has to include partisan snark in the obit for this great American patriot and adventurer.

  3. Why are all these lawyers yakking to the media about pending matters? Trial by media? What the devil happened to not making extrajudicial statements? The system is falling apart.

  4. It is a sad story indeed as this couple has been only in survival mode, NOT found guilty with Ponzi, shaken down for 5 years and pursued by prosecution that has been ignited by a civil suit with very deep pockets wrenched in their bitterness...It has been said that many of us are breaking an average of 300 federal laws a day without even knowing it. Structuring laws, & civilForfeiture laws are among the scariest that need to be restructured or repealed . These laws were initially created for drug Lords and laundering money and now reach over that line. Here you have a couple that took out their own money, not drug money, not laundering. Yes...Many upset that they lost money...but how much did they make before it all fell apart? No one ask that question? A civil suit against Williams was awarded because he has no more money to fight...they pushed for a break in order...they took all his belongings...even underwear, shoes and clothes? who does that? What allows that? Maybe if you had the picture of him purchasing a jacket at the Goodwill just to go to court the next day...his enemy may be satisfied? But not likely...bitterness is a master. For happy ending lovers, you will be happy to know they have a faith that has changed their world and a solid love that many of us can only dream about. They will spend their time in federal jail for taking their money from their account, but at the end of the day they have loyal friends, a true love and a hope of a new life in time...and none of that can be bought or taken That is the real story.

  5. Could be his email did something especially heinous, really over the top like questioning Ind S.Ct. officials or accusing JLAP of being the political correctness police.

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