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COA reverses summary judgment in third appeal in business case

March 7, 2017

In the third appeal regarding alleged business relationships between several men, the Indiana Court of Appeals has reversed summary judgment for the owners of the business in question, holding that there remains a genuine issue of material fact as to whether the other men suffered damages when they were denied ownership interests.

In Don Morris, et al. v. Brad Crain, et al., 32A05-1604-PL-761, Don Morris paid a rent installment and agreed to execute a five-year lease for the premises previously occupied by his employer, Waste Recovery, which had ceased doing business in 2006. During ownership negotiations for the new business, BioSafe, the parties settled on a plan that gave 40 percent ownership to Morris, 30 percent to Brad Crain and 20 percent to Richard Redpath.

Despite that arrangement, the Articles of Organization filed with the Indiana Secretary of State indicated that Crain and Redpath were the sole members, each holding 50 percent ownership. Then, when Justin Bisland and LPM Investments, LLC became 50 percent owners, Bisland fired Morris in October 2007.

Morris and Randy Coakes filed a complaint in March 2010, asserting that they had equitable interests and contractual rights in BioSafe and, thus, had standing to bring a shareholder derivative action. The Hendricks Superior Court granted summary judgment to the defendants in 2011, holding that the plaintiffs’ theory was contractual and that the defendants had correctly set out the current state of law regarding the plaintiffs’ complaint.

The Indiana Court of Appeals reversed that decision in Morris’ first appeal, holding that the judgment had been “improvidently granted.” BioSafe then moved for summary judgment a second time on Morris and Coakes’ breach of contract, unjust enrichment and equitable estoppel claim. The plaintiffs, however, held that their claims against BioSafe included an action for declaratory judgment, a shareholder derivative action and a demand for an accounting.

The trial court once again found in BioSafe’s favor on the plaintiffs’ three claims, and the Indiana Court of Appeals affirmed that decision in Morris’ second appeal, noting that the “only clear legal argument that Morris proffers on appeal is that summary judgment for BioSafe was inappropriate with respect to Morris’ shareholder derivative claim,” which Morris had abandoned.

Crain then filed a third round of litigation, moving for summary judgment on all of the plaintiffs’ claims, and the trial court once again granted judgment in Crain’s favor and struck down portions of the plaintiffs’ designated evidence. Morris filed a third appeal, and the Indiana Court of Appeals reversed the trial court’s third grant of summary judgment Tuesday.

In a unanimous appellate opinion, Judge Terry Crone first wrote that the trial court had abused its discretion in striking a substantial portion of an affidavit containing the transcript of a recorded conversation between Morris and Crain in October 2007. Specifically, Crone wrote that one statement Crain made during the conversation – “Right now, the company is worth about 6 million…” – is relevant to the case and is admissible.

Further, Crone wrote that summary judgment was improper because genuine issues of material facts remain as to whether the plaintiffs suffered damages by being deprived ownership interests, even though BioSafe has not been profitable.  Thus, the case was remanded to Hendricks Superior Court for further proceedings.

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