An investor in a life sciences company who lost the bulk of her $400,000 investment won’t have to pay nearly twice that amount to lawyers who represented the company that prevailed in part in a countersuit against her.
Julie Menefee entered into a contract in 2007 for ownership shares in Bloomington-based BioConvergence, LLC. She agreed to invest $400,000 in the company in exchange for 3,333 Class B-1 units of membership interest. This represented a valuation of $120 per share.
In 2012, after BioConvergence founder and CEO Alisa K. Wright informed Menefee that her shares were now worth about $15.50 apiece, Menefee sued her and BioConvergence. The suit raised claims including securities fraud, fraud, and breach of fiduciary duty. BioConvergence filed a counterclaim alleging breach of contract against Menefee.
Ultimately, a jury ruled for the defendants in 2017, including on the defense counterclaim against Menefee. A special judge in the Monroe Circuit Court, however, subsequently declined to award a defense request for attorney fees and costs totaling $732,018.39.
In a 54-page opinion Friday, Court of Appeals Judge Elaine Brown affirmed the decision in BioConvergence, LLC, and Alisa K. Wright v. Julie Menefee, 53A04-1708-PL-1810. Relying on Dale Bland Trucking, Inc. v. Kiger, 598 N.E.2d 1103, 1105 (Ind. Ct. App. 1992), the panel held that the lack of an enabling indemnity provision in the contract precluded a claim for attorney fees, and Menefee’s claims were not frivolous or in bad faith.
“Here, the indemnity provision did not explicitly permit an award of attorney fees nor refer to the recovery of attorney fees in an indemnity action,” Brown wrote for the panel. “Accordingly, we cannot say that reversal is warranted.”