UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF INDIANA 

SOUTH BEND DIVISION 

MONA C. TRACY and TERAH TRACY, ) 

 ) 

 Plaintiffs/ ) 

 Counter-Defendants ) 

 ) 

 vs. ) CAUSE NO. 3:15-cv-212 RLM 

 ) 

PAUL J. MINNE and JEAN M. MINNE, ) 

 ) 

 Defendants/ ) 

 Counter-Plaintiffs ) 

OPINION AND ORDER 

A December 30, 2010 meeting at the Kokomo, Indiana, Cracker Barrel 

played a pivotal role in the short life of a business called Phoenix Pallet. It was 

there that the original shareholders Mona and Terah Tracy and Mike and Tammy 

Madison first met Jean and Paul Minne, one whom would become a shareholder 

and the other president of the closely held corporation. The original shareholders 

hoped Mr. Minne and his money would save their business. 

Phoenix Pallet manufactured, refurbished, and sold wood pallets. It was 

incorporated in February 2010 and was struggling by the time of the Cracker 

Barrel meeting. Mr. Madison had asked Phoenix Pallet’s accountant, David 

Rushenberg, to keep an eye out for possible investors, and Mr. Rushenburg had 

suggested Mr. Minne, whose personal accounting work Mr. Rushenburg had 

done for years. That led to the December 2010 Cracker Barrel meeting. 

Mr. Minne had put quite a bit of money into Phoenix Pallet even before the 

Cracker Barrel meeting. He had gone to Phoenix Pallet’s Elkhart, Indiana facility, 
2

looked at records, asked questions, and saw promise in the company. He put 

$50,000 into Phoenix Pallet in October 2010 and another $40,000 in November, 

through Mr. Madison. Mr. Minne was enthusiastic at the Cracker Barrel meeting. 

He expressed the belief that he could have Phoenix Pallet making a profit in six 

months and the shareholders’ next annual meeting would be held in Las Vegas. 

Mr. Minne had two conditions that had to be met before he participated any 

further. First, since he would have the most money tied up in Phoenix Pallet, he 

insisted on being president. That condition seems to have been agreed to 

immediately. Second, he wanted to continue spending winters in Florida, where 

the Minnes had been going for Mrs. Minne’s health. Again, all present agreed to 

that condition. 

Not everyone at the Cracker Barrel had the same understanding of what it 

means to spend winters in Florida. The Madisons lived in Elkhart, Indiana, near 

the Michigan border. The Tracys lived in Terre Haute, Indiana. The Minnes lived 

about 150 miles north of the Tracys, in White Pigeon, Michigan. Maybe “winter” 

means something different to people from southern Michigan than it does to 

people southwest central Indiana, but the Tracys understood Mr. Minne to mean 

two or three months, and the Minnes had been spending five or six months in 

Florida. 

Mr. Minne thinks he presented a third condition: that he be paid enough 

to be pay for his country club dues. The record doesn’t support that belief. Both 

Tracys and both Madisons testified that they remember nothing about Mr. Minne 

being paid, and Phoenix Pallet’s financial records don’t reflect any salary 
3

payments. The minutes say nothing about pay (though the minutes also said 

nothing about winters in Florida, either, and everyone agrees that was 

discussed). Mr. Minne’s memory on this point is faulty. 

The Cracker Barrel meeting participants agreed that Mrs. Minne would 

become a shareholder with one-third of the shares. The Minnes understood that 

the Tracys were silent partners, while the Madisons worked at Phoenix Pallet. 

Despite the enthusiasm Mr. Minne brought to the Cracker Barrel meeting, 

Phoenix Pallet never made a profit, and closed with a crash slightly more than 

four years later. 

The Tracys, citizens of the state of Indiana, and the Minnes, citizens of the 

state of Michigan, have sued each other on various state law claims. Well over 

$75,000 is in controversy, so the court has jurisdiction under 28 U.S.C. § 

1332(a). The parties agree that Indiana law provides the rule of decision. A bench 

trial was held from August 13 through August 16, 2018. This memorandum is 

meant to satisfy the court’s obligation under Fed. R. Civ. P. 52(a). 

THE TALE OF PHOENIX PALLET

2010 

 When the Tracys and Madisons formed Phoenix Pallet, Mona Tracy and 

Tammy Madison were issued slightly more shares than their spouses in the event 

opportunities arose for a woman-owned business. Tammy Madison was named 

president. Even though the bylaws didn’t provide for a position of vice-president, 

the shareholders immediately selected Mike Madison vice-president. Mr. 
4

Madison was to run the plant while Mrs. Madison ran the office. The Tracys 

weren’t strictly silent partners but wanted to stay in the shadows. Mrs. Tracy 

had her own business that supplied pallet manufacturers, and preferred that 

her role in Phoenix Pallet not become widely known. 

Each couple put an initial investment into the business. The Tracys 

provided equipment worth $99,613 to Phoenix Pallet through a sale on credit at 

annual six percent interest rate. The Tracys also provided five computers. 

Phoenix Pallet leased a site that met all its needs, including electrical service, 

but might have been larger than needed (200 yard x 100 yards) at the company’s 

outset. The company entered the market with one expected arm tied behind its 

back: Phoenix Pallet applied for a Small Business Association loan of $150,000 

through 1st Source Bank, but was turned down and received a $50,000 line of 

credit instead; that rejection led both couples to put more money into the 

business for outstanding bills, paying themselves back as income came in. Mrs. 

Madison and Mrs. Tracy incurred Phoenix Pallet debt on credit cards. 

As 2010 proceeded, it became apparent that Phoenix Pallet needed a 

source of more money. It had a net loss of about $145,000. Mrs. Madison wasn’t 

able to keep the Tracys completely up-to-date on the financial information as she 

struggled with the accounting program the Tracys had provided, but the Tracys 

knew the company was struggling. 

Mr. Rushenburg (Phoenix Pallet’s accountant) told Mr. Madison that Mr. 

Minne might be interested in investing. Mr. Minne visited the Phoenix Pallet 

plant in Elkhart and the Madisons gave him free rein of the corporate records 
5

and financial information. Based on those visits and examinations, Mr. Minne 

came to believe that Phoenix Pallet could become a successful undertaking if 

sales could be increased. Mr. Minne didn’t discuss the investment with his wife. 

The Tracys didn’t know of, and didn’t object when they learned of, Mr. Minne’s 

$90,000 investment. 

The Kokomo Cracker Barrel meeting described at the outset of this opinion 

ensued. By the end of 2010, Mr. Minne was president of Phoenix Pallet, Mr. 

Madison was vice-president (notwithstanding the absence of mention of that 

office in the bylaws), and Mrs. Madison was secretary-treasurer. The Tracys, the 

Madisons, and Mrs. Minne each owned a third of the shares of Phoenix Pallet. 

Mr. Minne believes he asked the Tracys whether the equipment they had 

provided to Phoenix Pallet was a capital contribution to the company or a loan 

on credit, and that they told him it was a capital contribution. He left the Kokomo 

Cracker Barrel meeting with the belief that the equipment was a capital 

contribution, and now says he wouldn’t have invested had he known Phoenix 

Pallet didn’t own that equipment. Mr. Minne’s understanding was incorrect and 

he might have misunderstood what he was told. No other evidence in the case 

corroborates his memory; Mr. Tracy specifically remembers telling Mr. Minne the 

equipment was there on a six percent loan. The day before the Tracys met Mr. 

Minne for the first time at the Cracker Barrel meeting, Mr. Rushenberg produced 

an amortization schedule for the equipment. It doesn’t appear that the Tracys 

shared the amortization schedule with Mr. or Mrs. Minne, but it’s most unlikely 
6

that the Tracys would have told Mr. Minne the equipment was a capital 

contribution with an amortization schedule in hand. 

The Tracys, Madisons, and Minnes all moved forward with the hope that 

Phoenix Pallet would do better in 2011. Everyone honestly believed that Phoenix 

Pallet would be profitable if it could increase sales by $90,000. The Madisons 

returned to Elkhart, the Tracys returned to Terre Haute, and Minnes set out for 

Florida. 

As of the end of 2010, Mr. Minne was the largest investor at $90,000. The 

Tracys had put in $68,900 and the equipment. The Madisons had invested 

$32,409.94. 

Phoenix Pallet had $425,000 in gross sales in 2010 (a partial year of 

operation), and lost $179,000. 

2011 

 The Tracys drew even more deeply into the shadows in 2011 as Mr. Tracy 

suffered two serious health issues, and Phoenix Pallet became a less significant 

factor in their lives. Mr. Minne didn’t speak with the Tracys during all of 2011. 

 Back in Elkhart, Mrs. Madison worked less and less in the office as she 

took other jobs and another bookkeeper was hired. Mr. Madison continued to 

put in 60-hour weeks running the plant and, when Mr. Minne was away, running 

the business. Neither the Tracys nor the Madisons put more money into the 

business, but Mr. Minne made short-term advances totaling $183,000 during 
7

the course of 2011. Sales increased dramatically from 2010 to 2011, rising to 

$1.24 million, but Phoenix Pallet continued to lose money. 

Mr. Minne was an investor in three other businesses. Golf Properties was 

a real estate holding company. Elkhart Logistics and Fabric Technologies 

serviced the recreational vehicle industry. Golf Properties paid Mr. Minne a 

weekly management fee of $525 on Phoenix Pallet’s behalf, and Phoenix Pallet 

reimbursed Golf Properties. Mr. Minne testified that he did this so Phoenix Pallet 

wouldn’t be saddled with the payroll expenses connected with his management 

fee. Phoenix Pallet also used, while not paying for the use of, Elkhart Logistics 

trucks. At times, Fabric Technologies made loans to Mr. Minne, who in turn 

would pass the money along to Phoenix Pallet, and Phoenix Pallet would repay 

Fabric Technologies. As time went on and relationships soured, the Tracys would 

demand that Golf Properties and Elkhart Logistics be removed from the Phoenix 

Pallet facility, but nothing in the record suggests that anyone lost a penny by 

virtue of Mr. Minne’s having involved his other businesses in the Phoenix Pallet 

enterprise. 

As 2011 drew to a close, Mr. Minne realized he was the only one putting 

money into Phoenix Pallet and that Phoenix Pallet was likely to need more money 

from him to operate in 2012. He decided he wanted to protect his investment. 

He had an attorney draw up a promissory note and a security agreement for 

$200,000 (with annual interest at 5 percent) he thought he had put into the 

company. The attorney told Mr. Minne it would better if another officer signed 

on Phoenix Pallet’s behalf, as opposed to Mr. Minne signing as both president 
8

and creditor. When the Minnes were home from Florida for Christmas, he and 

Mr. Madison executed the note and security agreement, with Mr. Madison 

signing as vice-president. A copy of the note and security agreement were kept 

at the Phoenix Pallet office, and Mr. Minne had a UCC statement filed with the 

secretary of state’s office. 

Mr. Madison doesn’t remember signing the papers, and given the 

thickness of the eleven-page security agreement, he thinks he would have read 

it and remembered it. The Tracys seem to think Mr. Minne used Mr. Madison’s 

signature stamp to give himself a security interest in Phoenix Pallet. They point 

out that the signature on the note reads “Mike A. Madison,” as “Vice President,” 

and the file name at the bottom of the document reads, “msw\corp\phoenixpispn\jvw\amb. The security agreement is signed “Mike Madison” (again as Vice 

President), spells Mr. Minne’s name correctly, and the characters within the 

signature are of significantly greater weight (thickness) than the signature affixed 

to the promissory note. The file name at the bottom of this document is 

“msw\agree\pmpp-secag\jvw\mj.” 

It is more likely than not that Mr. Minne didn’t forge Mr. Madison’s 

signatures. First, testimony from both Madisons indicate that it wouldn’t have 

been unusual for Mr. Madison to sign as “Mike A.” on one line and as “Michael” 

on another. Second, although the relationships between the shareholders and 

officer of Phoenix Pallet soon took a nosedive, they were fine at the end of 2011. 

Mr. Minne and Mr. Madison were working well together. At some time – maybe 

in 2011 – Mrs. Madison became uncomfortable with Mr. Minne’s checkwriting 
9

practices, but speculation is required to think Mr. Minne know that by the end 

of 2011. And the Tracys had been the mutest of silent partners to that point. 

Finally, the Madisons and Tracys hadn’t put money into Phoenix Pallet for more 

than a year; they had chosen Mr. Minne to provide money. The Tracys and 

Madisons would have been hard pressed to deny Mr. Minne a security interest 

to the extent of his investment, and there’s no basis to find Mr. Minne thought 

he had to go under the table to get a security interest. 

Mr. Minne’s method of handling the transaction didn’t comply with the 

Phoenix Pallet bylaws. First, the bylaws didn’t create an office of vice president, 

so strictly by the bylaws (and ignoring how Phoenix Pallet had operated since its 

creation), Mr. Madison couldn’t sign as vice president. Second, the bylaws 

provide that, “[u]nless otherwise provided by the Board of Directors, all 

contracts, leases, commercial paper and other instruments in writing and legal 

documents, shall be signed by the President and attested by the Secretary. All 

bonds, deeds, and mortgages shall be signed by the President and attested by 

the Secretary. All certificates of stock shall be signed by the President and 

attested by the Secretary.” The directors hadn’t amended that provision or 

established another way to execute instruments of that sort. Mr. Minne had 

never seen the bylaws by the end of 2011; Mrs. Tracy had the bylaws. 

No one told the Tracys about the promissory note and the security 

agreement. 

Finally, it appears that the $200,000 figure referenced in the note was 

simply plucked from the air as a rough estimate of what Mr. Minne thought he 
10

had put in by December 2011. Available records suggest that Mr. Minne’s 

contributions in 2011 were closer to $170,000 than to $200,000, and had 

invested $90,000 in 2010. Some of what Mr. Minne put into Phoenix Pallet in 

2011 was repaid. These were interest free short-term loans to tide the company 

over until revenue came in. Phoenix Pallet financial records are too fuzzy to tell 

with any degree of confidence how close the contributions and repayments came 

to evening out; Plaintiffs’ Exhibit 37 indicates that Phoenix Pallet paid just under 

$17,000 directly to Mr. Minne and $42,000 through Golf Properties in 2011. That 

process of money-in-money-out continued through 2014. 

Phoenix Pallet had $1,239,000 in sales in 2011 – a 290 percent increase 

over 2010 – but lost $149,000. 

2012 

The year 2012 saw sales increase, the Madisons step aside as officers and 

shareholders, and the Tracys emerge from the shadows. 

Around April 2012, the Madisons notified the Tracys and the Minnes that 

they were going to file for bankruptcy. To keep their creditors from reaching 

Phoenix Pallet, they resigned their positions as officers and shareholders, and 

backdated their resignations to December 31, 2011. Mr. Madison remained at 

Phoenix Pallet as plant manager. He was paid $1,000 a week and ran the 

manufacturing facility and, when Mr. Minne was in Florida, he ran Phoenix 

Pallet. The Madisons signed a resignation form, as did the Minnes and the Tracys 

separately, all dated December 31, 2011. After the Madisons’ resignation, Mrs. 
11

Minne owned half the shares of Phoenix Pallet, and Mr. and Mrs. Tracy each 

owned a quarter. 

Mrs. Madison had virtually left the Phoenix Pallet office because of her 

distaste for the way Mr. Minne handled the checkbook. Phoenix Pallet suffered 

chronic cash flow shortages, and the checking account often had too little to pay 

bills as they came due. Sometimes, Mr. Minne would make short-term loans to 

the company (as Mrs. Madison did once at tax time). At other times, though, he 

would send checks off to a creditor expecting that a check coming in from a 

debtor would hit the account first, providing sufficient funds for the company 

check. It didn’t always work, and Phoenix Pallet incurred more than $21,000 in 

bounced check fees while Mr. Minne ran the business. Universal Machine, which 

Mrs. Tracy owned, appears to have been among the creditors paid with sounder 

checks. Sometimes, Mr. Minne would make what he viewed as a short-term loan 

to get the company over a stretch in which the receivables hadn’t yet come in, 

then have the company repay him a few days later. On other occasions, Mr. 

Minne had checks sent out for amounts less than full payment, trying to buy 

time until the cash flow improved. As would be seen in 2014, that practice didn’t 

always keep creditors at bay. 

Mr. Tracy returned to health sometime early in 2012, and the Tracys 

increased their focus on Phoenix Pallet’s financial health. Records that showed 

the company was still operating at a loss, and owing Mr. Minne $400,000, 

alarmed them, so they set up a July 2012 meeting with Mr. Minne, the Madisons, 

and Mr. Rushenburg. During that meeting, as Mrs. Tracy was examining 
12

financial paperwork Mr. Rushenburg had given her, Mr. Rushenburg said 

Phoenix Pallet had more than one set of books, and the Tracys should call him 

if they wanted accurate information. When the Tracys responded to that 

statement with alarm, Mr. Rushenburg insisted that Mrs. Tracy return all the 

paperwork he had produced, including papers she already had placed in her 

briefcase. After Mrs. Tracy complied, Mr. Rushenburg left hurriedly, and Mr. 

Minne and Mr. Madison left as well. 

Mrs. Tracy tried to get the “accurate” information from Mr. Rushenburg, 

but he wouldn’t return her calls. She asked Mr. Minne, but he said he didn’t 

hear Mr. Rushenburg say anything about a second set of books. Given the 

seating arrangement at the meeting and the conversation leading up to the 

statement, the Tracys can’t believe that Mr. Minne didn’t hear the statement. 

The Tracys contend that, assuming Mr. Minne heard the statement, his failure 

to dispute Mr. Rushenburg’s statement amounts to an admission by Mr. Minne 

that Mr. Rushenburg’s statement was true. See Fed. R. Evid. 801(d)(2)(B). 

Based on the trial evidence, it’s more likely than not that Mr. Rushenburg 

made the “more than one set of books” statement. Mr. Tracy and Mrs. Tracy both 

testified that they heard it; more significantly, Mrs. Madison (who gains nothing 

from this case) says she heard the statement, though she’s not sure whether Mr. 

Rushenburg or Mr. Minne uttered it. Mr. Rushenburg didn’t testify at trial. It is 

also more likely than not that Mr. Minne heard the statement. He was seated 

with Mr. Rushenburg to his left and Mrs. Tracy directly across from him. It’s less 
13

certain that the statement resonated with him as it did with the Tracys and Mrs. 

Madison. 

Still, the record contains no substantive evidence apart from the adoptive 

admission that Phoenix Pallet maintained more than one set of books. No second 

set of books was introduced into evidence; Mr. Rushenburg (the Phoenix Pallet 

accountant) didn’t testify to a second set; Mrs. Madison (who had been Phoenix 

Pallet’s principal bookkeeper until a few months before this meeting) didn’t 

testify to a second set; Mr. Madison (who ran Phoenix Pallet for about half the 

year) didn’t testify to a second set; David Gray (who sort of replaced Mr. 

Rushenburg as Phoenix Pallet’s accountant) didn’t testify to a second set. Mr. 

Minne’s failure to dispute Mr. Rushenburg’s statement – itself not substantive 

evidence – stands alone as proof of multiple books. 

It isn’t more likely than not that Phoenix Pallet maintained more than one 

set of books. Nonetheless, Mr. Rushenburg’s statement sent the relationship 

between the Tracys and Mr. Minne into a tailspin from which it never recovered. 

Mr. Tracy looked at Mr. Minne’s claimed $400,000 investment as more money 

than the Board ever authorized Phoenix Pallet to accept. It’s worth noting that 

the Board never authorized acceptance of the $90,000 Mr. Minne invested in 

2010, and never returned the money. 

Phoenix Pallet lost $39,000 on sales of $1,536,000 in 2012. 
14

2013 

The year 2013 saw more money put into by Phoenix Pallet by Mr. Minne, 

more unprofitability at Phoenix Pallet, and more disharmony between the Tracys 

and Mr. Minne. 

Mr. Minne opened personal lines of credit with PNC Bank and Fifth Third 

Bank and used those accounts to make short-term loans to Phoenix Pallet, which 

would make repayments to the banks when it could. Phoenix Pallet also made 

payments, though very untimely ones, to American Express and Chase Bank on 

credit cards in the names of Mona Tracy and Tammy Madison that were taken 

out in 2010. 

In June 2013, the parties began discussing the sale of either Phoenix Pallet 

or their interests in Phoenix Pallet. At one point later in the year, Terry Rodino 

considering buying the company but backed out when he learned that Phoenix 

Pallet didn’t own its building. 

The Tracys visited Phoenix Pallet’s Elkhart facility a few times (fewer than 

five) and remained dissatisfied with what they were learning about the company. 

They called a directors meeting in Terre Haute in December and Mr. Minne (but 

not Mrs. Minne) attended. No one had a good explanation for the company’s 

continuing unprofitability. 

Near the end of 2013, 1st Source Bank wanted payment on a prior loan 

before approving any more financing. The bank wanted $50,000. The Tracys put 

in $25,000, the Minnes put in $15,000 and Phoenix Pallet put in $10,000. This 

was the first money the Tracys had put into Phoenix Pallet since 2010. 
15

In December, Mr. Tracy told Mr. Minne that he and his wife were going to 

get more involved in the company’s day to day operation. According to Mrs. 

Tracy’s trial testimony, Mr. Minne had said at the 2010 Kokomo Cracker Barrel 

meeting that he wanted to be able to run the company without being nitpicked. 

In 2013, Phoenix Pallet had $1,412,000 in sales, and a loss of $42,000. 

2014 

 Although Phoenix Pallet sales continued to increase, 2014 saw three major 

setbacks. First, its insurance was cancelled in January for non-payment of 

premiums. Phoenix Pallet had been making partial premium payments because 

of cash shortfalls and had fallen $10,240 behind. Mr. Minne explains that 

Phoenix Pallet bookkeeper David Gray was responsible for paying the insurance 

company, and that he (Mr. Minne) hadn’t known of the arrearage. Phoenix Pallet 

was able to get replacement insurance, but the cost of the insurance was 

considerably higher. 

 Second, Phoenix Pallet’s landlord terminated the lease for its facility in 

July, citing arrearages in rent payments. Mr. Minne and Mr. Madison believe the 

landlord had an offer from a third party to purchase the facility and accelerated 

the end of the lease, which was to expire on December 31, 2014. Production had 

to stop and equipment had to be moved to a less efficient facility that didn’t have 

the sort of electrical service Phoenix Pallet needed. The Tracys blame Mr. Minne 

for not anticipating the need for a new facility at the lease’s end; proper planning, 

they say, would have reduced the cost to the company of the interruption arising 
16

from the relocation. This seems an unfair accusation: everyone involved in 

Phoenix Pallet hoped to sell the business and get out, perhaps with their money. 

The parties tried unsuccessfully to sell Phoenix Pallet to one of competitors, Blair 

Melvin. Burdening the business with a new, as yet unnecessary, lease would 

have made the business less marketable. 

 Third, there was what witnesses called a “supply war” in 2014. 

Competitors followed Phoenix Pallet trucks to vendors and offered the vendors 

more than Phoenix Pallet could afford to pay for a pallet. Phoenix Pallet had to 

find other vendors and went as far as Canada in that search. 

 The Tracys had been in the pallet business for many years before starting 

Phoenix Pallet, and Mr. Minne asked them to come to Elkhart, look things over 

for a few weeks, and see what they might suggest. Mr. Tracy went to Elkhart and 

left after two days, saying everything looked fine. Mrs. Tracy, who operated her 

own business in the field, never came. 

 In April, the Tracys offered to sell their interest in Phoenix Pallet to Mr. 

Minne for a non-negotiable price of $212,500. 

 The Tracys continued to believe they weren’t seeing the whole financial 

picture, and kept asking for more information. They got most of what they asked 

for, at least until late 2014, but often not promptly or in the form they wanted. 

Their relationship with Mr. Minne continued to fray. Lawyers were called in. The 

Tracys called a meeting for May 2014 at a law office in Terre Haute. The Minnes, 

having asked that an April meeting be rescheduled to accommodate their travel 

schedule, didn’t show. The Tracys voted to require Mr. Minne to fire Mr. 
17

Rushenburg as Phoenix Pallet’s accountant. The Tracys said they would find the 

next accountant, but no successor accountant provided services. After that 

meeting, Mrs. Minne conducted much of the email correspondence with the 

Tracys. 

The Board met on June 16, and the Tracys continued to vent their 

complaints about the information they were getting. Mr. Minne had hired David 

Gray as a bookkeeper (Mr. Gray called himself the company comptroller), and 

Mr. Gray was telling Mrs. Tracy he couldn’t get some of the information because 

the company had switched from Peachtree accounting software to Quickbooks. 

Mrs. Tracy was especially troubled by reports from Phoenix Pallet salesman 

Dustin Harding, and wanted to call his customers. Mr. Minne didn’t want her to 

do that, and said he would fill out the salesman’s reports. Mr. Gray eventually 

asked Mr. Minne to release him from having to deal with Mr. Tracy. 

 In his trial testimony, Mr. Gray explained the difficulties he encountered. 

When Phoenix Pallet began, the Tracys had insisted that the business use the 

Peachtree accounting program. Mrs. Madison was unfamiliar with the program 

and struggled to learn it. Eventually, Phoenix Pallet started using Quickbooks; 

although data could be ported from one program to the other, Mr. Gray chose to 

make the switchover manually so that he could balance the books. Mr. Gray 

devoted a good deal of his time to trying to recreate, for entry into the Quickbooks 

program, what had happened during the Peachtree years. 

The Board met again to choose a new board of directors on December 29, 

2014, by which time the relationship between the Tracys and Minnes consisted 
18

almost exclusively of distrust. They talked about selling Phoenix Pallet to Blair 

Melvin, but didn’t agree (Mrs. Tracy soon heard from her own customers that 

Mr. Melvin was buying Phoenix Pallet). It was agreed that Mrs. Tracy would 

review and sign outgoing checks (how she would do that from 240 miles away in 

Terre Haute wasn’t explained at trial), and that the Board would have to approve 

all overtime. 

Mr. Minne reported that Phoenix Pallet couldn’t make its $25,000 payment 

to 1st Source Bank, and the bank would call its note and close the company 

without further investment. Mr. Minne and the Tracys both said they would put 

no more money into Phoenix Pallet. By this point, the shareholders couldn’t even 

agree how to count votes: Mrs. Minne, owner of half the stock, thought she was 

half the votes; the Tracys, holders of two of the three director seats, thought they 

could outvote Mrs. Minne. As a result, they disputed who was on the Board after 

that meeting. Nor could the shareholders agree on what happened in that 

meeting; competing minutes were drawn up. 

 Phoenix Pallet hit its high water mark in sales in 2014, at $1,547,000, but 

lost $188,000. 

2015 

 Phoenix Pallet’s short and unprofitable life ended in the first weeks of 

2015. 

Mr. Minne told the Tracys in a phone call that he planned to make the 

January payment to the bank with money he expected customers to pay to 
19

Phoenix Pallet in the coming week. Unbeknownst to Mr. Minne, the Tracys told 

the bank’s loan officer that they would make the January payment if Phoenix 

Pallet didn’t because they didn’t want to company to shut down. The customer 

money didn’t come in before payment was due, and Mr. Minne, believing the 

bank would soon call its note and Phoenix Pallet would be unable pay, decided 

to fold his (and the Tracys’) tent. He notified the Tracys he was closing the 

company, though the board never voted to close or liquidate it. 

Phoenix Pallet didn’t make the payment due on January 15, and the bank 

made demand on its note by letter dated June 16. Mr. Minne’s attorney sent the 

Tracys a letter dated January 19 saying that Mr. Minne was calling “all of his 

Notes” to Phoenix Pallet and demanding a payoff in an unstated amount. Mr. 

Minne now concedes he held only the note dated December 31, 2011. No further 

communication between the Tracys and the Minnes occurred after the Tracys 

received the lawyer’s letter. 

On January 21, apparently before learning that Mr. Minne was calling his 

note, the Tracys reported (by email) that they had gotten a letter from 1st Source 

Bank and asking what would be done about it. The letter in question can’t be 

identified for certain on this record, but it would appear to be the bank’s January 

16 letter demanding payment. Mr. Minne responded, “Expecting some checks in. 

Plan on having it paid sometime next week.” The Tracys asked Mr. Minne to tell 

the loan officer, and Mr. Minne responded, “yes. It is being handled.” 

 Without telling the Tracys, Mr. Minne opened a Phoenix Pallet corporate 

checking account at Lake City Bank, into which he put payments from its 
20

customers, and from which he paid Phoenix Pallet bills. Mr. Minne testified 

unconvincingly that he moved the Phoenix Pallet money to the Lake City Bank 

out of concern that governmental entity would swoop in and seize the money if 

he didn’t. Mr. Minne paid off the 1st Source Bank loan in full after Phoenix 

Pallet’s assets were liquidated, and paid creditors he thought needed to be paid. 

Mr. Minne testified that $26,400 remained in the Lake City Bank account, 

though the bank statement shows a balance of $123.21. Mr. Minne paid off a 

personal loan from Fifth Third Bank, wrote himself checks for $9,500, $32,000, 

$1,000 $5,000, and $1,400, cashed another $1,500 check written to cash, and 

wrote two $9,500 checks to Golf Properties. Mr. Minne didn’t pay all the taxes 

Phoenix Pallet owed; a tax warrant has been issued against Mr. Minne and Mrs. 

Tracy for unpaid unemployment taxes in the amount of $52,516.36 with interest 

accruing at $331.61 every day. 

CONCLUSIONS OF LAW

 In Count I of their complaint, the Tracys assert a claim that the Minnes 

breached their fiduciary duty by maintaining a second set of books, improperly 

recording loans and repayments between Phoenix Pallet on the one hand and 

Mr. Minne and his associated businesses on the other, exercising purported 

rights as a secured creditor of Phoenix Pallet, and liquidating Phoenix Pallet. 

Count VI asserts a claim of deception against Mr. Minne only, based on keeping 

a second set of books, and knowingly presenting a false promissory note and 

security agreement. Count V alleges a fraud claim against Mr. Minne and a 
21

constructive fraud claim against both defendants based on false representations 

of Phoenix Pallet’s financial condition, status and affairs. Count VI asserts a 

claim against Mr. Minne for willful, reckless and gross negligence in the 

management, administration and supervision of Phoenix Pallet, based on pretty 

much everything asserted in count I, plus improper use of the property of 

Phoenix Pallet for the benefit of Mr. Minne and his other businesses. 

 In their counterclaim, the Minnes assert the following claims against the 

Tracys. Count I alleges fraud, specifically that the Tracys made false 

representations about the transfer of equipment to Phoenix Pallet. Count II 

alleges the Tracys engaged in constructive fraud by not telling the Minnes about 

the loan of the equipment. In Count III, the Minnes assert that the Tracys 

breached their fiduciary duties by failing to disclose the true nature of their 

contributions to Phoenix Pallet. Count V alleges that the Tracys made false and 

misleading written statements to the Minnes through the Phoenix Pallet records. 

“[A] claim for breach of fiduciary duty requires proof of three elements: (1) 

the existence of a fiduciary relationship; (2) a breach of that duty owed by the 

fiduciary to the beneficiary; and (3) harm to the beneficiary.” Rapkin Group, Inc. 

v. Cardinal Ventures, Inc., 29 N.E.3d 752, 757 (Ind. Ct. App. 2015); accord Good 

v. Indiana Teachers Ret. Fund, 31 N.E.3d 978, 983 (Ind. Ct. App. 2015) (quoting 

York v. Fredrick, 947 N.E.2d 969, 978 (Ind.Ct.App.2011). “The standard imposed 

by a fiduciary duty is the same whether it arises from the capacity of a director, 

officer, or shareholder in a closely held corporation. The fiduciary has a duty to 

deal fairly, honestly, and openly with his corporation and fellow stockholders 
22

and must not be distracted from the performance of his official duties by personal 

interests.” Rapkin Group v. Cardinal Ventures, 29 N.E.3d at 757 (citing G & N 

Aircraft, Inc. v. Boehm, 743 N.E.2d 227, 240 (Ind., 2001)). 

Indiana’s business decision rule has a strongly pro-management bias that 

includes “a presumption that in making a business decision, the directors of a 

corporation acted on an informed basis, in good faith and in the honest belief 

that the action taken was in the best interests of the company.” G & N Aircraft, 

Inc. v. Boehm, 743 N.E.2d 227, 238 (Ind. 2001). Negligence doesn’t overcome the 

presumption; recklessness or willful misconduct is required. Id. 

“To prove fraud, a plaintiff must establish the following elements: (1) a 

material misrepresentation of past or existing fact which (2) was untrue, (3) was 

made with knowledge of or in reckless ignorance of its falsity, (4) was made with 

the intent to deceive, (5) was rightfully relied upon by the complaining party, and 

(6) which proximately caused the injury or damage of which the plaintiff 

complains.” Kesling v. Hubler Nissan, Inc., 997 N.E.2d 327, 335 (Ind. 2013) 

(quoting Lawyers Title Ins. Corp. v. Pokraka, 595 N.E.2d 244, 249 (Ind. 1992)); 

BSA Const. LLC v. Johnson, 54 N.E.3d 1026, 1031 (Ind. Ct. App. 2016) (internal 

citations omitted). “[T]he failure to disclose all material facts can also constitute 

actionable fraud.” Kesling v. Hubler Nissan, Inc., 997 N.E.2d 327, 335 (Ind. 

2013) (quoting Lawson v. Hale, 902 N.E.2d 267, 275 (Ind. Ct. App. 2009)). 

“A claim for constructive fraud succeeds if the following five elements are 

established: 1) a duty owed by the party to be charged to the complaining party 

due to their relationship; 2) violation of that duty by the making of deceptive 
23

material misrepresentations of past or existing facts or remaining silent when a 

duty to speak exists; 3) reliance thereon by the complaining party; 4) injury to 

the complaining party as a proximate result thereof; and 5) the gaining of an 

advantage by the party to be charged at the expense of the complaining party.” 

Messmer v. KDK Financial Services, Inc., 83 N.E.3d 774, 781 (Ind. Ct. App. 2017) 

(citing Heyser v. Noble Roman’s Inc., 933 N.E.2d 16, 19-20 (Ind. Ct. App. 2010). 

A statutory claim for deception under Indiana law requires proof by a 

preponderance of the evidence that complainant suffered a pecuniary loss as a 

result of another person knowingly or intentionally making a false or misleading 

written statement with the intent to obtain property. Ind. Code § 35-43-5-3(a)(2). 

Conclusions of Law: Liability 

 Several of the claims and aspects of the claims can be resolved without 

much discussion because the predicate facts weren’t proven. First, there was no 

second set of Phoenix Pallet books. To the extent any of the Tracys’ claims rest 

on phantom bookkeeping, they are unproven. Second, the Tracys haven’t proven 

that either of the Minnes was responsible for false or deceptive entries in Phoenix 

Pallet’s only set of books. Confusion crept in as Mrs. Madison tried to learn the 

Peachtree accounting system that was foreign to her, and again as Mr. Gray tried 

to switch the company back to Quickbooks, which categorizes income and outgo 

differently than Peachtree. And entries appear to have been made inconsistently 

as the bookkeeping responsibilities passed from one person to another. But to 

the extent any of the Tracys’ claim rest on the proposition that the Minnes 
24

generally engaged in willful, reckless, or gross negligence, or fraud, or deception 

in maintaining the financial records of Phoenix Pallet, those claims are unproven. 

Third, the Tracys have proven no facts that would make Mrs. Minne liable to 

them on any of their theories. Mrs. Minne hasn’t been shown to have done 

anything other than hold shares through 2014, and no facts that were proven at 

trial come close to supporting a finding that anything she did or knew of in 2014 

or 2015 amounted to constructive fraud or breach of her fiduciary duty to her 

co-shareholders. 

 Of the Tracys’ claims, that leaves their claims against Mr. Minne for 

deception and breach of fiduciary duty. The deception claim is based on 

presentation of an invalid promissory note and security agreement; the Tracys 

contend that they were invalid because Phoenix Pallet’s signature was provided 

by one serving in the capacity of a nonexistent office and because the board of 

directors didn’t authorize it. 

 The court disagrees with the Tracys. By December 2011, Mr. Madison had 

served in the role of vice president for nearly two years, having been elected to 

that position by the board of directors. Whatever the bylaws might have said, Mr. 

Madison was the de facto vice-president. By December 2011, Mr. Minne and the 

Madisons had been working continuously without the direction of the Tracys. 

Mr. Madison ran the facility and ran the business when Mr. Minne was away; 

Mrs. Madison ran the office and put money in to keep things going and repaid 

herself; Mr. Minne ran the show, and had been hired specifically to put money 

into Phoenix Pallet as needed. The Tracys (who were focused on Mr. Tracy’s 
25

serious health problems) hadn’t uttered a peep as Mr. Minne put money into 

Phoenix Pallet. 

 The Minnes contend the Mr. Madison had apparent authority to sign the 

note and security agreement on Phoenix Property’s behalf. With respect to 

anyone on the planet apart from Mr. Minne, that would probably be true. If a 

principal makes some manifestation that leads a reasonable person to believe an 

agent has the authority to perform some act, the agent has apparent authority 

to bind the principal. Gallant Ins. Co. v. Davis, 751 N.E.2d 672 (Ind. 2001). But 

the Minnes concede they have found no authority under Indiana law to support 

the proposition that the principal’s president can reasonably rely on the agent’s 

apparent authority, and the court has no basis on which to predict how the 

Indiana Supreme Court would resolve that issue. 

 But Mr. Madison had inherent authority to sign the note and security 

agreement for Phoenix Pallet in December 2011. Inherent authority exists under 

Indiana law when an agent act acts within the usual scope of one in the same 

agency role, the contracting party reasonably believed that the agent was 

authorized to bind the principal through contract, and the contracting party 

wasn’t on notice that the agent lacked such authority. See Menard, Inc. v. DageMTI, Inc., 726 N.E.2d 1206, 1213 (Ind. 2000). Mr. Minne knew Mr. Madison to 

be a holder of about one sixth of the company’s shares, and Mr. Madison had 

been acting as the company’s vice president for the entire year Mr. Minne had 

been involved with Phoenix Pallet. The Madisons and Mr. Minne’s wife controlled 

two-thirds of the company’s shares between them, and the other shareholders 
26

had shown no interest in how Mr. Minne and Mr. Madison operated the business. 

Mr. Minne and Mr. Madison entered into a binding promissory note and created 

a legitimate security interest in Phoenix Pallet’s asset to secure the note. 

If none of this is right, the Tracys are estopped to deny Mr. Madison’s 

authority to act as Phoenix Pallet’s vice president. They elected him to that 

position when the company was formed, and signed company documents that 

Mr. Madison signed in his capacity as vice president. Notwithstanding the bylaws, the Tracys helped make Mr. Madison vice president and allowed him to 

identify himself in corporate papers. An assertion to the contrary simply comes 

too late. 

Because the Tracys’ deception claim is based on the proposition that Mr. 

Minne proceeded on an invalid note and agreement, the claim is unproven. 

 Nonetheless, Mr. Minne breached the fiduciary duty he owed to the Tracys 

when he failed to disclose the note and security agreement to the Tracys. As an 

officer of a close corporation, Mr. Minne owed the Tracys, as shareholders, a duty 

to deal fairly, honestly, and openly, Rapkin Group v. Cardinal Ventures, 29 

N.E.3d at 757, and to act in the honest belief that the action taken was in 

Phoenix Pallet’s best interests. G & N Aircraft v. Boehm, 743 N.E.2d at 238. Mr. 

Minne acted solely in his own interest. Granting himself a security interest in 

the money he already had put into the company gave his interest priority over 

investments by the Tracys and Madisons, who were shareholders. Mr. Minne 

argued that the note and security agreement benefitted Phoenix Pallet because 

he wouldn’t have put any more money into the business without them, but the 
27

evidence presented at trial doesn’t support that contention. Phoenix Pallet 

couldn’t benefit from the note and security agreement. 

 That Mr. Minne, as he says, never thought to tell the Tracys is easily 

believed in light of their lack of involvement after the Kokomo Cracker Barrel 

meeting. But the fiduciary duty doesn’t ebb and flow with the extent of thought 

one gives it. Mr. Minne filed his note and security agreement in January 2012, 

but couldn’t reasonably expect the Tracys to discover those papers as a result. 

Instead of telling the Tracys that he now held the only non-bank security interest 

in Phoenix Pallet’s assets, Mr. Minne kept that security interest like an ace up 

his sleeve for three years. Had he told the Tracys, they, too, could have secured 

their equipment loan to Phoenix Pallet. 

 Mr. Minne breached his fiduciary duty to the Tracys as shareholders a 

second time when he shuttered the company and moved its liquid assets to the 

Lake City Bank account without notice to the Tracys. Mr. Minne testified to a 

memory that the Minnes and Tracys had agreed to close the company during the 

December 2014 meeting, but that memory can’t be accurate because it’s wholly 

inconsistent with what the Tracys did after that meeting. The Tracys had 

promised their loan officer at the bank that they would make the January loan 

payment if Phoenix Pallet didn’t. They asked Mr. Minne to notify the 1st Source 

Bank loan officer that the January 2015 loan payment would be made. The 

Tracys wanted to sell the company, but they didn’t want to company to close. 

That conduct belies Mr. Minne’s memory that agreement had been reached at 

the December 2014 meeting to shut Phoenix Pallet down. The Tracys’ 
28

conversation with the bank, which was unknown to Mr. Minne, might well have 

been a breach of fiduciary duty on their behalf, but that’s not part of this suit. 

It’s pretty clear that by January 2015, the relationship between the Minnes and 

the Tracys had rotted to the point that nobody (except maybe Mrs. Minne) was 

being guided by their fiduciary duties to each other. 

 The court defers discussion of the Tracys’ damages and turns to the 

Minnes’ claims against the Tracys. 

 The facts found by the court don’t support any of the Minnes’ 

counterclaims. Count I (fraud), Count II (constructive fraud), and Count IV 

(deception) all rest on the proposition that the Tracys made false representations, 

or failed to disclose the truth about, their transfer of equipment at the birth of 

Phoenix Pallet. Neither proposition has been proven. Mr. Minne asked the Tracys 

about the equipment at the Kokomo Cracker Barrel meeting, and Mrs. Tracy told 

him the equipment was at the facility on a six percent loan. Regardless of what 

Mr. Minne might have come to believe before or after the Kokomo Cracker Barrel 

meeting, the Tracys told Mr. Minne the truth about their relationship to the 

equipment. 

Count III of the counterclaim (breach of fiduciary duty) alleges, first, that 

the Tracys misrepresented their equipment as paid-in capital instead of a loan. 

As just discussed, that just didn’t happen. Second, the Minnes allege that the 

Tracys failed to provide Mr. Minne with the corporate bylaws for more than a 

year. The Minnes don’t explain why the Tracys might have had a fiduciary duty 

to produce the bylaws without a request, and no such reason occurs to the court. 
29

Third, the Minnes say the Tracys bear the blame for failing to complete the tax 

returns. The Tracys insisted that Mr. Rushenburg be fired after the “second set 

of books” statement, and wanted authority to select Mr. Rushenburg’s successor 

as accountant. They produced a name (Kathy Mains), but Ms. Mains wound up 

doing no accounting work for Phoenix Pallet. Finding an accountant, as the 

Tracys promised to do, is one thing, but making sure that accountant produces 

useful services is another. The Minnes haven’t persuaded the court that the 

missed tax payment belongs at the Tracys’ door. 

 The Minnes haven’t proven any of their counterclaims. 

Conclusions of Law: Damages 

 The only successful claim, then, is the Tracys’ claim that Mr. Minne 

breached his fiduciary duty to them. The inquiry turns to damages. “Damages 

are ordinarily the proper remedy for a shareholder aggrieved by breach of director 

duty.” G & N Aircraft, Inc. v. Boehm, 743 N.E.2d at 243. The Indiana Supreme 

Court explains that the “traditional powers of equity courts are available to 

fashion a remedy for breach of a fiduciary duty in a close corporation.” Id. at 

244. “[W]hen the basis of liability is a failure to conform to a fiduciary duty, the 

measure of damages is the entire loss sustained,” Bunger v. Demming, 40 N.E.3d 

887, 899 (Ind. Ct. App. 2015) (quoting W & W Equip. Co. v. Mink, 568 N.E.2d 

564, 576 (Ind. Ct. App. 1991)), but the Indiana Supreme Court has “recognized 

the need for more flexible remedies in the case of close corporations.” G & N 

Aircraft, Inc. v. Boehm, 743 N.E.2d at 244. “Doubts and uncertainties as to the 
30

proof of the exact measure of damages must be resolved against the defendant 

because justice and public policy require that the wrongdoer bear the risk of 

uncertainty that his own wrong has created.” Bunger v. Demming, 40 N.E.3d 

887, 899 (Ind. Ct. App. 2015) (citing Lees Inns of Am., Inc. v. William R. Lee 

Irrevocable Trust, 924 N.E.2d 143, 160 (Ind. Ct. App. 2010)). 

 Mr. Minne’s first breach of his fiduciary duty was acquiring, perfecting, 

and not directly disclosing his security interest in Phoenix Pallet’s assets. Had 

he not done so, his interest wouldn’t have had priority over the Tracys’ interest: 

either they all would have been unsecured creditors, or the Tracys could have 

perfected their own security interest. Because Mr. Minne’s breach is only thing 

that gave his interest priority over the Tracys, the damages analysis will proceed 

as if Mr. Minne’s interest had no priority. Mr. Minne breached his fiduciary duty 

a second time by closing Phoenix Pallet and seizing control of its assets. 

The parties provide the court with little to work with in fashioning a 

remedy. The Tracys want their entire investment back, with interest running 

from the years in which they made their investments. Notwithstanding Mr. 

Minne’s breaches of his fiduciary duty, nothing in the record supports such a 

remedy. Mr. Minne’s efforts, which weren’t helped by anything the Tracys did, 

held off financial calamity for several years. The Tracys did nothing constructive 

to keep the business running after Mr. Minne joined Phoenix Pallet, and they 

point to no reason why all their money should be refunded. 

The court might look to how much each side put into Phoenix Pallet. The 

court’s rough calculations indicate that Mr. Minne put in about twice what the 
31

Tracys put in,1 but no truly equitable remedy would award Mr. Minne two-thirds 

of what was left when he closed Phoenix Pallet with neither authorization from, 

nor effective notice to, the Tracys. 

The redemption agreement between the parties provided that upon 

liquidation, the proceeds of the liquidation were to be divided by stock 

ownership. The Tracys had half the stock and Mrs. Minne the other half. What 

took place wasn’t a liquidation in the sense contemplated by the redemption 

agreement – in fact, it was a breach of fiduciary duty -- but the redemption 

agreement provides some guidance in fashioning a remedy. At the least, it sets a 

floor: Mr. Minne’s breach of fiduciary duty shouldn’t allow him to receive a 

greater share of the Phoenix Pallets assets than the redemption agreement would 

have allowed him. 

 But even an equal division gives Mr. Minne something he wouldn’t have 

had without breaching his fiduciary duty. Had he notified the Tracys of his intent 

to close the business and sought their agreement, the redemption agreement 

                                                            

1 The Tracys’ investment is the easier to calculate: Phoenix Pallet had $99,613 worth of 

equipment for which it had never paid, and the Tracys put in another $68,900 in 2010 

and $25,000 in 2013. The Tracys also made an indirect contribution to Phoenix Pallet 

by paying off an $11,000 credit card debt that was incurred before Mr. Minne invested. 

Setting aside interest, which Phoenix Pallet never paid to its officers or shareholders, 

and setting aside other debts, the Tracys would have been able to walk away from 

Phoenix Pallet’s liquidation with $204,513. 

 What the Minnes put into Phoenix Pallet can’t be said with similar certainty, 

because the company’s financial records don’t provide easy answers. In his opening 

statement, Mr. Minne pointed to the $565,305 that the December 31, 2014, balance 

sheet shows as the amount payable on Mr. Minne’s note; Mr. Gray testified at trial that 

this was a net figure, but it’s the best we’ve got. Assuming the figure’s accuracy, Phoenix 

Pallet owed a total of $769,818 to the Tracys as shareholders and Mr. Minne as president 

of the company. Setting aside the security interest obtained through a breach of 

fiduciary duty, 67.4 percent of that indebtedness was owed to Mr. Minne, and 32.5 

percent was owed to the Tracys. 
32

would have been triggered and Mr. Minne would have been entitled to half the 

post-liquidation assets. For him to receive half despite not having effectively 

notified or sought the agreement of the Tracys would be inequitable. 

 The most equitable method to calculate damages to be awarded to the 

Tracys is to identify what Phoenix Pallet had when it closed and award the Tracys 

two-thirds of what Phoenix Pallet had. That division effectively resolves any 

uncertainty against Mr. Minne, the wrongdoer. 

 As the court reads Plaintiffs’ Exhibit 25, Mr. Minne put a total of 

$83,800.74 into the Lake City account into which he testified he placed proceeds 

from Phoenix Pallets assets and accounts receivable. Mr. Minne used some of 

that money to pay creditors that he thought needed to be paid. It might be seen 

as inequitable to include those funds (which didn’t go into Mr. Minne’s pocket) 

in calculating damages he must pay to the Tracys, but those payments were part 

and parcel of Mr. Minne’s second breach of fiduciary – liquidating Phoenix Pallet 

without meaningful notification to, or consent of, the Tracys. 

 Treating the Lake City Bank account as the conduit through which all the 

proceeds of Phoenix Pallet passed (after 1st Source Bank was paid off), two-thirds 

of those proceeds amount to $55,867.16, which becomes the damages award. 

The Tracys ask for prejudgment interest on that amount, but it wasn’t a fixed 

sum until today, so Indiana law doesn’t allow for prejudgment interest in the 

absence of an agreement between the parties. See Kosarko v. Padula, 979 N.E.2d 

144, 146 (Ind. 2012). No credible evidence indicates that Mr. Minne ever agreed 

to pay the Tracys interest. 
33

 That leaves the matter of the tax warrant, which each side says the other 

should pay. The court doesn’t understand why Mr. Minne believes the Tracys 

should pay it. Mr. Minne ran Phoenix Pallet despite the Tracys’ increasingly 

obstructive conduct, and this record doesn’t even hint that anyone other than 

Phoenix Pallet paid its earlier taxes, or that the Tracys ever were asked to do so. 

Mr. Minne points to the Tracys’ insistence that they, and not Mr. Minne, find a 

new accountant when they insisted that Mr. Rushenburg be fired in the wake of 

the “second set of books” comment. The Tracys selected Kathy Mains to be the 

new accountant, but the communications between Mr. Minne and the Tracys 

were so shredded that no one can say just what, if anything, Ms. Mains did. In 

any event, insistence on selection of an accountant isn’t a guarantee of the 

accountant’s performance. 

 Mr. Minne was in charge of Phoenix Pallet’s day-to-day operation when the 

tax obligation was incurred. He testified at trial that he held back $26,400 from 

the Lake City Bank account for tax liabilities, indicating that he recognized that 

he was at least partly responsible for unpaid tax obligations. As between the 

Tracys and Mr. Minne, responsibility for the taxes was Mr. Minne’s. 

 Of course, the taxes weren’t payable to the Tracys, so they can’t be 

included in the damages award. The judgment will require Mr. Minne to hold the 

Tracys harmless on the $52,516.36 tax warrant against Mr. Minne and Mrs. 

Tracy for unpaid unemployment taxes. 
34

CONCLUSION

 The court: 

1. finds for plaintiffs Mona and Terah Tracy on their claim against 

defendant Paul Minne for breach of fiduciary duty; 

2. finds for defendant Paul Minne on all other claims against him; 

3. finds for defendant Jean Minne on all claims against her; and 

4. finds for counter-defendants Mona and Terah Tracy on all claims 

against them in Paul and Jean Minne’s counterclaim. 

The clerk shall enter a money judgment for Mona and Terah Tracy and against 

Paul Minne in the amount of $55,867.16. The judgment shall further order Paul 

Minne to hold Mona Tracy harmless on the tax warrant against them for unpaid 

employment taxes. Costs shall be assessed the defendants. 

 SO ORDERED. 

ENTERED: December 12, 2018 

 /s/ Robert L. Miller, Jr. 

 Judge, United States District Court