Court of Appeals of Indiana | Opinion 19A-CT-101 | December 4, 2019 Page 1 of 30

ATTORNEYS FOR APPELLANTS

Brad A. Catlin

Price Waicukuauski Joven & Catlin, 

LLC

Indianapolis, Indiana

Eric L. Zagar

Justin O. Reliford

J. Daniel Albert

Christopher Windover

Kessler Topaz Meltzer & Check, LLP

Radnor, Pennsylvania

Jeremy Friedman

David Tejtel

Friedman Oster & Tejtel, PLLC

New York, New York

Robert T. Dassow

William Fredrick Eckhart

Hovde Dassow & Deet, LLC

Indianapolis, Indiana

Stephen J. Oddo

Robbins, LLC

San Diego, California

ATTORNEYS FOR APPELLEES

Scott S. Morrisson

Mark J.R. Merkel

Krieg DeVault, LLP

Carmel, Indiana

Libby Yin Goodknight

Krieg DeVault, LLP

Indianapolis, Indiana

Michael E. Bern

Latham & Watkins, LLP

Washington, District of 

Columbia

Christopher Clark

Latham & Watkins, LLP

New York, New York

IN THE

COURT OF APPEALS OF INDIANA
Court of Appeals of Indiana | Opinion 19A-CT-101 | December 4, 2019 Page 2 of 30

Joseph Hipps and Eugene Protz,

Appellants-Plaintiffs,

v.

Biglari Holdings, Inc., Sardar 

Biglari, Philip L. Cooley, Ruth J. 

Person, Kenneth R. Cooper, 

James P. Mastrian, BH Merger 

Company, and NBHSA, Inc.,

Appellees-Defendants.

December 4, 2019

Court of Appeals Case No.

19A-CT-101

Appeal from the Hamilton

Superior Court

The Honorable Steven R. Nation,

Judge

Trial Court Cause No.

29D01-1801-CT-760

Tavitas, Judge.

Case Summary

[1] Joseph Hipps and Eugene Protz, individually and on behalf of a class of 

common shareholders (“Shareholders”) of Biglari Holdings, Inc. (“Biglari 

Holdings”) appeal the trial court’s grant of a motion to dismiss filed by the 

Defendants, Biglari Holdings, BH Merger Company, NBHSA, Inc., Sardar 

Biglari (“S. Biglari”), and the other members of the Biglari Holdings board of 

directors—Phillip Cooley, Kenneth Cooper, James Mastrian, and Ruth Person

(collectively, the “Board”). We affirm.1

1 We held oral argument in this matter on October 7, 2019, at the University of Notre Dame Law School. 

We thank the Law School for its hospitality and counsel for their presentations.
Court of Appeals of Indiana | Opinion 19A-CT-101 | December 4, 2019 Page 3 of 30

Issue

[2] Shareholders raise one issue, which we restate as whether the trial court 

properly dismissed their complaint against Defendants.

Facts

[3] Biglari Holdings is a publicly-traded company incorporated in Indiana that, 

among other things, franchises and operates two restaurant chains—Western 

Sizzlin and Steak ‘n Shake. S. Biglari is the CEO and chairman of the Board of 

Biglari Holdings. Cooley, Cooper, Mastrian, and Person are the remaining 

members of the Board. 

[4] The Lion Fund and the Lion Fund II (collectively, “the Lion Funds”) are 

private limited partnerships that each own substantial shares of Biglari 

Holdings. In turn, Biglari Holdings is the majority limited partner of the Lion 

Funds. Biglari Capital Corp. (“Biglari Capital”) is the general partner of the 

Lion Funds, and S. Biglari is the chairman, CEO, and sole owner of Biglari 

Capital.2

 

2 In April 2010, Biglari Holdings acquired Biglari Capital for $4.1 million. In July 2013, Biglari Holdings 

sold Biglari Capital back to S. Biglari for $1.7 million. Biglari Capital also “distributed to [Biglari Holdings] 

almost all of Biglari Capital’s limited partnership interests in the Lion Fund, totaling $5.8 million,” but 

Biglari Capital retained the general partnership interest in the Lion Funds. Appellants’ App. Vol. II pp. 29-

30. This transaction and others were addressed in a shareholder derivative action in federal court. See In re 

Biglari Holdings, Inc. Shareholder Derivative Litigation, 93 F.Supp.3d 936 (S.D. Ind. 2015). The action was 

dismissed by the district court. The Seventh Circuit affirmed the district court’s dismissal of the action. See 

In re Biglari Holdings, Inc. Shareholder Derivative Litigation, 813 F.3d 648 (7th Cir. 2016). 
Court of Appeals of Indiana | Opinion 19A-CT-101 | December 4, 2019 Page 4 of 30

[5] In 2011 and 2012, Biglari Holdings unsuccessfully sought to create a dual-class 

capital structure at Biglari Holdings, which required shareholder approval. The 

dual-class structure would have redesignated common stock as Class A and 

Class B common stock. 

[6] S. Biglari then sought to acquire voting control over Biglari Holdings. Through 

a series of complex transactions, Biglari Holdings contributed hundreds of 

millions of dollars in securities and cash to the Lion Funds in exchange for 

additional limited partnership interests in each of the Lion Funds. The Lion 

Funds then acquired additional common stock of Biglari Holdings. As a result 

of these transactions, S. Biglari, through his control of Biglari Capital and the 

Lion Funds, gained control of 54.7% of the Biglari Holdings common shares.

[7] Having gained voting control over Biglari Holdings, S. Biglari then sought to 

implement the dual class capital structure previously rejected by the 

shareholders. On December 21, 2017, Biglari Holdings entered into an 

agreement (“Reclassification Agreement”) whereby Biglari Holdings would 

merge with BH Merger Company to create NBHSA, Inc. Upon completion of 

the merger, NBHSA would be renamed Biglari Holdings, Inc. (“New Biglari 

Holdings”). Under the Reclassification Agreement, shareholders of Biglari 

Holdings would become shareholders of New Biglari Holdings. Biglari 

Holdings would be a wholly-owned subsidiary of New Biglari Holdings and 

renamed OBH, Inc. 
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[8] For every ten shares of common stock in Biglari Holdings, shareholders would 

receive ten shares of Class B stock and one share of Class A stock of New 

Biglari Holdings. Owners of Class B stock would have no voting rights. The 

purpose of this change was “[t]o sustain the dual goal of maintaining the 

founder’s control and of preserving the option of issuing equity in acquisitions, 

financings or for other purposes.” Appellants’ App. Vol. II p. 42. Minority 

shareholders voiced significant disapproval of the merger plan. 

[9] On January 29, 2018, Hipps filed a class action complaint in Hamilton County

that sought to enjoin the Reclassification, and Defendants removed the 

litigation to federal court. Hipps also filed a second state court action, which 

was removed to federal court. While Hipps’ actions were pending in federal 

court, Protz filed a class action complaint in Hamilton County on March 26, 

2018. Protz sought injunctive relief to prevent the merger. In April 2018, the 

parties reached an agreement whereby: (1) Defendants consented to remand to 

Hamilton County from federal court; and (2) Shareholders abandoned their 

request for injunctive relief, agreed to consolidate the actions, and agreed to 

challenge the Reclassification after it was consummated. The Reclassification 

plan was finalized on April 30, 2018. 

[10] On May 17, 2018, Shareholders filed a consolidated class action complaint 

against Defendants. The Shareholders’ main complaints relate to: (1) the shares 

acquired by the Lion Funds and the treatment of these shares as voting stock, 

which Shareholders contend violates the Indiana Business Corporations Law

(“IBCL” or “BCL”); and (2) the consummation of the Reclassification 
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Agreement. According to Shareholders, the voting and alleged improper 

treatment of the Lion Funds shares allowed S. Biglari to gain voting control of 

Biglari Holdings and consummate the Reclassification Agreement.

[11] The complaint included the following counts: 

(1) Count I, a claim against S. Biglari, as Biglari Holdings’

controlling shareholder, for breach of fiduciary duty “by 

exploiting his position of control to cause [Biglari Holdings] to 

enter into the Reclassification on terms unfairly beneficial to 

himself and detrimental to the Class”; 

(2) Count II, a claim against the Board for breach of fiduciary 

duty “by, among other things, facilitating and approving the 

Reclassification, which only serves to benefit S. Biglari at the 

expense of Plaintiffs and the Class”; 

(3) Count III, a claim against Biglari Holdings and the Board for 

breach of the company’s articles of incorporation by violating the 

IBCL by deeming shares acquired by the Lion Funds to be voting 

shares; 

(4) Count IV, a claim against S. Biglari for unjust enrichment by

maintaining his voting control “in perpetuity” through 

consummation of the Reclassification Agreement; 

(5) Count V, a claim for declaratory relief against Biglari 

Holdings and the Board that the voting of the shares acquired by 

Lion Funds “and treatment of said shares as voting stock violated 

the IBCL” and the articles of incorporation; and

(6) Count VI, a claim for declaratory relief against Biglari 

Holdings, New Biglari Holdings, and BH Merger Company that 
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the Reclassification Agreement was “invalid, void, voidable 

and/or unenforceable” because the Reclassification Agreement 

“is the product of breaches of fiduciary duty by S. Biglari and the 

other members of the Board.” 

Appellants’ App. Vol. II pp. 56-59.

[12] Pursuant to Indiana Trial Rule 12(B)(6), Defendants filed a motion to dismiss 

the complaint with an attached exhibit. Shareholders filed a response brief with 

exhibits, and Defendants filed a reply brief in support of their motion to 

dismiss. After a hearing, the trial court summarily granted Defendants’ motion 

to dismiss. Shareholders now appeal.

Analysis

[13] Shareholders appeal the trial court’s grant of Defendants’ motion to dismiss. 

Indiana Trial Rule 12(B)(6) allows a party to request dismissal for “[f]ailure to 

state a claim upon which relief can be granted . . . .” A motion to dismiss under 

Trial Rule 12(B)(6) “tests the legal sufficiency of the [plaintiffs’] claim, not the 

facts supporting it.” Bellwether Properties, LLC v. Duke Energy Indiana, Inc., 87 

N.E.3d 462, 466 (Ind. 2017) (citation omitted). Dismissals are improper under 

Trial Rule 12(B)(6) “‘unless it appears to a certainty on the face of the 

complaint that the complaining party is not entitled to any relief.’” Id. (quoting 

State v. American Family Voices, Inc., 898 N.E.2d 293, 296 (Ind. 2008)). We

review a Trial Rule 12(B)(6) dismissal “de novo, giving no deference to the trial 

court’s decision.” Id. “In reviewing the complaint, we take the alleged facts to 

be true and consider the allegations in the light most favorable to the 
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nonmoving party, drawing every reasonable inference in that party’s favor.” Id. 

The dismissal of a complaint under Trial Rule 12(B)(6) “is seldom appropriate”

because such dismissals “undermine the policy of deciding causes of action on 

their merits.” BloomBank v. United Fid. Bank F.S.B., 113 N.E.3d 708, 720 (Ind. 

Ct. App. 2018), trans. denied.

[14] Although not raised by the parties, we note that Indiana Trial Rule 12(B) 

provides:

If, on a motion, asserting the defense number (6), to dismiss for 

failure of the pleading to state a claim upon which relief can be 

granted, matters outside the pleading are presented to and not 

excluded by the court, the motion shall be treated as one for 

summary judgment and disposed of as provided in Rule 56. In 

such case, all parties shall be given reasonable opportunity to 

present all material made pertinent to such a motion by Rule 56.

[15] Here, both parties submitted matters outside of the pleading in arguing the 

motion to dismiss. Our Court has held:

when examination of the face of a complaint alone reveals that 

the plaintiff will not be entitled to relief under any set of 

circumstances, consideration of external materials aimed at 

substantiating or contradicting the complaint’s factual allegations 

is irrelevant, because a fortiori the complaint fails to state a claim 

upon which relief can be granted under any factual scenario. 

Dixon v. Siwy, 661 N.E.2d 600, 603 (Ind. Ct. App. 1996); see also Thomas v. 

Blackford Cty. Area Bd. of Zoning Appeals, 907 N.E.2d 988, 990 (Ind. 2009) (“If 

affidavits or other materials are attached to the 12(B)(6) motion, it is treated as 
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one for summary judgment under Rule 56.”). “In that instance, the trial court 

should exclude materials outside the pleadings which are submitted with a 

12(B)(6) motion, rather than convert the motion into one for summary 

judgment, because the external materials are irrelevant to the motion.” Id. 

[16] The trial court here did not exclude the evidence outside the pleadings, but 

there is no indication the extraneous materials played a part in the trial court’s 

decision. See, e.g., Bd. of Commissioners of Union Cty. v. McGuinness, 80 N.E.3d 

164, 167 (Ind. 2017) (“[I]t is apparent from the trial court’s disposition of this 

motion that the designated affidavit played no part in its decision. Thus while it 

was error for the trial court to not formally exclude the affidavit in its order, that 

error was harmless.”). At oral argument for this matter, both parties agreed

that we should apply the motion to dismiss standard of review. As such, we 

address this matter under the motion to dismiss standard of review, base our 

decision solely upon the Shareholders’ complaint, and exclude the extraneous 

materials submitted by the parties.

[17] This appeal involves a direct action by shareholders of a publicly-held 

corporation. This type of action by shareholders was described by our Supreme 

Court in G&N Aircraft, Inc. v. Boehm, 743 N.E.2d 227, 234 (Ind. 2001):

A direct action is “[a] lawsuit to enforce a shareholder’s rights 

against a corporation.” BLACK’S LAW DICTIONARY 472 (7th ed. 

1999). This action may be brought in the name of the 

shareholder “to redress an injury sustained by, or enforce a duty 

owed to, the holder.” 2 PRINCIPLES OF CORPORATE 

GOVERNANCE § 7.01, at 17 (A.L.I. 1994). Direct actions are 
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typically appropriate to enforce the right to vote, to compel 

dividends, to prevent oppression or fraud against minority 

shareholders, to inspect corporate books, and to compel 

shareholder meetings.[3]

 Id.

In this direct action, the Shareholders’ claims pertain to: (1) the voting of the 

Lion Funds shares; and (2) the Reclassification Agreement, which implemented 

the merger. We must determine whether the trial court properly dismissed each 

of the Shareholders’ claims. 

I. Counts III and V - Voting of the Lion Funds Shares

[18] Because many of the Shareholders’ arguments depend upon whether the Lion 

Funds properly voted their shares in Biglari Holdings, we begin by addressing 

this issue. In Count III, Shareholders allege that Biglari Holdings and the 

Board breached the company’s articles of incorporation and violated the IBCL 

by “reacquir[ing] hundreds of thousands of shares of its common stock through 

the Lion Funds” and deeming those shares “legally outstanding” and eligible 

3 Our Supreme Court also discussed another type of shareholder action—a derivative action:

Derivative actions, on the other hand, are suits “asserted by a shareholder on the corporation’s 

behalf against a third party . . . because of the corporation’s failure to take some action against 

the third party.” BLACK’S at 455. They are brought “to redress an injury sustained by, or 

enforce a duty owed to, a corporation.” A.L.I. at 17. Derivative actions are brought in the 

name of the corporation and are governed by Trial Rule 23.1 and Indiana Code section 23-1-32-

1. To bring a derivative action[,] a shareholder must satisfy four requirements. They are: (1) the 

complaint must be verified; (2) the plaintiff must have been a shareholder at the time of the 

transaction of which he complains; (3) the complaint must describe the efforts made by the 

plaintiff to obtain the requested action from the board of directors; and (4) the plaintiff must 

fairly and adequately represent the interests of the shareholders. Examples of actions that are 

typically required to be brought derivatively include actions to recover for loss of a corporate 

opportunity, to recover corporate waste, and to recover damages to a corporation caused by an 

officer or director’s self-dealing.

G&N Aircraft, Inc., 743 N.E.2d at 234-35.
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for voting. Appellants’ App. Vol. II p. 57. Similarly, in Count V, Shareholders 

request declaratory relief that “the voting of the Reacquired Shares and 

treatment of said shares as voting stock violated the IBCL and the Charter.” Id.

at 58. 

[19] In the transactions at issue, Biglari Holdings used company funds to purchase 

additional shares of the Lion Funds. The Lion Funds then used the funds to 

purchase additional shares of Biglari Holdings. This system allowed S. Biglari, 

who is the sole owner of Biglari Capital—the general partner of the Lion 

Funds—to gain control over 54.7% of the voting stock of Biglari Holdings. 

[20] Shareholders argue the Lion Funds’ voting of these shares violated two IBCL 

statutes—Indiana Code Section 23-1-27-2(a) and Indiana Code Section 23-1-30-

2. Shareholders also contend that, “[e]ven if the trial court believed that these 

statutory provisions did not independently prohibit S. Biglari’s misconduct, it 

should have read these provisions in conjunction to fulfill the legislative intent 

underlying the IBCL as a whole.” Appellants’ Br. p. 35.

[21] Shareholders’ arguments require that we interpret these statutes. The first step 

in statutory interpretation is determining if the legislature has spoken clearly 

and unambiguously on the point in question. Siwinski v. Town of Ogden Dunes, 

949 N.E.2d 825, 828 (Ind. 2011). If a statute is clear and unambiguous on its 

face, no room exists for judicial construction. Id. “We are not at liberty to 

construe a facially unambiguous statute.” Id. “However, if a statute contains 
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ambiguity that allows for more than one interpretation, it opens itself up to 

judicial construction to effect the legislative intent.” Id.

A. Non-Voting Shares

[22] Indiana Code Section 23-1-27-2(a) provides: “A corporation may acquire its 

own shares. Unless a resolution of the board of directors or the corporation’s 

articles of incorporation provide otherwise, shares so acquired constitute 

authorized but unissued shares.” Shareholders contend that unissued shares are 

not entitled to vote. 

[23] No Indiana or federal courts have addressed this statute. Under the plain, 

unambiguous language of the statute, however, the statute is not applicable 

here. The statute addresses a corporation acquiring its own shares. As 

Defendants point out, the Biglari Holdings shares were acquired by the Lion 

Funds, not Biglari Holdings. Biglari Holdings did not acquire its own shares, 

and accordingly, the statute is inapplicable.

[24] Shareholders, however, argue that the share acquisitions at issue by Lion Funds 

were “in sum and substance, reacquisitions by the Company that render the 

Reacquired shares no longer entitled to vote.” Appellants’ Br. p. 23. According 

to Shareholders, the Lion Funds are “mere instrumentalities” of Biglari 

Holdings, and Shareholders advocate that we should disregard the “separate 

corporate existences” between the Lion Funds and Biglari Holdings. Id. at 24. 

[25] Corporate identity may be disregarded where one corporation is so organized 

and controlled and its affairs so conducted that it is a mere instrumentality or 
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adjunct of another corporation. Konrad Motor & Welder Serv., Inc. v. Magnetech 

Indus. Servs., Inc., 973 N.E.2d 1158, 1165 (Ind. Ct. App. 2012). “Indiana courts 

will not recognize corporations as separate entities where evidence shows that 

several corporations are acting as one.” Id. “A subset of piercing the corporate 

veil to hold one corporation liable for the actions of another is the corporate 

alter ego doctrine.” Id.

“The corporate alter ego doctrine is a device by which a plaintiff 

tries to show that two corporations are so closely connected that 

the plaintiff should be able to sue one for the actions of the 

other.” [Ziese & Sons Excavating, Inc. v. Boyer Constr. Corp., 965 

N.E.2d 713, 719 (Ind. Ct. App. 2012)] (quotation omitted). “The 

purpose of the doctrine is to avoid the inequity that results when 

one corporation uses another corporation as a shield from 

liability.” Id. When a plaintiff seeks to pierce the corporate veil 

using this doctrine, we consider additional factors, including 

whether: (1) similar corporate names were used; (2) the 

corporations shared common principal corporate officers, 

directors, and employees; (3) the business purposes of the 

corporations were similar; and (4) the corporations were located 

in the same offices and used the same telephone numbers and 

business cards. Id. Corporate identity may be disregarded under 

the alter ego doctrine where multiple corporations are operated 

as a single entity; where they are “manipulated or controlled as a 

single enterprise through their interrelationship to cause illegality, 

fraud, or injustice or to enable one economic entity to escape 

liability arising out of an operation conducted by one corporation 

for the benefit of the whole enterprise.” Id. (quotation omitted). 

Factors indicating that a corporation is the alter ego of another 

may include the intermingling of business transactions, functions, 

property, employees, funds, records, and corporate names in 

dealing with the public. Id.
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Konrad Motor & Welder Serv., 973 N.E.2d at 1165.

[26] The parties have not directed us to any cases applying the corporate alter ego 

theory for the purpose of determining whether a corporation’s shares can be 

voted. As we have noted, the corporate alter ego doctrine allows a plaintiff to 

show that two corporations are so closely connected that the plaintiff should be 

able to sue one for the actions of the other. That is not the situation we have 

here; rather, the argument here concerns whether the Lion Funds were entitled 

to vote its shares in Biglari Holdings. We decline Shareholders’ invitation to 

twist the corporate alter ego doctrine and the clear language of the statute to fit 

this situation. Indiana Code Section 23-1-27-2(a) is inapplicable here.

B. Circular Ownership

[27] Next, Shareholders argue that Indiana Code Section 23-1-30-2 was violated. 

Indiana Code Section 23-1-30-2 provides:

(b) Absent special circumstances, the shares of a corporation are 

not entitled to vote if they are owned, directly or indirectly, by a 

second corporation, domestic or foreign, and the first corporation 

owns, directly or indirectly, a majority of the shares entitled to 

vote for directors of the second corporation.

(c) Subsection (b) does not limit the power of a corporation to 

vote any shares, including its own shares, held by it in or for an 

employee benefit plan or in any other fiduciary capacity.

[28] The Statute’s Official Comments state:
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(b) The [Indiana General Corporation Act (“GCA”)4

] prohibited 

an issuing corporation from voting any share that “belongs” to 

the corporation, IC 23-1-2-9(g), an unexplained term generally 

considered to prohibit a subsidiary from voting shares of its 

parent but whose application in other contexts was unclear. The 

BCL expressly prohibits a subsidiary from voting shares of its 

parent corporation, if the parent owns a majority of the 

subsidiary’s shares. This language does not prohibit, however, 

the voting of a corporation’s own shares in other circumstances 

where the corporation may have the power to direct the voting, 

such as shares owned by a limited partnership of which the 

corporation is the general partner.

(c) The clause “in or for an employee benefit plan or in any 

other” was added immediately before the words “fiduciary 

capacity” to state expressly that a corporation has the right to 

vote shares held by it in or for an employee benefit plan.

Ind. Code § 23-1-30-2, Official Commentary. The Official Commentary may be 

used by this Court “to determine the underlying reasons, purposes, and policies 

of this article and may be used as a guide in its construction and application.” 

I.C. § 23-1-17-5.5

4 The GCA was the predecessor to the IBCL.

5 Indiana Code Section 23-1-17-5 provides in full: 

Official comments may be published by the general corporation law study commission 

(P.L.237-1986) and the business law survey commission (IC 23-1-54-3). After their publication, 

the comments may be consulted by the courts to determine the underlying reasons, purposes, 

and policies of this article and may be used as a guide in its construction and application.
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[29] As explained by Professor Paul Galanti in the Indiana Practice Series on 

Business Organizations, “[t]his restriction on circular ownership is designed to 

prevent management from perpetuating control by direct or indirect corporate 

ownership of its own shares.” 18 IND. PRAC., Business Organizations § 20.8 

(2019). “Section 23-1-30-2(b) of the IBCL is not intended to affect the possible 

applications of common law principles invalidating circular holding situations 

not within its literal prohibition such as where the issuing corporation owns a 

large but not a majority interest in the corporation voting the shares.” Id. 

[30] Again, under the plain language of Indiana Code Section 23-1-30-2, the statute 

is inapplicable here. The statute limits voting rights in certain circumstances 

between two corporations. The Lion Funds, however, are limited partnerships, 

not corporations. The Official Commentary specifically addressed a similar 

situation involving a limited partnership when it stated: “This language does 

not prohibit, however, the voting of a corporation’s own shares in other 

circumstances where the corporation may have the power to direct the voting, 

such as shares owned by a limited partnership of which the corporation is the 

general partner.” Ind. Code § 23-1-30-2, Official Commentary. The circular 

ownership prohibition of Indiana Code Section 23-1-30-2, accordingly, does not 

apply here.

[31] We are constrained by the specific language of Indiana Code Section 23-1-20-2. 

We acknowledge that Defendants structured these transactions in such a way 

that the actions of Defendants are not prohibited by the IBCL. The statute, 

however, unambiguously does not apply here.
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C. Conclusion Regarding Counts III and V

[32] Because Indiana Code Section 23-1-27-2(a) and Indiana Code Section 23-1-30-2

are inapplicable here, Shareholders’ claims that the voting of the Lion Funds

shares violated the IBCL fail. Even accepting Shareholders’ facts as stated in 

their complaint as true, considering the allegations in the light most favorable to 

the Shareholders, and drawing every reasonable inference in the Shareholders’

favor, we conclude that Shareholders are not entitled to relief on Counts III and 

V. The trial court properly dismissed Counts III and V. 

II. Counts I, II, IV, and VI - Indiana Dissenters’ Rights Statute 

A. Summary

[33] We next address Defendants’ argument that the Shareholders’ remaining claims 

are barred by the Indiana Dissenters’ Rights Statute, Indiana Code Chapter 23-

1-44.6

 In general, the Dissenters’ Rights Statute allows a shareholder to dissent 

from certain corporate actions, including a merger, and obtain payment for the 

fair value of the shareholder’s shares. Professor Galanti has explained that:

In lieu of the right to block the transaction, shareholders who 

object to extraordinary corporate matters are given the right to 

require the corporation to buy their shares at a value determined 

in a statutorily defined manner. This permits them to withdraw 

from the corporation while permitting the enterprise to continue 

with those shareholders agreeable to the changes.

6 Defendants also argue that Counts III and V were barred by the Dissenters’ Rights Statute. Given our 

resolution of Counts III and V, however, we need not address this argument.
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20 IND. PRAC., Business Organizations § 43.1 (2019) (footnote omitted). The 

Dissenters’ Rights Statute provides the shareholder’s exclusive remedy in most 

circumstances. 

[34] If the merger at issue here is covered by the Dissenters’ Rights Statute, this 

Court must determine whether the remaining Shareholders’ claims, which 

relate to the Reclassification Agreement and merger, are covered by the 

Dissenters’ Rights Statute and, therefore, barred. Count I claims that S. Biglari 

breached his fiduciary duty by causing Biglari Holdings to enter into the 

Reclassification Agreement. Count II similarly claims that the Board breached 

its fiduciary duty by approving the Reclassification. Count IV is an unjust 

enrichment claim against S. Biglari related to the consummation of the 

Reclassification Agreement. Count VI seeks declaratory relief that the 

Reclassification Agreement is void. Each of these claims relates to the 

Reclassification Agreement, which implemented the merger.

B. Applicability of the Dissenters’ Rights Statute

[35] The Dissenters’ Rights Statute applies to the following corporate actions:

(1) Consummation of a plan of merger to which the corporation 

is a party if:

(A) shareholder approval is required for the merger by IC 

23-1-40, IC 23-0.6-1-7, or the articles of incorporation; and

(B) the shareholder is entitled to vote on the merger.
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(2) Consummation of a plan of share exchange to which the 

corporation is a party as the corporation whose shares will be 

acquired, if the shareholder is entitled to vote on the plan.

(3) Consummation of a sale or exchange of all, or substantially 

all, of the property of the corporation other than in the usual and 

regular course of business, if the shareholder is entitled to vote on 

the sale or exchange, including a sale in dissolution, but not 

including a sale pursuant to court order or a sale for cash 

pursuant to a plan by which all or substantially all of the net 

proceeds of the sale will be distributed to the shareholders within 

one (1) year after the date of sale.

(4) The approval of a control share acquisition under IC 23-1-42.

(5) Any corporate action taken pursuant to a shareholder vote to 

the extent the articles of incorporation, bylaws, or a resolution of 

the board of directors provides that voting or nonvoting 

shareholders are entitled to dissent and obtain payment for their 

shares.

(6) Election to become a benefit corporation under IC 23-1.3-3-2.

I.C. § 23-1-44-8(a).7

 Because the corporate action challenged by Shareholders is 

a merger that required shareholder approval, the Dissenters’ Rights Statute is at 

issue here.

7 Indiana Code Section 23-1-44-8 was amended effective January 1, 2018, to insert “IC 23-0.6-1-7” in 

subsection (a)(1)(A). See Pub. L. No. 118-2017, Sec. 20 (eff. Jan. 1, 2018).
Court of Appeals of Indiana | Opinion 19A-CT-101 | December 4, 2019 Page 20 of 30

[36] Shareholders’ main argument, however, is that the Dissenters’ Rights Statute is 

inapplicable because the merger was not approved by a majority of properly 

voting shareholders.8

 Defendants argue that the Shareholders did not make this 

argument below and that the argument is waived. Shareholders contend the 

issue was raised in the complaint and argued at the motion to dismiss hearing. 

See Appellants’ App. Vol. II p. 19 (“[T]he Reclassification would not have been 

approved but for S. Biglari’s illegal voting of the Reacquired Shares in favor of 

this unfair transaction.”); Tr. Vol. II p. 30 (“[T]he Dissenters’ Rights Statute 

only gives finality to mergers that were approved by a majority. So we’re 

asking the Court here to actually enforce the will of the majority that was 

entitled to vote on this reclassification.”). We do not find this issue waived.

8 With little explanation and no citations to authority, Shareholders also argue that the Dissenters’ Rights 

Statute does not bar their “breach of contract and declaratory judgment claims to the extent they seek 

prospective relief barring these shares from remaining outstanding and entitled to vote.” Appellants’ Br. p. 

39. This argument appears to relate to Counts III and V. We conclude that this argument is waived for 

failure to make a cogent argument. See Ind. Appellate Rule 46(A)(8); Zavodnik v. Harper, 17 N.E.3d 259, 264 

(Ind. 2014) (waiving a claim due to failure to support the claim with cogent argument or citation to relevant 

authority).

Shareholders also contend that S. Biglari structured the Reclassification of shares as a merger specifically to 

take advantage of the Dissenters’ Rights Statute. According to Shareholders, the Reclassification of shares 

could have been accomplished through “a charter or bylaw amendment,” but S. Biglari structured it as a 

merger to strip shareholders of their rights. Appellants’ Br. p. 42. Defendants point out that this argument 

was addressed by our Supreme Court in Fleming v. Int’l Pizza Supply Corp., 676 N.E.2d 1051, 1056 (Ind. 1997), 

where it held:

[W]e think it unmistakably clear that the legislature meant to reject the [Gabhart v. Gabhart, 370 

N.E.2d 345 (1972),] analysis that a merger which has no valid corporate purpose is a de facto 

dissolution. In our view, the legislature clearly disapproved not only the alternative dissolution 

remedy but also the notion the judicial inquiry into the purpose of the merger was permitted. 

And we would also observe that the legislature’s approach incorporated Gabhart’s teachings that 

a shareholder’s appraisal right could not be enforced by enjoining the merger, 267 Ind. at 383, 

370 N.E.2d at 353; and that the judiciary should not intrude into corporate management to the 

extent of passing upon the “entire fairness” of a merger. 267 Ind. at 388, 370 N.E.2d at 356.

Based on Fleming, the Shareholders’ argument fails.
Court of Appeals of Indiana | Opinion 19A-CT-101 | December 4, 2019 Page 21 of 30

[37] According to Shareholders, the Lion Funds shares were not entitled to vote on 

the merger. Shareholders contend that “only transactions that require and 

receive approval from a majority of shareholders—and, therefore, comport with 

the ‘majority rule’ policy—trigger the dissenters’ rights statute. The

Reclassification cannot pass that test because it did not receive approval by a 

majority of the shares ‘entitled to vote’ on it.” Appellants’ Br. p. 40. We have, 

however, concluded that the Lion Funds properly voted its shares. See supra

Section I. Accordingly, Shareholders’ argument fails, and the Dissenters’ 

Rights Statute is applicable here. 

C. Statutory Remedies

[38] In the event of the above corporate actions, including a merger, Indiana Code 

Section 23-1-44-8(a) provides that “[a] shareholder is entitled to dissent from, 

and obtain payment of the fair value[9] of the shareholder’s shares.” The statute 

provides very specific instructions on notices required to be sent to 

shareholders, procedures for payment to dissenting shareholders, and judicial 

determination of the fair value of shares in the case of a closely-held 

corporation. See Ind. Code Chapter 23-1-44. 

[39] The remedy for a shareholder of a publicly-traded company, however, is 

different. Indiana Code Section 23-1-44-8(b) provides:

9 “Fair value” means “the value of the shares immediately before the effectuation of the corporate action to 

which the dissenter objects, excluding any appreciation or depreciation in anticipation of the corporate action 

unless exclusion would be inequitable.” Ind. Code § 23-1-44-3.
Court of Appeals of Indiana | Opinion 19A-CT-101 | December 4, 2019 Page 22 of 30

This section [Indiana Code Section 23-1-44-8] does not apply to 

the holders of shares of any class or series if, on the date fixed to 

determine the shareholders entitled to receive notice of and vote 

at the meeting of shareholders at which the merger, plan of share 

exchange, or sale or exchange of property is to be acted on, the 

shares of that class or series were a covered security under 

Section 18(b)(1)(A) or 18(b)(1)(B) of the Securities Act of 1933, 

as amended.

As a result, Professor Galanti has explained that “[d]issenters’ rights are not 

available for the shareholders of corporations party to a merger, plan of share 

exchange, or sale or exchange of property, when the shares are publicly traded.” 

20 IND. PRAC., Business Organizations § 43.3 (2019). “This is the market 

exception to dissenters’ rights, sometimes referred to as the Wall Street Rule 

because shareholders who are dissatisfied with the terms of a merger can sell 

their shares.” Id. Because Biglari Holdings is a publicly traded company, the 

Shareholders do not have the ability to obtain payment from the company for 

the “fair market value” of the shares through a valuation proceeding; rather, the 

Shareholders’ sole remedy is to sell their shares on the market. 

D. Exclusivity of Remedies

[40] The remedies provided in the Dissenters’ Rights Statute are the exclusive 

remedies for dissenting shareholders. Indiana Code Section 23-1-44-8(d) states:

A shareholder:

(1) who is entitled to dissent and obtain payment for the 

shareholder’s shares under this chapter; or
Court of Appeals of Indiana | Opinion 19A-CT-101 | December 4, 2019 Page 23 of 30

(2) who would be so entitled to dissent and obtain payment but 

for the provisions of subsection (b);

may not challenge the corporate action creating (or that, but for 

the provisions of subsection (b), would have created) the 

shareholder’s entitlement.

[41] The Official Commentary to subsection (d) of the statute provides some 

background and explanation of this subsection:

Subsection (d), which establishes the exclusivity of Chapter 44’s 

dissenters’ rights remedies, deletes [Revised Model Business 

Corporation Act (“RMA”)] language stating that such rights are 

exclusive “unless the action is unlawful or fraudulent with 

respect to the shareholder or the corporation.” Deletion of this 

language reflects a conscious response to the Indiana Supreme 

Court’s decision in Gabhart v. Gabhart, 370 N.E.2d 345 (1972). 

The omission of this language was continued in the 2009 

amendments to the BCL.

Gabhart involved the interpretation of the GCA exclusivity 

provision, IC 23-1-5-7(c) (repealed 1986), which provided:

Every shareholder who did not vote in favor of such 

merger, consolidation, or exchange and who does not 

object in writing and demand payment of the value of his 

shares at the time and in the manner stated in this section 

shall be conclusively presumed to have assented to such 

merger, consolidation, or exchange.

Notwithstanding this language, the Gabhart court held that a 

minority shareholder was entitled to challenge a “freeze-out”

merger as a de facto dissolution if the merger did not have a 

“valid purpose” - defined by the Court as a purpose intended to 
Court of Appeals of Indiana | Opinion 19A-CT-101 | December 4, 2019 Page 24 of 30

advance a corporate interest. Gabhart refused to adopt the 

approach of the then-leading Delaware case, Singer v. Magnavox 

Co., 380 A.2d 969 (Del. 1977) (later overruled in Weinberger v. 

UOP, Inc., 457 A.2d 701, 703 (Del. 1983)), which permitted 

judicial inquiry into the entire fairness of the transaction on the 

basis of fiduciary duty owed to minority shareholders. The 

Gabhart court also found that IC 23-1-5-7(c) (repealed 1986) did 

establish the exclusive remedy for mergers with a “valid 

purpose.” Absent such a “valid purpose,” however, Gabhart held 

that minority shareholders were not limited to statutory appraisal 

rights but could also seek to enjoin the corporate transaction 

creating those rights.

Whether or not Gabhart correctly interpreted the GCA’s 

exclusivity provision, the Commission believed the decision 

created substantial uncertainty about whether and to what extent 

minority shareholders could seek to enjoin or undo corporate 

transactions authorized by statute and approved by the majority. 

Given the potential for disruption of corporate transactions were 

a Gabhart rule applied to the BCL, the General Assembly 

adopted subsection (d)[10] as a categorical statutory rule that 

shareholders entitled to dissenters’ rights may not challenge the 

corporate action creating that entitlement. Hence, the kind of 

minority shareholder challenge to corporate action permitted by 

Gabhart under IC 23-1-5-7(c) (repealed 1986) is not permitted 

under subsection (d). Consistent with this approach, the revised 

RMA exception to exclusivity for transactions between a 

10 Again, Indiana Code Section 23-1-44-8(d) provides:

A shareholder:

(1) who is entitled to dissent and obtain payment for the shareholder’s shares under this chapter; 

or

(2) who would be so entitled to dissent and obtain payment but for the provisions of subsection 

(b);

may not challenge the corporate action creating (or that, but for the provisions of subsection (b), 

would have created) the shareholder’s entitlement.
Court of Appeals of Indiana | Opinion 19A-CT-101 | December 4, 2019 Page 25 of 30

corporation and certain interested parties has not been included 

in the BCL.

In 1987, subsection (d) was amended to extend this categorical 

prohibition to shareholders who would be entitled to dissenters’

rights but for the “market exception” of subsection (b). Such 

shareholders, who have the ability to sell their shares in a 

recognized market and at a market price, also may not challenge 

the corporate action that (but for the “market exception”) would 

have created dissenters’ rights.

Consequently, the Dissenters’ Rights Statute “provides the exclusive remedy for 

minority shareholders challenging a proposed merger.” Settles v. Leslie, 701 

N.E.2d 849, 853 (Ind. Ct. App. 1998). 

[42] A shareholder’s ability to bring a breach of fiduciary duty claim in the context 

of a merger or other covered corporate action is also limited by the Dissenters’ 

Rights Statute. In the context of a closely-held corporation, our Supreme Court 

has held that the Dissenters’ Rights Statute gives the minority shareholder the 

opportunity to raise such a claim only during judicial valuation proceedings. 

Fleming v. Int’l Pizza Supply Corp., 676 N.E.2d 1051, 1057 (Ind. 1997). The 

shareholder may argue during those proceedings that the shares were valued 

too low due to breach of fiduciary duty and fraud by majority shareholders. Id. 

The Supreme Court held:

We conclude that the legislature meant to limit a dissenting 

shareholder seeking payment for the value of the shareholder’s 

shares to the statutory appraisal procedure. This accords with 

the policies of corporate majority rule and of ascertaining 

dissenters’ claims on a timely basis. But we also conclude that 
Court of Appeals of Indiana | Opinion 19A-CT-101 | December 4, 2019 Page 26 of 30

the legislature did not foreclose the ability of dissenting 

shareholders to litigate their breach of fiduciary duty or fraud 

claims within the appraisal proceeding. That is, it is perfectly 

consistent with the shareholder’s claim for payment in the 

appraisal process for the shareholder to allege that the value 

assigned to the shares in the merger or asset sale was too low 

because of the breach of fiduciary duty or fraud on the part of 

majority shareholders.

Id. The Court agreed that “the expression ‘corporate action to which the 

dissenter objects’ as used in Ind. Code § 23-1-44-3 includes not only the merger 

or asset sale itself but genuine issues of breach of fiduciary duty and fraud 

affecting the value of the shares at the time of the transaction.” Id. at 1058; see 

also Lees Inns of Am., Inc. v. William R. Lee Irrevocable Tr., 924 N.E.2d 143, 155-

161 (Ind. Ct. App. 2010) (discussing the proper valuation of a dissenting 

shareholder’s shares where breach of fiduciary duties was demonstrated), trans. 

denied. 

[43] For example, in Trietsch v. Circle Design Group, Inc., 868 N.E.2d 812 (Ind. Ct. 

App. 2007), in the context of a closely-held corporation, a shareholder sought 

money damages for the directors’ actions that resulted in a sale of assets. We 

held that the shareholder was precluded from recovering such damages because 

Indiana’s Dissenters’ Rights Statute was the exclusive remedy for actions or 

omissions in a merger or sale of assets. Trietsch, 868 N.E.2d at 820 (citing 

Galligan v. Galligan, 741 N.E.2d 1217, 1225-26 (Ind. 2001)).

[44] Here, as shareholders of a publicly-traded corporation, the Shareholders’ 

remedies under the Dissenters’ Rights Statutes are limited to selling their shares, 
Court of Appeals of Indiana | Opinion 19A-CT-101 | December 4, 2019 Page 27 of 30

and the exclusivity provisions limit their ability to challenge the corporate

action, even through a breach of fiduciary action claim. Despite these 

provisions, Shareholders argue that they are entitled to monetary damages for 

their breach of fiduciary duty and unjust enrichment claims:

[A]llowing post-closing claims for purely monetary damages—

like Plaintiffs’ breach of fiduciary duty and unjust enrichment 

claims here—in situations where shareholders would otherwise 

lack any judicial remedy at all comports with both (1) what

Defendants identify as the purpose of the dissenters’ rights statute 

(i.e., to deter injunctive claims), and (2) “the Supreme Court of 

Indiana[’s] . . . strong reluctance to foreclose all judicial remedies

for a director’s breach of duty.” 

Appellants’ Br. p. 43 (footnote omitted, citations omitted). This argument, 

however, goes against the exclusivity provisions of the Dissenters’ Rights 

Statute. 

[45] In support of their arguments, Shareholders rely on Shepard v. Meridian Insurance 

Group, 137 F.Supp.2d 1096 (S.D. Ind. 2001).11 Shepard addressed the 

Dissenters’ Rights Statute in the context of a publicly-traded company’s “cashout” merger, but a “cash-out” merger is not at issue here.

12 The shareholder in 

11 Shareholders also rely on Orlando v. CFS Bancorp, Inc., No. 2:13-CV-261 JD, 2013 WL 5797624 (N.D. Ind. 

Oct. 28, 2013). The Court in Orlando, however, specifically did not address whether the Indiana Dissenters’

Rights Statute barred plaintiff’s requested relief. Id. at *4. Consequently, Orlando is not persuasive here.

12 “[A] ‘freeze-out’ or ‘cash-out’ merger . . . occurs when the target corporation is merged into a wholly 

owned subsidiary of the acquirer, and the minority shareholders in the target corporation are forced to 

surrender their shares.” 19 AM. JUR. 2D Corporations § 2181; see also 19 AM. JUR. 2D Corporations § 2165.
Court of Appeals of Indiana | Opinion 19A-CT-101 | December 4, 2019 Page 28 of 30

Shepard alleged that the company’s directors “breached their duties to him and 

to other shareholders by failing to exercise reasonable care and by failing to 

secure a better offer” for the company’s shares in the cash-out merger. Shepard, 

137 F.Supp.2d at 1099. The shareholder sought injunctive relief to block the 

merger and compensatory and punitive damages. 

[46] The issue in Shepard was “whether and how Indiana law would provide 

shareholders or the corporation any remedy for the directors’ assumed breach of 

their duty of loyalty and due care to the corporation and to its shareholders 

when approving a cash-out merger for a publicly traded corporation.” Id. at 

1103. The court noted the differences between the Dissenters’ Rights Statute 

remedies for publicly-traded companies and privately-held companies. “A 

shareholder who dissents from a merger of a privately held company may reject 

the company’s offer of ‘fair value,’ which forces the company to file a judicial 

appraisal proceeding under the dissenters’ rights statute to determine ‘fair value’

for the shares pursuant to Ind. Code § 23-1-44-19.” Id. at 1102. On the other 

hand, in the case of a publicly-traded company, the shareholder must simply 

sell his or her shares at the market price. 

Because the proposed merger with State Auto is a “cash-out”

merger, Shepard contends that a sale of his shares at the market 

price would not provide him with a meaningful remedy for the 

wrongs he alleges here. The market price for MIGI stock reflects 

the agreed price for the merger. Shepard claims that the directors 

breached their duties by agreeing to that very price. Also, there is 

no reason to expect that the prospect of any future derivative 

claims could be factored into that price. As discussed below, if 

and when the merger closes, all the shareholders hurt by the 
Court of Appeals of Indiana | Opinion 19A-CT-101 | December 4, 2019 Page 29 of 30

alleged wrongs will lose their shares and thus also their standing 

to pursue such claims.

Id. at 1102-03 (emphasis added). The court considered several options and 

ultimately predicted that, in the case of a cash-out merger, the Indiana Supreme 

Court would allow “a post-merger direct action by an individual shareholder for 

monetary relief.” Id. at 1112.

[47] Shareholders argue that Shepard “conclusively” proves that the Dissenters’

Rights Statute is not a “categorial bar to every conceivable challenge to a 

merger.” Appellants’ Reply Br. p. 20. Shepard, however, merely left open the 

possibility that the Indiana Supreme Court might allow a direct action by 

shareholders for monetary damages after a cash-out merger. Indiana courts 

have not addressed this issue since Shepard. 

[48] Moreover, the Biglari Holdings merger does not involve a cash-out merger. 

Shepard also noted:

In many situations, such a sale may provide a dissenting 

shareholder with an adequate remedy. The market exception is 

based on the assumption that the market price of the shares 

reflect a current fair valuation of those shares. Even if officers 

and directors have breached their duties in ways that have 

depressed the price of the stock (for example, by agreeing to a 

sale of assets at too low a price), one could expect, at least 

theoretically, that the market price would also include an 

adjustment or valuation for any potential shareholder derivative 

claims against the officers or directors for earlier wrongs.
Court of Appeals of Indiana | Opinion 19A-CT-101 | December 4, 2019 Page 30 of 30

Shepard, 137 F.Supp.2d at 1099. This is exactly the situation we have here. 

Shareholders’ sole remedy under the Dissenters’ Rights Statute was to sell their 

shares; a direct action for post-closing monetary damages for breach of fiduciary 

duty or unjust enrichment was not permitted by the Statute.

E. Conclusion Regarding Counts I, II, IV, and VI

[49] Counts I, II, and IV included breach of fiduciary duty and unjust enrichment 

claims related to the Reclassification Agreement, while Count VI sought

declaratory relief that the Reclassification Agreement is void. We conclude that 

each of these claims, which relates to the merger, is barred by the Dissenters’ 

Rights Statute. Even accepting Shareholders’ facts as stated in their complaint 

as true, considering the allegations in the light most favorable to the 

Shareholders, and drawing every reasonable inference in the Shareholders’ 

favor, we conclude that Shareholders are not entitled to relief on Counts I, II, 

IV, and VI. The trial court properly granted Defendants’ motion to dismiss 

regarding Counts I, II, IV, and VI of the complaint.

Conclusion

[50] The trial court properly dismissed Shareholders’ complaint. We affirm.

[51] Affirmed.

Crone, J., and Altice, J., concur.