Court Opinion

ID: 3192144
Source: CourtListenerOpinion
Date Created: 2016-04-07 15:03:22.414956+00
Date Added: 2024-06-11T14:36:10.560343
License: Public Domain

FILED
                                                                               Apr 07 2016, 6:34 am

                                                                                   CLERK
                                                                               Indiana Supreme Court
                                                                                  Court of Appeals
                                                                                    and Tax Court

ATTORNEY FOR APPELLANT                                          ATTORNEY FOR APPELLEE
Kevin E. Steele                                                 Jonathan Halm
Burke Costanza & Carberry LLP                                   Abrahamson, Reed & Bilse
Valparaiso, Indiana                                             Hammond, Indiana

                                             IN THE
     COURT OF APPEALS OF INDIANA

Victor J. DiMaggio III,                                        April 7, 2016

Appellant-Plaintiff,                                           Court of Appeals Case No.
                                                               64A03-1505-PL-466
        v.                                                     Appeal from the Porter Superior
                                                               Court.
                                                               The Honorable William Alexa,
Elias Rosario,                                                 Judge.
Appellee-Defendant.                                            Cause No. 64D02-0803-PL-2790

________________________________

Elias Rosario,

Cross-Appellant/Counter-Plaintiff,

        v.

Victor J. DiMaggio III,

Cross-Appellee/Counter-Defendant.

Darden, Senior Judge

Court of Appeals of Indiana | Opinion 64A03-1505-PL-466 | April 7, 2016                                Page 1 of 22
                                       Statement of the Case
[1]   Victor J. DiMaggio appeals from the trial court’s order granting summary

      judgment in favor of Elias Rosario on DiMaggio’s complaint alleging breach of

      an oral contract; breach of fiduciary duty; and, usurpation of corporate

      opportunity. Rosario cross-appeals, contending, in the alternative, that the trial

      court erred by denying his first motion for summary judgment based on the

      statute of limitation. We affirm.

                                                      Issues
[2]   DiMaggio presents the following issues for review:

              I.       Whether the trial court erred by granting summary
                       judgment in favor of Rosario after finding there was no
                       oral contract and thus no breach;
              II.      Whether the trial court erred by granting summary
                       judgment in favor of Rosario on DiMaggio’s claims of
                       breach of fiduciary duty and usurpation of corporate
                       opportunity.
      Rosario cross-appeals raising the following issue for our review in the event we

      reverse the decision of the trial court:

              III.     Whether the trial court erred by denying Rosario’s motion
                       for partial summary judgment based on the statute of
                       limitation.

      Court of Appeals of Indiana | Opinion 64A03-1505-PL-466 | April 7, 2016    Page 2 of 22
                                Facts and Procedural History
[3]   Since this is the third time the parties have appeared before this Court, perhaps

      a brief background of their relationship will help to put the case in its proper

      perspective.

[4]   DiMaggio was the owner of Financial Advantage Corporation, a Delaware

      corporation based in Chicago that was in the business of providing financial

      services. From 1996 until 2002, Rosario served as an employee, officer,

      director, and shareholder of DiMaggio’s company.

[5]   In 1996 and again in 1997, DiMaggio and Rosario, both certified public

      accountants and entrepreneurs, decided to expand their business relationship.

      First, in January 1996, they formed Schererville Real Estate Holding, LLC, an

      Indiana limited liability corporation, for the purpose of investing in real estate

      with its principal place of business in Lake County, Indiana. Rosario and

      DiMaggio were each fifty percent shareholders in Schererville. Schererville

      owned real estate consisting of an office building and land in Schererville,

      Indiana.

[6]   Next, on December 29, 1997, they formed Galleria Realty Corporation, an

      Indiana, closely-held corporation. Galleria’s principal place of business was in

      Lake County, Indiana, and its purpose was to develop two mixed-use retail and

      office buildings located in Dyer, Indiana. They were the only two shareholders

      of Galleria. DiMaggio, who also holds a law degree, was the minority

      shareholder owning forty percent of the shares, with Rosario owning sixty

      Court of Appeals of Indiana | Opinion 64A03-1505-PL-466 | April 7, 2016    Page 3 of 22
      percent of the shares. DiMaggio was to contribute his expertise in marketing,

      sales, and leasing of the property. Rosario was to contribute his expertise in the

      build-out of the tenant spaces. Although the record discloses that DiMaggio

      and Rosario were involved in Financial Advantage Corporation, Schererville

      Real Estate Holding, LLC, and Galleria, DiMaggio and Rosario may have

      been engaged in other joint business ventures not noted in the record before us.

[7]   The first phase of the Galleria construction was completed in 2000, consisting

      of twenty four suites in a four-story 41,000 square foot mixed-use retail and

      office building. The second phase was completed in 2004, consisting of ten

      suites in a three-story 32,973 square-foot mixed-use retail and office building.

      Thus, after completion of the two phases, there was more than 73,000 total

      square feet of mixed-use retail and office building space.

[8]   Rosario and DiMaggio developed an estimation of projected income for the

      years 2000 to 2009 for Galleria. The “Galleria Realty Corporation Projected

      Income Statement Years 2000 to 2009” was based upon a projection of

      potential income and planned joint contributions to the business endeavor of

      Galleria. Appellant’s App. pp. 163-65.

[9]   According to DiMaggio’s answers to interrogatories dated October 31, 2014,
                                                                                            1
      sometime in early 2002, Rosario sent an abandonment letter to DiMaggio.

      1
       Although the letter is referred to in the designated materials, in some instances where it is noted as being
      attached as an exhibit, a copy of the letter is not before us in the record. Likewise, the transcriptions of voice
      mail messages referenced in the designated materials are not before us in the record.

      Court of Appeals of Indiana | Opinion 64A03-1505-PL-466 | April 7, 2016                               Page 4 of 22
       Apparently, DiMaggio wanted to discuss resolution of Rosario’s abandonment

       letter, but received no compliance from Rosario. DiMaggio stated that

       Rosario’s response to him on March 9, 2002, convinced him that Rosario was

       committed to abandoning the Galleria business venture. Id. at 429.

[10]   At some point, Rosario had come to believe that DiMaggio was engaging in

       improper business practices with respect to Financial Advantage Corporation.

       As a result, on December 10, 2002, Rosario sought to enter into a stock

       redemption agreement for his forty shares of common stock, a promissory note

       for fifty payments totaling $50,000.00 for the stock, and a general release.

       DiMaggio signed a stock redemption agreement as President of Financial

       Advantage Corporation; however, no promissory note or general release was

       executed.

[11]   In late 2002 or early 2003, Rosario commenced pursuing a real estate business

       venture in Porter County with Mark Nebel and William C. Haak. The three

       formed Liberty Lake Estates, LLC, in order to purchase an existing residential

       subdivision by the same name with the intent of improving it, and selling it to

       residential customers. Rosario’s role in that venture was to oversee the

       development, which was comprised of thirty-eight residential lots.

[12]   DiMaggio and Rosario met on August 27, 2003 at the Galleria complex. At

       that meeting, DiMaggio pressed Rosario to explain why he had abandoned his

       duties with Galleria. According to DiMaggio, Rosario replied that “it was

       something I had to do.” Id. at 434. Later, on September 9, 2003, Professional

       Court of Appeals of Indiana | Opinion 64A03-1505-PL-466 | April 7, 2016    Page 5 of 22
       Building Services (PBS) in Crete, Illinois, requested a meeting with both

       DiMaggio and Rosario regarding the design of the second phase of the Galleria

       project. Although Rosario attended the meeting, apparently he did not

       participate in it and left early, and DiMaggio answered most if not all of the

       questions. DiMaggio, in response to interrogatories proposed by Rosario,

       acknowledged that Rosario did not participate in the meeting, left early, and

       PBS expressed concern over his lack of participation at the meeting. Id.

[13]   Rosario claimed that in November 2003, DiMaggio changed the locks to the

       corporate offices of Galleria, thereby denying Rosario access to Galleria’s

       corporate records, tax documents, financial documents, tenant leases, bank

       account information, and loan documentation. Rosario also claimed that he

       received no notice of corporate or shareholder meetings, and did not receive

       any K-1 tax reporting forms, profits, dividends, or money owed to him due to

       his status as shareholder in Galleria.

[14]   On February 17, 2004, Financial Advantage Corporation filed a “Verified

       Complaint for Accounting and Other Relief” against Rosario in the Circuit

       Court of Cook County, Illinois. Appellee’s App. p. 103. DiMaggio, as

       President of Financial Advantage Corporation, was present when Rosario’s

       deposition was taken on March 14, 2006 in that case. Rosario answered

       questions about his involvement in Liberty Lake Estates. In DiMaggio’s

       deposition taken on April 6, 2006, DiMaggio testified about conversations he

       had with others—the first in April of 2003, and the second in May of 2004—

       Court of Appeals of Indiana | Opinion 64A03-1505-PL-466 | April 7, 2016   Page 6 of 22
       concerning his knowledge of Rosario’s involvement in Liberty Lake Estates. Id.

       at 35.

[15]   Subsequently, on March 26, 2008, DiMaggio filed a complaint against Rosario,

       Nebel, Haak, and Liberty Lake Estates, LLC, alleging among other things that

       they usurped a corporate opportunity from Galleria, causing damages to

       DiMaggio. The trial court granted a motion to dismiss filed by Nebel, Haak,

       and Liberty Lake Estates, LLC. This court affirmed the trial court’s decision.

       See DiMaggio v. Rosario, 950 N.E.2d 1272 (Ind. Ct. App. 2011), trans. denied.

[16]   DiMaggio then requested leave to file an amended complaint naming Rosario

       and Nebel as the only defendants. After DiMaggio was granted leave to do so,

       Nebel filed a motion to dismiss the amended complaint, asserting that

       DiMaggio’s claim against him personally was barred by res judicata. The trial

       court granted the motion to dismiss as to Nebel only and we affirmed the trial

       court’s decision. See DiMaggio v. Rosario, No. 64A04-1204-PL-169 (Ind. Ct.

       App. Sept. 28, 2012). After Nebel was dismissed from the action, Rosario was

       the only defendant remaining in the case.

[17]   After DiMaggio had filed the instant lawsuit on March 26, 2008, Galleria took

       out a promissory note with First DuPage Bank, signed by DiMaggio as

       President of Galleria, on April 30, 2008, in the principal amount of

       $3,826,746.69. The note was secured by a mortgage on both of the mixed-use

       office buildings. Galleria also entered into an assignment of rents to First

       DuPage Bank, signed by DiMaggio as President of Galleria, on that same date.

       Court of Appeals of Indiana | Opinion 64A03-1505-PL-466 | April 7, 2016   Page 7 of 22
       DiMaggio also signed as personal guarantor providing that his share of the

       indebtedness would be limited to fifty percent of the principal amount, interest,

       collection costs, expenses, and attorneys’ fees not to exceed $1,917,500.00.

       None of the documents contained Rosario’s signature.

[18]   On October 23, 2009, First Midwest Bank bought First DuPage Bank’s title and

       interest in the note, mortgage, assignment of rents, and guaranty it held with

       respect to Galleria. Galleria stopped making payments beginning in November

       2009 and continuing thereafter. On October 31, 2012, and also on November

       5, 2012, First Midwest Bank served formal written notices of default and

       demand for payment and performance pursuant to the loan documents because

       Galleria had failed to make the required monthly payments.

[19]   Meanwhile in the instant matter, on August 14, 2012, Rosario had filed his first

       motion seeking partial summary judgment against DiMaggio alleging that the

       allegations of breach of fiduciary duty and usurpation of a corporate

       opportunity were barred by the statute of limitation. Finding that there were

       genuine issues of material fact about the timing of DiMaggio’s discovery of

       Rosario’s alleged wrongdoing, the trial court denied that motion by order dated

       November 6, 2013.

[20]   On April 4, 2013, First Midwest filed a complaint in the United States District

       Court of the Northern District of Indiana to recover under the note against

       Galleria; foreclose the mortgage on the property; and, to obtain a money

       judgment against DiMaggio as personal guarantor under the loan documents.

       Court of Appeals of Indiana | Opinion 64A03-1505-PL-466 | April 7, 2016   Page 8 of 22
       The loan matured on May 1, 2013, at which time the entire unpaid balance of

       the loan became due and owing. First Midwest then filed an amended

       complaint noting that the loan had matured since the filing of the original

       complaint. First Midwest alleged in the amended complaint that as of May 15,

       2013, the outstanding aggregate amount owed by Galleria was $3,590,538.59,

       which included owed principal in the amount of $3,483,616.50, accrued unpaid

       interest of $43,956.39, default interest of $45,480.96, late charges and/or

       insufficient fund fees of $6,068.56, and corporate advances of $12,629.89 less

       $1,213.71 of unapplied funds of Galleria.

[21]   On June 26, 2014, Rosario filed a second motion for summary judgment,

       contending that the allegations of DiMaggio’s complaint could only be brought

       as a derivative action since the injured party was Galleria. After responses and

       briefing on the motion, oral argument was held on August, 15, 2014, after

       which the trial court took the matter under advisement.

[22]   The First Midwest Bank litigation was resolved by way of a series of

       transactions commencing in September and October of 2014 after several

       settlement conferences led by a federal magistrate. To begin with, First

       Midwest assigned all of its rights, title and interest in Galleria’s note and

       mortgage to Set Indiana 1 LLC. Next, Galleria, per the terms proposed by Set

       Indiana 1 LLC, sought a loan modification. On October 7, 2014, DiMaggio

       and Rosario signed a resolution as the sole shareholders and directors of

       Galleria, authorizing the loan modification.

       Court of Appeals of Indiana | Opinion 64A03-1505-PL-466 | April 7, 2016    Page 9 of 22
[23]   Galleria and Set Indiana 1 LLC agreed to reinstate the loan, extend the terms of

       the maturity, and reduce the principal amount of indebtedness to

       $1,980,000.00, as evidenced by the terms set forth in an unsigned, undated copy

       of the loan modification agreement. An unsigned copy of the loan modification

       agreement reflects that it was made “this day, September ____, 2014, by and

       between Galleria Realty Corporation (“Galleria”), an Indiana corporation,

       Victor J. DiMaggio, III (“DiMaggio”), an Illinois resident, and Set Indiana 1,

       LLC (“Set Indiana”), a Florida limited liability company.” Appellant’s App. p.

       329.

[24]   The corporate entity Set Galleria LLC purchased all of Rosario’s and

       DiMaggio’s stock in Galleria. DiMaggio’s signature reflecting the transfer of

       his four hundred shares of stock to Set Galleria, LLC, is dated September 26,

       2014. Rosario’s signature reflecting the transfer of his six hundred shares of

       stock is dated October 7, 2014. Also on October 7, 2014, Set Galleria LLC and

       Galleria, by its new owner, signed a document releasing Rosario from any and

       all claims.

[25]   On October 8, 2014, before the trial court had ruled on Rosario’s second

       motion for summary judgment, DiMaggio filed a notice to the trial court. In

       the notice, DiMaggio contended that since First Midwest Bank had been paid

       in full, there were no creditors to be protected by way of requiring the action to

       be brought as a derivative action. In DiMaggio’s affidavit, which accompanied

       his notice, DiMaggio revealed that he was also released from any liability on his

       personal guaranty of the note and mortgage. On or about October 15, 2014,

       Court of Appeals of Indiana | Opinion 64A03-1505-PL-466 | April 7, 2016   Page 10 of 22
       Rosario filed a response to DiMaggio’s notice and requested a status

       conference. Apparently, before receiving and considering Rosario’s response,

       the trial court entered an order denying Rosario’s second motion for summary

       judgment dated October 17, 2014.

[26]   On October 24, 2014, Rosario filed a motion to reconsider the trial court’s

       October 17, 2014 order denying his motion for summary judgment, noting that

       the trial court made no reference to receipt and consideration of Rosario’s

       response to the notice. To his motion, Rosario attached a copy of his response,

       which included additional exhibits regarding the transactions that occurred in

       resolving the foreclosure action in the federal district court. Rosario challenged

       DiMaggio’s contention that there were no creditors in need of protection by

       way of bringing the claims in a derivative action. Rosario alleged that after the

       transactions were completed, Galleria owed Set Indiana 1 LLC $1,980,000.00,

       a debt that would mature in May of 2016. Rosario argued that since he and

       DiMaggio sold all of their stock to Set Galleria, Galleria’s debt transferred to

       Set Galleria by operation of law. Rosario also argued that because all of the

       shares of Galleria were sold to Set Galleria, DiMaggio no longer had standing

       to sue.

[27]   On November 14, 2014, the trial court granted Rosario’s motion to reconsider

       and vacated its prior October 17, 2014 order. Rosario was permitted to

       supplement his second motion for summary judgment and DiMaggio was given

       time in which to respond thereto. After conducting a hearing on February 13,

       Court of Appeals of Indiana | Opinion 64A03-1505-PL-466 | April 7, 2016   Page 11 of 22
       2015, the trial court granted Rosario’s second motion for summary judgment on

       April 23, 2015.

[28]   With respect to DiMaggio’s allegation of breach of oral contract, the trial court

       found that there was nothing more than a discussion and not an oral contract

       between Rosario and DiMaggio prior to incorporation; that DiMaggio failed to

       identify the duties of each party to the alleged oral contract; and, that he failed

       to identify consideration for the alleged oral contract. With respect to the

       counts alleging breach of fiduciary duty and usurpation of corporate

       opportunity, the trial court found that the claims were derivative because the

       alleged harm was to Galleria, the corporation. The trial court found that

       allowing DiMaggio, a former shareholder, to pursue a damages claim against

       Rosario, the other former shareholder, would permit an unfair distribution of

       recovery rightly belonging to Galleria, if at all. The trial court denied

       DiMaggio’s motion to correct error and this appeal ensued.

                                      Discussion and Decision
                                            Standard of Review
[29]   DiMaggio challenges the trial court’s order granting Rosario’s second motion

       for summary judgment on DiMaggio’s claims against Rosario. We first observe

       that a trial court’s order granting summary judgment comes to us “cloaked with

       a presumption of validity.” Town of Lapel v. City of Anderson, 17 N.E.3d 330, 332

       (Ind. Ct. App. 2014) (quoting Altevogt v. Brand, 963 N.E.2d 1146, 1150 (Ind. Ct.

       App. 2012)). On appellate review of the trial court’s order, we, like the trial

       Court of Appeals of Indiana | Opinion 64A03-1505-PL-466 | April 7, 2016     Page 12 of 22
       court, construe all facts and reasonable inferences in favor of the non-moving

       party to determine whether the moving party has shown, by way of designated

       evidence, that there is no genuine issue as to any material fact, such that it is

       entitled to judgment as a matter of law. Id. Where the dispute is one of law

       rather than fact, however, we apply a de novo standard of review to those

       materials designated to the trial court for summary judgment. Id. A trial court

       that enters factual findings and legal conclusions in its order on summary

       judgment assists our review by providing reasons for its decision. Id. However,

       we are not bound by them and “must affirm the trial court’s entry of summary

       judgment if it can be sustained on any theory or basis in the record.” Id.

[30]   Our Supreme Court has set forth the appropriate standard of review as follows:

               We review summary judgment de novo, applying the same
               standard as the trial court: “Drawing all reasonable inferences in
               favor of . . . the non-moving parties, summary judgment is
               appropriate ‘if the designated evidentiary matter shows that there
               is no genuine issue as to any material fact and that the moving
               party is entitled to judgment as a matter of law.’” Williams v.
               Tharp, 914 N.E.2d 756, 761 (Ind. 2009) (quoting T.R. 56(C)). “A
               fact is ‘material’ if its resolution would affect the outcome of the
               case, and an issue is ‘genuine’ if a trier of fact is required to
               resolve the parties’ differing accounts of the truth, or if the
               undisputed material facts support conflicting reasonable
               inferences.” Id. (internal citations omitted).
               The initial burden is on the summary-judgment movant to
               “demonstrate [ ] the absence of any genuine issue of fact as to a
               determinative issue,” at which point the burden shifts to the non-
               movant to “come forward with contrary evidence” showing an
               issue for the trier of fact. Id. at 761-62 (internal quotation marks
               and substitution omitted). And “[a]lthough the non-moving
       Court of Appeals of Indiana | Opinion 64A03-1505-PL-466 | April 7, 2016   Page 13 of 22
               party has the burden on appeal of persuading us that the grant of
               summary judgment was erroneous, we carefully assess the trial
               court’s decision to ensure that he was not improperly denied his
               day in court.” McSwane v. Bloomington Hosp. & Healthcare Sys.,
               916 N.E.2d 906, 909-10 (Ind. 2009) (internal quotation marks
               omitted).
               ....
               Even though Indiana Trial Rule 56 is nearly identical to Federal
               Rule of Civil Procedure 56, we have long recognized that
               “Indiana’s summary judgment procedure . . . diverges from
               federal summary judgment practice.” Jarboe v. Landmark Cmty.
               Newspapers of Ind., Inc., 644 N.E.2d 118, 123 (Ind. 1994). In
               particular, while federal practice permits the moving party to
               merely show that the party carrying the burden of proof lacks
               evidence on a necessary element, we impose a more onerous
               burden: to affirmatively “negate an opponent’s claim.” Id. Our
               choice to heighten the summary judgment burden has been
               criticized because it may let summary judgment be precluded by
               as little as a non-movant’s “mere designation of a self-serving
               affidavit.” E.g., Deuitch v. Fleming, 746 N.E.2d 993, 999-1000
               (Ind. Ct. App. 2001), trans. denied.
       Hughley v. State, 15 N.E.3d 1000, 1003-04 (Ind. 2014).

                                      I. Breach of Oral Contract
[31]   DiMaggio argues that the trial court erred by concluding that Rosario did not

       breach an oral contract. In reaching that conclusion, the trial court stated as

       follows:

               In reviewing the record and briefs, there is nothing to indicate
               that, if true, this agreement was anything more than mere
               discussion between [DiMaggio] and [Rosario] prior to
               incorporation and getting the project underway. There is no
               evidence that this discussion was a legally binding contract. Not

       Court of Appeals of Indiana | Opinion 64A03-1505-PL-466 | April 7, 2016   Page 14 of 22
               only has [DiMaggio] not identified the duties of each party to the
               alleged oral contract, but also, no consideration has yet been
               identified. Thus, this Court concludes that it is not a contract
               between the parties, and was merely a discussion between the
               parties.
       Appellant’s App. pp. 28-29.

[32]   “Contracts are formed when parties exchange an offer and acceptance.” Kelly v.

       Levandoski, 825 N.E.2d 850, 857 (Ind. Ct. App. 2005), trans. denied. Oral

       contracts exist when the parties agree to all of the terms of the contract. Id. If

       there is no agreement on one essential term of the contract, then there is no

       mutual assent, and, thus, no contract. Id. “A meeting of the minds of the

       contracting parties, having the same intent, is essential to the formation of a

       contract.” Id. Whether the facts presented establish the existence of a contract

       is a question of law. Id.

[33]   Here, the facts presented to the trial court established that an oral contract

       existed between DiMaggio and Rosario with respect to the creation and

       purpose of Galleria. Among the designated materials is the certificate of

       incorporation for Galleria issued by the Indiana Secretary of State on December

       19, 1997. The articles of incorporation name Rosario as the registered agent

       and he and DiMaggio are listed as the incorporators. Galleria stock certificates

       reflected that Rosario held six hundred shares while DiMaggio held four

       hundred shares. In his complaint, DiMaggio set forth that he was to contribute

       his expertise in marketing, sales, and leasing of the property, while Rosario was

       to contribute his expertise in the build-out of the tenant spaces. The first phase

       Court of Appeals of Indiana | Opinion 64A03-1505-PL-466 | April 7, 2016   Page 15 of 22
       of the mixed-used retail and office building was completed in 2000.

       Additionally, DiMaggio designated documentation of his and Rosario’s

       estimate of projected income for the years 2000 to 2009. We conclude that the

       designated evidence, in addition to the undisputed facts, established that the

       parties had engaged in an ongoing business venture for several years which

       supports the existence of an oral contract.

[34]   The statute of limitation for actions based on an oral contract is six years after

       the cause of action accrues. Ind. Code § 34-11-2-7(a) (1998). Under the

       discovery rule, a cause of action accrues and the statute of limitation begins to

       run when the plaintiff knew or, in the exercise of ordinary diligence, could have

       discovered that an injury had been sustained as a result of the tortious act of

       another. Custom Radio Corp. v. Actuaries & Benefit Consultants, Inc., 998 N.E.2d

       263, 268 (Ind. Ct. App. 2013). The rule applies to both tort and contract

       claims. Id.

[35]   Our discussion does not end there, however. Galleria was also a closely-held

       corporation. “Indiana courts have characterized closely-held corporations as

       ‘incorporated partnerships’ and as such have imposed a fiduciary duty upon

       shareholding ‘partners’ to deal fairly not only with the corporation but with

       fellow shareholders as well.” Melrose v. Capitol City Motor Lodge, Inc., 705

       N.E.2d 985, 991 (Ind. 1998).

[36]   Under the Uniform Partnership Act, a partnership may be dissolved when there

       is a “change in the relation of the partners caused by any partner ceasing to be

       Court of Appeals of Indiana | Opinion 64A03-1505-PL-466 | April 7, 2016   Page 16 of 22
       associated in the carrying on as distinguished from the winding up of the

       business.” Ind. Code § 23-4-1-29 (1997). Among the ways in which a

       partnership may be dissolved is withdrawal by a partner or abandonment. See,

       e.g., Ford v. Lafayette Life Ins. Co., 362 F.2d 970 (D.C.Cir. 1966) (applying

       Indiana law finding dissolution of partnership where one of two partners

       withdrew); Marksill Specialities, Inc. v. Barger, 428 N.E.2d 65 (Ind. Ct. App. 1981)

       (finding abandonment by one of two partners effected a dissolution). This
                                                         2
       stands in contrast with corporations, where a corporation’s board of directors

       may propose dissolution for submission to the shareholders and the attendant

       notice of dissolution upon adoption by the requisite number of votes. Ind.

       Code §§ 23-1-45-2 (2002); 23-1-45-7 (1990).

[37]   Here, there are multiple references in the designated materials to Rosario’s

       abandonment of Galleria’s business endeavors. Indeed, DiMaggio’s complaint

       alleges damages due to Rosario’s non-participation beginning very early in

       2002. We have stated the following about the law of abandonment:

                The abandonment of a contract is a matter of intention to be
                ascertained from the facts and circumstances surrounding the
                transaction from which the abandonment is claimed to have
                resulted. An abandonment of a contract need not be express but
                may be inferred from the conduct of the parties and attendant
                circumstances. A contract will be treated as abandoned when the acts

       2
        “Dissolution of partnerships differs from dissolution of corporations. The term refers to the end of the
       existence of the entity in the case of corporations. Under the IUPA, dissolution does not terminate the
       authority of partners for purposes of winding up partnership affairs or completing partnership transactions.”
       Paul J. Galanti, 17 Ind. Prac., Business Organizations § 6.2.

       Court of Appeals of Indiana | Opinion 64A03-1505-PL-466 | April 7, 2016                          Page 17 of 22
               of one party, inconsistent with the existence of the contract, are acquiesced
               in by the other party.
               Abandonment of a contract is a mixed question of law and fact;
               what constitutes an abandonment is a question of law; and
               whether there has been an abandonment is a question of fact.
       Baker v. Estate of Seat, 611 N.E.2d 149, 152 (Ind. Ct. App. 1993).

[38]   Here, the facts establish, according to DiMaggio, that Rosario notified him

       before March 9, 2002, via written letter, that he was abandoning Galleria.

       Although DiMaggio wanted Rosario to remain with Galleria, there is no

       evidence that Rosario ever actively participated in the business operation of

       Galleria or repudiated his intention of abandoning the business venture of

       Galleria after sending the abandonment letter. Thereafter, DiMaggio solely

       continued to operate Galleria. We note that the oral contract was breached in

       early 2002; and, indisputably on or before March 9, 2002. The damages

       claimed by DiMaggio are alleged to have occurred after Rosario’s

       abandonment and DiMaggio’s acquiescence. Rosario acted consistently with

       abandonment and inconsistently with the terms of the contract. The evidence

       established that Rosario’s conduct after March 2002 was consistent with

       someone who had abandoned a business venture.

[39]   Furthermore, the statute of limitation for the breach of an oral contract is six

       years. Ind. Code § 34-11-2-7(a). The statute of limitation commences to run

       when the plaintiff knew or with the exercise of ordinary diligence could have

       discovered that an injury had been sustained. Custom Radio Corp., 998 N.E.2d

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       at 268. DiMaggio filed his lawsuit on March 26, 2008, beyond the expiration of

       the statute of limitation.

          II. Breach of Fiduciary Duty and Usurpation of Corporate
                                 Opportunity
[40]   DiMaggio also alleged that Rosario breached a fiduciary duty by failing to

       present the Liberty Lakes residential real estate opportunity to him and Galleria

       before choosing to pursue it with Nebel and Haak and by failing to lend his

       expertise to Galleria. DiMaggio brought this claim as a direct action. The trial

       court granted summary judgment in favor of Rosario after concluding that these

       claims were derivative in nature.

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

       corporation.’” G & N Aircraft, Inc. v. Boehm, 743 N.E.2d 227, 234 (Ind. 2001)

       (quoting Black’s Law Dictionary 472 (7th ed. 1999)). With respect to direct

       actions they are “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.” Id.

[42]   With respect to derivative actions, they 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.” Id. (quoting Black’s at 455).

       Derivative actions are those brought in the name of the corporation. Id. In

       order to bring a derivative action, a shareholder must satisfy the following four

       requirements: (1) the complaint must be verified; (2) the plaintiff must have

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       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. Id. Cited examples of

       actions required to be brought by derivative action include actions to recover for

       loss of a corporate opportunity, recover corporate waste, and to recover

       damages to a corporation caused by an officer or director’s self-dealing. Id.

[43]   Although this is the general rule, courts on appeal have acknowledged that the

       above may not apply in the case of closely-held corporations. As adopted by

       our Supreme Court, the American Law Institute proposed a rule applying to

       closely-held corporations, which is as follows:

               In the case of a closely held corporation, the court in its
               discretion may treat an action raising derivative claims as a direct
               action, exempt it from those restrictions and defenses applicable
               only to derivative actions, and order an individual recovery, if it
               finds that to do so will not (i) unfairly expose the corporation or
               the defendants to a multiplicity of actions, (ii) materially
               prejudice the interests of creditors of the corporation, or (iii)
               interfere with a fair distribution of the recovery among all
               interested persons.
       Barth v. Barth, 659 N.E.2d 559, 562 (Ind. 1995) (quoting A.L.I., Principles of

       Corporate Governance § 7.01(d)).

[44]   Shareholders in a closely-held corporation stand in a fiduciary relationship to

       each other, such that they must deal fairly, honestly, and openly with the

       corporation and with their fellow shareholders. Id. at 561. A shareholder in a

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       closely-held corporation has a fiduciary duty not to appropriate to his own use a

       business opportunity that in equity and fairness belongs to the corporation.

       McLinden v. Coco, 765 N.E.2d 606, 615 (Ind. Ct. App. 2002). DiMaggio argues

       that Rosario breached the fiduciary relationship by failing to present the Liberty

       Lakes residential development opportunity to Galleria and by failing to

       participate in Galleria’s business.

[45]   An action for breach of fiduciary duty must be commenced within two years

       after the cause of action accrues. Ind. Code § 34-11-2-4 (2013). “Under

       Indiana’s discovery rule, a cause of action accrues, and the statute of limitation

       begins to run, when the plaintiff knew or in the exercise of ordinary diligence

       could have discovered that an injury had been sustained as a result of the

       tortious act of another.” Del Vecchio v. Conseco, Inc., 788 N.E.2d 446, 449 (Ind.

       Ct. App. 2003).

[46]   As stated earlier, according to DiMaggio, in early 2002 Rosario sent an

       abandonment letter to him regarding the Galleria business venture. DiMaggio

       felt certain that as of March 9, 2002, Rosario was committed to abandoning

       Galleria. DiMaggio wanted an explanation, but none was forthcoming from

       Rosario. In his affidavit, DiMaggio acknowledges that he subsequently learned

       in late 2002 or early 2003 that Rosario was pursuing another business venture,

       i.e., the Liberty Lakes real estate development in Porter County. The two real

       estate business ventures differed in purpose—Galleria, development of mixed-

       use real estate; and, Liberty Lakes Estates, development of a subdivision

       consisting of residential home lots. However, assuming for the sake of

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       argument that Rosario owed a fiduciary duty to DiMaggio when he was

       pursuing the Liberty Lakes opportunity, the facts are undisputed that

       DiMaggio’s claims would be barred by the two-year statute of limitation

       because he did not file his complaint raising said claims until March 26, 2008,

       which is beyond the two-year statute of limitation.

[47]   Our resolution of these issues is not altered by the fact that Rosario still held his

       600 shares of stock in Galleria after he abandoned the enterprise, or that he later

       sold the shares to Set Galleria. The sale of shares was consistent with a

       winding up of Galleria’s business and not inconsistent with Rosario’s

       abandonment of the enterprise. Additionally, Liberty Lakes was a subdivision

       consisting of thirty-eight residential lots in Porter County unlike the mixed-use

       retail and office real estate development in Lake County. We conclude that the

       trial court correctly granted summary judgment in favor of Rosario, albeit on

       other grounds.

[48]   Because of our resolution of the issues presented on appeal, we need not

       address Rosario’s cross-appeal issue.

                                                  Conclusion
[49]   In light of the foregoing, we affirm the trial court’s judgment.

       Riley, J., and Brown, J., concur.

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