Court Opinion

ID: 4168643
Source: CourtListenerOpinion
Date Created: 2017-05-16 16:10:01.492096+00
Date Added: 2024-06-11T13:58:14.269759
License: Public Domain

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be                              FILED
regarded as precedent or cited before any                     May 16 2017, 8:11 am
court except for the purpose of establishing
                                                                   CLERK
the defense of res judicata, collateral                        Indiana Supreme Court
                                                                  Court of Appeals
estoppel, or the law of the case.                                   and Tax Court

ATTORNEYS FOR APPELLANT                                 ATTORNEY FOR APPELLEE
James F. Guilfoyle                                      W. Brian Burnette
Larry O. Wilder                                         Applegate Fifer Pulliam LLC
Jeffersonville, Indiana                                 Jeffersonville, Indiana

                                          IN THE
    COURT OF APPEALS OF INDIANA

Jason Wooldridge,                                       May 16, 2017
Appellant-Defendant,                                    Court of Appeals Case No.
                                                        72A01-1608-MF-2018
        v.                                              Appeal from the Scott Circuit
                                                        Court
Sellersburg Properties, LLC,                            The Honorable Roger L. Duvall,
Appellee-Plaintiff                                      Judge
                                                        Trial Court Cause No.
                                                        72C01-1601-MF-2

Baker, Judge.

Court of Appeals of Indiana | Memorandum Decision 72A01-1608-MF-2018 | May 16, 2017     Page 1 of 6
[1]   Sellersburg Properties, LLC (Sellersburg), filed a complaint against Jason

      Wooldridge seeking payment on a promissory note for which Wooldridge had

      executed a personal guarantee. The trial court granted summary judgment in

      Sellersburg’s favor, and Wooldridge now appeals. Finding no error, we affirm

      and remand for further proceedings.

                                                    Facts
[2]   WAG Development, LLC (WAG), is a closely held company that is owned by

      three members: (1) Sellersburg, which is owned by William Galligan (William)

      and Charles Galligan (Charles); (2) Wooldridge Homes, Inc., which is owned

      by Wooldridge; and (3) Thomas Galligan (Thomas).

[3]   In May 2011, WAG executed a promissory note (the Note) in the principal

      amount of $360,931.38 in favor of MainSource Bank. Payment of the

      promissory note was secured by, among other things, a mortgage on real estate

      owned by WAG and personal guarantees executed by Wooldridge, William,

      Charles, Thomas, and Ann Marie Kempf. Each personal guarantee jointly and

      severally guaranteed payment of all sums due under the Note in the event of

      default. At some point, the WAG venture failed without paying the Note.

[4]   On October 12, 2012, Sellersburg purchased the Note, the mortgage, the

      guarantees, and all other loan documents, along with the underlying debt, from

      MainSource Bank. The maturity date on the Note passed without the debt

      being paid. Consequently, the Note went into default and the balance of the

      Note became immediately due.

      Court of Appeals of Indiana | Memorandum Decision 72A01-1608-MF-2018 | May 16, 2017   Page 2 of 6
[5]   On January 25, 2016, Sellersburg filed a complaint against WAG and

      Wooldridge to collect on the Note and foreclose on the mortgage.1 Wooldridge

      filed an answer, counter-claim, and a third-party complaint against his co-

      guarantors for contribution and other claims. On April 5, 2015, Sellersburg

      filed a motion for summary judgment. Following briefing and a hearing, on

      August 2, 2016, the trial court granted Sellersburg’s motion. Among other

      things, the trial court’s order: (1) foreclosed on the mortgage and ordered the

      sale of WAG’s real estate; (2) found Wooldridge and WAG jointly and

      severally liable for a monetary judgment in the amount of $553,927.79 (the

      principal balance of the Note plus accrued interest), plus prejudgment and

      postjudgment interest. Wooldridge now appeals

                                       Discussion and Decision
[6]   Our standard of review on summary judgment is well established:

                 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

      1
          WAG did not file a responsive pleading or enter an appearance in the underlying lawsuit.

      Court of Appeals of Indiana | Memorandum Decision 72A01-1608-MF-2018 | May 16, 2017            Page 3 of 6
              undisputed material facts support conflicting reasonable
              inferences.” Id. (internal citations omitted).

      Hughley v. State, 15 N.E.3d 1000, 1003 (Ind. 2014).

[7]   Wooldridge does not dispute that a debt is owed, that the amount of debt

      alleged is correct, or that he owes a share of that debt. Instead, he argues that

      Sellersburg, despite being the owner of the debt, cannot pursue the balance

      against Wooldridge because Sellersburg, by and through its owners, is a co-

      guarantor of Wooldridge. We cannot agree. Sellersburg is a separate corporate

      entity. There is no evidence in the record remotely providing a basis to find

      that Sellersburg’s corporate status is in any way invalid or a legal fiction.

      Sellersburg is a valid holder of the Note and is entitled to enforce it; Sellersburg

      is not a guarantor of the Note; Wooldridge is a personal guarantor of the Note

      and is required to stand by that guarantee.

[8]   Wooldridge also argues that as co-members of WAG, Sellersburg owes him

      fiduciary duties that it has breached. See Rapkin Grp., Inc. v. Cardinal Ventures,

      Inc., 29 N.E.3d 752, 757 (Ind. Ct. App. 2015) (noting that LLC members owe

      fiduciary duties to one another). We cannot agree, however, because in 2008,

      Wooldridge assigned his membership in WAG to a corporate entity—

      Wooldridge Homes, Inc. Therefore, while Sellersburg may owe fiduciary

      duties to Wooldridge Homes, Inc., it owes no fiduciary duties to Wooldridge

      himself.

      Court of Appeals of Indiana | Memorandum Decision 72A01-1608-MF-2018 | May 16, 2017   Page 4 of 6
[9]    Even if Sellersburg owed fiduciary duties to Wooldridge, we note that in the

       context of a limited liability company, a claimant arguing breach of fiduciary

       duty must show recklessness or willful misconduct on the part of the fiduciary.

       Id. (noting that a breach of fiduciary duty occurs when an LLC member fails to

       deal fairly, honestly, and openly with his company or fellow members). Here,

       when it became apparent that WAG was unable to satisfy its debt to

       MainSource, Sellersburg stepped forward and bought the debt. There is no

       evidence that Sellersburg in any way manipulated the situation or failed to deal

       fairly, honestly, and openly with Wooldridge.

[10]   And in any event, Wooldridge was not harmed by Sellersburg’s actions, as

       there is no dispute that he is a personal guarantor of the Note and is and has

       always been secondarily liable for the balance of the debt. See id. (noting that to

       prevail on a breach of fiduciary duty claim, the claimant must establish harm).

       Had Sellersburg not purchased the Note, Wooldridge would have been liable to

       MainSource. That he is liable to Sellersburg instead does not establish that he

       suffered harm as a result of Sellersburg’s actions. Consequently, his claim for

       breach of fiduciary duty is unavailing.

[11]   We understand Wooldridge’s frustration that, at the moment, he is the only one

       of five personal guarantors of the Note who is on the hook to pay the debt. But

       his third-party complaint against those individuals for contribution, among

       other claims, remains in the trial court. That is the most appropriate way for

       Wooldridge to seek relief from his co-guarantors.

       Court of Appeals of Indiana | Memorandum Decision 72A01-1608-MF-2018 | May 16, 2017   Page 5 of 6
[12]   In sum, it is undisputed that Sellersburg owns the Note and that Wooldridge is

       a personal guarantor of the Note. He neither disputes those facts nor the

       amount of the judgment entered by the trial court. As a result, the trial court

       properly granted summary judgment in Sellersburg’s favor.

[13]   The judgment of the trial court is affirmed and remanded for further

       proceedings.

       Robb, J., and Barnes, J., concur.

       Court of Appeals of Indiana | Memorandum Decision 72A01-1608-MF-2018 | May 16, 2017   Page 6 of 6