Court Opinion

ID: 9905489
Source: CourtListenerOpinion
Date Created: 2023-11-29 17:04:53.175664+00
Date Added: 2024-06-11T09:23:41.596963
License: Public Domain

FILED
                                                                       Nov 29 2023, 9:17 am

                                                                           CLERK
                                                                       Indiana Supreme Court
                                                                          Court of Appeals
                                                                            and Tax Court

ATTORNEYS FOR APPELLANTS                                  ATTORNEYS FOR APPELLEE
James J. O’Connor, Jr.                                    Mark R. McKinney
Carta H. Robison                                          Vincent Walker
Barrett McNagny LLP                                       McKinney & Company Law
Fort Wayne, Indiana                                       Muncie, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

Anthony A. Brummett, Cheers,                              November 29, 2023
Inc., Terry Lee Orrick, and John                          Court of Appeals Case No.
Doe,                                                      23A-CT-683
Appellants-Defendants,                                    Appeal from the Delaware Circuit
                                                          Court
        v.                                                The Honorable John M. Feick,
                                                          Judge
Brian Bailey,                                             Timothy R. Hollems, Master
Appellee-Plaintiff.                                       Commissioner
                                                          Trial Court Cause No.
                                                          18C04-2112-CT-150

                                 Opinion by Judge Brown
                             Judges Vaidik and Bradford concur.

Brown, Judge.

Court of Appeals of Indiana | Opinion 23A-CT-683 | November 29, 2023                           Page 1 of 12
[1]   Anthony A. Brummett, Cheers, Inc., (“Cheers”), and Terry Lee Orrick

      (collectively, “Appellants”) 1 appeal the trial court’s interlocutory order denying

      their motion for summary judgment. We reverse.

      Facts and Procedural History

[2]   On the evening of January 4, 2020, into the early morning of January 5, 2020,

      Brian Bailey, Lauren Segura, and Nelson Segura were at Cheers, a bar located

      in Muncie, Indiana. While seated at the bar, Bailey grabbed Lauren between

      her thighs, Nelson responded by grabbing him by his shirtfront and pushing

      him off his bar stool, and Bailey fell to the ground.

[3]   On December 26, 2021, Bailey filed a complaint claiming that Nelson

      “perpetrated an assault” against him. Appellants’ Appendix Volume II at 12.

      The complaint also alleged Appellants were “willfully negligent, wantonly

      reckless and grossly negligent because of their or their employees’ acts, failures

      to act, and/or refusal to help [Bailey] on the night of the incident.” Id. at 13.

[4]   On August 23, 2022, Appellants moved for summary judgment asserting that

      the individual defendants were not liable and Cheers did not owe a duty to

      Bailey to protect him from the unforeseeable act of a third party. The

      designated evidence included Lauren and Nelson’s depositions, an affidavit by

      Brummett, and two surveillance video recordings of the incident. Brummett’s

      1
          John Doe, later identified as Nelson Segura, did not join in the motion for summary judgment.

      Court of Appeals of Indiana | Opinion 23A-CT-683 | November 29, 2023                                Page 2 of 12
      affidavit stated that he controls all shares of Cheers through purchase and

      assignment, he is purchasing Cheers, “all furnishings, fixtures, equipment,

      merchandise, inventory, furniture, supplies, Indiana Alcoholic Beverage Permit

      No. RR18-07633, and all other personal property related to the operation” and

      the associated real estate “on land contract, whereby Orrick financed the

      purchase and [he] make[s] monthly installment payments to Orrick beginning

      May 1, 2011, pursuant to the terms and conditions of that certain Promissory

      Note dated March 18, 2011.” Id. at 44. He operates Cheers as manager

      “pursuant to the Management Agreement,” he is “responsible for the operation

      and control of the assets of [Cheers],” “[a]s a shareholder of [Cheers], [he does]

      not operate [it] in [his] personal capacity,” and Cheers “operates as an

      independent business structure and observes the corporate formalities.” Id. at

      45. On November 20, 2022, Bailey filed a response.

[5]   On January 27, 2023, the trial court issued an Order Denying Defendant’s [sic]

      Motion for Summary Judgment, finding that “[g]iven that a potentially unjust

      or illegal act occurred on the property of [Cheers] and Brummett is the bar

      manager, summary judgment on this issue is inappropriate,” Nelson had

      worked for Brummett’s Plumbing for about ten years, foreseeability is a fact-

      specific inquiry, and whether Cheers timely intervened was a question of fact

      for the fact finder. Id. at 9-10.

      Discussion

[6]   Appellants argue there is no genuine issue of material fact which supports

      piercing the corporate veil and holding Brummett and Orrick liable or finding
      Court of Appeals of Indiana | Opinion 23A-CT-683 | November 29, 2023       Page 3 of 12
      that Cheers had a duty to care for Bailey because the actions of Nelson were not

      foreseeable. They claim the trial court “erred by focusing on facts that were

      immaterial in the analysis for determining whether a landowner has a duty to

      protect an invitee from criminal acts of a third party.” Appellants’ Brief at 11.

      Appellants further contend that Bailey did not present evidence establishing that

      Cheers owed him a duty to prevent the exacerbation of his injuries. Bailey

      argues that piercing the corporate veil is a fact-intensive inquiry best left to the

      finder of fact and that “there exists a genuine dispute of material fact regarding

      whether the corporation was used to promote fraud, injustice, or illegal

      activity.” Appellee’s Brief at 9. He claims the acts were foreseeable and that

      Appellants had a duty to prevent further injury because they knew Bailey was

      injured.

[7]   We review an order for summary judgment de novo, applying the same standard

      as the trial court. Hughley v. State, 15 N.E.2d 1000, 1003 (Ind. 2014). The

      moving party bears the initial burden of making a prima facia showing that

      there are no genuine issues of material fact and that it is entitled to judgment as

      a matter of law. Manley v. Sherer, 992 N.E.2d 670, 673 (Ind. 2013). Summary

      judgment is improper if the party fails to carry its burden, but if it succeeds, then

      the nonmoving party must come forward with evidence establishing the

      existence of the genuine issue of material fact. Id. We construe all factual

      inferences in favor of the nonmoving party and resolve all doubts as to the

      existence of a material issue against the moving party. Id. Our review of a

      summary judgment motion is limited to those materials designated to the trial

      Court of Appeals of Indiana | Opinion 23A-CT-683 | November 29, 2023        Page 4 of 12
      court. Mangold ex rel. Mangold v. Ind. Dep’t of Nat. Res., 756 N.E.2d 970, 973

      (Ind. 2001).

[8]   Generally, a shareholder is not personally liable for the acts of the corporation.

      Aronson v. Price, 644 N.E.2d 864, 867 (Ind. 1994) (citation omitted). “While an

      Indiana court will impose personal liability to protect innocent third parties

      from fraud or injustice, the burden is on the party seeking to pierce the

      corporate veil to prove that the corporate form was so ignored, controlled or

      manipulated that it was merely the instrumentality of another and that the

      misuse of the corporate form would constitute a fraud or promote injustice.”

      Id. (citing Winkler v. V.G. Reed & Sons, Inc., 638 N.E.2d 1228, 1232 (Ind. 1994)).

      “When a corporation is functioning as an alter ego or a mere instrumentality of

      an individual or another corporation, it may be appropriate to disregard the

      corporate form and pierce the veil.” Blackwell v. Superior Safe Rooms LLC, 174

      N.E.3d 1082, 1092 (Ind. Ct. App. 2021).

              “While no one talismanic fact will justify with impunity piercing
              the corporate veil, a careful review of the entire relationship
              between various corporate entities, their directors and officers
              may reveal that such an equitable action is warranted.” Stacey–
              Rand, Inc. v. J.J. Holman, Inc., 527 N.E.2d 726, 728 (Ind. Ct. App.
              1988). When determining whether a shareholder is liable for
              corporate acts, our considerations may include: (1)
              undercapitalization of the corporation, (2) the absence of
              corporate records, (3) fraudulent representations by corporation
              shareholders or directors, (4) use of the corporation to promote
              fraud, injustice, or illegal activities, (5) payment by the
              corporation of individual obligations, (6) commingling of assets
              and affairs, (7) failure to observe required corporate formalities,

      Court of Appeals of Indiana | Opinion 23A-CT-683 | November 29, 2023        Page 5 of 12
              and (8) other shareholder acts or conduct ignoring, controlling,
              or manipulating the corporate form. Aronson, 644 N.E.2d at
              867. In addition, when “a plaintiff seeks to pierce the corporate
              veil in order to hold one corporation liable for another closely
              related corporation’s debt, the eight Aronson factors are not
              exclusive.” Oliver v. Pinnacle Homes, Inc., 769 N.E.2d 1188, 1192
              (Ind. Ct. App. 2002), trans. denied. Additional factors to be
              considered include whether: “(1) similar corporate names were
              used; (2) the corporations shared common principal corporate
              officers, directors, and employees; (3) the business purposes of
              the [organizations] were similar; and (4) the corporations were
              located in the same offices and used the same telephone numbers
              and business cards.” Id. (footnote omitted).

                                                    *****

              Piercing the corporate veil involves a highly fact-sensitive inquiry
              that is not typically appropriate for summary disposition.

      Reed v. Reid, 980 N.E.2d 277, 301-302 (Ind. 2012).

[9]   The designated evidence reveals that Brummett owned Cheers and was

      employed by Cheers as the bar manager. Orrick had sold Cheers to Brummett,

      and Brummett was still making monthly installment payments to Orrick in

      connection with the sale. Brummett’s affidavit also stated that he does not

      operate Cheers in a personal capacity and that Cheers “operates as an

      independent business structure and observes the corporate formalities.” Id. at

      45. The evidence does not demonstrate that Brummett or Orrick were present

      for the interaction between Bailey, Lauren, and Nelson. Nelson had previously

      installed cameras for Cheers and worked for Brummett for ten years doing

      Court of Appeals of Indiana | Opinion 23A-CT-683 | November 29, 2023       Page 6 of 12
       plumbing and construction. We cannot say, in light of the factors in Reed, that

       the designated evidence supports piercing the corporate veil.

[10]   To the extent Brummett argues that Cheers did not owe Bailey a duty of care

       because the attack was not foreseeable, we note that we recently discussed

       foreseeability in Singh v. Singh, 155 N.E.3d 1197 (Ind. Ct. App. 2020), which

       discussed the Indiana Supreme Court’s holding in Cavanaugh’s Sports Bar &

       Eatery, Lt. v. Porterfield, 140 N.E.3d 843 (Ind. 2020). Specifically, in Singh, we

       held:

               Landowners must “take reasonable precautions to protect
               invitees from foreseeable criminal attacks.” Rogers v. Martin, 63
               N.E.3d 316, 326 (Ind. 2016) (citation omitted). Ascertaining
               whether this duty extends to “the criminal act at issue,” Goodwin
               v. Yeakle’s Sports Bar & Grill, Inc., 62 N.E.3d 384, 389 (Ind. 2016),
               in a “particular scenario,” Rogers, 63 N.E.3d at 320, hinges on the
               foreseeability of the attack, requiring “a general threshold
               determination that involves an evaluation of (1) the broad type of
               plaintiff and (2) the broad type of harm,” id. at 325. When
               considering these categories, courts should determine whether
               the defendant knew or had reason to know of any present and
               specific circumstance that would cause a reasonable person to
               recognize the probability or likelihood of imminent harm.

               Under the criminal act at issue in this particular scenario,
               Cavanaugh’s owed no duty to protect its patron from the sudden
               parking lot brawl when no evidence shows that Cavanaugh’s
               knew the fight was impending. Because we continue to decline
               to impose a comprehensive “duty on proprietors to afford
               protection to their patrons” from unpredictable criminal
               attacks, Goodwin, 62 N.E.3d at 394, we reverse and remand.

                                                      *****

       Court of Appeals of Indiana | Opinion 23A-CT-683 | November 29, 2023       Page 7 of 12
        Further, the Court addressed evaluating the “broad class of
        plaintiff” and the “broad type of harm” in these cases and
        acknowledged that, when it did so in these cases,

                 a key factor is whether the landowners knew or had reason
                 to know about any present and specific circumstances that
                 would cause a reasonable person to recognize the
                 probability or likelihood of imminent harm. See Goodwin, 62
                 N.E.3d at 385 (noting that, just before the barroom
                 shooting, all the parties were separately “socializing” at
                 “the small establishment”); Rogers, 63 N.E.3d at
                 319 (remarking that the homeowner observed that her co-
                 host was, before attacking a house-party guest, “just ‘being
                 normal,’ and it was not obvious to her that he had ‘a buzz
                 going’” from drinking alcohol); id. (observing that, before
                 the guest was found dead outside her home, the
                 homeowner saw him “lying motionless on the basement
                 floor with his eyes closed”). If landowners had reason to
                 know of any imminent harm, that harm was, as a matter
                 of law, foreseeable in the duty context. See, e.g., id. at
                 327 (holding that it was foreseeable “that a house-party
                 guest who is injured on the premises could suffer from an
                 exacerbation of those injuries”). In the years since
                 Goodwin and Rogers, courts have thoughtfully applied this
                 framework, finding duty only when landowners had this
                 contemporaneous knowledge.

                                               *****

        The Court’s 3-2 majority opinion seems to instruct both
        narrowing the review of whether a duty is foreseeable and
        limiting when a duty is found to exist.

                 By pointing to police runs made to the bar during the year
                 before the quarrel, Porterfield improperly substitutes
                 evidence of the bar’s past raucousness for
                 contemporaneous knowledge of imminent harm. We

Court of Appeals of Indiana | Opinion 23A-CT-683 | November 29, 2023        Page 8 of 12
                 repeat, this type of historical evidence, while “appropriate
                 in evaluating foreseeability in the context of proximate
                 cause,” should play no role when we evaluate
                 “foreseeability as a component of duty.” Goodwin, 62
                 N.E.3d at 393. Considering prior reports of the bar’s
                 unruliness shifts our common law jurisprudence back into
                 a recently supplanted totality analysis and risks fabricating
                 a duty when harm is merely “sufficiently likely.” Id. at
                 392 (quotation omitted). A landowner’s present
                 knowledge, however, more conclusively elevates the
                 knowledge of risk to “some probability or likelihood of
                 harm,” id., allowing courts to continue to find a duty when
                 “reasonable persons would recognize it and agree that it
                 exists,” Rogers, 63 N.E.3d at 325.

        [Cavanaugh’s, 140 N.E.3d at 843-844].

        In a separate opinion in which Justice David joined, Justice Goff
        dissented and disagreed with adding new requirements to the
        foreseeability inquiry that “elevat[ed] the standard to impose a
        duty.” Cavanaugh’s, 140 N.E.3d at 844 (Goff, J., dissenting). He
        further observed that the “majority also relie[d] on the particular
        facts of this case” including “the lack of tension in the bar, noting
        that ‘for hours before the fracas, [the plaintiff] and his friend
        socialized with bartenders and had no animosity with any other
        customers.’” Id. at 846 (quoting majority op. at 843).
        Accordingly, it appears that, in practice, an examination of
        particular facts is necessary to fully resolve the question of duty at
        this stage and to properly apply Cavanaugh’s required
        “foreseeability as a component of duty” analysis. See 140 N.E.3d
        at 844 (majority op.).

Singh, 155 N.E.3d at 1204-1205, 1207-1208 (citing Cavanaugh’s, 140 N.E.3d at

837-838, 843-844) (footnote omitted).

Court of Appeals of Indiana | Opinion 23A-CT-683 | November 29, 2023        Page 9 of 12
[11]   The record reveals that Nelson had previously worked for Brummett for

       approximately ten years doing plumbing and construction work. The evidence

       does not demonstrate that Brummett was at Cheers on the night in question. A

       DJ was playing in the bar, in which there were “a bunch of people.”

       Appellants’ Appendix Volume II at 39. There were two staff members serving

       drinks at the bar, and the evidence does not demonstrate that they were familiar

       with Nelson. Bailey stated to Nelson that Bailey was drunk and “a pervert” to

       Nelson, and Nelson laughed off the statement and turned around because he

       did not wish to speak to Bailey. Id. at 40. Thirty to forty minutes later, Bailey

       grabbed Lauren between her legs, Nelson responded by grabbing Bailey’s

       shirtfront, Nelson pushed Bailey off the stool, and Bailey fell to the ground.

       Nelson pushed Bailey off the stool approximately fifteen seconds after Bailey

       grabbed Lauren. We cannot say that Appellants had notice of present and

       specific circumstances that would cause a reasonable person to recognize the

       risk of an imminent criminal act, or that Nelson pushing Bailey off a bar stool

       was foreseeable. See Cavanaugh’s, 140 N.E.3d at 843 (finding that Cavanaugh’s

       could not foresee a patron blinding another in a sudden parking lot fight

       because it had no reason to believe a fight would occur due to it occurring

       suddenly and without warning); Goodwin, 62 N.E.3d at 393-394

       (“although bars can often set the stage for rowdy behavior, we do not believe

       that bar owners routinely contemplate that one bar patron might suddenly

       shoot another. . . . But to impose a blanket duty on proprietors to afford

       protection to their patrons would make proprietors insurers of their patrons’

       safety which is contrary to the public policy of this state.”).
       Court of Appeals of Indiana | Opinion 23A-CT-683 | November 29, 2023    Page 10 of 12
[12]   With respect to Brummett’s argument that a question of fact does not exist as to

       whether Cheers staff had a duty to intervene to prevent further injury, we note

       that in Rogers v. Martin, the Indiana Supreme Court analyzed a homeowner’s

       duty to take precautions to prevent a co-host from fighting with and injuring a

       house-party guest separately from the homeowner’s duty to a social guest “to

       protect him from the exacerbation of an injury occurring in her home,” after

       finding him unconscious on her floor. 63 N.E.3d 316, 327 (Ind. 2016).

[13]   The designated evidence reveals that the staff of Cheers witnessed Bailey after

       he had been pushed to the floor. Lauren stated in her deposition that after

       Nelson grabbed Bailey, “he went down and, like, the whole crowd just went —

       everybody just, like, gathered. That’s all I know. I didn’t see what happened.”

       Appellants’ Appendix Volume II at 36. The video recording reveals that after

       Nelson pushed Bailey off the stool, Bailey lay on the floor, patrons at the bar

       gathered around Bailey, and two bartenders saw the commotion, looked over

       the bar counter at Bailey on the ground, and saw people checking on him.

       Exhibit D at 1:04, 1:28-1:35. One of the bartenders exited the frame and

       reappeared next to Bailey, either speaking with or examining him. Id. at 1:45-

       1:55. The other bartender exited the frame and similarly reappeared and can be

       seen either examining or speaking with Bailey. Id. at 2:10-2:45. Bailey

       designated no evidence in response to the motion for summary judgment.

       Because there is no designated evidence that Bailey suffered an injury, we

       cannot say that Appellants owed Bailey a duty to prevent further harm. See

       Rose v. Martin’s Super Markets LLC, 120 N.E.3d 234, 244 (Ind. Ct. App. 2019)

       Court of Appeals of Indiana | Opinion 23A-CT-683 | November 29, 2023    Page 11 of 12
       (holding grocery store had no duty to take action to prevent exacerbation of

       customer’s injuries where store had knowledge of active shooter but had no

       knowledge of customer’s injuries inflicted by shooter until it was too late to

       offer her assistance), trans. denied.

[14]   For the foregoing reasons, we reverse the trial court’s denial of Appellants’

       motion for summary judgment.

[15]   Reversed.

       Vaidik, J., and Bradford, J., concur.

       Court of Appeals of Indiana | Opinion 23A-CT-683 | November 29, 2023    Page 12 of 12