Court Opinion

ID: 3177455
Source: CourtListenerOpinion
Date Created: 2016-02-16 16:19:40.316064+00
Date Added: 2024-06-11T09:36:33.562773
License: Public Domain

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D), this
Memorandum Decision shall not be                                  Feb 16 2016, 8:10 am
regarded as precedent or cited before any
court except for the purpose of establishing
the defense of res judicata, collateral
estoppel, or the law of the case.

ATTORNEY FOR APPELLANT                                    ATTORNEY FOR APPELLEE
Michael W. Bosch                                          Cheyenne N. Riker
Highland, Indiana                                         Millbranth & Bush, LLC
                                                          Valparaiso, Indiana

                                           IN THE
    COURT OF APPEALS OF INDIANA

Angelo Cappas,                                           February 16, 2016
Appellant-Plaintiff,                                     Court of Appeals Case No.
                                                         45A03-1508-PL-1242
        v.                                               Appeal from the Lake Superior
                                                         Court
ThruPort Intermodal, LLC,                                The Honorable William E. Davis,
Appellee-Defendant.                                      Judge
                                                         Trial Court Cause No.
                                                         45D05-1409-PL-93

Brown, Judge.

Court of Appeals of Indiana | Memorandum Decision 45A03-1508-PL-1242| February 16, 2016   Page 1 of 13
[1]   Angelo Cappas appeals from the entry of summary judgment in favor of

      ThruPort Intermodal, LLC (“ThruPort”) and against him. We affirm.

                                         Facts and Procedural History

[2]   ThruPort is an Indiana limited liability company. On October 31, 2013, at

      which time Cappas had a membership interest in the company, ThruPort

      promised to repay Cappas the principal sum of $170,000 pursuant to a

      promissory note which stated that the principal plus accrued interest would be

      due and payable on or before March 1, 2014, and that the note may be

      extended up to sixty days by agreement of the parties.

[3]   At some point, Cappas sent a letter to J. Justin Murphy, CEO of ThruPort,

      which stated:

               I am writing to confirm that I am willing to withdraw as a
               member of the company and to surrender my 4400 units of
               membership back to the company to facilitate locating alternative
               financing for the project. Pursuant to Section 10.01(E)(4), I
               represent and warranty [sic] that the Disposition is made in
               accordance with all applicable laws and regulations (including
               security laws).
               I understand that a Special Meeting of the Members may be
               called in the immediate future concerning same.

      Appellant’s Appendix at 101.1

      1
       This letter is undated. In his affidavit, Murphy states he received the letter on April 13, 2014, the date of the
      special meeting of members.

      Court of Appeals of Indiana | Memorandum Decision 45A03-1508-PL-1242| February 16, 2016              Page 2 of 13
[4]   On April 13, 2014, a special meeting of the members of ThruPort was held at

      which the members were present or represented. At the meeting, the members

      voted to approve the transfer of Cappas’s units of membership back to the

      company and to accept his resignation. The minutes of the special meeting

      state:

               The special meeting of the members of ThruPort Intermodal,
               LLC an Indiana Limited Liability Company was called to order
               on Sunday, April 13, 2014 at 5:30 p.m. (C.S.T.) . . . by the
               Manager, J. Justin Murphy. Also present was Robert Parks,
               Member, Gino Burelli, Member, Angelo Cappas, Member, Tom
               Fife, Member, by Proxy (Angelo Cappas), and J. Justin Murphy,
               Member.
               J. Justin Murphy then reported that the special meeting had been
               called pursuant to a notice of meeting and/or waiver of notice
               thereof in accordance with the operating agreement. It was
               ordered that a copy of the notice and waiver of notice be
               appended to the minutes of the meeting. The members then
               unanimously elected J. Justin Murphy to act as Chairman of the
               meeting.
               Murphy called the meeting to order and advised the members
               that Angelo Cappas reported on March 17, 2014 that he was
               unable to provide project funding. Further, that Angelo Cappas
               was willing to withdraw as a Member of the Company and to
               surrender all of his units of membership back to the company for
               such reason in order to facilitate locating alternative financing.
               Notice by Angelo Cappas that he is willing to relinquish and
               transfer his units of membership back to the Company subject to
               approval of the remaining members. Discussion followed.
               Motion made by Robert Parks to approve Angelo Cappas’
               transfer of units of membership back to the Company and accept
               his resignation. Seconded by Gino Burelli. No questions on the
               motion. The vote was called. Yes: Angelo Cappas, Robert

      Court of Appeals of Indiana | Memorandum Decision 45A03-1508-PL-1242| February 16, 2016   Page 3 of 13
                 Parks, Gino Burelli, Tom Fife, by Proxy (Angelo Cappas), and J.
                 Justin Murphy. Nays: None. Motion passed.

      Id. at 75. The members of ThruPort executed a “Ratification” which stated:

      “We, the undersigned Members, or assignees thereof, have read these Minutes

      of the Special Meeting held on April 13, 2014 and do hereby approve, ratify and

      confirm all business transacted as reported herein.” Id. at 106.

[5]   Also on April 13, 2014,2 Cappas and ThruPort executed a handwritten

      agreement which provided:

                 Whereas, Angelo Cappas has agreed to extend repayment of a
                 certain promissory note, dated October 31, 2013;
                 Whereas, Gino Burelli and Robert Parks have executed a
                 Guaranty to induce Angelo Cappas to extend said loan;
                 Whereas, Angelo Cappas has requested if the [Shell land3] is
                 purchased that he [receive] his entire $170,000 loan from
                 [ThruPort] and that his money be returned in full before any
                 other debts or obligations of the company.
                 Now, Therefore[, ThruPort] agrees if the [Shell land] is financed
                 and purchased that Angelo Cappas shall receive his entire
                 $170,000 loan in full before any other debts or obligations.

      Id. at 81-82.

      2
       The date of the agreement in the record is illegible, but ThruPort’s counsel stated at the March 12, 2015
      hearing that the agreement was dated April 13, 2014.
      3
          These words appear to state “Shell land.” Appellant’s Appendix at 81-82.

      Court of Appeals of Indiana | Memorandum Decision 45A03-1508-PL-1242| February 16, 2016           Page 4 of 13
[6]   In an amended complaint filed with the court on November 6, 2014,4 under

      Count I Cappas requested a declaration that his withdrawal from ThruPort was

      improper under Ind. Code § 23-18-6-6.1;5 alleged that, if the withdrawal was

      proper, ThruPort violated the terms of Section 12 of ThruPort’s operating

      agreement and should purchase his membership interest in an amount which

      could reasonably be expected to be realized upon the sale of company property;

      and requested the court to direct ThruPort to re-issue his units to him. Under

      Count II, Cappas requested an order directing ThruPort to open its books to

      determine whether any debts or obligations had been paid and for an order

      directing ThruPort not to pay any creditors, vendors or anyone else until the

      October 31, 2013 promissory note has been paid in full.

[7]   Among other motions, Cappas and ThruPort filed cross-motions for summary

      judgment. The designated evidence includes portions of ThruPort’s operating

      agreement. Additionally, ThruPort’s designated evidence includes an affidavit

      of Murphy which states in part that he is the managing member of ThruPort;

      that on April 13, 2014, ThruPort was without any assets; that ThruPort did not

      pay Cappas for his units of interest in ThruPort because his units of interest

      4
       The initial complaint, filed on September 5, 2014, according to the chronological case summary, is not
      included in the record. The court later denied a motion by Cappas to file a second amended complaint.
      5
          Ind. Code § 23-18-6-6.1 provides in part:

                 Unless otherwise provided in a written operating agreement, a member may not
                 withdraw from a limited liability company before the dissolution and winding up of the
                 limited liability company. A member may withdraw from a limited liability company
                 only at the time or upon the occurrence of events specified in the operating agreement
                 and in accordance with the operating agreement.

      Court of Appeals of Indiana | Memorandum Decision 45A03-1508-PL-1242| February 16, 2016             Page 5 of 13
      were without value at the time of Cappas’s transfer of the same to ThruPort;

      that on April 13, 2014, the only figures on the balance sheet of ThruPort were

      liabilities, which were in the form of expenses owed for consulting services and

      matters collateral to ThruPort operations; and that, while Cappas was a

      Member of ThruPort, Cappas received copies of ThruPort’s records and, since

      withdrawing as a member on April 13, 2014, Cappas has never made a demand

      on ThruPort to review or make copies of its records.

[8]   In an affidavit file-stamped January 20, 2015, Cappas states that, at the April

      13, 2014 meeting of the members of ThruPort, he signed the minutes of the

      meeting and a ratification; that Murphy told him that if he did not sign those

      documents he would never receive any of his money back from ThruPort; and

      that he felt intimidated and felt he had to sign the documents to have any

      chance of having his money returned to him. In an affidavit acknowledged on

      February 16, 2015, Cappas stated that ThruPort did not comply with the

      requirements of Sections 10.01, 10.02, 10.04, 10.06, 10.08, or 10.10 of its

      operating agreement.

[9]   On March 12, 2015, the court held a hearing at which ThruPort argued that the

      transfer of Cappas’s membership interest was governed by Article 10, not

      Article 12, of its operating agreement, and that it complied with Article 10.6

      6
       Article 12 of ThruPort’s operating agreement relates to events of default on the part of a member and the
      elections of the non-defaulting members upon the occurrence of an event of default, and Article 10 relates to
      the sale or transfer of a membership interest.

      Court of Appeals of Indiana | Memorandum Decision 45A03-1508-PL-1242| February 16, 2016           Page 6 of 13
       The court entered summary judgment in favor of ThruPort and against Cappas,

       finding no genuine issue of material fact that Cappas terminated his interest in

       ThruPort as per the terms of the operating agreement, and that there is no right

       of a member who has terminated his interest in a limited liability company to

       inspect records of the company that were created after the termination of the

       member’s interest. Cappas filed a motion to correct errors, which, after a

       hearing, the court denied.

                                                   Discussion

[10]   The issue is whether the trial court erred in entering summary judgment in

       favor of ThruPort and against Cappas. Our standard of review is the same as it

       is for the trial court. Manley v. Sherer, 992 N.E.2d 670, 673 (Ind. 2013). The

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

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

       matter of law. Id. Summary judgment is improper if the moving party fails to

       carry its burden, but if it succeeds, then the nonmoving party must come

       forward with evidence establishing the existence of a 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. An appellate court reviewing a challenged trial court summary

       judgment ruling is limited to the designated evidence before the trial court, but

       is constrained to neither the claims and arguments presented at trial nor the

       rationale of the trial court ruling. Id. The fact that the parties make cross-

       Court of Appeals of Indiana | Memorandum Decision 45A03-1508-PL-1242| February 16, 2016   Page 7 of 13
       motions for summary judgment does not alter our standard of review.

       Huntington v. Riggs, 862 N.E.2d 1263, 1266 (Ind. Ct. App. 2007), trans. denied.

[11]   Cappas claims that his withdrawal from ThruPort is void because ThruPort did

       not follow the terms of its operating agreement. He cites or refers to portions of

       Section 10.01(C), (E), and (F), and Sections 10.02, 10.04, 10.06, 10.08, and

       10.10, and notes that his affidavit which stated that ThruPort did not comply

       with the requirements of these sections and that the minutes of the April 13,

       2014 meeting do not contain any notations that Article 10 was followed.7

[12]   ThruPort maintains that Cappas transferred his membership interest in

       accordance with the terms of the operating agreement. It argues that Cappas

       ratified the minutes memorializing the transfer and that his letter to Murphy

       stated that the transfer was made pursuant to Section 10.01(E)(4) of the

       operating agreement. It notes that Cappas does not argue that Section 10.06

       was not followed because he was not paid, and contends that Murphy’s

       affidavit makes it clear that ThruPort was insolvent at the time of the transfer,

       and that this was the very reason Cappas transferred his membership interest,

       namely, in order to facilitate locating alternative financing.

       7
        Cappas does not present arguments related to Article 12 of the operating agreement or to Count II of his
       amended complaint. He does not claim the transfer of his membership interest was the result of, or
       connected to, an event of default under Article 12, and further, in his letter to Murphy, he referenced Section
       10.01(E)(4) of Article 10, and the term “Disposition” defined in the operating agreement and addressed in
       Article 10, indicating he intended to transfer his membership interest pursuant to Article 10 of the operating
       agreement.

       Court of Appeals of Indiana | Memorandum Decision 45A03-1508-PL-1242| February 16, 2016            Page 8 of 13
[13]   Article 10 of ThruPort’s operating agreement governs the sale or transfer of

       membership interests in the company. Section 10.01 addresses restrictions on

       transfer, and Section 10.01(A) provides in part that “[n]o Membership Interest

       may be transferred except by the unanimous written consent of the non-

       transferring Members, and then only in accordance with this Article 10.”

       Appellant’s Appendix at 90. Section 10.01(E) provides in part that “[t]he

       Company may not recognize for any purpose any purported Disposition [8] of all

       or part of a Membership Interest unless and until the other applicable provisions

       of this Section have been satisfied” and the company has received “a document

       (i) executed by both the Member effecting the Disposition . . . and the Person to

       which the Membership Interest or part thereof is Disposed, (ii) including the

       notice address of any Person to be admitted to the Company as a Member,”

       “(iii) setting forth the Sharing Ratios and the Commitments after the

       Disposition of the Member effecting the Disposition and the Person to which

       the Membership Interest or part thereof is Disposed (which together must total

       the Sharing Ratio and the Commitment of the Member effecting the

       Disposition before the Disposition),” and “(iv) containing a representation and

       warranty that the Disposition was made in accordance with all applicable laws

       and regulations (including securities laws) . . . .” Id. at 90-91. Section 10.01(F)

       provides in part that, for the right of a member to Dispose of a membership

       8
         The operating agreement provides that “‘Disposition (Dispose)’ means any sale, assignment, transfer,
       exchange, mortgage, pledge, grant, hypothecation, or other transfer, absolute or as security or encumbrance
       (including dispositions by operation of law).” Appellant’s Appendix at 77.

       Court of Appeals of Indiana | Memorandum Decision 45A03-1508-PL-1242| February 16, 2016         Page 9 of 13
       interest, either the membership interest subject to the Disposition must be

       registered under the Securities Act of 1933 as amended and any applicable state

       securities laws or the company must receive a favorable opinion of the

       company’s legal counsel to the effect that the Disposition is exempt from

       registration under those laws, but that the managers may waive the

       requirements of Section 10.01(F).

[14]   Section 10.02 relates to an offer to purchase made by a person not a party to the

       operating agreement. Section 10.03 relates to the purchase of a member’s

       interest by the company upon the bankruptcy, insolvency, death, or disability of

       the member or the appointment of a receiver of the member’s assets. Section

       10.04 provides in part that, “[i]n the event of the purchase of an interest by the

       Company pursuant to Section 10.03, or sale of a Membership Interest without a

       third party bona fide offer,” the purchase price would be determined based in

       part on the most recent certificate of value or, if unavailable, an appraisal. Id. at

       95. Section 10.06 provides terms related to the payment of the purchase price,

       and Section 10.08 relates to a closing of a purchase of a membership interest.

       Section 10.10 provides in part that “[s]trict compliance shall be required with

       each and every provision of this Article, it being understood and agreed that no

       Member shall, as set forth in Section 10.01 hereof, have the right or power to

       sell or assign any of his Membership Interest except in strict compliance with

       the procedures set forth in this Article.” Id. at 98.

[15]   In his letter to Murphy, Cappas stated that he was confirming his willingness to

       withdraw as a member of the company and surrender his units of membership

       Court of Appeals of Indiana | Memorandum Decision 45A03-1508-PL-1242| February 16, 2016   Page 10 of 13
       “back to the company to facilitate locating alternative financing for the project”

       and that, “[p]ursuant to Section 10.01(E)(4), I represent and warranty [sic] that

       the Disposition is made in accordance with all applicable laws and regulations

       (including security laws).” Id. at 101. The minutes of the April 13, 2014

       meeting of the members provide in part that Cappas reported that “he was

       unable to provide project funding,” that he was willing to withdraw as a

       member of the company and to surrender “all of his units of membership back

       to the company for such reason in order to facilitate locating alternative

       financing,” and that a motion to approve his transfer of units back to the

       company and accept his resignation passed by unanimous vote. Id. at 75.

[16]   These documents, taken together, satisfied the requirements of Section 10.01 of

       ThruPort’s operating agreement related to the transfer of a member’s interest in

       the company. The transfer of Cappas’s membership interest was approved by

       the unanimous written consent of the non-transferring members under Section

       10.01(A), and Cappas executed a document effecting the transfer under Section

       10.01(E). He also provided his specific representation and warranty that the

       disposition or transfer was made in accordance with Section 10.01(E)(iv),9 and,

       in agreeing to the transfer, the members, including Cappas and Murphy as the

       manager, waived the requirements of Section 10.01(F). Section 10.02 is

       9
         Cappas does not specifically argue that Section 10.01(E)(iii), which relates to a document setting forth a
       member’s Sharing Ratio and Commitments after a Disposition, is applicable or has any effect as, after the
       transfer, he has no membership interest. His letter to Murphy and the minutes of the April 13, 2014 meeting
       indicate that he transferred the entirety of his interest to ThruPort.

       Court of Appeals of Indiana | Memorandum Decision 45A03-1508-PL-1242| February 16, 2016        Page 11 of 13
       inapplicable as there was not a third party offer to purchase his interest, and

       Section 10.03 is inapplicable as ThruPort did not purchase his interest due to

       his bankruptcy, insolvency, death, or disability, or the appointment of a receiver

       of his assets. Cappas does not specifically argue that there was a sale of his

       membership interest without a third party offer for purposes of Sections 10.04,

       10.06, and 10.08. Further, Murphy’s affidavit states that, on April 13, 2014,

       ThruPort was without any assets, that ThruPort did not pay Cappas for his

       units of interest because the units did not have value at the time of the transfer,

       and that the only figures on the balance sheet at the time were certain liabilities.

       Finally, we observe that Cappas together with the members of ThruPort

       specifically ratified the transfer of his membership interest at the April 13, 2014

       meeting of members.

[17]   Based upon the designated evidence, we conclude that Cappas transferred his

       membership interest to ThruPort consistent with the provisions of the

       company’s operating agreement. Accordingly, the trial court did not err in

       entering summary judgment in favor of ThruPort and in rejecting Cappas’s

       request for the court to direct ThruPort to re-issue his previously-held

       membership interest to him.

                                                   Conclusion

[18]   For the foregoing reasons, we affirm the trial court’s entry of summary

       judgment in favor of ThruPort on Cappas’s claims.

[19]   Affirmed.

       Court of Appeals of Indiana | Memorandum Decision 45A03-1508-PL-1242| February 16, 2016   Page 12 of 13
Kirsch, J., and Mathias, J., concur.

Court of Appeals of Indiana | Memorandum Decision 45A03-1508-PL-1242| February 16, 2016   Page 13 of 13