Court Opinion

ID: 3161482
Source: CourtListenerOpinion
Date Created: 2015-12-10 16:05:06.751049+00
Date Added: 2024-06-11T12:03:13.972208
License: Public Domain

MEMORANDUM DECISION
                                                                         Dec 10 2015, 9:49 am
      Pursuant to Ind. Appellate Rule 65(D), this
      Memorandum Decision shall not be 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.

      APPELLANT PRO SE                                         ATTORNEY FOR APPELLEES
      E. Scott Treadway                                        Christopher C. Hagenow
      EST Law, LLC                                             Blackwell Burke & Ramsey, PC
      Indianapolis, Indiana                                    Indianapolis, Indiana

                                                   IN THE
          COURT OF APPEALS OF INDIANA

      E. Scott Treadway,                                       December 10, 2015

      Appellant-Plaintiff,                                     Court of Appeals Case No.
                                                               49A04-1503-CT-95
              v.                                               Appeal from the Marion Superior
                                                               Court.
                                                               The Honorable Heather A. Welch,
      Stewart & Irwin, P.C., Mary                              Judge.
      Schmid, Ronald Smith, Donald                             Cause No. 49D12-1305-CT-20905
      Wray, Peter Kovacs, Jeffrey
      Halbert, James Brauer, Glenn
      Bowman, and Edward Bielski,
      Appellees-Defendants.

      Shepard, Senior Judge

[1]   E. Scott Treadway appeals a grant of summary judgment in favor of Mary

      Schmid, Ronald Smith, Donald Wray, Peter Kovacs, Jeffrey Halbert, James

      Brauer, Glenn Bowman, and Edward Bielski (collectively “Individual

      Court of Appeals of Indiana | Memorandum Decision 49A04-1503-CT-95 | December 10, 2015    Page 1 of 14
      Defendants”) and the partial grant of summary judgment in favor of Stewart &

      Irwin, P.C.

[2]   Concluding that we do not have jurisdiction over the partial judgment entered

      for Stewart & Irwin and that the trial court appropriately granted summary

      judgment to the Individual Defendants, we affirm.

                               Facts and Procedural History
[3]   In March 2008, attorney Treadway entered into an Of Counsel Agreement with

      Stewart & Irwin, P.C. This agreement outlined the parties’ duties and

      responsibilities, as well as the manner of compensation. It provided Treadway

      office space, support staff, and billing services for his primarily hourly-billing

      business litigation practice. In return, Stewart & Irwin received a percentage of

      the fees he collected.

[4]   Greenfield Builders, Inc. (“GBI”) was a client Treadway brought with him.

      GBI had litigation in South Carolina for which Treadway was lead counsel,

      working on a contingency fee basis. At the conclusion of the GBI litigation,

      Stewart & Irwin paid Treadway $254,421.75 in fees, but Treadway believed he

      was due more.

[5]   The Of Counsel Agreement states that it does not cover contingency fee cases,

      and the parties never executed an additional agreement to deal with

      contingency fee cases. Unable to reach an agreement with Stewart & Irwin on

      the amount of fees he was owed from the GBI litigation, Treadway sued

      Stewart & Irwin and the Individual Defendants. The Individual Defendants
      Court of Appeals of Indiana | Memorandum Decision 49A04-1503-CT-95 | December 10, 2015   Page 2 of 14
      moved for summary judgment, and Stewart & Irwin moved for partial

      summary judgment. Treadway filed a response. Following a hearing, the trial

      court granted judgment for the Individual Defendants and partial summary

      judgment for Stewart & Irwin. Subsequently, upon request of the Individual

      Defendants, the court certified as final and appealable its order as to them. This

      appeal followed.

[6]   In this Court, Treadway has moved to file a supplemental appendix and has

      tendered one. The Individual Defendants have objected to the supplement and

      moved to strike a portion of Treadway’s original appendix.

[7]   The documents contained in Treadway’s supplemental appendix, as well as

      those in the identified portion of his original appendix, were not before the trial

      court, are therefore not part of the record on appeal, and cannot be considered

      by this Court. See Boczar v. Meridian St. Found., 749 N.E.2d 87, 92 (Ind. Ct.

      App. 2001) (matters outside record cannot be considered by court on appeal);

      see also Ind. Appellate Rule 27 (record on appeal shall consist of clerk’s record

      and all proceedings before trial court). Moreover, as this is an appeal from a

      summary judgment, we can consider only those materials specifically

      designated to the trial court, and none of these documents were included in

      Treadway’s designation of evidence. See Pond v. McNellis, 845 N.E.2d 1043,

      1053 (Ind. Ct. App. 2006) (appellate review of summary judgment is limited to

      materials designated to trial court), trans. denied.

      Court of Appeals of Indiana | Memorandum Decision 49A04-1503-CT-95 | December 10, 2015   Page 3 of 14
[8]   Therefore, by separate order, we deny Treadway’s motion to file a

      supplemental appendix, and we grant the Individual Defendants’ motion to

      strike pages 255-270 of Treadway’s original appendix.

                                                    Issues
[9]   Treadway presents various arguments to support his contention that the trial

      court erroneously granted summary judgment in favor of the Individual

      Defendants. Reorganized and restated, these contentions are:

              I.      Whether the court erred by granting Defendants’ motion
                      to strike.
              II.     Whether the trial court erred in granting summary
                      judgment for the Individual Defendants on Treadway’s
                      claim for breach of contract.
              III.    Whether the trial court erred in granting summary
                      judgment for the Individual Defendants on Treadway’s
                      claims of promissory estoppel and unjust enrichment.
              IV.     Whether the trial court erred in granting summary
                      judgment for the Individual Defendants on Treadway’s
                      claims of conversion and breach of fiduciary duty.
      Finally, the Individual Defendants raise on cross-appeal the issue of:
              V.      Whether the Individual Defendants are entitled to
                      appellate attorney fees.

      Court of Appeals of Indiana | Memorandum Decision 49A04-1503-CT-95 | December 10, 2015   Page 4 of 14
                                    Discussion and Decision
                                        Appellate Jurisdiction
        First, on cross-appeal, is the question whether this Court has jurisdiction over
                 the partial grant of summary judgment for Stewart & Irwin.

[10]   Upon request by the Individual Defendants, the trial court certified as final and

       appealable that portion of its order on summary judgment pertaining to them.

       Thus, although not disposing of all claims as to all parties, the judgment as to

       the Individual Defendants is final under Appellate Rule 2(H)(2) in as much as

       the court expressly determined in writing that there was no just reason for delay

       and entered judgment accordingly. See Smith v. Deem, 834 N.E.2d 1100, 1104

       (Ind. Ct. App. 2005), trans. denied.

[11]   That part of the order pertaining to Stewart & Irwin, however, was not certified.

       Thus, it is not a final judgment under Appellate Rule 2(H) and remains

       interlocutory, appealable only under Appellate Rule 14. The court’s order as to

       Stewart & Irwin is not appealable as of right pursuant to Rule 14(A), and

       Treadway did not seek permission to appeal under Rule 14(B). We do not

       presently have jurisdiction over the portion of the trial court’s judgment that

       pertains to Treadway’s claims against Stewart & Irwin.

                                          I. Motion to Strike
[12]   Treadway asserts that the trial court erred by striking a portion of his affidavit,

       designated as evidentiary material in his opposition to Defendants’ motion for

       summary judgment. We review a trial court’s order on a motion to strike for an

       Court of Appeals of Indiana | Memorandum Decision 49A04-1503-CT-95 | December 10, 2015   Page 5 of 14
       abuse of discretion. Williams v. Tharp, 914 N.E.2d 756, 769 (Ind. 2009). An

       abuse of discretion occurs when the trial court’s decision is against the logic and

       effect of the facts and circumstances before it. Illiana Surgery & Med. Ctr., LLC v.

       STG Funding, Inc., 824 N.E.2d 388 (Ind. Ct. App. 2005). Further, the trial

       court’s decision will be reversed only upon a clear showing of prejudicial error.

       Sun Life Assur. Co. of Can. v. Ind. Dep’t. of Ins., 868 N.E.2d 50 (Ind. Ct. App.

       2007), trans. denied.

[13]   Here, the court struck portions of paragraphs 15, 17, 18, 19, 20, 22, 23, 26, and

       27 of Treadway’s affidavit, finding the statements were impermissible

       conclusions and speculation. It also struck paragraph 29 as hearsay, portions of

       paragraph 21 as hearsay and impermissible conclusions, and a portion of

       paragraph 25 as impermissible conclusions. Treadway’s argument on appeal is

       simply that these statements are statements of fact and are neither hearsay nor

       impermissible conclusions.

[14]   Indiana Trial Rule 56(E) requires that “[s]upporting and opposing affidavits

       shall be made on personal knowledge, shall set forth such facts as would be

       admissible in evidence, and shall show affirmatively that the affiant is

       competent to testify to the matters stated therein.” Mere assertions of

       conclusions of law or opinions will not suffice in an affidavit. Kader v. Dep’t of

       Corr., 1 N.E.3d 717, 724 (Ind. Ct. App. 2103). Upon review, we find the

       statements in paragraphs 15, 17, 18, 19, 20, 22, 23, 26, and 27 to be opinions,

       conclusions of law, and statements not based on personal knowledge. Further,

       we find that both paragraphs 21 and 29 contain hearsay as well as legal

       Court of Appeals of Indiana | Memorandum Decision 49A04-1503-CT-95 | December 10, 2015   Page 6 of 14
       conclusions. Finally, paragraph 25 contains impermissible conclusions and

       opinions. These qualities do not comport with the requirements for affidavits.

       The court did not abuse its discretion in granting the motion to strike.

                                 II. Piercing the Corporate Veil
[15]   We turn now to the issues at the heart of the trial court’s order. Treadway

       contends that the court erred when it determined there was insufficient evidence

       to support piercing the corporate veil to hold the Individual Defendants liable

       under the Of Counsel Agreement.

[16]   On appeal from a grant or denial of summary judgment, our standard of review

       is identical to that of the trial court: whether there exists a genuine issue of

       material fact and whether the moving party is entitled to judgment as a matter

       of law. Winchell v. Guy, 857 N.E.2d 1024 (Ind. Ct. App. 2006). Appellate

       review is limited to those materials designated to the trial court. Pond, 845
N.E.2d at 1053. Thus, we are not permitted to search the materials on appeal

       for, or make a decision based upon, materials that were not specifically

       designated. Collins v. J.A. House, Inc., 705 N.E.2d 568 (Ind. Ct. App. 1999),

       trans. denied. All facts and reasonable inferences are construed in favor of the

       non-movant. Pond, 845 N.E.2d at 1053. Moreover, summary judgment may be

       affirmed if it is proper on any basis shown in the record. Pfenning v. Lineman,

       947 N.E.2d 392 (Ind. 2011). The party appealing the judgment carries the

       burden of persuading the appellate court that the trial court’s decision was

       erroneous. Bradshaw v. Chandler, 916 N.E.2d 163 (Ind. 2009).

       Court of Appeals of Indiana | Memorandum Decision 49A04-1503-CT-95 | December 10, 2015   Page 7 of 14
[17]   The elementary principle of corporate law is that corporate shareholders are

       liable for acts of the corporation only to the extent of their investment and are

       not personally liable for the corporation’s acts. CBR Event Decorators, Inc. v.

       Gates, 962 N.E.2d 1276, 1281 (Ind. Ct. App. 2012), trans. denied. Courts are

       reluctant to disregard corporate identity, and they do so only where the party

       seeking to pierce the corporate veil can establish that the corporate form has

       been misused and the result of that misuse is fraud or injustice. Id.

[18]   Whether a court should exercise its equitable power to pierce a corporate veil

       involves a highly fact-sensitive inquiry. Konrad Motor & Welder Serv., Inc. v.

       Magnetech Indus. Servs., Inc., 973 N.E.2d 1158 (Ind. Ct. App. 2012). The party

       seeking to pierce bears the burden of establishing that: (1) the corporate form

       was so ignored, controlled or manipulated that it was the mere instrumentality

       of another, and (2) the misuse of the corporate form constitutes a fraud or

       promotes injustice. CBR Event Decorators, Inc., 962 N.E.2d at 1282. In

       determining whether such a party has met its burden, evidence of the following

       factors is pertinent: (1) undercapitalization; (2) absence of corporate records;

       (3) fraudulent representation 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; or (8) other shareholder

       acts or conduct ignoring, controlling, or manipulating the corporate form. Id.

[19]   In support of his position, Treadway points to portions of several paragraphs in

       his affidavit, but the segments he refers to were rightly struck by the trial court.

       Court of Appeals of Indiana | Memorandum Decision 49A04-1503-CT-95 | December 10, 2015   Page 8 of 14
       He also directs us to the sole paragraph of his affidavit that was not struck. It

       states that the shareholders of Stewart & Irwin referred to themselves and one

       another as “partners.” Appellant’s Br. p. 11.

[20]   Treadway neither supplies case law that holds this to be an impropriety nor

       explains how this act, without more, is sufficient to pierce the corporate veil.

       Further, beyond the “partner” label, he has failed to designate evidence that the

       shareholders of the corporation acted as anything but shareholders. This dearth

       of evidence in no way satisfies the considerable burden he must fulfill in order

       to pierce the corporate veil. The trial court did not err on this issue.

                    III. Promissory Estoppel & Unjust Enrichment
[21]   In his complaint, Treadway asserted claims of promissory estoppel and unjust

       enrichment against the Individual Defendants. Essentially he argues that

       because he did not receive all the fees he was owed from the GBI litigation, the

       Individual Defendants must have received money that belonged to him.

[22]   The elements of the doctrine of promissory estoppel are: (1) a promise by the

       promisor; (2) made with the expectation that the promisee will rely thereon; (3)

       which induces reasonable reliance by the promisee; (4) of a definite and

       substantial nature; and (5) injustice can be avoided only by enforcement of the

       promise. Huber v. Hamilton, 33 N.E.3d 1116, 1124 (Ind. Ct. App. 2015). In

       addition, to prevail on a claim of unjust enrichment, a plaintiff must establish:

       (1) a benefit conferred upon another at the express or implied consent of such

       other party; (2) allowing the other party to retain the benefit without restitution

       Court of Appeals of Indiana | Memorandum Decision 49A04-1503-CT-95 | December 10, 2015   Page 9 of 14
       would be unjust; and (3) the plaintiff expected payment. Good v. Ind. Teachers

       Ret. Fund, 31 N.E.3d 978, 982 (Ind. Ct. App. 2015), trans. denied.

[23]   As for promissory estoppel, the designated evidence fails to show a promise

       made to Treadway by the Individual Defendants. Treadway refers to a promise

       by the Individual Defendants to collect fees and remit them to him, but for

       support he cites to paragraphs in his designated affidavit, portions of which

       were struck by the trial court and the remainder of which merely reiterate his

       allegations without providing any evidence. He also refers to the Of Counsel

       Agreement, but it was executed by Treadway and Stewart & Irwin, not by the

       Individual Defendants. We find no evidence in the designated materials that

       the Individual Defendants made any promise to Treadway or that shows the

       existence of a genuine issue of material fact as respects promissory estoppel.

[24]   Likewise, Treadway has not designated any evidence that the Individual

       Defendants received any of the funds he alleges are his. Once again he refers to

       various struck paragraphs and to memoranda he sent to Mary Schmid, who

       was President of Stewart & Irwin at the time, and to Stewart & Irwin’s

       Executive Committee. The portions of the paragraphs in his affidavit that were

       not struck and the memoranda restate his claims but provide no actual evidence

       in support thereof. Thus, the trial court did not err in granting judgment for the

       Individual Defendants on these issues.

       Court of Appeals of Indiana | Memorandum Decision 49A04-1503-CT-95 | December 10, 2015   Page 10 of 14
                     IV. Conversion and Breach of Fiduciary Duty
[25]   Treadway raised claims of conversion and breach of fiduciary duty against the

       Individual Defendants in his complaint. The trial court granted summary

       judgment for the Individual Defendants on these allegations, determining they

       were time-barred because Treadway had failed to file them within the two-year

       statute of limitations.

[26]   An action for conversion is governed by a two-year statute of limitations.

       French v. Hickman Moving & Storage, 400 N.E.2d 1384 (Ind. Ct. App. 1980); see

       Ind. Code § 34-11-2-4(a)(2) (1998). Similarly, breach of fiduciary duty is a tort

       claim subject to the two-year statute. Shriner v. Sheehan, 773 N.E.2d 833 (Ind.

       Ct. App. 2002), trans. denied; see Ind. Code § 34-11-2-4(a)(2). Under Indiana’s

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

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

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

       act of another. Doe v. United Methodist Church, 673 N.E.2d 839 (Ind. Ct. App.

       1996), trans. denied.

[27]   Here, the undisputed evidence shows that on August 19, 2010, Treadway

       received a check from the GBI litigation proceeds. According to his complaint,

       Treadway “promptly notified [Stewart & Irwin] that it was not entitled to the

       money it retained, that the money belonged to [him] and demanded that the

       money be remitted to [him].” Appellant’s App. p. 13. Treadway states he

       Court of Appeals of Indiana | Memorandum Decision 49A04-1503-CT-95 | December 10, 2015   Page 11 of 14
       severed his relationship with Stewart & Irwin in September 2010. The

       complaint was filed on May 17, 2013, outside the two-year period.

[28]   In hopes of avoiding the limitations period, Treadway argues fraudulent

       concealment and continuing wrong, but these doctrines prove unhelpful to his

       cause. When a plaintiff obtains information that would lead to the discovery of

       the cause of action through ordinary diligence, the statute of limitations begins

       to run, regardless of any fraudulent concealment perpetrated by the defendants.

       Dickes v. Felger, 981 N.E.2d 559 (Ind. Ct. App. 2012). And, the doctrine of

       continuing wrong will not prevent the statute from beginning to run when the

       plaintiff learns of facts which should lead to the discovery of his cause of action

       even if his relationship with the tortfeasor continues beyond that point. C & E

       Corp. v. Ramco Indus., Inc., 717 N.E.2d 642 (Ind. Ct. App. 1999). In support of

       his argument on this issue, Treadway cites to his supplemental appendix and to

       pages 255-270 of his original appendix, both of which are not part of the record

       on appeal in this case and which have been denied filing and struck from the

       record, respectively. The designated evidence shows that, by his own

       admission, Treadway was aware of the fees issue by August 2010, making his

       May 2013 complaint untimely. Thus, the trial court correctly determined that

       these claims are barred by the statute of limitations, and summary judgment for

       the Individual Defendants was proper on these issues.

                                    V. Appellate Attorney Fees
[29]   Finally, the Individual Defendants request appellate attorney fees pursuant to

       Indiana Appellate Rule 66(E) due to Treadway’s procedural bad faith caused by
       Court of Appeals of Indiana | Memorandum Decision 49A04-1503-CT-95 | December 10, 2015   Page 12 of 14
       his “many departures from proper appellate procedure.” Appellees’ Br. p. 45.

       Appellate Rule 66(E) provides, in part, that this Court “may assess damages if

       an appeal . . . is frivolous or in bad faith. Damages shall be in the Court’s

       discretion and may include attorneys’ fees.” Procedural bad faith arises when a

       party flagrantly disregards the form and content requirements of the rules of

       appellate procedure, omits and misstates relevant facts appearing in the record,

       and files briefs written in a manner calculated to require the maximum

       expenditure of time, both by the opposing party and the reviewing court.

       Wressell v. R.L. Turner Corp., 988 N.E.2d 289, 299 (Ind. Ct. App. 2013), trans.

       denied. Although Rule 66(E) permits an award of damages on appeal, we act

       with restraint in this regard due to the potential chilling effect on the right to

       appeal. Id.

[30]   The Individual Defendants contend that Treadway submitted materials on

       appeal that were not before the trial court or that were stricken from the record

       by the trial court, made improper factual claims, failed to serve a copy of his

       corrected brief upon opposing counsel, and submitted a disorganized brief.

       Pretty much true, but we conclude these deficiencies did not quite pass the

       sanctions threshold.

                                                Conclusion
[31]   We conclude that this Court does not have jurisdiction over the partial

       summary judgment granted to Stewart & Irwin and that the trial court did not

       abuse its discretion in granting the Individual Defendants’ motion to strike

       Court of Appeals of Indiana | Memorandum Decision 49A04-1503-CT-95 | December 10, 2015   Page 13 of 14
       portions of Treadway’s affidavit. Though we conclude that the court properly

       granted judgment for the Individual Defendants, we decline to award appellate

       fees.

[32]   Affirmed.

[33]   Robb, J., and Pyle, J., concur.

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