Court Opinion

ID: 2819127
Source: CourtListenerOpinion
Date Created: 2015-07-22 15:05:52.992447+00
Date Added: 2024-06-11T15:44:20.054046
License: Public Domain

MEMORANDUM DECISION                                             Jul 22 2015, 10:00 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.

ATTORNEYS FOR APPELLANTS                                  ATTORNEYS FOR APPELLEES
Alan S. Brown                                             G. Daniel Kelley
Maggie L. Smith                                           Thomas E. Mixdorf
Bryan S. Strawbridge                                      Ice Miller LLP
Jenai M. Brackett                                         Indianapolis, Indiana
Abigail T. Rom
Frost Brown Todd LLC
Indianapolis, Indiana

                                             IN THE
    COURT OF APPEALS OF INDIANA

Hameck Oil Company, Ltd.,                                 July 22, 2015
TWE Management, LLC,                                      Court of Appeals Case No.
Eckard Global, LLC, and                                   49A02-1409-PL-635
Troy W. Eckard,                                           Appeal from the
                                                          Marion Superior Court
Appellants-Defendants,
                                                          The Honorable Michael D. Keele,
        v.                                                Judge
                                                          Cause No. 49D07-1311-PL-40165
J Group Energy I, LLC and
Bakken Oil & Gas Management,
Inc., and HOC Bakken Legacy I,
LLC,1

1
 We include HOC Bakken Legacy I, LLC in the caption because it was added as a plaintiff on September 8,
2014, when the trial court granted Plaintiffs’ request to file a second amended complaint. Pursuant to
Indiana Appellate Rule 17(A), a party of record in the trial court shall be a party on appeal.

Court of Appeals of Indiana | Memorandum Decision 49A02-1409-PL-635 |July 22, 2015          Page 1 of 18
      Appellees-Plaintiffs.

      Kirsch, Judge.

[1]   In 2011, Hameck Oil Company, Ltd. (“Hameck Oil”), J Group Energy I, LLC

      (“J Group”) and nonparty Eckard Global Energy, LLC (“EGE”) executed a

      Company Agreement (“Company Agreement”) forming HOC Bakken Legacy

      I, LLC (“Legacy I” or “the Company”), a Delaware limited liability company,

      involved in the business of acquiring oil and gas leases in North Dakota.

      Disputes arose, and this lawsuit ensued. J Group, and Bakken Oil and Gas

      Management, Inc. (“Bakken Oil”) (collectively, “Plaintiffs”) filed a complaint,

      later amended, against Hameck Oil, TWE Management, LLC (“TWE”),

      Eckard Global, LLC (“Eckard Global”), and Troy W. Eckard (“Eckard”)

      (collectively, “Defendants”), seeking injunctive relief and, later, damages.

      Defendants sought to compel arbitration pursuant to a section of the Company

      Agreement, and after the trial court denied Defendants’ Motion to Compel

      Arbitration, Defendants now appeal and raise several issues, of which we find

      the following restated issue to be dispositive: whether the trial court erred when

      it determined that the Company Agreement’s arbitration provision did not

      apply to Hameck Oil, the Company’s Manager.

[2]   We affirm.

      Court of Appeals of Indiana | Memorandum Decision 49A02-1409-PL-635 |July 22, 2015   Page 2 of 18
                                  Facts and Procedural History2
                                                   The Parties

[3]   Eckard is a Texas businessman, and in October 2011, he traveled to Indiana

      several times to discuss a business investment proposal with individuals, some

      or all of whom comprised Plaintiff J Group, an Indiana limited liability

      company.3 J Group likewise traveled to Texas and attended meetings and

      conferences on the subject. According to the complaint, Eckard’s proposal was

      that he, through companies he owned, and J Group would form a limited

      liability company for purposes of acquiring oil and gas leases. Eckard would be

      a minority stakeholder in the company, but would serve as its Manager; J

      Group would be majority stakeholder, would fund the venture, and would have

      certain rights to participate in key decisions, but would not be involved in the

      day-to-day operations of the business. Appellees’ App. at 7.

[4]   Following in-person meetings and oral and written communications, Legacy I

      was formed pursuant to the Company Agreement, which was executed on

      December 19, 2011. Generally speaking, Legacy I’s purpose was to acquire

      oil/gas/mineral leases that would generate income and revenue for the

      investment venture. Legacy I was formed as a limited liability company

      2
       We held oral argument on June 17, 2014 at Purdue University’s Krannert School of Executive
      Management. We thank counsel for their preparation and argument, and we commend them on their
      outstanding advocacy. We also thank the students for their insightful questions and comments posed after,
      but not specifically related to, the oral argument.
      3
       The record before us indicates that J Group has four members: Ethan Jackson, and his sons, Wessley
      Jackson, Blake Jackson, and Mark Jackson. Appellants’ App. at 203, 213.

      Court of Appeals of Indiana | Memorandum Decision 49A02-1409-PL-635 |July 22, 2015             Page 3 of 18
      organized under the laws of the State of Delaware with its principal place of

      business in Indianapolis. J Group owns a 95% ownership interest in Legacy I

      and is classified as a “B Member.” It has contributed 100% of the capital to

      Legacy I, which exceeds $10 million. EGE owns a 5% ownership interest in

      Legacy I and is classified as an “A Member.” EGE has contributed no capital

      to Legacy I, and it is not a party to this lawsuit. Eckard is manager of, and he

      owns and controls, EGE. The Company Agreement named Hameck Oil as

      Manager of Legacy I. Hameck Oil is a limited partnership organized under the

      laws of Texas with its principal place of business in Texas. The Company

      Agreement was signed by three entities: (1) Manager Hameck Oil (Eckard

      signed in his capacity as president of TWE, which is a general partner of

      Hameck Oil); (2) Class A Member EGE (Eckard signed as manager of EGE);

      and (3) Class B Member J Group (Ethan Jackson signed as manager of J

      Group).

[5]   On July 28, 2013, Eckard sent an email to representatives of J Group stating

      that Hameck Oil would be resigning as Manager of Legacy I effective August

      15, 2013.4 On November 14, 2013, Plaintiff Bakken Oil was appointed as the

      new Manager of Legacy I. Bakken Oil is a corporation organized under the

      4
        Section 4.3 of the Company Agreement provides that “[a] Manager may resign at any time in writing
      setting forth the effective date of the resignation and sending it to all Members. The resignation need not be
      accepted in order to be effective.” Appellants’ App. at 36.

      Court of Appeals of Indiana | Memorandum Decision 49A02-1409-PL-635 |July 22, 2015                 Page 4 of 18
      laws of the State of Delaware with its principal place of business in

      Indianapolis.

                                                   The Lawsuit

[6]   Plaintiffs filed their complaint on November 1, 2013, amended December 2,

      2013, seeking, initially, preliminary and permanent injunctive relief, namely

      that Defendants be ordered to turn over books, records, and other materials to

      allow for the orderly transition of company business from Hameck Oil to

      Bakken Oil, the new Manager of Legacy I. In addition to naming Eckard and

      Hameck Oil as Defendants, Plaintiffs also named Defendants TWE and Eckard

      Global,5 which are limited liability companies organized under the laws of

      Texas with principal places of business in Texas. Plaintiffs did not name Class

      A Member EGE as a defendant in the lawsuit.

[7]   The complaint alleges that Hameck Oil, as the Manager of Legacy I, had access

      to and control over the books, records, and accounts of Legacy I and that TWE,

      as the General Partner of Hameck Oil, also had access and control over the

      books and records of Legacy I. The complaint claims that Eckard Global “has

      been used by the other Defendants” to conduct management duties with respect

      to Legacy I and, like the others, had access to the books and records of Legacy

      I. Appellees’ App. at 8. It further asserts that at all material times Eckard

      directed and controlled the actions of the other named Defendants and that

      5
          Eckard is manager and sole member of Eckard Global.

      Court of Appeals of Indiana | Memorandum Decision 49A02-1409-PL-635 |July 22, 2015   Page 5 of 18
      Hameck Oil has failed to discharge its responsibilities, refused to cooperate, and

      violated fiduciary duties under the provisions of the Company Agreement.

      Plaintiffs contend in the complaint, “Defendants have routinely ignored and

      manipulated the corporate forms for their own purposes,” including, but not

      limited to, failing to keep corporate records, comingling assets and affairs, and

      misdirecting revenues of Legacy I. Id. at 9-10.

        The Company Agreement’s Arbitration Provisions - Original and Amended

[8]   In December 2013, Defendants filed a Motion to Dismiss and a Motion to

      Compel Arbitration pursuant to the Company Agreement. The Motion to

      Dismiss sought dismissal of Defendants Eckard and Eckard Global because

      they did not sign, and were not parties to, the Company Agreement. Appellants’

      App. at 95, 101. Alternatively, Defendants argued that Plaintiffs’ claims against

      all Defendants should be subject to arbitration. In support of arbitration,

      Defendants relied on Section 13.10 of the Company Agreement, entitled

      “Binding Arbitration,” which provides in part:

              Any controversy, claim or dispute between or among the Company
              and any Member or among the Members arising out of or relating to
              this Company Agreement or any other matters pertaining to the
              Company, shall be settled by binding arbitration in Newcastle County,
              Delaware, in accordance with the applicable rules of the American
              Arbitration Association (“AAA”) then in effect. . . . The Members
              expressly agree that the provisions of this Section 13.10 shall be valid
              and enforceable to the greatest extent possible under the laws of the
              United States of America or the State of Delaware. . . .
              Notwithstanding the foregoing, the Company may pursue suit for
              injunctive relief against any Member who violates the Member’s
              covenants in Article 11.

      Court of Appeals of Indiana | Memorandum Decision 49A02-1409-PL-635 |July 22, 2015   Page 6 of 18
       Appellants’ App. at 48.

[9]    In January 2014, the trial court granted the parties’ joint motion to stay the

       litigation as they pursued settlement negotiations. During the stay, Defendants

       produced additional records for Legacy I, and Plaintiffs claim that this revealed

       that Defendants’ actions caused in excess of $1.7 million in harm to Legacy I

       and J Group.

[10]   On May 7, 2014, Bakken Oil and J Group amended the Company Agreement

       to delete Section 13.10 (the binding arbitration provision).6 The

       amended/replacement section reads:

               All provision [sic] of this Company Agreement relating to or requiring
               arbitration of any controversy, claim, dispute or anything else which
               has to date arisen with respect to, or which in the future may arise or
               relate to this Company Agreement, or to any other matter pertaining
               to the Company, including but not limited to Article 13.10 and Article
               4.10, are deleted and shall have no force or effect whatsoever.
       Id. at 204.7

[11]   On May 12, 2014, five days after Plaintiffs’ May 7 amendment to the Company

       Agreement that deleted the arbitration provision, Plaintiffs filed a Motion to

       Lift Stay, which motion the trial court granted on May 13. Also on May 13,

       6
        Plaintiffs assert that they amended the Company Agreement pursuant to Section 13.6, which permits
       amendment “by the Manager with consent of a Majority of the Members.” Appellees’ App. at 38.
       7
         Bakken Oil and J Group also amended the Company Agreement to delete former Section 13.2, which
       stated that Delaware law was the governing law, and replaced it with a new Section 13.2 that provided the
       laws of Indiana shall govern the Company Agreement and all issues, claims, or matters arising under it.
       Appellants’ App. at 204. The amendments also provided that Legacy I “shall wind up.” Id.

       Court of Appeals of Indiana | Memorandum Decision 49A02-1409-PL-635 |July 22, 2015              Page 7 of 18
       Plaintiffs sought to file a second amended complaint, but the trial court denied

       the request pending determination of Defendants’ December 2013 Motion to

       Dismiss and Motion to Compel Arbitration. A few days later, on May 16,

       Defendants filed a Renewed Motion to Dismiss and Motion to Compel

       Arbitration.

[12]   On May 22, 2014, Defendants Hameck Oil and EGE filed a complaint in a

       Texas state court against the four individuals that comprise J Group – Ethan

       Jackson, Wessley Jackson, Blake Jackson and Mark Jackson – as well as other

       individuals and entities. The forty-three-page complaint alleges that the

       Jacksons, their attorney and their accountants gained access to confidential and

       propriety information during the formation and operation of Legacy I,

       including access to confidential lease summaries and exclusive and unique

       mapping and trend analysis, and that they used this information to, among

       other things, engage in fraud, misappropriation of confidential trade secrets,

       and unfair competition over a three-year period. They also allege tortious

       interference with the Legacy I Company Agreement and breach of fiduciary

       duties. The lawsuit was subsequently removed to, and is pending in, Federal

       District Court for the Eastern District of Texas.

                                  Trial Court’s August 14, 2014 Order

[13]   The trial court held a hearing on Defendants’ motions on July 23, 2014, at

       which counsel for both parties presented argument. Thereafter, on August 14,

       2014, the trial court denied Defendants’ Motion to Dismiss, finding that

       Plaintiffs did not sue Eckard or Eckard Global strictly in their capacities as
       Court of Appeals of Indiana | Memorandum Decision 49A02-1409-PL-635 |July 22, 2015   Page 8 of 18
       signatories to the Company Agreement, but rather because they had access to

       and control over the books and records of Legacy I and that Eckard Global, in

       addition to having access to books and records, had been used by other

       Defendants to conduct management duties with respect to Legacy I. The trial

       court determined that Defendants failed to carry the requisite burden for a

       motion to dismiss and denied it.

[14]   With regard to Defendants’ Motion to Compel Arbitration, the trial court found

       that “[t]he plain terms of the Company Agreement do not provide the Manager

       with a right to arbitrate the dispute before the Court.” Appellants’ App. at 13.

       More specifically, the trial court determined that Section 13.10 regarding

       Binding Arbitration, identifies the Company and the Members as the entities

       that are subject to arbitration, not the Manager. Id. at 14. Having determined

       that the plain terms of the Company Agreement did not provide for arbitration

       of the dispute in this case and denying Defendants’ motion on that basis, the

       trial court declined to address Plaintiffs’ arguments that the Company

       Agreement was amended to remove arbitration provisions and that Defendants

       waived any right to compel arbitration by having filed the Texas lawsuit.

[15]   On August 18, 2014, Plaintiffs filed a renewed motion for leave to file a second

       amended complaint that added Legacy I as a named plaintiff and sought

       damages in addition to injunctive relief. Appellees’ App. at 1-2. The trial court

       Court of Appeals of Indiana | Memorandum Decision 49A02-1409-PL-635 |July 22, 2015   Page 9 of 18
       granted their request on September 8, 2014.8 Defendants timely filed an

       interlocutory appeal9 and, at Defendants’ request, the trial court stayed the

       proceedings pending resolution of this appeal.

                                           Discussion and Decision
[16]   Defendants assert that the trial court erred when it denied its Motion to Compel

       Arbitration. We review a trial court’s denial of a motion to compel arbitration

       de novo. Smith Barney v. StoneMor Operating LLC, 953 N.E.2d 554, 557-58 (Ind.

       Ct. App. 2011), aff’d on reh’g, 959 N.E.2d 309 (Ind. Ct. App. 2011); Norwood

       Promotional Prods., Inc. v. Roller, 867 N.E.2d 619, 623 (Ind. Ct. App. 2007), trans.

       denied. A party seeking to compel arbitration must satisfy a two-pronged

       burden of proof. Daimler Chrysler Corp. v. Franklin, 814 N.E.2d 281, 284 (Ind.

       Ct. App. 2004). The party must first demonstrate the existence of an

       enforceable agreement to arbitrate the dispute; second, the party must prove

       that the dispute is the type of claim that the parties agreed to arbitrate.

       Norwood, 867 N.E.2d at 623 (citing Showboat Marina Casino P’ship v. Tonn &

       Blank Constr., 790 N.E.2d 595, 597 (Ind. Ct. App. 2003)).

[17]   When determining whether parties have agreed to arbitrate a dispute, we apply

       ordinary contract principles. Daimler Chrysler, 814 N.E.2d at 285-86. Words

       used in a contract are to be given their usual and common meaning unless,

       8
           Our reference to “Plaintiffs” throughout this decision includes Legacy I.
       9
        See Ind. Code § 35-57-2-19(a)(1) (appeal may be taken from order denying application to compel
       arbitration); Ind. Appellate Rule 14(D).

       Court of Appeals of Indiana | Memorandum Decision 49A02-1409-PL-635 |July 22, 2015           Page 10 of 18
       from the contract and the subject matter thereof, it is clear that some other

       meaning was intended. Id. at 285; see also Smith Barney, 953 N.E.2d at 558

       (when interpreting arbitration clause, court is to give language of contract its

       plain and ordinary meaning). Every doubt is to be resolved in favor of

       arbitration, and the parties are bound to arbitrate all matters, not explicitly

       excluded, that reasonably fit within the language used. Norwood, 867 N.E.2d at

       623-24 (quotations omitted). However, parties are only bound to arbitrate those

       issues that by clear language they have agreed to arbitrate; arbitration

       agreements will not be extended by construction or implication. Id. Arbitration

       is a matter of contract and a party cannot be required to submit to arbitration

       unless it has agreed to do so. MPACT Constr. Grp., LLC v. Superior Concrete

       Constructors, Inc., 802 N.E.2d 901, 910 (Ind. 2004).

[18]   Legacy I is a limited liability company organized pursuant to the Delaware

       Limited Liability Company Act. 6 Del. Code § 18-101 et seq. (“the LLC Act”).

       “It is the policy of [the LLC Act] to give the maximum effect to the principle of

       freedom of contract and to the enforceability of limited liability company

       agreements.” 6 Del. Code § 18-1101(b); see also Kuroda v. SPJS Holdings LLC,

       971 A.2d 872, 880 (Del. Ch. 2009) (limited liability companies are creatures of

       contract, and parties have discretion to use LLC agreement to define character

       of company and rights and obligations of parties).

[19]   Turning to the Company Agreement at hand, Defendants argue that the trial

       court erred when it denied Defendants’ Motion to Compel Arbitration because

       Section 13.10 of the Company Agreement is a valid and enforceable arbitration

       Court of Appeals of Indiana | Memorandum Decision 49A02-1409-PL-635 |July 22, 2015   Page 11 of 18
       provision that “covers the subject matter of Plaintiffs’ complaint[.]” Appellants’

       Br. at 4-5. Again, it reads:

               Any controversy, claim or dispute between or among the Company
               and any Member or among the Members arising out of or relating to
               this Company Agreement or any other matters pertaining to the
               Company, shall be settled by binding arbitration in Newcastle County,
               Delaware, in accordance with the applicable rules of the American
               Arbitration Association (“AAA”) then in effect. . . . The Members
               expressly agree that the provisions of this Section 13.10 shall be valid
               and enforceable to the greatest extent possible under the laws of the
               United States of America or the State of Delaware. . . .
               Notwithstanding the foregoing, the Company may pursue suit for
               injunctive relief against any Member who violates the Member’s
               covenants in Article 11. The Members will continue to perform their
               respective obligations under this Company Agreement pending the
               final resolution of any dispute, unless to do so would be impossible or
               impractical under the circumstances.
       Appellants’ App. at 48.

[20]   Defendants’ position is that Section 13.10 applies, and arbitration should be

       ordered, because the section provides that it applies to any controversy, claim

       or dispute “arising out of or relating to this Company Agreement or any other matter

       pertaining to the Company” and that Plaintiffs’ claims – alleging that Hameck Oil,

       as Manager, has not and will not turn over the books and records, has breached

       its fiduciary duties, and that it thereby has caused economic damages – clearly

       arise out of or relate to the Company Agreement. Id. (emphasis added).

       Therefore, Defendants contend, the dispute should be settled by arbitration.

[21]   This position, however, overlooks the prior modifying language in Section

       13.10 stating that any controversy, claim or dispute “between or among the

       Court of Appeals of Indiana | Memorandum Decision 49A02-1409-PL-635 |July 22, 2015   Page 12 of 18
Company and any Member or among the Members” shall be settled by arbitration.

Id. (emphasis added). Other language, appearing later in Section 13.10,

likewise focuses on the Members, stating, “The Members expressly agree that the

provisions of this Section 13.10 shall be valid and enforceable to the greatest

extent possible under the laws of the United States of America or the State of

Delaware[.]” Id. (emphasis added). The section concludes with the statement

that, while any arbitration proceeding is pending, “The Members will continue to

perform their respective obligations under this Company Agreement pending

the final resolution of any dispute[.]” Id. (emphasis added). In this case,

Plaintiffs’ claim is against Hameck Oil, former Manager, as well as affiliated

Defendants Eckard, Eckard Global, and TWE. Section 13.10 does not list or

identify the Manager as an entity with whom disputes are arbitrable. As with

any contract, the court must give the language of the contract its plain and

ordinary meaning, and the parties are only bound to arbitrate those issues that

by clear language they have agreed to arbitrate. Norwood, 867 N.E.2d at 623-24.

We agree with the trial court that disputes with the Manager are not within the

scope of Section 13.10. Had the parties intended to include disputes with the

Manager in the arbitration provision of 13.10, they could have done so. They

did not, and we cannot rewrite the arbitration provision to impose new or

different obligations on the parties.10

10
   Defendants argue that, in addition to Hameck Oil being able to enforce the arbitration clause, the non-
signatory Defendants Eckard Global, TWE, and Eckard are entitled to enforce the arbitration clause
pursuant to the doctrine of equitable estoppel given that J Group asserted allegations of interdependent and

Court of Appeals of Indiana | Memorandum Decision 49A02-1409-PL-635 |July 22, 2015              Page 13 of 18
[22]   On appeal, Defendants assert that, even if the Manager is not expressly

       included by the language of Section 13.10, the Company Agreement, when

       construed in its entirety, reflects that Manager “Hameck Oil is the Company,

       Member, or both,” based on the fact that Hameck Oil executed the Company

       Agreement beneath the words “the undersigned Members” and also because

       the Company Agreement gives such power to the Manager that, not only does

       it act on behalf of the Company, but that the Manager is the Company.

       Appellants’ Br. at 10.

[23]   Plaintiffs assert that this “extraordinary argument” was not made to the trial

       court, and, thus, it is waived. Appellees’ Br. at 17. Regardless of waiver, we are

       not persuaded that, as Defendants’ claim, the Manager is the legal equivalent of

       a Member and/or the Company. The Company Agreement identifies the

       “Company” as Legacy I. Appellants’ App. at 30. It identifies Hameck Oil as the

       Manager. Id. at 36 (“The initial Manager shall be Hameck Oil Company, Ltd.,

       a Delaware limited partnership”). The Company Agreement defines a Member

       as “any person who owns units and who has signed the Company Agreement,”

       id. at 31, and Hameck Oil does not own units. Furthermore, the Members are

       specifically identified on the addendum to the Company Agreement as the

       following: (1) J Group, a Class B Member; and (2) EGE, a Class A Member.

       concerted misconduct by Defendants. Appellants’ Br. at 5, 14-15. Having determined that the Company
       Agreement does not provide Manager Hameck Oil with a right to compel arbitration, we find that equitable
       estoppel does not apply here, because the non-signatories’ rights to arbitration, if any, would be derivative of
       Hameck Oil’s right.

       Court of Appeals of Indiana | Memorandum Decision 49A02-1409-PL-635 |July 22, 2015                 Page 14 of 18
       Id. at 51. The Company Agreement assigns various duties and responsibilities

       to the Manager. For example, Section 4.1 gives the Manager the power to

       “exclusively exercise the powers of the Company and shall manage the business

       and affairs of the Company,” and that any substantial decisions shall be made

       only by the Manager. Id. at 34. Other sections of the Company Agreement

       outline the Manager’s responsibilities, such as: Section 1.1 (Manager’s

       responsibilities regarding capital accounts); Sections 4.1-4.10 (Manager’s fees

       and responsibilities); Section 6.1(c) (Manager’s ability to request additional

       capital contributions); Sections 9.1-9.5 (Manager’s responsibility regarding

       books and records, tax returns, tax elections, and financial statements); Section

       12.1 (wind up procedures). Id. at 29, 34-37, 37, 42-43, 45. Based on the

       foregoing, we do not accept Defendants’ suggestion that Hameck Oil, as

       Manager, was also a Member and/or the Company.

[24]   Defendants urge that, even if it is determined that disputes with the Manager

       are not included in the language of Section 13.10 and that the Manager is

       neither the Company nor a Member, another section of the Company

       Agreement – Section 4.10 – expressly addresses disputes between the Manager,

       the Company, and the Members and states that such disputes are arbitrable.

       Section 4.10 provides:

               The rights, compensation, and ownership of the Manager and its
               Affiliates creates several and various conflicts of interest. The
               Manager has not developed, and does not expect to develop, any
               formal process for resolving conflicts of interest. While the conflicts of
               interest that exist between the Manager, the Company, and the
               Members, and that could later develop, could materially and adversely

       Court of Appeals of Indiana | Memorandum Decision 49A02-1409-PL-635 |July 22, 2015   Page 15 of 18
                affect the Members, the Manager, in its sole judgment and discretion,
                will try to mitigate such potential adversity by the exercise of business
                judgment in an attempt to fulfill its fiduciary obligations. There can be
                no assurance that such an attempt will prevent adverse consequences
                resulting from the numerous conflicts of interest. If such conflicts cannot
                be resolved, then the dispute will be resolved by arbitration, pursuant to Section
                13.10 below.
       Id. at 37 (emphasis added). We find that the language of the arbitration

       provision in Section 4.10 identifies only a single class of disputes involving the

       Manager that are arbitrable: conflicts of interest. Plaintiffs do not seek

       resolution of a conflict of interest between a Member (or the Company) and the

       Manager, and we find Section 4.10 is not applicable to the present dispute.

[25]   Defendants have failed to show that the trial court erred when it determined

       that the plain language of the Company Agreement did not provide Manager

       Hameck Oil with a right to arbitrate the dispute.11

[26]   Affirmed.

       Friedlander, J., concurs.

       Baker, J., concurs in result with separate opinion.

       11
          Because we resolve this case on the basis that the plain language of the Company Agreement did not give
       Hameck Oil the right to enforce arbitration of the dispute with Plaintiffs, we do not address the effect, if any,
       of Plaintiffs’ May 2014 amendment of the Company Agreement, deleting the arbitration clause language of
       Section 13.10, nor do we reach Plaintiffs’ argument that Defendants waived any right to arbitration by suing
       members of J Group and affiliated individuals in Texas.

       Court of Appeals of Indiana | Memorandum Decision 49A02-1409-PL-635 |July 22, 2015                  Page 16 of 18
                                                  IN THE
           COURT OF APPEALS OF INDIANA

       Hameck Oil Company, Ltd.,                                Court of Appeals Case No.
                                                                49A02-1409-PL-635
       TWE Management, LLC,
       Eckard Global, LLC, and Troy
       W. Eckard,
       Appellants-Defendants,

               v.

       J Group Energy I, LLC, Bakken
       Oil & Gas Management, Inc.,
       and HOC Bakken Legacy I,
       LLC,
       Appellees-Plaintiffs

       Baker, Judge, concurring in result.

[27]   While I concur in the result reached by the majority, I respectfully part ways

       with the analysis it applies to get there. Specifically, I disagree with the

       majority’s interpretation of the Company Agreement. In my view, it is readily

       apparent that the parties to the contract intended that all disputes related to the

       Company should be submitted to binding arbitration. I concede that the

       drafting of the arbitration provision is somewhat inartful, but I still believe that

       the Company Manager is bound to arbitrate disputes just as Members and the
       Court of Appeals of Indiana | Memorandum Decision 49A02-1409-PL-635 |July 22, 2015   Page 17 of 18
       Company are bound. The Manager is a signatory to the contract, and the

       Manager was empowered to—and charged with—acting as the Company and

       conducting its day-to-day business. Furthermore, Section 4.10 of the Company

       Agreement provides that the Manager must abide by certain procedures when a

       conflict of interest arises. If those procedures do not resolve the conflict, then

       the binding arbitration provision governs. The clear import of Section 4.10 is

       that, in all cases except for conflicts of interest, disputes involving the Manager

       are to be submitted to binding arbitration. Consequently, I disagree with the

       majority’s conclusion that disputes involving the Manager are not covered by

       the binding arbitration provision.

[28]   Although in my opinion the Defendants had a right to arbitration granted by

       the Company Agreement, I believe that the Defendants waived that right by

       filing a lawsuit related to the Company in Texas. It is well established that a

       contractual right to arbitrate can be waived, and that participation in litigation

       supports a finding of waiver. St. Mary’s Med. Ctr. of Evansville, Inc. v. Disco

       Aluminum Prods. Co., 969 F.2d 585, 587, 589-91 (7th Cir. 1992) (applying

       Indiana law). Here, the Defendants not only participated in litigation, they

       filed their own lawsuit regarding matters that, on their face, arise out of or

       relate to the Company and the Company Agreement. The Defendants cannot

       have it both ways, and by instituting litigation, they waived their right to

       enforce the binding arbitration provision in the lawsuit filed by the Plaintiffs.

       As a result, I agree with the majority that the trial court’s judgment should be

       affirmed.

       Court of Appeals of Indiana | Memorandum Decision 49A02-1409-PL-635 |July 22, 2015   Page 18 of 18