Employment Law - Professional Employment Contracts and Non Compete Clause.
MRSD is a physician practice group providing cardiovascular medical services. Doctors Blatchford and Cieutat are married surgeons recruited by MRSD who both signed employment agreements with MRSD. Prior to signing the agreements, the doctors had no ties to Indiana or MRSD. The agreements specifically addressed the procedure for terminating employment, employee covenants, and a conditional option for stock purchase. The doctors eventually became partners in MRSD and signed a stock transfer agreement that contained a non-competition clause as well as new employment agreements. Subsequently, the relationship between the doctors became hostile and the partners of MRSD voted to terminate Blatchford. The following day, Cieutat resigned. Thereafter, Blatchford and Cieutat filed a nine-count complaint against MRSD alleging dereliction and waste, wrongful termination, breach of fiduciary duties, breach of contract, and a request for declaratory judgment that the non-compete clause was unreasonably restrictive and against public policy, and therefore unenforceable. MRSD filed a counterclaim and sought a preliminary injunction prohibiting Blatchford and Cieutat from competing against MRSD pursuant to the non-compete clauses. The trial court denied MRSD's motion for preliminary injunction, finding that the non-compete clauses were unenforceable. MRSD brought an interlocutory appeal and the appellate court affirmed.
The case returned to the trial court and Blatchford and Cieutat filed a motion for summary judgment on certain counts of its Complaint and on all of MRSD's counterclaims. MRSD filed its own motion for summary with regard to Blatchford and Cieutat's Complaint. Following a hearing, the court granted MRSD's motion for summary judgment on Blatchford's complaint but granted Blatchford's motion for summary judgment that the non-compete clause was unenforceable. MRSD appealed and Blatchford and Cieutat cross-appealed.
The appellate court affirmed the trial court's conclusion that the non-compete clauses are unenforceable because MRSD did not designate any evidence contradicting Blatchford's own evidence that tends to show that enforcement of the non-compete clauses would have been contrary to public policy. The appellate court also affirmed the grant of summary judgment to MRSD on Blatchford's claims for wrongful termination and breach of fiduciary duty. Mercho-Roushdi-Shoemaker-Dilley Thoraco-Vascular Corp. v. Blatchford, 900 N.E.2d 786 (Ind. Ct. App. 2009).
Construction Law - Negligent Performance Claim.
The Indianapolis-Marion County Public Library filed a complaint against Thornton Tomasetti Engineers (TTE) and related defendants for negligent performance of engineering services during the library construction project in addition to various claims for breach of contract, negligence, fraud and bad faith. TTE filed a motion for partial summary judgment joined by the Co-Defendants claiming that they were entitled to summary judgment because the designated evidence established that there had been no personal injury or damage to other property that would permit the Library to maintain an action against them in tort. In other words, the Defendants maintained that the Library's damages arose from the project itself and not from physical damage outside of the project. Following a hearing, the trial court granted the Defendants' motion for summary judgment, determining that the economic loss doctrine barred the Library's negligence claims. The Library appealed the trial court's entry of summary judgment in favor of the Defendants.
Concluding that the trial court properly granted summary judgment for the defendants because the economic loss doctrine precludes the Library from recovering, the appellate court affirmed. The Indianapolis-Marion County Public Library v. Charlier Clark & Linard, P.C., 900 N.E.2d 801 (Ind. Ct. App. 2009).
Business Transactions - Shareholder Derivative Action.
Plaintiffs filed two substantively identical shareholder-derivative complaints on behalf of Biomet, Inc., alleging that the named defendants, as Biomet directors and officers, had breached their fiduciary duties by participating in improper stock option backdating. Thereafter, Biomet announced that it had entered into an agreement, subject to shareholder approval, to sell the Company to a consortium of private-equity investors. Also, Biomet announced that a special committee of its board of directors had concluded that option backdating had occurred and that the resulting errors in accounting for the option might have a material effect on the Company's historical and/or current financial statements.
Plaintiffs then filed a consolidated amended derivative complaint adding information about the special committee's finding of stock option backdating and added an additional derivative claim against the Defendants. Defendants filed a motion to dismiss the consolidated complaint. With this motion pending, the Biomet special committee delivered its final report on Plaintiffs' claims in the derivative action and concluded that pursuit of the claims made in the Biomet derivative litigation was not in the best interests of the Company. Aware of Biomet's special committee final report, the Sponsor Group completed a tender offer under which more than 80% of Biomet's public shareholder had agreed to sell their shares. Biomet was then merged with a corporate entity affiliated with the Sponsor Group and all remaining public shareholders were cashed out at the same price offered to those who tendered their shares. All of Biomet's public shareholders, including Plaintiffs, received a cash payment for their stock in Biomet and the Buyer became the sole owner of Biomet stock.
Defendants then filed a supplemental brief arguing, that as a result of the sale, Plaintiffs no longer held any stock in the Company and had lost standing to maintain the derivative lawsuit. The trial court heard arguments and granted Defendants' motion to dismiss holding that Plaintiffs did not have standing to maintain the derivative action. Plaintiffs appealed.
The appellate court affirmed, holding that the Buyer succeeded to the rights of the former Biomet corporation to seek redress for any alleged injury suffered by the corporation as a result of options backdating by the Defendants, and Plaintiffs had sold their shares in that corporation. Long v. Biomet, Inc., 901 N.E.2d 37 (Ind. Ct. App. 2009).
Real Estate - Tax Deed.
Thomas Grabowski's deceased parents owned a piece of unimproved real property in LaPorte County. To Thomas's knowledge, no estate proceedings were opened following either of the Grabowskis' deaths. Waters purchased a tax sale certificate for the property which had been recorded as delinquent for nonpayment of taxes. Waters assigned one half of his interest in the property to Klare. Neither Waters nor Klare knew the owners of the property or that they were deceased. Plaintiffs sent notice of the tax sale by certified mail to Grabowski and the notices were returned as undeliverable. The county auditor ultimately issued the Plaintiffs a tax deed to the property.
The Plaintiffs next filed a complaint for declaratory judgment to quiet title to the property, listing the Grabowskis, their heirs, and their successors in interest among the defendants. Once attempts at service did not yield a response, Plaintiffs filed a motion for default judgment that was granted by the trial court. Nine months later, Thomas Grabowski filed a motion to set aside the default judgment on the grounds that service of process by publication had been defective and that the default judgment was therefore void. Following a hearing, the trial court rejected Thomas's claim that service of process was defective and denied Thomas's motion. Grabowski appealed.
The appellate court affirmed, holding that because the instant case involved tax-sale property previously owned by now-deceased persons lacking an estate or named representative, and given the Plaintiffs' efforts to serve these persons and their unnamed heirs and successors in interest both at their last known address and by publication in the county where the property at issue is located, such notice was reasonably calculated to apprise the persons and their unnamed successors in interest, including Thomas, of the instant action. This was so especially in light of the fact that the record lacks evidence demonstrating how a more diligent search would have revealed the identities or locations of interested parties. Grabowski v. Waters, 2009 Ind. App. LEXIS 227.
Banking - Case of First Impression.
Although Indiana adopted Article 3 of the Uniform Commercial Code decades ago, the appellate court has not had occasion in this State to consider the propriety of a bank's refusal to pay a cashier's check. Thus, this appeal presents an issue of first impression in Indiana, namely, under what circumstances - if any - an issuing bank may properly refuse to pay a cashier's check.
South Central Bank appeals the trial court's order denying partial summary judgment and granting Lynnville National Bank's motion for summary judgment on South Central's complaint against Lynnville. Specifically, South Central alleges that the trial court erred by concluding that Lynnville was entitled to refuse to pay a cashier's check that it had issues.
The appellate court reversed and remanding with instructions to enter final judgment in South Central's favor in the amount of the original cashier's check plus expenses, interest, and consequential damages, finding that Lynnville wrongfully refused to pay the cashier's check, that none of the applicable defenses were available to Lynnville, and that South Central did not fail to mitigate its damages. South Central Bank v. Lynnville National Bank, 901 N.E.2d 576 (Ind. Ct. App. 2009).
Sales - Indiana Deceptive Consumer Sales Act.
Lawson, who was looking to buy a Ford tractor, saw several tractors on the lot of R.H. Equipment. He stopped to look at a 1989 Ford 2120 tractor on the lot and he called the number on the R.H. Equipment sign to inquire about the tractor. Over time, Lawson made several inquiries about the history of the tractor, and Hale told him that it leaked oil and fuel. After test driving the tractor for a few blocks, Lawson decided that he wanted to purchase it. Lawson again asked Hale if he knew whether there was anything wrong with the tractor. Hale again told him it leaked oil and fuel. After Lawson gave Hale payment for the tractor, Hale presented Lawson with an R.H. Equipment invoice that included the words "AS IS." Lawson signed the invoice.
Lawson then immediately drove the tractor to Pigg Implement where he noticed that there was oil running out underneath the engine onto the gravel. Pigg Implement's service manager inspected the tractor and observed that the engine was cracked and had been welded. After learning additional details about the back story of the tractor, Lawson via an attorney sent a letter to Hale giving him an opportunity to cure the defect in the tractor pursuant to the Indiana Deceptive Consumer Sales Act. Hale responded that the tractor was sold "as is." Lawson filed a complaint for violation of the Indiana Deceptive Consumer Sales Act, violation of the implied warranty of merchantability, breach of an express warranty, and fraud. A bench trial was held and the court ruled for Hale. Lawson appealed.
The appellate court affirmed in part, reversed in part, and remanded, holding (1) that although the trial court should have concluded that Hale, doing business as R.H. Equipment, was a "supplier" of tractors for the purposes of the IDCSA, the deceptive acts giving rise to liability under the IDCSA are very specifically defined and unfortunately for Lawson, Hale's acts did not fall into of the Act's categories as there was no general "fraud" category; (2) that the judgment in favor of Hale on Lawson's claim for breach of the implied warranty of merchantability as Lawson signed the invoice and gave it back to Hale knowing that it said "AS IS" rather than rescinding the sale or objecting to the language; and (3) that the trial court erred in favor of Hale on Lawson's claim for fraud as the evidence presented by Lawson "strikes [the court] as a textbook case of fraud." Lawson v. Hale, 2009 Ind. App. LEXIS 341.
Contract Law - Real Property.
Two contracts for the sale of a multi-tenant office park were entered into by Winterton, LLC. The first contract was between Winterton and Jacob Acquisitions, LLC, as purchaser, whose interest was later assigned to Winterton Inverstors, LLC. The second contract was between Winterton and Brown, as purchaser. The second contract was intended to be a back-up to the first and was to become effective upon the termination or expiration of the first. As things developed, no sale occurred under either contract. Investors sued Winterton claiming a breach of the contract and seeking specific performance and damages. Brown intervened claiming that the first contract had terminated and seeking a declaration that his contract was effective.
The trial court granted a partial summary judgment to the Investors against Winterton finding Winterton in breach of contract for failing to provide estoppel certificates and by changing the closing date and, following a trial on damages, entered a judgment against Winterton. The trial court also granted summary judgment to Investors against Brown finding that the second contract did not become effective as the purchase agreement had not terminated. Winterton appealed the grant of partial summary judgment in favor of Investors, the trial court's denial of Winterton's cross-motion for summary judgment, and the trial court's award of damages in favor of Investors and against Winterton. In addition, Brown appealed the trial court's grant of summary judgment in favor of Investors, and the trial court's denial of his motion for summary judgment and its grant of summary judgment in favor of Winterton.
The appellate court reversed in part, affirmed in part, and remanded, holding that (1) the trial court erroneously determined that Winterton breached the Purchase Agreement by not providing to Investors estoppel certificates and subordination agreements for its tenants; (2) Winterton did not breach the Purchase Agreement by unilaterally changing the closing date; (3) the trial court properly determined that the Purchase Agreement between Winterton and Investors did not terminate. The Winterton, LLC v. Winterton Investors, LLC, 900 N.E.2d 754 (Ind. Ct. App. 2009).
