e-scott-treadway-v-stewart-irwin-pc-mary-schmid-ronald-smith ( 2015 )

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
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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
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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.
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[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.
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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
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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
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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).
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[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.
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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
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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.
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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
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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
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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
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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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