Anthony A. Brummett v. Brian Bailey ( 2023 )

FILED
Nov 29 2023, 9:17 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANTS ATTORNEYS FOR APPELLEE
James J. O’Connor, Jr. Mark R. McKinney
Carta H. Robison Vincent Walker
Barrett McNagny LLP McKinney & Company Law
Fort Wayne, Indiana Muncie, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Anthony A. Brummett, Cheers, November 29, 2023
Inc., Terry Lee Orrick, and John Court of Appeals Case No.
Doe, 23A-CT-683
Appellants-Defendants, Appeal from the Delaware Circuit
Court
v. The Honorable John M. Feick,
Judge
Brian Bailey, Timothy R. Hollems, Master
Appellee-Plaintiff. Commissioner
Trial Court Cause No.
18C04-2112-CT-150
Opinion by Judge Brown
Judges Vaidik and Bradford concur.
Brown, Judge.
Court of Appeals of Indiana | Opinion 23A-CT-683 | November 29, 2023 Page 1 of 12
[1] Anthony A. Brummett, Cheers, Inc., (“Cheers”), and Terry Lee Orrick
(collectively, “Appellants”) 1 appeal the trial court’s interlocutory order denying
their motion for summary judgment. We reverse.
Facts and Procedural History
[2] On the evening of January 4, 2020, into the early morning of January 5, 2020,
Brian Bailey, Lauren Segura, and Nelson Segura were at Cheers, a bar located
in Muncie, Indiana. While seated at the bar, Bailey grabbed Lauren between
her thighs, Nelson responded by grabbing him by his shirtfront and pushing
him off his bar stool, and Bailey fell to the ground.
[3] On December 26, 2021, Bailey filed a complaint claiming that Nelson
“perpetrated an assault” against him. Appellants’ Appendix Volume II at 12.
The complaint also alleged Appellants were “willfully negligent, wantonly
reckless and grossly negligent because of their or their employees’ acts, failures
to act, and/or refusal to help [Bailey] on the night of the incident.” Id. at 13.
[4] On August 23, 2022, Appellants moved for summary judgment asserting that
the individual defendants were not liable and Cheers did not owe a duty to
Bailey to protect him from the unforeseeable act of a third party. The
designated evidence included Lauren and Nelson’s depositions, an affidavit by
Brummett, and two surveillance video recordings of the incident. Brummett’s
1
John Doe, later identified as Nelson Segura, did not join in the motion for summary judgment.
Court of Appeals of Indiana | Opinion 23A-CT-683 | November 29, 2023 Page 2 of 12
affidavit stated that he controls all shares of Cheers through purchase and
assignment, he is purchasing Cheers, “all furnishings, fixtures, equipment,
merchandise, inventory, furniture, supplies, Indiana Alcoholic Beverage Permit
No. RR18-07633, and all other personal property related to the operation” and
the associated real estate “on land contract, whereby Orrick financed the
purchase and [he] make[s] monthly installment payments to Orrick beginning
May 1, 2011, pursuant to the terms and conditions of that certain Promissory
Note dated March 18, 2011.” Id. at 44. He operates Cheers as manager
“pursuant to the Management Agreement,” he is “responsible for the operation
and control of the assets of [Cheers],” “[a]s a shareholder of [Cheers], [he does]
not operate [it] in [his] personal capacity,” and Cheers “operates as an
independent business structure and observes the corporate formalities.” Id. at
45. On November 20, 2022, Bailey filed a response.
[5] On January 27, 2023, the trial court issued an Order Denying Defendant’s [sic]
Motion for Summary Judgment, finding that “[g]iven that a potentially unjust
or illegal act occurred on the property of [Cheers] and Brummett is the bar
manager, summary judgment on this issue is inappropriate,” Nelson had
worked for Brummett’s Plumbing for about ten years, foreseeability is a fact-
specific inquiry, and whether Cheers timely intervened was a question of fact
for the fact finder. Id. at 9-10.
Discussion
[6] Appellants argue there is no genuine issue of material fact which supports
piercing the corporate veil and holding Brummett and Orrick liable or finding
Court of Appeals of Indiana | Opinion 23A-CT-683 | November 29, 2023 Page 3 of 12
that Cheers had a duty to care for Bailey because the actions of Nelson were not
foreseeable. They claim the trial court “erred by focusing on facts that were
immaterial in the analysis for determining whether a landowner has a duty to
protect an invitee from criminal acts of a third party.” Appellants’ Brief at 11.
Appellants further contend that Bailey did not present evidence establishing that
Cheers owed him a duty to prevent the exacerbation of his injuries. Bailey
argues that piercing the corporate veil is a fact-intensive inquiry best left to the
finder of fact and that “there exists a genuine dispute of material fact regarding
whether the corporation was used to promote fraud, injustice, or illegal
activity.” Appellee’s Brief at 9. He claims the acts were foreseeable and that
Appellants had a duty to prevent further injury because they knew Bailey was
injured.
[7] We review an order for summary judgment de novo, applying the same standard
as the trial court. Hughley v. State, 15 N.E.2d 1000, 1003 (Ind. 2014). The
moving party bears the initial burden of making a prima facia showing that
there are no genuine issues of material fact and that it is entitled to judgment as
a matter of law. Manley v. Sherer, 992 N.E.2d 670, 673 (Ind. 2013). Summary
judgment is improper if the party fails to carry its burden, but if it succeeds, then
the nonmoving party must come forward with evidence establishing the
existence of the genuine issue of material fact. Id. We construe all factual
inferences in favor of the nonmoving party and resolve all doubts as to the
existence of a material issue against the moving party. Id. Our review of a
summary judgment motion is limited to those materials designated to the trial
Court of Appeals of Indiana | Opinion 23A-CT-683 | November 29, 2023 Page 4 of 12
court. Mangold ex rel. Mangold v. Ind. Dep’t of Nat. Res., 756 N.E.2d 970, 973
(Ind. 2001).
[8] Generally, a shareholder is not personally liable for the acts of the corporation.
Aronson v. Price, 644 N.E.2d 864, 867 (Ind. 1994) (citation omitted). “While an
Indiana court will impose personal liability to protect innocent third parties
from fraud or injustice, the burden is on the party seeking to pierce the
corporate veil to prove that the corporate form was so ignored, controlled or
manipulated that it was merely the instrumentality of another and that the
misuse of the corporate form would constitute a fraud or promote injustice.”
Id. (citing Winkler v. V.G. Reed & Sons, Inc., 638 N.E.2d 1228, 1232 (Ind. 1994)).
“When a corporation is functioning as an alter ego or a mere instrumentality of
an individual or another corporation, it may be appropriate to disregard the
corporate form and pierce the veil.” Blackwell v. Superior Safe Rooms LLC, 174
N.E.3d 1082, 1092 (Ind. Ct. App. 2021).
“While no one talismanic fact will justify with impunity piercing
the corporate veil, a careful review of the entire relationship
between various corporate entities, their directors and officers
may reveal that such an equitable action is warranted.” Stacey–
Rand, Inc. v. J.J. Holman, Inc., 527 N.E.2d 726, 728 (Ind. Ct. App.
1988). When determining whether a shareholder is liable for
corporate acts, our considerations may include: (1)
undercapitalization of the corporation, (2) the absence of
corporate records, (3) fraudulent representations 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,
Court of Appeals of Indiana | Opinion 23A-CT-683 | November 29, 2023 Page 5 of 12
and (8) other shareholder acts or conduct ignoring, controlling,
or manipulating the corporate form. Aronson, 644 N.E.2d at
867. In addition, when “a plaintiff seeks to pierce the corporate
veil in order to hold one corporation liable for another closely
related corporation’s debt, the eight Aronson factors are not
exclusive.” Oliver v. Pinnacle Homes, Inc., 769 N.E.2d 1188, 1192
(Ind. Ct. App. 2002), trans. denied. Additional factors to be
considered include whether: “(1) similar corporate names were
used; (2) the corporations shared common principal corporate
officers, directors, and employees; (3) the business purposes of
the [organizations] were similar; and (4) the corporations were
located in the same offices and used the same telephone numbers
and business cards.” Id. (footnote omitted).
*****
Piercing the corporate veil involves a highly fact-sensitive inquiry
that is not typically appropriate for summary disposition.
Reed v. Reid, 980 N.E.2d 277, 301-302 (Ind. 2012).
[9] The designated evidence reveals that Brummett owned Cheers and was
employed by Cheers as the bar manager. Orrick had sold Cheers to Brummett,
and Brummett was still making monthly installment payments to Orrick in
connection with the sale. Brummett’s affidavit also stated that he does not
operate Cheers in a personal capacity and that Cheers “operates as an
independent business structure and observes the corporate formalities.” Id. at
45. The evidence does not demonstrate that Brummett or Orrick were present
for the interaction between Bailey, Lauren, and Nelson. Nelson had previously
installed cameras for Cheers and worked for Brummett for ten years doing
Court of Appeals of Indiana | Opinion 23A-CT-683 | November 29, 2023 Page 6 of 12
plumbing and construction. We cannot say, in light of the factors in Reed, that
the designated evidence supports piercing the corporate veil.
[10] To the extent Brummett argues that Cheers did not owe Bailey a duty of care
because the attack was not foreseeable, we note that we recently discussed
foreseeability in Singh v. Singh, 155 N.E.3d 1197 (Ind. Ct. App. 2020), which
discussed the Indiana Supreme Court’s holding in Cavanaugh’s Sports Bar &
Eatery, Lt. v. Porterfield, 140 N.E.3d 843 (Ind. 2020). Specifically, in Singh, we
held:
Landowners must “take reasonable precautions to protect
invitees from foreseeable criminal attacks.” Rogers v. Martin, 63
N.E.3d 316, 326 (Ind. 2016) (citation omitted). Ascertaining
whether this duty extends to “the criminal act at issue,” Goodwin
v. Yeakle’s Sports Bar & Grill, Inc., 62 N.E.3d 384, 389 (Ind. 2016),
in a “particular scenario,” Rogers, 63 N.E.3d at 320, hinges on the
foreseeability of the attack, requiring “a general threshold
determination that involves an evaluation of (1) the broad type of
plaintiff and (2) the broad type of harm,” id. at 325. When
considering these categories, courts should determine whether
the defendant knew or had reason to know of any present and
specific circumstance that would cause a reasonable person to
recognize the probability or likelihood of imminent harm.
Under the criminal act at issue in this particular scenario,
Cavanaugh’s owed no duty to protect its patron from the sudden
parking lot brawl when no evidence shows that Cavanaugh’s
knew the fight was impending. Because we continue to decline
to impose a comprehensive “duty on proprietors to afford
protection to their patrons” from unpredictable criminal
attacks, Goodwin, 62 N.E.3d at 394, we reverse and remand.
*****
Court of Appeals of Indiana | Opinion 23A-CT-683 | November 29, 2023 Page 7 of 12
Further, the Court addressed evaluating the “broad class of
plaintiff” and the “broad type of harm” in these cases and
acknowledged that, when it did so in these cases,
a key factor is whether the landowners knew or had reason
to know about any present and specific circumstances that
would cause a reasonable person to recognize the
probability or likelihood of imminent harm. See Goodwin, 62
N.E.3d at 385 (noting that, just before the barroom
shooting, all the parties were separately “socializing” at
“the small establishment”); Rogers, 63 N.E.3d at
319 (remarking that the homeowner observed that her co-
host was, before attacking a house-party guest, “just ‘being
normal,’ and it was not obvious to her that he had ‘a buzz
going’” from drinking alcohol); id. (observing that, before
the guest was found dead outside her home, the
homeowner saw him “lying motionless on the basement
floor with his eyes closed”). If landowners had reason to
know of any imminent harm, that harm was, as a matter
of law, foreseeable in the duty context. See, e.g., id. at
327 (holding that it was foreseeable “that a house-party
guest who is injured on the premises could suffer from an
exacerbation of those injuries”). In the years since
Goodwin and Rogers, courts have thoughtfully applied this
framework, finding duty only when landowners had this
contemporaneous knowledge.
*****
The Court’s 3-2 majority opinion seems to instruct both
narrowing the review of whether a duty is foreseeable and
limiting when a duty is found to exist.
By pointing to police runs made to the bar during the year
before the quarrel, Porterfield improperly substitutes
evidence of the bar’s past raucousness for
contemporaneous knowledge of imminent harm. We
Court of Appeals of Indiana | Opinion 23A-CT-683 | November 29, 2023 Page 8 of 12
repeat, this type of historical evidence, while “appropriate
in evaluating foreseeability in the context of proximate
cause,” should play no role when we evaluate
“foreseeability as a component of duty.” Goodwin, 62
N.E.3d at 393. Considering prior reports of the bar’s
unruliness shifts our common law jurisprudence back into
a recently supplanted totality analysis and risks fabricating
a duty when harm is merely “sufficiently likely.” Id. at
392 (quotation omitted). A landowner’s present
knowledge, however, more conclusively elevates the
knowledge of risk to “some probability or likelihood of
harm,” id., allowing courts to continue to find a duty when
“reasonable persons would recognize it and agree that it
exists,” Rogers, 63 N.E.3d at 325.
[Cavanaugh’s, 140 N.E.3d at 843-844].
In a separate opinion in which Justice David joined, Justice Goff
dissented and disagreed with adding new requirements to the
foreseeability inquiry that “elevat[ed] the standard to impose a
duty.” Cavanaugh’s, 140 N.E.3d at 844 (Goff, J., dissenting). He
further observed that the “majority also relie[d] on the particular
facts of this case” including “the lack of tension in the bar, noting
that ‘for hours before the fracas, [the plaintiff] and his friend
socialized with bartenders and had no animosity with any other
customers.’” Id. at 846 (quoting majority op. at 843).
Accordingly, it appears that, in practice, an examination of
particular facts is necessary to fully resolve the question of duty at
this stage and to properly apply Cavanaugh’s required
“foreseeability as a component of duty” analysis. See 140 N.E.3d
at 844 (majority op.).
Singh, 155 N.E.3d at 1204-1205, 1207-1208 (citing Cavanaugh’s, 140 N.E.3d at
837-838, 843-844) (footnote omitted).
Court of Appeals of Indiana | Opinion 23A-CT-683 | November 29, 2023 Page 9 of 12
[11] The record reveals that Nelson had previously worked for Brummett for
approximately ten years doing plumbing and construction work. The evidence
does not demonstrate that Brummett was at Cheers on the night in question. A
DJ was playing in the bar, in which there were “a bunch of people.”
Appellants’ Appendix Volume II at 39. There were two staff members serving
drinks at the bar, and the evidence does not demonstrate that they were familiar
with Nelson. Bailey stated to Nelson that Bailey was drunk and “a pervert” to
Nelson, and Nelson laughed off the statement and turned around because he
did not wish to speak to Bailey. Id. at 40. Thirty to forty minutes later, Bailey
grabbed Lauren between her legs, Nelson responded by grabbing Bailey’s
shirtfront, Nelson pushed Bailey off the stool, and Bailey fell to the ground.
Nelson pushed Bailey off the stool approximately fifteen seconds after Bailey
grabbed Lauren. We cannot say that Appellants had notice of present and
specific circumstances that would cause a reasonable person to recognize the
risk of an imminent criminal act, or that Nelson pushing Bailey off a bar stool
was foreseeable. See Cavanaugh’s, 140 N.E.3d at 843 (finding that Cavanaugh’s
could not foresee a patron blinding another in a sudden parking lot fight
because it had no reason to believe a fight would occur due to it occurring
suddenly and without warning); Goodwin, 62 N.E.3d at 393-394
(“although bars can often set the stage for rowdy behavior, we do not believe
that bar owners routinely contemplate that one bar patron might suddenly
shoot another. . . . But to impose a blanket duty on proprietors to afford
protection to their patrons would make proprietors insurers of their patrons’
safety which is contrary to the public policy of this state.”).
Court of Appeals of Indiana | Opinion 23A-CT-683 | November 29, 2023 Page 10 of 12
[12] With respect to Brummett’s argument that a question of fact does not exist as to
whether Cheers staff had a duty to intervene to prevent further injury, we note
that in Rogers v. Martin, the Indiana Supreme Court analyzed a homeowner’s
duty to take precautions to prevent a co-host from fighting with and injuring a
house-party guest separately from the homeowner’s duty to a social guest “to
protect him from the exacerbation of an injury occurring in her home,” after
finding him unconscious on her floor. 63 N.E.3d 316, 327 (Ind. 2016).
[13] The designated evidence reveals that the staff of Cheers witnessed Bailey after
he had been pushed to the floor. Lauren stated in her deposition that after
Nelson grabbed Bailey, “he went down and, like, the whole crowd just went —
everybody just, like, gathered. That’s all I know. I didn’t see what happened.”
Appellants’ Appendix Volume II at 36. The video recording reveals that after
Nelson pushed Bailey off the stool, Bailey lay on the floor, patrons at the bar
gathered around Bailey, and two bartenders saw the commotion, looked over
the bar counter at Bailey on the ground, and saw people checking on him.
Exhibit D at 1:04, 1:28-1:35. One of the bartenders exited the frame and
reappeared next to Bailey, either speaking with or examining him. Id. at 1:45-
1:55. The other bartender exited the frame and similarly reappeared and can be
seen either examining or speaking with Bailey. Id. at 2:10-2:45. Bailey
designated no evidence in response to the motion for summary judgment.
Because there is no designated evidence that Bailey suffered an injury, we
cannot say that Appellants owed Bailey a duty to prevent further harm. See
Rose v. Martin’s Super Markets LLC, 120 N.E.3d 234, 244 (Ind. Ct. App. 2019)
Court of Appeals of Indiana | Opinion 23A-CT-683 | November 29, 2023 Page 11 of 12
(holding grocery store had no duty to take action to prevent exacerbation of
customer’s injuries where store had knowledge of active shooter but had no
knowledge of customer’s injuries inflicted by shooter until it was too late to
offer her assistance), trans. denied.
[14] For the foregoing reasons, we reverse the trial court’s denial of Appellants’
motion for summary judgment.
[15] Reversed.
Vaidik, J., and Bradford, J., concur.
Court of Appeals of Indiana | Opinion 23A-CT-683 | November 29, 2023 Page 12 of 12