Jason Wooldridge v. Sellersburg Properties, LLC (mem. dec.)

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be FILED
regarded as precedent or cited before any May 16 2017, 8:11 am
court except for the purpose of establishing
CLERK
the defense of res judicata, collateral Indiana Supreme Court
Court of Appeals
estoppel, or the law of the case. and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEY FOR APPELLEE
James F. Guilfoyle W. Brian Burnette
Larry O. Wilder Applegate Fifer Pulliam LLC
Jeffersonville, Indiana Jeffersonville, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Jason Wooldridge, May 16, 2017
Appellant-Defendant, Court of Appeals Case No.
72A01-1608-MF-2018
v. Appeal from the Scott Circuit
Court
Sellersburg Properties, LLC, The Honorable Roger L. Duvall,
Appellee-Plaintiff Judge
Trial Court Cause No.
72C01-1601-MF-2
Baker, Judge.
Court of Appeals of Indiana | Memorandum Decision 72A01-1608-MF-2018 | May 16, 2017 Page 1 of 6
[1] Sellersburg Properties, LLC (Sellersburg), filed a complaint against Jason
Wooldridge seeking payment on a promissory note for which Wooldridge had
executed a personal guarantee. The trial court granted summary judgment in
Sellersburg’s favor, and Wooldridge now appeals. Finding no error, we affirm
and remand for further proceedings.
Facts
[2] WAG Development, LLC (WAG), is a closely held company that is owned by
three members: (1) Sellersburg, which is owned by William Galligan (William)
and Charles Galligan (Charles); (2) Wooldridge Homes, Inc., which is owned
by Wooldridge; and (3) Thomas Galligan (Thomas).
[3] In May 2011, WAG executed a promissory note (the Note) in the principal
amount of $360,931.38 in favor of MainSource Bank. Payment of the
promissory note was secured by, among other things, a mortgage on real estate
owned by WAG and personal guarantees executed by Wooldridge, William,
Charles, Thomas, and Ann Marie Kempf. Each personal guarantee jointly and
severally guaranteed payment of all sums due under the Note in the event of
default. At some point, the WAG venture failed without paying the Note.
[4] On October 12, 2012, Sellersburg purchased the Note, the mortgage, the
guarantees, and all other loan documents, along with the underlying debt, from
MainSource Bank. The maturity date on the Note passed without the debt
being paid. Consequently, the Note went into default and the balance of the
Note became immediately due.
Court of Appeals of Indiana | Memorandum Decision 72A01-1608-MF-2018 | May 16, 2017 Page 2 of 6
[5] On January 25, 2016, Sellersburg filed a complaint against WAG and
Wooldridge to collect on the Note and foreclose on the mortgage.1 Wooldridge
filed an answer, counter-claim, and a third-party complaint against his co-
guarantors for contribution and other claims. On April 5, 2015, Sellersburg
filed a motion for summary judgment. Following briefing and a hearing, on
August 2, 2016, the trial court granted Sellersburg’s motion. Among other
things, the trial court’s order: (1) foreclosed on the mortgage and ordered the
sale of WAG’s real estate; (2) found Wooldridge and WAG jointly and
severally liable for a monetary judgment in the amount of $553,927.79 (the
principal balance of the Note plus accrued interest), plus prejudgment and
postjudgment interest. Wooldridge now appeals
Discussion and Decision
[6] Our standard of review on summary judgment is well established:
We review summary judgment de novo, applying the same
standard as the trial court: “Drawing all reasonable inferences in
favor of . . . the non-moving parties, summary judgment is
appropriate ‘if the designated evidentiary matter shows that there
is no genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law.’” Williams v.
Tharp, 914 N.E.2d 756, 761 (Ind. 2009) (quoting T.R. 56(C)). “A
fact is ‘material’ if its resolution would affect the outcome of the
case, and an issue is ‘genuine’ if a trier of fact is required to
resolve the parties’ differing accounts of the truth, or if the
1
WAG did not file a responsive pleading or enter an appearance in the underlying lawsuit.
Court of Appeals of Indiana | Memorandum Decision 72A01-1608-MF-2018 | May 16, 2017 Page 3 of 6
undisputed material facts support conflicting reasonable
inferences.” Id. (internal citations omitted).
Hughley v. State, 15 N.E.3d 1000, 1003 (Ind. 2014).
[7] Wooldridge does not dispute that a debt is owed, that the amount of debt
alleged is correct, or that he owes a share of that debt. Instead, he argues that
Sellersburg, despite being the owner of the debt, cannot pursue the balance
against Wooldridge because Sellersburg, by and through its owners, is a co-
guarantor of Wooldridge. We cannot agree. Sellersburg is a separate corporate
entity. There is no evidence in the record remotely providing a basis to find
that Sellersburg’s corporate status is in any way invalid or a legal fiction.
Sellersburg is a valid holder of the Note and is entitled to enforce it; Sellersburg
is not a guarantor of the Note; Wooldridge is a personal guarantor of the Note
and is required to stand by that guarantee.
[8] Wooldridge also argues that as co-members of WAG, Sellersburg owes him
fiduciary duties that it has breached. See Rapkin Grp., Inc. v. Cardinal Ventures,
Inc., 29 N.E.3d 752, 757 (Ind. Ct. App. 2015) (noting that LLC members owe
fiduciary duties to one another). We cannot agree, however, because in 2008,
Wooldridge assigned his membership in WAG to a corporate entity—
Wooldridge Homes, Inc. Therefore, while Sellersburg may owe fiduciary
duties to Wooldridge Homes, Inc., it owes no fiduciary duties to Wooldridge
himself.
Court of Appeals of Indiana | Memorandum Decision 72A01-1608-MF-2018 | May 16, 2017 Page 4 of 6
[9] Even if Sellersburg owed fiduciary duties to Wooldridge, we note that in the
context of a limited liability company, a claimant arguing breach of fiduciary
duty must show recklessness or willful misconduct on the part of the fiduciary.
Id. (noting that a breach of fiduciary duty occurs when an LLC member fails to
deal fairly, honestly, and openly with his company or fellow members). Here,
when it became apparent that WAG was unable to satisfy its debt to
MainSource, Sellersburg stepped forward and bought the debt. There is no
evidence that Sellersburg in any way manipulated the situation or failed to deal
fairly, honestly, and openly with Wooldridge.
[10] And in any event, Wooldridge was not harmed by Sellersburg’s actions, as
there is no dispute that he is a personal guarantor of the Note and is and has
always been secondarily liable for the balance of the debt. See id. (noting that to
prevail on a breach of fiduciary duty claim, the claimant must establish harm).
Had Sellersburg not purchased the Note, Wooldridge would have been liable to
MainSource. That he is liable to Sellersburg instead does not establish that he
suffered harm as a result of Sellersburg’s actions. Consequently, his claim for
breach of fiduciary duty is unavailing.
[11] We understand Wooldridge’s frustration that, at the moment, he is the only one
of five personal guarantors of the Note who is on the hook to pay the debt. But
his third-party complaint against those individuals for contribution, among
other claims, remains in the trial court. That is the most appropriate way for
Wooldridge to seek relief from his co-guarantors.
Court of Appeals of Indiana | Memorandum Decision 72A01-1608-MF-2018 | May 16, 2017 Page 5 of 6
[12] In sum, it is undisputed that Sellersburg owns the Note and that Wooldridge is
a personal guarantor of the Note. He neither disputes those facts nor the
amount of the judgment entered by the trial court. As a result, the trial court
properly granted summary judgment in Sellersburg’s favor.
[13] The judgment of the trial court is affirmed and remanded for further
proceedings.
Robb, J., and Barnes, J., concur.
Court of Appeals of Indiana | Memorandum Decision 72A01-1608-MF-2018 | May 16, 2017 Page 6 of 6