R. Bruce Wallace v. Alliance Environmental, Inc. and Ruth Brown

Pursuant to Ind.Appellate Rule 65(D), this
Memorandum Decision shall not be FILED
regarded as precedent or cited before any Jun 04 2012, 8:32 am
court except for the purpose of establishing
the defense of res judicata, collateral CLERK
estoppel, or the law of the case. of the supreme court,
court of appeals and
tax court
ATTORNEYS FOR APPELLANT: ATTORNEY FOR APPELLEE:
BRUCE D. BRATTAIN SCOTT A. WEATHERS
MARIO GARCIA The Weathers Law Office, P.C.
Brittain & Minnix Indianapolis, Indiana
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
R. BRUCE WALLACE, )
)
Appellant-Respondent, )
)
vs. ) No. 49A04-1111-CC-665
)
ALLIANCE ENVIRONMENTAL, INC. and )
RUTH BROWN, )
)
Appellee-Petitioner. )
)
APPEAL FROM THE MARION SUPERIOR COURT
The Honorable David J. Dreyer, Judge
Cause No. 49D10-0501-CC-441
June 4, 2012
MEMORANDUM DECISION - NOT FOR PUBLICATION
VAIDIK, Judge
Case Summary
In our previous opinion in this case, we reversed the trial court’s award of
damages to Ruth Brown for R. Bruce Wallace’s breach of fiduciary duty and remanded
with instructions for revising the amount. The trial court recalculated the damages, and
Wallace filed a motion to correct errors, which was denied. He now appeals that denial,
contending that on remand the trial court failed to follow the specific instructions given
by this Court in calculating the damages he owed. We find that the trial court properly
calculated damages in accordance with our remand instructions and therefore affirm.
Facts and Procedural History
Alliance Environmental, Inc. was an environmental architectural engineering and
consulting services company. Wallace was its President and CEO, and Brown was a
minority shareholder beginning in November 2002. In 2005, Wallace negotiated a sale of
Alliance’s assets. Also in 2005, Alliance sued Brown to recover funds that it loaned to
Brown in 2003 that had yet to be repaid. Brown filed a third-party complaint, alleging
that she was entitled to a portion of the proceeds of Alliance’s asset sale and that Wallace
had breached the fiduciary duty that he owed her as a shareholder.
After a bench trial, the trial court entered judgment in the amount of $90,000 in
favor of Brown. Brown filed a motion to correct errors, which was denied. Brown
appealed, and a panel of this Court reversed and remanded with specific instructions: the
trial court was to consider what compensatory damages were due to Brown as a result of
Wallace’s breach of fiduciary duty and offset that number “by her financial gain resulting
from Alliance’s failure to repay the $75,000 loan from Wallace to Alliance and
Alliance’s failure to pay Wallace certain compensation in accordance with the
2
agreement.” Brown v. Alliance Envtl. Inc., No. 49A02-0909-CV-854, slip op. at 4 (Ind.
Ct. App. July 16, 2010). The certain compensation included both Wallace’s back-wages
dating to 1994 and certain deferred compensation. Id. This Court also found that the trial
court’s finding that Brown owned twelve percent of the common stock of Alliance was
clearly erroneous. Id. at 5.
On remand, the trial court found that Brown had a 2.7% ownership interest in
Alliance. It also adopted a report prepared by Kevin L. Petrow, CPA, as to the amount of
damages caused by Wallace’s breach of fiduciary duty. The report concluded that the
total damages were $1,583,754.62, the amount of the outstanding loan to Wallace was
$190,000, and Wallace’s deferred compensation was $138,503.42. After deducting the
loan and deferred compensation, the trial court found the total damages to be
$1,255,742.62 and Brown’s 2.7% share to be $33,528.33. The trial court accordingly
entered judgment against Wallace in the amount of $33,528.33. Wallace filed a motion
to correct errors, which was denied.
Wallace now appeals.
Discussion and Decision
Wallace raises one argument on appeal, which we restate as whether the trial court
abused its discretion in denying his motion to correct errors. Wallace contends that the
trial court failed to properly follow specific instructions from this Court on remand. A
trial court has considerable discretion to grant or deny motions to correct error. Young v.
Ind. Dep’t of Natural Res., 789 N.E.2d 550, 554 (Ind. Ct. App. 2003), trans. denied. We
review the trial court’s ruling on a motion to correct errors for an abuse of discretion. Id.3
Since this Court has previously entered an opinion on this case, the law of the case
doctrine applies. The law of the case doctrine provides that an appellate court’s
determination of a legal issue binds both the trial court and the appellate court in any
subsequent appeal involving the same case and substantially the same facts. Dutchmen
Mfg., Inc. v. Reynolds, 891 N.E.2d 1074, 1082 (Ind. Ct. App. 2008) (citing Pinnacle
Media, LLC v. Metro. Dev. Comm’n of Marion Cnty., 868 N.E.2d 894, 901 (Ind. Ct. App.
2007), trans. denied), trans. denied. The purpose of the doctrine is to minimize
unnecessary relitigation of legal issues once they have been resolved by an appellate
court. Id. (citing Luhnow v. Horn, 760 N.E.2d 621, 625 (Ind. Ct. App. 2001)).
Accordingly, all issues decided directly or by implication in a prior decision are binding
in all further portions of the same case. Id. (citing Keesling v. T.E.K. Partners, LLC, 881
N.E.2d 1025, 1029 (Ind. Ct. App. 2008)).
In our previous opinion issued in this case, we instructed the trial court to only
consider financial losses resulting from Alliance’s loans during the time that Brown was
a shareholder. On remand, the trial court found that this amount was $1,583,754.62.
This amount was indicated in the Petrow report, Appellant’s App. p. 67, which was
conducted by a Certified Public Accountant who had access to all of Alliance’s financial
records when writing the report. While we acknowledge that we also received evidence
in the record that showed that Alliance’s losses during this time could have been
$300,529.93 less, id. at 123, 160, 137, 144, the Petrow report was prepared after a
“review of financial and other records of Alliance Environmental, Inc.” Id. at 64. All of
the debts included in the $1,583,754.62 amount were properly determined by the Petrow
report to have been incurred when Brown was a shareholder of Alliance, id. at 42, and we
4
will not reweigh the evidence on appeal. The Petrow report was adopted by the trial
court, so we find that the amount of total damages that the trial court calculated on
remand, therefore, was in compliance with the instructions articulated in our previous
opinion.
We also find that the trial court was correct in finding that the outstanding loan to
Wallace and his deferred compensation should be deducted from Brown’s total damages.
However, the trial court incorrectly labeled the two amounts – the amount of the
outstanding loan is $138,503.42, and the deferred compensation is $190,000. Id. at 63.
But since the amounts are correct and just labeled incorrectly, this error is harmless.
Finally, we find that the trial court’s determination that Brown had a 2.7%
ownership interest in Alliance was in compliance with our remand instructions. We
found the previous finding that Brown held a 12% interest in Alliance to be clearly
erroneous. Brown owned sixty shares of Alliance stock, and there were a total of 2250
shares of stock. Brown, No. 49A02-0909-CV-854, slip op. at 2. On remand, the trial
court correctly calculated this to be a 2.7% interest in the corporation.
We therefore affirm the trial court’s denial of Wallace’s motion to correct errors
and affirm the entry of judgment in favor of Brown in the amount of $33,528.33.
Affirmed.
CRONE, J., and BRADFORD, J., concur.
5