Geiger & Peters, Inc. v. Berghoff

854 N.E.2d 842, 2006 WL 2425320
CourtIndiana Court of Appeals
DecidedOctober 3, 2006
Docket49A02-0509-CV-832
StatusPublished
Cited by6 cases

This text of 854 N.E.2d 842 (Geiger & Peters, Inc. v. Berghoff) is published on Counsel Stack Legal Research, covering Indiana Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Geiger & Peters, Inc. v. Berghoff, 854 N.E.2d 842, 2006 WL 2425320 (Ind. Ct. App. 2006).

Opinion

OPINION

BAILEY, Judge.

Case Summary

Appellants-Third Party Plaintiffs Geiger & Peters, Inc. (°G & P") and Carl L. Peters ("Peters"), (collectively referred to as "Appellants"), appeal the trial court's grant of summary judgment to Appellees, Third Party Defendants Michael R. Berg-hoff ("Berghoff") and Lenex Steel Company ("Lenex Steel"), (collectively, "Appel-lees"). We affirm. 1

Issues

Appellants raise four issues, which we consolidate, reorder, and restate as whether the trial court erred by granting summary judgment to Appellees because genuine issues of material fact exist regarding whether:

*844 () Berghoff owed a fiduciary duty to G & P, as a creditor of FSC;
G & P, via its status as FSC's corporate guarantor, has standing to pursue a personal cause of action against Berghoff for breach of fiduciary duty; and (I1)
With regard to Peters's derivative claim for tortious interference of contract, Berghoff intended to tortiously interfere with FSC and Duke Construction's business contracts. (IIT)

Facts and Procedural History

I. Background: The Parties

The relevant facts are undisputed. G & P and Ferguson Steel Company, Inc., ("FSC") are engaged as competitors in the steel fabricating business. G & P is owned, in part, by Peters, who is also a shareholder of FSC. Apart from Peters's ownership interest in the two corporations, G & P and FSC "have no common ownership or corporate officers," and "no joint venture or similar relationships have been undertaken between the two companies for any project or contract." Appellants' App. at 107. Instead, each corporation "is a separate and distinct company and operation, with separate officers, managers, physical offices, fabrication facilities, banking relationships, bonding arrangements, customer lists, contracts and operations." Id.

On March 20, 2002, Peters and J. Russell Sutton ("Sutton"), 2 the other owner of FSC, in their capacity as directors, appointed Berghoff as the President of FSC. Berghoff served as FSC's president until February of 2003, and "was entrusted with the ongoing daily operations and activities of FSC." Id. at 106. In November of 2002, Berghoff became part owner and officer of Lenex Steel, which is also engaged in the construction industry as a steel fabricator and supplier.

Prior to December of 2002, Marvin E. Ferguson ("Ferguson") served as a director of FSC and as an officer and owner of Marvin E. Ferguson, Inc. ("MEFI"). MEFI is engaged in the construction industry as a "steel fabrication consultant and brokerage firm." Id. Prior to 20083, FSC entered into a consulting agreement with Ferguson and MEFI, pursuant to which "Ferguson and MEFI were to solicit and obtain steel purchase orders and contracts on construction projects for FSC." Id. at 107. In particular, Ferguson and MEFI were contracted to maintain FSC's existing business relationship with Duke Construction Company and Duke/Weeks companies ('Duke Construction"), as well as to develop future and ongoing work for FSC with Duke Construction.

IIL The Controversy: G & P's Guaranty and FSC's Default

A. The Bank and the FSC Guaranties

In 2001, G & P tendered $3,000,000.00 to FSC as an unsecured loan, to be repaid in full by April of 2001. At the same time, FSC attempted to secure a line of credit with First Indiana Bank, NA. (the "Bank"), to fund the working capital of FSC's business. In March of 2001, the Bank increased FSC's line of credit from $10,000,000.00 to $13,000,000.00, "so that FSC could repay G & P the [$3,000,000.00] owed." Id. at 108. In exchange, on April 13, 2001, G & P executed a Corporate Limited Guaranty ("Bank Guaranty"), wherein G & P agreed to guarantee "when due, whether by acceleration, anticipatory repudiation, or otherwise, each of the following ...:

*845 (a) The full and prompt payment of all Credit Obligations and any extension or renewal thereof, and all interest, expenses, reasonable costs of collection, reasonable attorney's fees or other obligations due in connection with or on account of such Credit Obligations up to, but not exceeding, an amount equal to the lesser of: 1) the difference between the Borrowing Base (as determined as of the date the particular Advances were made to the Borrower [ie., FSC] giving rise to the Credit Obligations and $3,000,000.00; or (1) $3,000,000.00; and
(b) All interest, expenses, reasonable costs of collection, reasonable attorneys fees or other obligations due in connection with or on account of this Guaranty."

Id. at 175.

That same day, FSC and G & P executed an Agreement to Provide Guaranty (the "FSC Guaranty"). The FSC Guaranty provided that G & P would guarantee FSC's line of credit with the Bank "to a maximum sum of $3,000,000.00," in exchange for: (1) 2% interest per annum "on the greatest amount that [FSC's] Credit Note exceeded the Borrowing Base [ie., $10,000,000.00] during such calendar quarter;" (2) reimbursement and indemnification for all payments made by G & P on the Bank Guaranty; and (8) an assignment of FSC's life insurance policies. Id. at 183. In relevant part, the FSC Guaranty contains the following provisions:

5. Waivers and Amendments. This Agreement may be amended or modified, and its terms or conditions may be waived, only by a written instrument executed by the parties hereto....
6. Emtire Agreement. This Agreement constitutes the entire understanding of the parties relative to the subject matter hereof and supersedes all prior agreements and undertakings between or among any of the parties relating to the subject matter hereof.
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9. Term. This Agreement shall expire one (1) year from the date of this Agreement, but may be renewed for like terms upon written agreement of the parties.

Id. at 184 (emphasis in original).

B. FSC's Default and Liquidation

In the past, FSC had provided structural steel to Duke Construction on multiple commercial projects throughout central Indiana, Ohio, and other parts of the Midwest. Indeed, although FSC had numerous other customers, Duke Construction "accounted for well in excess of 50% of the FSC business at all relevant times hereto." Id. at 106-07. However, in the fall of 2002, Duke Construction began withdrawing its business from FSC.

In October of 2002, FSC defaulted on its line of credit with the Bank, which was guaranteed by G & P. On or about November 1, 2002, Duke Construction decided to no longer award "FSC any new fabrication and erection contracts because of [FSC's] uncertain financial position." Id. at 476. On November 6, 2002, in a memorandum from Berghoff to Sutton, Berghoff outlined a proposal that he believed "would result in an agreement with [the Bank] to extend [FSC's] credit facility." Id. at 702.

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Cite This Page — Counsel Stack

Bluebook (online)
854 N.E.2d 842, 2006 WL 2425320, Counsel Stack Legal Research, https://law.counselstack.com/opinion/geiger-peters-inc-v-berghoff-indctapp-2006.