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

• Court: Indiana Court of Appeals
• Decided: May 16, 2017
• Docket: 72A01-1608-MF-2018
• Status: Published

Opinion

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