Williams v. Orentlicher

939 N.E.2d 663, 2010 Ind. App. LEXIS 2489, 2010 WL 5313416
CourtIndiana Court of Appeals
DecidedDecember 28, 2010
Docket49A02-1003-PL-249
StatusPublished
Cited by8 cases

This text of 939 N.E.2d 663 (Williams v. Orentlicher) 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
Williams v. Orentlicher, 939 N.E.2d 663, 2010 Ind. App. LEXIS 2489, 2010 WL 5313416 (Ind. Ct. App. 2010).

Opinions

OPINION

NAJAM, Judge.

STATEMENT OF THE CASE

Warren L. Williams and Robert Frankel are former employees of the Indiana State Teacher's Association ("ISTA"). As employees of the ISTA, they also acted as fiduciaries with the ISTA Insurance Trust ("the Trust"), an entity legally separate and distinct from the ISTA. Their employment agreements with the ISTA contained arbitration clauses. In July of 2009, the Trust, by its trustees ("the Trustees"), filed suit against Williams and Frankel. In turn, Williams and Frankel filed a motion to compel arbitration of the Trust's claims, which the trial court denied. They now bring this interlocutory appeal1 from the trial court's order denying their motion to compel arbitration. Williams and Frankel raise three issues for our review, one of which we find dis-positive: whether the Trust is bound by the arbitration provisions of Williams' and Frankel's employment agreements with [665]*665the ISTA. We hold the Trust is not bound by Williams' and Frankel's contracts with the ISTA.2 Accordingly, we affirm the trial court's denial of the motion to compel arbitration.

FACTS AND PROCEDURAL HISTORY3

The ISTA is a labor organization that represents employees of Indiana's public schools. It is governed by a Board of Directors, which employs an Executive Director along with other staff. In 1985, the ISTA established the Trust, a common-law trust intended to provide insurance programs for Indiana school corporations to adopt as benefit plans for their employees. The Trust is a legally separate entity from the ISTA and is managed by a nine-member Board of Trustees.

According to the Trust's governing documents, the Executive Director of the ISTA is ex officio a trustee of the Trust. That is, the Executive Director is a trustee by virtue of his position with the ISTA. Similarly, the Deputy Executive Director of the ISTA's Financial Services Program ("FSP") serves ex officio as Director of the Trust.4 The Director of the Trust is "the named fiduciary of the Trust and [is] responsible for the administration of the Trust." Appellants' App. at 206A.

From 1984 until his resignation on May 14, 2009, Williams was the Executive Director of the ISTA. Because of his position with the ISTA, Williams was a trustee of the Trust. Further, in 2002 the ISTA's Board of Directors elected Williams the CEO of the Trust. As such, "hle was specifically responsible for day-to-day oversight of the Trust's assets, and [he] was the primary contact between the Trust and its investment advisors." Id. at 204A. As CEO and trustee, Williams had a fiduciary relationship with the Trust.

From 2002 until his resignation on April 2, 2009, Frankel was the Deputy Executive Director of the FSP.5 FSP is "the trade name for the financial products and services provided through several entities affiliated with ISTA." Id. at 205A. And, again, because of his position with the ISTA, Frankel was the Director of the Trust.

In July of 2008, Williams and Frankel renewed their employment agreements with the ISTA. Williams' agreement provided that he "accepts employment as the Executive Director of the [ISTA] ... and [covenants] to carry out efficiently and properly the duties and responsibilities of the Executive Director position, as defined from time to time by the Board of Directors." Id. at 361A. Frankel's agreement stated that he "accepts employment [666]*666as the Deputy Executive Director of [the FSP] ... and [covenants]. to carry out efficiently and properly the duties and responsibilities of the Deputy Executive Director of [the FSP] position, as defined from time to time by the Board of Directors." Id. at 370A. Neither agreement mentions the Trust.

Each of the employment agreements contained the following arbitration clause:

Dispute Resolution. Should any issue arise regarding the performance of any obligation under the terms of this Agreement, including the invocation of the ["Jwith causef"] termination provision contained herein, the parties agree that prior to initiating or filing any lawsuit regarding such issue[] that they will make reasonable efforts to resolve any such issue with [sic] reasonable time of such written notification to either party. Should the parties be unable to resolve the issue, the parties agree to submit the issue to arbitration before an arbiter selected by the parties through the alternative striking procedure from a panel of seven arbiters provided by the American Arbitration Association. Any requests for arbitration of a ["Iwith cause[") termination shall be made by the Employee in writing within thirty (30) days of receipt of the notice of termination. In any arbitration, each party shall bear their [sic] own costs and attorney's fees and the cost of the arbiter's time shall be split equally. If an arbiter should determine that the termination is without cause, the arbiter may only award the Employee the salary and benefits provided by this Agreement for a termination without cause, subject to mitigation of damages by the Employee.

Id. at 362A, 371A (emphasis added). On April 2, 2009, and May 14, 2009, Frankel and Williams, respectively, resigned from their employment with the ISTA.

On July 24, 2009, the Trustees, on behalf of the Trust, filed their complaint against Williams and Frankel, among others. According to the Trustees complaint, Williams, in his role as CEO and trustee of the Trust, breached his fiduciary duties to the Trust; "conspired ... to place the bulk of the Trust's assets in alternative investments and private placements without informing the Trust's Board of Trustees [either] of the risks associated with such investments" or that other named defendants "would gain thereby," id. at 236A; and aided and abetted other named defendants in their respective breaches of fiduciary duties. Likewise, the Trustees alleged that Frankel, in his role as Director of the Trust, breached his fiduciary duties to the Trust on numerous occasions. According to the Trustees, because of the alleged malfeasance of Williams, Frankel, and others, the Trust

ceased serving as a funding vehicle for the [medical insurance programs] and the [long-term disability insurance programs]. As of [June 30 and July 31, 2009, the Trust] was without liquid resources to pay future benefits-with an estimated present value of at least $34 million-to some 650 [long-term disability] claimants, or to satisfy the claims of participating school corporations with respect to the Trust's "claims stabilization reserves," totaling an additional estimated amount of several million dollars, or to satisfy other obligations.

Id. at 208A. The ISTA is not a named party in the Trustees' lawsuit.

On July 27, 2009, Williams filed a demand for arbitration against the ISTA, alleging almost $300,000 in unpaid compensation and benefits. On October 8, the ISTA filed an answer and counterclaim against Williams. In particular, the ISTA "set[] forth the following counterclaims against Mr. Williams: tortious malfea[667]*667sance, negligent performance of a contract, unjust enrichment, and breach of contract." Id. at 395A. The ISTA also stated that it would seek "repayment of all damages resulting from Mr. Williams' acts and omissions underlying all counterclaims, in-eluding, but not limited to[,] liabilities caused by Mr. Williams." Id.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
939 N.E.2d 663, 2010 Ind. App. LEXIS 2489, 2010 WL 5313416, Counsel Stack Legal Research, https://law.counselstack.com/opinion/williams-v-orentlicher-indctapp-2010.