Absher v. Clark County Rural Elec. Membership Corp.

Decision Date22 February 1994
Docket NumberNo. 10A04-9302-CV-51,10A04-9302-CV-51
PartiesLonzo J. ABSHER, Gregory R. Willian, James K. Roland, Daniel L. Dean, Donald Graf, Terry Scott, Paul A. Harris, Robert B. Click, & Jerry Landers and Walter Crum, et al., Appellant-Plaintiffs, v. CLARK COUNTY RURAL ELECTRIC MEMBERSHIP CORPORATION and The Board of Directors of the Clark County Rural Electric (Membership Corporation), D. Scott Cook, Joe J. Weber, Candace S. Meyer, Carl Popp, Charles Heil, Glen Reis, and Randall Moser Individually and as Directors of the Clark County Rural Electric Membership Corporation, Appellee-Defendants.
CourtIndiana Appellate Court

David E. Mosley, Charles Gregory Read, Jeffersonville, for appellant-plaintiffs.

David S. Richey, Charles W. Ritz III, James A.L. Buddenbaum, Parr Rickey Obremskey & Morton, Indianapolis, David A. Lewis, Doehrman & Lewis, Jeffersonville, for appellee-defendants.

CHEZEM, Judge.

Case Summary

Plaintiff-appellant Lonzo Absher, et al. ("Absher") appeals the decision of the trial court to dismiss his complaint against the Clark County Rural Electric Membership Corporation ("REMC") for failure to state a claim upon which relief can be granted under Indiana Trial Rule 12(B)(6). We affirm.

Issue

Absher presents one issue for review: Whether the trial court properly dismissed Absher's complaint for failure to state a claim upon which relief could be granted.

Factual and Procedural History

Absher and his fellow plaintiff-appellants are members of the REMC. On October 15, 1991, Absher filed a complaint against the REMC, its board of directors and certain individual directors ("directors"). The trial court dismissed the complaint and Absher filed an amended complaint on April 1, 1992. The trial court dismissed the amended complaint on October 16, 1992, pursuant to T.R. 12(B)(6). Additional facts will be supplied where necessary.

Discussion and Decision

A motion to dismiss under T.R. 12(B)(6) is made to test the legal sufficiency of the claim, not the supporting facts. Gray v. Westinghouse, (1993), Ind.App., 624 N.E.2d 49, 52, reh'g denied. On review, we determine whether the complaint states any allegation upon which relief could be granted. Id. A complaint can not be dismissed under T.R. 12(B)(6) unless it appears to a certainty that the plaintiff would not be entitled to relief under any set of facts. Id. We must take the facts alleged in the complaint as true and determine whether, in a light most favorable to the plaintiff, the complaint is sufficient to constitute a valid claim. Id.

Absher's lengthy and confusing amended complaint contains six counts. 1 Counts I-IV appear to be based on a negligence theory because they use terms such as, "breach of duty" and "causal" connections. Count I alleged that the directors breached their fiduciary duty to the members by creating unlawful subsidiary corporations to the REMC, which caused damages to be incurred to the REMC and its members. Count II alleged the directors breached their fiduciary duties by obtaining loans and encumbering assets without prior approval of the Indiana Utilities Regulatory Commission, which caused economic damage to the REMC and its members. Count III alleged that the directors breached fiduciary duties by unsound, imprudent and unbusinesslike practices, which caused damage to the REMC and its members. Count IV alleged that the directors breached fiduciary duties and violated the Rural Electric Membership Corporation Act, Ind.Code Sec. 8-1-13-17, by not returning excess funds to members and by spending funds on projects not necessary to REMC operations.

Even taking Absher's allegations in Counts I-IV as true, he fails to state valid claims. The economic losses of which Absher complains are not recoverable under a negligence theory because purely economic interests are not entitled to protection against mere negligence. Jordan v. Talaga (1989), Ind.App., 532 N.E.2d 1174, 1181, reh'g denied, trans. denied ("where there is no accident, and no physical damage, and the only loss is a pecuniary one, ... the courts have adhered to the rule ... that purely economic interests are not entitled to protection against mere negligence.").

Absher contends that the directors' conduct constituted ultra vires actions without approval of the members. Indeed, the confusing nature of the complaint makes this argument possible. However, under the REMC Act, only actions which deal with amendment of the REMC articles of incorporation require member approval. Because the actions alleged did not involve the articles of incorporation, the complaint also fails to state a valid claim under an ultra vires theory. The members' proper recourse against directors with whose methods they disagree is to vote for new directors in the next election. The trial court properly dismissed Counts I-IV.

Count V alleged that the board of directors denied members access to board meetings and to the minutes and records of meetings and, therefore, violated the member's rights to inspect records and attend meetings. We must give effect to the plain and ordinary meaning of statutory language. Coons v. Kaiser (1991), Ind.App., 567 N.E.2d 851, 852, reh'g denied. The REMC Act defines and establishes the authority of REMCs. Indiana Code Sec. 8-1-13-1 et seq. The REMC act does not give members the right to attend board meetings, nor does it give them the right to access board minutes and records. The basis for Absher's allegation is the Not-For-Profit Act, Ind.Code Sec. 23-7-1.1-13, which was repealed effective August 1, 1991. Ind.Code Sec. 23-7-1.1-13 provided members with the right to inspect the books and records of a non-profit corporation. It did not provide the right to attend board meetings. Absher posits that because REMCs are patterned after not-for-profit corporations, the Not-For-Profit Act should be applied to REMCs. We reject this contention.

We first note that this portion of the Not-for-Profit Act was repealed before Absher filed his complaint and was not replaced by amendment as were other portions of the Act. Even though Absher urges that this court has previously applied principles of private corporate law to REMCs, the Not-For-Profit Act was not in effect at the time of this litigation. Further, we can not find any instance where it has been applied in this context to REMCs by this court. Second, if the legislature had...

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4 cases
  • Collard v. Enyeart
    • United States
    • Indiana Appellate Court
    • November 5, 1999
    ...Trial Rule 12(B)(6) tests the legal sufficiency of the claim, not the facts which support it. Absher v. Clark County Rural Electric Membership Corp., 629 N.E.2d 870, 871 (Ind.Ct.App.1994),trans. denied. Review of a dismissal under Trial Rule 12(B)(6) is de novo, and thus deference is not re......
  • Goldsmith, In re
    • United States
    • Indiana Appellate Court
    • September 9, 1997
    ...to dismiss under T.R. 12(B)(6) tests the legal sufficiency of the claim, not the facts which support it. Absher v. Clark County Rural Electric, 629 N.E.2d 870, 871 (Ind.Ct.App.1994), trans. denied. Review of a dismissal under T.R. 12(B)(6) is de novo, and thus deference is not required with......
  • BP AMOCO v. LAKE COUNTY PROPERTY TAX ASSESSMENT BD., 49T10-0209-TA-114.
    • United States
    • Indiana Tax Court
    • April 1, 2003
    ...it must be determined whether the complaint states any allegation upon which relief can be granted. Absher v. Clark County Rural Elec. Membership Corp., 629 N.E.2d 870, 871 (Ind.Ct.App.1994), trans. denied. The complaint must be evaluated in a light most favorable to the non-moving party, w......
  • BP Amoco Corporation v. Lake County Property Tax Assessment Bd. of Appeals
    • United States
    • Indiana Tax Court
    • April 1, 2003
    ...is not uniform with other comparable properties, it sufficiently states an allegation upon which relief could be granted. See Absher, 629 N.E.2d at 871. At point, however, BP has not had the opportunity to present facts on the record to support its claim. Indeed, the Indiana Board dismissed......

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