Branham Corp. v. Newland Res., LLC

• Decision Date: 23 September 2014
• Docket Number: No. 06A05–1311–CT–572.,06A05–1311–CT–572.
• Citation: 17 N.E.3d 979
• Parties: The BRANHAM CORPORATION, Appellant–Plaintiff, v. NEWLAND RESOURCES, LLC ; Samuel Sutphin; White River Funding Corp.; White River Venture Partners, L.P.; Gene Tanner; David Knall; Madeira Partners, L.P. ; Mike Henderson; Brian Henderson; Tim DeBruiker; Driver Solutions, LLC ; Archie Leslie; Fifth Third Bank; Ecoholdings, LLC; Dorothy Alig; Greenleaf, LLC; Royal Run Partners, L.P.; John Michael Kensill; Susan Kensill, and Ecosource, LLC, Appellees–Defendants. Thomas N. Eckerle; Thomas N. Eckerle Prof. Corp., Appellants–Defendants, v. The Branham Corporation, Appellee–Plaintiff.
• Court: Indiana Appellate Court

17 N.E.3d 979

The BRANHAM CORPORATION, Appellant–Plaintiff

v.NEWLAND RESOURCES, LLC ;

Samuel Sutphin;

White River Funding Corp.;

White River Venture Partners, L.P.;

Gene Tanner;

David Knall;

Madeira Partners, L.P. ;

Mike Henderson;

Brian Henderson;

Tim DeBruiker;

Driver Solutions, LLC ;

Archie Leslie;

Fifth Third Bank;

Ecoholdings, LLC;

Dorothy Alig;

Greenleaf, LLC;

Royal Run Partners, L.P.;

John Michael Kensill;

Susan Kensill, and Ecosource, LLC, Appellees–Defendants.

Thomas N. Eckerle;

Thomas N. Eckerle Prof. Corp., Appellants–Defendants

v.The Branham Corporation, Appellee–Plaintiff.

No. 06A05–1311–CT–572.

Court of Appeals of Indiana.

Sept. 23, 2014.

Donn H. Wray, Marc A. Menkveld, Katz & Korin, PC, Mickey J. Lee, McGinnis Wutscher Beiramee, LLP, Indianapolis, IN, Roger L. Burrus, Burrus & Sease, LLP, Zionsville, IN, Attorneys for Appellant the Branham Corporation.

Dina M. Cox, Neal Bowling, Lewis Wagner, LLP, Indianapolis, IN, Attorneys for Appellants Thomas N. Eckerle and Thomas N. Eckerle Prof. Corp.

Paul D. Vink, Bryan H. Babb, Bose McKinney & Evans LLP, Indianapolis, IN, Attorneys for Appellee White River.

Robert V. Clutter, Sergey G. Grechukhin, Kirtley, Taylor, Sims, Chadd & Minnette, P.C., Lebanon, IN, Attorneys for Appellee Newland Resources, LLC and Dorothy Alig.

Julia Blackwell Gelinas, Maggie L. Smith, Frost Brown Todd LLC, Indianapolis, IN, Attorneys for Fifth Third Capital Holdings, LLC.

Melissa R. Garrard, Melissa R. Garrard, Attorney at Law, P.C., Lebanon, IN, Attorney for EcoHoldings, LLC.

Thomas E. Densford, Bauer & Densford, Bloomington, IN, Attorney for John Michael Kensill and Susan Kensill.

Donn H. Wray, Marc A. Menkveld, Katz & Korin, PC, Mickey J. Lee, McGinnis Wutscher Beiramee, LLP, Indianapolis, IN, Roger L. Burrus, Burrus & Sease, LLP, Zionsville, IN, Attorneys for Appellee the Branham Corporation.

OPINION

BAILEY, Judge.

Case Summary

In 2007, The Branham Corporation (Branham) obtained a judgment against Newland Resources, LLC (Newland) and related entities for breach of contract. The judgment was uncollectible in light of 2004–2005 distributions by Newland that had depleted corporate assets available for creditors. In 2011, Branham filed proceedings supplemental and new claims for relief under the Indiana Crime Victims Relief Act, Indiana Code section 34–24–3–1 (Victims Relief Act)¹ and Indiana's Corrupt Business Influence Act, Indiana Code section 34–24–2–6 (RICO).² In addition to Newland, named defendants included the appellees: Samuel Sutphin (Sutphin), White River Funding Corp., White River Venture Partners, L.P., Gene Tanner, David Knall, Madeira Partners, L.P., Mike Henderson, Brian Henderson, Tim DeBruiker, Driver Solutions, LLC, Archie Leslie, Fifth Third Bank, EcoHoldings, LLC (EcoHoldings), Dorothy Alig, Greenleaf, LLC (Greenleaf), Royal Run Partners, L.P., John Michael Kensill (Kensill), Susan Kensill, and Ecosource, LLC (Ecosource).³ Summary judgment was granted to the majority of the defendants⁴ on the new claims, on statute of limitations and res judicata grounds. Branham appeals the grant of summary judgment.

The appeal of the grant of summary judgment has been consolidated with an appeal by Thomas Eckerle, a past provider of legal services to Newland, and the Thomas Eckerle Professional Corporation (collectively, Eckerle). Eckerle appeals the denial of a motion to correct error which challenged the February 4, 2013 dismissal, without prejudice, of Eckerle as a defendant. We affirm the trial court's summary judgment order but remand for inclusion of Eckerle as a prevailing defendant. We reverse the order dismissing Eckerle.

Issues

Branham presents three issues for review, which we consolidate and restate as the following issue: whether summary judgment was improvidently granted.

Eckerle presents a single, consolidated issue: whether he, like the other defendants, was entitled to a grant of summary judgment as opposed to a dismissal that deprived him of the opportunity to protect his professional reputation and seek attorney's fees from Branham for frivolous litigation.

Facts and Procedural History

To date, Branham has not been paid a 2007 judgment obtained against Newland. Branham has alleged that funds that would have been available to pay the judgment were wrongfully depleted by Newland's 2004–2005 distributions of proceeds Newland received upon the 2004 sale of its wholly-owned subsidiary, Boone County Utilities, LLC (BCU). The distributions to shareholders and members, which took place during BCU's bankruptcy proceedings, left Newland and BCU with joint assets of less than $10,000.

The facts surrounding the September 15, 2004 commencement of litigation⁵ and the November 2, 2007 jury verdict were recited by this Court in a prior appeal:

Newland was organized on October 11, 1994 and originally formed to develop real estate. Sometime in 1992 or 1993, prior to its organization, Newland began to explore a possible development project in Boone County consisting of 270 acres at the intersections of State Road 334 and I–65 now known as Royal Run Subdivision. Newland considered several options for water and sewer utility service to its residential subdivision in the Royal Run area before ultimately forming a wholly-owned utility operating company in April 1996 known as Boone County Utilities, LLC, (BCU). BCU was to provide water and sewer utilities to the Royal Run area.

Newland entered into an agreement with Branham (the Branham Agreement) for assistance in negotiating a contract with the City of Indianapolis for the acceptance of sewage flow from the BCU service area, and in negotiating a contract with the Indianapolis Water Company for selling water to BCU for delivery to the BCU service area. The Branham Agreement contained the following compensation provision [for a monthly retainer and success fee]....

BCU entered into a purchase agreement with the Town of Whitestown (the Whitestown Purchase Agreement) on February 11, 2004....

Article III of the Whitestown Purchase Agreement provided that Whitestown would transfer to BCU $4,200,000 at closing. Article II, 2.4 of the Whitestown Purchase Agreement further provided in pertinent part: In addition to the Purchased Assets, on and after the Closing Date, Whitestown shall assume the following [obligations of BCU]: ...

BCU (debtor) ultimately filed a petition for Chapter 11 bankruptcy (the Bankruptcy Matter). Valenti Held Real Estate Group, LLP (Valenti) was a named creditor and interested party in the Bankruptcy Matter. In addition to the Bankruptcy Matter, there was a matter pending before the Indiana Utility Regulatory Commission (IURC) relating to the continued operation of BCU (the IURC Matter). Valenti claimed that the order issued by the IURC in the IURC Matter entitled Valenti to refunds of $1,743,678.33 (Refund Claim) and Valenti claimed and certified in the Bankruptcy Matter that it was entitled to an additional $2,478,496.00 (Certified Claim) in reimbursement for sewer and water facilities previously constructed and dedicated to BCU. Valenti's Refund Claim and Certified Claim totaled $4,222,174.33.

On February 11–12, 2004, Whitestown, BCU, and Valenti entered into a Novation and Substitution Agreement (the Novation Agreement) that provided that Whitestown would pay Valenti a cash amount of $900,000.00 and Whitestown would issue a Series B Junior Bond (Valenti Bond) for $3,322,175.00. The Novation Agreement was conditioned upon approval by the Bankruptcy Court in the Bankruptcy Matter and any other regulatory approval of the Novation Agreement and the Purchase Agreement. Upon such approval, Valenti agreed that the Whitestown obligations under the Novation Agreement operated as a novation and substitution of any and all obligations of BCU under prior agreements.

BCU, Debtor, filed in the Bankruptcy Court a Disclosure Statement Relating To Debtor's Amended Liquidating Plan of Reorganization (Disclosure Statement) and an Amended Liquidating Plan of Reorganization (Amended Plan). The Disclosure Statement and the Amended Plan established that Whitestown would pay $4,200,000.00 to BCU, and would pay $4,222,175.00 to Valenti to resolve BCU's obligations to Valenti. A Motion to Sell was submitted to the Bankruptcy Court seeking approval for the sale of BCU to Whitestown. The Bankruptcy Court held a hearing on the Motion To Sell [sic] and issued its Memorandum of Decision granting the Motion to Sell and approving the Purchase Agreement and the Novation Agreement in its entirety subject to immaterial modification. The closing occurred on July 20, 2004.

On October 31, 2005, Branham filed its First Amended Complaint against Newland and others. After the answer and affirmative defenses were filed and several orders were issued, the only remaining count of the Branham complaint alleged a breach of contract against Newland, the only remaining party, pertaining to the calculation and payment of the success fee. Newland filed a motion for partial summary judgment that was denied, and the matter proceeded to a jury trial. Newland's motions for judgment on the evidence were denied by the trial court and the jury, after determining liability, ultimately returned a verdict in favor of Branham for damages in the amount of $397,853.92 using the formula provided in Jury Instruction No. 5. The trial court entered judgment on the jury verdict.

Newland Resources, LLC v. Branham Corp., 918 N.E.2d 763, 767–69 (Ind.Ct.App.2009) (“Newland I ”). The Newland I Court determined that the trial court did not err in its interpretation of the contractual provisions triggering the entitlement to and calculation of the success fee, and that there was sufficient evidence before the jury on the issue of the purchase price to support the jury's calculation of the success fee. Id. at 771. The matter was remanded for the calculation of post-judgment interest owed to Branham. Id. at 773.

On cross-appeal, Branham argued that the trial court erred by dismissing counts alleging a civil...