Rodriguez v. Tech Credit Union Corp.

• Citation: 824 N.E.2d 442
• Decision Date: 29 March 2005
• Docket Number: No. 45A04-0409-CV-470.,45A04-0409-CV-470.
• Parties: Catalina RODRIGUEZ, Appellant-Plaintiff, v. TECH CREDIT UNION CORP., Leroy Johnson, Eddie Veal, Tanya Burns, and Tony Rodriguez, Appellees-Defendants.
• Court: Court of Appeals of Indiana

824 N.E.2d 442

Catalina RODRIGUEZ, Appellant-Plaintiff, v. TECH CREDIT UNION CORP., Leroy Johnson, Eddie Veal, Tanya Burns, and Tony Rodriguez, Appellees-Defendants.

No. 45A04-0409-CV-470.

Court of Appeals of Indiana.

March 29, 2005.

Nathaniel Ruff, Merrillville, IN, Attorney for Appellant.

Paul J. Peralta, D. Lucetta Pope, Baker & Daniels, South Bend, IN, Attorneys For Appellees.

OPINION

BAKER, Judge.

Appellant-plaintiff Catalina Rodriguez (Rodriguez) appeals the trial court's grant of summary judgment in favor of appellees-defendants Tech Credit Union Corp. (Tech), Leroy Johnson, Eddie Veal, Tanya Burns, and Tony Rodriguez (collectively, "the Board Members") in her claim for breach of and tortious interference with an employment contract. Specifically, Rodriguez argues that the trial court improperly granted summary judgment to Tech because it was responsible for the alleged breach of her contract as the successor to LTV Steel Employees Federal Credit Union (LTV) and that summary judgment should not have been granted to the Board Members on the basis of statutory immunity. Finding that Tech could properly be sued as LTV's successor but that LTV and the Board Members acted within the business judgment rule, we affirm the judgment of the trial court.

FACTS

Before it dissolved, LTV was an Indiana nonprofit corporation that operated a credit union in East Chicago. The members of the board of directors received no compensation for their services. On January 21, 2000, Rodriguez assumed the position of General Manager of LTV under the terms of a written employment contract. According to the terms of the contract, Rodriguez was to "perform the duties and responsibilities of General Manager of Credit Union, subject to the direction and policies of the Board of Directors of Credit Union." Board Members' App. p. 11. If Rodriguez failed to perform these duties or if she engaged in certain misconduct, the contract allowed LTV to terminate her employment. Specifically, paragraph 13.2.5 of the contract stated:

The material breach of this agreement, or negligent or willful misperformance by [Rodriguez] of [her] duties and obligations under the agreement, or dishonest, fraudulent or criminal acts of [Rodriguez], provided however, [LTV] shall be given prior written notice of the charges against [Rodriguez] and [Rodriguez] is given an opportunity to respond in person or in writing, at the option of [Rodriguez], to the charges before a final decision is made to terminate this agreement.

Board Members' App. p. 38.

At the time that Rodriguez became general manager, LTV was operating under a Letter of Understanding with its regulating body, the National Credit Union Administration (NCUA), based on its poor management and financial condition. In August 2000, the NCUA notified Johnson, the president of LTV, that limited improvement had occurred in a few areas, but that "poor loan quality is adversely affecting your credit union. Loan policy and underwriting practice is poor, delinquent and loss loans are extremely high, collection efforts are ineffective, and the Provision for Loan Loss expense is causing an operating loss for this year." Board Members' App. p. 46.

In January 2002, the Board Members, who constituted the Executive Committee of the Board of Directors of LTV, determined that Rodriguez had breached her duties under the contract and prepared a memorandum notifying her of the charges against her. Specifically, the Board Members stated that:

1) Rodriguez recommended to the Directors at a March 28, 2001 meeting that LTV engage Airey Insurance and Financial Services, Inc. to broker the marketing and sale of variable annuity and life products without informing the board that she had signed a contract for those services on August 22, 2000, and that her son worked for Airey as a Sales Representative and would receive compensation for its new business.

2) On March 7, 2001, Rodriguez acted at the request of former LTV president Ed Stewart, despite the directive from the newly elected board that she not do so, and summoned security officers to remove board member Tanya Burns from the LTV premises, subsequently paying those security officers from LTV funds without authorization from the Board.

3) Rodriguez negligently extended loan repayment periods for various credit union members based on personal relationships to the detriment of LTV.

4) Rodriguez negligently or willfully failed to develop and implement policies to comply with the November 8, 2000 Letter of Understanding between LTV and the NCUA; and

5) Rodriguez generally failed to execute her duties as the General Manager.

After receiving this letter, Rodriguez requested that the Board convene a meeting on January 15, 2002, to allow her to respond to the charges. Although the Board did so, Rodriguez did not attend the meeting personally. Instead, she submitted a written response. LTV's Board reviewed the response and concluded that Rodriguez failed to adequately rebut the allegations against her because:

1) Rodriguez did not explain why she presented the Airey venture as a new contract in March 2002, and failed to disclose the relationship between Airey and her son to the new Board Members;

2) Witnesses contradicted Rodriguez's version of the incident involving efforts to remove Tanya Burns from the premises;

3) Rodriguez failed to explain her assent to loan extensions and her failure as a manager to prevent loan officers from making inadvisable loans;

4) Rodriguez had missed over one hundred days of work in 2001; and

5) Rodriguez had purchased 500 lapel pins on behalf of another institution with LTV funds.

In deciding whether to terminate Rodriguez's employment for cause, the Board Members further concluded that Rodriguez had failed to implement the directive of the Board that LTV perform its own collections work, that Rodriguez had used LTV funds to purchase shirts for its employees after the Board denied her request for funding, and that NCUA examiner Dale Turner had advised the Board to terminate Rodriguez's employment based on her actions regarding Airey. In an Executive Committee session, the Board Members voted to terminate Rodriguez's employment, and Johnson informed Rodriguez in writing on January 31, 2002, that her employment would end on February 1, 2002.

On April 27, 2002, Tech acquired LTV. The Agreement of Merger stated, "The LTV Steel Employees Federal Credit Union shall be merged into TECH Credit Union under the name and charter of TECH Credit Union." Appellant's App. p. 143 (emphasis in original). The parties agreed that a bond of insurance would be purchased to cover any of LTV's liabilities; however, the Agreement itself was silent as to whether Tech acquired LTV's liabilities. LTV dissolved, and the credit union now does business as Tech.

On September 16, 2002, Rodriguez filed a complaint against Tech and the Board Members, alleging breach of and tortious interference with her employment contract. On October 2, 2003, the Board Members filed a motion for summary judgment, asserting that they acted within the scope of their authority and in the best interest of LTV. On the same day, Tech also filed a motion for summary judgment, alleging that it was neither a party to nor in privity with Rodriguez's employment contract and that Rodriguez had failed to name a necessary party, namely LTV. After a number of continuances, the trial court conducted a hearing on the summary judgment motions on June 29, 2004. On August 5, 2004, the trial court granted both motions for summary judgment, finding that Tech did not acquire the liabilities of LTV,...