Shortridge v. Platis

• Decision Date: 12 January 1984
• Docket Number: No. 2-383A80,2-383A80
• Citation: 458 N.E.2d 301
• Court: Indiana Appellate Court
• Parties: Douglass R. SHORTRIDGE, Special Administrator of the Estate of William M. Platis, deceased, and Dorthey Platis, Plaintiffs-Appellants, v. George PLATIS, Nick J. Thiros, Wechsler Coffee Corporation and G & F Consulting Corporation, Defendants-Appellees.

Page 301

458 N.E.2d 301

Douglass R. SHORTRIDGE, Special Administrator of the Estate

of William M. Platis, deceased, and Dorthey

Platis, Plaintiffs-Appellants, v. George PLATIS, Nick J. Thiros, Wechsler Coffee Corporation and G & F Consulting Corporation, Defendants-Appellees.

No. 2-383A80.

Court of Appeals of Indiana,

Third District.

Jan. 12, 1984.

Douglass R. Shortridge, Douglass R. Shortridge, P.C., Indianapolis, for plaintiffs-appellants.

Terrill D. Albright, Steven L. Householder, Baker & Daniels, Indianapolis, for defendants-appellees George Platis and G & F Consulting Corp.

David Capp, Cohen & Thiros, Merrillville, James H. Voyles, Ober, Symmes, Cardwell, Voyles & Zahn, Indianapolis, for defendant-appellee Nick J. Thiros.

Jim A. O'Neal, Robert G. Zeigler, Ice, Miller, Donadio & Ryan, Indianapolis, for defendant-appellee Wechsler Coffee Corp.

HOFFMAN, Judge.

William and George Platis were brothers engaged in the business of coffee roasting and sales. In 1974, the Platis brothers merged their company with the Cambridge Coffee Company, owned by Robert and Richard Richheimer, and formed Metrobridge, Inc. Following consolidation, Richheimer Coffee Company (owned by the Richheimers) owned 71% of the Metrobridge shares, while George and William Platis each owned 14.5%.

The Richheimers and the Platis brothers executed a stockholders' agreement restricting transfer of Metrobridge shares in order to "preserve continuity of management" and "to prevent any of the Stock from being acquired by a person other than the parties ... or a Permitted Transferee ... [.]" This comprehensive agreement included the following buy/sell clause:

"In the event of the death of either WILLIAM or GEORGE, the survivor of them shall have the right of option, so long as he lives, to make, from time to time, such purchases as such survivor desires, from Permitted Transferees of the decedent, of Stock which was owned by such decedent at the time of his death, each such purchase to be at the same price as is fixed in preceding sub-paragraph (b)(ii) hereof; such purchase price(s) shall be paid in five (5) approximately equal annual instalments the first instalment payable one (1) year from the exercise of such option evidenced by promissory note(s) bearing interest at 7% per annum and collateralized by the Stock purchased[.]"

The following formula was included for the purpose of determining the purchase price of stock in the event that the option to purchase was exercised:

"The book value of such Stock, so proposed to be sold, as of the date of the close of the immediately preceding fiscal year of CORPORATION unless subsequent thereto an audit report of CORPORATION shall have been prepared by a Certified Public Accountant for a portion of the CORPORATION'S current fiscal year, which book value shall be conclusively determined by the audit report for the respective period aforementioned after deducting therefrom any valuation of good will plus that sum, as and for the proportionate share of the good will of CORPORATION, as is allocable to the Stock proposed to be sold. The total good will value shall be conclusively deemed to be equal to three (3) times the net earnings of CORPORATION averaged over its three (3) immediately preceding fiscal years."

On April 28, 1978, William Platis suffered a massive heart attack and died. George Platis sent notice of his intent to exercise the option to purchase William's stock on June 8, 1978. William's widow, Dorthey Platis, objected to the sale due to a dispute over the valuation of the stock. Based on her objections, the executor of William's estate, Nick Thiros, delayed the sale.

In response, George Platis filed suit against Thiros seeking specific performance of the stockholders' agreement. Several different estimates were made using the formula contained in the agreement, the highest being for $138,000. Instead of pursuing further court intervention in this matter, the parties struck a settlement agreement on November 7, 1978. Dorthey Platis agreed to a sale of stock for $140,000 cash, and the George Platis suit was dismissed with prejudice.

Early in 1979, George Platis sold his interest in Metrobridge to Wechsler Coffee Corporation for approximately $720,000 and entered into an employment contract with Wechsler in the amount of $200,000.

On March 18, 1980, Douglass Shortridge, acting as Special Administrator for the Estate of William Platis, filed suit against George Platis. Shortridge amended his complaint on March 16, 1982 and joined Nick Thiros, Wechsler Coffee Corporation, and G & F Consulting Corporation as parties defendant. Essentially, Shortridge claimed that defendants had either jointly or severally worked to assure the fraudulent conveyance of William Platis' stock at a depreciated value to George Platis. Summary judgment was granted in favor of all defendants, from which appellants Dorthey Platis and Douglass Shortridge now appeal.

It should first be noted that "[t]he standard of review applied by the courts of appeal is the same as that of the lower courts; summary judgment is proper only when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Matter of Estate of Belanger, (1982) Ind.App., 433 N.E.2d 39, at 42; Enderle v. Sharman, (1981) Ind.App., 422 N.E.2d 686. As stated in Aetna Ins. Co., etc. v. Monteith Tire Co., (1983) Ind.App., 443 N.E.2d 880, at 881 "Summary judgment is not a procedure for trying facts and determining the preponderance of the evidence, but rather it is a procedure for applying the law to the facts when no factual controversy exists. Central Realty, Inc. v. Hillman's Equip., Inc. (1969), 253 Ind. 48, 246 N.E.2d 383. The standard of review applied by courts of appeal is the same as that of trial courts; summary judgment is proper only when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. F.W. Means & Co. v. Carstens (1981), Ind.App., 428 N.E.2d 251."

Appellants first contend that the trial court erred in granting summary judgment due to the existence of a material issue of fact on their claim of constructive fraud. Appellants' amended complaint and affidavits in opposition to defendants' motions for summary judgment allege that defendants materially misrepresented their intentions to Dorthey Platis in order to purchase her stock under the buy/sell agreement formula. This formula led to a valuation of the stock representing only one third of its market value.

Appellants' allegation of fraud under the facts and circumstances set forth in the record does not present a material issue of fact to be resolved at trial. The buy/sell agreement originally executed represents a valid contract, which is entitled to enforcement in a court of law. In effect, the Platis brothers agreed that should one of them die, the survivor would have the option to purchase stock based on a predetermined formula. A similar buy/sell agreement was enforced by this Court in Stech v. Panel Mart, Inc., (1982) Ind.App., 434 N.E.2d 97. The Stech court specifically held that:

"A contract may be declared unenforceable due to unconscionability when there is a gross disparity in bargaining power which leads the party with the lesser power to sign a contract unwillingly or unaware of its terms. Additionally, the contract must be one that no sensible person, not under delusion, duress or in distress would make, and such as no honest and fair person would accept. Dan Purvis Drugs, Inc. v. Aetna Life Ins. (1980), Ind.App., 412 N.E.2d 129 citing Weaver v. American Oil Co. (1971), 257 Ind. 458, 276 N.E.2d 144. Rosella [appellant] has failed to show a great disparity in bargaining power. In effect, each shareholder was wagering that one of the other shareholders, or their spouses, would be the first to die. The mere fact that Rosella lost her wager does not make the Stock Purchase Agreement unconscionable. The trial court therefore did not err in failing to find the Stock Purchase Agreement unconscionable." 434 N.E.2d at 103.

In the case at bar, George had the absolute right to purchase William's stock at any time for the amount of money calculated under the formula. The highest estimate contained in the record was $138,000, to be paid in equal installments over five years. Instead, George paid William's estate $140,000 cash.

Regardless of defendants' representations to Dorthey Platis, constructive fraud is not at issue in this case. George Platis exercised a contractual right to purchase the stock, and Dorthey Platis was obligated to transfer these shares. There can be no recovery in fraud for a deception by which a person is induced to do something which he is already bound to do. M.B. Kahn Const. Co., Inc. v. S.C. Nat. Bank (1980), 275 S.C. 381, 271 S.E.2d 414, 415; Berry v. Robotka (1969), 9 Ariz.App. 461, 453 P.2d 972, 979; Ellis v. Crockett, (1969) 51 Haw. 45, 451 P.2d 814, 820; Miller v. Tietz Construction Company, (1955) 46 Wash.2d 180, 279 P.2d 641, 642-43; Beltner v. Carlson, (1951) 153 Neb. 797, 46 N.W.2d 153, 155; 37 C.J.S. Fraud Sec. 41(c).

Assuming the truth of appellants' allegations, at worst Dorthey Platis was "deceived" into performing a contract entered into between her husband and George Platis. The facts do not indicate that she relied to her detriment, or that she has sustained any injury compensable by law. Her claims of fraud, constructive fraud, abuse of a confidential relationship, equitable estoppel and waiver are therefore without merit.

Appellants also contend that a fraud was perpetrated based on the following section of the 1974 shareholders' agreement:

"provided, however, that if any Permitted Transferee of such decedent desires to sell any Stock owned by him and obtains a written bona fide offer for the purchase thereof, then such Permitted Transferee shall give notice to all the other Stockholders of such desire to sell,...