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Memory Gardens Mgmt. Corp. v. Liberty Equity Partners, LLC

Court of Appeals of Indiana

September 3, 2015

Memory Gardens Management Corporation, Inc., Appellant-Plaintiff,
v.
Liberty Equity Partners, LLC, and Old Bridge Funeral Home, LLC, Appellees-Defendants

Appeal from the Marion Superior Court. The Honorable Heather A. Welch, Judge. Trial Court Cause No. 49D12-1312-CC-45476.

ATTORNEYS FOR APPELLANT: Andrea L. Ciobanu, Alex Beeman, Ciobanu Law, P.C., Indianapolis, Indiana.

ATTORNEYS FOR APPELLEES: Edward F. Schrager, Joshua T. Robertson, Cohen Garelick & Glazier, Indianapolis, Indiana.

Brown, Judge. Riley, J., and Friedlander, Sr. J., concur.

OPINION

Brown, Judge.

[¶1] Memory Gardens Management Corporation, Inc. (" MGMC" ) appeals the trial court's order granting summary judgment in favor of Liberty Equity Partners, LLC, and Old Bridge Funeral Home, LLC (collectively, the " Old Bridge Parties" ). MGMC raises one issue which we revise and restate as whether the trial court erred in granting summary judgment. Additionally, the Old Bridge Parties request appellate attorneys' fees. We affirm and remand.

Facts and Procedural History

[¶2] Ansure Mortuaries of Indiana, LLC (" Ansure" ) owned several subsidiary companies owning and operating funeral homes, cemeteries, and other businesses in the funeral home and cemetery industry. MGMC was one of these wholly-owned subsidiaries but, unlike Ansure's other subsidiaries, was a management company whose primary function was to provide centralized managerial and administrative services to Ansure and its subsidiaries. Until January 2008, Robert Nelms was the Managing Member and CEO of the Old Bridge Parties, as well as the sole shareholder of Ansure and MGMC.

[¶3] On January 3, 2008, certain holders of a mortgage and other debt instruments executed by Ansure filed a Motion For Appointment Of Receiver Over Mortgagor Companies (the " Receivership Action" ) in the Johnson Circuit Court (the " Receivership Court" ) seeking the appointment of a receiver on the grounds that: (1) a receiver was necessary to protect their mortgage interest; (2) property, rents, and profits were in danger of being lost, removed, or materially injured; and (3) Ansure was in imminent danger of insolvency. Nelms, Ansure, and MGMC, among other subsidiaries of Ansure, were named as defendants in the Receivership Action. On January 17, 2008, the State of Indiana filed a separate complaint seeking injunctive relief, declaratory relief, restitution, and appointment of a receiver in order to prevent continuing securities violations and misappropriations of trust fund monies by the defendants in the Receivership Action,[1] and the Receivership Court entered a Temporary Restraining Order " in order to maintain the status quo between the Parties and to allow the Parties to conduct discovery and prepare for the preliminary injunction hearing." Appellant's Appendix at 51.

[¶4] On January 22, 2008, by agreement of the parties in the Receivership Action, Lynette Gray (the " Receiver" ) was appointed as Temporary Receiver by the Receivership Court. On January 25, 2008, the Receivership Court entered an Order Extending Restraining Order and Appointment of Receiver, which provided that the Receiver was to oversee and control Ansure and its subsidiaries, including MGMC. On May 2, 2008, the Receivership Court issued its Findings of Fact, Conclusions Thereon, Preliminary Injunction, and Order of Continuing Receivership (the " Receivership Order" ), which made the receivership over Ansure and its subsidiaries, including MGMC, permanent. In the Receivership Order, the Receiver was granted all of the rights and powers available to her under Indiana law. Additionally, the Receivership Order provided:

262. The receiver shall, specifically:
A. Take control of [Ansure], including all wholly owned subsidiaries;
B. Marshall and account for all assets of the business entities;
C. Marshall and account for all trust fund assets of the business entities;
D. Assume the management of the day-to-day operations the [sic] business entities; and,
E. Manage the business operations of each entity in the best interests of the creditors and owner(s) thereof.
* * * *
267. [Ansure], its owner(s), directors, employees, agents, and the Defendants herein, shall fully cooperate with the Receiver or any of her employees or agents, including, but not limited to:
A. Replying promptly as requested to any inquiry from the Receiver, her employees, or agents;
B. Making available all books, records, accounts, documents, information, and property;
C. Abstaining from obstructing, interfering, frustrating, and / or interrupting the Receiver, her employees, or agents, in the conduct of her duties.
268. Pursuant to Indiana Trial Rule 66(B), the Board of Directors of [Ansure] shall direct its employees to file with this Court, within thirty (30) days of this Order, a full, complete, itemized statement, in affidavit form, setting forth in detail all the assets and all the liabilities of [Ansure], including those assets and liabilities of the wholly owned subsidiaries, along with the names and addresses of all known creditors.
* * * *
271. Robert Nelms and [Ansure] and their respective owners, directors, agents, employees, and / or assignees are hereby PRELIMINARILY ENJOINED from:
* * * *
C. Altering, disposing, destroying, erasing, or secreting away any and all records . . . pertaining to the operating, management, or control of [Ansure] or any of its wholly-owned subsidiaries and the trust funds associated therewith;
* * * *
F. Obstructing, interfering with, frustrating, and / or interrupting the Receiver, her employees, or agents, in the conduct of her duties; and
G. Conducting business or directing business decisions for or on behalf of [Ansure] or any of its wholly-owned subsidiaries.

Id. at 70-72.

[¶5] On June 2, 2008, MGMC's Controller filed an affidavit with the Receivership Court which purported to itemize the assets of Ansure and each of its wholly-owned subsidiaries. The itemization of MGMC's assets identified items such as office equipment, including tables, chairs, microwaves, and computer monitors, construction equipment, and automotive equipment. The Controller's affidavit did not identify any loans made by MGMC to the Old Bridge Parties. In an affidavit submitted to the Receiver, David Hernandez, a funeral director at the Old Bridge Funeral Home, stated that " during the construction of the Old Bridge Funeral Home, approximately $450,000.00 was lent by Memory Gardens to Old Bridge Funeral Home, LLC to complete the construction." Id. at 460.

[¶6] On May 18, 2009, the Receiver filed her First Annual Report, which reported that she concentrated her efforts on the management of MGMC because it oversaw the business operations of all the entities controlled by Ansure. In her report, the Receiver confirmed that she had received MGMC's Controller's affidavit itemizing Ansure's assets. In addition, the Receiver reported that she interacted daily with members of MGMC's management team, including the acting CEO and Controller, the Trust and Compliance Officer, the Vice President of Sales and Marketing, and Ansure's Board Members. The Receiver also reported that she exchanged information with Nelms and his attorneys regularly. Neither ...


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