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Ellis v. Keystone Construction Corp.

Court of Appeals of Indiana

September 5, 2017

Jason Ellis, Appellant-Defendant /Counterclaimant,
Keystone Construction Corporation, Appellee-Plaintiff/Counterclaim Defendant.

         Appeal from the Hendricks Superior Court 4 Trial Court Cause No. 32D04-1207-PL-77 The Honorable Mark A. Smith, Judge

          Attorneys for Appellant Thomas A. Brodnik Patrick M. Cline Doninger Tuohy & Bailey LLP Indianapolis, Indiana Scott Treadway EST Law, LLC Indianapolis, Indiana

          Attorneys for Appellee T. Joseph Wendt Edward M. Smid Barnes & Thornburg LLP Indianapolis, Indiana

          MATHIAS, JUDGE.

         [¶1] Jason Ellis ("Ellis") challenges the order of the Hendricks Superior Court granting summary judgment in favor of Keystone Construction Corporation ("Keystone"). On appeal, Ellis presents four issues, one of which we find dispositive, which we restate as whether the trial court erred in determining that the doctrine of judicial estoppel precluded Ellis's claims against Keystone.

         [¶2] We affirm.

         Facts and Procedural History [1]

         [¶3] Keystone is a construction company formed by Ersal Ozdemir ("Ersal") in 2002, with Ersal as the sole shareholder. Ellis was experienced in the commercial construction industry, and in late 2002 and early 2003, Ersal recruited Ellis to come to work for Keystone. Ellis claims that Ersal offered to make him a "partner" in Keystone with a 20% ownership interest. Ellis agreed and began to work for Keystone as the director of construction.

         [¶4] Thereafter, although Ellis's partnership or ownership status was never formalized in writing, Ersal introduced Ellis to others as his "partner, " and told others that he had a "partner" in Keystone. Ellis was also referred to on Keystone's website as a partner and in internal corporate records as a "partner" and "director." Ersal also discussed Keystone's obligation to pay dividends to Ellis, and Ellis received some dividends from Keystone in addition to his salary.

         [¶5] After Ellis joined Keystone, Ersal's younger brother, Huseyin Ozdemir ("Huseyin"), also joined Keystone as a third member or shareholder. Huseyin's background was in finance and accounting, and he became the financial officer of the company. Huseyin told others working for Keystone that he, Ersal, and Ellis were "partners" or "owners" of Keystone. Appellant's App. Vol. 4, p. 25.

         [¶6] As the company grew, it became involved in several large commercial construction projects. Ellis and Huseyin also pressured Ersal to reduce their ownership status to writing in a formal shareholder or partnership agreement. In 2006, Ersal sent Ellis and Huseyin an email stating that he had met with attorneys who were preparing a partnership agreement, a buy/sell agreement, and stock certificates. Apparently, however, these agreements were never signed by the parties.

         [¶7] In 2010, Huseyin sent Ersal an email demanding that Ersal purchase his shares of Keystone for $2, 500, 000, which Huseyin believed represented his share of the value of Keystone at the time, which he determined was in excess of $7, 500, 000. Huseyin also complained of Ersal's failure to formalize the ownership of the company. Ersal responded by claiming that he had always owned 100% of the company. He also stated that if Huseyin believed the company was worth that much, he should buy it from Ersal for that price.

         [¶8] At the same time as the dispute over ownership of Keystone was developing, Ellis and his then wife, Brooke Ellis ("Brooke") were in the process of dissolving their marriage. Brooke filed for dissolution in February 2010. Eventually, Ellis and Brooke entered into a settlement agreement resolving all issues in the dissolution, which the dissolution court accepted and incorporated into the dissolution decree. This settlement agreement purported to disclose "all the property and interest, both real and personal, now held by [Ellis and Brooke]." Appellee's App., Vol. 3, p. 164. The agreement also provided that Ellis and Brooke "have amicably and equitably divided all personal property acquired during the course of the marriage, " and that both parties "represent and warrant to each other that there has been a full disclosure of assets and that the property referred to in this Agreement represents all the property of any sort whatsoever which either of them have an interest in or right to, whether legal or equitable." Id. at 168, 171. The settlement agreement also contained a provision stating that, "[i]t is understood and agreed that this is an agreement to settle all property rights[.]" Id. at 171. The settlement agreement further contained an integration clause stating, that "[e]ach party hereto acknowledges . . . that this Agreement constitutes all of the terms of the contract between said parties." Id. On March 18, 2011, the dissolution court approved the Ellises' proposed Settlement Agreement. Notably, however, the settlement agreement contained no mention of any ownership interest or shares of Keystone.

         [¶9] In November 2011, Huseyin resigned from Keystone. He also transferred $2, 500, 000 from Keystone to an organization he owned[2] to compensate him for what he believed was his share of the value of Keystone. Ellis questioned Ersal about Huseyin's departure from Keystone, asking in an email if Huseyin was "still partners with us?" and if there would be a "distribution to shareholders soon for 2011." Appellant's App. Vol. 6, p. 124. Ersal responded with an email stating:

Christi is trying to put the [Keystone] financials together by next week. I am not sure if there will be any profit sharing distribution at this time. I will let you know after I review the financials. ...

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