from the Howard Superior Court The Honorable Richard A.
Maughmer, Special Judge Trial Court Cause No.
Attorney for Appellant Jeremy A. Peelle Peelle Law Office
Attorney for Appellee Alan D. Wilson Kokomo, Indiana.
Mark Blacklidge ("Mark") appeals the trial
court's judgment against him personally, and in favor of
Kent Blacklidge ("Kent"), Mark's father, for
$40, 623.55 in past-due appraisal fees, following a bench
Mark raises two issues which we restate as follows:
I. Whether the trial court clearly erred when it disregarded
the parties' formation of a limited liability company
("LLC") and found Mark personally liable to Kent
under the parties' oral appraisal fee contract.
II. Whether the trial court erred when it applied the
six-year statute of limitations contained in Indiana Code
Section 34-11-2-7 to the parties' oral agreements, rather
than the two-year statute of limitations contained in Indiana
Code Section 34-11-2-1 that is applicable to employment
and Procedural History
The facts favorable to the judgment are as follows. Kent and
Mark are father and son, and both are real estate appraisers.
In the year 2000, they orally agreed to start a business
together. The business, based in Kokomo, was called
Blacklidge Appraisals (hereinafter, "the appraisal
entity"). They did not create any formal documentation
of either the appraisal entity or their business relationship
with each other. They did, however, have an oral contract
under which they were equals in the appraisal entity and each
person was entitled to seventy percent of the appraisal fees
for appraisals that person performed, with the other thirty
percent being used to pay overhead expenses.
In December of 2004, the appraisal entity became a limited
liability company ("LLC") with Kent and Mark having
49/51 percent interests, respectively.
Although the parties filed Articles of Organization with the
Indiana Secretary of State, that document is not contained in
the record. And the parties took no further formal steps
related to the establishment of the LLC; they did not create
a written operating agreement, a management agreement, or any
other written agreement between Kent, Mark, and the LLC, and
they held no LLC meetings. Neither Kent nor Mark were
employees of the LLC. Rather, after creation of the LLC, the
parties continued to operate under the oral agreement that
each individual was still entitled to seventy percent of the
fees from appraisals that individual completed, after
overhead expenses were paid.
In 2013, the appraisal entity made an election for Subchapter
S status. Effective January 1, 2014, Kent
voluntarily relinquished all of his interest in the appraisal
entity to Mark. However, neither the Subchapter S status
election nor Kent's relinquishment of interest in the
appraisal entity changed the business relationship and
division of appraisal income between Kent and Mark that had
been created by their oral agreement.
Nancy Nicholson ("Nicholson") of the McNeal
Accounting Firm did the accounting for the appraisal entity
beginning in 2010. She kept track of what Kent was owed based
on the parties' oral agreement for the distribution of
appraisal profits. According to an "Unpaid Bills
Detail" report Nicholson generated on December 31, 2013,
from her accounting records, Kent was owed $28, 607.35 in
appraisal fees that had already been collected for the period
from May 16, 2011 through December 31, 2013. Tr. at 69-70;
Appellee's App. at 11-13. Nicholson provided a copy of
that Unpaid Bills Detail report to both Kent and Mark on or
around February 9, 2014. Tr. at 78-79.
Nicholson terminated her business relationship with the
appraisal entity at the end of 2013. After that time, Mark
handled the appraisal entity's finances. Beginning in
January 2014, Mark wrote all the checks and made all
checkbook entries, and Kent received no accounting records
regarding his appraisal fees. However, Kent kept his own
detailed, separate records of all the income from the
appraisals he performed from the beginning of the appraisal
entity until he left it.
After Nicholson left the appraisal entity-i.e., approximately
January 1, 2014- Kent began receiving smaller and smaller
payments for the appraisals he did. Kent terminated his
business relationship with Mark on June 24,
2015. On February 16, 2016, Kent filed a
complaint against Mark for damages arising out of Mark's
breach of the parties' oral appraisal fees agreements. On
March 28, Mark filed his answer, a counterclaim for "bad
faith litigation, " and affirmative defenses, including
the defenses that Kent's "[c]omplaint is subject, in
part or in whole, to the Statute of Limitations" and
"the Statute of Frauds." Appellant's App. at
13-16. Mark filed a motion for summary judgment which was
The trial court held a bench trial on September 29, 2017, at
which Kent, Mark, and Nicholson testified. The court entered
judgment in favor of Kent, and made the following findings
1. Kent and Mark are father and son.
2. Kent and Mark are both real estate appraisers.
3. In the year 2000, Kent and Mark orally agreed to establish
an appraisal entity wherein Kent and Mark were equals.
4. Appraisal entity overhead and expenses were to be paid
first before any profit would be taken by Kent or Mark.
5. The goal of the appraisal entity was to show no profit.
6. The appraisal entity became a Limited Liability Company
(LLC) in 2004 with Kent and Mark having 49/51 per cent
7. No articles regarding the establishment of the LLC have
been provided to the court.
8. Except for required filings with the Indiana Secretary of
State, no LLC formalities were accomplished ...