MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be                                  FILED
regarded as precedent or cited before any                         Feb 07 2017, 5:41 am
court except for the purpose of establishing                           CLERK
the defense of res judicata, collateral                            Indiana Supreme Court
                                                                      Court of Appeals
estoppel, or the law of the case.                                       and Tax Court




ATTORNEY FOR APPELLANT                                   ATTORNEYS FOR APPELLEES
Edward R. Hannon                                         Michael B. Langford
Steuerwald Hannon & Witham, LLP                          Braden K. Core
Danville, Indiana                                        Paul D. Root
                                                         Scopelitis, Garvin, Light,
                                                         Hanson & Feary, P.C.
                                                         Indianapolis, Indiana



                                           IN THE
    COURT OF APPEALS OF INDIANA

Michael Kent Smith,                                      February 7, 2017
Appellant-Plaintiff,                                     Court of Appeals Case No.
                                                         32A01-1605-PL-1013
        v.                                               Appeal from the Hendricks
                                                         Superior Court
Thomas L. Taulman, II; Thomas                            The Honorable Stephanie LeMay-
McClelland; Christina R.                                 Luken, Judge
Hurley; Gary R. Meunier;                                 Trial Court Cause Nos.
Denny D. Smith; T.K.O.                                   32D05-1207-PL-82
Enterprises, Inc.; T.K.O.                                32D05-1510-PL-154
Commercial Development, LLC;
SCS Fleet Services, LLC; GTS
Properties, LLC; and T.K.O.
South, LLC,
Appellees-Defendants



Court of Appeals of Indiana | Memorandum Decision 32A01-1605-PL-1013 | February 7, 2017    Page 1 of 25
      Baker, Judge.


[1]   This appeal is a continuation of an action in which this Court has already ruled.

      T.K.O. Graphix, a closely held business, suffered financially during the

      economic downturn that began in 2008. Michael Kent Smith (“Kent”) was a

      minority shareholder in the business. As the company worked to stay

      profitable, Kent’s ownership in the company was significantly reduced, and

      eventually his employment was terminated. In 2011, Kent filed a lawsuit

      against the company’s majority owner, Thomas L. Taulman, II (“Taulman”)

      and four of the company’s employees, alleging fraud and breach of fiduciary

      duty. After losing on summary judgment, Kent appealed. This Court reversed

      the trial court’s entry of summary judgment on Kent’s claims, finding that

      additional discovery was needed. In 2015, Kent filed a second lawsuit, alleging

      additional breaches of fiduciary duty by Taulman and the four employees. The

      trial court consolidated the two cases. The Appellees moved for summary

      judgment a second time, and the trial court granted it in their favor.


[2]   Kent now appeals, arguing that the trial judge should have recused herself, that

      his two actions should not have been consolidated, and that summary judgment

      should not have been granted to the Appellees. Finding that the trial judge was

      not required to recuse herself, that the two actions were properly consolidated,

      and that summary judgment was properly granted, we affirm.




      Court of Appeals of Indiana | Memorandum Decision 32A01-1605-PL-1013 | February 7, 2017   Page 2 of 25
                                                       Facts     1




[3]   This Court’s first opinion in this matter establishes the following facts:

               In 1985, Thomas L. Taulman, Sr., Taulman, and Kent formed
               T.K.O. Enterprises. T.K.O. Enterprises is a full-service graphics
               firm, and its work includes the design, manufacture, installation,
               and removal of graphics on trailers used in the trucking industry.
               Each of the three men owned T.K.O. Enterprises in equal one-
               third shares. Eventually, Taulman, Sr. sold some of his shares
               back to the company and transferred the remainder of his shares
               to his son, Taulman. From 2000 to late 2009, Taulman owned
               about 52% of the shares of T.K.O. Enterprises, and Kent owned
               the remaining shares, or about 48%.


               Although Taulman, the President of T.K.O. Enterprises, was
               actively engaged in the management and promotion of the
               business, it is not clear that Kent had any specific job description.
               Rather, Kent was the Vice President, and he would help with
               various odds-and-ends around the company. Nonetheless,
               Taulman and Kent shared in the profits, and their respective
               incomes were based upon their ownership interests.


               Over time, T.K.O. Enterprises expanded through the creation of
               the T.K.O. Companies, in particular:


                    T.K.O. Commercial, which owns and manages certain real
                     property and is owned equally by Taulman and Kent;
                    SCS, which removes decals from and cleans semi-trailers and is
                     equally owned by Taulman, Kent, Meunier, and Smith;



      1
       We heard oral argument on December 19, 2016, at Mississinewa High School. We thank the school’s
      administration, faculty, staff, and students for their hospitality. We also thank counsel for their oral
      argument and subsequent discussion with the students.

      Court of Appeals of Indiana | Memorandum Decision 32A01-1605-PL-1013 | February 7, 2017          Page 3 of 25
         GTS, which owns and manages certain real property and is 50%
          owned by T.K.O. Enterprises, 25% owned by Meunier, and 25%
          owned by Smith; and
         T.K.O. South, which owns and manages certain real property and is
          wholly owned by T.K.O. Enterprises.

        Between 2005 and 2009, Taulman and Kent discussed having
        Kent sell his shares in T.K.O. Enterprises, but no agreement was
        reached. In 2009, T.K.O. Enterprises suffered substantial losses
        in business and faced bankruptcy. In June of that year,
        Huntington Bank (“Huntington”) downgraded its relationship
        with T.K.O. Enterprises to “substandard” due to poor financial
        performance, which placed T.K.O. Enterprises’ line of credit
        with Huntington in jeopardy. On September 11, Tina Magyar,
        T.K.O. Enterprises’ Controller, e-mailed Taulman and Kent to
        tell them that T.K.O. Enterprises was almost completely unable
        to meet its financial obligations.


        Shortly thereafter, Taulman invested $50,000 of his own money
        in T.K.O. Enterprises to cover operating expenses. Taulman
        asked Kent to make a similar investment. Kent declined.
        Instead, Kent agreed to reduce his annual salary from $120,000
        to $50,000, and he agreed to condition his employment on
        working “a billable position.” In working a billable position,
        Taulman informed Kent that Kent’s job requirements would
        include reporting to [Thomas] McClellan or another assigned
        supervisor each week for specific instructions to help where
        needed, and that Kent would “have to be accountable for [his]
        work.”


        On October 5, 2009, T.K.O. Enterprises’ line of credit with
        Huntington expired, and the bank refused to automatically renew
        it. Also in October, Taulman sought to have a new investor,
        Terry Dillon, buy out Kent’s shares in T.K.O. Enterprises.
        Taulman discussed this plan with Kent, and Kent agreed. But
        Huntington informed Taulman that it would not renew the line

Court of Appeals of Indiana | Memorandum Decision 32A01-1605-PL-1013 | February 7, 2017   Page 4 of 25
        of credit even if Dillon bought out Kent, and the deal fell
        through.


        Although facing tough market conditions, T.K.O. Enterprises,
        through Taulman and the rest of its sales staff, continued to
        pursue potential customers throughout 2009. In particular, in
        mid-2009 T.K.O. Enterprises began to engage TruGreen, a
        nationwide provider of residential and commercial lawn and
        landscape services, in what “had the potential to be a large
        account representing a sizeable volume of sales in 2010.” Kent
        was aware of T.K.O. Enterprises’ attempt to secure a contract
        with TruGreen. In November of 2009, TruGreen selected
        T.K.O. Enterprises to demonstrate its products in a pilot
        program. Taulman informed Kent of this development.


        Throughout this time T.K.O. Enterprises faced the prospect of
        bankruptcy. Taulman requested Kent to make a capital
        contribution on several occasions, which Kent declined to do.
        Kent was included on monthly e-mails that provided detailed
        reports on T.K.O. Enterprises’ weak financial condition. Kent, a
        guarantor to T.K.O. Enterprises’ line of credit, discussed having
        T.K.O. Enterprises “shut the doors to be able to pay vendors, pay
        our taxes, and walk away without filing personal bankruptcy.”
        Kent’s understanding of the TruGreen negotiations, among
        others, was that there was “nothing to count on for me to invest
        money in the company” because the company “was not going to
        make it.” Indeed, in late 2009, Kent told Taulman, [Christina]
        Hurley, and [Denny] Smith that, even if the company landed the
        TruGreen account, T.K.O. Enterprises should “do the TruGreen
        job if it comes in and then shut . . . down.”


        On December 16, 2009, Taulman issued a notice of a special
        meeting of the board of directors to be held on December 21,
        which was also the date of T.K.O. Enterprises’ annual
        shareholders meeting. According to the notice, new and
        additional shares in T.K.O. Enterprises would be offered, and
Court of Appeals of Indiana | Memorandum Decision 32A01-1605-PL-1013 | February 7, 2017   Page 5 of 25
        Taulman was to receive 52% of those shares in exchange for his
        earlier $50,000 investment. Kent was to be given the option to
        purchase the remaining 48% of the new shares at the meeting.


        Taulman attended the meeting on December 21 as President of
        T.K.O. Enterprises. Kent attended as Vice President. Hurley
        attended as Secretary. Also present were McClellan, [Gary]
        Meunier, and Smith, high-ranking employees of T.K.O.
        Enterprises whom Taulman had invited. Kent had been
        informed before the meeting that Hurley, McClellan, Meunier,
        and Smith were each willing to invest up to $25,000 in T.K.O.
        Enterprises.


        At that meeting, Kent asked “everyone’s opinion of why they
        would invest into the company” and stated that he was
        concerned with the future of the company. Hurley’s handwritten
        minutes of the meeting do not reflect any statements about
        TruGreen. However, the official minutes, which were prepared
        subsequent to the meeting by Taulman and reviewed and signed
        by Hurley as consistent with her recollection, reflect that
        Taulman stated at the meeting that “TruGreen was about 90%
        sure, but no signed purchase order at the time.” And Hurley
        recorded that at least three other accounts were discussed, along
        with Smith stating that he thought the “industry was coming
        back” and McClellan stating there had been a small upswing in
        sales. Meunier then added that he “feels very strongly about the
        company and his future”; McClellan stated that he “believes in
        himself and work ethic” and that he “would take the gamble to
        keep his job”; and Hurley stated that she “wanted to keep what
        she had at T.K.O.” because she “believed in the company.”


        Kent did not think the others had presented any information that
        “would benefit the company. There was nothing really to bank
        on. As such, he agreed to waive his right to purchase the new
        shares and agreed to reduce his total shareholdings to 9.8% in
        T.K.O. Enterprises. Hurley, McClellan, Meunier, and Smith
Court of Appeals of Indiana | Memorandum Decision 32A01-1605-PL-1013 | February 7, 2017   Page 6 of 25
        each then purchased 9.8% of T.K.O. Enterprises. Taulman
        remained the majority shareholder with 51% of the total shares.
        The parties’ agreement became effective on December 22, 2009.


        In March of 2010, TruGreen awarded its contract for graphics
        services to T.K.O. Enterprises. Largely as a result of this
        contract, T.K.O. Enterprises’ sales in 2010 were the highest in its
        history. In July of 2010, Taulman fired Kent for leaving work
        before the end of work days, failing to keep regular hours, failing
        to report to McClellan and other supervisors, and failing to work
        billable positions.


        On December 19, 2011, Kent filed his complaint against the
        Defendants. In his complaint, Kent alleged that Taulman and
        the Employees had breached fiduciary duties owed to Kent and
        that they had committed fraud at the December 21, 2009,
        meeting. . . .


        During discovery, Kent requested the Defendants to produce “all
        communications they shared with one another as well as
        communications they shared with the company’s bankers and
        customers.” . . . .


        One document produced was a December 28, 2009, letter from
        Taulman to Huntington in which Taulman described the
        following outlook for 2010:


                 I feel 100% sure we will get the large order [with
                 TruGreen] soon . . . .


                                                    ***


                 . . . As for projecting out the next 6 months, January and
                 February are usually slow months but we are seeing good

Court of Appeals of Indiana | Memorandum Decision 32A01-1605-PL-1013 | February 7, 2017   Page 7 of 25
                       activity with the 2 semi trailer factories (Great Dane) that
                       we do business with. Our fleet customers are saying that
                       their maintenance costs are killing them and it would be
                       cheaper to have new equipment than what it is costing
                       them to keep their existing equipment. They are starting to
                       request bids from us and some have decided to buy


                       now. . . . Simon Mall is one of our accounts and we are
                       currently bidding some large projects for them. . . . With
                       all the new accounts we have landed this year and with
                       one of our biggest competitors . . . being bought and closed
                       down this year too we have gained a lot more of the
                       market share. . . . As for what I can predict in the next 6
                       months, I think that January and February are break even
                       months, March, April, May and June I believe will be
                       profitable . . . and with TruGreen beginning in early 2010,
                       I think that April and May could be even bigger. . . . If for
                       any reason TruGreen is delayed or doesn’t happen . . . we
                       will still make money with our current accounts that we
                       have for the next 6 months. . . .


              Among other things, the Great Dane account was not an account
              raised by either Taulman or the [Individual Defendants] in
              response to Kent’s questions at the December 21, 2009, meeting.


[4]   Smith v. Taulman, 20 N.E.3d 555, 560-63 (Ind. Ct. App. 2014) (internal citations

      omitted). Following significant discovery, Kent learned that numerous

      documents within the scope of his first request for the production of documents

      had not been produced, and he submitted a second request for the production of

      documents. The Appellees stated that they would produce documents

      responsive to his requests. Five days later, on October 15, 2013, the Appellees

      filed their motion for summary judgment in the First Action. The parties

      Court of Appeals of Indiana | Memorandum Decision 32A01-1605-PL-1013 | February 7, 2017   Page 8 of 25
      agreed to allow Kent an extension of time in which to respond to the summary

      judgment motion. On November 26, 2013, Kent filed a motion to compel

      discovery. On December 23, 2013, Kent filed his response to the motion for

      summary judgment. On January 21, 2014, the trial court held a consolidated

      hearing on the Appellees’ motion for summary judgment and on Kent’s motion

      to compel. Following the hearing, the court entered summary judgment in

      favor of the Appellees on all of Kent’s claims and denied Kent’s motion to

      compel.


[5]   Kent appealed. In Smith v. Taulman, this Court held that the trial court erred

      when it denied Kent’s motion to compel because his discovery requests were

      relevant to the arguments made on summary judgment involving his fraud and

      breach of fiduciary duties claims. 20 N.E.3d at 567. For that reason, this Court

      reversed the trial court’s entry of summary judgment on Kent’s claims against

      Taulman for Taulman’s alleged breach of fiduciary duties and Kent’s claims

      against Taulman and the Individual Defendants for fraud.2 Id.


[6]   Following remand, the parties continued discovery in the First Action, which

      was being litigated in Hendricks County Superior Court 5. On October 14,

      2015, Kent filed the Second Action in Hendricks County Superior Court 2,

      alleging additional claims of breaches of fiduciary duties against Taulman and

      the Individual Defendants for their actions after they became official



      2
       The other issues discussed in our earlier opinion were either affirmed in that opinion or later dismissed by
      Kent.

      Court of Appeals of Indiana | Memorandum Decision 32A01-1605-PL-1013 | February 7, 2017            Page 9 of 25
      shareholders. Specifically, he asserted that Taulman and the Individual

      Defendants were taking excessive compensation to minimize profits and

      earnings, thereby depriving Kent of dividends; were knowingly and deliberately

      operating T.K.O. Enterprises to minimize profits and increase income to other

      entities principally owned by certain shareholders; and were self-dealing by

      creating several new entities that provide services identical to SCS and GTS to

      divert income from T.K.O. Enterprises and from Kent.


[7]   On December 3, 2015, the Appellees filed with Superior Court 5 a motion to

      consolidate the lawsuits under Indiana Trial Rule 42(A). Before the trial court

      ruled on that motion, the Appellees filed on December 15, 2015, another

      motion for summary judgment in the First Action in Superior Court 5. In their

      motion, the Appellees asked that, “in the event that this case is consolidated

      with the [Second] Action, the Individual Defendants respectfully request

      summary judgment against Plaintiff Michael Kent Smith on all claims asserted

      in the [Second] Action.” Appellant’s App. Vol. 2 p. 65. The Appellees

      included in their motion arguments for the issues in the Second Action.


[8]   On December 22, 2015, the Superior Court 5 granted consolidation for

      discovery and trial. On December 23, 2015, the Superior Court 2 judge

      disqualified himself from the case due to a conflict of interest and transferred

      the case to Superior Court 5. Kent objected to the transfer and requested a

      selection of special judge. On January 4, 2016, Kent filed a motion to

      reconsider and vacate the order of consolidation, and he requested a hearing.

      The trial court denied the motion to reconsider consolidation.

      Court of Appeals of Indiana | Memorandum Decision 32A01-1605-PL-1013 | February 7, 2017   Page 10 of 25
[9]    On February 2, 2016, the trial court held a hearing on the second summary

       judgment motion as it related to both the First Action and the Second Action,

       and on February 9, 2016, granted summary judgment in favor of the Appellees.

       On March 10, 2016, Kent filed a motion to correct error and a verified motion

       for recusal and appointment of special judge. On April 5, 2016, the trial court

       denied all of Kent’s motions. Kent now appeals.


                                        Discussion and Decision
[10]   Kent raises several issues on appeal, which we restate and consolidate as

       follows: (1) whether the trial judge was required to recuse herself; (2) whether

       consolidation of the two lawsuits was contrary to Indiana Trial Rule 42; and (3)

       whether summary judgment was warranted regarding Taulman’s and the

       Individual Defendants’ knowledge and representations about T.K.O.

       Enterprises’ financial condition.3


                                                      I. Recusal
[11]   Kent argues that Judge LeMay-Luken of Hendricks County Superior Court 5

       should have recused herself from the case. Specifically, he argues that Judge

       LeMay-Luken violated Judicial Conduct Rules 1.2, 2.2, 2.3, 2.5, and 2.11

       because she did not recuse herself when her conduct appeared impartial.




       3
           Kent filed a partial motion to dismiss other issues he raised on appeal. This Court granted that motion.


       Court of Appeals of Indiana | Memorandum Decision 32A01-1605-PL-1013 | February 7, 2017            Page 11 of 25
[12]   Indiana Judicial Conduct Rule 1.2 provides that a judge must act in a way that

       promotes public confidence in the independence, integrity, and impartiality of

       the judiciary, and must avoid impropriety and the appearance of impropriety.

       A judge must apply the law and perform all judicial duties fairly and impartially

       and without bias or prejudice. Jud. Cond. R. 2.2, 2.3. A judge has a duty to

       perform competently, diligently, and promptly. Jud. Cond. R. 2.5.


[13]   A judge must hear and decide matters assigned to her unless disqualification is

       required; disqualification is required when the judge’s impartiality might

       reasonably be questioned, including when, among other things, the judge has a

       personal bias or prejudice concerning a party or party’s lawyer, or personal

       knowledge of the facts that are in dispute in the proceeding. Jud. Cond. R.

       2.11. “The question is not whether the judge’s impartiality is impaired in fact,

       but whether there exists a reasonable basis for questioning a judge’s

       impartiality.” Tyson v. State, 622 N.E.2d 457, 459 (Ind. 1993). Counsel cannot

       “lie in wait, raising the recusal issue only after learning the court’s ruling on the

       merits.” Id. at 460 (quotation marks and citation omitted).


[14]   Kent bases his argument on “the combination of rulings that were contrary to

       law and directly contravened the Court of Appeals’ decision in 2014.

       Specifically, the grant of summary judgment is contrary to the 2014 appellate

       opinion.” Appellant’s Br. p. 50. Kent argues that Judge LeMay-Luken should

       not have granted the Appellees’ second motion for summary judgment because

       Taulman and the Individual Defendants did not present new evidence in their

       second motion, despite this Court’s finding in 2014 that they had not presented

       Court of Appeals of Indiana | Memorandum Decision 32A01-1605-PL-1013 | February 7, 2017   Page 12 of 25
       evidence to satisfy their burden for summary judgment. According to Kent,

       because the trial court judge granted the motion, she failed to act impartially

       “by failing to follow the Court of Appeals’ holding and insolently entering

       summary judgment again on the same argument that her ruling was reversed

       upon in 2014.” Id. Further, Kent contends that Judge LeMay-Luken was not

       impartial because she failed to apply the correct standard of proof, improperly

       shifting the burden of proof to Kent, the nonmovant; improperly consolidated

       the two cases; and withheld a hearing as required by Indiana Trial Rule 42 and

       as requested by Kent.


[15]   Kent’s recusal argument is without merit. He relies solely on the fact that the

       trial court judge ruled against him, but adverse rulings alone are not evidence of

       bias and do not warrant recusal. See Voss v. State, 856 N.E.2d 1211, 1217 (Ind.

       2006) (“The mere assertion that certain adverse rulings by a judge constitute

       bias and prejudice does not establish the requisite showing.”). Because Kent

       has not established a reasonable basis for questioning the trial court judge’s

       impartiality, we find that Judge LeMay-Luken was not required to recuse

       herself.


                                           II. Consolidation
[16]   Kent argues that the transfer of the Second Action from Hendricks County

       Superior Court 2 to Hendricks County Superior Court 5 violated Indiana Trial




       Court of Appeals of Indiana | Memorandum Decision 32A01-1605-PL-1013 | February 7, 2017   Page 13 of 25
       Rule 424 and was done in error because the cases do not involve a common

       question of law or fact that is determinative in the actions.


[17]   In Hendricks County, an action, cause, proceeding, or other matter filed in the

       Hendricks Circuit or Superior Court “may be transferred by the court in which

       it is filed to either of the other courts by transferring all original papers filed

       with the consent of the court to which it is transferred.” Ind. Code § 33-33-32-

       4. Hendricks County Local Rule 32-AR1 provides that miscellaneous civil

       cases must be filed in Hendricks Superior Courts 2, 4, or 5. The rule allows for

       “judges and magistrates of the courts of record in the county to preside over

       hearings or issue orders for one another in order to promote efficiency and

       provide for timely resolution of cases.” Hendricks County LR-32-AR1.


[18]   Indiana Trial Rule 42(A) provides that “[w]hen actions involving a common

       question of law or fact are pending before the court, it may order a joint hearing

       or trial of any or all the matters in issue in the actions; it may order all the

       actions consolidated; and it may make such orders concerning proceedings

       therein as may tend to avoid unnecessary costs or delay.” Consolidation is




       4
         Kent also stated that consolidation violated Indiana Trial Rule 79, which governs selection of a special
       judge. He did not develop an argument in his brief as to how the trial court violated this rule. However, in
       his reply brief, he states that the trial rules specify the proper procedure for when trial court judges
       acknowledge a conflict of interest, as the Superior Court 2 judge did, arguing that “[i]t is not within the
       judges’ discretion to ignore T.R. 79 and transfer the case because Superior Court 5 improperly demanded
       consolidation.” Appellant’s Reply Br. p. 10. Because we find that Superior Court 2 was permitted to transfer
       the Second Action to Superior Court 5, regardless of whether the Superior Court 2 judge had a conflict of
       interest, we find that Trial Rule 79 does not apply in this case, and a special judge was not required.

       Court of Appeals of Indiana | Memorandum Decision 32A01-1605-PL-1013 | February 7, 2017       Page 14 of 25
       proper when the common questions of law or fact are determinative. Bodem v.

       Bancroft, 825 N.E.2d 380, 382 (Ind. Ct. App. 2005).


[19]   We find that the Superior Court properly consolidated the two cases under the

       local rules and Trial Rule 42(A). As Kent notes, Rule 42(A) applies to cases

       pending in the same court. The First Action was pending in Superior Court 5,

       and the Second Action was pending in Superior Court 2. Both courts have

       authority to hear miscellaneous civil cases, and the local rules permit judges to

       preside over hearings or issue orders for one another; thus, Hendricks County

       Superior Courts operate as a unified court system in which Superior Courts 2

       and 5 share authority and responsibility to hear cases from the other divisions.

       This means that, as far as Trial Rule 42(A) is concerned, Superior Courts 2 and

       5 are the same court. Under Indiana Code section 33-33-32-4 and the local

       rules, one superior court can transfer an action to another superior court, and

       once transfer is complete, the superior court presiding over the actions can

       consolidate them under Trial Rule 42(A).


[20]   Consolidation under Trial Rule 42(A) requires common questions of law or

       fact, and this requirement is met here. Although Kent argues that the two

       actions involve different allegations, facts, and time frames, we find that they

       both involve claims of fraud and breach of fiduciary duty between the same

       parties following the dilution of Kent’s shares in December 2009, such that

       consolidation was proper under Trial Rule 42(A). Cases only need some

       common question of law or fact to be consolidated; complete overlap is not

       required. See Bodem, 825 N.E.2d at 382 (granting consolidation under Trial

       Court of Appeals of Indiana | Memorandum Decision 32A01-1605-PL-1013 | February 7, 2017   Page 15 of 25
       Rule 42(A) of two lawsuits filed by plaintiff against two defendants following

       two car accidents that took place on different days and in different counties

       because “the commonality and overlap in alleged injuries presents a common

       question of fact sufficient to justify consolidation”). In other words, statutory

       authority and the local rules permitted the Superior Court 2 judge to transfer the

       Second Action to Superior Court 5, and Trial Rule 42(A) permitted the

       Superior Court 5 judge to consolidate the two actions.5


                                      III. Summary Judgment
[21]   Indiana’s summary judgment standard is well established:


                We review summary judgment de novo, applying the same
                standard as the trial court: Drawing all reasonable inferences in
                favor of . . . the non-moving parties, summary judgment is
                appropriate if the designated evidentiary matter shows that there
                is no genuine issue as to any material fact and that the moving
                party is entitled to judgment as a matter of law. A fact is material
                if its resolution would affect the outcome of the case, and an
                issue is genuine if a trier of fact is required to resolve the parties’
                differing accounts of the truth, or if the undisputed material facts
                support conflicting reasonable inferences.


                The initial burden is on the summary-judgment movant to
                demonstrate the absence of any genuine issue of fact as to a



       5
         Kent argues that a hearing was required before consolidation could be granted. According to Kent, his two
       lawsuits were pending in two different courts, making Trial Rule 42(D), which governs consolidation of
       actions pending in different courts for the purpose of discovery and pre-trial proceedings, the relevant rule.
       Because we find that the two actions were pending in the same court for purposes of Trial Rule 42, making
       Trial Rule 42(A), which allows for but does not require a hearing prior to consolidation, the relevant rule for
       consolidation of these two actions, Kent was not entitled to a hearing before his lawsuits were consolidated in
       Superior Court 5.

       Court of Appeals of Indiana | Memorandum Decision 32A01-1605-PL-1013 | February 7, 2017          Page 16 of 25
               determinative issue, at which point the burden shifts to the non-
               movant to come forward with contrary evidence showing an
               issue for the trier of fact. And although the non-moving party
               has the burden on appeal of persuading us that the grant of
               summary judgment was erroneous, we carefully assess the trial
               court’s decision to ensure that he was not improperly denied his
               day in court.


[22]   Hughley v. State, 15 N.E.3d 1000, 1003 (Ind. 2014) (internal quotation marks

       and citations omitted).


                                            A. First Action
                                                  1. Fraud
[23]   Kent asserts that summary judgment was not available in the First Action

       because material facts were in dispute regarding Taulman’s and the Individual

       Defendants’ knowledge and misrepresentations about T.K.O. Enterprises’

       financial condition when Kent’s shares were redistributed. Specifically, he

       asserts that when Taulman and the Individual Defendants moved for summary

       judgment, they did not disprove Kent’s allegations that they failed to disclose

       all material information when Kent asked for it, nor did they disprove that they

       made material misrepresentations of their knowledge of prospective sales and

       T.K.O. Enterprises’ improving financial condition. Kent states that if Taulman

       and the Individual Defendants had reported that the company’s financial future

       was promising, he would have voted against the divestment of shares to them

       and retained his interest in T.K.O Enterprises.




       Court of Appeals of Indiana | Memorandum Decision 32A01-1605-PL-1013 | February 7, 2017   Page 17 of 25
[24]   Kent fails to state exactly how Taulman and the Individual Defendants

       committed fraud against him or what material facts they failed to disclose.

       “The essential elements of actual fraud are a false material representation of past or

       existing facts, made with knowledge or reckless ignorance of the falsity, which

       causes reliance to the detriment of the person relying on the representation.”

       Comfax Corp. v. N. Am. Van Lines, Inc., 587 N.E.2d 118, 125 (Ind. Ct. App. 1992)

       (emphasis added). Fraud is not limited only to affirmative representations; it

       can also include the failure to disclose all material facts. Lawson v. Hale, 902

       N.E.2d 267, 275 (Ind. Ct. App. 2009).


[25]   In September 2009, Taulman emailed the bank about the TruGreen account,

       writing that “I know this is not for sure but I would have to say I feel 95% sure

       we will land this in the next 30 to 60 days” and “I feel 99% sure we got this but

       can’t guarantee it till I see” a purchase order. Appellant’s App. Vol. 5 p. 20, 22.

       On December 4, 2009, he wrote to the bank, “we did land the TruGreen

       account but we are doing 1 location in January of 25 vehicles so they can

       decided [sic] if they use option 1 or 2 on some of the trucks.” Id. at 24. On

       December 28, 2009, Taulman sent a long email to the bank about the

       company’s positive financial outlook, writing that they did not have a signed

       purchase order for the TruGreen project, but “I feel 100% we will get the large

       order soon”; he also wrote that “[a]s for projecting out the next 8 months,

       January and February are usually slow months but we are seeing good activity

       with” Great Dane. Id. at 26-28.




       Court of Appeals of Indiana | Memorandum Decision 32A01-1605-PL-1013 | February 7, 2017   Page 18 of 25
[26]   A meeting of T.K.O. Enterprises’ shareholders and directors took place on

       December 21, 2009. Kent, Taulman, and the Individual Defendants were

       present. The meeting minutes includes the following information:


            Two attendees reported that the “[i]ndustry is coming back.”
            Taulman reported “a small upswing in sales, but nothing to bank [o]n.
             TruGreen was about 90% sure, but no signed purchase order at the
             [t]ime.”
            Taulman “has been talking to multiple banks with no commitment from
             any.”
            Taulman reported that the company had losses around $350,000, and
             more capital was needed than the $50,000 he had already put into the
             company.
            Kent stated that he was concerned with the future of the company, and
             he asked the other attendees why they would invest in the company. In
             response, Meunier said that “he feels very strongly about the company
             and [its] future”; McClelland said that “he believes in himself and his
             work ethics. He would take a gamble to be able to continue his
             employment at TKO Graphix”; Smith said that he “feels very strongly
             that TKO Graphix will pull through in this bad economy and become
             successful again. He is willing to take that risk to help TKO Graphix
             succeed”; and Hurley said that “she believed in TKO Graphix and would
             do what she needed to do [to] help TKO Graphix continue.”
            Kent said that “at this time he is not putting any money into the
             company. He wants his name removed off the line. He will go down in
             stocks, but does not want the risk” and that “he doesn’t care about his
             majority ownership at this point unless you bring someone else in that
             would have controlling interest.”
            Kent said that “he didn’t feel he had security in his job at TKO
             Graphix.” Taulman and Smith responded that “no one has a guaranteed
             position.”

       Id. at 61-63.



       Court of Appeals of Indiana | Memorandum Decision 32A01-1605-PL-1013 | February 7, 2017   Page 19 of 25
[27]   This evidence may indicate that the company had potential to survive the

       national economic recession that was ongoing at the time, but it does not show

       that Taulman and the Individual Defendants misrepresented past or existing

       facts or failed to disclose material facts regarding the company’s financial

       future. First, the financial information and prospect of landing the TruGreen

       account that Taulman shared in his correspondence with the banks aligns with

       the information that he shared at the board meeting.


[28]   Second, although Kent alleges that Taulman and the Individual Defendants did

       not tell him that the company’s financial future was positive, when he asked the

       Individual Defendants why they would invest in the company, they expressed

       confidence in the company’s ability to survive the economic recession while

       also acknowledging that continuing to invest in the company was a gamble and

       a risk. Indeed, the risk was real—the company’s sales in 2009 were down 31%

       from 2008 and down 44% from their 2006 high; sales in December 2009 were

       down nearly 20% compared to December 2008, and down 49% from their

       December 2005 high. Yet the Individual Defendants’ responses to Kent’s

       question suggest that, despite the uncertainty, they believed that T.K.O.

       Enterprises could have a promising future. That Kent chose to disregard their

       positive outlook does not mean that they misrepresented or withheld facts from

       him, nor will we find that they did so merely because they could not guarantee

       a certain financial future, which would be unrealistic for any business, even

       during a good economy.




       Court of Appeals of Indiana | Memorandum Decision 32A01-1605-PL-1013 | February 7, 2017   Page 20 of 25
[29]   T.K.O. Enterprises’ finances became more secure when the company secured

       the TruGreen account. Although Taulman exhibited confidence about securing

       the TruGreen account in December 2009, TruGreen did not formally award

       T.K.O. Graphix the contract until March 2010; Taulman signed the contract in

       March 2010 and TruGreen countersigned in April 2010. We find it hard to see

       how Taulman and the Individual Defendants could have withheld from Kent

       information about the TruGreen account’s impact on T.K.O. Graphix in

       December 2009, considering that the account was not formally secured until

       April 2010. Moreover, the record indicates that regardless of whether T.K.O.

       Enterprises secured the account, Kent wanted out of the business. Despite

       reports that the industry was bouncing back, that the company had a small

       upswing in sales, and that the TruGreen account was probable, Kent expressed

       concern with the company’s future and a desire to avoid risk. These concerns

       suggest that Kent wanted out of the business regardless of its future prospects.


[30]   In sum, Kent’s fraud claim is based on how the company ended up doing in

       2010, not on the past or existing facts related to the company’s actions and

       financial standing as of December 2009. When Kent states that the company’s

       financial situation was improving in December 2009, contrary to what may

       have been represented to him, he does so with the benefit of hindsight of

       knowing that the company’s financial position did, in fact, improve. A fraud

       claim cannot be based on future events. “[A]ctual fraud may not be based on

       representations regarding future conduct, or on broken promises, unfulfilled

       predictions, or statements of existing intent which are not executed.” Comfax


       Court of Appeals of Indiana | Memorandum Decision 32A01-1605-PL-1013 | February 7, 2017   Page 21 of 25
       Corp., 587 N.E.2d at 125. We find that Kent has failed to allege facts or

       demonstrate a genuine issue of material fact showing that Taulman and the

       Individual Defendants falsely represented past or existing facts or withheld

       material facts related to T.K.O. Enterprises’ financial situation. Accordingly,

       we affirm the trial court’s grant of summary judgment on the fraud claims.


                                          2. Fiduciary Duty
[31]   Kent also argues that Taulman was not entitled to summary judgment on his

       claim of breach of fiduciary duty because Taulman breached his duty when he

       knowingly misrepresented T.K.O. Enterprises’ financial condition and withheld

       2010 sales projects to manipulate Kent into agreeing to redistribute his shares.

       He refers to his argument for his fraud claims to support his argument that

       Taulman breached his fiduciary duty.


[32]   Under Indiana’s business judgment rule, a director of a closely held corporation

       is not liable for any action taken or not taken as a director, regardless of the

       nature of the alleged breach of duty, unless the director has breached or failed to

       perform the duties of the director’s office, and the breach or failure to perform

       constitutes willful misconduct or recklessness. Ind. Code. § 23-1-35-1(e). “A

       director is not to be held liable for informed actions taken in good faith and in

       the exercise of honest judgment in the lawful and legitimate furtherance of

       corporate purposes.” G & N Aircraft, Inc. v. Boehm, 743 N.E.2d 227, 238 (Ind.

       2001). A fiduciary must perform his duties “fairly, honestly, and openly.” Id.

       at 239.


       Court of Appeals of Indiana | Memorandum Decision 32A01-1605-PL-1013 | February 7, 2017   Page 22 of 25
[33]   Kent’s allegations do not overcome the presumption that Taulman acted in

       good faith and in lawful and legitimate furtherance of corporate purposes. The

       evidence indicates that Taulman communicated frequently with the company’s

       banks to make the company’s financial future more secure in a challenging

       economy. No evidence shows that Taulman’s actions constituted willful

       misconduct or recklessness. Kent’s argument is based on speculation as to what

       Taulman might have known and what his motivations might have been.

       Speculation is not sufficient to gain reversal of summary judgment. See Beatty v.

       LaFountaine, 896 N.E.2d 16, 20 (Ind. Ct. App. 2008) (holding that mere

       speculation, guesses, supposition, and conjecture “are not sufficient to create a

       genuine issue of material fact to defeat summary judgment.”). Therefore, we

       affirm the grant of summary judgment on this claim.


                                          B. Second Action
[34]   Kent asserts that summary judgment was improper in the Second Action

       because the Individual Defendants’ compensation is excessive, thereby

       minimizing profits to deprive him of dividends. He also asserts that Taulman

       and the Individual Defendants engaged in self-dealing by their creation and

       ownership of several new entities that provide services identical to SCS and

       GTS in order to divert income away from T.K.O. Companies and from Kent.


[35]   To prevail on an excessive compensation claim, a plaintiff-shareholder must

       show that “the compensation is unjust, oppressive, or fraudulent.” G & N

       Aircraft, Inc., 743 N.E.2d at 239 (quotation marks and citation omitted). “Once


       Court of Appeals of Indiana | Memorandum Decision 32A01-1605-PL-1013 | February 7, 2017   Page 23 of 25
       a corporate officer’s compensation is challenged, the burden of establishing

       unreasonable compensation lies with the minority shareholder instituting the

       action.” Krukemeier v. Krukemeier Mach. & Tool Co., 551 N.E.2d 885, 887 (Ind.

       Ct. App. 1990) (quotation marks and citation omitted).


[36]   Kent states that the Appellees, in moving for summary judgment, did not

       designate evidence that shows that the compensation was reasonable and not

       excessive. But in an excessive compensation claim, the burden of proof rests on

       the plaintiff, not on the defendant. Kent states that in 2012, Taulman and the

       Individual Defendants received $80,000 on the SCS payroll and continue to

       receive a minimum monthly payment of $1,500. He provides no context for

       how these payments are unjust, oppressive, or fraudulent. His complaint seems

       to be based on the fact that he “was never notified of a board meeting at which

       such compensation was to be considered and he never agreed to it.”

       Appellant’s Br. p. 47-48. Further, Kent’s only evidence to support his claim is

       from his designated expert, who merely stated “I have reviewed sufficient

       financial information of the Company to determine wages paid to all equity

       holders of the Company, excluding Mr. K. Smith, have been excessive, such

       wages greater than reasonable compensation taking the form of a quasi-

       dividend.” Appellant’s App. Vol. 5 p. 175.


[37]   Without facts about exactly what or how much financial information the expert

       reviewed, how he came to his conclusion that the compensation was excessive

       for all equity holders except for Kent, how the compensation compares to

       similar companies, and what compensation would be reasonable for this

       Court of Appeals of Indiana | Memorandum Decision 32A01-1605-PL-1013 | February 7, 2017   Page 24 of 25
       company, we find the expert’s affidavit to be a conclusory opinion unsupported

       by facts. Without facts, the affidavit does not meet the requirements of Indiana

       Trial Rule 56(E), which provides that an adverse party to a motion for

       summary judgment “may not rest upon the mere allegations or denials of his

       pleading, but his response, by affidavits or as otherwise provided in this rule,

       must set forth specific facts showing that there is a genuine issue for trial.”

       (Emphasis added); see also Whitlock v. Steel Dynamics, Inc., 35 N.E.3d 265, 273

       (Ind. Ct. App. 2015) (“[T]he affiants—rather than merely setting forth

       conclusory statements—were required to give specific details which they

       perceived to be the basis for their conclusions . . . .”). Further, “a lack of detail

       in an affidavit goes to the weight and credibility of the affidavit.” Miami Sand &

       Gravel, LLC v. Nance, 849 N.E.2d 671, 680 (Ind. Ct. App. 2006) (finding that

       conclusory statements that lacked specificity and detail in an affidavit were

       insufficient to create genuine issues of material fact).


[38]   We find that Kent did not meet his burden of establishing that a genuine issue

       of material fact exists as to whether the compensation is unjust, oppressive, or

       fraudulent. Accordingly, we affirm the trial court’s grant of summary

       judgment.


[39]   The judgment of the trial court is affirmed.


       Bradford, J., and Altice, J., concur.




       Court of Appeals of Indiana | Memorandum Decision 32A01-1605-PL-1013 | February 7, 2017   Page 25 of 25
