MEMORANDUM DECISION
                                                                   Apr 30 2015, 10:08 am
Pursuant to Ind. Appellate Rule 65(D), this
Memorandum Decision shall not be regarded as
precedent or cited before any court except for the
purpose of establishing the defense of res judicata,
collateral estoppel, or the law of the case.



ATTORNEYS FOR APPELLANTS                                  ATTORNEYS FOR APPELLEE
Shaw R. Friedman                                          ANDREW C. KESLING,
Friedman & Associates, P.C.                               INDIVIDUALLY AND AS TRUSTEE
LaPorte, Indiana                                          OF THE ANDREW C. KESLING
                                                          TRUST DATED MARCH 28, 2001
Carmen M. Piasecki
Nickle & Piasecki                                         Thomas G. Burroughs
South Bend, Indiana                                       Michael W. Hile
                                                          Katz & Korin, PC
Geoffrey Slaughter                                        Indianapolis, Indiana
Taft Stettinius & Hollister LLP
Indianapolis, Indiana                                     ATTORNEYS FOR APPELLEE TP
                                                          ORTHODONTICS, INC.
                                                          Sean M. Clapp
                                                          Elizabeth M. Ellis
                                                          Clapp Ferrucci
                                                          Fishers, Indiana



                                             IN THE
    COURT OF APPEALS OF INDIANA

Christopher K. Kesling, Emily                            April 30, 2015
Kesling, and Adam Kesling,                               Court of Appeals Case No.
                                                         45A03-1404-PL-135
Appellants-Plaintiffs,
                                                         Appeal from the Lake Superior Court
        v.                                               The Honorable John R. Pera, Special
                                                         Judge
                                                         Trial Court Cause No. 45D10-0907-
Andrew C. Kesling, individually                          PL-94
and as Trustee of the Andrew C.
Kesling Trust Dated March 28,


Court of Appeals of Indiana | Memorandum Decision 45A03-1404-PL-135 |April 30, 2015        Page 1 of 21
      2001, Peter Kesling, and TP
      Orthodontics, Inc.,
      Appellees-Defendants




      Bradford, Judge.



                                          Case Summary                   1




[1]   Appellants-Plaintiffs Christopher Kesling, Emily Kesling, and Adam Kesling

      (collectively, the “Siblings”) are shareholders in a family-owned business,

      Appellee-Defendant TP Orthodontics, Inc. (“TPO”). The Siblings’ brother,

      Appellee-Defendant Andrew Kesling, and father, Appellee-Defendant Peter

      Kesling, are also shareholders in TPO.


[2]   The instant dispute arises from the transfer of certain shares of TPO from Peter

      to Andrew. Simply stated, the Siblings challenge the transfer, arguing that the

      transfer violated the terms of TPO’s Shareholder Agreement, and that under the

      terms of the Shareholder Agreement, they should have received the right of first

      purchase of the shares in question. Finding that the transfer of the shares in

      question did not violate the terms of the Shareholder Agreement, the trial court




      1
        We note that Appellants have filed a Motion for Oral Argument. Appellants’ Motion for Oral Argument is
      denied in an order handed down simultaneously with this memorandum decision.

      Court of Appeals of Indiana | Memorandum Decision 45A03-1404-PL-135 |April 30, 2015         Page 2 of 21
      determined that the Siblings were not entitled to their requested relief. We

      agree and accordingly affirm the judgment of the trial court.



                            Facts and Procedural History
[3]   Initially we note that the instant appeal is the second time the parties have come

      before our court in relation to the underlying claims. Our prior opinion in this

      matter instructs us to the underlying relevant facts and procedural history: “In

      1955, Harold Kesling, who was Peter’s father, along with Peter and Peter’s

      brother David Kesling, founded TPO, which is in the business of developing,

      marketing, and selling orthodontic devices.” Kesling v. Kesling, 967 N.E.2d 66,

      67 (Ind. Ct. App. 2012). “TPO is a closely held corporation and is organized

      under Subchapter S of the Internal Revenue Code.” Id. “At TPO’s

      incorporation, Peter was made the president of the board.” Id. “Harold’s

      wishes were that TPO would remain a family business.” Id.

[4]           The corporate by-laws, adopted in 1956, set forth the method for
              transferring stock in TPO:
                       (1) By delivery of the certificate endorsed either in blank
                       or to a specified person by the person appearing by the
                       certificate to be the owner of the shares represented
                       thereby; or
                       (2) By delivery of the certificate and a separate document
                       containing a written assignment of the certificate or a
                       power of attorney to sell, assign, or transfer the same or
                       the shares represented thereby, signed by the person
                       appearing by the certificate to be the owner of the shares
                       represented thereby. Such assignment or power of
                       attorney may be either in blank or to a specified person.
              Exhibit 1 at 26.
      Court of Appeals of Indiana | Memorandum Decision 45A03-1404-PL-135 |April 30, 2015   Page 3 of 21
        In 1973, the TPO shareholders entered into an agreement which
        restricted a shareholder’s ability to transfer shares of TPO to a non-
        shareholder, noting that “the parties desire by mutual agreement to
        protect the small business corporation classification from destruction
        due to the transfer of shares to persons not now shareholders.” Exhibit
        3 at 1. On July 8, 1993, this agreement was amended and restated (the
        “Shareholder Agreement”), noting that “all of its shareholders,
        hereinafter collectively referred to as ‘Shareholders’, WITNESSETH:”
        and reiterating at the outset that “the parties desire by mutual
        agreement to protect the small business corporation qualification by
        restricting the transfer of shares to persons not now shareholders” and
        that “there are now voting and non-voting shares of [TPO] having the
        same rights and privileges, except voting rights.” Exhibit 4 at 1. The
        Shareholder Agreement stated the following:
                 1. Any present Shareholder shall not be limited in the
                 transfer of any of his or her voting or non-voting [TPO]
                 shares to other existing Shareholders of [TPO].
                 2. Each and all of the Shareholders hereby gives to [TPO]
                 the first right to purchase for cash, or on such terms as
                 may be agreeable to the parties, any voting and/or non-
                 voting shares hereafter offered for transfer to a person not
                 at the time of transfer then Shareholders of [TPO]. This
                 first right to purchase shall cover both voluntary and
                 transfers by operation of law. The said first right to
                 purchase shall exist for a period of ninety (90) days from
                 the date of written notice by a Shareholder to [TPO] of an
                 offer to sell or from the date that any certificates are
                 tendered to [TPO] for transfer to a new Shareholder,
                 whichever is the earlier. Beginning on the ninety-first
                 (91st) day ... the existing Shareholders of [TPO] shall
                 have the right to purchase all of the offered shares as a
                 group, or as individuals. This right to purchase in the
                 Shareholders shall extend for ninety (90) days....
                                                ****
        On September 24, 1999, a special meeting of the Board of Directors
        was held [during which] … a variety of topics were addressed
        including “a proposed resolution governing requests to transfer shares



Court of Appeals of Indiana | Memorandum Decision 45A03-1404-PL-135 |April 30, 2015   Page 4 of 21
        into the name of a revocable trust.” Id. The following resolution (the
        “1999 Resolution”) was unanimously adopted:
                 “WHEREAS, David L. Kesling and Sharon F. Kesling
                 have requested transfer of their shares of [TPO] stock into
                 certain revocable trusts;
                 WHEREAS, it is likely that other shareholders will also
                 desire to also transfer shares into revocable trusts;
                 WHEREAS, the Corporation has a stock purchase
                 Agreement dated July 8, 1993, which restricts transfer of
                 the shares to persons who are not presently shareholders
                 of the Corporation; and
                 WHEREAS, it is in the best interests of the Corporation
                 to develop a policy for handling such requests for transfer
                 of shares to a revocable trust.
        NOW, THEREFORE, BE IT AND IT IS HEREBY RESOLVED
        that:
                 1. The Corporation shall accept requests for transfer of
                 shares into a revocable trust, provided that each of the
                 terms set forth in this resolution have been performed.
                 2. Any shareholder requesting transfer of his or her shares
                 into a trust must deliver a copy of the first and last (or
                 signature) pages of the Trust, together with a copy of all
                 dispositive provisions of the Trust, to establish that the
                 income of the trust will be paid solely to a shareholder
                 and that, upon the death of the shareholder, the Trust will
                 distribute the shares to the estate of the shareholder,
                 subject to any stock purchase Agreement in effect at that
                 time. Presently, the stock purchase Agreement gives the
                 Corporation the first right to purchase all or part of the
                 shares prior to any distribution to a new shareholder. The
                 Trust shall also contain no provisions which would
                 disqualify the Corporation as a Small Business
                 Corporation under Sub-Chapter S of the Internal Revenue
                 Code.
                 3. The shareholder shall enter into an agreement in
                 writing with the Corporation to the effect that the
                 shareholder (a) will not alter or change the dispositive

Court of Appeals of Indiana | Memorandum Decision 45A03-1404-PL-135 |April 30, 2015   Page 5 of 21
                       provisions of the Trust without the approval of the
                       Corporation and (b) acknowledges that the Corporation
                       shall not transfer on the transfer books of the Corporation
                       the shares held in trust to any person in violation of the
                       stock purchase Agreement then in effect.
              Id. The minutes from the meeting also noted that Peter was stepping
              down as Chairman of the Board of Directors but that he would
              continue as a member of the board. The minutes were signed by
              Andrew, as President, and Peter, as Chairman.
      Id. at 68-70 (emphases in original).


[5]   Prior to the 2001 annual shareholder meeting, Andrew contacted his attorney

      about estate planning advice.2 Id. at 70. “On March 28, 2001, Andrew formed

      the Andrew C. Kesling Trust Dated March 28, 2001 (the “Trust”), by executing

      a Declaration of Revocable Living Trust (the “Trust Declaration”).” Id.

              The Trust Declaration states at the top: “I, ANDREW C. KESLING
              ... declare that by this instrument I am creating the Andrew C. Kesling
              Trust. Initially, I shall act as Trustee. By acceptance of this
              instrument, I and any Successor Trustee agree to administer the trust
              according to the terms of this instrument.” Exhibit 7 at 1. The Trust
              Declaration names “Andrew C. Kesling” as grantor as well as trustee
              during his life, and he signed the document as both grantor and
              trustee. Id. Section 1.02, which defines “Trustee,” also notes that
              Andrew’s wife, Dorothy R. Kesling, was to act as trustee upon
              Andrew’s death or if he should become incapacitated or resign, and
              that upon Dorothy’s resignation or incapacity, James W. Kaminski
              was to act as trustee. Id. The Trust Declaration also named a “Trust
              Committee” for appointing successor trustees, as well as removing a
              current trustee after Andrew’s death, which was comprised of Peter,
              Daniel Lewis, and James Kaminski. Id. at 1-2. Also, as grantor,




      2
       Andrew’s attorney was also TPO’s assistance secretary, had served as TPO’s attorney for
      many years, and was the personal attorney for both Peter and Andrew. Id. at 70.

      Court of Appeals of Indiana | Memorandum Decision 45A03-1404-PL-135 |April 30, 2015   Page 6 of 21
        Andrew reserved under Article Eight “the right to amend, modify, or
        revoke this Agreement, in whole or in part, at any time or times, by
        notice in writing delivered to the Trustee ... effective immediately upon
        actual delivery to the Trustee.” Id. at 25.
        Section 2.01, entitled “Funding,” states that “I hereby transfer to the
        trust estate the property listed in Exhibit ‘A’ attached hereto,” and
        Exhibit A listed, among other things, Andrew’s shares of TPO voting
        and non-voting stock (540 and 3,488 shares, respectively). Id. at 2, 34.
        Also, Section 2.03, entitled “Distributions,” stated the following:
                 The Trustee shall distribute to or for my benefit and/or
                 the benefit of my wife, Dorothy R. Kesling, all of the net
                 income and so much of the principal as I shall direct in
                 writing. In the event of my incapacity, the Trustee may
                 distribute to or for the benefit of Dorothy R. Kesling so
                 much of the net income and principal as the Trustee shall
                 determine in its sole discretion to be necessary or
                 appropriate for the health, maintenance and support of
                 either of us....
        Id. at 2-3.
        Article Three, which governs disposition of the Trust’s property upon
        Andrew’s death, directs that the assets be allocated into a marital fund,
        in which a separate trust would be formed for the benefit of Dorothy,
        and a family fund for distribution to Andrew’s four children and their
        descendants. Section 3.08 is entitled “Family Disaster” and states that
        “[i]n the event [Dorothy] fails to survive my death, and in the further
        event there are no descendants of mine surviving my death, then the
        Trustee shall distribute the trust estate as follows,” and further states
        that Andrew’s TPO shares “shall be sold to that corporation in
        accordance with the terms of the Shareholders Agreement then in
        effect.” Id. at 8. Also, Article Five listed the powers of the trustee and
        included, under Section 5.01(e), the power:
                 To vote any corporate stock, either in person or by proxy,
                 with or without power of substitution, except that if the
                 possession of this power as to any security would
                 adversely affect the issuing company or the Trustee’s
                 ability to retain or vote such security, the Trustee shall
                 vote such security as directed by the income beneficiary or
                 beneficiaries of the trust in which the security is held.

Court of Appeals of Indiana | Memorandum Decision 45A03-1404-PL-135 |April 30, 2015   Page 7 of 21
              Id. at 14. Finally, Paragraph 8.01 denoted the power reserved by the
              grantor and stated: “I reserve, during my lifetime, the right to amend,
              modify or revoke this Agreement, in whole or in part, at any time or
              times, by notice in writing to the Trustee, and such amendment,
              modification or revocation shall be effective immediately upon actual
              delivery to the Trustee.” Id. at 25.


      Id. at 70-71 (emphases in original).


[6]   “In February 2004, at a time in which Andrew was serving as the CEO of TPO

      and Doug Biege was serving as President, tension developed between Andrew

      and Peter regarding Andrew interfering with Biege’s duties as President, and

      Peter made a decision to remove Andrew from TPO’s day-to-day operations.”

      Id. “After a conversation between Peter and Andrew, however, Peter decided

      not to remove Andrew.” Id.

              However, in May 2004, tension between Peter and Andrew resurfaced,
              and Andrew told Peter that Peter had “three choices.... [Andrew] said,
              I can buy you out; you can buy me out; or we can sell the company.”
              Transcript at 503. Soon after, Andrew became “really shocked” when
              Peter told him that he decided to sell Andrew “enough [voting stock]
              to give [Andrew] 51 percent.” Id. at 503-504. Peter made this decision
              because Andrew “had been running the Company for 20 years or so”
              and was “definitely the better businessman” of Peter’s children. Id. at
              1065.


      Id. at 71-72 (emphases in original). “Peter informed TPO’s Board of his

      intention to sell a majority interest in TPO to Andrew, and on May 15, 2004,

      the Board noted and approved ... the sale of 5,410 shares of voting stock by

      Peter C. Kesling to Andrew C. Kesling.” Id. at 72 (internal quotation omitted).




      Court of Appeals of Indiana | Memorandum Decision 45A03-1404-PL-135 |April 30, 2015   Page 8 of 21
[7]   “On May 18, 2004, Peter sent a letter to the law office of Newby, Lewis,

      Kaminski & Jones (“NLKJ”) requesting that Daniel Lewis prepare documents

      to effect the sale of 5,410 shares of Peter’s voting stock to Andrew.” Id. “Peter

      attached to the letter an outline of the agreement noting that he would sell

      Andrew 5,293 shares at $144.71 and 117 shares, which would ‘carry [Andrew]

      beyond 50 percent of the voting shares,’ at $241.18.” Id. (quoting Appellant’s

      Trial App. p. 576). “The outline, signed by Peter, states: ‘I agree to the sale of

      my shares of [TPO] Voting stock to Andrew C. Kesling as set forth above.’” Id.

      (quoting Appellant’s Trial App. p. 577). “As part of the agreed-upon

      transaction between Andrew and Peter, Andrew agreed to pay one-half of

      Lewis’s legal fee, and Lewis represented both Andrew and Peter.” Id.


[8]   “On May 21, 2004, Lewis sent a letter to Andrew with enclosed drafts of the

      two agreements to purchase stock, and on May 24, 2004, Lewis sent the same

      to Peter.” Id.

              The drafts listed ‘PETER C. KESLING’ as Seller and ‘ANDREW C.
              KESLING’ as Buyer, stated that ‘[s]ince Buyer is an existing
              shareholder of [TPO], this sale and transfer of shares is permitted
              under the terms’ of the Shareholder’s Agreement, and noted that ‘[s]o
              long as Buyer is not in default in making the payments ... the Buyer
              shall be entitled to all rights to vote the shares deposited with the
              Escrow Agent,’ which was NLKJ.


      Id. (quoting Trial Ex. 11) (brackets in original).


[9]   “Soon after, Andrew expressed concern to Lewis about what would happen

      with his TPO shares “if something happened to him,” and on June 16, 2004,


      Court of Appeals of Indiana | Memorandum Decision 45A03-1404-PL-135 |April 30, 2015   Page 9 of 21
       Lewis sent Andrew a letter with enclosures consisting of amended purchase

       agreements and a draft of a Voting Trust Agreement (the “Voting Trust”).” Id.

               The Voting Trust stated that it was an agreement “between ANDREW
               C. KESLING (“Shareholder”), and ANDREW C. KESLING
               (“[Voting] Trustee”)” and that at its execution, “Shareholder shall
               assign and deliver all stock certificates representing shares of voting
               stock of [TPO] to the [Voting] Trustee, who shall cause the shares
               represented thereby to be transferred to the [Voting] Trustee as voting
               trustee on the books of” TPO, and indicated that this included the
               shares he was purchasing from Peter. Exhibit 17 at Paragraph 1. The
               Voting Trust stated that the Voting Trustee or any successor “shall
               have the exclusive right to vote upon such shares” and noted that in
               the event of death or disability of the Voting Trustee, “Peter C. Kesling
               or Charlene J. Kesling, or their survivor, shall serve as first alternate
               successor Trustee(s),” and that Lewis was named as second alternate
               successor Trustee. Id. at Paragraphs 2, 5.
               Also, language was added to the purchase agreements reading: “So
               long as Buyer is not in default in making the payments herein
               provided, the Buyer or any voting trustee designated by Buyer shall be
               entitled to all rights to vote the shares deposited with the Escrow
               Agent.” Exhibit 13 at Paragraph 5. Also, a new paragraph titled
               “Death of Buyer ” was added to the draft purchase agreements which
               stated that “[i]n the event of the death of the Buyer ... the shares are
               subject to purchase by [TPO] or its shareholders pursuant to the
               provisions of the Shareholder Agreement.” Id. at Paragraph 7. Lewis
               included this paragraph “to remind everyone ... what would happen,”
               because under the Shareholder Agreement, if Andrew died, “he
               couldn’t pass the shares onto his children.... Or his wife.... Because she
               was not a shareholder.” Transcript at 953.


       Id. at 72-73 (emphases in original).


[10]   “On June 21, 2004, Andrew and Lewis spoke by telephone and discussed

       making amendments to the Trust.” Id. at 73. “Andrew ‘wanted to be more

       precise about what would happen to his shares’ in the event of his death, and

       Court of Appeals of Indiana | Memorandum Decision 45A03-1404-PL-135 |April 30, 2015   Page 10 of 21
       also wanted language in the purchase agreements allowing for an opportunity

       to cure in the event of default in making installment payments.” Id. (quoting

       Trial Tr. p. 955). “Based upon these concerns, Lewis made further changes to

       the purchase agreements in what would be the final drafts.” Id. “Paragraph 7

       was changed to read: ‘Death of Buyer. In the event of the death of the Buyer ...

       the shares are subject to disposition as stated in the Declaration of Revocable

       Living Trust dated March 28, 2001, established by Buyer, as amended June 25,

       2004.’” Id. (quoting Trial Exhibit 15A, B at Paragraph 7). “Also, the default

       provisions were changed to provide Andrew a thirty-day grace period and to

       allow Andrew to keep any shares he had paid for in the event of default.” Id.


[11]   “On June 25, 2004, Peter, his wife Charlene, Andrew, Lewis, and another

       attorney, James Kaminski, met at the NLKJ offices to finalize the sale of stock

       to Andrew.” Id.

               Andrew, individually, and Peter signed both purchase agreements as
               amended (the “Stock Purchase Agreements”), and Lewis signed both
               agreements to accept his appointment as escrow agent. Andrew’s
               Voting Trust was also executed; Andrew signed as both Shareholder
               and Trustee of the Voting Trust, Peter and Charlene signed as the First
               Successor Trustees, Lewis signed as the Second Successor Trustee, and
               Kaminski signed as the Third Successor Trustee. Overall, the meeting
               lasted thirty minutes or less.
               Further, on that same day Andrew signed the First Amendment to
               Declaration of Revocable Living Trust (the “Trust Amendment”), in
               which Andrew’s “[v]oting and nonvoting shares of [TPO], together
               with any voting trust certificates representing voting shares of [TPO]
               held in voting trust” were allocated to the Marital Fund provided for in
               the Trust upon the death or incapacity of Andrew. Exhibit 16 at
               Paragraph 3.04(a)(iii). Also, Paragraph 3.06 states the following:


       Court of Appeals of Indiana | Memorandum Decision 45A03-1404-PL-135 |April 30, 2015   Page 11 of 21
                        Termination of Family Fund—If my wife survives me, the
                        Family Fund shall continue during the lifetime of my
                        wife, Dorothy R. Kesling. Upon her death, or upon my
                        death if she does not survive me, the Trustee shall take the
                        following actions:
                        (a) The Trustee shall offer to sell all voting and non-voting
                        shares of [TPO], together with voting trust certificates ...
                        held in any voting trust at the price according to a formula
                        contained in the then existing Shareholders Agreement
                        among [TPO] to the following existing shareholders:
                        (i) To my father and mother, Peter C. Kesling and
                        Charlene J. Kesling, or the survivor;
                        (ii) If my father and mother are not living, then to the
                        then living members of a class consisting of my uncle,
                        David L. Kesling, my brother, Christopher K. Kesling,
                        my sister, Emily Kesling, and my brother Adam W.
                        Kesling, in equal shares.
               Id. at Paragraph 3.06. A similar provision for selling Andrew’s TPO
               shares to his relatives was included in Paragraph 3.08 in the event of a
               Family Disaster. The Trust Amendment was signed by Andrew as
               Grantor, pursuant to the Grantor’s power of amendment reserved in
               Paragraph 8.01 of the Trust.


       Id. at 73-74 (emphases in original).


[12]   “After the Stock Purchase Agreements were signed, Peter endorsed his stock

       certificates, which included certificates 56, 61, and 70, and provided them to his

       assistant, Lori Allen, and Allen prepared the back of the certificates pursuant to

       instructions which she received and noted that the new stock certificates were

       issued to ‘Andrew C. Kesling Trust dated March 28, 2001.’” Id. at 74 (quoting

       Trial Exs. 36A, 36B, 36C). “Peter signed each of the certificates.” Id. “Three

       stock certificates were issued in the name of the Trust: Certificate 176 reflected

       ownership of the 117 shares Andrew purchased at the premium rate, Certificate
       Court of Appeals of Indiana | Memorandum Decision 45A03-1404-PL-135 |April 30, 2015   Page 12 of 21
       177 reflected ownership of the other 5,293 shares Andrew purchased from

       Peter, and Certificate 178 reflected the 540 shares Andrew owned prior to the

       purchase from Peter.” Id.


[13]   Peter subsequently expressed concern during a February 28, 2006 meeting of

       the TPO Board of Directors regarding certain royalty payments paid to

       Andrew. Id. In light of the concerns raised by Peter, during a September 26,

       2006 board meeting, “the directors adopted a resolution forming an

       investigating committee to determine whether TPO ‘has a legal or equitable

       right or remedy to recover funds improperly paid by [TPO] to Andrew’ and

       whether ‘it is in the best interest of [TPO] to pursue that right or remedy,’ and

       delineating the specificities of the task.” Id. (quoting Trial Ex. 5 J) (brackets in

       original). “In November 2006, based on this investigation, Peter filed a

       complaint against Andrew which was removed to federal court.” Id. During

       this lawsuit, it came to light that the stock purchased by Andrew was

       “apparently” transferred by Peter directly to Andrew’s Trust. Id.


[14]   On January 10, 2008, the Siblings filed a complaint naming Andrew, the Trust,

       Peter, and TPO as defendants. Id. at 75. In this complaint, the Siblings

       “requested that an ‘order be entered declaring that [they] are entitled to

       purchase the 5,950 voting shares of TPO stock pursuant to the terms of the

       Shareholder Agreement....’” Id. (quoting Appellant’s Trial App. p. 50). “In

       their complaint, the Siblings stated that, as a result of Peter’s lawsuit in federal

       court, they were made aware that the 5,410 shares of stock sold to Andrew were

       not transferred to Andrew but rather to the Trust, that ‘[t]he Trust was not an

       Court of Appeals of Indiana | Memorandum Decision 45A03-1404-PL-135 |April 30, 2015   Page 13 of 21
       existing shareholder of TPO at the time the TPO shares were transferred into

       it,’ that this was a violation of the Shareholder Agreement, and that therefore

       they were entitled to purchase the shares.” Id. (quoting Appellant’s Trial App.

       p. 46).


[15]   “On February 29, 2008, Peter, as part of his answer to the Siblings’ complaint,

       asserted a cross-claim against Andrew requesting that the court rescind Stock

       Purchase Agreements executed on June 25, 2004 and return the stock to Peter

       because ‘Peter would not have entered into the 2004 Transaction, giving

       Andrew voting control of the Company, had he known that Andrew had

       caused the Company to pay himself substantial royalties to which he was not

       entitled.’” Id. (quoting Appellant’s Trial App. p. 74). “On September 5, 2008,

       Peter moved for leave to amend his answer and cross-claim, stating that, based

       upon discovery provided by Andrew on July 17, 2008, Peter ‘learned that

       Andrew Kesling was not a shareholder of [TPO] in June, 2004. The discovery

       of this new fact is important because it forms an additional basis for Peter’s

       actual and constructive fraud claims....’” Id. (quoting Appellant’s Trial App. p.

       265).


[16]   “On July 12, 2010, the court commenced a five-day bench trial in which

       evidence consistent with the foregoing was presented.” Id. Following trial, the

       trial court found for Peter and against Andrew and the Siblings. Id. at 76-77.

       Andrew appealed the trial court’s order.




       Court of Appeals of Indiana | Memorandum Decision 45A03-1404-PL-135 |April 30, 2015   Page 14 of 21
[17]   On appeal, we concluded that Andrew’s Trust Declaration did not deprive him

       of his status as a shareholder of TPO and that Andrew, and not the Trust, was

       the legal owner of the shares in question. Id. at 83-86. In light of this

       conclusion, we further concluded that the trial court had abused its discretion in

       finding against Andrew and for Peter on the question of rescission. Id. at 86.

       We therefore reversed the judgment of the trial court and remanded the matter

       to the trial court for further proceedings. Id. at 87.


[18]   On remand, the parties agreed that the issues before the court “present no new

       factual issues requiring the taking of additional evidence.” Appellants’ Appeal

       App. p. 43. The parties subsequently filed post-trial briefs.


[19]   After taking the matter under advisement, the trial court entered its final

       judgment on March 28, 2014.3 In reaching its final judgment, the trial court

       noted that “[t]he crux of the Siblings arguments is that Andrew did not comply

       with the 1999 Resolution when transferring Peter’s voting shares and his own

       shares to the Trust, which the Siblings contend constituted a transfer to a non-

       shareholder, and therefore triggered the Siblings right to purchase those shares

       pursuant to the Shareholder Agreement.” Appellants’ Appeal App. p. 55. The

       trial court found that Andrew’s transfer of the TPO shares to his Trust did not

       constitute a transfer to a non-shareholder, and as such, Andrew’s conduct did




       3
         We note that the portions of the trial court’s final judgment relating to Peter’s claims against
       Andrew are not at issue in the instant appeal. We will therefore focus our discussion of the trial
       court’s final judgment to the portions relating to the Siblings’ claims against Andrew.

       Court of Appeals of Indiana | Memorandum Decision 45A03-1404-PL-135 |April 30, 2015   Page 15 of 21
       not trigger the Siblings right to purchase the TPO shares at issue under the First

       Right of Refusal Provision of the Shareholders Agreement. The trial court

       further found that “[h]aving established that the Siblings are not entitled to the

       relief which they seek under the circumstances presented in this action, this

       Court now holds that the Siblings shall take nothing by way of their

       Complaint.” Appellants’ Appeal App. p. 60. The Siblings now appeal.



                                  Discussion and Decision
                                      I. Standard of Review
[20]   Where, as here, the trial court enters findings and conclusions sua sponte, we

       apply the standard of review set out in Trial Rule 52. Chidester v. City of Hobart,

       631 N.E.2d 908, 909 (Ind. 1994). “Under that rule, issues covered by the

       special findings will not be disturbed unless clearly erroneous. T.R. 52(A).” Id.

       at 910. “We determine whether the evidence supports the findings and the

       findings support the judgment, and we disturb the judgment only where there is

       no evidence supporting the findings or the findings fail to support the

       judgment.” Id. (citing Indpls. Convention & Visitors Ass’n v. Indpls. Newspapers,

       Inc., 577 N.E.2d 208 (Ind. 1991)).

               “In deference to the trial court’s proximity to the issues, ‘we disturb
               the judgment only where there is no evidence supporting the findings
               or the findings fail to support the judgment.’” [Garling v. Ind. Dep’t of
               Natural Res., 766 N.E.2d 409, 410 (Ind. Ct. App. 2002)] (quoting Oil
               Supply Co. v. Hires Parts Serv., Inc., 726 N.E.2d 246, 248 (Ind. 2000)).
               “We do not reweigh the evidence, but only consider the evidence
               favorable to the trial court's judgment.” Id.

       Court of Appeals of Indiana | Memorandum Decision 45A03-1404-PL-135 |April 30, 2015   Page 16 of 21
       Bowyer v. Ind. Dep’t of Natural Res., 944 N.E.2d 972, 983 (Ind. Ct. App. 2011).

       “Further, we review questions of law de novo, and afford no deference to the

       trial court in this regard.” Terry Weisheit Rental Props., LLC v. David Grace, LLC,

       12 N.E.3d 930, 935 (Ind. Ct. App. 2014) (citing In re Estate of Owen, 855 N.E.2d

       603, 608 (Ind. Ct. App. 2006)).


          II. Whether the Trial Court Erred in Finding that the
         2004 Transfer Did Not Trigger the Appellants’ Right of
                             First Purchase
[21]   Appellants contend that the trial court erred in finding that Andrew’s 2004

       transfer of his shares of TPO, and the shares of TPO that he purchased from

       Peter, to his Trust did not trigger their right of first purchase. Again, the

       Shareholder Agreement provides the shareholders with a right of first purchase

       if one shareholder seeks to transfer their shares to a non-shareholder. The right

       to first purchase is triggered by an offer to transfer shares to a non-shareholder.

       Appellants claim that because Andrew’s Trust was not a shareholder prior to

       the transfer, Andrew’s 2004 transfer of shares of TPO to his Trust constituted a

       transfer to a non-shareholder which then triggered their right of first purchase.

       We disagree.


[22]   In our prior opinion relating to this matter, we concluded that Andrew, not his

       Trust, retained ownership of the shares. Kesling, 967 N.E.2d at 86.

       Accordingly Andrew remained the shareholder of TPO. Id. In reaching this

       conclusion we stated that “there is no question that Andrew is the beneficial

       Court of Appeals of Indiana | Memorandum Decision 45A03-1404-PL-135 |April 30, 2015   Page 17 of 21
       and record owner of the shares of TPO, and indeed the Trust under Section

       5.01(e) makes clear that Andrew is entitled to vote the shares.” Id. at 83. We

       additionally stated that

               Andrew’s Trust Declaration for estate planning purposes did not
               deprive Andrew of control of his property, and he continues to be
               responsible for the taxes thereon and his creditors can reach the shares.
               At any point, Andrew can revoke the Trust, in which case there would
               be no debate about where ownership lies.


       Id. at 86.


[23]   Appellants have presented no additional evidence which would cast doubt on

       our prior conclusion. Upon review, we reiterate our prior conclusion that even

       following Andrew’s 2004 transfer of his shares to his Trust, Andrew, and not

       the Trust, remained the shareholder. Andrew, therefore, did not transfer his

       shares to a non-shareholder. Because there was no transfer of shares to a non-

       shareholder, the 2004 transfer did not trigger the first purchase rights set forth in

       the Shareholder Agreement. The trial court, therefore, did not err in reaching

       this same conclusion.




       Court of Appeals of Indiana | Memorandum Decision 45A03-1404-PL-135 |April 30, 2015   Page 18 of 21
         III. Whether the Trial Court Erred in Finding that the
        Language of the Trust Listing Andrew’s Wife, Dorothy,
            as a Potential Successor Trustee or Beneficiary of
             Andrew’s Trust In the Event of Andrew’s Death
             Constituted a Transfer of TPO Shares to a Non-
                               Shareholder
[24]   The Siblings alternatively argue that the trial court erred in finding that the

       language of the Trust listing Dorothy as a potential successor trustee or

       beneficiary in the event of Andrew’s death constituted a transfer of TPO shares

       to a non-shareholder. The Siblings further argue that this transfer triggered

       their right of first purchase set forth in the Shareholder Agreement. We cannot

       agree.


[25]   In considering this claim, the trial court found as follows:

                To begin, to the extent that Indiana law provides that equitable interest
                in property held in trust is vested in the trust beneficiaries, this Court is
                not persuaded by the Siblings arguments that Andrew’s Trust
                Declaration, allowing him to direct payments from the Trust to
                Dorothy, amounts to an ownership interest in the Trust, belonging to
                Dorothy, which rises to the level of a transfer to a non-shareholder vis
                a vis the Shareholder Agreement. Further, while this Court agrees that
                Andrew’s testamentary devise providing for a transfer of TPO shares
                to Dorothy or any other non-shareholder may constitute a transfer to a
                non-shareholder upon the death or incapacity of Andrew, this Court
                finds that such a claim is not yet ripe and is therefore not now properly
                before this Court. There simply was no evidence presented at trial, nor
                is there a present claim, that Andrew’s wife is exerting any ownership
                of the stock in question. That she may do so at some uncertain further
                date is pure speculation, and grasps at the straws of events and
                circumstances that do not now exist.


       Court of Appeals of Indiana | Memorandum Decision 45A03-1404-PL-135 |April 30, 2015   Page 19 of 21
               Andrew’s transfer of TPO shares to the revocable Trust, even as
               amended, do not negate the fact that for purposes of this case Andrew
               remains the owner of the TPO shares at issue. Nor do the terms of the
               Trust Declaration or the Trust Amendment negate the fact that
               Andrew remains the Grantor, Trustee, and lifetime beneficiary of the
               Trust. Furthermore, Andrew remains taxable for all income of the
               Trust and subject to claims against the Trust by his creditors. Even
               further, it remains that Andrew can revoke the Trust at any time, in
               which case there would be no debate about where ownership lies.
               That established, this Court cannot now render a ruling against
               Andrew based upon what the Siblings anticipate may be a future
               transfer of TPO shares to a non-shareholder at the time of Andrew’s
               death or incapacitation. It follows that his Court holds that
               Andrew[’s] transfer of TPO shares to the Trust, as amended, does not
               constitute a transfer to a non-shareholder.


       Appellants’ Appeal App. p. 58 (emphasis in original, brackets added).


[26]   We find the trial court’s analysis in this regard to be sound. Although the

       Siblings argue that Dorothy received a vested interest in the TPO shares at the

       time Andrew transferred the shares to his Trust, see generally Matter of Walz, 423

       N.E.2d 729, 733 (Ind. Ct. App. 1981) (providing that “[w]hen the inter vivos

       settlor creates his trust and transfer property thereto, he creates a present

       interest in the beneficiaries”), the clear language of the Trust did not create any

       present ownership interest in the shares of TPO that are at issue in the instant

       appeal.


[27]   Again, in our prior opinion relating to this matter, we concluded that Andrew,

       not his Trust, retained ownership of the shares. Kesling, 967 N.E.2d at 86. As

       the trial court found, there is no evidence in the record that indicates that

       Dorothy or any other non-shareholder is exerting any ownership of the shares

       Court of Appeals of Indiana | Memorandum Decision 45A03-1404-PL-135 |April 30, 2015   Page 20 of 21
       of TPO. In fact, the record demonstrates that Andrew, and Andrew alone, is

       exerting full ownership of the shares in question. Andrew remains the Grantor,

       Trustee, and lifetime beneficiary of the Trust. He remains liable for all taxable

       income generated from the Trust and subject to claims against the Trust by his

       creditors. Further, he has retained and exercises full voting rights over the

       shares in question. Furthermore, Andrew has the power to revoke the Trust at

       any time, in which case there would be no debate as to where ownership of the

       shares at issue lies. Accordingly, we agree with the trial court that Andrew’s

       transfer of the TPO shares in question to his Trust does not constitute a transfer

       to a non-shareholder.4 As such, the transfer did not trigger the first purchase

       rights set forth in the Shareholder Agreement.5


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

       Vaidik, C.J., and Kirsch, J., concur.




       4
         To the extent that the Siblings argue that Andrew’s transfer of the shares of TPO at issue to
       his Trust violates the “strong public policy” allowing shareholders in a closely held corporation
       to choose with whom they associate, we note that because Andrew, a shareholder before the
       transfer, remains the sole shareholder with respect to the shares at issue after the transfer there
       has been no change in the identity of the individuals associated with one another via their
       position as shareholders.


       5
          We note that TPO raised an alternative argument on cross-appeal on the chance that we
       reversed the trial court’s judgment in favor of TPO. However, because we affirm the judgment
       of the trial court, we need not consider the alternative argument raised by TPO on cross-appeal.

       Court of Appeals of Indiana | Memorandum Decision 45A03-1404-PL-135 |April 30, 2015   Page 21 of 21
