GJMS LLC v. Hamstra Builders Inc
2:18-cv-00135
| N.D. Ind. | Mar 30, 2022Background:
- GJMS, LLC (formed 2009) had an Operating Agreement naming Wilbert Hamstra as initial sole Member and Manager; the Manager need not be a Member.
- A separate Management Agreement made Wilbert an independent‑contractor Manager with specified monthly compensation for a nine‑year term and stated GJMS could not terminate him without his written agreement.
- In 2016 Greg Hamstra assigned his membership interest to his wife Jodi in a divorce settlement and agreed to indemnify Jodi and GJMS from management fees payable after December 31, 2017.
- On June 4, 2016 Wilbert executed an assignment resigning as Manager and transferring his membership to Jodi; despite that resignation, GJMS continued paying Wilbert under the Management Agreement.
- GJMS sued Wilbert, Van Kley, and Hamstra Builders, Inc., alleging theft/conversion (Ind. Code) and breach of fiduciary duty; GJMS moved for partial summary judgment on Counts II and III.
- The court denied partial summary judgment, finding genuine issues of material fact (including the Management Agreement's validity and whether payments through 2017 were authorized) precluded judgment as a matter of law.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether payments to Wilbert after his June 2016 resignation were unauthorized | Payments were unauthorized because Wilbert resigned as Member and Manager and thus lost payment rights under the Operating and Management Agreements | Parties had discussed/understood Wilbert would continue to be paid through 12/31/2017; divorce indemnity and email communications support authorization | Denied summary judgment; factual dispute exists whether payments were authorized |
| Whether the Management Agreement is binding on GJMS | Management Agreement may be invalid because someone else signed for GJMS, so company not bound | Management Agreement is valid and governs Wilbert's compensation | Denied summary judgment; material questions about who signed and interplay with Operating Agreement preclude ruling |
| Whether GJMS satisfied the heightened summary‑judgment burden as the party who will bear the trial burden | GJMS must show evidence so one‑sided no reasonable juror could disagree | Defendants point to evidence creating disputed issues for trial | Court applied precedent requiring a movant‑with‑the‑burden to show overwhelming evidence and concluded GJMS did not meet that burden |
Key Cases Cited
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (explains summary judgment standard and role of judge vs. jury)
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (sets burden‑shifting framework when movant does not bear ultimate burden)
- Reserve Supply Corp. v. Owens‑Corning Fiberglass Corp., 971 F.2d 37 (7th Cir. 1992) (movant who bears the burden must show the evidence is so one‑sided it must prevail)
- Dempsey v. Atchison, Topeka & Santa Fe Ry. Co., 16 F.3d 832 (7th Cir. 1994) (summary judgment appropriate where no disputed material fact)
- NLFC, Inc. v. Devcom Mid‑Am., Inc., 45 F.3d 231 (7th Cir. 1995) (courts must construe facts in favor of the nonmoving party)
- Doe v. R.R. Donnelley & Sons Co., 42 F.3d 439 (7th Cir. 1994) (clarifies the court's role in deciding summary judgment motions)
- Addicks Servs., Inc. v. GGP‑Bridgeland, LP, 596 F.3d 286 (5th Cir. 2010) (movant with the burden must establish the case beyond peradventure to obtain summary judgment)