Jason Ellis v. Keystone Construction Corporation
2017 Ind. App. LEXIS 381
Ind. Ct. App.2017Background
- Jason Ellis worked for Keystone Construction as director of construction and claimed Ersal Ozdemir orally promised him a 10–20% ownership (he asserts 20%); no written stock/partnership agreement was executed.
- Ellis received some dividends and was referred to internally and externally as a "partner," but ownership was never formalized; Huseyin Ozdemir later left Keystone and took $2.5M from the company.
- Ellis and his wife Brooke executed a marital dissolution Settlement Agreement (incorporated into the divorce decree) that represented it disclosed "all the property and interest" of the parties; it did not list any ownership interest in Keystone.
- After Ellis resigned in May 2012, Keystone sued for declaratory judgment that Ellis was not a shareholder; Ellis counterclaimed for breach of fiduciary duty, fraud, breach of contract, promissory estoppel, conversion, unjust enrichment, and related relief.
- Keystone moved for summary judgment, ultimately arguing judicial estoppel based on Ellis’s omission of the claimed ownership interest from the divorce settlement; the trial court granted summary judgment for Keystone and entered final judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether judicial estoppel bars Ellis from claiming ownership in Keystone | Ellis argues omission was in good faith (to expedite divorce) and evidence (affidavits) creates factual dispute about intent | Keystone argues Ellis knew of the claim, had motive to conceal it from the dissolution court, and thus should be estopped | Held: Judicial estoppel applies; omission was intentional concealment, so Ellis is estopped from asserting ownership |
| Whether Ellis created a genuine issue of fact on his intent/good-faith nondisclosure | Ellis and Brooke filed affidavits saying they intentionally omitted Keystone interest to avoid delaying divorce and would address it later | Keystone contends those admissions show intentional hiding (bad faith), not a mistaken omission | Held: Court found affidavits show intentional omission; no genuine issue of material fact on good faith |
| Viability of breach of fiduciary duty claim premised on shareholder status | Ellis contends he was a partner/shareholder and directors breached fiduciary duties to him | Keystone contends claim depends on shareholder status; judicial estoppel bars that status | Held: Dismissed—because estoppel bars Ellis’s shareholder claim, fiduciary-duty claim fails |
| Viability of contract/promissory estoppel/unjust enrichment claims based on alleged 20% interest | Ellis claims Keystone promised 20% stock/dividends and withheld distributions | Keystone argues all these claims depend on shareholder ownership, which is estopped | Held: Dismissed—these claims fail because Ellis is estopped from asserting ownership |
Key Cases Cited
- Morgan Cty. Hosp. v. Upham, 884 N.E.2d 275 (Ind. Ct. App. 2008) (adopts burden-shifting test for judicial estoppel where claimant omitted an asset from prior proceeding)
- Robson v. Texas E. Corp., 833 N.E.2d 461 (Ind. Ct. App. 2005) (judicial estoppel prevents litigants from taking inconsistent positions in successive proceedings)
- Turner v. Stuck, 778 N.E.2d 429 (Ind. Ct. App. 2002) (applies judicial estoppel where party denied asset in divorce then claimed it in later litigation)
- Ryan Operations G.P. v. Santiam–Midwest Lumber Co., 81 F.3d 355 (3d Cir. 1996) (judicial estoppel not meant as a technical trap; focuses on preventing "playing fast and loose" with the courts)