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Indiana Law Annotated

Vol. 25 No. 12 (November 17, 2003)

Table of Contents

COURT OF APPEALS AT LAW SCHOOL TODAY

The Court of Appeals of Indiana will hear an oral argument for Estate of Penzenik v. Penz Products at noon on Monday, Nov. 17, in the Moot Court Room. The panel will include Judge Margret G. Robb, Judge Mark Bailey, and Judge Edward W. Najam Jr. All are invited to attend.

***FOR THE CASE SYNOPSIS, SCROLL TO THE END OF THIS ISSUE.***

EVENTS & LECTURES

FIRST ANNUAL MULTICULTURAL GRADUATE STUDENT RECEPTION TUESDAY

The first annual Multicultural Graduate Student Reception will be held from 6 p.m. to 8 p.m. on Tuesday, Nov. 18, in the Lilly Library. Join us for dessert and live jazz featuring Proyecto Herencia and to learn about graduate student resources and opportunities. This event is sponsored by the Office of Multicultural Affairs, the African Students Association, the Asian American Graduate Students, the Asian Cultural Center, the Black Graduate Student

Association, the International Center, the International Graduate Student Association, La Casa, the GPSO, the Latino Graduate Student Association, the MESA, and the Neal Marshall Black Cultural Center. For more information, contact 855-0174 or angemart@indiana.edu.

NEWS FROM THE FACULTY

Professor Kenneth Dau-Schmidt is the recipient of the Industrial Relations Research Association Excellence in Education Award, which recognizes outstanding teaching in labor and employment law.

NEWS FROM CAREER SERVICES

GOVERNMENT OPPORTUNITIES WORKSHOP TUESDAY

Career Services will present "Government Opportunities" at 12:15 p.m. on Tuesday, Nov. 18, in room 122.

INDIANA BAR EXAM WORKSHOP WEDNESDAY

Career Services will host a presentation covering what students need to know about the Indiana bar exam at 12:15 p.m. on Wednesday, Nov. 19, in room 120.

CAREER SERVICES COMMENT BOX: DROP US A LINE

There is now a comment box located outside the Career Services Office for your comments and suggestions. Once each week, the suggestions will be read, and responses will be published either in the next week's ILA or on our Web page. They will also be posted on the bulletin board in the hallway.

NEWS FROM STUDENT ORGANIZATIONS

BLS HOSTS MBA/JD PANEL DISCUSSION TUESDAY NIGHT

The Business and Law Society (BLS) is hosting an informational event at 6 p.m. on Tuesday, Nov. 18, in room 124, for students interested in pursuing a joint degree in business. Several joint degree students will be on hand to discuss the programs offered and to answer questions that students may have. Pizza and refreshments will be provided. All are welcome. For more information, or please contact ashields@indiana.edu.

WOMEN'S LAW CAUCUS PRESENTS "HOW TO SURVIVE A FORMAL BUSINESS DINNER" WEDNESDAY NIGHT

Formal business dinners are often an important part of call-back interviews. Don't miss a job opportunity because of poor table manners! Come to "How to Survive a Formal Business Dinner" at 6:30 p.m. on Wednesday, Nov. 19, at Terry's Banquet and Catering. Joe Boes, assistant director in the Office of Development at the Kelley School of Business, will guide guests through four delicious courses, teaching all how to turn a potentially intimidating experience into a thoroughly enjoyable one. Tickets are $18 and will be sold in the lobby from 11:00 a.m. to 1:00 p.m. before the dinner. Faculty, staff, and non-Law School guests are welcome. We hope you'll join us!

PAD HOSTS FOOD DRIVE AND JEWELRY SALE THIS WEEK

Phi Alpha Delta service fraternity (PAD) is hosting a food drive from Monday, Nov. 17 to Friday, Nov. 21. Some professors will be offering participation incentives. Barrels for food are located on both the first and basement floors. Please join us in this great cause and help us to fill all four barrels. We'd love to see them overflow!

No time for holiday shopping? Let PAD help! PAD will be selling hand-made, custom jewelry from Monday, Nov. 17, to Friday, Nov. 21. Proceeds from the sale will be used by PAD's Philanthropy Committee.

PAD FINAL SEMESTER MEETING THURSDAY

Phi Alpha Delta will hold its last meeting for the fall semester at 6:30 p.m. on Thursday, Nov. 20, in room 120. We will discuss past, current, and future events. We also would like to hear members' suggestions and comments. Free pizza will be provided at the meeting. If you have not been able to make it to a meeting yet this semester, please come on by! As usual, we will be heading to Kilroy's immediately following the meeting. See you then!

ELS PIZZA AND CHAT WITH PROFESSOR FISCHMAN NEXT WEEK

Professor Robert Fischman will speak to the Environmental Law Society about his recent book, The National Wildlife Refuges: Coordinating a Conservation System through Law, at noon on Monday, Nov. 24, in room 124. Published by Island Press, Professor Fischman's book provides a comprehensive examination of the laws and policies governing management of the national wildlife refuges, offering for the first time a practical description and analysis of the management regime outlined in the 1997 National Wildlife Refuge System Improvement Act. The book describes the National Wildlife Refuge System and its legal history, discusses oil and gas development in refuges, and offers observations about how well the refuge system law resolves historic tensions and achieves modern conservation goals.

The National Wildlife Refuge System is an important model for sustainable resource management, and the book's analyses of the refuge system's ecological management criteria, conflicts between primary and subsidiary uses, and tension between site-specific standards and uniform national goals all offer important lessons for environmental governance generally. Visit this link to learn more about Professor Fischman's book: http://www.islandpress.org/books/detail.html?cart=1068576964615&SKU=1-55963-991-1.

Professor Fischman is a noted expert in public natural resources law and the ELS faculty advisor. We are delighted to learn more about his work and hope interested students and faculty within the Law School community will join us for what promises to be a fun and informative occasion! Lunch will be provided. Please contact Dave Campbell at davcampb@indiana.edu with any questions.

ANNOUNCEMENTS

SCHEDULING EVENTS

ALL e-mail about reserving classrooms must be sent to BL-LAW-EVENTS. Mail must be sent to the correct address, bl-law-events (for Outlook users) or bl-events-law@exchange.indiana.edu (for non- Outlook users). Please include the date and time of event, length of time room will be needed, classroom requested and number of people attending event. Requests should be sent at least one week before the event and include the name of the person requesting, the organization planning the event, and an e-mail address. Confirmations will be sent by reply e-mail. Thank you!

AUDIO - VIDEO SERVICES

Requests for AV services may be sent to Beth at av@exchange.indiana.edu. Please include the name of your group and the e-mail address of the contact person, a description of what you want to do, and the date, location, starting time and duration of the event. Requests must be made at least 48 hours in advance and will be confirmed by e-mail.

CALENDAR

Nov. 17: Indiana Court of Appeals oral argument, noon, Moot Court Room

Nov. 18: Career Services "Government Opportunities" workshop, 12:15 p.m., room 122; Multicultural Graduate Student Reception, 6 p.m. to 8 p.m., Lilly Library; BLS joint degree panel, 6 p.m., room 124

Nov. 19: Career Services Indiana bar exam workshop, 12:15 p.m., room 120; "How to Survive a Formal Business Dinner," 6:30 p.m., Terry's Banquet and Catering

Nov. 20: Phi Alpha Delta meeting, 6:30 p.m., room 120

Nov. 21:

ILA: Please visit our Web site at www.law.indiana.edu/publications/ila/ilacurrent.shtml. The ILA is published every Monday with news about the coming week. If you have questions about an item appearing in the ILA, please contact Lesa Petersen (e-mail: petersen@indiana.edu; phone: 856-4044).

Submissions: Information and articles for the ILA should be submitted by Friday at 3 p.m. for inclusion in Monday's edition. Please e-mail all submissions to ila@indiana.edu.

***CASE SYNOPSIS: Estate of Penzenik v. Penz Products***

IN THE COURT OF APPEALS OF INDIANA

ESTATE OF GREGORY J. PENZENIK, LINDA A. PENZENIK, Personal Representative, Appellants-Plaintiffs,

vs.

PENZ PRODUCTS, INC., DAVID PENZENIK, and RICHARD PENZENIK, Appellees-Defendants.

APPEAL FROM THE ST. JOSEPH SUPERIOR COURT

The Honorable Jenny Pitts Manier, Judge

Cause No. 71D05-0003-CP-341

CASE SYNOPSIS

Facts and Procedural History

Penz is a closely held corporation owned by members of the Penzenik family. In 1991, the shareholders executed a buy-sell agreement ("the Agreement"), which purported to require the sale of all shares back to Penz upon a shareholder's death. By 1998, Penz was owned entirely by three brothers, David, Richard, and Gregory. On July 25, 1998, Gregory died. Gregory's widow, Linda, opened his estate and issued a notice to creditors.

In April 1999, Penz filed a "Petition to Enforce Compliance with Buy-Sell Agreement," requesting that the trial court order the Estate to sell the shares. After a trial at which the proper interpretation of the Agreement was hotly contested, the court found that the Estate was required to sell the shares to Penz. The Estate appealed, and the Court of Appeals held that Penz's petition for specific performance was not timely filed under Indiana Code Section 29-1-14-21. See Estate of Penzenik v. Penz Products, Inc., 749 N.E.2d 61, 62-63 (Ind. Ct. App. 2001) ("Penzenik I"). But the Court also stated that "[u]nlike the general claim statute, under which an untimely claim is forever barred, the consequence of a failure to file a timely claim under IC 29-1-14-21 is that the claimant must proceed against the distributees, rather than the estate." Penzenik I, 749 N.E.2d at 64-65.

While Penzenik I was pending in the trial court, the Estate filed a complaint against Penz for breach of fiduciary duty and minority shareholder oppression. Penz answered and filed a counterclaim seeking specific performance and declaratory relief. Then, following our decision in Penzenik I, Penz filed an amended counterclaim adding the Trust and its trustees as counterdefendants. On March 5, 2003, the trial court entered judgment in favor of Penz. The trial court ordered the Trust to sell Penz "all shares in Penz Products, Inc. previously owned by decedent Gregory Penzenik and now held by [the Trust.]" This appeal ensued.

Parties' Arguments

The Estate presents three issues on appeal. First, the Estate contends that the trial court erred when it found that the Trust was required to sell its shares to Penz under the Agreement. Second, the Estate contends that Penz did not present sufficient evidence to prove that the Agreement was validly executed. And third, the Estate maintains that the trial court abused its discretion when it excluded certain evidence.

The Agreement

The Appellants contend that "the Agreement does not give Penz the right to force a sale directly upon the Trust, the sole distributee of the shares." Specifically, the Appellants maintain that "the Personal Representative was the only person named in the Agreement from whom Penz had the right to purchase the shares. . . [and] [b]ecause Penz blew the claim deadline against the Personal Representative, Penz lost the right to exercise its right to purchase shares from the Personal Representative." The Agreement provides in relevant part as follows:

II.

PURCHASE AND SALE UPON DEATH OF STOCKHOLDER

Upon the death or total disability of a Stockholder, all of the shares of stock of the Corporation owned by him shall be sold and purchased as hereinafter provided.

***

B. Obligation of Corporation to Purchase. The Corporation shall have the right, but not be mandatorily obligated, to purchase from a deceased or totally disabled Stockholder's Personal Representative and the deceased Stockholder's Personal Representative shall, in the event of the exercise of its right to purchase, offer to sell to the Corporation all of the shares of the Corporation owned by the decedent and to which the deceased or totally disabled Stockholder or his Personal Representative shall be entitled, at a price calculated as hereinafter set forth in paragraph III hereof.

(Emphases added).

But Penz contends that the Appellants' interpretation of that provision is wrong. Penz claims that Paragraphs IX and XI support its position that Penz has the right to purchase the shares from the Trust. Those paragraphs provide in relevant part as follows:

IX.

APPLICABILITY TO ALL SHAREHOLDERS

This Agreement covers not only shareholders on the date hereof who have executed this Agreement, but also shareholders who subsequently acquire shares in the Corporation by gift or devise.

***

XI.

SURVIVABILITY

This Agreement shall be binding upon and insure to the benefit of the heirs, executors, administrators, guardians, successors, and assigns of the parties hereto.

Execution of Agreement

The Appellants also contend that Penz did not fulfill its burden to prove that the Agreement was validly executed pursuant to Trial Rule 9.2. As such, they maintain that the Agreement should not have been admitted into evidence. Penz responds that the Appellants have waived the issue on appeal, both for allegedly failing to cite to the record in support of their argument and for allegedly failing to raise the issue to the trial court. In the alternative, Penz maintains that the Agreement was properly admitted into evidence.

Indiana Trial Rule 9.2 provides in relevant part that execution of a written instrument filed with a pleading shall be admitted into evidence without proving its execution unless execution is denied under oath in the responsive pleading or by an affidavit filed therewith. But the requirement that execution of a written instrument be denied under oath or otherwise does not apply against a party who is or becomes dead. T.R. 9.2(G). Such parties shall be deemed to have denied execution or admissibility without any responsive pleading or denial. Id. Thus, the presumption of execution does not apply to establish execution of a written instrument by a person who is dead. Id.

Memorandum

Finally, the Appellants contend that the trial court abused its discretion when it excluded certain evidence. Specifically, the Estate sought to introduce into evidence a 1995 memorandum ("the memorandum") prepared by an attorney for Penz, Lawrence R. Williams, III, discussing methods by which Penz could divest Gregory Penzenik of all ownership interest in the corporation. The Appellants maintain that the memorandum was relevant to their affirmative defense of unclean hands, as well as their claims for breach of fiduciary duty and minority shareholder oppression. But Penz objected to the proffered evidence, stating that the memorandum was irrelevant and also invoking attorney-client privilege. The Estate argued that Penz had waived the attorney-client privilege because the memorandum had been introduced as an exhibit to Linda Penzenik's deposition. The trial court sustained Penz's objection on the basis of the attorney-client privilege, and the Estate made an offer of proof.

Appeal

This appeal has been assigned to Judge Edward W. Najam, Jr. of Monroe County, Judge Margaret G. Robb of Tippecanoe County, and Judge L. Mark Bailey of Decatur County. The panel will hear the oral argument on Nov. 17, 2003, at noon, in the Moot Court Room of the Indiana University School of Law in Bloomington. Each side is allotted thirty minutes to argue its position.