Wyoming Pharmacies, LLC d/b/a Kentuckiana Pharmacy, Dr. Assad Nasr, and Dr. Erin Morsey v. Crosses Enterprises, LLC and Dr. Rafael Cruz (mem. dec.) ( 2017 )

MEMORANDUM DECISION FILED
09/12/2017, 10:32 am
Pursuant to Ind. Appellate Rule 65(D), CLERK
this Memorandum Decision shall not be Indiana Supreme Court
Court of Appeals
regarded as precedent or cited before any and Tax Court
court except for the purpose of establishing
the defense of res judicata, collateral
estoppel, or the law of the case.
ATTORNEY FOR APPELLANTS ATTORNEY FOR APPELLEES
A. David Hutson James F. Guilfoyle
Hutson Legal Guilfoyle Law Office
Jeffersonville, Indiana Jeffersonville, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Wyoming Pharmacies, LLC September 12, 2017
d/b/a Kentuckiana Pharmacy, Court of Appeals Case No.
Dr. Assad Nasr, and Dr. Erin 10A01-1703-MI-514
Morsey, Appeal from the Clark Circuit
Appellants-Defendants, Court
The Honorable Andrew Adams,
v. Judge
Trial Court Cause No.
Crosses Enterprises, LLC and 10C01-1701-MI-6
Dr. Rafael Cruz,
Appellees-Plaintiffs.
Najam, Judge.
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Statement of the Case
[1] Wyoming Pharmacies, doing business as Kentuckiana Pharmacy; Dr. Assad
Nasr; and Dr. Erin Morsey (collectively “Kentuckiana Pharmacy”) bring this
interlocutory appeal as of right following the trial court’s issuance of a
preliminary injunction that prohibited Kentuckiana Pharmacy from relocating
its business pending resolution of the case. Kentuckiana Pharmacy raises one
issue on appeal, namely, whether the trial court abused its discretion when it
issued the preliminary injunction without providing sufficient findings of fact
and conclusions thereon.
[2] We reverse and remand for further proceedings.
Facts and Procedural History
[3] Dr. Rafael Cruz is a physician and the sole member of Crosses Enterprises,
LLC (collectively “Crosses Enterprises”), which had leased office space for Dr.
Cruz’s medical practice. Drs. Nasr and Morsey are pharmacists. On July 18,
2014, Crosses Enterprises, through Dr. Cruz, offered Dr. Nasr the use of empty
office space in the same building as his medical practice to use as a pharmacy.
On July 25, Drs. Cruz, Nasr, and Morsey formed Kentuckiana Pharmacy, a
Wyoming limited liability company, that operated out of Crosses Enterprises’
office space. On August 4, Kentuckiana Pharmacy obtained its Certificate of
Authority from the Indiana Secretary of State’s office.
[4] On November 6, the parties signed an operating agreement. Pursuant to that
agreement, all three individuals each “own 33.3%” of Kentuckiana Pharmacy
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and will each receive “a 33.3% share of the profits.” Appellant’s App. Vol. II at
65. The operating agreement also provided that the members agreed to divide
the profits “three or four times a year depending on cash flow” and that “[a]ll
partners will have equal access to the ‘books’ and any financial information
pertaining to the operations of all the pharmacies.” Id. The pharmacy began
operations in June 2015.
[5] At the end of the year, Dr. Nasr met with his accountant to begin preparing his
taxes. The accountant informed Dr. Nasr that Kentuckiana Pharmacy was
registered with the IRS as a single-member limited liability company (“LLC”)
instead of a multi-member LLC. On the advice of Dr. Nasr’s accountant, Dr.
Nasr presented a resolution to Drs. Cruz and Morsey that would remove Drs.
Cruz and Morsey as members of Kentuckiana Pharmacy. Drs. Nasr and
Morsey signed the document. Dr. Cruz’s signature appears on the document
but the parties contest whether he actually signed it.
[6] On July 20, 2016, Drs. Cruz and Nasr put in an offer to buy a piece of property
for the pharmacy, but the deal did not go through. On December 26, Dr. Nasr
individually executed a lease agreement for a new location for Kentuckiana
Pharmacy.
[7] On January 12, 2017, Dr. Cruz filed a complaint in the trial court alleging
twelve counts of wrongdoing on the part of Drs. Nasr and Morsey. On
February 8, Dr. Cruz moved for a preliminary injunction to “maintain the status
quo” and to prevent Dr. Nasr from relocating Kentuckiana Pharmacy out of
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Crosses Enterprises’ office space without Dr. Cruz’s consent. Appellant’s App.
Vol. II at 31.
[8] The trial court held a hearing on the motion for a preliminary injunction on
February 22. During the hearing, Karen Sherlock appeared as a witness on
behalf of Dr. Cruz. Sherlock is Dr. Cruz’s assistant and the custodian of his
business records. Sherlock testified that Dr. Cruz is currently an owner of
Kentuckiana Pharmacy and that she was not aware of any document that Dr.
Cruz signed to relinquish his ownership interest in Kentuckiana Pharmacy.1
She further testified that “Dr. Nasr has access to Dr. Cruz’s signature on
prescriptions and because he has prescriptive authority to [give] vaccinations, so
he could have lifted it off of there.” Tr. at 35. Sherlock also testified that she
was not aware of any rent paid by Kentuckiana Pharmacy to Crosses
Enterprises for the use of the office space.
[9] Dr. Nasr testified that Dr. Cruz’s only involvement with Kentuckiana
Pharmacy involved mutual customers and that Dr. Cruz had never requested to
see Kentuckiana Pharmacy’s books or records. Dr. Nasr further testified that
he was present when Dr. Cruz signed the resolution removing Drs. Cruz and
Morsey as members of Kentuckiana Pharmacy and that he witnessed Dr. Cruz
sign the document. He also testified that he believed that the resolution made
1
Dr. Cruz argues in his Appellees’ brief that he was not aware of the resolution and that he did not sign it.
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Drs. Cruz and Morsey “not members of the company” and also “not owners of
the company.” Tr. at 86.
[10] On March 2, the trial court entered a preliminary injunction against
Kentuckiana Pharmacy. The trial court’s order states:
FINDINGS/ORDER
Comes now the Court, having held a hearing on February 22,
2017, and finds as follows:
1. Wyoming Pharmacies, LLC is [a] Wyoming Corporation
doing business in Indiana as Kentuckiana Pharmacy and
Kentuckiana Pharmacies, and that this Court has jurisdiction
over this matter as the primary location of operations is Clark
County, Indiana;
2. That Plaintiff Dr. Rafael Cruz and Defendants Dr. Assad
Nasr and Dr. Erin Morsey formed Wyoming Pharmacies,
LLC [on] July 21, 2014 and the parties entered into an
agreement as Wyoming Pharmacies, LLC to do business as
Kentuckiana Pharmacy and Kentuckiana Pharmacies that
provided the three partners an[] equal share in the profits of
Kentuckiana Pharmacy;
3. That there exists a dispute over ownership of the corporation;
4. That the Defendant is enjoined from relocating the
corporation pending resolution of this matter;
5. That the Plaintiff is required to post a security bond in the
amount of $25,000 in accordance with Indiana Trial
Procedure 65(c).
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Appellant’s App. Vol. II at 8. This appeal ensued.
Discussion and Decision
[11] Kentuckiana Pharmacy argues that the entry of the preliminary injunction was
an abuse of discretion. Specifically, Kentuckiana Pharmacy contends that the
trial court issued the preliminary injunction “without considering the adequacy
of the physician’s remedies at law, his likelihood of success at trial, the balance
of harms[,] or the public interest.” Appellant’s Br. at 4.
[12] “[T]he power to issue a preliminary injunction should be used sparingly, and
such relief should not be granted except in rare instances in which the law and
facts are clearly within the moving party’s favor.” Union Twp. School Corp. v.
State ex rel. Joyce, 706 N.E.2d 183, 189 (Ind. Ct. App. 1998), trans denied. The
grant or denial of a preliminary injunction rests within the sound discretion of
the trial court, and our review is limited to whether there was a clear abuse of
that discretion. Apple Glen Crossing, LLC v. Trademark Retail, Inc., 784 N.E.2d
484, 487 (Ind. 2003). To obtain a preliminary injunction, the moving party has
the burden of showing by a preponderance of the evidence that: (1) the
movant’s remedies at law are inadequate, which will cause him irreparable
harm pending resolution of the substantive action; (2) the movant has at least a
reasonable likelihood of success at trial by establishing a prima facie case; (3) the
threatened injury to the movant outweighs the potential harm to the nonmoving
party that would result from the grant of an injunction; and (4) the public
interest would not be disserved by the injunction. Id. If the movant fails to
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prove any of these requirements, the trial court’s grant of an injunction is an
abuse of discretion. Id.[13] Kentuckiana Pharmacy argues that the trial court committed reversible error
because it failed to issue findings of fact and conclusions thereon pursuant to
Indiana Trial Rule 52. Trial Rule 52 provides that “[t]he court shall make
special findings of fact without request . . . in granting or refusing preliminary
injunctions . . . .” Further, Trial Rule 65(D) provides that “[e]very order
granting temporary injunction and every restraining order shall include or be
accompanied by findings as required by Rule 52[.]” “A trial court’s failure to
enter findings of fact and conclusions of law, as required by Ind. Trial Rule 52
and Ind. Trial Rule 65, in an order granting a preliminary injunction constitutes
reversible error.” GKC Indiana Theatres, Inc. v. Elk Retail Investors, LLC, 764
N.E.2d 647, 651 (Ind. Ct. App. 2002).
[14] In this case, the trial court’s order granting the preliminary injunction contained
only the following language:
1. Wyoming Pharmacies, LLC is [a] Wyoming Corporation
doing business in Indiana as Kentuckiana Pharmacy and
Kentuckiana Pharmacies, and that this Court has jurisdiction
over this matter as the primary location of operations is Clark
County, Indiana;
2. That Plaintiff Dr. Rafael Cruz and Defendants Dr. Assad
Nasr and Dr. Erin Morsey formed Wyoming Pharmacies,
LLC [on] July 21, 2014 and the parties entered into an
agreement as Wyoming Pharmacies, LLC to do business as
Kentuckiana Pharmacy and Kentuckiana Pharmacies that
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provided the three partners an[] equal share in the profits of
Kentuckiana Pharmacy;
3. That there exists a dispute over ownership of the corporation;
4. That the Defendant is enjoined from relocating the
corporation pending resolution of this matter;
5. That the Plaintiff is required to post a security bond in the
amount of $25,000 in accordance with Indiana Trial
Procedure 65(c).
Appellant’s App. Vol. II at 8.
[15] The trial court did not include any specific findings of fact as required by Trial
Rule 52 and only provides as a conclusion that a dispute exists over the
ownership of Kentuckiana Pharmacy. The trial court’s failure to enter the
required findings of fact and conclusions thereon in this case requires reversal.
[16] Although we may review a trial court’s grant of a preliminary injunction
notwithstanding its failure to enter the mandatory findings, we will do so “only
when the facts are simple and uncontested, and only a question of law is
presented for review.” Whiteco Indus., Inc. v. Nickolick, 549 N.E.2d 396, 398
(Ind. Ct. App. 1990). We do not have such a case here. It is clear from the
record that the facts are not uncontested. Specifically, the ownership of
Kentuckiana Pharmacy continues to be contested and is an underlying subject
of the case before the trial court.
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[17] Because the ultimate outcome of this case will be determined primarily by
factual determinations, the absence of factual findings by the trial court leaves
us unable to determine if Crosses Enterprises has demonstrated a likelihood that
it will prevail on the merits. See Whiteco Idus., 549 N.E.2d at 399. We
conclude that appellate review of the trial court’s preliminary injunction is
precluded by the lack of proper findings, and, thus, we reverse the trial court’s
order, dissolve the preliminary injunction, and remand for further proceedings
not inconsistent with this opinion. See id.[18] Reversed and remanded.
Kirsch, J., and Brown, J., concur.
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