NAJAM, Judge.
The Cain Family Farm, L.P. ("the Limited Partnership"), and The Cain Family Farm, LLC ("the LLC") (collectively "Cain Family Farm"), appeal the trial court's grant of summary judgment in favor of Charles O. Drerup and Antlers Ridge, LLC ("Antlers Ridge") on Cain Family Farm's complaint seeking to prevent the transfer of real property owned by the Limited Partnership to Antlers Ridge. Cain Family Farm also appeals the trial court's denial of its cross-motion for summary judgment. Cain Family Farm presents the following dispositive issues for review on appeal:
We affirm.
The Limited Partnership holds title to approximately 400 acres of real property in the Sylvan Lake area of Noble County ("the Sylvan Lake property"). The property consists of seventeen tracts, including lake front property, tillable farm acreage, and woodlands. The LLC is the sole general partner of the Limited Partnership and has exclusive control of the management and operation of the Limited Partnership. In particular, the Limited Partnership Agreement provides the LLC with "the full and exclusive power" to manage and operate the Limited Partnership's affairs, "including (but not limited to) the power to: (a) buy and sell any real or personal property to or from any person[.]" Appellants' App. at 17. The LLC, in turn, is "managed by its members." Id. at 193. The four Cain siblings, Candace Somerlott, Melanie Sue Todd, John Cain, Jr., and Patricia Dekko (collectively "the Cain siblings"), are the only members of the LLC and are also the only limited partners in the Limited Partnership.
On August 6, 2008, the Limited Partnership entered into an "Exclusive Contract
In early August, Candace had told Dremp that she and her siblings were going to sell the Sylvan Lake property, and Dremp expressed an interest in purchasing a portion of the Sylvan Lake property to use as a hunt club.
Before the auction, the Cain siblings discussed "reserve prices"
On October 25, Schrader conducted the auction. Candace, Melanie, and John attended, and Patricia was available by telephone. Drerup, a member of Antlers Ridge, attended the auction with other members of Antlers Ridge, and they intended to bid on several of the tracts offered for sale. At some point late in the auction, when the bidding had slowed, Kevin Jordan and Rex Schrader, who both worked for Schrader, met with Candace, Melanie, and John in a private room off of the main auction hall. Drerup was not present at that meeting. Jordan and Rex wanted to discuss the bidding, which was well below the minimum prices set for the tracts by the Cain siblings prior to the auction. None of the Cain siblings in attendance agreed that the tracts should sell for any amount below the previously agreed upon minimum prices.
A short time later, Melanie and John also returned to the auction hall. The auctioneer announced that all but one tract of the Sylvan Lake property, Tract 5, would be sold that day, and the auctioneer commenced a two minute countdown for final bids. Neither Melanie nor John heard that announcement, and they did nothing to interrupt the auction. At the close of bidding, Antlers Ridge had made the highest bids on Tracts 2 through 4 and 6 through 17, for a total purchase price of $1,350,000. Candace had made the highest bid on Tract 1, but that bid was below the minimum price previously agreed upon by the Cain siblings.
After Candace heard the auctioneer announce that the tracts would be sold that day, she and her husband looked at the bidding for Tract 1 and observed that the bid was too low. Candace "called Rex over to the table" where she and her husband were sitting, and she indicated to Rex that Tract 1 would not be sold because the final bid was too low. According to Candace, Rex responded, in a "gruff and rough demeanor," "Oh yes you are. We have already announced it. The farm is selling today. It is selling today." Appellants' App. at 1187. Candace testified that as he made those statements, Rex had "put his hands on the table [and] leaned over in my face[.]" Id.
At the conclusion of the bidding, Melanie and John went outside to discuss the auction, and then they returned inside to find Candace. In the meantime, Schrader had prepared and Candace and Drerup had signed a purchase agreement for Antlers Ridge's purchase of Tracts 2 through 4 and 6 through 17, for a total purchase price of $1,350,000 ("the Purchase Agreement"). Candace executed the Purchase Agreement in the name of the LLC, in its capacity as the general partner of the Limited Partnership.
Approximately two weeks after the auction, "the Limited Partnership and LLC, through [their] legal counsel" wrote a letter to Schrader "demand[ing]" that the Purchase Agreement be rescinded, and Cain Family Farm did not close on the sale. Id. at 318. And on December 23, Cain Family Farm filed a complaint against Schrader, Antlers Ridge, and Candace alleging breach of contract (against Schrader) and breach of fiduciary duty (against Candace), seeking to quiet title (against Antlers Ridge), and seeking a declaratory judgment and attorney's fees. After filing an answer and counterclaim for specific performance of the Purchase Agreement, Antlers Ridge filed a motion for summary judgment,
Appellants' App. at 29-31. This interlocutory appeal as of right under Indiana Appellate Rule 14(A)(4) ensued.
Our standard of review for summary judgment appeals is well established:
Dreaded. Inc. v. St. Paul Guardian Ins. Co., 904 N.E.2d 1267, 1269-70 (Ind.2009) (citations omitted). The party appealing a summary judgment decision has the burden
Cain Family Farm contends that Candace, in her capacity as a member of the LLC, "had neither the apparent nor inherent authority to bind the LLC" and, by extension, the Limited Partnership, to the Purchase Agreement. Brief of Appellants at 27. Cain Family Farm maintains that the trial court "incorrectly applied prior case law on apparent and inherent authority," the trial court's holding "was inconsistent with the facts designated by the Cain Family Farm," and "[a]t the very least, whether [Candace] is cloaked with apparent and/or inherent authority to execute the [Purchase Agreement] is a genuine issue of material fact" precluding summary judgment. Id. We cannot agree.
Apparent authority is the authority that a third person reasonably believes an agent to possess because of some manifestation from the agent's principal. Pepkowski v. Life of Indiana Ins. Co., 535 N.E.2d 1164, 1166 (Ind.1989). The necessary manifestation is one made by the principal to a third party, who in turn is instilled with a reasonable belief that another individual is an agent of the principal. Id. at 1166-67. It is essential that there be some form of communication, direct or indirect, by the principal, which instills a reasonable belief in the mind of the third party. Id. at 1167. Statements or manifestations made by the agent are not sufficient to create an apparent agency relationship. Id. Generally, the question of whether an agency relationship exists is a question of fact. Douglas v. Monroe, 743 N.E.2d 1181, 1187 (Ind.Ct.App.2001). However, if the evidence is undisputed, there are times when summary judgment is appropriate in agency cases. Id. In Gallant Insurance Co. v. Isaac, 751 N.E.2d 672, 677 (Ind.2001), our supreme court observed that
Here, Candace and two of her siblings were present throughout the auction, and the undisputed designated evidence shows that Drerup knew that Candace and her two siblings had "met in private"; they had rejected the bid on Tract 5; and, insofar as Drerup knew or had reason to believe, they had not rejected the bids by Antlers Ridge on Tracts 2 through 4 and 6 through 17.
Schrader then presented the Purchase Agreement to Drerup and Candace to be signed. Again, Candace had previously communicated to Drerup that the consent of all the Cain siblings was required to sell the property. Because the Cain siblings attended the auction
Cain Family Farm has not designated evidence of facts showing the existence of a genuine issue of material fact on the question of apparent authority. We agree with the trial court's conclusion that Cain Family Farm "placed Candace in a position to perform acts appearing reasonable to a third person such as Drerup, including executing the Antlers Ridge Purchase Agreement, and their action in doing so was sufficient to endow Candace with apparent authority." Id. While the existence of apparent authority is generally a question of fact, we hold that there are no genuine issues of material fact and that Candace had apparent authority, as a matter of law, to execute the Purchase Agreement.
Cain Family Farm next contends that the trial court "erroneously applied I.C. § 23-18-3-1.1(b)" to conclude that Candace had the authority to bind the LLC to the Purchase Agreement. Indiana Code Section 23-18-3-1.1 provides:
(Emphases added).
Here, on this issue, the trial court concluded in relevant part that
Appellants' App. at 31-32 (emphasis added, citations to record omitted).
Cain Family Farm maintains that subsection (d) of the statute applies here, not subsection (b). In particular, Cain Family Farm asserts that there is no genuine issue of material fact that Candace's actions were "not apparently for the carrying on in the usual way the business of the [LLC]." Brief of Appellants at 20. And Cain Family Farm asserts that there is no genuine issue of material fact that Candace did not have the unanimous consent of the members of the LLC to bind it to the Purchase Agreement. Thus, Cain Family Farm contends that the Purchase Agreement is "not valid and enforceable." Id.
No Indiana court has yet interpreted or applied the statutory language at issue, namely, "apparently carrying on in the usual way the business or affairs of the limited liability company." I.C. § 23-18-3-1.1(b). Thus, we are presented with an issue of first impression. Cain Family Farm argues that it "is not in the business of selling real estate," the sale of the Sylvan Lake property was "a major endeavor," and the sale was a "liquidation of the assets" of Cain Family Farm. Brief of Appellants at 21-22. Thus, Cain Family Farm contends that Candace was not "apparently carrying on in the usual way the business or affairs" of the LLC when she executed the Purchase Agreement. See I.C. § 23-18-3-1.1(b). Antlers Ridge, however, contends that Cain Family Farm had sold real estate in the past; Candace had previously executed documents binding the LLC, including a contract to develop real estate; and, as the trial court found, Candace, as a member of the general partner, had explicit authority to sell real estate under the Limited Partnership Agreement.
We agree with the trial court and hold that subsection (b) applies here. The business of the LLC was, simply, to act as the general partner of the Limited Partnership, which owned the real estate. The Limited Partnership Agreement gave the LLC "the full and exclusive power" to manage and operate the Limited Partnership's affairs, including the power to "buy and sell any real or personal property[.]" Appellants' App. at 198. Thus, as described in Issue One, when Candace signed the Purchase Agreement she "apparently carr[ied] on in the usual way the business" of the LLC, which was to act as the general partner of the Limited Partnership. Further, the undisputed evidence shows that all the Cain siblings agreed to sell the Sylvan Lake property at auction and had authorized Candace to execute the
The dispositive issue on appeal is whether Candace had apparent authority to bind the LLC and, by extension, the Limited Partnership, when she executed the Purchase Agreement. While the designated evidence reveals questions of material fact concerning whether Candace had actual authority to bind the LLC and whether Schrader breached its contract and violated its fiduciary duty to Cain Family Farm, those issues are not before us in this appeal. The undisputed designated evidence shows that the Cain siblings gave Drerup the reasonable belief that Candace represented them and was authorized to execute the Purchase Agreement on behalf of the LLC. During the auction, the Cain siblings rejected the bid on Tract 5, while, insofar as Drerup knew or had reason to believe, they had not rejected the Antlers Ridge bids on Tracts 2 through 4 and 6 through 17, and their agent, Schrader, expressly and publicly stated that the farm was being sold that day and presented Drerup and Candace with a purchase agreement. By all appearances, Candace had authority, and there are no indicia that would have placed Drerup on notice or inquiry notice that Candace did not have authority to sign the Purchase Agreement for the LLC. Thus, the Purchase Agreement is valid and enforceable under the doctrine of apparent authority. And because Candace executed the Purchase Agreement "for apparently carrying on in the usual way the business" of the LLC, namely, to act as the general partner of the Limited Partnership, the Purchase Agreement is also valid and enforceable under Indiana Code Section 23-18-3-1.1(b). Whether we consider the question of apparent authority under the common law or the Indiana Business Flexibility Act, the outcome is the same.
Affirmed.
BAILEY, J., and BARNES, J., concur.