COA: Former pet company exec had no ownership interest

The former president of a company that manufactured animal and pet products has failed to convince the Court of Appeals of Indiana that along with being an executive at the company, he also held an ownership stake.

Mike Bassett and his wife Kathleen sued Scott Pet Products and Harlan Pet Products along with their owners after he was fired from Harlan Pet Products in March 2020. Bassett had served as company president ever since Harlan acquired Bassett’s former employer, Scott Pet Products.

In their lawsuit, the Bassetts accused the Harlan defendants of breach of contract for failing to honor the agreement that Mike Bassett has a 15% equity interest in Scott Pet Products and promissory estoppel based on the Bassetts’ reliance on the Harlans’ promises that Mike had a 15% equity interest in Scott Pet.

The Harlan defendants eventually filed a motion for partial summary judgment seeking on, among other claims, the Bassetts’ breach of contract, declaratory judgment and promissory estoppel claims.

In November 2021, the Marion Superior Court granted the Harlan defendants summary judgment on the merits of the Bassetts’ breach of contract claim. The court concluded that although the parties had agreed on many of the essential terms of Mike Bassett’s ownership interest in Scott Pet, the ownership agreement failed for lack of consideration.

The Bassetts appealed but the Court of Appeals affirmed in Michael R. Bassett and Kathleen A. Bassett v. Scott Pet Products, Inc., Harlan Pet Products, Inc., Hal P. Harlan, Hugh P. Harlon, and Doug H. Harlan, 22A-PL-433.

In particular, the Bassetts challenged the trial court’s conclusion that the parties did not enter into an enforceable contract. Specifically, the Bassetts argued that summary judgment was not warranted because consideration existed to support the parties’ ownership interest agreement.

Pointing to Hinkel v. Sataria Distribution & Packaging, Inc., 920 N.E.2d 766, 767-68 (Ind. Ct. App. 2010) and Buschman v. ADS Corporation, 782 N.E.2d 423, 430 (Ind. Ct. App. 2003), the appellate panel found that Bassetts’ argument that Mike Bassett continued employment at Scott Pet provided consideration for the Harlans’ promises of an ownership interest failed as a matter of law.

Mike Bassett’s employment agreement, which provided the terms of his compensation, did not mention any ownership interest and provided that it constituted the entire agreement between the parties.

“Mike has never contested the validity of the Employment Agreement,” Judge Patricia Riley wrote for the court. “Mike’s own deposition testimony established that there was no agreement on his ownership interest when he signed the Employment Agreement. Mike’s continued and future employment was the consideration for the Employment Agreement. Mike’s continued employment at SPP could not, therefore, supply the necessary consideration to render enforceable any promises by the Harlans which could have modified the written Employment Agreement.”