Written Formalities for Indiana LLC Membership and Jury Trials for Unjust Enrichment:
Commentary on Andrew Nemeth Properties, LLC v. Panzica

I. Introduction

The Indiana Supreme Court’s decision in Andrew Nemeth Properties, LLC, et al. v. William A. Panzica, et al. (Ind. Sup. Ct., Nov. 6, 2025) establishes three important points of first impression in Indiana law:

1. LLC Membership Formalities: A person can become a member of an Indiana LLC only if there is written evidence—either in a written operating agreement or in written consent by all members—even for original, founding members.
2. Jury Trial for Unjust Enrichment: A claim for unjust enrichment seeking a money judgment is a legal claim, not an equitable one, and therefore carries a constitutional right to a jury trial under Article 1, Section 20 of the Indiana Constitution.
3. Unclean Hands as a Defense to Legal Restitution: The equitable doctrine of unclean hands (and its legal corollary, in pari delicto) can be asserted as a defense to unjust enrichment claims, including those seeking only monetary relief—though when factual disputes exist, the defense must be decided by a jury, not a judge.

The dispute arose from an ambitious industrial development deal. Andrew Nemeth, a commercial real estate broker, and the Panzica brothers, who own an architecture and construction business, orally agreed to pursue a build-to-suit lease for Nello Corporation via a new LLC, NP3, LLC. The “N” stood for Nemeth and “P3” for the three Panzicas. But the parties never signed a written operating agreement identifying the members. After a falling out—centered on a concealed $256,000 brokerage commission and an alleged forged purchase agreement—the Panzicas executed a backdated operating agreement making a Panzica entity the sole member of NP3 and cutting Nemeth out.

Nemeth sued, asserting membership-based claims, breach of contract, unjust enrichment, and other theories. The trial court:

• Granted summary judgment to the Panzicas on Nemeth’s contract and membership claims, holding that he was not an LLC member as a matter of law because there was no written evidence of his membership interest; and
• Denied Nemeth a jury on his surviving unjust enrichment claim, tried the case to the bench, and ruled for the defendants—both on the merits and on an unclean-hands theory grounded in the alleged forgery.

The Court of Appeals largely sided with Nemeth, but on transfer the Indiana Supreme Court vacated that opinion and crafted its own, more nuanced approach: it endorsed the trial court’s narrow conclusion that Nemeth was never an LLC member, but it revived his breach-of-contract claim (as a promise-to-make-him-a-member theory) and restored his right to a jury on unjust enrichment and on the related unclean-hands issues. The decision is a significant clarification of Indiana LLC, restitution, and civil procedure doctrine.

II. Summary of the Opinion

A. Holdings

The Court answered three questions of first impression and resolved the case as follows:

1. LLC Membership Requires a Writing
   • Indiana Code § 23-18-6-1(a)(1) (the “Membership Statute”) governs all LLC membership—both original and later-added members.
   • Under that statute, a person may become a member of an Indiana LLC only by:
     • Compliance with the terms of a written operating agreement concerning membership; or
     • If no such written operating agreement governs membership, by the written consent of all members.
   • Because there was no written operating agreement naming Nemeth and no written consent making him a member, he was not a member of NP3 as a matter of law.
2. Breach of Contract Claim Survives
   • Even though Nemeth was not a member, he may still have a valid contract claim that the Panzicas breached an oral agreement to make him a member.
   • The record contains evidence from which a jury could find an agreement on essential terms (equal ownership; Nemeth’s capital contribution by services; the Panzicas’ contribution of cash and construction expertise).
   • Thus, genuine issues of material fact precluded summary judgment on Nemeth’s breach-of-contract claim.
3. Right to Jury on Unjust Enrichment
   • Unjust enrichment is a species of quasi-contract historically enforced in the common-law action of assumpsit.
   • When the plaintiff seeks only a money judgment (as Nemeth did by the time of trial), the claim is legal, not equitable.
   • Therefore, Article 1, Section 20 guarantees a jury trial for such unjust enrichment claims.
4. Unclean Hands Defense Applies, But Is For the Jury
   • The equitable doctrine of unclean hands (and the legal corollary in pari delicto) can bar relief where the plaintiff’s intentional wrongdoing is closely connected to the subject of the suit.
   • The Court holds that defendants may invoke unclean hands as a defense to unjust enrichment claims even when the plaintiff seeks only legal (monetary) relief.
   • However, because that defense turns on disputed facts here—above all, whether Nemeth forged or manipulated the purchase agreement—it must be decided by the jury, not the judge.

B. Disposition

The Indiana Supreme Court:

• Affirmed in part the trial court’s conclusion that Nemeth was not an LLC member.
• Reversed the summary judgment on Nemeth’s breach-of-contract claim, holding that a jury must resolve factual disputes regarding whether the parties formed an enforceable agreement to make Nemeth a member.
• Reversed the denial of Nemeth’s jury request on the unjust enrichment claim, vacated the bench trial judgment, and remanded for a jury trial on both the breach-of-contract and unjust enrichment claims, including the unclean-hands defense.

III. Detailed Analysis

A. Factual and Procedural Background

1. The Deal Structure

Nello Corporation sought to consolidate and relocate its operations to South Bend, Indiana. Nemeth, acting as broker and development consultant, arranged economic incentives of roughly $13 million and negotiated a land purchase that entitled him to a $256,000 brokerage commission.

Nello initially intended to own the new facility. Later, it asked Nemeth to have a third-party entity finance and own the building and lease it back to Nello. Nemeth invited the three Panzica brothers—through their construction business—to join him in a joint venture using a newly formed LLC, NP3, LLC, which would:

• Acquire the land;
• Construct the facility; and
• Lease it long-term to Nello.

According to Nemeth, the parties orally agreed that NP3 would have four equal members—Nemeth and each of the three Panzicas—each contributing capital in kind:

• Nemeth: brokerage and development services, deal origination, and assignment of the land purchase agreement;
• The Panzicas: architectural and construction services plus cash for the land acquisition.

2. Formation of NP3 and the Alleged Commission Concealment

Nemeth filed the articles of organization for NP3, LLC in September 2014, listing himself as registered agent. The company name itself (“NP3”) reflected the intended four-way venture. Crucially, however:

• The articles did not list any members.
• No written operating agreement was executed at that time.

In October 2014, Nello entered into a 15-year lease with NP3. To facilitate financing, Nemeth assigned the land purchase agreement to a Panzica entity (Panzica Investments), which would then convey the property to NP3. The purchase agreement provided Nemeth a $256,000 commission. The Panzicas say they did not know about the commission at the time and requested a copy of the purchase agreement. Nemeth supplied a version that omitted the commission clause.

The Panzicas contend Nemeth deliberately altered or forged that document to hide the commission. Nemeth says he simply sent the wrong version amid many iterations of the deal documents. In December 2014 the Panzicas discovered the commission, concluded they had been deceived, but proceeded with the closing to avoid sunk losses and allowed Nemeth to keep the commission.

3. Excluding Nemeth from NP3 and the Backdated Operating Agreement

In February 2015, the relationship collapsed. Bill Panzica executed a written operating agreement for NP3, backdated to January 1, 2015 and made effective as of September 12, 2014 (the date of organization). This agreement:

• Named Panzica Investments, LLC as the sole initial member of NP3;
• Listed the three Panzica brothers as managers; and
• Omitted Nemeth entirely from membership.

The project was completed, and Nello became a paying tenant under the lease with NP3.

4. The Litigation Path

Nemeth (and his single-member LLC) sued the Panzicas and NP3, asserting six claims, including declaratory relief, a claim to ownership and distributions, breach of contract, unjust enrichment, procuring cause for the lease, and conversion. He later dropped the conversion claim.

Key procedural steps:

• Summary judgment:
  • The trial court granted summary judgment for the Panzicas on:
    • All membership-based claims (including breach of contract), holding that Nemeth could not be a member because there was no written operating agreement naming him and no written member consent as contemplated by I.C. § 23-18-6-1(a)(1).
    • The “procuring cause” claim, ruling Indiana law does not recognize that as a standalone cause of action.
  • The unjust enrichment claim survived summary judgment.
• Bench trial:
  • Nemeth requested a jury, but the trial court sua sponte converted the trial to a bench trial on the ground that unjust enrichment and unclean hands are equitable issues.
  • After a four-day trial, the court found Nemeth failed to prove unjust enrichment and held that, in any event, the unclean-hands doctrine barred recovery based on the alleged forgery.
• Court of Appeals:
  • Held that the Business Flexibility Act did not require a writing for original LLC membership and that pre-formation oral agreements could establish initial membership.
  • Held that unjust enrichment claims for money damages are legal, not equitable, and that unclean hands does not bar such legal claims.
• Supreme Court on transfer:
  • Vacated the Court of Appeals’ opinion.
  • Addressed the statutory and constitutional questions as matters of first impression.

B. Issue One: Written Formalities for Indiana LLC Membership

1. Statutory Framework

Indiana’s Business Flexibility Act (I.C. § 23-18-1-1 to § 23-18-13-2) governs LLCs. Two provisions are central:

• Definition of “Member” (I.C. § 23-18-1-15):

  “‘Member’ means a person admitted to membership in a limited liability company under IC 23-18-6-1 and as to whom an event of dissociation has not occurred.”

• Membership Statute (I.C. § 23-18-6-1):
  • Provides two routes to membership:
    1. By “acquiring an interest directly from the limited liability company” (the direct acquisition provision, § 23-18-6-1(a)(1)); or
    2. As “an assignee of an interest” (the assignment provision, § 23-18-6-1(a)(2) and cross-references).
  • The direct acquisition provision states that a person becomes a member:

    “upon compliance with the operating agreement or if the operating agreement does not provide in writing, upon the written consent of all members.”

Another key provision defines “operating agreement” broadly:

“‘Operating agreement’ means any written or oral agreement of the members as to the affairs of a limited liability company and the conduct of its business that is binding upon all the members.” (I.C. § 23-18-1-16) (emphasis added).

This definition is the source of the interpretive tension: if operating agreements may be oral, does the direct acquisition provision allow membership via an oral operating agreement, or are writings still required for membership?

2. The Ambiguity in § 23-18-6-1(a)(1)

The phrase “or if the operating agreement does not provide in writing, upon the written consent of all members” is syntactically ambiguous:

• Nemeth’s reading:
  • The phrase “in writing” modifies “provide,” not “operating agreement.”
  • If there is any operating agreement, written or oral, that addresses membership, a prospective member can comply with it and become a member.
  • Only if no operating agreement addresses membership in writing must the prospective member obtain written consent from all members.
  • Result: Oral operating agreements can create membership interests.
• The Panzicas’ reading:
  • The phrase is clarifying that the “operating agreement” contemplated in § 23-18-6-1(a)(1) is a written operating agreement.
  • If such a written operating agreement exists, its written terms control admission; if not, written consent of all members is required.
  • Result: A writing is always required for admission as a member—either within a written operating agreement or via separate written consent.

The Court deemed both readings plausible, triggering the need for deeper interpretive analysis based on context, related statutes, and purpose.

3. Why the Court Required a Writing for Membership

Justice Molter’s opinion identifies three main reasons why the Panzicas’ interpretation better reflects legislative intent.

a. Harmony with Related Provisions (In Pari Materia)

The Court closely compared the direct acquisition provision with the assignment provision (I.C. § 23-18-6-4(b)), which is explicit about written formalities:

• An assignee may become a member only via unanimous consent of other members.
• Consent must be “evidenced in any manner specified in writing in an operating agreement,” and absent such specification, consent must be by a “written instrument, dated and signed.”
• There is one carve-out: “Except as otherwise provided in a written operating agreement.”

The Court found it implausible that the legislature intended looser formalities for direct membership acquisition than for assignment-based membership. Both are essentially ways to obtain an ownership stake in the LLC. Requiring a writing in both contexts:

• Promotes consistency within the statute;
• Supports creditor protection policies by ensuring a reliable record of members and their contributions (see I.C. § 23-18-4-8(a)(1), (5)); and
• Avoids a patchwork system in which some membership interests depend on undocumented oral understandings while others are formally recorded.

Thus, “in pari materia” comparison strongly suggested that the General Assembly intended all routes to membership to require written evidence.

b. Alignment with Other States’ Statutes

Indiana’s membership statute closely resembles provisions in states like Georgia and Massachusetts, which more clearly require:

• Compliance with the written operating agreement’s membership provisions, or
• If none, unanimous written consent of all members.

The Court reasoned that Indiana likely borrowed the substantive policy choice—membership by written terms or written consent—even if its statutory syntax is less precise. When state statutes share near-identical structure and language, interpretive uniformity is a strong baseline assumption.

c. Early Public Understanding

Shortly after enactment of the Business Flexibility Act, a 1994 Indiana Law Review article by practicing business lawyers described the new membership rule as:

“A person may become a member of the LLC upon compliance with the terms of the operating agreement, or if the operating agreement is not in writing, upon the written consent of all members.”

While the Court rightly placed modest weight on a single article, it treated this as corroborative evidence of what sophisticated readers believed the statute meant at the time: writing is essential, either in the operating agreement or as a freestanding written consent.

4. Original Versus Later-Added Members: One Statute for All

Nemeth argued, in the alternative, that even if § 23-18-6-1(a)(1) requires a writing, that requirement applies only to new members joining an already-formed LLC. Original members, he contended, predate the entity and therefore fall outside the provision’s reach.

The Court rejected that argument for several reasons.

a. The “Member” Definition Contains No Carve-Out

The statutory definition of “member” incorporates § 23-18-6-1 without distinguishing between founders and later additions:

“‘Member’ means a person admitted to membership in a limited liability company under IC 23-18-6-1…” (I.C. § 23-18-1-15, emphasis added).

There is no textual basis to bifurcate membership routes based on timing. If the General Assembly had intended such a distinction, it knew how to draft it—as shown by other statutes (e.g., the limited partnership statute, I.C. § 23-16-4-1, which expressly applies only “[a]fter the formation of a limited partnership”).

b. The Timing Provision Explicitly Reaches Formation

Section 23-18-6-1(b) sets the “effective time” of admission to membership as the latest of:

• “the date the limited liability company is organized,”
• a time specified in the operating agreement, or
• the time admission is reflected in company records.

By including “the date the LLC is organized” as a possible effective admission date, the statute clearly contemplates that it governs membership at the moment of formation. That undercuts any claim that founding members bypass § 23-18-6-1.

c. Legislative Inaction and Separation of Powers

Over time, model LLC acts (from the ABA and Uniform Law Commission) have come to distinguish more expressly between:

• Persons who become members at formation; and
• Those who join later.

Indiana has not followed those revisions. The Court declined to judicially “update” the statute to create a separate regime for initial membership, emphasizing that such a change would be legislative, not interpretive, work. The task of rewriting membership rules belongs to the General Assembly, not the courts.

5. Key Consequence: Nemeth Was Not a Member as a Matter of Law

Applying these principles, the Court held:

• LLC membership in Indiana always requires a writing—either a written operating agreement specifying membership or written consent by all members where no such written terms exist.
• That requirement applies to founders and later-added members alike.
• It was undisputed that:
  • No written operating agreement naming Nemeth as a member was ever executed; and
  • No written consent by all members admitted him.

Therefore, Nemeth could not, as a matter of law, be an LLC member. All claims premised on actual LLC membership (ownership, distributions, declaratory rights) were properly rejected on that ground.

6. How This Interacts with Oral Operating Agreements

A doctrinal nuance is worth highlighting. The statutory definition of “operating agreement” includes oral agreements. The Court’s interpretation does not declare those oral agreements void. Instead, it draws a line:

• Parties may form and be bound by oral operating agreements on many issues (management structure, duties, sharing of profits, etc.), but
• Membership status itself cannot vest via an oral operating agreement alone; some written manifestation is required under § 23-18-6-1(a)(1).

In practice, this means:

• An oral understanding about ownership and governance may be enforceable as a contract (supporting a claim for damages), yet
• That same understanding does not, without writings, confer the legal status of “member” vis-à-vis the LLC, its creditors, or third parties.

The Court uses that distinction to preserve Nemeth’s contract theory (discussed next), even while definitively rejecting his membership status.

C. Issue Two: Breach of Contract to Make Someone an LLC Member

1. Status Versus Promise

Having concluded Nemeth was not a member, the Court turned to whether he could nonetheless pursue a breach-of-contract claim based on an alleged promise that he would be made a member. This reframes the question from:

• “Was Nemeth a member?” to
• “Did the parties make and then breach a binding promise to make Nemeth a member?”

The trial court’s summary judgment effectively conflated those questions, reasoning that if Nemeth was not a member, there could be no contract-based membership rights. The Supreme Court separated them:

• Membership status is determined by statutory formalities (and Nemeth does not meet them).
• Contractual obligations arise from mutual assent and consideration. A party can breach a promise even if statutory conditions are never satisfied.

2. Summary Judgment Standard

Applying Indiana’s summary judgment standard, the Court emphasized:

• Summary judgment is proper only when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law (Ind. Trial Rule 56(C); Thomas v. Valpo Motors, Inc.).
• Evidence must be viewed in the light most favorable to the non-moving party, drawing all reasonable inferences in that party’s favor.
• Even “self-serving” testimony can defeat summary judgment where a reasonable jury could credit it (Hughley v. State).

Under this standard, the Court concluded that the trial court had improperly “weighed” conflicting evidence rather than simply determining whether a triable issue existed.

3. Evidence of an Oral Agreement

Nemeth offered substantial evidence that, taken as true, could convince a jury that the parties formed an oral contract making him an equal member in NP3 in exchange for his contributions:

• His own deposition testimony describing a four-way equal-ownership agreement with service-based capital contributions.
• The choice of company name—“NP3”—tying Nemeth’s initial to those of the three Panzicas, implying joint ownership.
• Nemeth’s filing of the articles of organization for NP3 and designation as registered agent.
• A bank meeting at which, by Bill Panzica’s own testimony, “the intent” was for Nemeth to be “part of NP3.”
• The Nello lease signed on NP3’s behalf, which listed Nemeth as one of the LLC’s members.
• Emails from Bill Panzica to:
  • An insurance agent describing NP3 as “NP3, LLC (Panzica Investments and Andrew Nemeth).”
  • A title company representative stating that NP3 consisted of Nemeth and the three Panzica brothers.
• A personal guaranty by Nemeth on a loan commitment benefiting a Panzica entity, which Nemeth testified he would not have given absent an understanding that he was part of NP3.
• A bank loan presentation listing Nemeth and each Panzica as 25% owners of NP3.

This evidence, if believed, could support findings of mutual assent, essential terms, and consideration.

4. Disputed Material Terms: Contributions and Profit Sharing

The Panzicas argued there was no contract as a matter of law because:

• They never all collectively reached a final agreement with Nemeth; and
• There was no agreement on essential terms such as:
  • The valuation of Nemeth’s contributions (services, commission, deal origination);
  • Precise capital accounts; and
  • Allocation of profits and losses.

The Court deemed these contentions to be classic factual disputes about contract formation and terms, not uncontested points that justify summary judgment. Nemeth testified that they agreed on equal ownership and on the nature of each party’s contributions. A jury must decide whether:

• That testimony is credible;
• The parties’ conduct (emails, documents, naming, guarantees) corroborates a contract; and
• Any missing details are too indefinite to enforce or, instead, could be reasonably implied or supplied by law.

5. Implications: Contracts About Membership vs. Membership Itself

The Court’s approach has an important conceptual and practical consequence:

• Actual membership in an LLC is a statutory status that depends on compliance with the formal requirements of § 23-18-6-1. Without the requisite writings, one simply is not a “member.”
• Promises regarding membership are governed by ordinary contract law. Parties may agree to confer membership at a later date, to execute written instruments in the future, or to compensate for failure to do so. Such agreements are enforceable (subject to any applicable statute of frauds) even when membership has not yet vested.

On remand, if a jury finds that the parties formed a binding contract which the Panzicas breached by excluding Nemeth, his remedy could take different forms (the opinion does not decide this):

• Expectation damages approximating the value of the promised membership interest; or
• Other monetary relief reflecting the lost benefit of the bargain.

The Court did not expressly address whether specific performance (ordering that Nemeth be made a member notwithstanding the statutory writing requirement) would be available. That remains an open question for future cases.

D. Issue Three: Jury Trial Right for Unjust Enrichment Claims Seeking Money

1. Constitutional Framework: Law vs. Equity

Article 1, Section 20 of the Indiana Constitution provides:

“In all civil cases, the right of trial by jury shall remain inviolate.”

Indiana’s jurisprudence construes this to preserve the jury right for those types of actions that carried a jury at the time of the 1851 Constitution, i.e., actions historically heard in English common-law courts. Claims traditionally heard in courts of equity (like injunctions and specific performance) are not within the constitutional jury guarantee (Songer v. Civitas Bank; State v. $2,435 in U.S. Currency).

Therefore, to resolve whether unjust enrichment claims for money are jury-eligible, the Court asked:

“How were similar claims classified and tried in 1851—at law (with juries) or in equity (without)?”

2. Historical Characterization of Unjust Enrichment and Quasi-Contract

Unjust enrichment is a modern label for a family of remedies rooted in quasi-contract, also called contracts implied-in-law. Indiana cases, consistent with broader common-law tradition, describe quasi-contract as:

• A “legal fiction” by which courts impose a duty to pay for benefits received, despite the absence of an actual, bargained-for contract (Clark v. Peoples Savings & Loan Ass’n; Zoeller v. East Chicago Second Century, Inc.).
• Historically enforced through a common-law action called assumpsit.

Indiana precedent squarely ties quasi-contract/unjust enrichment to legal, not equitable, procedure when the remedy is money:

• McKinney v. Springer (1843) and Board of Commissioners v. Greensburg Times (1939) recognize that quasi-contract claims are typically brought in assumpsit, a legal action.
• Bayh v. Sonnenburg and Reed v. Reid use unjust enrichment and quasi-contract interchangeably, emphasizing that such claims require restitution of money or value unjustly retained.
• Nehi Beverage Co. v. Petri (1989) explicitly classifies unjust enrichment claims seeking money as “triable at law and not in equity,” entitling a party to a jury trial.

Treatises and the Restatement (Third) of Restitution align with this characterization: when the only relief sought is a money judgment enforceable by ordinary execution, the claim is presumptively legal.

3. Legal vs. Equitable Unjust Enrichment Remedies

Confusion often arises because “unjust enrichment” is a theory of recovery that can support both:

• Legal remedies (money judgments); and
• Equitable remedies (constructive trusts, equitable liens, subrogation, rescission).

The Court carefully distinguished between:

• The source of the obligation (equitable notions of fairness and prevention of unjust enrichment); and
• The form of the remedy (money vs. specifically equitable devices).

Where a plaintiff asks the court to re-title property, impose a constructive trust, or otherwise engage in classic equitable fashion, the action is equitable. Where a plaintiff seeks a pure money judgment payable from the defendant’s general assets, it is a claim “at law in every sense.”

4. Application to Nemeth’s Claim

By the time of trial, only Nemeth’s unjust enrichment claim remained. At:

• The final pretrial conference; and
• The start of trial

Nemeth made clear that he was seeking only a money judgment as restitution for the benefits he conferred (bringing the deal, securing incentives, arranging the lease and land transaction).

The trial court nonetheless treated unjust enrichment as an equitable claim, denied a jury, and tried the case itself. The Supreme Court corrected this:

• Unjust enrichment claims for money damages are legal, not equitable.
• Indiana even has a civil pattern jury instruction for unjust enrichment (Pattern Instruction No. 3317), underscoring its jury-trial pedigree.
• The trial court’s denial of a jury therefore violated the constitutional right guaranteed by Article 1, Section 20.

The Court declined to let earlier dicta describing quantum meruit or unjust enrichment as “equitable” doctrines override the historical and procedural reality that these are legal claims when reduced to monetary relief.

5. Litigation Implications

Going forward, litigants and trial courts in Indiana must assume:

• A plaintiff who sues for unjust enrichment and seeks only a money judgment has a constitutional right to a jury, absent a valid jury waiver.
• Labeling a claim as “equitable,” or invoking equitable principles, does not eliminate the jury right if the remedy requested is purely legal.
• Courts should carefully distinguish between:
  • Quasi-contract unjust enrichment claims (legal, money-only, jury-eligible); and
  • Equitable restitution claims (constructive trusts, rescission, etc., not necessarily jury-eligible).

E. Issue Four: The Scope and Role of Unclean Hands in Modern Practice

1. The Unclean Hands Doctrine: Purpose and Requirements

Unclean hands is a venerable equitable maxim: “He who comes into equity must come with clean hands.” Indiana caselaw adds important limits:

• The plaintiff’s misconduct must be intentional (not a mere mistake or negligence).
• The misconduct must bear an “immediate and necessary relation” to the matter being litigated (Hardy v. Hardy).

The doctrine serves primarily to protect the integrity of the court, not to reward the defendant:

• Courts will not use their equitable powers to help a plaintiff obtain the fruits of his own fraud or wrongdoing.
• Classic examples include:
  • A husband who transfers property to a third party to defraud his spouse and then seeks a constructive trust to recover it—courts often deny relief based on unclean hands.
  • Parties who ask courts to enforce or unwind an illegal or immoral bargain in a way that would entrench or reward misconduct.

In this case, the Panzicas alleged that Nemeth forged or manipulated the land purchase agreement and deliberately concealed his commission, then sought restitution for a share of profits from the deal he allegedly corrupted. If true, that conduct could trigger the unclean hands doctrine.

2. Can Unclean Hands Bar Legal Claims?

A contested doctrinal question, nationally and in scholarship, is whether unclean hands can bar only equitable relief (injunctions, constructive trusts) or whether it can also apply to legal claims seeking damages.

• Traditional (“orthodox”) view: Unclean hands is limited to equitable proceedings because it arose in chancery, and common-law courts historically did not apply it to actions at law.
• Modern, merged-system view: After the merger of law and equity and in light of doctrines like in pari delicto, there is no principled reason to cabin the doctrine to formally “equitable” cases. Courts should instead focus on whether the plaintiff’s misconduct should bar any recovery, legal or equitable.

The Court canvassed this debate, noting that many equitable doctrines have long since migrated into the domain of legal defenses.

3. The Role of In Pari Delicto

Both sides agreed that a related doctrine, in pari delicto, has been recognized in Indiana’s common-law courts. In pari delicto—literally “in equal fault”—bars recovery where the plaintiff’s wrongdoing is substantially equal to or greater than the defendant’s. Historically:

• In pari delicto has been described as a corollary of the unclean-hands maxim.
• It was recognized in actions at law, not confined to equity (e.g., wagers, illegal contracts, fraud-related disputes).

As the Court observed (citing, among others, Ervin v. State ex rel. Walley), common-law courts sometimes simply refused to aid either party where both engaged in wrongdoing, leaving them where they put themselves.

Over time, the line between unclean hands and in pari delicto has blurred; the labels differ, but the core idea is the same: a plaintiff’s serious, closely connected misconduct may bar relief altogether.

4. Integrating Unclean Hands With Unjust Enrichment

Critically, the parties agreed on two points that shaped the Court’s resolution:

1. There is a legal analog to unclean hands (in pari delicto) that has historically operated in courts of law.
2. The plaintiff’s conduct is already relevant to the elements of unjust enrichment: restitution is available only where it would be “unjust” to allow the defendant to retain the benefit, and a plaintiff’s own wrongdoing can make restitution unjust.

The Restatement (Third) of Restitution states this explicitly:

“Recovery in restitution to which an innocent claimant would be entitled may be limited or denied because of the claimant’s inequitable conduct in the transaction that is the source of the asserted liability.” (§ 63)

Thus, even without invoking “unclean hands” by name, a factfinder deciding unjust enrichment must necessarily ask:

• Is it fair to force the defendant to pay, given all the circumstances?
• Does the plaintiff’s own misconduct make an otherwise valid restitution claim inequitable?

The Court concluded that allowing the unclean hands defense to be expressly raised in unjust enrichment cases—whether the remedy sought is legal or equitable—simply makes explicit what is already implicit in the “unjustness” inquiry.

5. Who Decides Unclean Hands: Judge or Jury?

Even if the defense is available, a separate question arises: is it for the judge or the jury to decide?

• Because unjust enrichment for money is a legal claim with a jury right, the jury is the primary factfinder on all elements and fact-based defenses.
• Unclean hands (or in pari delicto) in this context turns on factual questions:
  • Did Nemeth actually forge or alter documents?
  • Did he intentionally conceal the commission?
  • Was any misconduct directly related to the transaction underlying his claim?

The Court clarified:

• The judge may still grant a directed verdict or judgment as a matter of law (Cosme v. Clark)—but only where the evidence is undisputed or cannot support the plaintiff’s claim.
• Where, as here, key facts are disputed and credibility is central, the jury must weigh those facts and decide both the unjust enrichment and unclean-hands issues.

Accordingly, the trial court’s decision—that unclean hands barred Nemeth’s claim—could not render the denial of a jury harmless. The same disputed factual matrix (alleged forgery, concealment, intention) that grounds the unclean-hands analysis must be evaluated by a jury on remand.

6. Practical Consequences for Trial Practice

Post-Nemeth, Indiana practitioners should assume:

• Defendants can plead and argue unclean hands (and/or in pari delicto) as defenses to unjust enrichment claims, even where the plaintiff seeks only money.
• These defenses will usually be jury questions, not matters reserved to the court, when underlying conduct is disputed.
• Jury instructions should:
  • Explain the elements of unjust enrichment (benefit, expectation of payment, and unjustness of retention); and
  • Explain that intentional, closely related plaintiff misconduct can defeat or limit recovery.
• Litigants must be prepared to present evidence about both parties’ conduct and relative fault, not merely the transfer of benefits.

IV. Complex Concepts Simplified

This decision features several technical concepts. The following simplified explanations may help non-specialists follow the Court’s reasoning.

1. LLC Membership vs. Operating Agreement

• LLC: A limited liability company is a business entity that protects its owners (members) from personal liability, similar to a corporation, but is often taxed like a partnership.
• Member: A person who owns an interest in the LLC—akin to a shareholder in a corporation or a partner in a partnership.
• Operating Agreement: The internal “constitution” of the LLC—rules about how it is managed, how profits are shared, and how decisions are made. In Indiana, these agreements may be written or oral, but membership itself now requires written evidence.

2. “Direct Acquisition” vs. “Assignment” of Membership

• Direct acquisition: The LLC itself admits someone as a member—like issuing membership interests directly.
• Assignment: A current member transfers their interest (or part of it) to someone else, who then may become a member if certain conditions (including written consents) are satisfied.
• Under Nemeth, both routes require written documentation of membership.

3. Quasi-Contract and Unjust Enrichment

• Contract: A real agreement between parties—offer, acceptance, consideration—usually enforceable because the parties meant to be bound.
• Quasi-contract: A “fake” contract imposed by courts. There is no true agreement, but the law pretends there was one to prevent unfair results.
• Unjust enrichment: A situation where one party has received a benefit, at another’s expense, under circumstances that make it unfair to let the recipient keep it without paying for it.
• Example: If a builder mistakenly improves the wrong property and the owner knowingly watches and says nothing, a court may require the owner to pay the reasonable value of the work, even though they never signed a contract.

4. Law vs. Equity

• Courts of law historically decided claims for money damages and used juries.
• Courts of equity handled special remedies (like injunctions, specific performance, constructive trusts) and did not use juries.
• Modern courts combine both functions, but the distinction still matters for:
  • Whether a party has a constitutional right to a jury; and
  • What kinds of remedies are available.

5. Unclean Hands and In Pari Delicto

• Unclean hands: A court will not help a plaintiff who has acted wrongly in connection with the dispute. For example, someone who participates in fraud cannot ask the court to enforce a contract that carries out that fraud.
• In pari delicto: “In equal fault.” If both parties are equally blameworthy (e.g., both engaged in illegal conduct), the court may leave them where it finds them and deny relief to both.
• Both doctrines aim to avoid using the judicial process to reward or legitimize wrongdoing.

6. Summary Judgment vs. Trial

• Summary judgment: A pre-trial decision by a judge that there is no genuine dispute about any material fact and one side is clearly entitled to win as a matter of law. No jury is involved.
• Trial: If there are factual disputes—especially about who is telling the truth—those issues must be decided at trial, often by a jury in civil cases.
• In Nemeth, the Supreme Court held that factual disputes about the alleged oral contract and about any wrongdoing by Nemeth require a jury’s evaluation.

V. Broader Impact on Indiana Business and Litigation Practice

1. LLC Formation and Documentation Practices

The most immediate impact on business lawyers and entrepreneurs is the heightened emphasis on written documentation of LLC membership:

• Oral promises of membership are not enough to confer legal ownership status in an Indiana LLC.
• Founders should:
  • Execute written operating agreements clearly identifying all members and their ownership percentages; and
  • Ensure that any later additions to membership are documented in written consents or amendments.
• Handshake deals and informal partner understandings are now far more dangerous for service contributors (like brokers, consultants, or key employees) who expect an equity stake.

Creditors, lenders, and counterparties benefit from this clarity. Membership rolls and capital contribution records are more reliable, reducing the risk of surprise claims by alleged “oral members” who surface years later.

2. Protection for Service-Based “Equity Partners”

The Court’s recognition of a separate contractual route to relief is significant for individuals who contribute services, expertise, or relationships in exchange for promised ownership:

• Even if the statutory formalities for membership are not met, a service provider may still:
  • Sue for breach of an oral or written promise to grant equity; and/or
  • Pursue unjust enrichment if the promise claim fails.
• This dual track—contract and unjust enrichment—creates a safety net for contributors who are cut out after they generate substantial value.

However, the lack of automatic membership from oral agreements means:

• Service contributors must be vigilant about getting their membership rights in writing, especially where the LLC’s name, marketing, and external documents might otherwise give them a false sense of security.

3. Increased Jury Trials in Business Disputes

By solidifying unjust enrichment as a legal claim with a jury right when money is sought, Nemeth:

• Likely increases the number of business disputes tried to juries, particularly in:
  • Broken joint venture/“partner” disputes;
  • Failed mergers or acquisitions where one party has conferred value without a completed contract; and
  • Real estate development and commission fights.
• Reduces the ability of defendants to classify unjust enrichment as “equitable” to obtain a bench trial.

Lawyers will need to consider jury dynamics more carefully in litigating quasi-contract claims. The decision also underscores the need for clear jury instructions about the nature of unjust enrichment and the role of fairness and conduct on both sides.

4. Refining the Law–Equity Relationship in Indiana

The decision is also part of a larger trend: assimilating equitable principles into legal actions within Indiana’s unified court system while still respecting the historical law/equity distinction for purposes of jury rights. Nemeth contributes to this evolution by:

• Classifying unjust enrichment-for-money as legal for jury purposes, based on its assumpsit roots.
• Simultaneously allowing an equitable defense (unclean hands) to operate in that legal context, in tandem with the legal in pari delicto doctrine.

This balanced approach:

• Prevents technical labels from undermining substantive fairness; and
• Affirms that modern courts may apply equitable concepts to legal claims where that is consistent with historical practice and contemporary justice.

5. Potential Legislative Response

By foregrounding statutory ambiguities and comparing Indiana’s membership rules with national models, the Court’s opinion may spur the General Assembly to revisit the Business Flexibility Act. Possible areas for legislative refinement include:

• Explicitly distinguishing between:
  • Admission of members at formation; and
  • Admission of members after formation.
• Clarifying the role of oral operating agreements in membership and capital contribution arrangements.
• Codifying or confirming the writing requirements that the Court inferred from the existing statutory scheme.

Until then, the Nemeth interpretation is binding: membership requires written evidence; oral understandings are contractual but do not confer member status.

VI. Conclusion

Andrew Nemeth Properties, LLC v. Panzica is a foundational decision in three key areas of Indiana civil law.

• LLC Law: The Court holds that membership in an Indiana LLC—whether at formation or later—requires written proof via a written operating agreement or written consent of all members. Oral understandings cannot alone create member status, though they may support independent contract claims.
• Civil Procedure and Constitutional Law: Unjust enrichment claims seeking only a money judgment are legal actions with a constitutional right to a jury under Article 1, Section 20. Trial courts cannot reclassify such claims as equitable to avoid juries.
• Equity and Restitution: The unclean-hands doctrine (and its legal twin, in pari delicto) may bar unjust enrichment claims, including those for money, where the plaintiff’s intentional wrongdoing is closely connected to the transaction. But when the underlying facts are disputed, this defense must be resolved by the jury, not the judge.

For transactional lawyers, the message is simple but critical: paper your LLC deals—especially the list of members and their interests. For litigators, Nemeth underscores the central role of juries in Indiana civil practice whenever monetary relief is sought on historically legal theories and clarifies that equitable defenses remain potent, but must be tried to the proper factfinder.

In short, the decision tightens formal requirements for LLC ownership, broadens and clarifies the availability of jury trials in restitution cases, and harmonizes equitable defenses with modern unified civil procedure—all while leaving space for juries to adjudicate the messy factual disputes that arise when business partnerships formed on trust and handshake deals unravel.