Court Opinion

ID: 9945252
Source: CourtListenerOpinion
Date Created: 2024-02-27 17:05:17.898547+00
Date Added: 2024-06-11T14:25:25.220310
License: Public Domain

IN THE

            Court of Appeals of Indiana
                   Elpers Bros. Construction & Supply, Inc., et al.,
                                        Appellants-Defendants              FILED
                                                                       Feb 27 2024, 9:01 am
                                                    v.                     CLERK
                                                                       Indiana Supreme Court
                                                                          Court of Appeals
                                                                            and Tax Court
                              Deane L. Smith, II, M.D., et al.,
                                          Appellees-Plaintiffs

                                          February 27, 2024
                                     Court of Appeals Case No.
                                            23A-PL-437
                          Appeal from the Vanderburgh Circuit Court
                              The Honorable David D. Kiely, Judge
                                        Trial Court Cause No.
                                        82C01-1712-PL-6198

                             Opinion by Chief Judge Altice
                        Judges Weissmann and Kenworthy concur.

Court of Appeals of Indiana | Opinion 23A-PL-437 | February 27, 2024   Page 1 of 22
      Altice, Chief Judge.

      Case Summary
[1]   The parties are before us once again, as we previously addressed issues

      unrelated to those presented in the instant appeal. 1 Here, Elpers Bros.

      Construction & Supply, Inc. (Elpers Construction), Elpers Development, Inc.

      (Elpers Development) (collectively, the Builders), and Stonegate Estates

      Subdivision Homeowners’ Association, Inc. (the HOA), appeal the grant of

      partial summary judgment in favor of Deane L. Smith and Lori A. Smith

      (collectively, the Smiths). Elpers Construction claims that the trial court erred

      in determining that it owed the Smiths a non-delegable duty as a matter of law

      to properly design and construct a drainage system in their neighborhood.

      Elpers Construction further contends that the trial court erred in denying its

      motion for summary judgment as to the Smiths’ fraud claim. The HOA claims

      that the trial court erred in not granting its request for summary judgment

      regarding the Smiths’ claim that the HOA operated as the Builders’ “alter ego,”

      and Elpers Development maintains that its summary judgment motion should

      have been granted on the Smiths’ negligence claim.

[2]   We affirm in part, reverse in part, and remand for further proceedings

      consistent with this opinion.

      1
       See Elpers Bros. Construction and Supply, Inc. and Elpers Dev., Inc. v. Smith, No. 19A-PL-1327 (Ind. Ct. App.
      April 27, 2020).

      Court of Appeals of Indiana | Opinion 23A-PL-437 | February 27, 2024                                 Page 2 of 22
          Facts and Procedural History
[3]       In 2006, the Builders 2 purchased real estate in Evansville that they subsequently

          divided into a sixteen-lot neighborhood (the Subdivision). Elpers Construction

          delegated portions of the Subdivision’s design and construction to various

          independent subcontractors, including Sitecon, Inc. (Sitecon), a certified

          engineering firm. Elpers Construction contracted with Sitecon to design and

          construct the neighborhood drainage system because it did not have the

          expertise and engineers on its staff to perform the work.

[4]       Sitecon’s design included a lake on Lot 1 in the Subdivision to catch storm

          water runoff that would be released into a downstream waterway. Before

          Sitecon could commence construction, a proposed drainage report had to be

          approved by the Vanderburgh County Drainage Board (the Board). 3 The

          County Surveyor reviewed Sitecon’s drainage plans and recommended

          approval, which the Board ultimately granted in December 2006. Sitecon then

          recorded the Subdivision plat and commenced construction of the drainage

          system. Sitecon staked off the perimeter for the lake. No one from Elpers

          Construction discussed the size of the lake with Sitecon, nor did Elpers

          Construction oversee or manage its construction. When the lake was

      2
        Elpers Development is a separate entity owned by Elpers Construction “that typically serves as a general
      contractor for more economically priced subdivisions and homes.” Appellants’ Appendix Vol. 4 at 3.

      3
        In accordance with Ind. Code § 36-9-27-68 and -69.5, the County Surveyor is required to review a final drainage
      report and the calculations therein to determine whether the design plans comport with the county drainage
      ordinances.

          Court of Appeals of Indiana | Opinion 23A-PL-437 | February 27, 2024                             Page 3 of 22
      completed, Sitecon re-measured it to ensure that it had been constructed

      according to plan. The County Engineer’s office conducted several inspections

      during construction to ensure that the drainage system was properly installed.

[5]    In January 2007, Paul Elpers, as president of Elpers Construction, signed the

      “Notice of Intent to Construct a Water Main Extension,” State Form 49008, as

      the “responsible person”:

              19. Certifications:

              Responsible Person

              I certify that I have reviewed and understand the applicability
              requirements of this rule and that the water main proposed with
              the submission of this NOI meets the applicability and eligibility
              requirements of this rule. I also certify that the design and
              construction of this project will be performed under my direction or
              supervision to assure conformance with 327 I.A.C. 8-3.5 and will meet
              all local rules or laws, regulations and ordinances. The information
              submitted is, to the best of my knowledge and belief, true,
              accurate, and complete. I am aware that there are significant
              penalties for submitting false information, including the
              possibility of fine and imprisonment.

              /s/ Paul A. Elpers 01-25-07

      Appellants’ Appendix Vol. 3 at 43-45. (Emphasis added).

[6]   An amended drainage plan that Elpers Construction submitted to Vanderburgh

      County provided in part:

      Court of Appeals of Indiana | Opinion 23A-PL-437 | February 27, 2024            Page 4 of 22
              THE CONTRACTOR SHALL COMPLY WITH ALL
              LOCAL, STATE AND FEDERAL CODES, ORDINANCES,
              RULES, REGULATIONS, ORDERS AND OTHER LEGAL
              REQUIREMENTS OF MUNICIPAL AUTHORITIES
              WHICH BEAR ON THE PERFORMANCE OF THE WORK.

      Id. at 41-42.

[7]   The Smiths purchased Lot 1 in the Subdivision on May 2, 2007, and hired

      Elpers Construction to build their residence. Lot 1 included the lake, and

      Elpers Construction represented to the Smiths that while they could use the lake

      for recreational purposes, it would also serve as a retention pond for the

      Subdivision. Thus, the lake was subject to an easement for drainage of surface

      and storm water from other lots.

[8]   The construction contract between the Smiths and Elpers Construction

      provided that Elpers Construction would obtain all necessary permits and

      licenses and comply with all laws and ordinances during the construction

      process. At some point, Elpers Construction represented to the Smiths that it

      had received “all necessary approvals from governmental agencies.” Appellants’

      Appendix Vol. 8 at 21.

[9]   In June 2007, the Builders recorded Conditions, Reservations, Restrictions,

      and Protective Covenants for the Subdivision (collectively, the Restrictions). In

      accordance with the Restrictions, the HOA was incorporated on July 16, 2008.

      The four owners of Elpers Construction served as the HOA’s Board of

      Directors during the Subdivision’s development, and they retained complete

      control of the HOA. The HOA was responsible for monitoring and paying
      Court of Appeals of Indiana | Opinion 23A-PL-437 | February 27, 2024     Page 5 of 22
       various expenses of the Subdivision, including the electric bill for operating the

       fountain in the lake, maintaining the streetlights, and providing general

       maintenance in common areas.

[10]   The HOA did not adopt any corporate bylaws or adopt an annual budget; nor

       did it prepare or record minutes of any Board of Directors’ meetings. On the

       other hand, the HOA opened a bank account that was maintained separately

       from the Builders’ accounts. The HOA deposited the association dues into that

       account, and it paid the HOA’s expenses from that account. The HOA also

       had its own federal tax identification number that it used when filing tax

       returns.

[11]   At some point during construction of the Smiths’ residence, Paul Elpers

       recommended to the Smiths that they purchase a geothermal heating and

       cooling system. Paul had them look at a unit similar to one that was installed

       in another residence that Elpers Construction had built. Paul was aware that a

       heating company he had previously consulted refused to install a geothermal

       unit on the Smiths’ property because the lake lacked sufficient depth. Paul,

       however, did not advise the Smiths about that determination.

[12]   After the Smiths met with Paul, they selected Beuligmann Heating and Air

       (Beuligmann) to install a geothermal system. Elpers Construction contracted

       with Beuligmann for the sale and installation of the unit, including coils that

       were to be placed in the lake. Elpers Construction invoiced the Smiths for the

       system, with an additional ten percent general contractor’s fee.

       Court of Appeals of Indiana | Opinion 23A-PL-437 | February 27, 2024      Page 6 of 22
[13]   From 2009 until sometime in 2015, the system operated with no problems. At

       some point, however, the Smiths noticed “soil and mud runoff,” erosion, and

       silt buildup at one end of the lake. Appellants’ Appendix Vol. 2 at 41. The

       excessive silt formed a sandbar that protruded from the surface of the lake. The

       Smiths also observed that their yard flooded when it stormed, and that debris

       would wash into their yard. The geothermal system functioned less efficiently,

       and the Smiths believed that was due to drainage issues in the Subdivision and

       deteriorating lake conditions. It was determined that the coils in the geothermal

       unit had been damaged because of the silt buildup.

[14]   The Smiths engaged an engineering firm, Morley and Associates (Morley), to

       review Sitecon’s drainage plans. Morley’s report identified eleven deficiencies

       in the plan and construction that contributed to the erosion and buildup. More

       precisely, one of Morley’s engineers noticed an error in the drainage calculation

       for the size of the culvert that ran under the street in front of the Smiths’ lot.

       The engineer determined that the wrong precipitation value was used, thus

       affecting water flow into the lake. Those errors meant that storm water was

       more likely to cover the road, cause debris to back up in the system, and result

       in flooding to the Smiths’ yard. It was determined that the geothermal system

       was damaged and had to “be reconstructed with dredging of the lake,” along

       with “remedial measures to prevent the lake from refilling with dirt and silt.”

       Id. at 42. The estimated remediation cost amounted to nearly $240,000.

[15]   Morley’s engineers also discovered that the necessary permits from the U.S.

       Army Corps of Engineers and the Indiana Department of Environmental

       Court of Appeals of Indiana | Opinion 23A-PL-437 | February 27, 2024         Page 7 of 22
       Management (IDEM) had not been obtained. IDEM sent the Smiths a letter

       sometime in 2019, indicating that Elpers Construction had failed to obtain the

       required authorization for the lake on their property. An inspection revealed

       multiple violations of environmental statutes, rules, and regulations, including

       improper placement of instream structures and the failure to obtain

       authorization for discharge of fill material. The Smiths were also informed that

       a required permit had not been obtained in accordance with the Clean Water

       Act (the Act), and that several violations of the Act had been committed in

       constructing the drainage system.

[16]   On December 12, 2017, the Smiths filed a complaint against the Builders and

       the HOA. The complaint alleged that the lake was no longer usable because of

       the sediment from upstream runoff, and that the Smith’s geothermal system

       was damaged and would have to be reconstructed with dredging and other

       remedial measures and/or that the coils would have to be relocated. The

       complaint further alleged that the Builders and the HOA had failed to act in

       accordance with the various agreements or to remediate the continuing damage

       to their property or undertake proper reconstruction and maintenance of the

       drainage facilities. Thus, the Smiths sought a declaratory judgment declaring

       Builders and the HOA in breach and in violation of the requirements of the

       subdivision plat, and all applicable ordinances, regulations, and statutes, and an

       order directing the Builders to immediately comply with the provisions of the

       subdivision plat and its conditions, and to perform such corrective and remedial

       work as necessary to be in full compliance. The Smiths also alleged that the

       Court of Appeals of Indiana | Opinion 23A-PL-437 | February 27, 2024     Page 8 of 22
       Builders negligently designed, constructed, and maintained the drainage and

       erosion control facilities of the Subdivision, and that the Builders and the

       HOA—acting in concert—negligently maintained the Subdivision’s drainage

       and erosion control facilities.

[17]   In July 2018, the Smiths replaced their geothermal system at a cost of nearly

       $26,000, and they had the new system’s pipes placed in the ground rather than

       in the lake. Thereafter, on November 4, 2021, the Smiths filed an amended

       complaint adding counts against Elpers Construction for breach of contract and

       fraud. The Smiths also added a count for declaratory judgment, where it

       sought to pierce the HOA’s corporate veil that would “impose all of the legal

       duties and obligations” of the HOA on the Developers because the HOA was

       merely operating as the Builders’ “alter ego.” Id. at 125.

[18]   On August 12, 2022, the Smiths moved for partial summary judgment,

       claiming that Elpers Construction owed them a non-delegable duty to properly

       design and construct the drainage system, and that it should be charged with all

       the duties and liabilities of the HOA. The Builders moved for summary

       judgment on those same issues.

[19]   The HOA filed a separate motion for summary judgment, claiming that it was

       entitled to judgment as a matter of law on all counts because the Smiths failed

       to assert any viable claims against it, and that the Builders should not be

       considered the HOA’s alter ego. The HOA asserted that “alter ego liability is

       the only allegation or claim against [it in the amended complaint].” Appellants’

       Court of Appeals of Indiana | Opinion 23A-PL-437 | February 27, 2024      Page 9 of 22
       Appendix Vol. 13 at 5. Thus, because the HOA was not mentioned in any of the

       other counts in the amended complaint, i.e., breach of contract or negligence,

       the HOA asserted that it was entitled to summary judgment because “there is

       nothing for the [Builders] to be liable for on behalf of the HOA. . . .” Id. at 6.

       The HOA further maintained that it has always operated as a separate legal

       entity from the Builders.

[20]   The trial court issued the following minute entry on December 20, 2022:

               Court grants Plaintiffs’ motion for partial summary judgment,
               finding that that [Elpers Construction] had a non-delegable duty
               to properly design and build the [Subdivision’s ] drainage. All
               other Plaintiffs’ requests for summary judgment are denied. The
               Court denies [HOA’s] request for summary judgment concerning
               the HOA being an “alter ego” and grants all other requests for
               summary judgment made by [the HOA].

       Appellants’ Appendix Vol. 2 at 38.

[21]   The Builders and the HOA moved to certify the trial court’s order for

       interlocutory appeal. That motion was granted, and we accepted jurisdiction of

       the appeal. Additional facts will be supplied as necessary.

       Standard of Review
[22]   Our summary judgment standard of review is well settled:

               We review a summary judgment ruling de novo, applying the
               same standard as the trial court. The moving party bears the
               initial burden of making a prima facie showing that there are no
               genuine issues of material fact and that it is entitled to judgment

       Court of Appeals of Indiana | Opinion 23A-PL-437 | February 27, 2024      Page 10 of 22
               as a matter of law. Summary judgment is improper if the moving
               party fails to carry its burden, but if it succeeds, then the
               nonmoving party must come forward with evidence establishing
               the existence of a genuine issue of material fact. We construe all
               factual inferences in favor of the nonmoving party and resolve all
               doubts as to the existence of a material issue against the moving
               party. Our review is limited to those facts designated to the trial
               court.

       Ind. Univ. v. Thomas, 167 N.E.3d 724, 731 (Ind. Ct. App. 2021) (citations

       omitted).

[23]   We further note that the filing of cross-motions for summary judgment neither

       alters this standard nor changes our analysis, in that we consider each motion

       separately to determine whether the moving party is entitled to judgment as a

       matter of law. Erie Indem. Co. for Subscribers at Erie Ins. Exch. v. Est. of Harris by

       Harris, 99 N.E.3d 625, 629 (Ind. 2018).

       Discussion and Decision4

       I. Elpers Construction’s Non-Delegable Duty to the Smiths
[24]   Elpers Construction argues that the trial court erred in granting the Smiths’

       motion for partial summary judgment because the designated evidence failed to

       establish that it owed them a non-delegable duty to design and construct the

       drainage system. Elpers Construction asserts that because Sitecon designed and

       4
        The Builders and the HOA have filed a “Joint Motion to Strike Appellees’ Appendix.” We deny this
       motion by separate order issued contemporaneously with this opinion.

       Court of Appeals of Indiana | Opinion 23A-PL-437 | February 27, 2024                      Page 11 of 22
       constructed the system and submitted the plans for the county’s approval, it is

       not liable as a matter of law. Hence, Elpers Construction maintains that it was

       entitled to summary judgment on this issue.

[25]   A principal that delegates a duty to an independent contractor is generally not

       liable for the negligence of that independent contractor in performing the duty.

       Bagley v. Insight Communications Co., L.P., 658 N.E.2d 584, 586 (Ind.1995).

       However, an exception to this general rule exists “where the principal is by law

       or contract charged with performing the specific duty.” Id. Duties that are

       imposed by law or contract are considered non-delegable because they are

       deemed so important to the community that the principal should not be

       permitted to transfer these duties to another. Id. at 587.

[26]   Relevant here are the circumstances in Bartholomew Cnty. v. Johnson, 995

       N.E.2d 666 (Ind. Ct. App. 2013), where landowners—whose property was

       damaged by flooding—brought an action against the county alleging that the

       damage was caused by the county’s negligent design, construction,

       maintenance, and operation of a nearby bridge. The county filed a third-party

       complaint against the bridge designer and builder. In determining that the

       county could not avoid liability for delegating its legal duty to maintain bridges,

       we analyzed the holding in Shand Mining, Inc. v. Clay County Bd. of

       Commissioners, 671 N.E.2d 477, 481 (1996), trans. denied, where it was

       determined that while a governmental entity could delegate its responsibility for

       maintaining streets to a private party, the county could not avoid liability for

       negligent maintenance of the streets on the basis of that delegation. The

       Court of Appeals of Indiana | Opinion 23A-PL-437 | February 27, 2024     Page 12 of 22
       holdings in Johnson and Shand Mining were premised on well-settled Indiana

       law that a principal cannot avoid liability for the negligence of its agent if the

       principal is by law or contract charged with performing the specific duty. See

       Bagley, 658 N.E.2d 584 at 586.

[27]   As for Elpers Construction’s development of the Subdivision in this case, Ind.

       Code § 36-9-27-69.5 provides that

           (a) Unless otherwise required by an ordinance of the county, a person who
               lays out a subdivision of lots or lands outside the corporate boundaries of
               any municipality must submit plans and specifications for the drainage of
               the subdivision in accordance with this section. The county drainage board
               must approve the drainage plan before the person may proceed with
               development of the subdivision.

           (b) A drainage plan and specifications submitted under subsection (a) to the county
               drainage board must comply with this chapter. Except as provided in
               subsection (c), the plan must comply with the following standards:

               (1) The plan must maintain the amount of drainage through the tract that
                   existed when the tract was created. If any tiles are cut, broken down,
                   or rendered useless during the construction activity on the tract, the
                   landowner will be responsible for the repair, replacement, or
                   relocation of the tile.

               (2) The plan may not change the locations where surface water enters the
                   tract and exits the tract from the locations that existed when the tract
                   was created.

               (3) Water which sheds off of a new structure, especially when the new
                   structure is elevated or near a property line, or both, must exit the
                   tract in the same location where it did when the tract was created.

           (c) The county drainage board may approve an alternate plan that does not
               comply with the standard set forth in subsection (b)(2).

       (Emphases added).

       Court of Appeals of Indiana | Opinion 23A-PL-437 | February 27, 2024           Page 13 of 22
[28]   In addition to the above, various Indiana statutes and local ordinances impose

       duties on the developer of a subdivision to properly design and install the area’s

       drainage components. For instance, Ind. Code § 36-7-4-702 provides:

           (d) As a condition of primary approval of a plat, the commission or
               committee may specify:

                        (1) the manner in which public ways shall be laid out, graded, and
                        improved;
                        (2) a provision for water, sewage, and other utility services;
                        (3) a provision for lot size, number, and location;
                        (4) a provision for drainage design; and
                        (5) a provision for other services as specified in the subdivision
                        control ordinance.

       (Emphases added). Vanderburgh County has an ordinance that imposes a

       specific duty on a developer to include “a provision for drainage design” under

       I.C. § 36-7-4-702. More particularly, Vanderburgh County Code 13.04.095,

       “Conditions of drainage plan approval,” states in part that

               F. The person . . . or . . . entity to whom approval of the drainage
               plan is granted must be the person . . . or entity who will be
               responsible for accomplishing the project for which the drainage
               plan is developed. Should the person . . . or other entity to which
               approval of the Drainage Plan is granted is no longer responsible
               for accomplishing the project for which the Drainage Plan is
               developed, then the person . . . or other entity that assumes or
               acquires a project with an approved Drainage Plan must
               immediately apply to the Drainage Board for approval to transfer
               the obligations of the previously approved Drainage Plan by
               submitting to the Drainage Board a Form 801 with the
               information required under Section 13.04.085.

       Court of Appeals of Indiana | Opinion 23A-PL-437 | February 27, 2024      Page 14 of 22
[29]   Additionally, the specific error that was made in the stormwater runoff

       calculations in this case is addressed in Vanderburgh County Code 13.04.205,

       “Determination of Runoff Quantities,” that states:

               Computing Rates of Stormwater Runoff. The stormwater runoff
               quantities shall be computed for the area of the project, plus the area of
               the watershed flowing into the project. The quantity of runoff
               which is generated as the result of a given rainfall intensity may
               be calculated as follows in this section.

       (Emphasis added).

[30]   In light of the above, Elpers Construction cannot delegate the duty to properly

       design and construct the drainage system for the Subdivision with impunity

       because it is a duty specifically imposed upon it by law. If Elpers Construction

       were permitted to prevail, its roles and responsibilities would be significantly

       reduced, which is contrary to the express terms of the statutes and ordinance

       that require conformity with the drainage code. We therefore conclude that the

       trial court properly granted partial summary judgment to the Smiths on their

       claim that Elpers Construction owed a non-delegable duty to properly design

       and construct the Subdivision’s drainage system.

       II. The HOA
[31]   The HOA argues that the trial court erred in granting only partial summary

       judgment in its favor. Specifically, the HOA contends that it should have been

       “entirely dismissed” from the action because there are no longer any viable

       claims of wrongdoing, i.e., breach of contract or negligence, against it in light of

       Court of Appeals of Indiana | Opinion 23A-PL-437 | February 27, 2024            Page 15 of 22
       the trial court’s order. Appellants’ Brief at 32. Hence, the HOA contends that

       because “piercing the corporate veil” is only a remedy rather than a cause of

       action, the trial court should have granted its motion for summary judgment in

       all respects. Appellants’ Brief at 33.

[32]   The corporate alter ego doctrine is a device by which a plaintiff attempts to

       demonstrate that two corporations are so closely connected that the plaintiff

       should be able to sue one for the actions of the other. Greater Hammond Cmty.

       Servs., Inc. v. Mutka, 735 N.E.2d 780, 785 (Ind. 2000). A court “pierces the

       corporate veil” to furnish a means for a complainant to reach a second

       corporation or individual upon a claim that otherwise would have existed only

       against the first corporation. Reed v. Reid, 980 N.E.2d 277, 297 (Ind. 2012).

       Courts will not provide the protection of limited liability to an entity “that is a

       mere instrumentality of another and engages in misconduct in the function or

       use of the corporate form.” CBR Event Decorators, Inc. v. Gates, 962 N.E.2d

       1276, 1281-82 (Ind. Ct. App. 2012), trans. denied. Courts invoke the equitable

       doctrine of piercing the corporate veil to “protect innocent third parties from

       fraud or injustice.” Reed, 980 N.E.2d at 301.

[33]   Although our courts have not had occasion to specifically address whether

       piercing the corporate veil under an alter ego theory constitutes an independent

       claim for substantive relief, the jurisdictions that have addressed this issue have

       determined that piercing the veil is not a theory of liability. Rather, such is a

       remedy and a means of imposing liability on an underlying cause of action like

       Court of Appeals of Indiana | Opinion 23A-PL-437 | February 27, 2024      Page 16 of 22
       a tort or breach of contract. 5 We adhere to that determination and conclude

       that piercing the corporate veil is an equitable remedy rather than an

       independent cause of action.

[34]   Here, the trial court partially granted the HOA’s motion for summary

       judgment but for it “being an alter ego” of the Builders. Appellant’s Appendix

       Vol. 2 at 38. In other words, the trial court granted summary judgment in the

       HOA’s favor on all independent causes of action. In light of the trial court’s

       order, we can only conclude that any independent underlying causes of action

       that the Smiths asserted against the HOA, i.e., breach of contract and/or

       negligence, were dismissed. Inasmuch as the alter ego theory is not an

       independent cause of action, the remedy of piercing the corporate veil would be

       futile, and the HOA must necessarily be dismissed as a named party. We

       therefore conclude that the trial court erred in only partially granting the HOA’s

       motion for summary judgment.

       III. Elpers Development
[35]   Elpers Development argues that the trial court erred in denying its motion for

       summary judgment on the Smiths’ negligence claim against it, contending that

       5
         See Krawaic v. Manly, 811 S.E.2d 542, 552 (N.C. 2018); A.L. Dougherty Real Est. Mgmt. Co., LLC v. Su Chin
       Tsai, 98 N.E.3d 504, 515 (Ill App. 2017); Monster Heavy Hauler’s, LLC v. Goliath Energy Services, LLC, 83
       N.W.2d 917, 926 (N.D. 2016) Gallagher v. Persha, 891 N.W.2d 505, 509 (Mich. App. 2016); Steiner Electric Co.
       v. Maniscalco, 51 N.E.3d 45, 63 (Ill. App. 1st Dist. 2016); Pister v. State, Dep’t of Revenue, 354 P.3d 357, 362-63
       (Ala. 2015); Dodd v. Savino, 426 S.W.3d 275, 291 (Tx. Ct. App. 14th Dist. 2014); Restaurant of Hattiesburg,
       LLC v. Hotel & Restaurant Supply, Inc., 84 So.3d 32, 47 (Miss. App. 2012).

       Court of Appeals of Indiana | Opinion 23A-PL-437 | February 27, 2024                                 Page 17 of 22
       it successfully negated the “duty element.” Appellants’ Brief at 38. Therefore,

       Elpers Development maintains that it is not subject to liability in this matter.

[36]   Summary judgment is rarely appropriate in negligence cases. Rather, issues of

       negligence, contributory negligence, causation, and reasonable care are more

       appropriately left for the determination of a trier of fact. Humphery v. Duke

       Energy Ind., Inc., 916 N.E.2d 287, 290-91 (Ind. Ct. App. 2009). We note,

       however, that whether a duty exists in the context of a negligence claim is a

       question of law for the court to decide. Goodwin v. Yeakle’s Sports Bar and Grill,

       Inc., 62 N.E.3d 384, 386-87 (Ind. 2016). In circumstances where the element of

       duty has not already been declared or otherwise articulated, Indiana courts use

       a three-part balancing test to determine whether a duty exists: (1) the

       relationship between parties; (2) the foreseeability of harm; and (3) public policy

       concerns. Goodwin, 62 N.E.3d at 387.

[37]    With regard to the relationship between the parties, our Supreme Court

       recently reaffirmed the rule announced in Citizens Gas & Coke Util. v. Amer. Econ.

       Ins., 486 N.E.2d 998, 1000 (Ind. 1985) that requires privity before a party can

       bring a negligence claim against a third-party contractor for property damage.

       See U.S. Automatic Sprinkler Corp. v. Erie ins. Exch., 204 N.E.3d 215, 225 (Ind.

       2023) (holding that when a contractor’s alleged negligent work poses a risk to

       only property—not persons—the privity requirement precludes recovery for

       property damages in a negligence action).

       Court of Appeals of Indiana | Opinion 23A-PL-437 | February 27, 2024      Page 18 of 22
[38]   Here, while the Smiths alleged that Elpers Development was negligent because

       its construction of other residences in the Subdivision may have contributed to

       the erosion and sediment buildup in the lake, there was no contract or

       relationship between the Smiths and Elpers Development. The designated

       evidence establishes that Elpers Development did not construct the Smiths’

       residence, it had no role in developing the Subdivision’s drainage system, and it

       did not participate in the lake’s construction. It is also undisputed that Elpers

       Development’s alleged negligence did not pose a risk of personal injury to the

       Smiths.

[39]   In light of these circumstances, the privity requirement set forth in Citizens Gas

       and U.S. Sprinkler controls, and the Smiths are therefore precluded from

       recovering property damages from Elpers Development. Thus, we need not

       address the remaining two prongs of the duty test, and we therefore conclude

       that the trial court erred in denying Elpers Development’s motion for summary

       judgment.

       IV. Elpers Construction—Fraud
[40]   Elpers Construction argues that the trial court erred in denying its motion for

       summary judgment on the fraud claim. Specifically, Elpers Construction

       contends that the Smiths failed to adequately plead allegations of fraud with

       specificity “that would raise an issue of material fact.” Appellants’ Brief at 46.

[41]   To prevail on a fraud claim, the plaintiff must establish (1) a material

       misrepresentation of past or existing fact; (2) which was untrue; (3) was made

       Court of Appeals of Indiana | Opinion 23A-PL-437 | February 27, 2024       Page 19 of 22
       with knowledge of or in reckless ignorance of its falsity; (4) was made with the

       intent to deceive; (5) was rightfully relied upon by the complaining party; and

       (6) which proximately caused the injury or damage of which the plaintiff

       complains. BSA Const. LLC v. Johnson, 54 N.E.3d 1026, 1031 (Ind. Ct. App.

       2016), trans. denied.

[42]   Indiana Trial Rule 9(B) provides that all averments of fraud must be pled with

       specificity as to the “circumstances constituting fraud.” To satisfy this

       requirement, the party alleging fraud must specifically allege the elements of

       fraud, the time, place, and substance of false reports, and any facts that were

       misrepresented, as well as the identity of what was procured by fraud.

       BloomBank v. United Fid. Bank F.S.B., 113 N.E.3d 708, 721 (Ind. Ct. App. 2018),

       trans. denied. The failure to comply with the rule’s specificity requirements

       constitutes a failure to state a claim upon which relief may be granted; thus,

       “any pleading which fails to satisfy the requirements fails to raise an issue of

       material fact.” Payday Today, Inc. v. Hamilton, 911 N.E.2d 26, 33 (Ind. Ct. App.

       2009), trans. denied.

[43]   Elpers Construction asserts that the Smiths did not specifically allege any

       misrepresentation or any other basis for the fraud claim. See, e.g., Weber v.

       Costin, 654 N.E.2d 1130, 1134 (Ind. Ct. App. 1995) (holding that

       misrepresentations not pled in complaint are properly disregarded by the court).

       Notwithstanding that contention, this court has held that

               the exact level of particularity that is required will necessarily
               differ based on the facts of the case. [W]hile we require a
       Court of Appeals of Indiana | Opinion 23A-PL-437 | February 27, 2024         Page 20 of 22
               plaintiff claiming fraud to fill in a fairly specific picture of the
               allegations in [the] complaint, we remain sensitive to information
               asymmetries that may prevent a plaintiff from offering more
               detail.

       BloomBank, 113 N.E.3d at 721.

[44]   Here, the Smiths alleged in their amended complaint that Elpers Construction

       recommended that they install a geothermal heating and air conditioning

       system, representing that such a system would operate more efficiently than a

       conventional HVAC unit. Paul Elpers—the president of Elpers Construction

       —advised the Smiths that the lake would accommodate heating coils for the

       geothermal system and function properly, even though he had been informed of

       deficiencies in the lake’s size and its inability to allow for such a system. The

       Smiths purchased the system, and Elpers Construction billed the Smiths for the

       price of the unit plus a ten percent general contractor’s fee.

[45]   The Smiths alleged in their complaint that they relied on Paul’s

       misrepresentations to their detriment that resulted in damage to their unit

       because of the faulty design and construction of the retention pond. These

       allegations are sufficient to satisfy the required specificity for fraud. We

       therefore conclude that the trial court properly denied Elpers Construction’s

       motion for summary judgment on the fraud claim.

       Conclusion
[46]   In light of our discussion above, we conclude that the trial court properly

       granted summary judgment for the Smiths on their claim that Elpers
       Court of Appeals of Indiana | Opinion 23A-PL-437 | February 27, 2024      Page 21 of 22
       Construction owed a non-delegable duty to properly design and construct the

       Subdivision’s drainage system. The trial court erred, however, in granting only

       partial summary judgment for the HOA, and we further conclude that the trial

       court erred in denying Elpers Development’s motion for summary judgment.

       Finally, we conclude that the trial court properly denied Elpers Construction’s

       motion for summary judgment on the Smiths’ fraud claim.

[47]   Judgment affirmed in part, reversed in part, and remanded for further

       proceedings consistent with this opinion.

       Weissmann, J. and Kenworthy, J., concur.

       ATTORNEYS FOR APPELLANTS
       Alyssa C.B. Cochran
       Crystal G. Rowe
       Van T. Willis
       New Albany, Indiana

       Reed Schmitt
       Derrick McDowell
       Evansville, Indiana

       ATTORNEYS FOR APPELLEES
       David L. Jones
       Craig R. Emig
       Evansville, Indiana

       Court of Appeals of Indiana | Opinion 23A-PL-437 | February 27, 2024    Page 22 of 22