Court Opinion

ID: 7073084
Source: CourtListenerOpinion
Date Created: 2022-07-24 07:58:08.882008+00
Date Added: 2024-06-11T16:12:39.969448
License: Public Domain

SULLIVAN, Judge,
dissenting.
The representations relied upon by TEN, Wheeler, Brown and Bird as the basis of their claim were much more in the realm of opinion and “trade talk” than statements of past or existing material facts.
To the minimal extent that Warren’s representations were of past or existing fact rather than of opinion or future projection, and to the extent that they were inaccurate at the time made, such could not have been the cause of losses to plaintiffs. Those representations were met or even exceeded before plaintiffs experienced financial losses. The representations in question, as a matter of law, could not have caused com-pensable damages.
To the extent that one or more representations may not have been accurate at the time made, and did not become factual in time, plaintiff’s either knew of the inaccuracy or because of the circumstances were not justified in relying upon them. To recover in fraud, a plaintiff must prove reliance and, in addition, that such reliance was reasonable under the circumstances. Tutwiler v. Snodgrass (1981) 2nd Dist., Ind.App., 428 N.E.2d 1291. As stated long ago in Culley v. Jones (1905) 164 Ind. 168, 73 N.E. 94:
“Representations might be ... harmless when addressed to an active, sagacious, well-informed man, and yet might utterly mislead [a person] ... incapable of intelligently transacting business of magnitude involving large sums of money. The design of the law is to protect the weak and credulous from the wiles and stratagems of the artful and the cunning, as well as those whose vigilance and sagacity enable them to protect themselves.” 164 Ind. at 176.
The purpose of the law and the protections afforded it are not frustrated when the parties, as here, “deal at arm’s length with equal means of knowledge.” Wisconics Engineering, Inc. v. Fisher (1984) 2nd Dist., Ind.App., 466 N.E.2d 745, 756 trans. denied. Wheeler, Brown and Bird engaged in a business evaluation with eyes wide open and with full opportunity to discover actual prospects for success. They did in fact know or have ready access to all knowledge concerning the number of subscribers, the incidence of placements, and all other related material information.
It is not the function of the law of fraud to relieve a business person from an investment which upon reflection becomes undesirable. Plumley v. Stanelle (1974) 2nd Dist., 160 Ind.App. 271, 311 N.E.2d 626.
I am also at a loss to understand the argument made by TEN, and adopted in the majority opinion, with respect to the theory of damages upon which recovery is made. TEN asserts that no claim is made for losses involved in the conduct of the business as a result of Warren’s representations. Rather, it is claimed that but for such representations, Wheeler, Brown and Bird would not have invested time and money in becoming involved in the venture.
To give cognizance to this argument is to bestow validity upon a hypothetical, but parallel, absurdity. Had TEN become an overwhelming financial success and had Wheeler, Brown and Bird become multi-mil-lionaires as a result of their affiliation with ETS and HRIN, they might have sought and recovered substantial damages from Warren for making them the victims of *1105increased income tax liability and because of the new and uncomfortable pressures of the adulation, privilege and responsibility which accompany corporate success. I know of no conceivable rationale which would permit such damage recovery.
In my view, American Independent Management Systems, Inc. v. McDaniel (1982) 3rd Dist. Ind.App., 443 N.E.2d 98, does not provide the authority for the holding here. In McDaniel, plaintiffs did make an initial start-up investment for their business in reliance upon American’s contractual obligation to provide support materials, training services, investment advice and tax return preparation. None of the contemplated materials or services were forthcoming and American went out of business. That set of circumstances is decidedly different from the business scenario presented in this case. The McDaniels sustained monetary loss, not only initially but on a continuing basis as a result of American's total default and failure to perform. Unlike, the case before us, they sustained recognizable and compensable injury.
Where, as here, no cognizable injury is claimed, there should be no damages.
I would reverse the judgment.