Court Opinion

ID: 3216649
Source: CourtListenerOpinion
Date Created: 2016-06-23 21:00:53.516212+00
Date Added: 2024-06-11T14:30:10.970886
License: Public Domain

In the

         United States Court of Appeals
                         For the Seventh Circuit
                             ____________________  

Nos.  15-­‐‑3037  &  15-­‐‑3048  
ACF  2006  CORP.,  
                                                                   Plaintiff-­‐‑Appellee,  
                                             v.  

MARK   C.   LADENDORF,   ATTORNEY   AT   LAW,   P.C.,   and   TIMOTHY  
F.  DEVEREUX,  
                                                 Defendants-­‐‑Appellants,  
                                     and  
DAVID  L.  BEALS,  SR.,  et  al.,  
                                    Intervening  Defendants-­‐‑Appellants.  
                             ____________________  

            Appeals  from  the  United  States  District  Court  for  the  
               Southern  District  of  Indiana,  Indianapolis  Division.  
          No.  1:13-­‐‑cv-­‐‑01286-­‐‑TWP-­‐‑DML  —  Tanya  Walton  Pratt,  Judge.  
                             ____________________  

           ARGUED  APRIL  13,  2016  —  DECIDED  JUNE  23,  2016  
                             ____________________  

        Before  EASTERBROOK,  MANION,  and  ROVNER,  Circuit  Judg-­‐‑
es.  
    EASTERBROOK,   Circuit   Judge.   Attorney   William   F.   Conour  
stole   more   than   $4.5   million   from   clients’   trust   funds,   was  
convicted  of  fraud,  and  is  serving  ten  years  in  prison.  Shortly  
2                                                  Nos.  15-­‐‑3037  &  15-­‐‑3048  

before   these   crimes   came   to   light,   attorney   Timothy   Deve-­‐‑
reux   left   Conour   Law   Firm,   LLC,   and   took   21   clients   with  
him   to   Mark   Ladendorf’s   law   firm.   These   clients   ultimately  
produced   attorneys’   fees   aggregating   some   $2   million.   This  
appeal   presents   a   three-­‐‑corner   fight   about   who   gets   how  
much   of   that   money.   The   contestants   are   Devereux   and   the  
Ladendorf   Firm   (collectively   the   Lawyers),   several   persons  
from  whom  Conour  stole  (collectively  the  Victims),  and  ACF  
2006  (the  Lender),  whose  parent  corporation  Advocate  Capi-­‐‑
tal,  Inc.,  made  a  loan  to  the  Conour  Firm  to  finance  the  legal  
work   and   out-­‐‑of-­‐‑pocket   expenses   that   a   contingent-­‐‑fee   law  
firm  must  bear  while  suits  are  in  progress.  
     There  are  two  principal  questions.  First,  how  much  of  the  
$2   million   goes   to   the   Conour   Firm   for   the   services   it   per-­‐‑
formed   before   Devereux   left?   Second,   how   are   the   funds   to  
which  the  Conour  Firm  is  entitled  to  be  divided  between  the  
Victims  and  the  Lender?  After  a  bench  trial,  the  district  court  
concluded  that  the  Conour  Firm  is  entitled  to  some  $775,000  
under   principles   of   quantum   meruit.   2015   U.S.   Dist.   LEXIS  
112772  (S.D.  Ind.  Aug.  25,  2015).  The  judge  also  decided  that  
the   Lender   has   priority   over   the   Victims.   2015   U.S.   Dist.  
LEXIS   10942   (S.D.   Ind.   Jan.   30,   2015),   reconsideration   denied  
2015  U.S.  Dist.  LEXIS  21709  (S.D.  Ind.  Feb.  24,  2015).  We  start  
with  the  Lawyers’  appeal,  because  it  determines  how  much  
is  available  for  division  between  the  Victims  and  the  Lender.  
     In  Indiana,  as  in  other  states,  clients  may  discharge  their  
lawyers   for   any   reason.   If   newly   hired   counsel   pursues   the  
case  to  a  successful  conclusion,  the  original  lawyer  is  entitled  
to  be  paid  for  the  value  of  the  work  done.  See  Galanis  v.  Ly-­‐‑
ons  &  Truitt,  715  N.E.2d  858,  861  (Ind.  1999).  That’s  the  doc-­‐‑
trine   of   quantum   meruit.   At   the   bench   trial,   the   parties   con-­‐‑
Nos.  15-­‐‑3037  &  15-­‐‑3048                                               3  

tested  the  value  of  the  different  lawyers’  contributions  to  11  
of  the  21  cases  that  Devereux  took  from  the  Conour  Firm  to  
the  Ladendorf  Firm.  Only  two  cases  remain  in  dispute.  The  
parties  refer  to  them  by  initials:  L.B.  and  R.S.  
     L.B.  was  a  products-­‐‑liability  suit  arising  from  the  failure  
of  a  gear  puller  and  the  severe  injury  that  the  failure  caused.  
Whether  the  gear  puller  was  defective  was  the  principal  dis-­‐‑
pute.  If  so,  L.B.  stood  to  receive  a  substantial  award  (with  a  
potential  contest  about  how  much);  if  not,  L.B.  would  receive  
nothing.   The   Conour   Firm   filed   a   complaint,   served   stand-­‐‑
ard   interrogatories,   and   hired   an   expert   who   examined   the  
location  of  the  accident  but  could  not  perform  scientific  tests  
on  the  gear  puller  until  the  defendant  turned  it  over,  which  
happened  at  5  p.m.  on  the  day  before  Devereux  moved  from  
the   Conour   Firm   to   the   Ladendorf   Firm.   On   the   same   day,  
the  defendant  took  two-­‐‑hour  depositions  of  two  witnesses.  
     The  real  work  of  discovery  began  with  testing,  which  oc-­‐‑
curred  on  the  Ladendorf  Firm’s  watch  and  revealed  that  the  
gear   puller’s   metal   was   brittle   because   it   had   been   exposed  
to   hydrogen   during   manufacture.   That   scientific   analysis  
(embodied  in  the  expert’s  report)  was  followed  by  more  dis-­‐‑
covery   (including   a   deposition   of   the   defense   expert)   and   a  
settlement  for  $3.550  million  on  the  eve  of  trial.  The  Laden-­‐‑
dorf   Firm   had   prepared   a   detailed   trial   plan   and   had   more  
than  70  exhibits  and  21  witnesses  ready  to  go.  The  plaintiff’s  
contingent-­‐‑fee  contract  with  the  Ladendorf  Firm  entitled  it  to  
almost  $1.4  million  in  fees,  plus  about  $40,000  in  costs.  
     The   district   court   concluded   that   the   Conour   Firm   gets  
40%  of  this  $1.4  million,  plus  its  own  expenses  of  $3,000,  for  
a   total   of   roughly   $600,000.   The   court   gave   a   one-­‐‑sentence  
explanation:   “This   is   based   upon   the   fact   that   the   Conour  
4                                                   Nos.  15-­‐‑3037  &  15-­‐‑3048  

Firm   engaged   in   discovery,   hired   an   investigator   to   inter-­‐‑
view  witnesses,  took  two  depositions,  inspected  the  facility,  
obtained   the   defective   part   at   issue,   began   developing   the  
destructive   testing   protocol,   and   prepared   the   settlement  
statement   and   the   demand   letter.”   2015   U.S.   Dist.   LEXIS  
112772   at   *24.   What   the   judge   did   not   explain   is   why   the  
Conour  Firm’s  work,  though  valuable  to  the  client,  was  any-­‐‑
where  close  to  40%  of  either  the  effort  expended  or  the  value  
provided.  The  bulk  of  the  work—both  the  scientific  analysis  
and   the   legal   time—was   performed   by   the   Ladendorf   Firm  
after  the  gear  puller  became  available  for  testing.  
      Three   witnesses   at   trial   put   the   value   of   the   Conour  
Firm’s  work  at  10%  of  the  total.  No  one  testified  differently.  
If  we  use  expenses  as  a  proxy  for  work  done,  the  Ladendorf  
Firm  could  have  claimed  a  larger  share.  (It  incurred  $40,000  
of   the   $43,000   total   expenses,   or   93%.)   Any   estimate   of   the  
value   of   legal   work   is   bound   to   be   imprecise.   Still,   the   fact  
that   three   witnesses   chose   90%   without   contradiction   (the  
Lender   did   not   present   a   legal   expert’s   analysis   of   the   rela-­‐‑
tive   value   of   the   two   law   firms’   work)   provides   a   starting  
point.  Yet  the  district  court  did  not  mention  that  estimate  or  
justify   the   40%   ratio   it   chose.   And   the   Lender   does   not   de-­‐‑
fend   it   substantively.   Instead   the   Lender   relies   entirely   on  
the  standard  of  appellate  review.  
    Appellate   review   of   findings   in   a   bench   trial   is   deferen-­‐‑
tial,  see  Fed.  R.  Civ.  P.  52(a)(6),  and  the  answer  to  “who  pro-­‐‑
vided  what  part  of  the  value?”  is  a  proposition  of  fact.  Still,  
Rule   52(a)   allows   a   court   of   appeals   to   reverse   a   finding  
when  the  court  has  a  definite  and  firm  conviction  that  a  mis-­‐‑
take   has   been   made.   See   Anderson   v.   Bessemer   City,   470   U.S.  
564,  573  (1985);  United  States  v.  United  States  Gypsum  Co.,  333  
Nos.  15-­‐‑3037  &  15-­‐‑3048                                                    5  

U.S.  364,  395  (1948).  We  have  such  a  conviction  with  respect  
to   the   allocation   of   fees   for   the   L.B.   matter.   The   Lender   has  
not   argued   that   it   is   entitled   to   a   new   trial   if   we   disagree  
with  the  district  court’s  findings.  Because  the  Lender  has  not  
attempted   to   justify   any   ratio   other   than   40%,   we   order   the  
award   reduced   to   10%   (roughly   $140,000   plus   $3,000   in   ex-­‐‑
penses).  
     The   R.S.   case   was   another   products-­‐‑liability   matter,   set-­‐‑
tled  for  a  total  of  $520,000.  One  defendant  paid  $20,000  while  
the   Conour   Firm   was   handling   the   case,   and   the   remaining  
defendants   paid   $500,000   after   Devereux   moved   to   the  
Ladendorf   Firm.   The   Ladendorf   Firm   received   a   contingent  
fee  of  $200,000,  or  40%  of  the  $500,000  collected  while  it  had  
the  case.  The  district  court  found  that  the  Conour  Firm  is  en-­‐‑
titled   to   60%   of   that   $200,000,   or   $120,000.   2015   U.S.   Dist.  
LEXIS  112772  at  *22–24.  
     That   allocation   seems   generous   to   the   Ladendorf   Firm,  
because  the  judge  found  that  the  Conour  Firm  did  essential-­‐‑
ly   all   of   the   work   and   that   the   case   settled   promptly   after  
Devereux   moved   to   the   Ladendorf   Firm.   Nonetheless   the  
Lawyers  tell  us  that  60%  is  too  high—that,  indeed,  the  Con-­‐‑
our   Firm   should   get   nothing.   This   is   not   because   of   any   es-­‐‑
timate   of   the   amount   of   work   done;   the   Lawyers   concede  
that   almost   all   of   the   legal   work   occurred   while   Devereux  
was  at  the  Conour  Firm.  Instead  the  Lawyers  insist  that  the  
Conour  Firm  should  be  docked  for  damaging  the  plaintiff’s  
prospects   in   two   ways:   (a)   accepting   only   $20,000   from   one  
defendant,  and  (b)  not  paying  all  of  the  expert  witness’s  in-­‐‑
voice.   (The   Conour   Firm   told   R.S.   that   it   was   holding   on   to  
the  entire  $20,000  to  cover  costs  already  incurred,  but  appar-­‐‑
ently  some  of  that  money  found  its  way  to  Conour’s  pocket.)  
6                                                      Nos.  15-­‐‑3037  &  15-­‐‑3048  

    Although   the   Lawyers   assert   that   settling   with   one   de-­‐‑
fendant  for  $20,000  decreased  the  total  recoveries  obtainable  
from   the   case,   they   do   not   explain   how.   Damages   would  
have   been   joint   and   several;   other   defendants   remained   lia-­‐‑
ble  (if  liable  at  all)  for  the  full  injury.  As  for  the  failure  to  pay  
the  expert’s  entire  bill:  the  Ladendorf  Firm  didn’t  pay  either,  
and   Devereux   testified   that   he   had   decided   that   an   expert  
was   unnecessary.   Whether   either   or   both   firms   stiffed   the  
expert   would   be   important   in   a   suit   by   the   expert   seeking  
full   compensation,   or   a   demand   by   R.S.   for   some   of   the  
$20,000  that  the  Conour  Firm  kept,  but  it  does  not  affect  how  
the   $200,000   fee   should   be   divided   between   the   two   law  
firms.  
     The  Lawyers  raise  one  more  issue.  The  district  court  add-­‐‑
ed   8%   prejudgment   interest   to   the   award.   2015   U.S.   Dist.  
LEXIS  112772  at  *31–32.  The  Lawyers  maintain  that  this  is  in-­‐‑
appropriate  because  all  of  the  disputed  fees  had  been  held  in  
an   IOLTA   account   pending   the   district   court’s   decision.  
IOLTA   stands   for   interest   on   lawyers’   trust   account,   and   in  
Indiana  that  interest  must  be  paid  to  groups  that  will  use  the  
money   to   secure   legal   representation   for   those   who   cannot  
afford  it.  Ind.  R.  Prof.  Conduct  1.15(f).  The  Lawyers  contend  
that  they  should  not  be  required  to  pay  prejudgment  interest  
when  they  did  not  receive  any  interest  to  begin  with.  Interest  
is  compensation  for  the  time  value  of  money  and  is  therefore  
part   of   complete   compensation.   See   West   Virginia   v.   United  
States,   479   U.S.   305,   310   &   n.2   (1987);   In   re   Oil   Spill   by   the  
Amoco  Cadiz  off  the  Coast  of  France  on  March  16,  1978,  954  F.2d  
1279,  1331–37  (7th  Cir.  1992).  But  if  a  given  pot  of  money  has  
no  time  value  (at  least  to  law  firms),  then  there  is  nothing  to  
apportion   between   the   parties—no   reason   why   the   Conour  
Nos.  15-­‐‑3037  &  15-­‐‑3048                                             7  

Firm  should  be  compensated  for  delay  in  payment  when  the  
Ladendorf  Firm  is  not.  
     Indiana   law   appears   to   support   the   Lawyers’   position.  
Kummerer   v.   Marshall,   971   N.E.2d   198,   202   (Ind.   App.   2012).  
Once  again,  the  Lender  has  chosen  not  to  engage  on  the  mer-­‐‑
its.  Its  brief  does  not  discuss  Kummerer  or  otherwise  defend  
the   substance   of   the   district   court’s   decision.   Instead   the  
Lender  contends  that  the  Lawyers  waived  this  point  by  not  
calling  it  to  the  district  judge’s  attention.  
     The   Lawyers   have   a   good   reason   for   this,   however:   The  
Lender  never  asked  for  prejudgment  interest.  The  court  add-­‐‑
ed  interest  unbidden  (sua  sponte  as  lawyers  like  to  say).  The  
Lawyers   might   have   filed   a   motion   to   amend   the   judgment  
under  Fed.  R.  Civ.  P.  59(e),  but  the  opportunity  to  file  such  a  
motion   is   an   option   rather   than   a   command.   A   litigant   is  
never  required  to  remonstrate  with  the  judge  (to  take  an  ex-­‐‑
ception)  once  a  decision  has  been  made.  Fed.  R.  Civ.  P.  46.  It  
is  enough  to  present  one’s  views  on  contested  issues  before  
the  decision  is  made.  As  neither  the  Lender  nor  the  Victims  
requested  prejudgment  interest,  the  Lawyers  had  no  reason  
to  think  that  this  was  an  open  issue  and  therefore  were  not  
obliged   to   address   the   subject   before   the   judge   issued   her  
decision.   The   award   of   prejudgment   interest   was   a   misstep  
that  must  be  undone  on  remand.  
    It  follows  from  this  discussion  that  the  Lawyers  owe  the  
Conour   Firm   less   than   the   current   value   of   the   Conour  
Firm’s   indebtedness   to   the   Lender—and   substantially   less  
than   what   Conour   owes   to   the   Victims.   The   outcome   thus  
turns  on  priority  between  the  Lender  and  the  Victims;  one  or  
the  other  will  receive  everything  the  Lawyers  must  disgorge.  
8                                                     Nos.  15-­‐‑3037  &  15-­‐‑3048  

     Advocate  Capital  made  a  loan  in  2008  and  filed  a  financ-­‐‑
ing  statement  under  the  Uniform  Commercial  Code.  Its  lien  
dates  to  that  year.  (The  transfer  from  Advocate  to  ACF  does  
not   affect   priority.)   The   Victims   did   not   get   a   judgment  
against  Conour,  either  directly  or  via  the  restitution  awarded  
in  the  criminal  prosecution,  until  2014.  It  follows,  the  district  
court  held,  that  the  Lender  has  priority  under  the  UCC.  2015  
U.S.  Dist.  LEXIS  10942  at  *14–30.  
        The   Victims   contend   that   Ind.   Code   §30-­‐‑4-­‐‑3-­‐‑22   gives  
them  priority  as  the  victims  of  a  breach  of  trust.  The  district  
court   rejected   this   argument   on   the   ground   that   neither   the  
legal   theory   nor   the   statute   had   been   identified   in   the   Vic-­‐‑
tims’   complaint.   2015   U.S.   Dist.   LEXIS   10942   at   *29–30;   2015  
U.S.   Dist.   LEXIS   21709   at   *5–6.   That   is   not   a   satisfactory   rea-­‐‑
son.  Complaints  plead  claims,  which  is  to  say  grievances.  The  
Victims’   grievance   was   stated,   as   Fed.   R.   Civ.   P.   8   contem-­‐‑
plates,   plainly   and   without   unnecessary   detail:   Their   trust  
funds  were  plundered,  and  they  want  recompense.  The  rea-­‐‑
sons  why  they  believe  that  they  have  priority  over  the  Lend-­‐‑
ers   need   not   be   pleaded,   because   complaints   need   not   cite  
authority  or  set  out  a  line  of  legal  argument.  See,  e.g.,  Johnson  
v.  Shelby,  135  S.  Ct.  346  (2014);  Bartholet  v.  Reishauer  A.G.  (Zü-­‐‑
rich),  953  F.2d  1073  (7th  Cir.  1992).  The  Victims  have  a  single  
claim   for   relief;   multiple   legal   theories   in   support   of   that  
claim   differ   from   multiple   claims   that   must   be   separately  
pleaded.  See,  e.g.,  Frank  v.  Walker,  819  F.3d  384,  387–88  (7th  
Cir.  2016).  Making  legal  arguments  in  support  of  one’s  claim  
comes  after  the  pleadings.  The  Victims  raised  Ind.  Code  §30-­‐‑
4-­‐‑3-­‐‑22  at  the  right  time,  and  in  the  right  way.  
        The  district  court  concluded,  in  the  alternative,  that  §30-­‐‑
4-­‐‑3-­‐‑22   does   not   support   the   Victims   to   the   extent   they   seek  
Nos.  15-­‐‑3037  &  15-­‐‑3048                                                               9  

relief  against  funds  held  by  the  Conour  Firm,  as  opposed  to  
Conour  personally.  2015  U.S.  Dist.  LEXIS  21709  at  *7–9.  That  
conclusion  has  more  support.  
     If  a  trustee  wrongfully  removes  money  (or  other  proper-­‐‑
ty)   from   a   trust,   Ind.   Code   §30-­‐‑4-­‐‑3-­‐‑22(b)   and   (c)(1)   provide  
ways  for  the  court  to  order  the  assets  returned.  But  the  Vic-­‐‑
tims   are   not   trying   to   retrieve   what   Conour   took   or   funds  
that   can   be   traced   to   his   theft.   The   money   generated   by   the  
Lawyers  has  never  been  held  in  trust  for  the  Victims  and  is  
unrelated   to   Conour’s   crimes.   The   Victims   therefore   must  
rely   on   §30-­‐‑4-­‐‑3-­‐‑22(c)(2),   which   provides   for   situations   in  
which  the  trust’s  assets  “cannot  be  traced  and  identified”:  
    (A)   In   a   case   of   commingling   of   funds   or   property,   the   benefi-­‐‑
    ciary  is  entitled  to  a  lien  against  the  trustee’s  individual  property  
    from  the  date  and  in  the  amount  of  the  fund  or  the  value  of  the  
    property  at  the  time  of  the  commingling.  
    (B)  In  a  case  of  conversion  of  property,  the  beneficiary  is  entitled  
    to   a   lien   against   the   trustee’s   individual   property   from   the   date  
    and  according  to  the  value  of  the  property  at  the  time  of  the  con-­‐‑
    version.  

Conour   converted   the   Victims’   trust   funds   before   Advocate  
Capital  made  its  loan,  so  if  the  Victims  have  a  lien  under  this  
statute   it   comes   ahead   of   the   Lender’s   interest.   But   the   dis-­‐‑
trict   court   thought   that   the   Victims   lose   because   subpara-­‐‑
graphs  (A)  and  (B)  both  say  that  the  lien  is  “against  the  trus-­‐‑
tee’s  individual  property”.  Funds  held  by  the  Conour  Firm,  
or  to  which  the  Conour  Firm  becomes  entitled,  are  not  Wil-­‐‑
liam   Conour’s   “individual   property”.   Nor   was   the   Conour  
Firm   the   trustee;   William   Conour   was   trustee   of   all   client  
funds   held   in   trust,   so   “individual   property”   refers   to   Con-­‐‑
our’s  personal  property.  
10                                                        Nos.  15-­‐‑3037  &  15-­‐‑3048  

      Conour   had   (and   may   still   have)   an   interest   in   the   Con-­‐‑
our   Firm   as   a   member   of   the   limited   liability   company,   but  
Conour  and  the  LLC  are  distinct  entities.  (The  Victims  have  
not  argued  that  Indiana’s  standards  for  veil-­‐‑piercing  are  sat-­‐‑
isfied.)  It  was  the  LLC,  not  Conour,  that  employed  Devereux  
and   borrowed   money   from   Advocate   Capital.   The   Victims  
have   not   asked   the   court   to   transfer   to   them   the   value   of  
Conour’s   membership   interest   in   the   LLC,   which   does   not  
appear   to   have   any   monetary   value   (and,   if   it   does,   may  
have  been  seized  already  to  provide  restitution  in  the  crimi-­‐‑
nal   prosecution).   Instead   the   Victims   want   the   benefit   of  
funds  that  the  Lawyers  owe  to  the  Conour  Firm,  and  §30-­‐‑4-­‐‑
3-­‐‑22(c)(2)   does   not   create   such   a   remedy.   Not   directly,   any-­‐‑
way.  Not  without  the  aid  of  another  statute.  
       The   Conour   Firm   is   a   professional-­‐‑services   business,  
which  in  Indiana  is  subject  to  a  rule  that  the  use  of  a  corpo-­‐‑
rate   form   does   not   change   the   relation   between   lawyer   (or  
physician)  and  client.  The  Victims  rely  on  Ind.  Code  §23-­‐‑1.5-­‐‑
2-­‐‑7:  
       (a)   The   relationship   between   an   individual   performing   profes-­‐‑
       sional  services  as  an  employee  of  a  professional  corporation  and  
       a  client  or  patient  is  the  same  as  if  the  individual  performed  such  
       services  as  a  sole  practitioner.  

       (b)  The  relationship  between  a  professional  corporation  perform-­‐‑
       ing  professional  services  and  the  client  or  patient  is  the  same  as  
       between  the  client  or  patient  and  the  individual  performing  the  
       services.  

If  William  Conour  had  operated  his  law  practice  as  a  propri-­‐‑
etorship  or  partnership,  then  under  §30-­‐‑4-­‐‑3-­‐‑22(c)(2)  all  of  its  
assets   would   be   available   to   aggrieved   clients,   and   a   claim  
based   on   a   breach   of   trust   would   come   ahead   of   a   lender’s  
interest   if   the   breach   predated   the   loan.   Section   23-­‐‑1.5-­‐‑2-­‐‑7  
Nos.  15-­‐‑3037  &  15-­‐‑3048                                                              11  

tells  us  that  the  client  has  the  same  rights  vis-­‐‑à-­‐‑vis  a  profes-­‐‑
sional  corporation  as  it  does  against  a  solo  practitioner—and  
one  of  those  rights  is  to  recompense  for  breach  of  trust.  
      As   far   as   we   can   tell,   Indiana’s   judiciary   has   yet   to   con-­‐‑
sider   the   effect   of   §23-­‐‑1.5-­‐‑2-­‐‑7   in   the   36   years   since   its   enact-­‐‑
ment,   though   it   did   say   that   the   law’s   predecessor   was   de-­‐‑
signed  to  prevent  the  corporate  form  from  changing  the  tra-­‐‑
ditional   relation   between   a   professional   and   a   client   or   pa-­‐‑
tient.  See  Birt  v.  St.  Mary  Mercy  Hospital  of  Gary,  Inc.,  175  Ind.  
App.   32,   39–43   (1977).   That   seems   to   give   the   Victims   the  
upper  hand  in  their  contest  with  the  Lender.  We  can  imagine  
some   possible   responses.   Perhaps   Indiana’s   legislature  
meant  the  word  “corporation”  literally,  so  that  a  lawyer  who  
arranges  for  his  assets  to  come  to  an  LLC  avoids  the  applica-­‐‑
tion  of  §23-­‐‑1.5-­‐‑2-­‐‑7.  Perhaps  something  about  the  relation  be-­‐‑
tween  §30-­‐‑4-­‐‑3-­‐‑22(c)(2)  and  §23-­‐‑1.5-­‐‑2-­‐‑7  means  that  the  former  
trumps  the  latter.  Neither  of  these  possibilities  seems  likely.  
But  we  don’t  have  to  decide  because,  continuing  a  pattern  of  
refusing  to  engage  on  the  merits,  the  Lender  does  not  make  
either  argument.  Indeed,  the  Lender’s  brief  does  not  cite  §23-­‐‑
1.5-­‐‑2-­‐‑7  or  consider  the  possibility  that  assets  of  a  professional  
LLC  are  imputed  to  the  lawyer  (or  the  professional  debts  of  
a   lawyer   imputed   to   the   LLC)   for   the   purpose   of   statutes  
such  as  §30-­‐‑4-­‐‑3-­‐‑22(c)(2).  
     The  norm  that  victims  of  a  lawyer’s  breach  of  trust  have  a  
remedy  notwithstanding  the  later  grant  of  a  security  interest  
to  a  commercial  lender  is  one  of  long  standing  and  is  reflect-­‐‑
ed   in   Indiana   by   §30-­‐‑4-­‐‑3-­‐‑22(c)(2).   Section   23-­‐‑1.5-­‐‑2-­‐‑7   tells   us  
that   the   use   of   the   corporate   form   to   hold   assets   of   a   legal  
practice   does   not   change   that   norm.   It   follows   that   the   Vic-­‐‑
12                                                Nos.  15-­‐‑3037  &  15-­‐‑3048  

tims   have   priority   over   the   Lender   in   the   funds   that   the  
Conour  Firm  is  entitled  to  receive  from  the  Lawyers.  
       The   judgment   of   the   district   court   is   reversed,   and   the  
case   is   remanded   for   the   entry   of   judgment   consistent   with  
this  opinion.