Court Opinion

ID: 4244965
Source: CourtListenerOpinion
Date Created: 2018-02-14 16:09:12.077194+00
Date Added: 2024-06-11T14:43:30.915380
License: Public Domain

FILED
                                                                         Feb 14 2018, 8:50 am

                                                                               CLERK
                                                                          Indiana Supreme Court
                                                                             Court of Appeals
                                                                               and Tax Court

ATTORNEY FOR APPELLANT                                ATTORNEYS FOR APPELLEE
Jay A. Rigdon                                         Eileen S. Pruitt
Rockhill Pinnick LLP                                  Barnes & Thornburg LLP
Warsaw, Indiana                                       South Bend, Indiana
                                                      Mark J. Crandley
                                                      Annette England
                                                      Barnes & Thornburg LLP
                                                      Indianapolis, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

Sandra S. Weaver,                                          February 14, 2018

Appellant-Plaintiff,                                       Court of Appeals Case No.
                                                           20A03-1707-PL-1702

        v.                                                 Appeal from the Elkhart Circuit
                                                           Court

Elkhart Community School                                   The Hon. Michael A. Christofeno,
                                                           Judge
Corporation,
                                                           Trial Court Cause No.
Appellee-Defendant.                                        20C01-1406-PL-175

Bradford, Judge.

Court of Appeals of Indiana | Opinion 20A03-1707-PL-1702 | February 14, 2018                      Page 1 of 9
                                           Case Summary
[1]   Appellant-Plaintiff Sandra Weaver was married to David McGuire, an

      employee of Appellee-Defendant Elkhart Community School Corporation

      (“ECS”). As part of McGuire’s employment contract with ECS (“the

      Contract”), ECS paid for a life insurance policy, with Weaver as the

      beneficiary. In 2012, after becoming ill, McGuire resigned from ECS

      (terminating the life insurance policy) and died early the next year. Weaver

      sued ECS, asserting several claims stemming from her allegation that an ECS

      employee advised her that McGuire should resign instead of applying for long-

      term disability coverage, which would have left the life insurance policy in

      place.

[2]   ECS moved to dismiss (and later for summary judgment on) Weaver’s claims,

      arguing that Weaver had failed to comply with the notice provisions of the

      Indiana Tort Claims Act (“the ITCA”). The trial court denied ESC’s motions

      on ITCA grounds but granted it summary judgment on the basis that Weaver’s

      claims are without merit as a matter of law. Weaver contends that the trial

      court erred in granting ECS summary judgment at all, while ECS argues that

      the trial court should have granted summary judgment and/or dismissed

      Weaver’s claims on ITCA grounds. Because we are convinced by ECS’s

      argument, we reverse the judgment of the trial court and remand with

      instructions to dismiss Weaver’s claims.

      Court of Appeals of Indiana | Opinion 20A03-1707-PL-1702 | February 14, 2018   Page 2 of 9
                             Facts and Procedural History
[3]   Before he passed away, McGuire was married to Weaver and a supervisor of

      curriculum for ECS. Pursuant to the Contract, ECS paid for an insurance

      policy on his life, with Weaver as the beneficiary. McGuire developed brain

      cancer and, in the spring and summer of 2012, it became clear that he would

      not be able to continue working. On May 15, 2012, McGuire submitted his

      resignation to ECS, to be effective on July 1, 2012, which, inter alia, terminated

      the life insurance coverage. McGuire died on March 7, 2013.

[4]   On June 23, 2014, Weaver sued ECS, asserting several claims, namely breach

      of fiduciary duty, constructive fraud, interference with contractual relationship,

      and breach of implied contract of good faith and dealing. At the heart of all of

      Weaver’s claims is the allegation that an ECS employee advised her that

      McGuire should resign instead of applying for long-term disability coverage. It

      does not appear to be in dispute that, had McGuire applied for disability

      coverage instead of resigning, his life insurance coverage would have continued.

      Weaver requested damages in the amount of two years of McGuire’s salary.

[5]   On August 4, 2015, ECS moved to dismiss on the ground that Weaver had

      failed to serve the required statutory notice pursuant to the ITCA, which

      motion the trial court denied on January 6, 2016. On October 26, 2016, ECS

      moved for summary judgment both on the ITCA ground and the ground that

      the undisputed facts did not support Weaver’s claims as a matter of law. On

      March 21, 2017, the trial court granted ECS’s summary judgment motion. On

      Court of Appeals of Indiana | Opinion 20A03-1707-PL-1702 | February 14, 2018   Page 3 of 9
      April 24, 2017 Weaver filed a motion to correct error that the trial court denied

      on June 26, 2017.

                                  Discussion and Decision
[6]   Weaver contends that the trial court erred in entering summary judgment in

      favor of ECS on the basis that her claims failed as a matter of law. Also,

      apparently anticipating ECS’s lead argument, Weaver argues that her claims

      are not subject to the ITCA, as they arose from the Contract and are, therefore,

      contract claims. ECS argues that the trial court should have dismissed

      Weaver’s claims or entered summary judgment in favor of ECS on the ground

      that they sound in tort and that she failed to satisfy the notice requirements of

      the ITCA. We choose to address the fundamental question of whether

      Weaver’s claims sound in tort or contract, the answer to which renders it

      unnecessary to address them further.

[7]   As mentioned, Weaver brought claims of breach of fiduciary duty, intentional

      interference with contract, constructive fraud, and breach of the implied

      contract of good faith and dealing:

                      14. Defendant’s action in advising McGuire and Weaver
              that McGuire should resign instead of applying for long term
              disability was a breach of Defendant’s fiduciary responsibility to
              McGuire and to Plaintiff. Defendant was aware of the financial
              advantages that would accrue to it and the disadvantages that
              would accrue to Weaver should the alternative be taken, and
              failed to advise McGuire of those advantages.
                    15. Defendant’s actions in this case constituted
              constructive fraud, and damaged Weaver.

      Court of Appeals of Indiana | Opinion 20A03-1707-PL-1702 | February 14, 2018   Page 4 of 9
                      16. Defendant’s advice to McGuire interfered with the
              contractual relationship that existed between McGuire and the
              life insurance company providing insurance coverage for
              McGuire.
                    17. Defendant breached its implied contract of good faith
              and fair dealing as an employer of McGuire, and its advice cost
              McGuire a benefit that he believed he was entitled to, and
              Weaver insurance coverage that she would have received.

      Appellant’s App. Vol. II pp. 34–35.

[8]   The question is whether these allegations sound in tort or in contract, the claim

      that they sound in tort being the basis of ECS’s motion to dismiss.

              A motion to dismiss under Ind. Trial Rule 12(B)(6) is made to
              test the legal sufficiency of the claim, not the supporting facts.
              Hosler ex rel. Hosler v. Caterpillar, Inc., 710 N.E.2d 193, 196 (Ind.
              Ct. App. 1999). When reviewing a T.R. 12(B)(6) motion to
              dismiss, we view the pleadings in the light most favorable to the
              non-moving party, and draw every reasonable inference in favor
              of that party. Minks v. Pina, 709 N.E.2d 379, 381 (Ind. Ct. App.
              1999). We will affirm a successful T.R. 12(B)(6) motion when a
              complaint states a set of facts, which, even if true, would not
              support the relief requested in that complaint. Burress v. Indiana
              Farmers Mut. Ins. Group, 626 N.E.2d 501, 503 (Ind. Ct. App.
              1993), trans. denied (1994). Moreover, we will affirm the trial
              court’s grant of a motion to dismiss if it is sustainable on any
              theory or basis found in the record. Id. When reviewing a ruling
              on a motion to dismiss, we stand in the shoes of the trial court
              and must determine if the court erred in its application of the
              law. Novicki v. Rapid-American Corp., 707 N.E.2d 322, 323 (Ind.
              Ct. App. 1999).

      C & E Corp. v. Ramco Indus., Inc., 717 N.E.2d 642, 643–44 (Ind. Ct. App. 1999).

      Court of Appeals of Indiana | Opinion 20A03-1707-PL-1702 | February 14, 2018    Page 5 of 9
[9]    As a commentator has observed,

               The fundamental difference between tort and contract lies in the
               nature of the interests protected. Tort actions are created to
               protect the interest in freedom from various kinds of harm. The
               duties of conduct which give rise to them are imposed by the law,
               and are based primarily upon social policy, and not necessarily
               upon the will or intention of the parties. They may be owed to
               all those within the range of harm, or to some considerable class
               of people. Contact actions are created to protect the interest in
               having promises performed. Contract obligations are imposed
               because of conduct of the parties manifesting consent, and are
               owed only to the specific individuals named in the contract.

       WILLIAM L. PROSSER, LAW OF TORTS 634 (3d. ed. 1964). Along the same

       lines, the Indiana Supreme Court has noted that “[i]t is axiomatic that tort

       obligations arise, not from an agreement between the parties, but by operation

       of law.” Erie Ins. Co. v. Hickman by Smith, 622 N.E.2d 515, 518 (Ind. 1993).

[10]   Consistent with these principles, the appellate courts of Indiana have addressed

       whether each of the specific claims brought by Weaver is a tort and have

       determined that each is. This court has determined that “[b]reach of fiduciary

       duty is a tort claim for injury to personal property[.]” Farmers Elevator Co. of

       Oakville v. Hamilton, 926 N.E.2d 68, 79 (Ind. Ct. App. 2010), trans. denied. As

       for constructive fraud, this court has declared that “[e]ven though a constructive

       fraud claim can relate to a contract, it is grounded in duty, breach of duty and

       deceit. Hence, a constructive fraud claim is a tort, and the Indiana Tort Claims

       Act applies to this claim.” Ind. Dep’t Of Transp. v. Shelly & Sands, Inc., 756
N.E.2d 1063, 1077–78 (Ind. Ct. App. 2001), trans. denied. A claim for

       Court of Appeals of Indiana | Opinion 20A03-1707-PL-1702 | February 14, 2018   Page 6 of 9
       interference with a contractual relationship—even though clearly related to and

       derivative of a contractual relationship—sounds in tort: “In contrast to a

       breach of contract claim, which does not necessarily involve intentional

       wrongdoing, a claim of intentional interference with contract is established only

       when there is tortious conduct, i.e., that which is intentional and unjustified.”

       Bilimoria Computer Sys., LLC v. Am. Online, Inc., 829 N.E.2d 150, 156 (Ind. Ct.

       App. 2005).

[11]   Finally, a claim that a party to a contract has breached its duty of good faith

       and fair dealing with another party has also been squarely held to be a tort,

       despite, again, arising out of a contractual relationship:

                Indiana law has long recognized that there is a legal duty implied
                in all insurance contracts that the insurer deal in good faith with
                its insured.[1] [Vernon Fire & Cas. Ins. Co. v. Sharp, 264 Ind. 599,
                609, 349 N.E.2d 173, 181 (Ind. 1976)]; Wedzeb Enterprises v. Aetna
                Life & Cas. Co. (1991), Ind. App., 570 N.E.2d 60, 63; [Liberty
                Mutual Ins. Co. v. Parkinson, 487 N.E.2d 162, 164 (Ind. Ct. App.
                1985), trans. denied]. Whether breach of this duty constitutes a
                tort involves a judicial balancing of three factors: (1) the
                relationship between the parties, (2) the reasonable foreseeability
                of harm to the person injured, and (3) public policy concerns.
                [Webb v. Jarvis, 575 N.E.2d 992, 995 (Ind. 1991)].

       Erie Ins., 622 N.E.2d at 518. So, while we express no opinion on the merits of

       any of Weaver’s claims, they are clearly all torts, as she alleges violations of

       1
         We shall assume, without deciding, that ECS qualifies as an “insurer” and therefore had a duty to act in
       good faith with McGuire.

       Court of Appeals of Indiana | Opinion 20A03-1707-PL-1702 | February 14, 2018                      Page 7 of 9
       duties imposed by law, not by contract. None of Weaver’s claims allege that

       ECS breached the terms of the contract in any respect, and a claim that does

       not allege the violation of a contractual duty is not a contract claim.

[12]   Having determined that Weaver’s claims sounded in tort, compliance with the

       notice provisions of the ITCA is a condition precedent to filing a tort suit

       against a qualifying political subdivision, which Weaver acknowledges did not

       occur in this case. See Orem v. Ivy Tech State College, 711 N.E.2d 864, 869 (Ind.

       Ct. App. 1999) (noting that the “notice provision is … procedural precedent

       which must be fulfilled before filing suit”), trans. denied. A claimant must tender

       the statutorily prescribed notice within 180 days after the alleged loss. See Ind.

       Code §§ 34-13-3-8, -12; Orem, 711 N.E.2d at 869 (noting that tort claims

       brought against a political subdivision “are barred unless the governing body of

       the political subdivision is given notice of the claim within one hundred and

       eighty days after the loss occurs.”). Once a defendant raises the failure to

       comply with the ITCA, “the burden shifts to the plaintiff to prove

       compliance[,]” Davidson v. Perron, 716 N.E.2d 29, 34 (Ind. Ct. App. 1999),

       which Weaver does not even attempt to do. Indiana courts have consistently

       held that the failure to comply with the ITCA’s notice requirements requires

       dismissal. See, e.g., Orem, 711 N.E.2d at 870. Because Weaver brought only

       tort claims against ECS but failed to comply with the notice provisions of the

       ITCA, we reverse the judgment of the trial court and remand with instructions

       to dismiss Weaver’s claims on that basis.

[13]   We reverse the judgment of the trial court and remand with instructions.

       Court of Appeals of Indiana | Opinion 20A03-1707-PL-1702 | February 14, 2018   Page 8 of 9
Robb, J, and Crone, J., concur.

Court of Appeals of Indiana | Opinion 20A03-1707-PL-1702 | February 14, 2018   Page 9 of 9