Court Opinion

ID: 4326830
Source: CourtListenerOpinion
Date Created: 2018-11-01 16:15:59.035181+00
Date Added: 2024-06-11T07:49:37.386111
License: Public Domain

FILED
                                                                       Nov 01 2018, 8:42 am

                                                                           CLERK
                                                                       Indiana Supreme Court
                                                                          Court of Appeals
                                                                            and Tax Court

ATTORNEY FOR APPELLANT                                    ATTORNEYS FOR APPELLEE
Christopher P. Jeter                                      Crystal G. Rowe
Massillamany Jeter & Carson LLP                           Kightlinger & Gray, LLP
Fishers, Indiana                                          New Albany, Indiana
                                                          Michael E. Brown
                                                          Kightlinger & Gray, LLP
                                                          Indianapolis, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

Indy Auto Man, LLC,                                       November 1, 2018
Appellant-Plaintiff,                                      Court of Appeals Case No.
                                                          18A-PL-1154
        v.                                                Appeal from the Hamilton
                                                          Superior Court
Keown & Kratz, LLC, and                                   The Honorable J. Richard
Dustin Stohler,                                           Campbell, Judge
Appellees-Defendants                                      Trial Court Cause No.
                                                          29D04-1507-PL-5455

Baker, Judge.

Court of Appeals of Indiana | Opinion 18A-PL-1154 | November 1, 2018                           Page 1 of 8
[1]   Indy Auto Man, LLC (IAM), appeals the trial court’s order granting summary

      judgment in favor of Keown & Kratz, LLC (the Firm), on IAM’s legal

      malpractice complaint. Finding that there are genuine issues of material fact

      that must be resolved by a factfinder, we reverse and remand for further

      proceedings.

                                                      Facts
[2]   IAM is a used car dealership that, at the time of the facts giving rise to this

      appeal, was located in Carmel. Yevgeniy Gorin is one of IAM’s two principal

      members. In August 2013, IAM was the named defendant in two unrelated

      lawsuits.

[3]   Mario Massillamany is Gorin’s friend and long-time attorney. Gorin attempted

      to retain Massillamany (who was then with Barnes & Thornburg) to represent

      IAM in the two lawsuits, but Massillamany declined. Gorin asked that

      Massillamany recommend a “good reputable attorney” with “some backing to

      them” because IAM had made the mistake in the past of retaining “backyard

      mechanics,” or attorneys “that were not associated with anyone,” costing it “a

      lot of money” as a result. Appellant’s App. Vol. III p. 30. Massillamany

      recommended that IAM hire Dustin Stohler, a college friend, whom he knew to

      be affiliated with the Firm.

[4]   The Firm is a fifty-fifty limited liability company owned by William Keown and

      Donald Kratz. The Firm has no employees or secretarial staff and, while

      Keown and Kratz split expenses, they maintain separate clients and profits.

      Court of Appeals of Indiana | Opinion 18A-PL-1154 | November 1, 2018        Page 2 of 8
[5]   In early 2013, the Firm realized that it was having to refer increasing numbers

      of prospective clients to other attorneys for litigation needs. In April 2013, the

      Firm and Stohler began discussing the possibility of working together. They

      reached an understanding but did not memorialize it to writing. Evidently, the

      parties agreed that Stohler would work on some cases for the Firm but would

      also maintain his own separate clients. The Firm gave him rent-free office

      space, Firm business cards and letterhead, and a Firm email address. He was

      allowed to use the Firm’s conference rooms and to have his mail delivered to

      the Firm’s office address. Stohler was permitted to use the Firm’s billing

      assistant for his work on Firm client files. The Firm also added Stohler to its

      legal malpractice insurance policy and, while the Firm claims that this was only

      intended to cover cases involving the Firm’s clients for whom Stohler did work,

      there is nothing in writing in the record supporting that claim. In May 2013, an

      announcement appeared in the Wabash College alumni newsletter indicating

      that Stohler had “recently joined the Indianapolis law firm Keown and Kratz as

      a Litigation and Employment Attorney.” Id. at 127. The Firm did not place

      the announcement.

[6]   IAM retained Stohler to represent it in the two pending cases. When filing his

      appearance and answer in both cases, he used Firm letterhead and listed the

      Firm address and his Firm email address as his contact information.

[7]   At some point, the relationship between Stohler and the Firm began to sour.

      Kratz and Keown found that Stohler was tardy, provided pleadings rife with

      errors, missed deadlines, failed to return calls to clients, and often failed to

      Court of Appeals of Indiana | Opinion 18A-PL-1154 | November 1, 2018         Page 3 of 8
      apprise anyone of his whereabouts. They found him to be unprofessional and

      became concerned that he was abusing alcohol. In January 2014, Stohler

      stopped coming to work at the Firm and did not respond to phone calls or an

      email from Kratz. The Firm filed a missing person’s report and the police

      found that he was “alive and well.” Id. at 61. During Stohler’s absence, mail

      addressed to him at the Firm arrived at the Firm’s office and was placed on his

      desk without being opened. The Firm eventually learned that Stohler had

      accepted an in-house position at a collections firm.

[8]   At some point either during or after Stohler’s relationship with the Firm, he

      failed to respond to discovery within the appropriate timeframe on each of the

      two IAM cases. In one of those cases, a default judgment and damages award

      of approximately $60,000 were entered against IAM. When Gorin received

      notice of the damages award, he attempted to contact Stohler but was

      unsuccessful, so he reached out to Massillamany. Massillamany felt

      responsible for IAM’s situation because he had recommended Stohler, so he

      stepped in as IAM’s attorney in both cases. He was able to settle both cases for

      the aggregate sum of $45,000.

[9]   In July 2015, IAM filed a legal malpractice complaint against Stohler and the

      Firm. IAM attempted to serve Stohler but was unsuccessful; he has never

      appeared in this case. On September 12, 2016, the Firm filed a motion for

      summary judgment, arguing that as a matter of law it did not owe IAM a duty

      Court of Appeals of Indiana | Opinion 18A-PL-1154 | November 1, 2018     Page 4 of 8
       of care. Following briefing and argument, on March 3, 2017, the trial court

       entered summary judgment in favor of the Firm. IAM now appeals. 1

                                     Discussion and Decision
[10]   Our standard of review on summary judgment is well settled:

               The party moving for summary judgment has the burden of
               making a prima facie showing that there is no genuine issue of
               material fact and that the moving party is entitled to judgment as
               a matter of law. Reed v. Reid, 980 N.E.2d 277, 285 (Ind. 2012).
               Once these two requirements are met by the moving party, the
               burden then shifts to the non-moving party to show the existence
               of a genuine issue by setting forth specifically designated
               facts. Id. Any doubt as to any facts or inferences to be drawn
               therefrom must be resolved in favor of the non-moving
               party. Id. Summary judgment should be granted only if the
               evidence sanctioned by Indiana Trial Rule 56(C) shows there is
               no genuine issue of material fact and that the moving party
               deserves judgment as a matter of law. Freidline v. Shelby Ins.
               Co., 774 N.E.2d 37, 39 (Ind. 2002).

       Goodwin v. Yeakle’s Sports Bar and Grill, Inc., 62 N.E.3d 384, 386 (Ind. 2016).

       Our Supreme Court has cautioned that “[a]s long as competent evidence has

       been designated in response to a summary judgment motion, . . . ‘weighing [the

       1
         IAM filed a first appeal in 2017. This Court dismissed the appeal without prejudice, finding that the
       summary judgment order was not final because it did not address Stohler or include the “magic language” of
       Indiana Trial Rule 56(C). Indy Auto Man, LLC v. Keown & Kratz, LLC, 84 N.E.3d 718, 771-72 (Ind. Ct. App.
       2017). On remand, IAM voluntarily dismissed Stohler from the case. The Firm argues that this Court’s
       opinion was erroneous and that IAM has forfeited its right to appeal because it did not seek rehearing or
       transfer. There is no requirement that IAM have done so. Instead, it chose to follow this Court’s directive
       and is therefore entitled to bring this appeal.

       Court of Appeals of Indiana | Opinion 18A-PL-1154 | November 1, 2018                            Page 5 of 8
       evidence]—no matter how decisively the scales may seem to tip—[is] a matter

       for trial, not summary judgment.’” Stafford v. Szymanowski, 31 N.E.3d 959, 963

       (Ind. 2015) (quoting Hughley v. State, 15 N.E.3d 1000, 1005-06 (Ind. 2014)). In

       other words, if any weighing of evidence—of the facts—is required, then

       summary judgment is inappropriate.

[11]   Here, IAM argues that the Firm assumed a duty of care to it because Stohler

       was acting as the Firm’s agent. For an agency relationship to arise, three

       elements must be established: (1) a manifestation of consent by the principal;

       (2) acceptance of authority by the agent; and (3) control exerted by the principal

       over the agent. Bunger v. Demming, 40 N.E.3d 887, 893 (Ind. Ct. App. 2015).

       Generally, whether an agency relationship existed is a question of fact. Id. at

       894.

[12]   IAM argues that Stohler had actual and/or apparent authority to act as the

       Firm’s agent; we will address only the issue of apparent authority. Apparent

       authority is the authority that a third person reasonably believes an agent to

       possess because of some manifestation from the agent’s principal. E.g., Rogers v.

       Sigma Chi Int’l Fraternity, 9 N.E.3d 755, 764 (Ind. Ct. App. 2014). To find that a

       person had apparent authority to act for the principal, it is essential that there be

       some form of communication, direct or indirect, by the principal, which instills

       a reasonable belief in the mind of the third party. Pepkowski v. Life of Ind. Ins.

       Co., 535 N.E.2d 1164, 1166-67 (Ind. 1989). The communication from the

       principal need not be made directly to the third party; instead, the

       communication is sufficient to endow the agent with apparent authority if it

       Court of Appeals of Indiana | Opinion 18A-PL-1154 | November 1, 2018         Page 6 of 8
       placed the agent in a position to perform acts or make representations that

       appear reasonable to a third party. Id.

[13]   Here, the following facts are undisputed:

           • The Firm provided Stohler with rent-free office space and allowed him to
             use the Firm’s mailing address.
           • The Firm provided Stohler with business cards and letterhead.
           • The Firm provided Stohler with an email address, though he never
             activated it.
           • Stohler used the Firm’s contact information when filing appearances in
             the two IAM cases.
           • The Firm added Stohler to its legal malpractice insurance policy. The
             Firm believes that was only intended to cover Stohler’s work for the
             Firm’s clients, but there is no written evidence supporting that belief.
           • IAM sought to retain an attorney with the backing of a firm and selected
             Stohler, in part, because it believed that he was in such a situation.

       The Firm emphasizes that when IAM retained Stohler, it was not familiar with

       the Firm or the arrangement that Stohler had with the Firm. But at his

       deposition, Gorin testified that “I knew [Stohler] was affiliated with the law

       firm. I don’t know when I found that out.” Appellant’s App. Vol. III p. 30.

       Moreover, Massillamany attested that

               I informed [IAM] that I had an attorney, Dustin Stohler, he
               worked for a firm Keown & Kratz, they’re a smaller firm, they
               can handle the work. They won’t charge you the hourly rate that
               I was charging at the time at Barnes & Thornburg, they’d be
               cheaper and just as good. And I believe they’re a Hamilton
               County firm. So I said, since your cases are in Hamilton County,
               it would be good to have a Hamilton County firm.

       Court of Appeals of Indiana | Opinion 18A-PL-1154 | November 1, 2018      Page 7 of 8
       Id. at 69.

[14]   In other words, Massillamany believed Stohler worked for the Firm, Wabash

       College published an advertisement announcing that Stohler worked for the

       Firm, and the court system was sending mail to the Firm on behalf of Stohler—

       all third parties who relied on manifestations made by the Firm (e.g., provision

       of letterhead, permission to use business address, etc.). At the very least, there

       is a question of fact as to whether IAM had a reasonable belief that Stohler was

       acting as the Firm’s agent based on the Firm’s manifestations. It is clear that

       this evidence must be weighed and evaluated by a trier of fact. Consequently, it

       was erroneous to enter summary judgment in favor of the Firm on IAM’s

       complaint.2

[15]   The judgment of the trial court is reversed and remanded for further

       proceedings.

       May, J., and Robb, J., concur.

       2
        We address only Stohler’s apparent authority to act on behalf of the Firm in this appeal, finding that issue
       dispositive. We express no opinion as to whether Stohler may have also had actual authority. That, too, is
       an argument that must be evaluated by a factfinder.

       Court of Appeals of Indiana | Opinion 18A-PL-1154 | November 1, 2018                                Page 8 of 8