Court Opinion

ID: 4149755
Source: CourtListenerOpinion
Date Created: 2017-03-02 17:09:46.653224+00
Date Added: 2024-06-11T14:46:33.342869
License: Public Domain

FILED
      OPINION ON REHEARING
                                                                 Mar 02 2017, 9:05 am

                                                                     CLERK
                                                                 Indiana Supreme Court
                                                                    Court of Appeals
                                                                      and Tax Court

      ATTORNEY FOR APPELLANT                                   ATTORNEYS FOR APPELLEE
      James A. Knauer                                          Forrest Bowman, Jr.
      Steven E. Runyan                                         Jennifer K. Bowman
      Kroger, Gardis & Regas, LLP                              Bowman & Bowman
      Indianapolis, Indiana
                                                               Mark Crandley
                                                               Barnes & Thornburg, LLP
                                                               Indianapolis, Indiana

                                                  IN THE
           COURT OF APPEALS OF INDIANA

      Central Indiana Podiatry, P.C.,                          March 2, 2017
      Northwest Surgery Center,                                Court of Appeals Case No.
      LLC, d/b/a Foot & Ankle                                  49A02-1603-PL-498
      Surgery Center, f/k/a Foot &                             Appeal from the Marion Superior
      Ankle Surgery Center, LLC and                            Court
      Anthony E. Miller, D.P.M.,                               The Honorable Cynthia J. Ayers,
      Appellants-Plaintiffs,                                   Judge
      v.                                                       Trial Court Cause No.
                                                               49D04-1210-PL-41939
      Barnes & Thornburg, LLP,
      Appellee-Defendant.

      May, Judge.

[1]   Central Indiana Podiatry, P.C., Northwest Surgery Center, LLC d/b/a Foot &

      Ankle Surgery Center f/k/a Foot & Ankle Surgery Center, LLC (“FASC”),

      Court of Appeals of Indiana |Opinion on Rehearing 49A02-1603-PL-498 | March 2, 2017   Page 1 of 11
      and Anthony Miller, D.P.M. (“Miller”) (collectively, “the Miller Parties”)

      petition for rehearing of our decision dated October 19, 2016, in which we

      affirmed the trial court’s grant of summary judgment in favor of Barnes &

      Thornburg (“B&T”) based on our holding sua sponte the Miller Parties were

      precluded from advancing fraud-related arguments because they did not do so

      as part of a pleading. Central Indiana Podiatry, P.C., et. al. v. Barnes & Thornburg,

      LLP, 62 N.E.3d 440, 447 (Ind. Ct. App. 2016).1 We grant rehearing to

      acknowledge and adopt our Indiana Supreme Court’s holding in Nichols v.

      Amax Coal Co., 490 N.E.2d 754, 755 (Ind. 1986), reh’g denied, and affirm the trial

      court’s grant of summary judgment on grounds different than those expressed

      in our earlier opinion.

[2]   Before the trial court, the Miller Parties alleged “B&T’s actions in procuring the

      Release Agreement constituted fraudulent inducement and fraudulent

      concealment, and B&T engaged in constructive fraud.” Id. at 447. The Miller

      Parties raised those allegations of fraud for the first time in their response to

      B&T’s motion to dismiss, in which B&T argued the Miller Parties’ action was

      precluded by the Fee Release, as that Release included a clause releasing B&T

      from relevant liability. We held the Miller Parties improperly presented their

      claims of fraud before the trial court because they did not “state a claim of fraud

      as required by [Indiana Trial Rule] 9(B).” Id. at 448.

      1
        The facts of this case are quite complicated. See Central Indiana Podiatry, 62 N.E.3d at 442-7, for a full
      iteration of the proceedings appealed.

      Court of Appeals of Indiana |Opinion on Rehearing 49A02-1603-PL-498 | March 2, 2017                   Page 2 of 11
                           Application of Nichols and Indiana Trial Rules

[3]   In their petition for rehearing, the Miller Parties argue our holding “runs afoul,”

      (Reh’g Br. of Appellant at 2), of our Indiana Supreme Court’s decision in

      Nichols v. Amax Coal Co., 490 N.E.2d 754, 755 (Ind. 1986), reh’g denied. In that

      case, Nichols filed a breach of contract action against Amax, Inc., asserting the

      company violated her oral contract of employment. In their motion for

      summary judgment, Amax argued Nichols’ action was barred by the statute of

      limitations. In her response to summary judgment, Nichols claimed Amax

      engaged in fraudulent concealment. The trial court ruled in favor of Amax on

      summary judgment, and our court affirmed, holding:

              [F]raud and concealment must be specifically pleaded. Nichols
              failed to allege fraud or concealment in her complaint or in any
              response to the answer filed by Amax Coal Company and Amax,
              Inc. Because Nichols failed to plead fraud or concealment as
              required by T.R. 9(B), the statute of limitations was not tolled.

      Nichols v. Amax Coal Co., 481 N.E.2d 1103, 1105 (Ind. Ct. App. 1985) (internal

      citations omitted), reh’g denied with dissenting opinion at 482 N.E.2d 776 (Ind. Ct.

      App. 1985), vacated on transfer by Nichols v. Amax Coal Co., 490 N.E.2d 754 (Ind.

      1986), reh’g denied. When our court denied rehearing, Judge Ratliff wrote an

      opinion dissenting from that decision.

[4]   On transfer, our Indiana Supreme Court adopted the reasoning of Judge

      Ratliff’s dissent and held:

      Court of Appeals of Indiana |Opinion on Rehearing 49A02-1603-PL-498 | March 2, 2017   Page 3 of 11
              Initially, a plaintiff need not anticipate a statute of limitations
              defense and plead matter[s] in avoidance in the complaint. If the
              complaint shows on its face that the statute of limitations has
              run, the defendant may file a T.R. 12(B)(6) motion. Plaintiff may
              then amend to plead the facts in avoidance. On the other hand,
              if the defendant simply answers the complaint setting up the
              statute of limitations, the plaintiff may, but does not have to, file
              a reply in avoidance. The defendant may seek summary
              judgment, in which event it becomes incumbent upon the
              plaintiff to present facts raising a genuine issue in avoidance of
              the statute of limitations. If the case goes to trial, the plaintiff
              must establish the facts in avoidance of the statute of limitations.

      Nichols, 490 N.E.2d at 755 (emphasis added).

[5]   While it appears at first blush that Nichols would create an exception to Trial

      Rule 9(B) that applies only to fraudulent concealment claims raised in response

      to a defendant raising a statute-of-limitations affirmative defense, such defense

      is among a long, non-exhaustive list of affirmative defenses set forth in Trial

      Rule 8(C). Willis v. Westerfield, 839 N.E.2d 1179, 1185 (Ind. 2006) (noting the

      non-exhaustive nature of T.R. 8(C)). B&T’s defense of release is also listed in

      Rule 8(C). That the Nichols case refers by name only to the statute of

      limitations affirmative defense does not require we limit the holding to that

      defense: Judge Ratliff’s reasoning directly and explicitly applied the principles

      of notice pleading, and did not rely upon some special feature of a statute of

      limitations defense or a fraudulent concealment claim pleaded in response. See

      Nichols v. Amax Coal Co., 482 N.E.2d 776 (Ind. Ct. App. 1985) (Ratliff, J.,

      dissenting), vacated on transfer by Nichols v. Amax Coal Co., 490 N.E.2d 754 (Ind.

      1986), reh’g denied.
      Court of Appeals of Indiana |Opinion on Rehearing 49A02-1603-PL-498 | March 2, 2017   Page 4 of 11
[6]   Moreover, the Nichols case is in a very similar procedural posture to the case at

      bar. Nichols did not plead the fraud in anticipation of a statute of limitation

      affirmative defense, but Amax ultimately asserted the statute-of-limitation

      defense. Nichols then responded by alleging that Amax had engaged in

      fraudulent concealment that tolled the limitation period. Likewise, here, the

      Miller Parties’ complaint did not include their allegations of the fraudulent

      creation of a Fee Release Agreement. B&T answered the Miller Parties’

      complaint by raising the Fee Release as an affirmative defense, and then B&T

      filed both a motion to dismiss and a motion for summary judgment based on

      the Fee Release. The Miller Parties did not respond to B&T’s answer, but

      instead argued in response to B&T’s motion to dismiss and motion for

      summary judgment that the Fee Release was obtained by fraud. Pursuant to

      Nichols, this was a procedurally appropriate manner in which to respond

      without waiving the claim of fraud. See Nichols, 490 N.E.2d at 755 (When the

      defendant answers with an affirmative defense, “the plaintiff may, but does not

      have to, file a reply in avoidance.”). Thus, we grant rehearing to vacate our

      earlier holding in which we concluded the Miller Parties were precluded from

      advancing their claims of fraud because they did not specifically plead them as

      required by the Indiana Trial Rules.

[7]   Having reversed our prior decision, we return to the question with which we

      were originally faced on appeal – whether the trial court erred by granting

      summary judgment for B&T – and Nichols again tells us how to proceed: “The

      defendant may seek summary judgment, in which event it becomes incumbent

      Court of Appeals of Indiana |Opinion on Rehearing 49A02-1603-PL-498 | March 2, 2017   Page 5 of 11
      upon the plaintiff to present facts raising a genuine issue in avoidance of the

      [affirmative defense].” 490 N.E.2d at 755. To that end, we now examine

      whether the Miller Parties designated evidence that created a genuine issue of

      material fact about whether the Fee Release was procured by fraud.

                                      Examination of Fraud Claims

[8]   The Miller Parties argue the Fee Release is invalid because it was procured in

      the wake of B&T’s fraudulent inducement, fraudulent concealment, and

      constructive fraud. All three types of fraud alleged require a misrepresentation

      and/or concealment. See America’s Directories, Inc. v. Sellhorn One Hour Photo,

      Inc., 833 N.E.2d 1059, 1068 (Ind. Ct. App. 2005) (“Fraudulent inducement

      occurs when a party is induced through fraudulent misrepresentations to enter

      into a contract.”), trans. denied; and see Brown v. Indiana Nat. Bank, 476 N.E.2d

      888, 891 (Ind. Ct. App. 1985) (“Fraudulent concealment is one type of

      actionable fraud in which one having a duty to disclose certain facts to another

      knowingly fails to do so, and as a result, the other relies upon this nondisclosure

      to his detriment.”), reh’g denied, trans. denied; and see Demming v. Underwood, 943

      N.E.2d 878, 892 (Ind. Ct. App. 2011) (the five elements of constructive fraud

      are (1) duty of the alleged fraudster due to their relationship with the alleged

      victim, (2) violation of that duty by way of misrepresentation or failure to act,

      (3) reliance thereon by the alleged victim, (4) injury to the alleged victim as a

      proximate result of the violation of duty, and (5) the alleged fraudster’s gain of

      an advantage over the alleged victim), reh’g denied, trans. denied.

[9]   Specifically, the Miller Parties claim B&T
      Court of Appeals of Indiana |Opinion on Rehearing 49A02-1603-PL-498 | March 2, 2017   Page 6 of 11
               [(1)] failed to inform [the Miller Parties] that the Vogel
               Agreement did not give the Practice the bargain it thought it had
               obtained, (2) [B&T] proposed new, necessary, [sic] terms, and (3)
               [B&T] falsely represented to [the Miller Parties] that the Federal
               Litigation had been settled in order to get paid and obtain the Fee
               Dispute Release.

       (Br. of Appellant at 22.) The Miller Parties further argued, on the issue of the

       bargain negotiated from the Federal Litigation settlement, that B&T

               withheld the fact that it failed to include a durational term in the
               Vogel Agreement and that the Vogel Agreement itself was
               insufficient to give [the Miller Parties] the benefit of its bargain,
               because immediately after receiving the Vogel Agreement, [B&T
               attorney] initiated a plan to obtain additional terms he knew were
               necessary to give [the Miller Parties] the benefit of the bargain
               that [the Miller Parties] thought it had already achieved.

       (Id. at 23.)

[10]   However, these arguments do not comport with the designated evidence.

       While one B&T attorney testified during a deposition he worked to change the

       terms of the Vogel Agreement, specifically the change in corporation type, these

       changes were not concealed from Miller. In fact, B&T documented and

       testified they communicated at length with Miller regarding the change of

       FASC from an S-Corp to an LLC and what that would mean. B&T testified

       the change in corporation type was necessary to protect Miller’s tax interests.

       (App. at 121-2; 410; 1049; 1058.)

       Court of Appeals of Indiana |Opinion on Rehearing 49A02-1603-PL-498 | March 2, 2017   Page 7 of 11
[11]   Miller claims if he had known about the deficiencies with the Settlement

       Agreement, he would have not signed the Fee Release. B&T required Miller to

       retain outside counsel to review the Fee Release prior to Miller signing it. B&T

       had a conversation with Jim Knauer, who was Miller’s attorney at the time and

       is Miller’s attorney on appeal. (Id. at 123.) As Miller’s attorney, it was

       Knauer’s responsibility to inquire regarding the status of the settlement of

       Federal claims filed by Vogel against the Miller Parties, as that was the

       litigation that spawned the fees to be released by the Fee Release Agreement.

       The Miller Parties have not demonstrated Knauer raised any questions about

       the status of the settlement or B&T responded deceptively to any questions

       Knauer or Miller may have asked. Knauer advised Miller to sign the Fee

       Release. The designated evidence does reveal Miller was in frequent contact

       with his entire litigation team at B&T and was permitted to review documents

       as they were prepared; none of the evidence Miller cites suggests B&T engaged

       in the web of concealment that Miller weaves in his argument.

[12]   Further, Miller relies heavily on his statements set forth in an affidavit filed as

       part of the malpractice action. In the affidavit, he emphasizes the importance

       the durational time limit played in the Vogel Agreement, specifically that he

       thought Vogel would perform surgeries with FASC as long as he practiced in

       the area. (Id. at 884.) Miller argues had he known Vogel could terminate his

       affiliation with FASC under the original terms of the Vogel Agreement, he

       would not have signed the Fee Release. However, in his testimony as part of

       the Hamilton County Litigation, Miller testified multiple times that he was not

       Court of Appeals of Indiana |Opinion on Rehearing 49A02-1603-PL-498 | March 2, 2017   Page 8 of 11
       concerned about the time frame in which Vogel would perform surgeries at

       FASC and had not given the time frame much thought. (Id. at 410.)

[13]   In Gaboury v. Ireland Road Grace Brethren, Inc., our Indiana Supreme Court held,

       “contradictory testimony contained in an affidavit of the nonmovant may not

       be used by him to defeat a summary judgment motion where the only issue of

       fact raised by the affidavit is the credibility of the affiant.” 446 N.E. 1310, 1314

       (Ind. 1983), reh’g denied. Much of Miller’s argument on appeal is about the

       alleged concealment of Vogel’s concerns about implementing the Settlement

       Agreement resolving the federal litigation because Vogel wanted a durational

       time limit on his ownership of FASC. Miller’s position regarding his concern

       with a durational time limit seems to change based on what would benefit him

       in a particular case. The changing nature of Miller’s own testimony cannot

       create a genuine issue of material fact to defeat B&T’s motion for summary

       judgment, as the time frame and the communication surrounding the Vogel

       Agreement and Vogel Litigation seem to be the crux of Miller’s fraud

       allegations.

                                                    Conclusion

[14]   As there is no evidence creating a genuine issue of material fact from which a

       reasonable jury could conclude B&T concealed information from the Miller

       Parties, and as Miller’s contradictory testimony in two different lawsuits cannot

       create an issue of material fact, we conclude the trial court did not err when it

       granted summary judgment in favor of B&T. We grant rehearing to

       acknowledge, adopt, and apply our Indiana Supreme Court’s holding in Nichols;
       Court of Appeals of Indiana |Opinion on Rehearing 49A02-1603-PL-498 | March 2, 2017   Page 9 of 11
vacate our prior opinion, Podiatry, 62 N.E.3d 440 (Ind. Ct. App. 2016); and

affirm the trial court’s grant of summary judgment for B&T.

Bailey, J., concurs.

Crone, J., concurs with separate opinion.

Court of Appeals of Indiana |Opinion on Rehearing 49A02-1603-PL-498 | March 2, 2017   Page 10 of 11
                                                   IN THE
            COURT OF APPEALS OF INDIANA

       Central Indiana Podiatry, P.C.,                          Court of Appeals Case No.
       Northwest Surgery Center,                                49A02-1603-PL-498
       LLC, d/b/a Foot & Ankle
       Surgery Center, f/k/a Foot &
       Ankle Surgery Center, LLC and
       Anthony E. Miller, D.P.M.,
       Appellants-Plaintiffs,
       v.
       Barnes & Thornburg, LLP,
       Appellee-Defendant.

       Crone, Judge, concurring.

[15]   I agree with the granting of rehearing in this case. I write separately to reiterate

       my concerns about “allowing attorneys to prospectively insulate themselves

       from liability for future acts of legal malpractice” under Indiana Rule of

       Professional Conduct 1.8(h), which, in my view, “subverts the very nature of

       the attorney-client relationship.” Cent. Ind. Podiatry, 62 N.E.3d at 449, 450

       (Crone, J., concurring).

       Court of Appeals of Indiana |Opinion on Rehearing 49A02-1603-PL-498 | March 2, 2017   Page 11 of 11