Terry L. Balz v. Claims Professional Representatives, LLC (mem. dec.) ( 2018 )


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  •       MEMORANDUM DECISION
    Pursuant to Ind. Appellate Rule 65(D),                                         FILED
    this Memorandum Decision shall not be
    Aug 02 2018, 9:11 am
    regarded as precedent or cited before any
    court except for the purpose of establishing                                   CLERK
    Indiana Supreme Court
    Court of Appeals
    the defense of res judicata, collateral                                         and Tax Court
    estoppel, or the law of the case.
    ATTORNEY FOR APPELLANT                                   ATTORNEYS FOR APPELLEE
    Alan W. Roles                                            John W. Mervilde
    Coleman, Roles & Associates, PLLC                        Rick D. Meils
    Louisville, Kentucky                                     Meils Thompson Dietz & Berish
    Indianapolis, Indiana
    IN THE
    COURT OF APPEALS OF INDIANA
    Terry L. Balz,                                           August 2, 2018
    Appellant-Defendant,                                     Court of Appeals Case No.
    10A04-1711-CT-2816
    v.                                               Appeal from the Clark Circuit
    Court 1
    Claims Professional                                      The Honorable Marsha Owens
    Representatives, LLC,                                    Howser, Special Judge
    Appellee-Plaintiff.                                      Trial Court Cause No.
    10C01-1306-CT-091
    Barnes, Senior Judge.
    Case Summary
    [1]   Terry L. Balz appeals from the grant of summary judgment in favor of Claims
    Professional Representatives, LLC (“CPR”). We affirm.
    Court of Appeals of Indiana | Memorandum Decision 10A04-1711-CT-2816 | August 2, 2018              Page 1 of 23
    Issue
    [2]   The sole issue before us is whether genuine issues of material fact precluded
    entry of summary judgment in favor of CPR.
    Facts
    [3]   On January 8, 2018, Balz’s home (“the premises”), located in Clark County,
    was destroyed by fire and deemed a complete loss. Balz suffered serious
    injuries in the fire. At the time, the premises were insured under a
    homeowners’ insurance policy (“Policy”) issued by United Farm Family
    Mutual Insurance Company (“Farm Bureau”). The Policy included the
    following “Physical Damage Coverages”: $123,724 for the “Dwelling”;
    $12,372 for “Other Structures”; $61,900 for “Personal Property”; and $24,700
    for “Loss of Use.” App. Vol. II p. 35. The “functional replacement cost loss
    settlement” endorsement of the Policy states, in part:
    (1) “If, at the time of loss[ ]
    ...
    (b) You contract for repair or replacement of the damaged building for
    the same use, within 180 days of the damage unless we otherwise agree;
    we will pay, after application of deductible, the lesser of the following
    amounts:
    (a) [the policy limits applicable to the building]; or
    Court of Appeals of Indiana | Memorandum Decision 10A04-1711-CT-2816 | August 2, 2018   Page 2 of 23
    (b) “[t]he necessary amount actually spent to repair or replace the
    damaged building on a “functional replacement cost” basis. . . . .
    
    Id. at 91.
    [4]   On or about January 11, 2010, Balz received the first of three letters from CPR,
    a public adjusting company, seeking to represent him in his claim negotiations
    with Farm Bureau. Balz subsequently executed a “Limited Authority
    Authorization & Assignment” agreement with CPR on or about February 12,
    2010, wherein he gave CPR the right to “prepare and present” his claim to
    Farm Bureau; instructed Farm Bureau to “recognize [CPR] as a party in
    interest and [to] discuss limit of coverage and/or value(s) of the aforementioned
    loss(es) with [CPR]”; authorized Farm Bureau to release all insurance claim
    records to CPR; provided written notice to Farm Bureau that CPR’s agent, Lisa
    VanHimbergen, would “develop, present and negotiate” on his behalf; and
    agreed to pay CPR “10% of the amount of the settlement, judgment, or award
    proceeds, when recovered . . . .” App. Vol. III pp. 106, 117. Balz contends,
    and CPR disputes, that by executing the agreement with CPR, he relinquished
    his right to communicate with Farm Bureau directly and was foreclosed from
    doing so.
    [5]   Before the fire, Balz, who was skilled in construction, had purchased materials
    to remodel his house. After the fire, he believed that he could rebuild the
    house—an approximately $60,000 repair—for approximately $35,000, if he
    provided some labor himself and hired subcontractors only for work that he
    Court of Appeals of Indiana | Memorandum Decision 10A04-1711-CT-2816 | August 2, 2018   Page 3 of 23
    could not complete himself. He asked VanHimbergen to relay his request to
    Farm Bureau.
    [6]   CPR counters that, by insisting on serving as the contractor responsible for
    performing the repairs and “demand[ing] that the money be paid directly to
    him,” Balz refused to comply with the Policy provision requiring him to “to
    contract for repair or replacement of the damaged building” and, thereby,
    forfeited recovery for functional replacement costs. App. Vol. II p. 10.
    [7]   VanHimbergen presented Balz’s insurance claim to Farm Bureau, which agreed
    to pay the entire limits under the policy to or on behalf of Balz, including
    functional replacement costs of $34,277.46. App. Vol. II p. 10. On or about
    July 7, 2010, Farm Bureau paid full policy limits to CPR, but did not pay
    functional replacement costs. CPR collected its fee in the amount of $19,572.40
    and paid the remaining monies to Balz.
    [8]   On June 25, 2013, Balz sued CPR for breach of contract, breach of the duty of
    good faith and fair dealing, fraud in the inducement, constructive fraud,
    negligent misrepresentation, criminal conversion, tortious conversion,
    intentional infliction of emotional distress, negligent infliction of emotional
    distress, and punitive damages. In his complaint, Balz alleged that CPR: (1)
    fraudulently induced his execution of the representation agreement through
    express and implied promises “made to lure [him] into executing the
    [agreement]”; (2) failed to perform its claims processing duties; (3) failed to
    collect functional replacement cost insurance proceeds owed to him in the
    Court of Appeals of Indiana | Memorandum Decision 10A04-1711-CT-2816 | August 2, 2018   Page 4 of 23
    amount of $34,277.46; (4) wrongfully collected a fee of $19,572.40; and (5)
    allowed the statute of limitations to run, resulting in Balz forfeiting his
    opportunity to recover insurance benefits for functional replacement costs.
    App. Vol. III p. 172.
    [9]   On December 12, 2016, CPR moved for summary judgment. CPR’s
    designated materials included a deposition of Balz, taken on November 19,
    2015; and the deposition of VanHimbergen, taken on October 25, 2016. The
    trial court conducted a hearing on CPR’s motion for summary judgment on
    September 25, 2017. It entered summary judgment in CPR’s favor on October
    30, 2017. The trial court’s order provided, in part, as follows:
    3.      That on or about February 12, 2010, CPR and Balz
    entered into a contract wherein CPR agreed “to render such
    services to the insured (Balz); to prepare and present insureds
    [sic] claim for loss and damage caused” by fire on January 8,
    2010. In exchange, Balz agreed to pay “CPR for services
    promised a sum of 10% of the amount of settlement.”
    4.     That CPR presented Balz’s claim to Balz’s insurer, Indiana
    Farm Bureau Insurance[,] thereby fulfilling its contractual
    obligations.
    5.    That Indiana Farm Bureau agreed to pay the entire limits
    under the policy to or on behalf of Balz.
    6.    That lndiana Farm Bureau agreed on behalf of Balz [to]
    “functional replacement costs” in the amount of $34,277.46.
    Court of Appeals of Indiana | Memorandum Decision 10A04-1711-CT-2816 | August 2, 2018   Page 5 of 23
    7.     That the subject policy of insurance with Indiana Farm
    Bureau provided, “If at the time of the loss, (B) you contract for
    repair or replacement of the damaged building for the same use
    within l80 days [of the damage unless we and you otherwise
    agree; we will pay, after application of deductible, the lesser of
    the following amounts: (a) The limit of liability under this policy
    that applies to the building; or (b) The necessary amount actually
    spent to repair or replace the damaged building on a “functional
    replacement cost basis. . . . ”].
    8.    That Balz refused “to contract for repair or replacement of
    the damaged building” as expressly provided by the policy of
    insurance. Instead, he demanded that the money be paid directly
    to him.
    9.     That CPR fulfilled its contractual obligations and was
    entitled to a fee equal to 10% of the policy limits.
    10. That Balz’s claims for (l) Breach of Contract, (2) Breach of
    the Duty of Good Faith and Fair Dealing, (3) Fraud in the
    lnducement, (4) Constructive Fraud, (5) Negligent
    Misrepresentation, (6) Criminal Conversion, (7) Tortious
    Conversion, (8) Intentional lnfliction of Emotional Distress, and
    (9) Negligent lnfliction of Emotional Distress all fail as a matter
    of law.
    App. Vol. II pp. 9-10. Balz now appeals.
    Analysis
    [10]   Balz argues that the trial court erred by granting summary judgment to CPR.
    The purpose of summary judgment is to terminate litigation about which there
    can be no factual dispute and which can be determined as a matter of law.
    Court of Appeals of Indiana | Memorandum Decision 10A04-1711-CT-2816 | August 2, 2018   Page 6 of 23
    Sheehan Const. Co., Inc. v. Cont’l Cas. Co., 
    938 N.E.2d 685
    , 689 (Ind. 2010). On
    appeal from a summary judgment, we apply the same standard of review as the
    trial court: summary judgment is appropriate only where the designated
    evidentiary matter shows there is no genuine issue as to any material fact and
    that the moving party is entitled to judgment as a matter of law. Young v. Hood’s
    Gardens, Inc., 
    24 N.E.3d 421
    , 423-24 (Ind. 2015); see also Ind. Trial Rule 56(C).
    All facts and reasonable inferences drawn from those facts are construed in
    favor of the nonmovant. Sheehan Const. Co., 
    Inc., 938 N.E.2d at 688
    . The party
    who lost in the trial court has the burden of demonstrating that the grant of
    summary judgment was erroneous. Auto-Owners Ins. Co. v. Benko, 
    964 N.E.2d 886
    , 890 (Ind. Ct. App. 2012), trans. denied.
    [11]   As to virtually all of his claims, Balz generally alleges the following:
    104. [Balz] has suffered damages as a result of the wrongful
    conduct of [CPR]. [CPR] is liable to [Balz] for such damages
    suffered, in a reasonable amount, to compensate him for his loss,
    including, but not limited to reasonable costs of this litigation and
    attorney’s fees, loss of his income and future financial stability
    and creditworthiness, mental anguish, mortification, extreme
    emotional distress and other damages.
    105. The conduct of [CPR] was willful and intentional, and
    entered into knowingly by [CPR]. Moreover, [CPR]’s conduct
    amounts to gross negligence, reckless disregard of the rights of
    [Balz], and made with malice and oppression. Based on its
    conduct, [CPR] is liable to [Balz] for punitive damages.
    App. Vol. III pp. 181-82.
    Court of Appeals of Indiana | Memorandum Decision 10A04-1711-CT-2816 | August 2, 2018   Page 7 of 23
    A. Breach of the Duty of Good Faith and Fair Dealing
    [12]   Balz argues that genuine issues of material fact precluded entry of summary
    judgment in CPR’s favor regarding his claim of breach of CPR’s duty of good
    faith and fair dealing; in his complaint, he alleged:
    58. There is an implied duty of good faith and fair dealing in
    every contract, including the contract, and the course of dealings
    and patterns and practices—as well as any revisions offered by
    [CPR] —that amounted to contracts between [Balz] and [CPR].
    59. [CPR] breached its obligation of good faith and fair
    dealing with respect to the discharge of its contractual
    obligations, including, but not limited to (1) its failure to
    minimize the burden for [Balz]; (2) its refusal to abide by its
    contractual duties to assist in working with the insurer in
    processing [Balz’s] insurance claim; (3) its utter failure to collect
    all money due under the claim; (4) its obtaining a large fee that
    was not earned; (5) its continual refusal to honor its repeated
    promises to provide Mr. Balz an accounting and turn claims
    processing over to him; and (6) all other improper and intentional
    bad acts designed to undermine the contractual obligations
    [CPR] owed [Balz].
    60. Through all of its wrongful conduct, [CPR] exercised an
    unfair advantage over [Balz] by refusing to act in a reasonable
    and workmanlike manner regarding its contractual duties to
    [Balz]. All [CPR]’s conduct described herein amounts to
    wrongful interference and destruction of [Balz’s] business affairs.
    61. The breach of the duties of good faith and fair dealing to
    [Balz] committed by [CPR] has caused [Balz] damages, and has
    caused him to suffer monetary loss . . . .
    Court of Appeals of Indiana | Memorandum Decision 10A04-1711-CT-2816 | August 2, 2018   Page 8 of 23
    App. Vol. III p. 11.
    [13]   Indiana courts have recognized an implied covenant of good faith and fair
    dealing in contract law, but generally only in limited circumstances involving
    employment contracts and insurance contracts. Lake County Trust Co. v. Wine,
    
    704 N.E.2d 1035
    , 1039 (Ind. Ct. App. 1998). If the contract is ambiguous or
    expressly imposes such a duty on the parties, then the courts will impose such a
    duty. First Fed. Sav. Bank of Ind. v. Key Markets, Inc., 
    559 N.E.2d 600
    , 604 (Ind.
    1990). Our supreme court has explained our courts’ reluctance to extend this
    duty to other, unambiguous contracts:
    It is not the province of courts to require a party acting pursuant
    to such a[n unambiguous] contract to be “reasonable,” “fair,” or
    show “good faith” cooperation. Such an assessment would go
    beyond the bounds of judicial duty and responsibility. It would
    be impossible for parties to rely on the written expressions of
    their duties and responsibilities. Further, it would place the court
    at the negotiation table with the parties.
    
    Id. [14] Here,
    the underlying agreement is unambiguous; it is neither an employment
    nor an insurance contract. The involvement of insurer Farm Bureau does not
    implicate the latter, as Farm Bureau is not a party to the agreement between
    Balz and CPR. Having found that CPR owed no duty to Balz, he is in no
    position to assert that CPR failed to exercise such duties in good faith.
    Accordingly, the trial court did not err in granting summary judgment in favor
    Court of Appeals of Indiana | Memorandum Decision 10A04-1711-CT-2816 | August 2, 2018   Page 9 of 23
    of CPR regarding Balz’s claim of breach of the duty of good faith and fair
    dealing.
    B. Breach of Contract
    [15]   Balz argues as follows that genuine issues of material fact precluded entry of
    summary judgment in CPR’s favor regarding his breach of contract claim. In
    his complaint, he alleged:
    53. At all relevant times, [CPR] had a contract with [Balz] and
    agreed to assist him in processing his insurance claim after his
    house fire on January 8, 2010.
    54. At all relevant times, [CPR] failed to perform its claims
    processing duties as promised, said failure amounting to breaches
    of contract.
    55. As a result of [CPR]’s breaches, but not limited to the
    violations stated herein, [Balz] has been damaged, has suffered
    monetary loss . . . .
    56. The breaches by [CPR] were willful and intentional, and
    entered into knowingly by [CPR]. Moreover, [CPR]’s conduct
    amounts to gross negligence, reckless disregard of the rights of
    [Balz], and made with malice and oppression. Based on its
    conduct, [CPR] is liable to [Balz] for punitive damages.
    App. Vol. III p. 175.
    [16]   “The essential elements of a breach of contract action are the existence of a
    contract, the defendant’s breach thereof, and damages.” Fairfield Dev., Inc. v.
    Georgetown Woods Sr. Apartments Ltd. P’ship, 
    768 N.E.2d 463
    , 473 (Ind. Ct. App.
    Court of Appeals of Indiana | Memorandum Decision 10A04-1711-CT-2816 | August 2, 2018   Page 10 of 23
    2002). Here, the designated materials disclose that Balz entered into a written
    agreement with CPR, wherein CPR would represent Balz in claim negotiations
    with Farm Bureau in exchange for a fee of ten percent of the claim settlement.
    VanHimbergen presented Balz’s claim to Farm Bureau; Farm Bureau agreed to
    pay policy limits, including functional replacement costs of $34,277.46, to Balz.
    In order for Balz to recover functional replacement costs, the Policy required
    Balz to “contract for the repair of the damaged building . . . within 180 days of
    the damage” unless Farm Bureau and Balz/CPR otherwise agreed. App. Vol.
    II p. 91.
    [17]   The designated materials, particularly Balz’s deposition testimony, establish
    that he was intent on serving as the contractor for purposes of the repair (and
    having the money paid directly to him) rather than contracting with another
    person or entity to complete the repair, as was required under the terms of the
    Policy. As CPR argues, “Balz knew he was required to contract with someone
    to rebuild his residence, he had no intention of doing so, and CPR had no way
    of compelling him to do so.” Appellee’s Br. p. 24.
    [18]   Based on the foregoing, we conclude that CPR fulfilled its contract obligations
    to prepare and present Balz’s claim to Farm Bureau when it obtained Farm
    Bureau’s commitment to pay him policy limits, including $34,277.46 in
    functional replacement costs; however, the functional replacement costs were
    forfeited as a result of Balz’s own actions and omissions. No genuine issue of
    material fact precluded entry of summary judgment regarding his breach of
    contract claim.
    Court of Appeals of Indiana | Memorandum Decision 10A04-1711-CT-2816 | August 2, 2018   Page 11 of 23
    C. Fraud in the Inducement
    [19]   Balz argues that genuine issues of material fact precluded entry of summary
    judgment in CPR’s favor regarding his claim of fraud in the inducement. In his
    complaint, he alleged:
    70. [CPR] made material misrepresentations of past or
    existing facts, including all the facts set 
    forth supra
    , and
    including, but not limited to, statements that [CPR] would
    perform its duties to [Balz] in a reasonable and businesslike
    manner, and would honor its contracts with [Balz], including,
    but not limited to performing an inventory and making sure all
    monies owed [Balz] under his claim were, in fact, paid. [Balz]
    also relied on statements made by [CPR] that promised him a full
    accounting for its services and promises that it, [CPR], would
    relinquish the claims processing to [Balz]’s care, as well as other
    statements designed to make [Balz] act in reliance of same.
    71. The misrepresentations made by [CPR] to [Balz] were
    false.
    72. [CPR] made the misrepresentations to [Balz] knowing the
    statements were false or in reckless ignorance of the falsity.
    73. [Balz] relied upon [CPR]’s statements and such reliance
    was justifiable.
    74. [CPR]’s wrongful conduct injured [Balz] and caused him
    damages. [CPR] is liable to [Balz] for such damages suffered, in
    a reasonable amount, to compensate him for his loss . . . .
    App. Vol. III p. 177.
    Court of Appeals of Indiana | Memorandum Decision 10A04-1711-CT-2816 | August 2, 2018   Page 12 of 23
    [20]   CPR counters that “[n]othing in the record suggests that anything CPR said in
    any of those letters was a misrepresentation of a past or existing fact”; “Balz’s
    only evidence in support of his position is his subjective belief that he could
    have received a larger settlement”; and “CPR’s statements plainly were
    statements about the outcomes for previous clients and did not constitute an
    express or implied promise that Balz’s claim would turn out in a certain way.”
    Appellee’s Br. p. 12.
    [21]   To sustain an action for fraud, it must be proven that a material representation
    of a past or existing fact was made which was untrue and known to be untrue
    by the party making it or else recklessly made and that another party did in fact
    rely on the representation and was induced thereby to act to his detriment.
    Fleetwood Corp. v. Mirich, 
    404 N.E.2d 38
    , 42 (Ind. Ct. App. 1980). Fraud need
    not be proven by direct or positive evidence; it may be proven by circumstantial
    evidence, provided there are facts from which the existence of all the elements
    can be reasonably inferred. Plymale v. Upright, 
    419 N.E.2d 756
    , 760 (Ind. Ct.
    App. 1981).
    [22]   Fraudulent inducement occurs when a party is induced through fraudulent
    misrepresentation to enter into a contract. Lightning Litho, Inc. v. Danka Indus.,
    
    776 N.E.2d 1238
    , 1241 (Ind. Ct. App. 2002), trans. denied. Because the essential
    elements of fraudulent inducement are no different from any other action on
    fraud, the action may not be predicated upon representations of future conduct.
    Siegel v. Williams, 
    818 N.E.2d 510
    , 515 (Ind. Ct. App. 2004). While an oral
    promise as to future conduct will not support an ordinary fraud action, such
    Court of Appeals of Indiana | Memorandum Decision 10A04-1711-CT-2816 | August 2, 2018   Page 13 of 23
    promise may form the basis of a constructive fraud action if the promise induces
    one to place himself in a worse position than he would have been in had no
    promise been made and if the party making the promise derives a benefit as a
    result of the promise. 
    Id. [23] Here,
    the designated facts establish that CPR’s primary objectives were to
    present Balz’s claim to Farm Bureau and to obtain a favorable claim payment.
    CPR successfully obtained Farm Bureau’s promise to pay Balz the policy limits,
    including functional replacement costs. As Balz acknowledged in his deposition
    testimony, he did not accept Farm Bureau’s express condition as to functional
    replacement costs; he, consequently, forfeited recovery of those benefits. Given
    that he otherwise recovered policy limits, and that his primary injury—the
    forfeiture—resulted directly from his own actions/omissions, Balz cannot
    establish that his reliance on any of CPR’s statements, which really amounted
    to future predictions or puffery, caused the forfeiture. The trial court did not err
    in granting summary judgment in CPR’s favor as to Balz’s claim of fraud in the
    inducement.
    D. Constructive Fraud
    [24]   Balz argues that genuine issues of material fact precluded entry of summary
    judgment in CPR’s favor regarding his claim of constructive fraud. In his
    complaint, he alleged:
    77. [CPR] had a duty to [Balz] by virtue of its contractual
    relationship between the [CPR] and [Balz].
    Court of Appeals of Indiana | Memorandum Decision 10A04-1711-CT-2816 | August 2, 2018   Page 14 of 23
    78. [CPR] violated its duty to [Balz] by the making of deceptive
    material misrepresentations of the past or existing facts or
    remaining silent when the duty to speak exists, including, but not
    limited to, statements that [CPR] would obtain more money for
    [Balz] if [CPR] handled the claim than if [Farm Bureau] handled
    the claim directly, as well as statements that [CPR] would obtain
    all proceeds [Balz] was entitled to receive under his policy of
    insurance. [CPR] also promised—falsely - that it would perform
    an inventory, but required [Balz]—in fragile health due to
    injuries incurred in the house fire—to do the work. [CPR] also
    promised to provide a complete accounting and turn over the
    claims processing to [Balz], and made other statements and
    omissions designed to unfairly mislead [Balz].
    79. [Balz] relied thereon on the false statements made by [CPR].
    80. [Balz] was injured by the wrongful conduct of [CPR] . . . .
    81. [CPR] gained an unfair advantage at the expense of [Balz].
    82. As a result, [Balz] suffered damages, and [CPR] is liable to
    [Balz] for such damages suffered . . . .
    App. Vol. III pp. 178-179.
    [25]   Constructive fraud may be found where one party takes unconscionable
    advantage of his dominant position in a confidential or fiduciary relationship.
    Stoll v. Grimm, 
    681 N.E.2d 749
    , 757 (Ind. Ct. App. 1997); see Estates of Kalwitz v.
    Kalwitz, 
    717 N.E.2d 904
    , 913 (Ind. Ct. App. 1999) (“Any breach of a duty
    arising from a confidential or fiduciary relation, without any actual fraudulent
    intent gains an advantage at the expense of any one to whom he owes such
    Court of Appeals of Indiana | Memorandum Decision 10A04-1711-CT-2816 | August 2, 2018   Page 15 of 23
    duty, amounts to a constructive fraud.”). In addition, a representation
    regarding future conduct can, in some situations, give rise to a constructive
    fraud. Wells v. Stone City Bank, 
    691 N.E.2d 1246
    , 1250 (Ind. Ct. App. 1998),
    trans. denied. A confidential or fiduciary relationship exists when confidence is
    reposed by one party in another with resulting superiority and influence
    exercised by the other. Drudge v. Brandt, 
    698 N.E.2d 1245
    , 1250 (Ind. Ct. App.
    1998). The question of whether a confidential relationship exists is one of fact
    to be determined by the finder of fact. Dawson v. Hummer, 
    649 N.E.2d 653
    , 661
    (Ind. Ct. App. 1995).
    [26]   It is well-settled Indiana law that the parties cannot rely on a contractual
    relationship to create a duty. Contractual agreements do not give rise to a
    fiduciary relationship creating a duty. See Comfax Corp. v. North American Van
    Lines, Inc., 
    587 N.E.2d 118
    , 125-26 (Ind. Ct. App. 1992) (holding that an arms-
    length, contractual arrangement does not create a fiduciary relationship and
    does not provide a basis for constructive fraud claim); see also Orem v. Ivy Tech
    State College, 
    711 N.E.2d 864
    , 869 (Ind. Ct. App. 1999) (“There must always be
    a violation of some duty owing to plaintiff, and generally such duty must arise
    by operation of law and not by mere agreement of the parties.”) (citing
    BLACK’S LAW DICTIONARY 1489 (6th ed. 1990)), trans. denied.
    [27]   Absent a special relationship, which does not exist here, CPR does not have a
    duty to Balz. The trial court properly found that Balz’s constructive fraud claim
    fails as a matter of law.
    Court of Appeals of Indiana | Memorandum Decision 10A04-1711-CT-2816 | August 2, 2018   Page 16 of 23
    E. Negligent Misrepresentation
    [28]   Balz argues that genuine issues of material fact precluded entry of summary
    judgment in CPR’s favor regarding his claim of negligent misrepresentation. In
    his complaint, he alleged:
    85. [CPR], in the course of its business, profession or
    employment, and in a transaction in which [CPR] had a
    pecuniary interest, supplied false information for the guidance of
    [Balz] in his business transactions, including but not limited to
    promises that [CPR] would provide insurance claims processing
    services for [Balz] in a reasonable and businesslike manner, and
    all promises [CPR] made to [Balz] that it would provide a full
    accounting for all the work it performed under the contracts in
    question and would turn the claims processing over to [Balz],
    and other statements which were caused by conduct precipitated
    by [CPR], and other such false statements, all designed for [Balz]
    to rely upon, and upon which he did rely, and acted upon to his
    detriment.
    86. [Balz] looked to [CPR]—who claimed to have expertise in
    claims handling as a public adjuster licensed under the laws of
    Indiana—to share its expertise regarding the transactions in
    question.
    87. [CPR] provided advice and guidance to [Balz], including
    but not limited to the advice 
    described supra
    , and provided such
    advice and guidance with intent that the information provided
    would influence [Balz] in making his decisions.
    88. [Balz] had a justifiable reliance upon the information
    provided to him by [CPR].
    Court of Appeals of Indiana | Memorandum Decision 10A04-1711-CT-2816 | August 2, 2018   Page 17 of 23
    89. [CPR] failed to exercise reasonable care or competence in
    obtaining or communicating the information about the
    transactions to [Balz].
    90. [Balz] acted upon the information provided by [CPR] to
    his detriment and has suffered damages as a result of the
    wrongful conduct of [CPR]. . . . .
    App. Vol. III p. 180.
    [29]   In its motion for summary judgment, CPR cited Darst v. Illinois Farmers Ins. Co,
    
    716 N.E.2d 579
    , 585 (Ind. Ct. App. 1999), for the proposition that “despite the
    limited recognition of the tort in the context of an employer-employee
    relationship, Indiana does not recognize the tort of negligent
    misrepresentation.” See Short v. Haywood Printing Co., Inc., 
    667 N.E.2d 209
    , 213
    (Ind. Ct. App. 1996) (holding that the tort of negligent misrepresentation is
    recognized only in employer-employee context under Indiana law). The
    designated materials establish the relationship of the parties to be as follows:
    Balz, a private individual, contracted with public adjusting company CPR, to
    negotiate his insurance claim against Farm Bureau; theirs is not an employer-
    employee relationship. Accordingly, the trial court did not err in granting
    summary judgment in favor of CPR regarding Balz’s negligent
    misrepresentation claim.
    F. Intentional Infliction of Emotional Distress
    [30]   Balz argues that genuine issues of material fact precluded entry of summary
    judgment in CPR’s favor regarding his claim of intentional infliction of
    Court of Appeals of Indiana | Memorandum Decision 10A04-1711-CT-2816 | August 2, 2018   Page 18 of 23
    emotional distress. Specifically, he alleges that CPR solicited him when he had
    just lost his home, was dealing with medical injuries sustained in the fire, and
    “in shock”; he also argues that “as negotiations progressed with [Farm Bureau’s
    adjuster], CPR did not return [his] calls, . . . did not negotiate with his
    homeowner’s adjuster so that he could be the contractor for repairs of his
    home”; “caused him to lose insurance proceeds to which he was entitled”;
    “took its full fee from the benefit proceeds of the policy”; and “let the statute of
    limitations run.” Appellant’s Br. p. 23.
    [31]   Balz maintains that a question of fact exists as to whether CPR’s conduct
    constituted intentional infliction of emotional distress. In his complaint, he
    alleged:
    111. [CPR] engaged in extreme and outrageous conduct in that
    it lured [Balz], in a weakened and fragile state, to enter a contract
    with [CPR] when [CPR]’s past conduct has shown that after it
    collects its unearned fee, it fails to complete the claims
    procedures it promised to handle. [CPR] preyed upon [Balz] and
    is destroying the fabric of our society by engaging in depraved
    conduct designed to deprive [Balz] of his insurance proceeds by
    skimming a ten percent (10%) fee from the insurance proceeds
    and allowing the statute to run on $34,277.46 of loss of structure
    proceeds simply because [CPR] had no “cut” of the remaining
    proceeds. It is outrageous and shocking that a public adjuster
    licensed to do business in the State of Indiana would enter a
    contract with [Balz] and fail to fulfill its duties to [Balz] under the
    contract. Indeed, [Farm Bureau] has stated it is [CPR]’s normal
    course of dealings and pattern and practice of conduct in the
    State of Indiana to prey upon individuals whose lives have been
    hit with tragedy. Approaching individuals after a fire ravages
    their home—or after being beset by some other equally tragic
    Court of Appeals of Indiana | Memorandum Decision 10A04-1711-CT-2816 | August 2, 2018   Page 19 of 23
    loss—with only the intention of skimming a ten percent (10%) fee
    off the victim’s insurance money re-victimizes such individuals.
    In this case, it goes without saying that the conduct [CPR]
    engaged in exceeds all bounds usually tolerated by a decent
    society and has caused [Balz] mental distress of a very serious
    kind. [CPR]’s conduct is atrocious and utterly intolerable in a
    civilized society as it has stripped [Balz] of his dignity by [CPR]’s
    conduct designed to re-victimize [Balz] after a total loss and
    serious injuries.
    App. Vol. III pp. 183-85.
    [32]   In Cullison v. Medley, our Supreme Court adopted the tort of intentional
    infliction of emotional distress and described it as “extreme and outrageous
    conduct [that] intentionally or recklessly causes severe emotional distress to
    another.” 
    570 N.E.2d 27
    , 31 (Ind. 1991) (quoting Restatement (Second) Of
    Torts § 46 (1965)). The intent to harm emotionally constitutes the basis of the
    tort. 
    Cullison, 570 N.E.2d at 31
    . The elements of the tort are that a defendant
    (1) engages in extreme and outrageous conduct that (2) intentionally or
    recklessly (3) causes (4) severe emotional distress to another. Lachenman v. Stice,
    
    838 N.E.2d 451
    (Ind. Ct. App. 2005), trans. denied. The requirements to prove
    this tort are “rigorous.” Branham v. Celadon Trucking Servs., Inc., 
    744 N.E.2d 514
    , 523 (Ind. Ct. App. 2001).
    [33]   “Liability for intentional infliction of emotional distress is found only if there is
    extreme and outrageous conduct.” Bradley v. Hall, 
    720 N.E.2d 747
    , 752 (Ind.
    Ct. App. 1999). In describing what constitutes extreme and outrageous
    conduct, we have cited the following comment:
    Court of Appeals of Indiana | Memorandum Decision 10A04-1711-CT-2816 | August 2, 2018   Page 20 of 23
    d. Extreme and outrageous conduct. The cases thus far decided have
    found liability only where the defendant’s conduct has been
    extreme and outrageous. It has not been enough that the
    defendant has acted with an intent which is tortious or even
    criminal, or that he has intended to inflict emotional distress, or
    even that his conduct has been characterized by “malice,” or a
    degree of aggravation which would entitle the plaintiff to punitive
    damages for another tort. Liability has been found only where
    the conduct has been so outrageous in character, and so extreme
    in degree, as to go beyond all possible bounds of decency, and to
    be regarded as atrocious, and utterly intolerable in a civilized
    community. Generally, the case is one in which the recitation of
    the facts to an average member of the community would arouse
    his resentment against the actor, and lead him to exclaim,
    “Outrageous!”
    
    Id. at 752-53
    (quoting Restatement (Second) of Torts § 46). In other words,
    intentional infliction of emotional distress is found where conduct exceeds all
    bounds usually tolerated by a decent society and causes mental distress of a
    very serious kind. Branham v. Celadon Trucking Servs., Inc., 
    744 N.E.2d 514
    , 514
    (Ind. Ct. App. 2001). What constitutes extreme and outrageous conduct
    depends, in part, upon prevailing cultural norms and values. 
    Id. In the
    appropriate case, the question can be decided as a matter of law. 
    Id. [34] Considering
    the facts in the light most favorable to Balz as the non-moving
    party and even assuming that CPR was inattentive or failed to attend to Balz’s
    needs as it should have, we can conclude as a matter of law that CPR’s conduct
    does not constitute “outrageous” behavior as contemplated by the narrow
    definition adopted from the Restatement. We cannot say that CPR’s conduct
    was so extreme as to go beyond all possible bounds of decency or that it can be
    Court of Appeals of Indiana | Memorandum Decision 10A04-1711-CT-2816 | August 2, 2018   Page 21 of 23
    regarded as atrocious and utterly intolerable in a civilized society. See Bradley,
    
    720 N.E.2d 752-53
    . As we have observed: “The law does not provide a
    remedy for every annoyance that occurs in everyday life. Many things which
    are distressing or may be lacking in propriety or good taste are not actionable.”
    
    Branham, 744 N.E.2d at 518
    (citations omitted). Such is the case here,
    especially given that Balz’s insistence on being designated as the contractor of
    record is the sole reason that he forfeited recovery of functional replacement
    costs benefits. The trial court did not err in granting the CPR’s motion for
    summary judgment on the Balz’s claim for intentional infliction of emotional
    distress.
    G. Request for Punitive Damages
    [35]   Balz argues that genuine issues of material fact precluded entry of summary
    judgment in CPR’s favor regarding his claim for punitive damages. He alleges
    that he is entitled to punitive damages because CPR engaged in “outrageous
    conduct” and “acted with gross negligence,” in “reckless disregard” of his
    rights, “and with malice and oppression in its actions and material omissions.”
    App. Vol. III p. 186.
    [36]   To award punitive damages, “some evidence should be required that is
    inconsistent with the hypothesis that the tortious conduct was the result of a
    mistake of law or fact, honest error of judgment, overzealousness, mere
    negligence or other such noniniquitous human failing.” Travelers Indemnity Co.
    v. Armstrong, 
    442 N.E.2d 349
    , 362 (Ind. 1982). Furthermore, the public interest
    Court of Appeals of Indiana | Memorandum Decision 10A04-1711-CT-2816 | August 2, 2018   Page 22 of 23
    must be served by the imposition of punitive damages. 
    Id. at 362-363.
    Such
    damages must be proven by clear and convincing evidence. 
    Id. at 363.
    [37]   Balz cannot meet his burden. Here, even construing the materials submitted for
    the summary judgment determination in the light most favorable to Balz, the
    conduct he alleges does not approach the level of egregious behavior required to
    recover punitive damages. The trial court thus properly granted summary
    judgment to CPR on the issue of punitive damages.
    Conclusion
    [38]   The trial court did not err in granting summary judgment in CPR’s favor; Balz’s
    claims each fail as a matter of law. We affirm.
    [39]   Affirmed.
    [40]   Vaidik, C.J., and Pyle, J., concur.
    Court of Appeals of Indiana | Memorandum Decision 10A04-1711-CT-2816 | August 2, 2018   Page 23 of 23
    

Document Info

Docket Number: 10A04-1711-CT-2816

Filed Date: 8/2/2018

Precedential Status: Precedential

Modified Date: 8/2/2018

Authorities (23)

Travelers Indemnity Co. v. Armstrong , 1982 Ind. LEXIS 1020 ( 1982 )

Cullison v. Medley , 1991 Ind. LEXIS 78 ( 1991 )

Comfax Corp. v. North American Van Lines, Inc. , 587 N.E.2d 118 ( 1992 )

Orem v. Ivy Tech State College , 1999 Ind. App. LEXIS 837 ( 1999 )

Fairfield Development, Inc. v. Georgetown Woods Senior ... , 2002 Ind. App. LEXIS 686 ( 2002 )

Lightning Litho, Inc. v. Danka Industries, Inc. , 2002 Ind. App. LEXIS 1764 ( 2002 )

Estates of Kalwitz v. Kalwitz , 1999 Ind. App. LEXIS 1828 ( 1999 )

Wells v. Stone City Bank , 1998 Ind. App. LEXIS 99 ( 1998 )

Stoll v. Grimm , 1997 Ind. App. LEXIS 761 ( 1997 )

Dawson v. Hummer , 1995 Ind. App. LEXIS 424 ( 1995 )

Siegel v. Williams , 2004 Ind. App. LEXIS 2384 ( 2004 )

First Federal Savings Bank of Indiana v. Key Markets, Inc. , 1990 Ind. LEXIS 178 ( 1990 )

Sheehan Construction Co. v. Continental Casualty Co. , 2010 Ind. LEXIS 801 ( 2010 )

Branham v. Celadon Trucking Services, Inc. , 2001 Ind. App. LEXIS 304 ( 2001 )

Plymale v. Upright , 1981 Ind. App. LEXIS 1347 ( 1981 )

Auto-Owners Insurance Co. v. Benko , 2012 Ind. App. LEXIS 116 ( 2012 )

Darst v. Illinois Farmers Insurance , 1999 Ind. App. LEXIS 1694 ( 1999 )

Fleetwood Corp. v. Mirich , 76 Ind. Dec. 78 ( 1980 )

Short v. Haywood Printing Co., Inc. , 1996 Ind. App. LEXIS 819 ( 1996 )

Lachenman v. Stice , 2005 Ind. App. LEXIS 2195 ( 2005 )

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