Doe, Jane R. v. Howe Military School

In the
United States Court of Appeals
For the Seventh Circuit
No. 99-3057
Jane R. Doe and Jane C. Doe,
Plaintiffs-Appellants,
v.
Howe Military School et al.,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of Indiana, South Bend Division.
Nos. 3:95-CV-0206RM & 3:95-CV-0717RM--Robert L. Miller,
Jr., Judge.
Argued February 10, 2000--Decided September 21, 2000
Before Flaum, Chief Judge, and Coffey and Diane P.
Wood, Circuit Judges.
Diane P. Wood, Circuit Judge. The two Jane Does
before us in this case claim that they suffered
from a variety of forms of sexual harassment,
abuse, and fraud when they attended Howe Military
School, in Howe, Indiana, in the early 1990s.
They relied on Title IX of the Educational
Amendments of 1972, 20 U.S.C. sec.sec. 1681-88,
and a variety of state law theories to support
their claims. The district court dismissed all
but Jane C. Doe’s fraud claim on the ground that
those claims were barred by the applicable
statutes of limitations. With the grant of
summary judgment for Howe on the remaining fraud
claim, the proceedings in the district court were
over, and the plaintiffs took this appeal.
Finding no error in the court’s rulings, we
affirm.
I
In 1989 and 1990, Jane R. Doe and Jane C. Doe
enrolled as students at Howe Military School.
Howe is a military boarding school operated as a
not-for-profit Indiana corporation. At the time
of enrollment, Jane C. was 14 and Jane R. was 15.
The two women allege that they suffered various
forms of abuse during their time as students at
Howe. Specifically, they allege that John R.
Giles, a U.S. Army Sergeant who worked as a
Military Instructor and Tactical Officer at the
school, sexually abused them repeatedly. Giles
would offer to cancel their demerits or to give
them special privileges--like soda pop, candy and
cigarettes--in return for sexual favors. Jane R.
and Jane C. felt compelled to agree. In addition,
they allege that Giles and other Howe employees
made derogatory comments about them, implying
they were immoral and unchaste; that the school’s
employees spoke poorly about female cadets in
general; and that male cadets harassed and abused
them.
Years later, Jane R. and Jane C. sued Howe
Military School, Giles, Thomas Merritt
(Superintendent of Howe), Lawrence E. Cowles
(Commandant of Howe), and Timothy L. Cook
(Tactical Officer at Howe), the latter three in
both their individual and official capacities.
Although their suits were separate, they filed
identical seven-count complaints. Count I of each
complaint alleged quid pro quo sexual harassment
under Title IX; Count II alleged hostile
environment discrimination under Title IX; Count
III alleged negligence; Count IV alleged
intentional harm; Count V alleged assault and
battery; Count VI alleged invasion of privacy;
Count VII alleged defamation. Jane C. also added
a Count VIII to her complaint, alleging fraud.
Both plaintiffs explained the timing of their
legal action by noting that the suits were filed
within a year of their becoming aware of their
injuries. For Jane R., the date of that
realization was April 1994; she filed suit the
following March. Jane C. became aware of her
injuries in April 1995 and filed suit in August
of that year. On May 13, 1996, the district court
consolidated the two cases, along with those of
three other former Howe students.
The district court eventually dismissed Counts
I - II (Title IX claims) and Counts III - VII
(state law claims) on the grounds that the claims
were time-barred. The court then granted summary
judgment on Jane C.’s Count VIII (fraud). At that
point, it entered a final judgment on the
consolidated cases, the effect of which we now
address.
II
Before we can reach the merits, we must first
decide whether we have jurisdiction over Jane
R.’s appeal. The answer depends on the degree to
which these two cases were consolidated in the
district court. If they merged entirely, then
there was no appealable final judgment until the
last claim of the last party was resolved.
Moreover, if they merged entirely, then the
filing of a timely motion under Fed. R. Civ. P.
59(e) by one party sufficed to toll the time for
filing a notice of appeal for all parties. See
Fed. R. App. P. 4(a)(4)(A)(iv). If, on the other
hand, the two cases were still technically
separate enough to require separate final
judgments, then one person’s filing of a Rule
59(e) motion would be of no help to the other,
and Jane R.’s appeal would be untimely.
In order to sort all of this out, we need to
examine the history of the cases and their
consolidation. Jane C.’s case was originally
assigned the case number 3:95-CV-717; Jane R.’s
case had the number 3:95-CV-206. On May 13, 1996,
the district court consolidated these two cases
with three others, stating:
. . . the court CONSOLIDATES, for purposes of
discovery and trial, the following cases: 3:95-
206RM, 3:95-240RM, 3:95-453RM, 3:95-717RM, and
3:95-818RM. All filings in these five
consolidated cases shall henceforth be docketed
in Cause No. 3:95-CV-206, and the Scheduling
Order entered in 3:95-CV-206 shall govern these
five consolidated cases.
Later orders related to these cases were issued
under docket number 3:95-CV-206 (which had
originally pertained only to Jane R.’s case),
often with the notation "consolidated" somewhere
in the caption.
The consolidated case proceeded. Over time, all
of Jane R.’s seven claims were dismissed in a set
of three orders issued on August 29, September
23, and October 25, 1996. As Jane R.’s part of
the case appeared to be over, on January 30,
1997, the defendants filed a motion under Fed. R.
Civ. P. 50 and 54(b) to enter a final judgment in
her case. Ten months later, on November 17, 1997,
the district court denied the motion. The
district court acknowledged the defendants’
desire to put to rest Jane R.’s claims, but it
found that granting the motion for a final
judgment in Jane R.’s case would inevitably lead
to successive appeals on identical issues, since
Jane C. would in all likelihood appeal the
resolution of the claims she had in common with
Jane R. once all of her claims had been finally
adjudicated.
As it turned out, Jane C.’s case was the last
of the five cases to be fully resolved. (The
three other plaintiffs whose cases had been
consolidated with Jane C.’s and Jane R.’s settled
their claims.) On June 21, 1999, the district
court entered two judgments. The first one had a
caption listing all five of the plaintiffs in the
consolidated cases and their individual case
numbers; the consolidated case number appears
under the heading "Judgment in a Civil Case." The
other judgment listed only Jane C. Doe as
plaintiff; under the heading "Judgment in a civil
case" appears Jane C.’s individual case number as
well as the notation "(Member case to case
consolidation with lead case 3:95-CV-206 RM)."
The text of both documents was identical,
reading:
IT IS ORDERED AND ADJUDGED that no issues
remaining, judgment is hereby entered for the
defendants on the amended complaint (all claims)
of Jane C. Doe in consolidated cause 3:95-CV-206
and shall close 3:95-CV-717, the case in which
Jane C. Doe’s complaint was originally filed.
(Italics added.) Jane C. then filed a Rule 59(e)
motion on July 6, 1999. The court denied her
motion on July 12, 1999, and both Jane R. and
Jane C. filed a joint notice of appeal on August
11, 1999.
The defendants urge that the judgments of June
21, 1999, addressed only Jane C.’s case, and thus
that Jane R. was too late in filing her notice of
appeal. They focus on Jane R.’s failure to join
in Jane C.’s Rule 59 motion, rather than arguing
that the final judgment in Jane R.’s case was
entered back around October 25, 1996. In their
response to this argument, the Does inadvertently
raise a different potential problem with Jane
R.’s appeal. They suggest in their reply brief
that perhaps "no final judgment as to Jane R.
Doe’s claims was ever entered." Reply Brief at 5;
see also id. at 7. Putting to one side the effect
of the consolidated June 21 judgment that lists
Jane R’s docket number, this statement is
literally true. The district court entered no
Rule 58 judgment in Jane R.’s case after the
October 25, 1996, order disposing of the last of
her claims; it declined to enter a Rule 54(b)
judgment in her case; and there is no separate
Rule 58 judgment for Jane R. in the record.
Instead, we have a consolidated Rule 58 judgment
whose caption (but not text) refers to her case,
and we have a separate Rule 58 judgment whose
caption and text refer only to the final
disposition of Jane C.’s case. If the defendants
are correct that Jane R. could not take advantage
of Jane C.’s Rule 59 motion, then her effort to
appeal would be barred as untimely. If the
plaintiffs are correct that there was never a
final judgment for Jane R., then the proper
course would be to dismiss her appeal as
premature and wait for the district judge to
complete proceedings in her case. And if the
plaintiffs’ original position is correct--that
the consolidation cures all these problems--then
we can proceed to the merits on both claims.
While we regret that this became so
complicated, we conclude that the third of these
possibilities best describes what happened below,
and thus that both appeals are properly before
us. Two questions are relevant to this
determination: (a) whether each plaintiff’s case
retained its separate identity and, if not, (b)
whether the district court in fact disposed of
all the claims, rendering the case appealable
even in the absence of a formal Rule 58 judgment.
See Otis v. City of Chicago, 29 F.3d 1159, 1165-
66 (7th Cir. 1994) (en banc) (holding Rule 58
judgment not necessary for appellate
jurisdiction).
Unfortunately, the fact that the district court
consolidated the cases under Rule 42(a) does not
give a simple answer to the first question. The
circuits disagree about whether or not this step
causes the previously separate cases to merge and
lose their individual identity. The issue arises
most frequently in the context of whether a Rule
54(b) judgment is required before a case that has
been consolidated with others can be appealed.
Compare, e.g., In re Massachusetts Helicopter
Airlines, Inc., 469 F.2d 439 (1st Cir. 1972)
(treating all consolidated cases as separate for
purposes of appellate jurisdiction), with Huene
v. United States, 743 F.2d 703, 705 (9th Cir.
1984) (treating cases consolidated for any
purpose as a single case for appealability
determinations); see also, Sandwiches, Inc. v.
Wendy’s Int’l, Inc., 822 F.2d 707, 710 (7th Cir.
1987) (describing approaches of various
circuits); Wright & Miller, Federal Practice and
Procedure sec. 2382 at 429, sec. 2386 at 468-69
& nn. 8, 9 (1995). This circuit has opted not to
take a strict, categorical approach. Instead, we
"look[ ] to the purposes of the final decision
rule and allow[ ] an appeal without a Rule 54(b)
judgment only when the parties and questions
readily are distinct." Sandwiches, 822 F.2d at
710. We explained our approach in Ivanov-McPhee
v. Washington Nat’l Ins. Co., 719 F.2d 927 (7th
Cir. 1983):
[W]here consolidated cases could, without undue
burden, have been brought as one action, where
there is no clear evidence that they have in
substance been consolidated only for limited
purposes, and where there is no showing that the
appellant’s interests will be seriously
undermined by dismissal of the appeal, the
provisions of Rule 54(b) must be complied with,
notwithstanding that the judgment in question
disposes of all the claims and parties on one of
the original actions.
Id. at 930. See also Eckstein v. Balcor Film
Investors, 8 F.3d 1121, 1125 (7th Cir. 1993).
Although the language in the two Rule 58
judgments of June 21 confused matters, the record
demonstrates that the district court and the
parties understood these cases to be consolidated
for all purposes. Even though each plaintiff’s
case presented a slightly different mix of
defendants and claims, and the district court was
careful to keep track of the progress of each
individual plaintiff’s claims, the cases had such
tremendous overlap that the court treated them as
one. All orders were entered under the
consolidated case number and caption, settlement
conferences and updates were conducted jointly,
and progress reports referred to all of the
cases. That the defendants moved for a Rule 54(b)
judgment for Jane R.’s claims demonstrates that
they believed the court’s consolidation of the
various cases in effect merged them into a single
action. Cf. Eckstein, 8 F.3d at 1125 (finding
district court did not merge consolidated cases
where court explicitly stated there was no merger
and entered a separate Rule 58 judgment in each
individual case). The district court’s order
denying the defendants’ motion reinforces this
view. Although it is more usual that a
consolidation merges cases into one where each
case has the same plaintiff, see, e.g., Ivanov-
McPhee, supra, we find that merger occurred here.
As we explained in Eckstein: "[C]ourts should
keep in mind the relation between consolidation
and appeal. Preserving formally separation may
multiply the number of appeals, which should not
occur when there is only one nucleus of facts."
8 F.3d at 1125.
This finding takes care of both potential
problems with Jane R.’s appeal. First, under Fed.
R. App. P. 4(a)(4)(A), we find that Jane C.’s
Rule 59(e) motion tolled the filing period for
both plaintiffs, as that rule extends the time to
appeal "for all parties." Had Jane R. and Jane C.
originally filed suit together, they would both
be "parties" to the same suit. See Eckstein, 8
F.3d at 1124-25. The nature of the consolidation
in this case achieved the same result. Second, we
find that the district court’s orders of June 21,
1999, demonstrate that the court understood that
by resolving Jane C.’s fraud claim, it was
resolving the last outstanding claim of the
consolidated case; the manner in which judgment
was entered on this claim demonstrates that the
district court meant to terminate the
consolidated case as a whole. Therefore, a
separate Rule 58 judgment specifically
terminating Jane R.’s case was unnecessary, and
our jurisdiction over both parties’ appeals is
secure.
III
Turning now to the merits, the Does’ appeals
raise five issues. First, both Does contest the
district court’s dismissal of their claims I -
VII as time-barred. Second, both Does argue that
the district court should have granted them leave
to amend their complaints. Third, Jane C. appeals
the district court’s grant of summary judgment in
favor of the defendants on her fraud claim.
Finally, they contest (fourth) the district
court’s rulings regarding discovery and (fifth)
its denial of Jane C.’s Rule 59(e) motion.
A. Rule 12(c) Dismissal
After the pleadings were closed, the court
dismissed Counts III - VII (all state law claims)
on September 23, 1996, on the grounds that they
were time-barred under Indiana law. In the same
order, the court also dismissed the two Title IX
claims (Counts I and II) as time-barred. Title IX
does not have its own statute of limitations. The
court therefore borrowed the state statute of
limitations for personal injury actions--the
state law claim the court viewed as most similar
to the Title IX allegations--and applied it to
the Title IX claims. We review de novo the
district court’s Rule 12(c) dismissal of the
claims as time-barred. Gutierrez v. Peters, 111
F.3d 1364, 1368 (7th Cir. 1997).
Indiana law requires that any action for
injuries to the person or character must be
commenced within two years after the cause of
action accrues. IC 34-11-2-4 (formerly Ind. Code
sec. 34-1-2-2(1)). "[A] cause of action for a
tort claim accrues and the statute of limitations
begins to run when the plaintiff knew, or in the
exercise of ordinary diligence, could have
discovered that an injury had been sustained as
a result of the tortious act of another." Wehling
v. Citizens Nat’l Bank, 586 N.E.2d 840, 843 (Ind.
1992); see also, Burks v. Rushmore, 534 N.E.2d
1101, 1103-04 (Ind. 1989). There is an exception
for cases where the plaintiff is under a legal
disability when the cause of action accrues. In
those circumstances, she may bring the cause of
action within two years after the disability is
removed. IC 34-11-6-1 (formerly Ind. Code sec.
34-1-2-5). So, for example, where the plaintiff
was a minor when the cause of action accrued, she
must bring the action within two years of
reaching majority.
Both Does filed their actions more than two
years after reaching majority: Jane R. turned 18
on October 5, 1992, and filed suit March 21,
1995; Jane C. turned 18 on February 11, 1993, and
filed suit August 30, 1995. Thus, the general
tolling period provided by IC 34-11-6-1 cannot
save their actions. Recognizing that, they both
argue that their suits are nonetheless timely
because the date from which the two years started
to run was the date when each became aware of her
psychological injuries, not the time of the
underlying events (as tolled during their
minority). Here, they assert (and we accept for
present purposes) that they filed suit within two
years of the time when they recognized their
injuries.
While we appreciate the often elusive nature of
psychological injury, we conclude that the
plaintiffs’ argument cannot prevail in the face
of the Indiana Supreme Court’s decision in Doe v.
Shults-Lewis Child and Family Services, 718
N.E.2d 738 (Ind. 1999). In Shults-Lewis, two
women who had been foster children at the Shults-
Lewis home sued the home for repeated sexual
abuse suffered at the hands of one of the home’s
employees. Both women left the home in the late
1960s and did not bring suit until 1990, well
into adulthood. Jane F. testified regarding the
precise events of abuse, including hundreds of
acts of intercourse and the abusive employee’s
giving her quinine pills to induce an abortion.
She did not bring suit until 1990 because until
then she did not realize the connection between
the abuse and her psychological distress. Jane I.
also suffered hundreds of incidents of sexual
abuse; Jane I., however, did not remember
anything regarding the abuse until 1990, when she
had several conversations with Jane F. and other
members of the group home about the abuse. These
conversations triggered memories about the
circumstances surrounding the abuse, but not the
actual events of abuse. The defendants argued
that both women’s claims were time-barred. The
Indiana Supreme Court came to a different result
for each plaintiff. Jane F.’s claims were barred,
because: "Where the plaintiff actually retains
memories of the event, there is nothing to cause
a delay in the commencement of the cause of
action. There was nothing to prevent [Jane F.]
from bringing her claim when her legal disability
ended at age eighteen." 718 N.E.2d at 747 n.3. In
contrast, Jane I.’s claims were not time-barred
because she had no memory of the events and had
presented sufficient facts to invoke the
equitable doctrine of fraudulent concealment,
which tolled the statute of limitations.
Following the logic used in cases involving
suppressed memories of parental abuse, the court
also ruled that the home may be estopped from
asserting the statute of limitations in Jane I.’s
case, because the home was her guardian and
therefore owed a duty to inform her of the facts
of abuse. Because the home did not inform Jane I.
(and Jane I. had no independent memories of the
abuse), it concealed the information necessary
for her to assert her claim any earlier. Id. at
748.
The Indiana Supreme Court’s analysis of Jane
F.’s claims controls in this case: both Jane R.
and Jane C. remembered the events of abuse, and
therefore nothing prevented them from asserting
their claims during the two years after they
reached majority. The district court applied the
same statute of limitations, and the same
analysis, to the Does’ Title IX claims. Because
the plaintiffs do not challenge whether it was
correct for the district court to borrow the
state statute of limitations for the Title IX
claims, we do not address whether that ruling was
correct.
B. Denial of Motion for Leave to Amend
The Does requested leave to amend their
pleadings if the district court granted the
motions to dismiss the claims as time-barred, and
the motions to dismiss the Title IX claims
against the individual defendants. The Does’
request to amend consisted of the following:
IV. REQUEST IN THE ALTERNATIVE
In the alternative, plaintiffs request that they
be permitted to amend their complaints to more
specifically allege a claim against the
individual defendants, Merritt and Cowles, under
Title IX, or, in the alternative, to state a
claim against the individual defendants, Merritt
and Cowles, pursuant to 42 U.S.C. sec. 1983.
Amendments to pleadings should be freely given
when justice so requires.
They also wanted to amend their pleading against
defendant Giles in the event the court granted
Giles’s motion for judgment on the evidence. The
district court denied the motions, because they
did not comply with District Rule 7.1, which
states "[e]ach motion shall be separate;
alternative motions filed together shall each be
named in the caption on the face." The district
court noted that the Does failed to explain in
their request precisely how they planned to amend
their complaints, they did not demonstrate good
cause to amend the pleadings after the deadline,
nor more generally did they show why justice
required such amendments.
Whether the grant or denial of leave to amend
was proper is a question we review for abuse of
discretion. Bisciglia v. Kenosha Unified Sch.
Dist. No. 1, 45 F.3d 223, 226 (7th Cir. 1995).
Fed. R. Civ. P. 15(a) provides that, with the
exception of amendments made before the answer is
served, "a party may amend the party’s pleading
only by leave of court or by written consent of
the adverse party; and leave shall be freely
given." Although this is a liberal standard,
under which "leave to amend shall be freely
granted when justice so requires," "justice may
require something less in post-judgment
situations than in pre-judgment situations."
Twohy v. First Nat’l Bank, 758 F.2d 1185, 1196
(7th Cir. 1985), quoted in Diersen v. Chicago Car
Exchange, 110 F.3d 481, 489 (7th Cir. 1997).
In this case, the district court did not abuse
its discretion in denying the Does’ motions to
amend the pleadings. As the judge observed, the
motions did not state what specifically the Does
planned to allege in their amended pleadings. See
Glatt v. Chicago Park Dist., 87 F.3d 190, 194
(7th Cir. 1996) (holding motion to amend or
supplement the complaint, unlike an original
complaint, "requires more to compel acceptance
than the fact that the pleading sought to be
added states a claim"). With respect to the Title
IX claim, the Does argue that "it was clear that
the requested amendments went to the issue of
whether plaintiffs should have known of their
causes of action earlier, because that was the
issue raised by defendants’ motions." A quick
glance at the motion, which we have set forth
above, shows that this is not the case. District
courts do not have to engage in guessing games
about proposed amendments, and the judge here was
well within his discretion to deny this motion.
The Does did state something more specific with
regard to their desire to bring a sec. 1983
action. But they could have alleged a sec. 1983
violation in their original or amended
complaints. They provide no reason why this new
claim could only be brought at the last moment.
If there were facts warranting the delay, the
Does should have brought them to the court’s
attention. See Glatt, 87 F.3d at 194 (stating
court should consider the probable merit of the
claim sought to be added, as well as whether the
claim could have been added earlier and the
burden on the defendant in trying to meet it).
Furthermore, as Giles points out, it would have
been futile to have allowed the Does to amend
their complaints to assert a sec. 1983 action,
because such an action would also have been time-
barred under Indiana’s two-year statute of
limitations. See Stevens v. Northwest Indiana
Dist. Council, United Brotherhood of Carpenters,
20 F.3d 720, 726 (7th Cir. 1994).
At bottom, the Does wanted another shot in the
event their claims were dismissed. But pleading
is not like playing darts: a plaintiff can’t keep
throwing claims at the board until she gets one
that hits the mark. See id.C. Summary Judgment on Jane C.’s Fraud Claim
Jane C. filed an additional claim (count VIII)
alleging actual and constructive fraud. The
essence of her claim was that Howe officials,
Merritt and Cowles, intentionally misrepresented
the conditions at Howe in order to induce her to
attend the school. She claimed that the officials
told her she would be protected at Howe; she also
claims that the school’s promotional materials
implicitly represented that she would be safe and
protected from harm. The district court granted
summary judgment on both theories, and so our
review is once again de novo. L.R.J. Ryan v.
Wersi Electronic GmbH and Co., 59 F.3d 52, 53
(7th Cir. 1995).
Under Indiana law, to prove an actual fraud
claim, a plaintiff must demonstrate: "(1) a
material misrepresentation of past or existing
fact which (2) was untrue, (3) was made with
knowledge of or in reckless ignorance of its
falsity, (4) was made with the intent to deceive,
(5) was rightfully relied upon by the complaining
party, and (6) which proximately caused the
injury or damage complained of." Lawyers Title
Ins. Corp. v. Pokraka, 595 N.E.2d 244, 249 (Ind.
1992), quoted in Lycan v. Walters, 904 F.Supp.
884, 897 (S.D. Ind. 1995). "[A]ctual fraud may
not be based on representations regarding future
conduct, or on broken promises, unfulfilled
predictions or statements of existing intent
which are not executed." Lycan, 904 F.Supp. at
897, citing Biberstine v. New York Blower Co.,
625 N.E.2d 1308, 1315 (Ind. Ct. App. 1993).
There are several problems with Jane C.’s
allegations of actual fraud. First, Jane C. did
not state in her deposition that either defendant
Cowles or Merritt personally misrepresented any
facts to her. She said only that she saw Cowles
and Merritt from time to time around the school
and that her only personal contact with both
defendants was when she went to them to appeal
some demerits. She met with neither of these
defendants prior to enrolling in the school.
Second, the sorts of statements on which Jane
C. seeks to hang her fraud claim relate generally
to the school’s objectives for students’
education upon enrollment. For example, when Jane
C. visited the school for an initial interview,
she and her parents met with the admissions
director, Mr. Cox, for about an hour. Mr. Cox
explained how everything at the school worked,
including the disciplinary system, and he said
that she would be protected and safe from harm.
(Jane C. could not remember precisely what she
understood she would be protected from.) Jane C.
also pointed to Howe promotional brochures and
the school’s rules and regulations to support her
fraud claim. The Howe brochures contain broad
statements of the school’s goals and objectives
for its students’ education (e.g., "complete
preparatory training . . . can only be achieved
with a limited number of serious minded cadets.
Therefore selection of new students must be
carefully made"; "Howe will consider any student
for admission who demonstrates average to above
average academic ability, is of good moral
character and proven conduct, and who shows a
willingness to attend."). The rules and
regulations contain more information about Howe’s
"philosophy and objectives" and explain the
school’s disciplinary system in detail. This kind
of promise of future conduct or objectives does
not amount to actionable fraud under Indiana law,
and the district court was therefore correct to
grant summary judgment on the actual fraud claim.
Although promises of future conduct do not give
rise to claims of actual fraud, they can, in some
instances, give rise to a claim of constructive
fraud. Estates of Kalwitz v. Kalwitz, 717 N.E.2d
904, 913 (Ind. Ct. App. 1999). Constructive fraud
arises by operation of law when there is a course
of conduct which, if sanctioned by law, would
secure an unconscionable advantage, whether or
not there is actual intent to defraud. Wells v.
Stone City Bank, 691 N.E.2d 1246, 1250 (Ind. Ct.
App. 1998). The elements of constructive fraud
under Indiana law are: (1) a duty existing by
virtue of the relationship between the parties;
(2) representations or omissions made in
violation of that duty; (3) reliance on the
deceptive statements or omissions by the
complaining party; (4) injury as a result of this
reliance; (5) the gaining of an advantage by the
defrauding party over the complaining party. Id.
at 1250-51. See also Paulson v. Centier Bank, 704
N.E.2d 482, 490-91 (Ind. Ct. App. 1998). "Any
breach of a duty arising from a confidential or
fiduciary relation, whereby the party at fault
without any actual fraudulent intent gains an
advantage at the expense of any one to whom he
owes such duty, amounts to a constructive fraud."
Hall v. Indiana Dept. of State Revenue, 351
N.E.2d 35, 38 (Ind. Ct. App. 1976), quoting
Gorham v. Gorham, 103 N.E. 16, 18 (Ind. Ct. App.
1913).
Jane C. claims that the defendants failed to
inform her that the conduct of students and
employees could be inappropriate and even
dangerous, that the defendants did not provide
her with this information out of their desire to
induce her to attend the school (as part of a
plan to increase female enrollment to bring in
more tuition dollars), and that this omission of
material fact amounted to constructive fraud. The
problem with Jane C.’s claim is that prior to her
enrollment, the defendants probably owed her no
duty, see Wickey v. Sparks, 642 N.E.2d 262, 266
(Ind. Ct. App. 1994), and so she cannot establish
the first element of a constructive fraud claim.
Even if Indiana would recognize the "potential
student - private school" recruitment
relationship as the kind that gives rise to a
duty, her claim still cannot succeed. It would
then be analyzed exactly as her post-enrollment
claim is.
For purposes of the post-enrollment claim, we
assume that the school did owe her a duty to
supervise and protect her while she was a
student. See Miller v. Griesel, 308 N.E.2d 701,
706 (Ind. 1974). At the same time, however,
Indiana holds that schools are not insurers of
the safety of their pupils, nor are they strictly
liable for any injuries that occur. See Norman v.
Turkey Run Community School Corp., 411 N.E.2d
614, 617 (Ind. 1980).
Jane C. claims that the school should have told
her that the conduct of its students and
employees was inappropriate, that she ran a
substantial risk of harm from physical or mental
abuse if she attended, that she would need
counseling to avoid or remedy that harm from her
first day forward, and that the school would in
other ways be wanting. It omitted to make these
statements, she continues, because it wanted to
induce female cadets to attend the school in
order to get their tuition payments. The record,
however, does not support Jane C.’s assertions
that the school’s omission to communicate these
alleged risks to her was deceptive. To the
contrary, the school had rules forbidding abusive
behavior, and the exhibits that Jane C. attached
to her motion in opposition to summary judgment
show that the school took disciplinary action
where it was aware that school rules had been
violated. Its alleged omissions therefore cannot
support the hypothesis of the type of deceitful
and sadistic behavior that Jane C. accuses Howe
of engaging in. Following Turkey Run, we believe
that Indiana would not require a school to
outline the worst case scenario that a potential
or actual student could confront, since its duty
is only to exercise reasonable care. In addition,
to the extent that the "unconscionable advantage"
factor of the Indiana constructive fraud tort is
an independent factor rather than a conclusion
from the first four, we doubt that the
institution’s alleged desire to enroll more
female cadets is the sort of "unconscionable
advantage" that supports a claim. In Wells v.
Stone City Bank, supra, for example, the court
found an unconscionable advantage when a bank
created a sham transaction that generated
interest income for itself but no benefit for its
customer. See also Swain v. Swain, 576 N.E.2d
1281, 1283-84 (Ind. Ct. App. 1991) (finding
unconscionable advantage where plaintiff borrowed
money for defendant based upon defendant’s
repeated promises to make payments on the debt
and to marry plaintiff); McDaniel v. Shepherd et
al., 577 N.E.2d 239 (Ind. Ct. App. 1991) (holding
that jury could find constructive fraud where
agent for insurance company told accident victim
she would do better without an attorney and then
paid her $1000 in exchange for a release from
liability for all "known and unknown" injuries).
Recruiting female students with literature and
statements that have not been shown to be
intentionally deceptive, and then collecting
normal tuition payments from them in exchange for
instruction, falls short of this standard.
D. Discovery Rulings
It is apparent from the parties’ briefs and the
court’s rulings that discovery in these cases was
protracted and ugly. It went on for more than
four years. The plaintiffs apparently asked for
nearly every file in Howe’s possession, and Howe
was uncooperative. Going through the record
exhaustively to determine whether the district
court abused its discretion is, however,
unnecessary (and in any event an exercise that
would be inconsistent with that standard of
review). Notwithstanding Jane C.’s claim to the
contrary, the contested discovery rulings did not
make a difference in the disposition of the
plaintiffs’ claims. All claims except Jane C.’s
fraud claim were dismissed as time barred;
discovery could not have changed that fact. Nor
could it have changed the fact that the
allegations of fraud are legally insufficient:
the allegedly fraudulent statements were promises
of future conduct, and therefore not actionable
as actual frauds; and there was no constructive
fraud because Howe had no unconscionable
advantage over her. The district court’s
discovery rulings therefore do not amount to
reversible error, no matter how plaintiffs think
they should have been handled.
E. Rule 59(e) Motion
Jane C. filed a motion to alter or amend the
judgment and for relief from judgment under Fed.
R. Civ. P. 59(e) and 60(b)(3); because she filed
it within 10 days of entry of the final judgment,
the court properly construed it as a Rule 59(e)
motion. See Helm v. Resolution Trust Corp., 43
F.3d 1163, 1166 (7th Cir. 1995). Jane C.’s motion
urged the court to reconsider its grant of
summary judgment because she maintained that
Merritt and Cowles had not produced all of the
evidence she had requested. Her discussion of the
missing evidence did not convince the court that
the grant of summary judgment was improper.
The district court did not abuse its discretion
in denying Jane C.’s motion. See Britton v. Swift
Trans. Co., Inc., 127 F.3d 616 (7th Cir. 1997)
(grant or denial of Rule 59(e) motion reviewed
for abuse of discretion). The court had all of
the evidence before it and was intimately
familiar with the defendants’ conduct during
discovery. We see no reason to overturn the
district court’s considered judgment.
IV
The judgment of the district court is Affirmed.