Sandra S. Weaver v. Elkhart Community School Corporation

FILED
Feb 14 2018, 8:50 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE
Jay A. Rigdon Eileen S. Pruitt
Rockhill Pinnick LLP Barnes & Thornburg LLP
Warsaw, Indiana South Bend, Indiana
Mark J. Crandley
Annette England
Barnes & Thornburg LLP
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Sandra S. Weaver, February 14, 2018
Appellant-Plaintiff, Court of Appeals Case No.
20A03-1707-PL-1702
v. Appeal from the Elkhart Circuit
Court
Elkhart Community School The Hon. Michael A. Christofeno,
Judge
Corporation,
Trial Court Cause No.
Appellee-Defendant. 20C01-1406-PL-175
Bradford, Judge.
Court of Appeals of Indiana | Opinion 20A03-1707-PL-1702 | February 14, 2018 Page 1 of 9
Case Summary
[1] Appellant-Plaintiff Sandra Weaver was married to David McGuire, an
employee of Appellee-Defendant Elkhart Community School Corporation
(“ECS”). As part of McGuire’s employment contract with ECS (“the
Contract”), ECS paid for a life insurance policy, with Weaver as the
beneficiary. In 2012, after becoming ill, McGuire resigned from ECS
(terminating the life insurance policy) and died early the next year. Weaver
sued ECS, asserting several claims stemming from her allegation that an ECS
employee advised her that McGuire should resign instead of applying for long-
term disability coverage, which would have left the life insurance policy in
place.
[2] ECS moved to dismiss (and later for summary judgment on) Weaver’s claims,
arguing that Weaver had failed to comply with the notice provisions of the
Indiana Tort Claims Act (“the ITCA”). The trial court denied ESC’s motions
on ITCA grounds but granted it summary judgment on the basis that Weaver’s
claims are without merit as a matter of law. Weaver contends that the trial
court erred in granting ECS summary judgment at all, while ECS argues that
the trial court should have granted summary judgment and/or dismissed
Weaver’s claims on ITCA grounds. Because we are convinced by ECS’s
argument, we reverse the judgment of the trial court and remand with
instructions to dismiss Weaver’s claims.
Court of Appeals of Indiana | Opinion 20A03-1707-PL-1702 | February 14, 2018 Page 2 of 9
Facts and Procedural History
[3] Before he passed away, McGuire was married to Weaver and a supervisor of
curriculum for ECS. Pursuant to the Contract, ECS paid for an insurance
policy on his life, with Weaver as the beneficiary. McGuire developed brain
cancer and, in the spring and summer of 2012, it became clear that he would
not be able to continue working. On May 15, 2012, McGuire submitted his
resignation to ECS, to be effective on July 1, 2012, which, inter alia, terminated
the life insurance coverage. McGuire died on March 7, 2013.
[4] On June 23, 2014, Weaver sued ECS, asserting several claims, namely breach
of fiduciary duty, constructive fraud, interference with contractual relationship,
and breach of implied contract of good faith and dealing. At the heart of all of
Weaver’s claims is the allegation that an ECS employee advised her that
McGuire should resign instead of applying for long-term disability coverage. It
does not appear to be in dispute that, had McGuire applied for disability
coverage instead of resigning, his life insurance coverage would have continued.
Weaver requested damages in the amount of two years of McGuire’s salary.
[5] On August 4, 2015, ECS moved to dismiss on the ground that Weaver had
failed to serve the required statutory notice pursuant to the ITCA, which
motion the trial court denied on January 6, 2016. On October 26, 2016, ECS
moved for summary judgment both on the ITCA ground and the ground that
the undisputed facts did not support Weaver’s claims as a matter of law. On
March 21, 2017, the trial court granted ECS’s summary judgment motion. On
Court of Appeals of Indiana | Opinion 20A03-1707-PL-1702 | February 14, 2018 Page 3 of 9
April 24, 2017 Weaver filed a motion to correct error that the trial court denied
on June 26, 2017.
Discussion and Decision
[6] Weaver contends that the trial court erred in entering summary judgment in
favor of ECS on the basis that her claims failed as a matter of law. Also,
apparently anticipating ECS’s lead argument, Weaver argues that her claims
are not subject to the ITCA, as they arose from the Contract and are, therefore,
contract claims. ECS argues that the trial court should have dismissed
Weaver’s claims or entered summary judgment in favor of ECS on the ground
that they sound in tort and that she failed to satisfy the notice requirements of
the ITCA. We choose to address the fundamental question of whether
Weaver’s claims sound in tort or contract, the answer to which renders it
unnecessary to address them further.
[7] As mentioned, Weaver brought claims of breach of fiduciary duty, intentional
interference with contract, constructive fraud, and breach of the implied
contract of good faith and dealing:
14. Defendant’s action in advising McGuire and Weaver
that McGuire should resign instead of applying for long term
disability was a breach of Defendant’s fiduciary responsibility to
McGuire and to Plaintiff. Defendant was aware of the financial
advantages that would accrue to it and the disadvantages that
would accrue to Weaver should the alternative be taken, and
failed to advise McGuire of those advantages.
15. Defendant’s actions in this case constituted
constructive fraud, and damaged Weaver.
Court of Appeals of Indiana | Opinion 20A03-1707-PL-1702 | February 14, 2018 Page 4 of 9
16. Defendant’s advice to McGuire interfered with the
contractual relationship that existed between McGuire and the
life insurance company providing insurance coverage for
McGuire.
17. Defendant breached its implied contract of good faith
and fair dealing as an employer of McGuire, and its advice cost
McGuire a benefit that he believed he was entitled to, and
Weaver insurance coverage that she would have received.
Appellant’s App. Vol. II pp. 34–35.
[8] The question is whether these allegations sound in tort or in contract, the claim
that they sound in tort being the basis of ECS’s motion to dismiss.
A motion to dismiss under Ind. Trial Rule 12(B)(6) is made to
test the legal sufficiency of the claim, not the supporting facts.
Hosler ex rel. Hosler v. Caterpillar, Inc., 710 N.E.2d 193, 196 (Ind.
Ct. App. 1999). When reviewing a T.R. 12(B)(6) motion to
dismiss, we view the pleadings in the light most favorable to the
non-moving party, and draw every reasonable inference in favor
of that party. Minks v. Pina, 709 N.E.2d 379, 381 (Ind. Ct. App.
1999). We will affirm a successful T.R. 12(B)(6) motion when a
complaint states a set of facts, which, even if true, would not
support the relief requested in that complaint. Burress v. Indiana
Farmers Mut. Ins. Group, 626 N.E.2d 501, 503 (Ind. Ct. App.
1993), trans. denied (1994). Moreover, we will affirm the trial
court’s grant of a motion to dismiss if it is sustainable on any
theory or basis found in the record. Id. When reviewing a ruling
on a motion to dismiss, we stand in the shoes of the trial court
and must determine if the court erred in its application of the
law. Novicki v. Rapid-American Corp., 707 N.E.2d 322, 323 (Ind.
Ct. App. 1999).
C & E Corp. v. Ramco Indus., Inc., 717 N.E.2d 642, 643–44 (Ind. Ct. App. 1999).
Court of Appeals of Indiana | Opinion 20A03-1707-PL-1702 | February 14, 2018 Page 5 of 9
[9] As a commentator has observed,
The fundamental difference between tort and contract lies in the
nature of the interests protected. Tort actions are created to
protect the interest in freedom from various kinds of harm. The
duties of conduct which give rise to them are imposed by the law,
and are based primarily upon social policy, and not necessarily
upon the will or intention of the parties. They may be owed to
all those within the range of harm, or to some considerable class
of people. Contact actions are created to protect the interest in
having promises performed. Contract obligations are imposed
because of conduct of the parties manifesting consent, and are
owed only to the specific individuals named in the contract.
WILLIAM L. PROSSER, LAW OF TORTS 634 (3d. ed. 1964). Along the same
lines, the Indiana Supreme Court has noted that “[i]t is axiomatic that tort
obligations arise, not from an agreement between the parties, but by operation
of law.” Erie Ins. Co. v. Hickman by Smith, 622 N.E.2d 515, 518 (Ind. 1993).
[10] Consistent with these principles, the appellate courts of Indiana have addressed
whether each of the specific claims brought by Weaver is a tort and have
determined that each is. This court has determined that “[b]reach of fiduciary
duty is a tort claim for injury to personal property[.]” Farmers Elevator Co. of
Oakville v. Hamilton, 926 N.E.2d 68, 79 (Ind. Ct. App. 2010), trans. denied. As
for constructive fraud, this court has declared that “[e]ven though a constructive
fraud claim can relate to a contract, it is grounded in duty, breach of duty and
deceit. Hence, a constructive fraud claim is a tort, and the Indiana Tort Claims
Act applies to this claim.” Ind. Dep’t Of Transp. v. Shelly & Sands, Inc., 756
N.E.2d 1063, 1077–78 (Ind. Ct. App. 2001), trans. denied. A claim for
Court of Appeals of Indiana | Opinion 20A03-1707-PL-1702 | February 14, 2018 Page 6 of 9
interference with a contractual relationship—even though clearly related to and
derivative of a contractual relationship—sounds in tort: “In contrast to a
breach of contract claim, which does not necessarily involve intentional
wrongdoing, a claim of intentional interference with contract is established only
when there is tortious conduct, i.e., that which is intentional and unjustified.”
Bilimoria Computer Sys., LLC v. Am. Online, Inc., 829 N.E.2d 150, 156 (Ind. Ct.
App. 2005).
[11] Finally, a claim that a party to a contract has breached its duty of good faith
and fair dealing with another party has also been squarely held to be a tort,
despite, again, arising out of a contractual relationship:
Indiana law has long recognized that there is a legal duty implied
in all insurance contracts that the insurer deal in good faith with
its insured.[1] [Vernon Fire & Cas. Ins. Co. v. Sharp, 264 Ind. 599,
609, 349 N.E.2d 173, 181 (Ind. 1976)]; Wedzeb Enterprises v. Aetna
Life & Cas. Co. (1991), Ind. App., 570 N.E.2d 60, 63; [Liberty
Mutual Ins. Co. v. Parkinson, 487 N.E.2d 162, 164 (Ind. Ct. App.
1985), trans. denied]. Whether breach of this duty constitutes a
tort involves a judicial balancing of three factors: (1) the
relationship between the parties, (2) the reasonable foreseeability
of harm to the person injured, and (3) public policy concerns.
[Webb v. Jarvis, 575 N.E.2d 992, 995 (Ind. 1991)].
Erie Ins., 622 N.E.2d at 518. So, while we express no opinion on the merits of
any of Weaver’s claims, they are clearly all torts, as she alleges violations of
1
We shall assume, without deciding, that ECS qualifies as an “insurer” and therefore had a duty to act in
good faith with McGuire.
Court of Appeals of Indiana | Opinion 20A03-1707-PL-1702 | February 14, 2018 Page 7 of 9
duties imposed by law, not by contract. None of Weaver’s claims allege that
ECS breached the terms of the contract in any respect, and a claim that does
not allege the violation of a contractual duty is not a contract claim.
[12] Having determined that Weaver’s claims sounded in tort, compliance with the
notice provisions of the ITCA is a condition precedent to filing a tort suit
against a qualifying political subdivision, which Weaver acknowledges did not
occur in this case. See Orem v. Ivy Tech State College, 711 N.E.2d 864, 869 (Ind.
Ct. App. 1999) (noting that the “notice provision is … procedural precedent
which must be fulfilled before filing suit”), trans. denied. A claimant must tender
the statutorily prescribed notice within 180 days after the alleged loss. See Ind.
Code §§ 34-13-3-8, -12; Orem, 711 N.E.2d at 869 (noting that tort claims
brought against a political subdivision “are barred unless the governing body of
the political subdivision is given notice of the claim within one hundred and
eighty days after the loss occurs.”). Once a defendant raises the failure to
comply with the ITCA, “the burden shifts to the plaintiff to prove
compliance[,]” Davidson v. Perron, 716 N.E.2d 29, 34 (Ind. Ct. App. 1999),
which Weaver does not even attempt to do. Indiana courts have consistently
held that the failure to comply with the ITCA’s notice requirements requires
dismissal. See, e.g., Orem, 711 N.E.2d at 870. Because Weaver brought only
tort claims against ECS but failed to comply with the notice provisions of the
ITCA, we reverse the judgment of the trial court and remand with instructions
to dismiss Weaver’s claims on that basis.
[13] We reverse the judgment of the trial court and remand with instructions.
Court of Appeals of Indiana | Opinion 20A03-1707-PL-1702 | February 14, 2018 Page 8 of 9
Robb, J, and Crone, J., concur.
Court of Appeals of Indiana | Opinion 20A03-1707-PL-1702 | February 14, 2018 Page 9 of 9