Central Indiana Podiatry, P.C., Northwest Surgery Center, LLC, d/b/a Foot & Ankle Surgery Center, f/k/a Foot & Ankle Surgery Center, LLC and Anthony E. Miller, D.P.M. v. Barnes & Thornburg, LLP

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”),
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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.
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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:
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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.
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[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
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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
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[(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.)
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[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
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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;
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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.
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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).
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