HEYSER v. NOBLE ROMAN'S INC.

• Decision Date: 25 October 2010
• Docket Number: No. 29A04-1002-PL-71.,29A04-1002-PL-71.
• Citation: 933 N.E.2d 16
• Parties: Kari HEYSER, et al., Appellants-Defendants. v. NOBLE ROMAN'S, INC., et al., Appellee-Plaintiffs.
• Court: Indiana Appellate Court

933 N.E.2d 16

Kari HEYSER, et al., Appellants-Defendants.

v.NOBLE ROMAN'S, INC., et al., Appellee-Plaintiffs.

No. 29A04-1002-PL-71.

Court of Appeals of Indiana.

Aug. 19, 2010.

Rehearing Denied Oct. 25, 2010.

P. Adam Davis, Indianapolis, IN, Attorney for Appellants.

Jeffrey R. Gaither, Marisol Sanchez, Curtis T. Jones, Indianapolis, IN, Attorneys for Appellees.

OPINION

SHARPNACK, Senior Judge.

Appellants Kari Heyser, et al. (“the Franchisees”), seek review of the trial court's grant of partial summary judgment in favor of Appellees Noble Roman's Inc., Paul W. Mobley, A. Scott Mobley, Troy Branson, and Mitch Grunat (collectively, “Noble Roman's”). We affirm and remand for further proceedings.

I. ISSUE

The Franchisees raise one issue, which we restate as whether the trial court erred by granting partial summary judgment to Noble Roman's on the Franchisees' claim for constructive fraud. ¹

II. FACTS AND PROCEDURAL HISTORY

On, June 19, 2008, the Franchisees filed suit against Noble Roman's and two financial institutions (“the Banks”). The Franchisees asserted fraud and other claims against Noble Roman's and the Banks in relation to the Franchisees' agreements to open franchised Noble Roman's Pizza Restaurants that subsequently failed. On November 14, 2008, the Franchisees filed an Amended Complaint, which added more plaintiffs. On December 16, 2008, the Franchisees filed a Second Amended Complaint, which added other plaintiffs.

The Banks each filed a motion to dismiss the Franchisees' fraud claims against them for failure to state a claim upon which relief could be granted. The Franchisees filed a response. After a hearing on March 25, 2009, the trial court granted the Banks' motions to dismiss and dismissed them from the case with prejudice.

Next, Noble Roman's filed a Motion for Partial Summary Judgment and a supporting memorandum of law. In the memorandum, Noble Roman's asserted that the Franchisees were not “alleging constructive fraud.” Appellants' App. p. 166. Instead, Noble Roman's claimed that the Franchisees were alleging actual fraud, and that many of the alleged fraudulent statements in the Franchisees' Complaint and subsequent amendments did not qualify as actual fraud. The Franchisees filed a Response, in which they asserted that their Complaint and subsequent amendments alleged both actual and constructive fraud against Noble Roman's.

After a hearing, the trial court issued an order on September 23, 2009, granting Noble Roman's Motion for Partial Summary Judgment. The trial court determined, in part,

That as to constructive fraud, the Court finds that in the hearing of March 25, 2009 the Plaintiffs by counsel stated to the Court, ‘we have not plead constructive fraud.’ The Court finds that this is binding upon the parties and they are estopped from now asserting they have plead constructive fraud in the Complaint....

Appellants' App. p. 40.

On October 8, 2009, the Franchisees filed a “Motion to Correct Error, Reconsider and Vacate Order; Request for Clarification; Alternatively, Motion for Certification of Appeal of Interlocutory Order and for Stay of Proceedings Pending Appeal.” Appellants' App. p. 194. Noble Roman's filed a response. After a hearing, the trial court issued an order on January 12, 2010. In the order, the trial court denied the Franchisees' Motion to Correct Error, denied their request for leave to amend their complaint to more clearly identify constructive fraud claims, and denied their request to certify the September 23, 2009, order for discretionary interlocutory appeal.

On January 15, 2010, during a telephonic status conference, the Franchisees asked the trial court to reconsider the denial of their Motion to Correct Error. On February 4, 2010, the trial court issued an Order in which the trial court denied the Franchisees' request to reconsider. In the Order, the trial court stated, “the Court does not deem the prior statements of Plaintiffs' counsel to be ambiguous.” Appellants' App. p. 33. The trial court further determined:

there is no just reason for delay and the Court does now expressly enter [ ] Final Judgment as to the issues of whether or not the Plaintiffs included in the Amended Complaint the theory of constructive fraud and that the Plaintiffs may not have leave to file an Amended Complaint to include such theory.

Appellants' App. p. 34.

III. DISCUSSION

Our standard of review for a trial court's grant of a motion for summary judgment is well settled. Summary judgment is appropriate only where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C), Evan v. Poe & Associates, Inc., 873 N.E.2d 92, 97 (Ind.Ct.App.2007). All facts and reasonable inferences drawn from those facts are construed in favor of the nonmovant. Id. We must carefully review a decision on summary judgment to ensure that a party was not improperly denied its day in court. Id.

In this case, the Franchisees claim that the trial court should not have granted Noble Roman's Motion for Partial Summary Judgment. Specifically, the Franchisees assert that when their former attorney stated at the March 25, 2009, hearing that the Franchisees had not pleaded constructive fraud, he was not making a binding admission as to the Franchisees' claims against Noble Roman's.

An attorney can make an admission to a trial court that is binding upon his client. Hockett v. Breunig, 526 N.E.2d 995, 998 (Ind.Ct.App.1988). A statement which contains ambiguities or doubt is not to be regarded as a binding admission. See Maldonado v. Gill, 502 N.E.2d 1371, 1372 (Ind.Ct.App.1987), reh'g denied, transfer denied.

In Mid-States Aircraft Engines, Inc. v. Mize Co., Inc., 467 N.E.2d 1242, 1244 (Ind.Ct.App.1984), an aircraft maintenance company, Mid-States Aircraft Engines, Inc. (“Mid-States”), appealed the trial court's ruling that the trial court had personal jurisdiction over Mid-States. During a hearing before the trial court on Mid-States' motion to dismiss for lack of jurisdiction, Mid-States' counsel had stated that Mid-States “does receive business from the state of Indiana and in this particular case received business from the state of Indiana and would do so again.” See id. at 1245. On appeal, this Court determined that the attorney's statement to the trial court was a binding admission and provided relevant evidence on the subject of personal jurisdiction. See id. at 1248. Thus, the trial court properly determined that it had personal jurisdiction over Mid-States and did not err by reversing its earlier grant of Mid-States' motion to dismiss. See id.

Additionally, in Hockett, 526 N.E.2d at 996-997, a convicted murderer, Hockett, sued his former criminal defense attorneys, alleging malpractice. Hockett had also filed a petition for post-conviction relief. Id. at 997. In the malpractice case, the attorneys filed a motion for summary judgment while the petition for post-conviction relief was pending. Id. At a hearing on the attorneys' motion for summary judgment, Hockett's counsel stated that the decision in the post-conviction matter would most likely bind the trial court in the malpractice action. Id. at 998. Subsequently, Hockett lost in his post-conviction action, and the trial court in the malpractice action entered judgment in favor of the attorneys. Id. at 997. On appeal in the malpractice action, this Court concluded that Hockett's counsel's concession during argument on the motion for summary judgment was a binding admission. See id. at 998. Consequently, Hockett's loss in the post-conviction proceeding barred his legal malpractice action. See id.

Before turning to the case at hand, a brief review of the nature of fraud claims will be helpful. Actual fraud consists of five elements: 1) the fraud feasor must have made at least one representation of past or existing fact; 2) which was false; 3) which the fraud feasor knew to be false or made with reckless disregard as to its truth or falsity; 4) upon which the plaintiff reasonably relied; 5) and which harmed the plaintiff. Scott v. Bodor, Inc., 571 N.E.2d 313, 319 (Ind.Ct.App.1991). Actual fraud may not be predicated upon representations of future conduct. Siegel v. Williams, 818 N.E.2d 510, 515 (Ind.Ct.App.2004). Constructive fraud, on the other hand, arises by operation of law from a course of conduct which, if sanctioned by law, would secure an unconscionable advantage, irrespective of the actual intent to defraud. Drudge v. Brandt, 698 N.E.2d 1245, 1250 (Ind.Ct.App.1998). The elements of constructive fraud are different than the elements of actual fraud, as follows: 1) a duty owing by the party to be charged to the complaining party due to their relationship; 2) violation of that duty by the making of deceptive material misrepresentations of past or existing facts or remaining silent when a duty to speak exists; 3) reliance thereon by the complaining...