Parke County v. Ropak, Inc., 28A01-8711-CV-273

• Decision Date: 02 August 1988
• Docket Number: No. 28A01-8711-CV-273,28A01-8711-CV-273
• Parties: PARKE COUNTY, Indiana, Defendant-Appellant, v. ROPAK, INC., Plaintiff-Appellee.
• Court: Indiana Appellate Court

Page 732

526 N.E.2d 732

PARKE COUNTY, Indiana, Defendant-Appellant, v. ROPAK, INC., Plaintiff-Appellee.

No. 28A01-8711-CV-273.

Court of Appeals of Indiana,

First District.

Aug. 2, 1988.

Rehearing Denied Sept. 19, 1988.

Sydney L. Steele, Richard S. Pitts, Lowe Gray Steele & Hoffman, Donald C. Duck, Indianapolis, John R. Kenley, Rockville, for defendant-appellant.

Stephen L. Trueblood, Landyn K. Harmon, Trueblood Harmon Carter & Cook, Terre Haute, for plaintiff-appellee.

RATLIFF, Chief Judge.

STATEMENT OF THE CASE

Defendant County appeals judgment and award of $150,000.00 damages in favor of plaintiff corporation which filed suit against the county under the Indiana Tort Claims Act ¹ (ITCA). We affirm.

FACTS

Ropak, Inc., a meat processing business, was formed on January 13, 1977, by Gary and Anne Cooper. Ropak was unable to make a profit operating as a custom butchering service for the general public, so the Coopers changed the focus of their business to wholesale butchering for a commercial market. Gross sales increased during the years 1979-81, and Ropak cultivated a In the summer of 1980, complaints about run-off and smell from Ropak's operation prompted Dwight Milligan, the Parke County Sanitarian, to contact Cooper about the problem. Milligan informed Cooper that Ropak's waste water disposal system was not functioning properly. During July and August of 1980, Cooper and Milligan met at least twice to discuss the problem, and Milligan advised Cooper that the septic problem could be solved in either one (1) of two (2) ways. Cooper could either hook into the municipal sewer system or construct a holding pond or lagoon. Milligan contacted Cooper in September 1980, and informed him that the City of Rockville had refused permission for a sewer hook-up. Milligan further stated that Cooper would have to build a lagoon or be shut down.

profitable business relationship with Crest Mark Packing Co., a large meat packing company.

On September 24, 1980, Milligan issued Ropak a permit to begin building the lagoon. Milligan checked on the progress of the lagoon construction nearly every day. On February 18, 1981, a representative of the State Board of Health inspected the lagoon. The inspection revealed that the State had given no prior approval for the project, and no SPC-15 permit had been issued as was required by state law and Stream Pollution Control Board regulations. On February 19, Milligan notified Cooper by letter that the Parke County regulations had been satisfied, inspection by the State Board of Health had been completed, and Milligan had discussed the project with the State Board and found that everything was all right. Ropak began using the lagoon.

On or about May 11, 1981, Joseph Snyder of the State Board of Health notified Cooper that Ropak's waste disposal problem had been referred to the Attorney General's office for enforcement because Cooper had failed to comply with state law. The State Board denied Cooper's request for an SPC-15 permit. Cooper contacted Milligan, and Milligan stated again that he had discussed the issue with Joseph Snyder, that there was going to be no problem with the lagoon, and that Cooper should not worry about it. Snyder subsequently testified that he had never spoken with Milligan about the lagoon. Shortly after receiving the May 11 letter, Ropak was sued by the Stream Pollution Control Board which was seeking to enjoin use of the lagoon. Ropak hired an engineering consulting firm to work on correcting the lagoon problem, but Ropak's business operated at a loss and eventually closed. By letter dated October 20, 1981, Ropak notified the Parke County Board of Commissioners and the Attorney General of its claim against Parke County.

The Coopers filed a complaint for damages against Parke County and the State Board of Health on April 22, 1983. On August 18, 1983, the trial court granted summary judgment in favor of the State Board of Health finding that the plaintiffs' action against the State was barred for failure to comply with the notice requirements of the ITCA. Discovery ensued between the remaining parties, and Ropak, Inc. was substituted for the Coopers as plaintiff. Parke County filed a motion for summary judgment which was denied. A jury trial was held in May, 1987, and at the close of the plaintiff's case, Parke County moved for judgment on the evidence. The court granted the motion as to plaintiff's claim under 42 U.S.C. Sec. 1983 and the negligence claim, but allowed the fraud claim to go to the jury. The jury returned a verdict of $150,000.00 in favor of Ropak, and the court entered judgment upon the verdict. Parke County brings this appeal.

ISSUES

1. Was the plaintiff's claim of fraud based upon misrepresentations of fact or law?

2. Did the plaintiff comply with the notice requirements of the ITCA?

3. Did the trial court properly conclude that Parke County was not immune from liability under the ITCA?

4. Does the evidence support the findings of intentional misrepresentation and reasonable reliance?

5. Was the damage award adequately supported by the evidence?

6. Did the trial court properly exclude defendant's exhibit "I", a letter from plaintiff's counsel which allegedly showed plaintiff's reliance on someone other than the Parke County Sanitarian?

7. Did the trial court properly admit plaintiff's financial statements into evidence?

8. Did the trial court err in refusing defendant's tendered instructions numbered one (1), five (5), six (6), and eight (8), and in modifying defendant's instruction number seven (7)?

9. Did the trial court properly give instructions numbered four (4) and eleven (11)?

DISCUSSION AND DECISION

Issue One

The appellant contends first that any misrepresentation made by Dwight Milligan was one of law rather than fact, and therefore not actionable under a fraud theory. The appellant notes correctly that in order to sustain an action for fraud, it must be proven by a preponderance of the evidence that a material misrepresentation of a past or existing fact was made which was untrue and known to be untrue by the person making it, or else recklessly made, and that another party in fact relied on the misrepresentation and was induced thereby to act to his detriment. Plymale v. Upright (1981), Ind.App., 419 N.E.2d 756, 760. Parke County contends that Milligan's only misrepresentation concerned the need for a state permit, and because this was a legal issue rather than a factual issue, the fraud allegation must fail. In addition, Parke County argues that because all persons are charged with knowledge of the rights and remedies prescribed by statute, Middleton Motors, Inc. v. Indiana Dept. of State Revenue (1978), 269 Ind. 282, 285, 380 N.E.2d 79, 81, Ropak should have known about the state permit requirement and not relied on Milligan's statements.

Contrary to appellant's assertions, the record does contain evidence that Milligan's misrepresentations included factual misstatements as well as erroneous statements of law regarding the state permit. Cooper testified that he contacted Milligan after receiving a letter from Joseph Snyder of the State Board of Health advising him that Ropak's violations were being referred to the Attorney General for enforcement action. According to Cooper, Milligan stated that he had talked to Snyder, and that "everything was O.K. with the lagoon, there was no problem, don't worry about it." Record at 958. Cooper also testified that when he asked whether "any other paper" was necessary for approving the lagoon, Milligan never mentioned the State Board of Health. Furthermore, Milligan advised that the State Board of Health knew about the lagoon situation and that Milligan was "handling it". Record at 961-62. Cooper testified that he did not go over Milligan's head to contact the State Board on his own because Milligan had threatened to shut him down unless he complied with Milligan's instructions. At trial, Joseph Snyder testified that he had never spoken with Milligan about Ropak's lagoon.

Where the evidence conflicts, whether certain statements actually were made as asserted is a question of fact for the jury. Plymale, at 760. Whether plaintiffs acted in reliance on a defendant's representation and whether plaintiffs were justified in so doing are, likewise, factual questions for a jury. Id. However, where the alleged statements cannot be construed as anything but an expression of opinion or belief or a representation of law, the court may properly make such a finding and take the case from the jury. Id. at 760-61. The record contains evidence that Milligan told Cooper he had spoken to Joseph Snyder about Ropak and that Milligan would be handling the lagoon problem. Snyder testified that he had never spoken to Milligan. Milligan's statements about his contact with the State Board clearly were factual in nature and not limited to expressions of opinion and representations of law.

Parke County claims also that Cooper had no right to rely on Milligan's statements because neither Parke County nor Milligan had a fiduciary relationship to Cooper. The appellant is correct that a party seeking to prove fraud must establish a right to rely. Plymale, at 761. However, we find no authority for the position that the right to rely must be based on a fiduciary relationship. A person has a right to rely upon representations where the exercise of reasonable prudence does not dictate otherwise. Plymale, at 762, quoting Soft Water Utilities, Inc. v. LeFevre (1974), 159 Ind.App. 529, 308 N.E.2d 395. Whether reliance was justified is, on conflicting evidence, a matter for a jury to determine. Plymale, at 763. Cooper claims that Milligan's misrepresentations about the State's involvement deceived him into believing that State permission to build a lagoon had been given. Furthermore, Joseph Snyder testified that the State Board often used County Sanitarians to help make contacts, and an administrative...