Reinhart v. Boeck
| Decision Date | 18 December 2009 |
| Docket Number | No. 06A04-0905-CV-286.,06A04-0905-CV-286. |
| Citation | 918 N.E.2d 382 |
| Parties | David Nick REINHART a/k/a Rick Reinhart, Appellant-Defendant, v. Gregg W. BOECK, Appellee-Plaintiff. |
| Court | Indiana Appellate Court |
Michael L. Einterz, Andrew J. Einterz, Michael L. Einterz, Jr., Einterz & Einterz, Indianapolis, IN, Attorneys for Appellant.
Barton B. Ost, Blythe & Ost, Indianapolis, IN, Attorney for Appellee.
David Nick Reinhart appeals from the trial court's entry of summary judgment for Gregg W. Boeck. Reinhart raises four issues for our review, which we consolidate and restate as the following dispositive issue: whether a genuine issue of material fact precludes the entry of summary judgment for Boeck on his claim that Reinhart is jointly and severally liable for his business partner's fraudulent sale of unregistered securities.
We affirm.
The trial court's summary judgment order included a detailed, eight-page "statement of undisputed facts drawn from the designations filed in this case." Appellant's App. at 10. According to the trial court:
In October of 2005, Ronald G. Thomas began a scheme to lure David Nick Reinhart into a phony real estate business as a "partner" and stalking horse for other marks. Thomas and Reinhart first spoke on the phone. Thomas posed as an experienced real estate entrepreneur who had a partner named Josh Bach who handled construction. [Id. at 567 (citing Reinhart's Deposition).1] Thomas said that although he had a substantial line of credit he was looking for "partners" to expand the business. A few days after first speaking, Thomas and Reinhart met at a restaurant. Thomas said he was about to make $800,000 on the sale of some Castleton condominiums. Reiterating the same representations he made on the phone, Thomas continued to lure Reinhart into his business which he described as consisting of "partners." [Id. (citing Reinhart's Deposition).] Within a week, Thomas and Reinhart met again at another restaurant with Josh Bach. With Thomas reiterating the same sales pitch, Josh Bach "confirmed" that he was on the construction side of the business. Thomas for his part concentrated on the financial side. Immediately after this meeting the three ventured off to the west side of suburban Indianapolis to look at possible investment properties.
In early November of 2005, with assurances to Reinhart that (1) he was just the sort of person Thomas was looking to work with (2) that Reinhart had the right attitude and could be trained in real estate and (3) that Reinhart's lack of experience in real estate would be a blessing because he could more easily be taught by Thomas, Thomas invited Reinhart to join the business that Thomas called [TRG]. [Id. at 569 (citing Reinhart's Deposition).] Reinhart agreed to enter real estate transactions with Thomas for purposes of attempting to realize profits. [Id. (citing Reinhart's Deposition).] Shortly after, the two co-venturers bought some real estate which was titled in Reinhart's name. [Id. (citing Reinhart's Deposition).]
Reinhart also began to solicit investors for TRG. [Id. (citing Reinhart's Deposition).] Thomas had Reinhart do this because he told him that although business was great Thomas was tapped out on his credit lines. [Id. at 569-70 (citing Reinhart's Deposition).] This was an assertion that Reinhart heard spoken, not just to him, but to potential investors to whom he heard Thomas speak. [Id. at 570 (citing Reinhart's Deposition).] Reinhart never verified that Thomas had any lines of credit. [Id. (citing Reinhart's Deposition).] Reinhart also, though he had asked for financial documentation from Thomas and was promised the same, never received any financial documentation. [Id. (citing Reinhart's Deposition).] As a matter of undisputed fact, never during their entire association together, did Reinhart ever receive any financial statements from Thomas. [Id. (citing Reinhart's Deposition).] Reinhart never checked with Thomas' purported lawyer to confirm the accuracy of anything Thomas said. [Id. at 570-71 (citing Reinhart's Deposition).] Thomas tasked Reinhart with finding a total of six investors. Thomas told Reinhart he already had three. [Id. at 571 (citing Reinhart's Deposition).] When Reinhart asked for the names of the investors, Thomas declined to furnish them stating that they wanted to be confidential and Reinhart did not quibble with Thomas' position. [Id. (citing Reinhart's Deposition).]
An advertisement began appearing in the Indianapolis Star starting on December 4, 2005. The advertisement said:
REAL ESTATE
Serious Investor Wanted
I find the properties
Both names go on deed
Profits split 50/50
$15K-$80K per deal
The telephone number was Reinhart's home number. When prospects would call, Reinhart would repeat the assertions made to him by Thomas. [Id. at 249, ¶ 106 (citing Reinhart's Deposition).] Again, and importantly, for purposes of [the Indiana Uniform Securities Act], Reinhart never obtained any information from any source—Thomas, his law-firm, independent legal counsel, any investigation, the Indiana Security Commission or otherwise—how the investments would be documented and whether they were registered or, if not, exempt. [Id. at 571 (citing Reinhart's Deposition).]
To prospects who would call, including eventually Boeck, Reinhart would explain that he was working with Thomas[,] an experienced real estate investor. [Id. at 573 (citing Reinhart's Deposition).] He and Thomas were looking for investors to expand their business. [Id. at 573 (citing Reinhart's Deposition).] Investors would take 50% of the profits from investments and Reinhart and Thomas would split the other 50%. [Id. at 251 ¶ 121, 573 (citing Reinhart's Deposition).] Reinhart would attempt to get the prospect to meet with [him] and Thomas. [Id. at 573 (citing Reinhart's Deposition).]
In his first contact with Boeck, a return call to him after Boeck had left a message responding to the ad, Reinhart told Boeck that "we are looking for investors in our real estate business[";] that there were three partners including him; that "we buy properties . . . in foreclosure . . . and in volume from banks[";] that "we do two things with these properties; short sale and lease to own[";] that the partners concentrated on various aspects of the business; that "we make between $12,000 and $15,000 profit on each house sold in a short sale (there were 100 short sales for the partnership in the previous year)[";] and that "we made in excess of $1,000,000 last year." [Id. at 574-75 (citing Boeck's Affidavit); id. at 576-78 (citing Reinhart's Deposition).] Boeck was interested and told Reinhart he'd like documentation. Reinhart told Boeck that documentation could be furnished by [him] and his partners. [Id. at 578 (citing Reinhart's Deposition).] He indicated that the documentation would be detailed. [Id. (citing Reinhart's Deposition).] Boeck, thinking that he liked what he heard and wanted to hear more, agreed to meet Reinhart and Thomas at a restaurant for breakfast.
Reinhart knew that it was false when he said "we buy properties . . . in foreclosure . . . and in volume from banks." [Id. at 576 (citing Reinhart's Deposition).] He'd never done that. [Id. at 576-77 (citing Reinhart's Deposition).] Reinhart had no knowledge of the truth of the statements that his partners did 100 short sales in the previous year, that the partners made about $12,000 to $15,000 per short sale, or how much the partners made in the previous year. [Id. at 577 (citing Reinhart's Deposition).] Reinhart did not know because he had never received documentation. [Id. at 576-77 (citing Reinhart's Deposition).] Reinhart had never actually been involved in any lease[-]to[-]own transactions with the partners. [Id. at 576 (citing Reinhart's Deposition).]
On December 22, 2005, a meeting occurred with Boeck, Thomas and Reinhart. Thomas spun a tale of his great real estate experience, acumen and success, and yet it was a sad tale inasmuch as his partners' business was so good that even with the prodigious credit of the partners it was short on capital and needed money. That's why they were looking for five or six more investors— they'd already had found three.
The business, consisting of the three partners Thomas, Reinhart and Bach[,] were splitting the profits three (3) ways equally. [Id. at 579 (citing Boeck's Affidavit); id. at 581 (citing Reinhart's Deposition).] They were generating profits from buying twenty to twenty-five homes per month from banks, fixing them up with several construction crews who worked for them under direction of partner Bach and having the property back on the market in two to ten days. [Id. at 579-81 (citing Boeck's Affidavit).] The investment of the partners into more expensive $300,000-$500,000 homes was "eating into their working capital" and they needed more investors to grow their "crazy good" business even faster. [Id. (citing Boeck's Affidavit); id. at 582 (citing Reinhart's Deposition).] None of this was true.
Reinhart was largely silent during this meeting but gestured and appeared to assent as Thomas spoke. Reinhart did add that he was a pharmaceutical salesmen and that he was probably going to quit that job to go into real estate full time with his partner Thomas. [Id. at 581 (citing Boeck's Affidavit.]
Although lacking as clear a recollection, Reinhart in his deposition disputes substantially none of Boeck's version of the first conversation between the two. Reinhart disputes substantially none of Boeck's account about the breakfast meeting with Thomas and Reinhart. He does recall Thomas stating that he, Reinhart and Bach were partners equally splitting profits. He admits that that statement was false and he knew it at the time because Reinhart had never received any distributions by that point. Also concerning one other particular statement, that the partners were purchasing 20-25 homes...
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