Watkins v. Alvey

• Citation: 549 N.E.2d 74
• Decision Date: 30 January 1990
• Docket Number: No. 36A01-8906-CV-188,36A01-8906-CV-188
• Parties: B.J. WATKINS, Glennia Carroll and Edith Ralston, Appellants (Plaintiffs), v. Carl ALVEY and Martha Alvey, Appellees (Defendants).
• Court: Court of Appeals of Indiana

Page 74

549 N.E.2d 74

B.J. WATKINS, Glennia Carroll and Edith Ralston, Appellants (Plaintiffs), v. Carl ALVEY and Martha Alvey, Appellees (Defendants).

No. 36A01-8906-CV-188.

Court of Appeals of Indiana,

First District.

Jan. 30, 1990.

Gerald G. Angermeier, Jewell, Crump & Angermeier, Columbus, for appellants.

Linley E. Pearson, Atty. Gen. of Indiana, James C. Spencer, Deputy Atty. Gen., Indianapolis, amicus curiae.

STATEMENT OF THE CASE

RATLIFF, Chief Judge.

B.J. Watkins, Glennia Carroll and Edith Ralston (victims) appeal the trial court's judgment on the evidence in favor of Carl Alvey and Martha Alvey (Alveys) in an action charging the Alveys with conversion and with violation of the Indiana Deceptive Consumer Act. ¹

FACTS

In late 1986 the victims were enticed to join a pyramid scheme in which each was to invest $1,500.00 for the prospect of gaining $12,000.00 within four (4) to eight (8) weeks. The scheme had four levels of participation. The top level consisted of one person, Martha Alvey, who recruited the two participants in the second level. Those two participants recruited the four participants in the third level and those four participants recruited the eight on the lowest level of the pyramid. Under the scheme, the eight lowest level participants were to pass money to the two second level participants, who would then pass the money to the person at the top. Edith Ralston gave $1,500.00 to R.W. who was on the second level, and R.W. passed the money to Martha Alvey. B.J. Watkins gave $1,500.00 to J.C., who was on the second level, and J.C. passed the money to Carl Alvey to give to Martha Alvey. Glennia Carroll also gave $1,500.00 to J.C. who passed it to Martha Alvey through Carl Alvey.

After media coverage that this type of pyramid scheme was illegal, the victims hired an attorney who wrote Martha Alvey and demanded she return the victims' money. The Alveys did not repay the victims. The victims then filed a complaint charging the Alveys with conversion and with violation of the Indiana Deceptive Consumer Act.

A jury trial was held. At the close of the victims' case-in-chief the Alveys moved for a judgment on the evidence, asserting the victims had not demonstrated the Alveys were suppliers as the term was then defined in IC 24-5-0.5-2(3). The trial court granted the Alveys' motion and entered judgment in favor of the Alveys on the entire case. The trial court did not comment in its judgment on the victims' conversion cause of action. Further facts will be discussed as necessary.

ISSUES

1. Did the trial court err in granting judgment on the evidence for the Alveys by determining that the Alveys were not suppliers under IC 24-5-0.5-2(3)?

2. Did the trial court err in granting judgment on the evidence for the Alveys without addressing the victims' conversion cause of action?

Issue One

The trial court granted the Alveys' motion for judgment on the evidence after the victims' case-in-chief because the court found that the Alveys were not suppliers as defined by IC 24-5-0.5-2(3). The victims contend that the trial court erred in granting the Alveys' motion because the Alveys were suppliers under that statutory provision and violated the statutory provisions of the Indiana Deceptive Consumer Act by operating a pyramid scheme. We note that the Alveys did not file an appellate brief. When an appellee fails to submit a brief, an appellant may prevail by making a prima facie showing of reversible error. Stacey-Rand, Inc. v. J.J. Holman, Inc. (1988), Ind.App., 527 N.E.2d 726, 727. Thus, the victims may prevail by making a prima facie showing that the trial court made a reversible error.

Our standard for reviewing a trial court's ruling on a motion for judgment on the evidence is the same standard which governs a trial court in ruling upon the motion. State v. Omega Painting, Inc. (1984), Ind.App., 463 N.E.2d 287, 293. That is, we consider only the evidence and reasonable inferences therefrom most favorable to the nonmoving party. The motion should be granted only when there is a complete failure of proof because there is no substantial evidence or reasonable inference supporting an essential element of the claim. First Bank & Trust Co. of Clay County v. Bunch (1984), Ind.App., 460 N.E.2d 517, 518-19, trans. denied.

In 1986 the legislature amended the Deceptive Consumer Sales Act, IC 24-5-0.5-1 to 10 with Public Law 12-1986, thereby providing remedies to individuals who lose money in a pyramid promotional scheme. Determination of legislative intent is foremost in our construction of any statute and, whenever possible, we will give deference to that intent. Consideration of the reasons and policy underlying a statute and of the goals sought to be achieved by the legislation is indispensable to our ascertainment of the legislature's intent. In the Matter of Middlefork Watershed Conservancy District, Kleaving v. Board of Directors of Middlefork Watershed Conservancy District (1987), Ind.App., 508 N.E.2d 574, 577. We must view a statute within the context of an entire act, rather than in isolation. Board of School Trustees of South Vermillion School Corporation v. Benetti (1986), Ind.App., 492 N.E.2d 1098, 1102, trans. denied.

Chapter 0.5 of IC 24-5 is entitled "Deceptive Consumer Sales." Ind.Code 24-5-0.5-1 Construction and Purposes states:

"Sec 1. (a) This chapter shall be liberally construed and applied to promote its purposes and policies.

(b) The purposes and policies of this chapter are to: ...

(2) protect consumers from suppliers who commit deceptive sales acts; ..."

To section 10, entitled "Suppliers; deceptive acts", the legislature added subsection 3:

"Sec. 10. A supplier commits a deceptive act if the supplier gives any of the following representations, orally or in writing, or does any of the following acts:

* * * * * *

(3) Contrives, prepares, sets up, operates, publicizes by means of advertisements, or promotes a pyramid promotional scheme."

A "pyramid promotional scheme" is defined at IC 24-5-0.5-2(8), which reads as follows:

"(8) 'Pyramid promotional scheme' means any program utilizing a pyramid or chain process by which a participant in the program gives a valuable consideration exceeding one hundred dollars ($100) for the opportunity or right to receive compensation or other things of value in return for inducing other persons to become participants for the purpose of gaining new participants in the program ..."

"Promoting a pyramid promotional scheme," according to IC 24-5-0.5-2(9), means:

"(A) inducing or attempting to induce one (1) or more other persons to become participants in a pyramid promotional scheme; or

(B) assisting another in promoting a pyramid promotional scheme."

IC 24-5-0.5-4(a) permits an individual to seek damages and attorney fees for an incurred deceptive act after first providing notice, pursuant to IC 24-5-0.5-5(a), to the supplier. We hold that the clear intent of the legislature was to provide a cause of action and remedies for individuals who lose money in pyramid promotional schemes.

Although the record reflects the trial court granted the Alveys' motion for judgment on the evidence because "the Plaintiffs have failed to introduce any evidence on an essential element of their case under IC 24-5-0.5, i.e. whether the Defendants were 'suppliers' under the definition in the statute," Record at 252, the record does not reflect the parties' arguments on the issue at trial or the trial court's reasons for determining that the Alveys were not "suppliers." The term "supplier" was not amended by the legislature in 1986 when it added the provisions making pyramid schemes actionable deceptive acts. Thus, the definition of "supplier" at the time of trial remained:

"(3) '[S]upplier' means a seller, lessor, assignor, or other person who regularly engages in or solicits consumer transactions, including a manufacturer, wholesaler, or retailer, whether or not he deals directly with the consumer."

IC 24-5-0.5-2(3) (now at IC 24-5-0.5-2(3)(A)).

Our task is to analyze whether the legislature meant the term "supplier" to include a promoter of a pyramid scheme and, if so, then to decide whether evidence indicates the Alveys may have been suppliers. Whereas "supplier" as defined above indicates a person who "regularly engages in or solicits consumer transactions," the legislature used singular language in referring to the operation and promotion of a pyramid scheme. In IC 24-5-0.5-10(3) the legislature used the language "promotes a pyramid promotional scheme" when identifying the promotion and operation of a pyramid promotional scheme as a deceptive act. Thus, the legislature clarified that promotion and operation of one such scheme would be deceptive. In IC 24-5-0.5-2(8), when defining the term "pyramid promotional scheme," the legislature used the term "any program" to indicate that only one such program was required to meet the definition. Finally, in IC 24-5-0.5-2(9)(A), the legislature defined promotion of a pyramid scheme as "inducing or attempting one (1) or more other persons to become participants."

Thus, the...