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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