CRIT Corp. and Peoplelink, LLC v. William J. Wilkinson, Hoosier Investments, LLC, Peter G. Trybula, and Barnes & Thornburg LLP

Indiana Court of Appeals·Decided January 23, 2018·No. 71A03-1705-PL-982·Published

Opinion

FILED

Jan 23 2018, 7:40 am

CLERK

Indiana Supreme Court

Court of Appeals

and Tax Court

ATTORNEYS FOR APPELLANTS ATTORNEY FOR APPELLEES Robert J. Palmer Patrick D. Murphy Wendell W. Walsh Murphy Rice, LLP May Oberfell Lorber South Bend, Indiana Mishawaka, Indiana Jonathan S. Quinn Andrew G. May Neal, Gerber & Eisenberg LLP Chicago, Illinois

IN THE

COURT OF APPEALS OF INDIANA

CRIT Corp. and Peoplelink, January 23, 2018 LLC, Court of Appeals Case No. Appellants-Plaintiffs, 71A03-1705-PL-982 Appeal from the

v. St. Joseph Superior Court The Honorable

William J. Wilkinson, Hoosier Jenny Pitts Manier, Judge Investments, LLC, Peter G. Trial Court Cause No. Trybula, and Barnes & 71D05-1607-PL-240 Thornburg LLP,1 Appellees-Defendants.

1 The claims against William J. Wilkinson (“Wilkinson”) and Hoosier Investments, LLC were dismissed by the trial court. However, pursuant to Indiana Appellate Rule 17(A), “[a] party of record in the trial court . . . shall be a party on appeal.”

Court of Appeals of Indiana | Opinion 71A03-1705-PL-982 | January 23, 2018 Page 1 of 17

Kirsch, Judge.

[1] CRIT Corp. and Peoplelink, LLC (together, “Peoplelink”) appeal the trial court’s orders dismissing their complaint against attorney Peter G. Trybula and his employer Barnes & Thornburg LLP (together, “B&T”) for breach of fiduciary duty and for legal malpractice. Peoplelink raises the following restated issues for our review:

I. Whether the trial court erred in dismissing Peoplelink’s initial complaint, which alleged breach of fiduciary duty arising from an alleged conflict of interest; and

II. Whether the trial court erred in dismissing Peoplelink’s second amended complaint, which alleged legal malpractice, fraud, and constructive fraud arising from the same alleged conflict of interest.

[2] We affirm.

Facts and Procedural History [3] Peoplelink is a nationwide staffing solutions business based in South Bend,

Indiana that matches temporary employees with companies in need of short- term labor. CRIT Corp. is a holding company that wholly owns Peoplelink. From 2001 to 2011, Peoplelink was privately owned by the Wilkinson family. In 2011, the Wilkinson family sold a controlling interest to CRIT, but William Wilkinson (“Wilkinson”) continued to serve as Peoplelink’s President and Chief Executive Officer until December 31, 2015. Peter G. Trybula (“Trybula”) is an attorney with the law firm of B&T. When Wilkinson decided to part ways with Peoplelink, Trybula and B&T represented Wilkinson and acted on his behalf in connection with the written agreements, including the non-compete between Wilkinson and Peoplelink, whereby Wilkinson separated from the company and transferred his interest in Peoplelink to CRIT. Peoplelink and CRIT were represented by their own legal counsel (not by B&T) in this “highly negotiated transaction that involved sophisticated parties and counsel.” Appellants’ App. Vol. II at 172.

[4] After Wilkinson’s departure, Peoplelink agreed to continue using B&T and Trybula as one of its key company counsel. Id. at 178. B&T “continued to be actively involved in Peoplelink’s legal affairs, advising Peoplelink on a variety of significant matters, including a possible M&A transaction, a dispute regarding a prior M&A transaction, the renewal of an existing banking facility, and other ordinary course matters.” Id. B&T simultaneously represented Wilkinson in connection with his “proposed acquisition” of Ohio-based companies, Just in Time and HR Business (together, “JIT”). Id. at 181. Upon Wilkinson’s request, B&T acted “on behalf of Wilkinson” and as his attorney in connection with his effort to acquire JIT. Id. at 173, 182.

[5] On July 1, 2016, the President and Chief Operating Officer of Peoplelink, Jay Mattern (“Mattern”), received an e-mail from Trybula. The e-mail was intended to be sent to Wilkinson and concerned the acquisition of an Ohio- based staffing solutions company located just 250 miles from Peoplelink’s headquarters in South Bend. Trybula immediately attempted to recall the email he had unintentionally sent to Mattern. Attached to the e-mail that Trybula inadvertently sent to Mattern were draft copies of the transaction documents for the acquisition of JIT by an investment vehicle owned and controlled by Wilkinson. The transaction documents reflected that JIT -- like Peoplelink itself – provided temporary staffing solutions. Id. at 65, 78-144. Trybula’s e-mail was sent less than seven months after Wilkinson -- while represented by B&T -- agreed to refrain from engaging in the staffing services industry.

[6] On July 13, 2016, Peoplelink filed a complaint against Wilkinson for anticipatory breach of contract, alleging that Wilkinson breached his non- compete agreements by pursuing a proposed acquisition of JIT.2 Peoplelink also filed a complaint against B&T, alleging breach of fiduciary duty related to its representation of Wilkinson in his proposed acquisition of JIT. The complaint specifically alleged that B&T was liable for breaching its fiduciary duty by “concurrently representing Peoplelink and Wilkinson in matters in which . . . B&T [has] a conflict of interest.” Appellants’ App. Vol. II at 73. B&T moved to dismiss the fiduciary duty claim pursuant to Indiana Trial Rules 12(B)(1) and 12(B)(6). After a hearing, the trial court entered an order on November 21, 2016, granting dismissal under both rules. In the order, the trial court noted that, “in considering the impropriety of the alleged conduct at issue, Peoplelink itself [made] reference to the standard articulated in Rule 1.7” of the

2 The trial court dismissed CRIT Corp. and Peoplelink, LLC’s (“Peoplelink”) declaratory judgment claims against Wilkinson and Hoosier Investments, LLC and granted summary judgment for Hoosier Investments, LLC on the remaining contract claims against it. Appellees’ App. Vol. II at 105. After Wilkinson filed a motion to dismiss the remaining claims against him for anticipatory breach of contract, Peoplelink settled with Wilkinson, and the claims against him were dismissed. Id. at 106-11.

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Indiana Rules of Professional Conduct, which concerns lawyer conflicts of interest. Id. at 18. At the hearing on the motion to dismiss, Peoplelink had argued that “there has been a violation of Rule 1.7” and that “Rule 1.7 prohibits this precise conduct.” Hrg. Tr. Vol. II at 19, 31.

[7] After the dismissal of its fiduciary duty claim based on an alleged conflict of interest, Peoplelink filed a second amended complaint in which it alleged B&T had a conflict of interest and breached a fiduciary duty and, therefore, was liable for legal malpractice, fraud, and constructive fraud. The complaint alleged B&T violated “fiduciary and ethical obligations” and breached a “fiduciary duty,” which “misconduct also violated Rule 1.7 of the Indiana Rules of Professional Conduct.” Appellants’ App. Vol. II at 187-88, 191. The second amended complaint was based on “the same operative facts” as the initial complaint. Hrg. Tr. Vol. II at 47, 64, 74.

[8] B&T moved to dismiss the second amended complaint pursuant to Indiana Trial Rules 9(B), 12(B)(1), and 12(B)(6). A hearing was held, and on March 22, 2017, the trial court entered an order dismissing the second amended complaint and stating in part: “After a great deal of consideration and review of the materials filed and case law and other authority cited, the Court now Grants the Motion to Dismiss filed by [B&T].” Appellants’ App. Vol. II at 20. On April 4, 2017, the trial court entered Final Judgment for B&T pursuant to Trial Rule 54(B). Peoplelink now appeals.

Discussion and Decision

[9] A motion to dismiss for failure to state a claim tests the legal sufficiency of the

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CRIT Corp. and Peoplelink, LLC v. William J. Wilkinson, Hoosier Investments, LLC, Peter G. Trybula, and Barnes & Thornburg LLP, (Ind. Ct. App. 2018).

CRIT Corp. and Peoplelink, LLC v. William J. Wilkinson, Hoosier Investments, LLC, Peter G. Trybula, and Barnes & Thornburg LLP (CRIT Corp. and Peoplelink, LLC v. William J. Wilkinson, Hoosier Investments, LLC, Peter G. Trybula, and Barnes & Thornburg LLP) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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