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
Court of Appeals of Indiana | Opinion 71A03-1705-PL-982 | January 23, 2018 Page 2 of 17 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
Court of Appeals of Indiana | Opinion 71A03-1705-PL-982 | January 23, 2018 Page 3 of 17 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.
Court of Appeals of Indiana | Opinion 71A03-1705-PL-982 | January 23, 2018 Page 4 of 17 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.
Court of Appeals of Indiana | Opinion 71A03-1705-PL-982 | January 23, 2018 Page 5 of 17 Discussion and Decision [9] A motion to dismiss for failure to state a claim tests the legal sufficiency of the
claim, not the facts supporting it.3 Magic Circle Corp. v. Crowe Horwath, LLP, 72
N.E.3d 919, 922 (Ind. Ct. App. 2017). Our review of a trial court’s grant or
denial of a motion based on Indiana Trial Rule 12(B)(6) is de novo. Id. When
reviewing a motion to dismiss, we view the pleadings in the light most favorable
to the nonmoving party, with every reasonable inference construed in the
nonmovant’s favor. Id. Motions to dismiss are properly granted only “when
the allegations present no possible set of facts upon which the complainant can
recover.” Id. at 922-23 (quotations omitted).
I. Initial Complaint [10] Peoplelink argues that its initial complaint stated a viable claim for breach of
fiduciary duty against B&T, and the trial court erred when it dismissed the
initial complaint. Peoplelink claims that B&T had a conflict of interest in
representing Peoplelink and, at the same time, providing legal advice to
Wilkinson on a matter that was adverse to Peoplelink’s interests. Peoplelink
asserts that, in dismissing the initial complaint, the trial court misapplied our
Supreme Court’s case of Sanders v. Townsend, 582 N.E.2d 355 (Ind. 1991) and
that Sanders does not preclude claims for breaches of fiduciary duty merely
3 We note that the trial court dismissed Peoplelink’s complaint pursuant to Indiana Trial Rules 12(B)(1) and 12(B)(6). However, in its Appellants’ Brief, Peoplelink only discusses the standard of review for a dismissal under Trial Rule 12(B)(6). We, therefore, also only refer to the standard of review for that rule.
Court of Appeals of Indiana | Opinion 71A03-1705-PL-982 | January 23, 2018 Page 6 of 17 because they violate a rule of professional conduct. Peoplelink alleges that its
allegation of a breach of fiduciary duty is based on an independent common
law basis, and under Liggett v. Young, 877 N.E.2d 178 (Ind. 2007), its claim is
not barred.
[11] In Sanders v. Townsend, an attorney was sued by his clients, who alleged that he
“breached his fiduciary duties to them by coercing them into a settlement they
considered inadequate,” in violation of the Indiana Rules of Professional
Conduct. Id. at 358-59. On appeal after summary judgment was granted in
favor of the attorney, our Supreme Court affirmed the trial court, holding “that
to subject attorneys to suit for constructive fraud based on a violation of the
fiduciary duties that are regulated under the Rules of Professional Conduct . . .
would create unreasonable, unwarranted, and cumulative exposure to civil
liability.” Id. at 359. In reaching its decision, the Supreme Court relied in part
on the preamble to the Rules of Professional Conduct and stated that the
preamble makes it “clear that [the Rules] provisions do not purport to create or
describe any civil liability” and they “are not designed to be a basis for civil
liability.” Id. The Supreme Court also asserted its exclusive jurisdiction to
investigate, process, and apply “its Rules through its Disciplinary
Commission.” Id.
[12] Liggett v. Young, involved a contract dispute arising from Liggett’s construction
of a private residence for his attorney, defendant Young and, therefore,
concerned “the common law prohibition against attorney-client transactions,”
involving transactions between a lawyer and client “in which the lawyer does
Court of Appeals of Indiana | Opinion 71A03-1705-PL-982 | January 23, 2018 Page 7 of 17 not render legal services.” Id. at 179, 184. Our Supreme Court reaffirmed
Sanders and held that liability against an attorney “may not be predicated on a
claimed violation of a specific professional conduct rule relating to fiduciary
duties.” Id. at 183. It further held that Indiana law allows a client to “seek
damages if the attorney’s conduct constitutes a breach of fiduciary duty at
common law,” but only when there exists an “independent common law basis”
that is “apart from” a violation of the Rules of Professional Conduct. Id. The
Liggett court then noted that, apart from the Rules of Professional Conduct,
Indiana common law has long recognized that such “separate attorney-client
transactions” that are “entered into during the existence of a fiduciary
relationship are presumptively invalid as the product of undue influence.” Id. at
183-84. The Supreme Court acknowledged a long line of Indiana cases
supporting this presumption and additionally cited to a section of the
Restatement of The Law Governing Lawyers, all of which addressed the precise
behavior alleged to be a breach of fiduciary duty in Liggett, and which
constituted an independent common law basis apart from the violation of the
Rules of Professional Conduct. Id. at 184.
[13] Here, in its initial complaint, Peoplelink raised one claim against B&T, alleging
that B&T “breached [its] fiduciary duties by, among other things, concurrently
representing Peoplelink and Wilkinson in matters in which Trybula and B&T
[had] a conflict of interest” and in doing so “elevated the interests of Wilkinson
above the interest of Peoplelink to the detriment of Peoplelink.” Appellants’
App. Vol. II at 73. An Indiana attorney’s duty to not represent a client if the
Court of Appeals of Indiana | Opinion 71A03-1705-PL-982 | January 23, 2018 Page 8 of 17 representation involves a concurrent conflict of interest is found in Rules 1.7
and 1.8 of the Indiana Rules of Professional Conduct. Peoplelink’s allegation
of breach of fiduciary duty, therefore, was based on a violation of the fiduciary
duties regulated by the Rules of Professional Conduct, which both Sanders and
Liggett preclude.
[14] While Peoplelink urges that its allegation has an independent common law
basis apart from the violation of Rules 1.7 and 1.8, as Liggett requires, we find
that Peoplelink’s initial complaint did not establish an independent common
law basis for its claim against B&T. In support of its position, Peoplelink relies
on Blasche v. Himelick, 140 Ind. App. 255, 210 N.E.2d 378 (1965) and Bell v.
Clark, 653 N.E.2d 483 (Ind. Ct. App. 1995) as supporting an independent
common law basis for its allegation against B&T. However, both of those cases
involved attorney self-dealing, which is not the basis of Peoplelink’s allegation
of breach of fiduciary duty against B&T. See Bell, 653 N.E.2d at 490 (finding
legal malpractice based on claim by general partner against attorney for
partnership -- where attorney was also a limited partner in the partnership, had
adverse financial interests, and double-billed the general partner and
partnership for attorney fees – based on common law that provides, “A lawyer
commits a breach of trust going to the very essence of the attorney-client
relationship when he takes a position adverse to that of his client, or former
client, in a business transaction. Attorneys must not allow their private interests
to conflict with those of their client.” (citations omitted)); Blasche, 140 Ind. App.
at 257-58, 210 N.E.2d at 379-80 (involving action by heirs of deceased grantor
Court of Appeals of Indiana | Opinion 71A03-1705-PL-982 | January 23, 2018 Page 9 of 17 “attacking the validity of a certain deed by reason of fraud and undue
influence” where the defendant-attorney prepared and procured the deed
transferring the real estate to himself instead of the client-grantor’s heirs).
Peoplelink also cites to Price Waicukauski & Riley, LLC v. Murray, 47 F. Supp. 3d
810 (S.D. Ind. 2014) for support of an independent common law basis, but in
that case no breach of fiduciary duty claim was alleged, and therefore, the
district court did not analyze any such claim either based in the common law or
on a violation of the Rules of Professional Conduct and did not have the
opportunity to determine if any such claim fit into the exception carved out in
Liggett. Price, 47 F. Supp. 3d at 824.
[15] Additionally, Peoplelink cites to several cases from other jurisdictions as
support for an independent common law basis for its claim. The first is
Maritrans GP, Inc. v. Pepper, Hamilton & Scheetz, 602 A.2d 1277 (Pa. 1992), which
is a case that was handed down prior to Liggett and involved a denial of
injunctive relief against attorneys for misuse of a former client’s confidences
while representing another client in “substantially related” matters. Id. at 1279,
1283-84, 1285. In contrast, in the present case, Peoplelink never alleged in its
initial complaint that B&T misused client confidences received from Peoplelink,
or that B&T represented Peoplelink and Wilkinson in substantially related
matters. See Appellants’ App. Vol. II at 73-74. Additionally, Liggett did not
involve a request for injunctive relief, but instead, held that Indiana law allows
a client to “seek damages if the attorney’s conduct constitutes a breach of
fiduciary duty at common law,” but only when an independent common law
Court of Appeals of Indiana | Opinion 71A03-1705-PL-982 | January 23, 2018 Page 10 of 17 basis, apart from a violation of the Rules of Professional Conduct, exists.
Liggett, 877 N.E.2d at 183 (emphasis added). Peoplelink next relies on Airgas,
Inc. v. Cravath, Swaine & Moore LLP, No. 10-612, 2010 WL 3046586 (E.D. Pa.
Aug. 3, 2010), which involved a law firm representing one client in a possible
merger with a second client and also representing the first client in a lawsuit
against the second client when the hostile takeover failed. Id. at *1. That case
is distinguishable from the present case because, here, Peoplelink did not allege
that B&T represented Wilkinson in a lawsuit or any other matter brought
against Peoplelink. Lastly, Peoplelink cites to Ulico Cas. Co. v. Wilson, Elser,
Moshowitz, Edelman & Dicker, 843 N.Y.S.2d 749 (N.Y. Sup. Ct. 2007), aff’d as
modified by 56 A.D.3d 1 (N.Y. App. Div. 2008), but cites to the portion of the
opinion that was subsequently modified on appeal; specifically, on appeal, the
court granted defendant’s motion for partial summary judgment to the extent of
dismissing the claim of breach of fiduciary duty. Additionally, that case dealt
with the law firm’s dual representation of two clients in claims that implicated
insurance policies issued by both clients, id. at *8; here, there was no allegation
that B&T represented both Peoplelink and Wilkinson in the same matter.
[16] In support of its argument, Peoplelink also points to the language in the
Preamble of the Rules of Professional Conduct that states, “[A] lawyer’s
violation of a Rule may be evidence of breach of the applicable standard of
conduct.” Peoplelink asserts that the trial court ignored this language in its
dismissal of its initial complaint. However, although this language does appear
in the Preamble, the text also states that “[v]iolation of a Rule should not itself
Court of Appeals of Indiana | Opinion 71A03-1705-PL-982 | January 23, 2018 Page 11 of 17 give rise to a cause of action against a lawyer” and “[the Rules] are not
designed to be a basis for civil liability.” Ind. Professional Conduct Rule
Preamble 20. Even though the Preamble states that a violation of a Rule may
be used as evidence of breach of standard of conduct, pursuant to Liggett, an
independent common law basis separate from the rule violation must be shown.
[17] In this case, Peoplelink’s allegation of breach of fiduciary duty was only based
on a violation of the Rules of Professional Conduct, and no independent
common law basis apart from the rule violation was shown to exist for
Peoplelink’s allegation. We, therefore, conclude that the trial court did not err
when it dismissed Peoplelink’s initial complaint alleging breach of fiduciary
duty.
II. Second Amended Complaint [18] Peoplelink next asserts that, in its second amended complaint, it stated a viable
claim for legal malpractice on the basis that B&T’s professional competency fell
below the standard of care possessed by members of the legal profession by
rendering legal services when they were precluded from doing so due to a
conflict of interest and that the trial court erred when it dismissed its second
amended complaint for failure to state a claim. Peoplelink asserts that claims
for legal malpractice may be premised on circumstances where a lawyer
breaches his duty of loyalty to a client by representing an interest adverse to his
client. It further contends that it adequately alleged causation and damages for
its legal malpractice claim. Peoplelink also argues that the trial court erred in
Court of Appeals of Indiana | Opinion 71A03-1705-PL-982 | January 23, 2018 Page 12 of 17 dismissing Peoplelink’s claims of fraud and constructive fraud because they
were pled with sufficient particularity. We disagree.
[19] Peoplelink’s second amended complaint 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. B&T moved to dismiss this second complaint, and the trial court
granted the dismissal.
[20] As to the legal malpractice allegation, Peoplelink claimed that B&T was (1)
“obligated to exercise the degree of knowledge, skill, and competence ordinarily
possessed by members of the legal profession, including with respect to the
exercise of [its] duties of loyalty and independent judgment,” (2) and by failing
to disclose the conflict of interest regarding Wilkerson’s negotiations with JIT,
and by continuing to represent Wilkinson in such efforts, B&T fell short of
those obligations and, thus, breached its fiduciary duty of loyalty to Peoplelink.
Appellants’ App. Vol. II at 187-88. Peoplelink claimed this failure by B&T caused
Peoplelink to continue its attorney-client relationship with B&T, when
Peoplelink would have otherwise terminated the relationship and to continue to
pay for the services of a conflicted and disloyal lawyer. As such, Peoplelink
contends it should have been entitled to disgorgement of all fees it paid to B&T
Court of Appeals of Indiana | Opinion 71A03-1705-PL-982 | January 23, 2018 Page 13 of 17 during B&T’s representation of Wilkinson in his efforts to acquire JIT. Id. at
188.
[21] To prove a legal malpractice claim, the plaintiff-client must show: (1)
employment of the attorney (the duty); (2) failure of the attorney to exercise
ordinary skill and knowledge (the breach); (3) proximate cause (causation); and
(4) loss to the plaintiff (damages). Beal v. Blinn, 9 N.E.3d 694, 700 (Ind. Ct.
App. 2014), trans. denied. To establish causation and the extent of harm in a
legal malpractice case, the client must show that the outcome of the underlying
litigation would have been more favorable but for the attorney’s negligence. Id.
[22] Indiana’s notice pleading provision requires only “a short and plain statement
of the claim showing that the pleader is entitled to relief.” Indiana Trial Rule
8(A). The plaintiff need not set out in precise detail the facts upon which the
claim is based, but he must plead the operative facts necessary to set forth an
actionable claim. Bd. of Comm’rs of Union Cnty. v. McGuinness, 80 N.E.3d 164,
167 (Ind. 2017) (citing Trail v. Boys & Girls Club of Nw. Ind., 845 N.E.2d 130, 135
(Ind. 2006)). To establish legal malpractice, a plaintiff is required to allege both
proximate cause and actual damages. In its second amended complaint,
Peoplelink did not make any claim that B&T’s alleged malpractice, which was
based on a conflict of interest, caused Peoplelink to suffer any actual damages.
See Appellants’ App. Vol. II at 187-89. Instead, Peoplelink’s legal malpractice
claim sought the disgorgement of attorney fees paid to B&T while B&T was
representing Wilkinson in his efforts to acquire JIT. Id. at 188-89. “Disgorging
an agent of all compensation received during a period of employment in which
Court of Appeals of Indiana | Opinion 71A03-1705-PL-982 | January 23, 2018 Page 14 of 17 the agent was also breaching a fiduciary duty to the principal, without a
requirement for the principal to demonstrate financial loss, is an equitable, not
legal remedy.” Wenzel v. Hopper & Galliher, P.C., 830 N.E.2d 996, 1001 (Ind. Ct.
App. 2005). Peoplelink did not allege any actual damages resulting from B&T’s
alleged malpractice.4 The trial court properly granted dismissal as to
Peoplelink’s claim of legal malpractice.
[23] As to the claim of actual fraud, Peoplelink alleged that, “Trybula and B&T
concealed or failed to disclose one or more material facts within their
knowledge by failing to inform Peoplelink about: (a) Wilkinson’s efforts to
acquire [JIT], and (b) Trybula and B&T’s representation of Wilkinson in
connection with Wilkinson’s efforts to acquire [JIT].” Appellants’ App. Vol. II at
189. “The elements of actual fraud are: (i) material misrepresentation of past
or existing facts by the party to be charged (ii) which was false (iii) which was
made with knowledge or reckless ignorance of the falseness (iv) was relied upon
by the complaining party and (v) proximately caused the complaining party
injury.” Kapoor v. Dybwad, 49 N.E.3d 108, 121 (Ind. Ct. App. 2015) (citing Rice
v. Strunk, 670 N.E.2d 1280, 1289 (Ind. 1996)), trans. denied. Fraud is not limited
only to affirmative representations; the failure to disclose all material facts can
4 Peoplelink also requested punitive damages in its second amended complaint. However, “Indiana courts have long held that punitive damages are not freestanding and that an award of actual damages is a prerequisite to an award of punitive damages.” Best Formed Plastics, LLC v. Shoun, 51 N.E.3d 345, 355 (Ind. Ct. App. 2016). Accordingly, “punitive damages may not be awarded exclusively and must be ‘in addition to’ actual damages.” Id. Therefore, because Peoplelink’s second amended complaint did not request actual damages, the request for punitive damages fails.
Court of Appeals of Indiana | Opinion 71A03-1705-PL-982 | January 23, 2018 Page 15 of 17 also constitute actionable fraud. Lawson v. Hale, 902 N.E.2d 267, 275 (Ind. Ct.
App. 2009). However, under the Rules of Professional Conduct, “[a] lawyer
shall not reveal information relating to representation of a client unless the
client gives informed consent. . . .” Prof. Cond. R. 1.6(a). The information that
Peoplelink asserts should have been disclosed by B&T was obtained by B&T as
part of its representation of Wilkinson, and therefore, B&T had no duty to
disclose, and in fact, was prohibited by the Rules of Professional Conduct from
disclosing, this information related to its representation of Wilkinson. The trial
court properly dismissed Peoplelink’s claim of fraud in its second amended
complaint.
[24] As to constructive fraud, Peoplelink alleged that “Trybula and B&T concealed
or failed to disclose one or more material facts within their knowledge by failing
to inform Peoplelink about: (a) Wilkinson’s efforts to acquire [JIT]; and (b)
Trybula and B&T[’s] representation of Wilkinson in connection with
Wilkinson’s efforts to acquire [JIT][,]” and that Trybula and B&T had a duty to
disclose these material facts to Peoplelink as a result of [their] fiduciary
relationship with Peoplelink.” Appellants’ App. Vol. II at 191. Peoplelink’s
constructive fraud claim was pled “in the alternative” to the actual fraud claim
and was based on the same alleged “duty to disclose.” Id. As previously
discussed in reference to actual fraud, B&T had no duty to disclose information
learned through its representation of Wilkinson, and was actually prohibited
under the Rules of Professional Conduct from disclosing such information that
had been gleaned from the representation of a client. See Prof. Cond. R. 1.6(a).
Court of Appeals of Indiana | Opinion 71A03-1705-PL-982 | January 23, 2018 Page 16 of 17 The trial court properly dismissed Peoplelink’s claim of constructive fraud in its
second amended complaint.
[25] Based on this, we conclude that the trial court did not err in granting B&T’s
motion to dismiss Peoplelink’s second amended complaint. We, therefore,
affirm the trial court’s dismissal of both the initial complaint and the second
amended complaint.
[26] Affirmed.
Najam, J., and Brown, J., concur.
Court of Appeals of Indiana | Opinion 71A03-1705-PL-982 | January 23, 2018 Page 17 of 17