Opinion
Cause No. TH00-0028-C-T/H
June 25, 2002
ENTRY ON MOTIONS FOR SUMMARY JUDGMENT
This Entry is a matter of public record and is being made available to the public on the court's web site, but it is not intended for commercial publication either electronically or in paper form. Although the ruling or rulings in this Entry will govern the case presently before this court, this court does not consider the discussion to be sufficiently novel or instructive to justify commercial publication of the Entry or the subsequent citation of it in other proceedings.
Defendants filed a Motion for Summary Judgment. Plaintiffs oppose the Motion and filed a Motion for Partial Summary Judgment on Defendants' counterclaim. This court now GRANTS in part and DENIES in part Defendants' Motion and GRANTS Plaintiff's Motion.
I. Factual and Procedural Background
Additional facts may be set forth in the discussion sections as necessary. Those sections also will address various disputes about factual submissions.
Integrity is an Illinois corporation with its principal place of business in Vermilion County, Illinois, and all individually named Defendants are Illinois residents. (Amended Compl. at 1, ¶ 2; 2, ¶¶ 3-6.) Integrity provides financial and insurance services and has investment interests in Five Star Holdings, Ltd. ("Five Star")-a corporation organized (or to be organized) in the Cayman Islands for the purpose of operating life insurance or re-life insurance subsidiaries. Albert and Stanley Clark advanced funds to Integrity to assist in developing and financing Integrity's operations pending Integrity's anticipated return on its investment in Five Star. Plaintiffs maintain that these advancements to Integrity were made in reliance on Defendants' false representations about the progress of Integrity and Five Star, and that Defendants issued checks to Plaintiffs knowing that the checks would not be honored.
Mark and Jeffrey Clark, the sons of Stanley, were Plaintiffs in this lawsuit. However, on October 1, 2001, the Plaintiffs filed a stipulation of dismissal of Mark and Jeffrey, which this court granted on October 2, 2001.
To better understand the proceedings this court will first describe each Defendant and the previous rulings of the court before discussing the current quagmire. Integrity allegedly falsely represented to Plaintiffs the need for additional advancements to protect sums previously advanced to Integrity by Plaintiffs. (Id. ¶ 4.) Additionally, Integrity falsely promised prompt repayment "upon the imminent success of the [Five Star] investment of Integrity." (Id.)
In addition to specific acts, a "principal is liable even if an agent is acting solely to feather his own nest . . . [and] the principal's liability is derivative from the agent's fraud, and there is no need to allege a fraudulent representation by the principal." Ackerman v. Northwestern Mut. Life Ins. Co., 172 F.3d 467, 471 (7th Cir. 1999) Gleason v. Seaboard Air Line Ry., 278 U.S. 349 (1929)).
During 1999, Integrity executed and delivered at least seven checks in amounts totaling over $500,000. As a result, the Plaintiffs claim they were deprived of their property. (Amended Compl. ¶¶ 13, 19.) In particular, Integrity issued a $72,000 check payable to Stanley on July 13, 1999. (Id. ¶ 19.) This check was not honored, and Plaintiffs allege the Defendants issued the invalid check as a means of retaining control of their funds. (Id. ¶¶ 14, 21.)
Wireman was a shareholder and the Chairman of the Board of Directors of Integrity.
(Id. at 2, ¶ 3.) He began soliciting funds from Albert in November 1997, induced Albert's investment in Integrity, and falsely represented to Albert the need for additional advancements to protect sums previously advanced to Integrity by Plaintiffs. (Id. at 3, ¶¶ 1, 3-5.) Additionally, Wireman falsely promised prompt repayment "upon the imminent success of the [Five Star] investment of Integrity." (Id. at ¶ 4) In reliance on these representations, Albert made advances totaling over $700,000. (Id. at 3, ¶ 5.)
Additionally, on June 1, 1999, Wireman specifically sought to induce an advancement from Stanley Clark by falsely representing that repayment of Integrity's existing obligations to Clark was dependant upon Five Star's success, and that Five Star was in need of additional financing. (Id. at 5, ¶¶ 10, 11.) During 1999, Wireman executed at least one check, and delivered at least seven checks, in amounts exceeding $420,000. Wireman knew that the credit institution on which the checks were drawn would not honor them and thereby deprived Plaintiffs of their property.
Abney is a shareholder, member of the Board of Directors, and an officer of Integrity. (Id. at 2, ¶ 4.) Smythe is a shareholder, member of Integrity's Board of Directors, and an officer of Integrity. (Id. ¶ 5.) Starkey was a shareholder, member of Integrity's Board of Directors, and an officer of Integrity until the summer of 1999. (Id. at 2, ¶ 6.)
On January 6, 2000, the Plaintiffs filed their Complaint against the Defendants. At a minimum, the Complaint alleged statutory check deception under Indiana law in Counts V and VI, and it alleged a federal RICO violation predicated on wire fraud in Count VII.
Counts I, II, III, and IV contained the factual allegations cited in support of Counts V-VII and implied claims sounding in common law fraud. Integrity, Abney, Starkey, and Smythe filed their Motion to Dismiss on March 14, 2000. In that Motion, Defendants argued that Plaintiffs failed to state a claim upon which relief may be granted against Defendant Starkey because Plaintiffs alleged only that he was a shareholder, an officer, and a director of Integrity, and that these allegations alone are inadequate. Defendants also argued that Plaintiffs failed to state any claim upon which relief may be granted because the claims sounded in active fraud in one form or another and were not alleged with particularity. This court granted Defendants' Motion as to Starkey and as to Count VII, the RICO claim. The Plaintiffs then filed an amended complaint. Defendants filed a counterclaim against Albert and a cross-claim against Wireman alleging that Wireman had fraudulently induced the other Defendants to enter into Integrity, invest in Integrity, and incur debt for Integrity. The Defendants claim that Wireman committed fraud, violated his fiduciary duties, and conspired with Albert and that Albert is not a legitimate creditor of Integrity. In their counter and cross-claims, the Defendants ask for 3.2 million dollars and punitive damages to pay for the liabilities they have incurred. Default judgment was entered against Wireman on the cross-claim and on the Plaintiffs' amended complaint.
The remaining Defendants then filed this Motion for Summary Judgment, which the Plaintiffs oppose. Albert then filed a Motion for Partial Summary Judgment on the Defendants' counterclaim against him.
The First Amended Complaint contains six counts: two for common law fraud, two for conversion, and two for check deception (one count of each for each Plaintiff). The statements of material facts contain numerous disputes about who discussed what with whom and when. As best this court can uncover, Albert began investing in Integrity in July of 1998 and continued to give money until September of 1999. These investments (or loans) totaled over $700,000. These checks were solicited and received by all of the Defendants, until the summer of 1999, when Starkey quit Integrity. Throughout this time, according to Albert, the Defendants assured him of the continued success of Five Star and that his repayment would be soon forthcoming. Albert specifically notes two meetings in 1999: one in August in which Abney, Wireman, and Smythe assured him that Five Star was going as planned and one later in that year. (Pls.' Answers to Defs.' Interrogatories.)
In August and July of 1999, Albert paid some of the other investors of Integrity after Integrity wrote them non-sufficient funds ("NSF") checks. Between February 1998 and July 1999, Integrity wrote checks to repay Albert; at least seven of these checks, totaling over $400,000, were not payable due to insufficient funds in Integrity's accounts.
Defendants do not specifically challenge Albert's claims. Rather, they contend that Albert was conspiring with Wireman, that the conversations that took place involved only Wireman, and that the conversations took place after July 1, 1999. (St. of Material Facts ¶¶ 87, 93.) As to the contention that the conversations did not involve the other Defendants, Defendants rely on Albert's deposition. However, a close examination of the deposition reveals that Albert did not know exact dates of meetings with Abney, Starkey, and Smythe, but claimed that the meetings did occur. (Albert's dep. at 96-97.) Because at this stage of the proceedings, contested facts must be construed in favor of the Plaintiffs with respect to Defendants' Motion for Summary Judgment, and because Defendants offer no evidence in support of their contention, this court must assume that the meetings involved all of the Defendants. Albert does admit that at least Starkey and Smythe were not aware of the terms of his loans (or investments) until after November 1998. However, Albert continued to advance funds for six more months after he claims that all the Defendants were aware of the arrangement.
Although not cited by Defendants, in Abney's deposition, he contends that he did not solicit funds from Albert. (Abney's dep. at 155.) This presents a material question of fact for trial.
With respect to Stanley's claims, it appears that Stanley Clark was approached by Wireman in April 1999. A brief discussion of Integrity and the plans with Five Star and the necessity of further investment to start Five Star occurred between Wireman and Stanley.
A few days later, Stanley either invested or loaned $50,000 to Integrity. According to his deposition testimony and answers to Defendants' Interrogatories, Stanley understood that he would get his money back no later than July 31, 1999. He was to receive $70,000 and options to purchase stock in Five Star. This transaction was memorialized by a note which stated that Stanley would receive one million dollars, although he does not contend he is entitled to that much money. On July 13, Stanley received a check for $72,000 from Integrity (signed by Abney), at which time Wireman allegedly told Stanley he would soon be receiving his stock options. There were insufficient funds in Integrity's account to honor the check.
II. Standard Summary judgment should be granted if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there are no genuine issues of material fact and that the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The motion should be granted only if no reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). If the party opposing the motion bears the burden of proof at trial on an issue, that party can avoid summary judgment only by setting forth specific facts showing that there is a genuine issue for trial. Fed.R.Civ.P. 56(e); see Silk v. City of Chicago, 194 F.3d 788, 798 (7th Cir. 1999). When ruling on a motion for summary judgment, the court must construe the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in favor of that party. Anderson, 477 U.S. at 255. Speculation, however, is not the source of a reasonable inference. See Chmiel v. JC Penney Life Ins. Co., 158 F.3d 966, 968 (7th Cir. 1998) (noting that the court is not required to draw every conceivable inference from the record in favor of the non-movant, but only those inferences that are reasonable).
III. Defendants' Motion for Summary Judgment A. Common Law Fraud Defendants contend that the Plaintiffs cannot prove the elements of common law fraud: (1) material representations of past or existing fact, (2) that were false, (3) made with knowledge of their falsity or in regardless disregard thereof, and (4) justifiably and detrimentally relied on by the Plaintiffs.
1. Albert Clark
With respect to Albert's claim of common law fraud, Defendants recite several facts from the case without any explanation as to how these facts show that Albert cannot prove the elements of common law fraud. Albert had dealings with all of the Defendants.
(Material Facts 113-15.) Defendants claim that Albert's affidavit which states that all the Defendants had interactions with him should not be considered because it is inconsistent with prior deposition testimony. However, at his deposition, Albert did not testify that he did not have interactions with Abney, Starkey, and Smythe, only that he could not recall the exact meetings. It is not the job of this court to make Defendants' arguments for them and their failure to articulate why and how the Plaintiffs cannot prove the elements of common law fraud precludes an entry of summary judgment in their favor.
Plaintiffs filed a Motion to Strike Portions of Defendants' Reply to Statement of Additional Material Facts in which they request that portions of Defendants' Replies to Material Facts 113-15 be stricken. Specifically, they ask that the statement "Wireman was in charge of the corporation finances" be stricken because it is an additional fact and is not responsive to Plaintiffs' Material Facts in violation of Local Rule 56.1(d). Local Rule 56.1(d) requires that new evidence be filed only if it responds to the other party's response and is specifically designated as such. In this case, Defendants did neither and therefore, the evidence is STRICKEN. In any event, this court does not see how this piece of evidence would alter the course of this decision. Plaintiffs also move to strike Defendants' objections to Albert Clark's Motion to Dismiss Affidavit. (Pls.' Submissions, Ex. H.) Defendants claim that the affidavit is inconsistent with earlier deposition testimony and should therefore be stricken. The affidavit claims that Albert had conversations with all of the Defendants in which they solicited funds from him and made representations about the health of Integrity and Five Star. These statements are not inconsistent, as Defendants claim, with Albert's deposition testimony in which he says he cannot recall communications between himself and Starkey and then clarifies that he met with all three Defendants, but cannot recall specific dates. (Albert's dep. at 96-97.) Therefore, although this court does not strike Defendants' objection to Albert Clark's Motion to Dismiss Affidavit, the objection is OVERRULED.
Defendants also claim that Albert cannot pursue a common law fraud claim because all of the funds came from Clark Chevrolet, Inc., not Albert himself. However, the evidence shows that at least part of the funds came from Albert himself. (Ex. A to Pls.' Resp. to Defs.' Interrogs.) Although it is true that an individual cannot generally bring suit to collect a debt owed to a corporation even if the individual is the sole owner of the corporation, in this the case, part of the funds came from Albert individually and part of the funds came from Albert's corporations. The matter of which funds came from where is a factual question best left for trial.
Defendants also contend that the monies given to Integrity were to have been repaid if and when Five Star became viable, making the money an investment, not a loan.
Even if Five Star became viable, according to Defendants, the payments were to have taken the form of an interest in Five Star. The argument continues that because Five Star never became viable, there was no right of repayment. Defendants use Plaintiffs' answers to Defendants' First Amended Set of Interrogatories, Response to number two to support their argument. It reads:
The nature of each transaction was a loan, for which the principle would be repaid when Five Star Holdings became viable, repayment was to have been made in the form of an interest in Five Star Holdings, repayment of principle and interest, as well as an interest in the form of a stock option, were the terms of repayment with respect to Exhibit A, item number 34.
Accepting this as true, it does not preclude a claim of common law fraud. According to the Plaintiffs' Amended Complaint, Defendants made representations that the business was doing well which caused Plaintiffs to give more money to Defendants. Whether the funds were given as a loan or an investment does not go to any of the elements of common law fraud: (1) material representations of past or existing fact, (2) those representations were false, (3) the representations were made with knowledge of their falsity or regardless disregard thereof, and (4) the Plaintiffs justifiably and detrimentally relied on those representations.
In their Reply, Defendants appear to contend that the representations were of future conduct, statements of existing intent, or unfulfilled predictions. Statements that the business is doing well when it is fact not are statements of past or existing fact which satisfy the requirements for common law fraud.
Defendants next recite facts relating to Wireman's and Albert's prior relationship.
The court is unclear as to how these facts lead to summary judgment for the Defendants and the brief does nothing to shed light on this. Defendants first mention the lack of written documents, presumably raising a challenge under the statute of frauds. However, this issue was not raised in the original answer, the motion to dismiss, or the answer to the amended complaint and is therefore waived. See Fed.R.Civ.P. 8(c). Next Defendants contend that there was no agreement to pay interest on the monies received by Integrity.
The court is not exactly clear how this challenges an element of a common law fraud claim.
More likely, it goes to the issue of damages, which involves factual questions best resolved at trial.
Defendants also claim that "Albert Clark testified that he did not know who had accepted delivery of any checks for which he is making a claim, and that he cannot testify as to who solicited any monies from him, or any representations of fact which were made in conjunction therewith." (Br. at 26.) Defendants claim that these "admissions" defeat Plaintiffs' claims in their entirety. However, these admissions contradict Albert's affidavit, which contends that all the Defendants solicited extra funds from Albert. In support of their facts, Defendants rely on Albert's deposition testimony, which albeit is not very specific in who did what on a particular date, does contend that the Defendants solicited and received money from him.
Defendants finally contend that Albert cannot show reliance because he contacted both an accountant and a law firm and had no prior relationship with any of the Defendants.
Unlike constructive fraud, there is no special relationship requirement to establish a claim of common law fraud. Therefore, the apparent claim is that Defendant did not justifiably rely on any statements made by the Defendants. Neither the accountant or law firm gave any indication that the Five Star deal was not on track. Therefore, this is not the case where a Plaintiff ignored scores of evidence and invested money anyway. Finally, just because a Plaintiff consults outside advice does not mean he does not rely on the statements from the involved parties.
2. Stanley Clark Defendants make the same non-arguments for Stanley. For example, Defendants state that "Stanley Clark has a degree in business administration, insurance, and accounting from Indiana State University, and is, and has been, the President of numerous corporations and thus responsible for their financial operations." (Br. at 17.) They do not explain how this shows that Stanley cannot prove his case. This court can only speculate that Defendants meant this fact to relate to element four, that Stanley could not justifiably rely on any representations made to him because of his business acumen. Although "under Indiana law, a party has no right to rely on a statement if he has not exercised ordinary care in guarding against fraud," the Defendants have provided no case where a plaintiff cannot bring a claim of common law fraud because he is a business person. Scott v. Bodor, Inc., 571 N.E.2d 313, 322 (Ind.Ct.App. 1991). Just because a person has business experience does not mean he is immune to fraudulent representations.
The best argument (to use the term rather loosely) presented by Defendants is the statement that:
Stanley Clark admitted that the only discussion that he had was with Mr. Wireman and his brother Albert Clark (the other Plaintiff herein), and that he had no communications or discussions of any type with any of the other remaining Defendants concerning the delivery of the check, or the transmittal of funds to Integrity.
(Br. at 17.) The implication is that the other defendants, Abney, Starkey, and Smythe, did not make any representations to Stanley causing him to invest money in Integrity. This appears to be supported by Stanley's own deposition in which he admits to talking to only Wireman and Albert before investing money in Integrity. (Stanley Dep. at 39.) This being the case, the other Defendants cannot be liable for common law fraud when they did not make any representations to Stanley.
In any event, it is not entirely clear from the amended complaint that Stanley's common law fraud claim is brought against all the Defendants. In his description of the claim, Stanley only mentions the actions of Wireman and Integrity. However, even if he intended to bring a common law fraud claim against all the Defendants, it would only be viable against Wireman and Integrity for the reasons described above.
B. Conversion Defendants claim that there is no cause of action for conversion because Plaintiffs' funds were not specifically identifiable and segregated and because there is no cause of action for conversion for failure to pay a debt. Plaintiffs respond that the funds were obtained from them by creating a false impression that loans for Integrity and Five Star were being processed.
Indiana Code § 34-24-3-1 provides that:
A recent Indiana Court of Appeals case implied that there may be a difference between a common law conversion claim and one brought pursuant to the statute. Dominiack Mech. Inc. v. Dunbar, 757 N.E.2d 186, 189 n. 3 (Ind.Ct.App. 2001). Although Plaintiffs do not allege the statute in their amended complaint, this court was unable to conceive of any differences between common law conversion and the statute and will therefore address the claim under the statute as the parties do.
[i]f a person suffers a pecuniary loss as a result of a violation of IC 35-43 . . . the person may bring a civil action against the person who caused the loss for the following:
(1) An amount not to exceed three (3) times the actual damages of the person suffering the loss.
(2) The costs of the action.
(3) A reasonable attorney's fee.
(4) Actual travel expenses. . . .
(5) A reasonable amount to compensate the person suffering loss for time. . . .
(7) All other reasonable costs of collection.
Indiana Code § 35-43-4-3 provides that "a person who knowingly or intentionally exerts unauthorized control over property of another person commits criminal conversion." A person's control is unauthorized "if it is exerted . . . [b]y creating or confirming a false impression in the other person" Ind. Code § 35-43-4-1 (1998).
Plaintiffs' Count II reads:
13. On at least seven (7) occasions during 1999, Integrity, Wireman, Smythe, and Abney executed and delivered, checks payable to Clark in sums totaling approximately Four Hundred Twenty-Eight Thousand Five Hundred Dollars ($428,500.00) which instruments were drawn on the account of Integrity and its affiliates by its principals knowing that the credit institution upon which the instruments were drawn would not honor such instruments.
14. The issue and delivery of the checks payable to Clark by Defendants Wireman, Abney, and Smythe served to deprive Clark of its property and constitute acts of conversion of the property of the Plaintiffs.
(Amended Compl. ¶¶ 13-14.) Even accepting this allegation as true, it does not establish a claim for conversion. Defendants' action of writing bad checks did not constitute exerting unauthorized control over Plaintiffs' property. The bad checks were written well after Plaintiffs gave their money to Defendants. At this point in the transaction, there was no property of Plaintiffs for Defendants to exert unauthorized control over. The issuance of bad checks simply does not constitute conversion.
Stanley's conversion claim is presented in Count IV and reads, "The issue and delivery of the NSF check to Stanley J. Clark was made for the purpose of retaining for the use of the Defendants' property of Stanley J. Clark and constitutes a conversion of the Plaintiffs' property." (Amended Compl. ¶ 21.) The same deficiencies that are present in Albert's claim are present in Stanley's claim and the court will therefore address the counts together.
In their response to Defendants' Statement of Material Facts paragraph thirty-nine, Plaintiffs contend that "[t]he delivery of the insufficient funds check on July 13, 1999 allowed the Defendants to retain unauthorized control over Stanley Clark's $50,000." However, the Indiana code defines "exerting unauthorized control" as to "obtain, take, carry, drive, lead away, conceal, abandon, sell, convey, encumber, or possess property, or to secure, transfer, or extend a right to property." Ind. Code § 35-43-4-1 (1998). The issuance of the NSF check did none of these things.
In their brief, Plaintiffs contend that "[t]he Defendants exercised unauthorized control of the funds of Albert Clark by their creation of a false impression in Albert Clark, specifically, that the businesses of Integrity were going well, and that the Five Star Holdings Venture was going as planned." (Reply at 18.) Even if this was the claim that Plaintiffs had made in their amended complaint, it still fails. The Indiana Court of Appeals has stated that "the money [that is the subject of an action for conversion] must be capable of being identified as a special chattel. It must be a determinate sum with which the defendant was entrusted to apply to a certain purpose." Kopis v. Savage, 498 N.E.2d 1266, 1270 (Ind.Ct.App. 1986). In Kopis, the court of appeals held that there was no cause of action for conversion where Savage had given Kopis $40,000 as a deposit for a nursing home.
Savage never acquired the nursing home and Kopis refused to give the $40,000 back.
Although Kopis did have an obligation to repay the $40,000, Kopis' action did not constitute conversion because Savage maintained no property interest in the $40,000 after giving it to Kopis. Furthermore, the court was "unable to find anything in the agreement which suggests Kopis was under any obligation to return the specific $40,000 which Savage had given him." Id. at 1270 (emphasis in original). The funds given to Integrity by the Plaintiffs were intertwined with all the other funds in Integrity and Plaintiffs retained no property interest in them after giving them to Defendants.
Furthermore, in Indiana, refusal to pay a debt does not constitute conversion. Nat'l Fleet Supply, Inc. v. Fairchild, 450 N.E.2d 1015, 1019 (Ind.Ct.App. 1983). Plaintiffs contend in their Response that the money given to Defendants was loans. (Resp. at 13.) If this is the case, then there is no conversion action for failing to repay those funds. This is simply not the case where the Defendants exerted unauthorized control over the Plaintiffs' money. Rather the Plaintiffs either invested or loaned Integrity money and were unhappy when it could not be repaid.
C. Check Deception Statute, Indiana Code § 35-43-5-5
Defendants challenge these counts as violative of the statute of frauds and contend that the "essence of [the Plaintiffs'] claim is a contractual obligation-enforceable or unenforceable-from Integrity, and not the individual Defendants." (Br. at 21.) As to the first point, as discussed above, the Defendants have waived any statute of frauds defense pursuant to Federal Rule of Civil Procedure 8(c). The second point is only made in that one sentence quoted above. This court is not clear on the bases for this claim and because the Defendants have the burden at this stage of the proceedings, they cannot prevail on this contention.
IV. Plaintiff's Motion for Partial Summary Judgment With respect to Defendants' counterclaim, Albert contends that there is no evidence to support the claim that Albert conspired with Wireman to use Integrity as a vehicle to satisfy a pre-existing debt from Wireman to Clark. In Indiana there is no independent cause of action for conspiracy. Indianapolis Horse Patrol, Inc. v. Ward, 217 N.E.2d 626 (Ind. 1966). There is a cause of action for damages resulting from a conspiracy.
Albert also filed a Motion to Strike Portions of Defendants/Counter-Plaintiffs' Evidentiary Submissions in Their Response to Albert Clark's Motion for Partial Summary Judgment, to Strike a Portion of Said Response Itself and Request for Sanctions Pursuant to 28 U.S.C. § 1927 and Request for Hearing Thereon. Although it is hard to parse out all of Albert's requests, it appears that he would like to strike parts of three affidavits and accompanying appendices based on a lack of personal knowledge, hearsay, and inadequate record support among other things. He also requests that this court strike three pages of the Defendants' brief. He further requests sanctions and a hearing on sanctions because Defendants' Response "multiplies the proceedings by attempting to present patently inadmissible evidence to which Albert Clark is required to respond or face the possibility that such material will be deemed admitted." (Mot. at 17.) In Smythe's affidavit, paragraphs four, eight, fifteen, and sixteen are all STRICKEN because they are based on hearsay and are conclusory. The second affidavit, that of Scott Lerner, attempts to establish a foundation for a letter between Max Bradshaw to Albert's attorney. This is not a matter of which Lerner has personal knowledge, although the letter itself does not establish any fraud, but merely says that Albert was enthusiastic about his investment in Integrity. Finally, the appendix contains over twenty pages of what appear to be phone records. There is no testimony identifying these records or who prepared them. Therefore, these unsworn and uncertified records are also STRICKEN. Because this court determined that Albert prevailed on his Motion for Partial Summary Judgment even considering the remaining disputed matters, the remainder of the Motion to Strike is DENIED as moot. This court also DENIES Albert's request for sanctions and a hearing.
"[A]llegations of a civil conspiracy are just another way of asserting concerted action in the commission of a tort." Boyle v. Anderson Fire Fighters Ass'n Local 1262, 497 N.E.2d 1073, 1079 (Ind.Ct.App. 1986). According to Defendants' counterclaim, Albert and Wireman engaged in violation of fiduciary duties and fraud.
As to the first contention, Albert as a creditor of the company does not have a fiduciary duty to Integrity or the other Defendants. As to the second claim, the Defendants have presented no evidence to satisfy the elements of common law fraud. As discussed above, in order to prove common law fraud, Defendants must show: (1) a material representation of past or existing fact, (2) those representations were false, (3) the representations were made with knowledge of their falsity or regardless disregard thereof, and (4) the Defendants justifiably and detrimentally relied on those representations. The Defendants can cite to no false representations that Albert made to them, no reliance by them on anything Albert may have said, and no harm that resulted to them from Albert's actions.
A civil conspiracy "is a combination of two or more persons, by concerted action, to accomplish an unlawful purpose or to accomplish some purpose, not itself unlawful, by unlawful means." Ward, 217 N.E.2d at 628. Therefore, even if the there was a separate cause of action for conspiracy, Defendants would need to show some concerted action between Albert and Wireman. Although there does not need to be direct proof of the conspiracy, there must be sufficient circumstantial evidence from which a court can infer an agreement including, a course of conduct, independent facts susceptive to an inference of concurrence of intent, or other circumstantial evidence. Moore v. Fletcher, 196 N.E.2d 422, 434-35 (Ind. 1964).
The facts in this case show that there is insufficient evidence to support a finding of a conspiracy between Albert and Wireman. The only connection pointed to by the Defendants is the prior business dealings between the two, including a $285,000 debt owed to Albert by Wireman. This is simply insufficient to show an agreement to defraud the Defendants. Defendants claim that the prior business dealings between Albert and Wireman were concealed from them. However, Abney admitted in his deposition that he knew that Albert and Wireman had past business dealings, although not specific details.
(Abney dep. at 155.) Further, Albert had no control or access over Integrity. Although Albert did pay some of Integrity's investors per Wireman's request, this did not damage either Integrity or the other Defendants. This could be evidence of an agreement, but if the supposed purpose of a conspiracy between Albert and Wireman was to defraud Defendants, it hardly makes sense that Albert would contribute extra money to the company. Albert invested heavily in Integrity and apparently did not use the funds of the company to satisfy the personal debt owed to him by Wireman. As stated by the Seventh Circuit, "no reasonable jury could infer a conspiracy from the meager evidence of agreement produced" by Defendants. United States ex. rel Durcholz v. FKW, Inc., 189 F.3d 542, 546 (7th Cir. 1999).
Defendants attempt to show that Albert exercised control over Integrity by submitting numerous financial documents of Integrity's that were faxed to Albert. This does nothing more than show that Albert was checking on his investment. The Defendants also rely on what they claim were more than 1200 phone calls made by Albert and Wireman to each other. However, because the phone records were unsworn and unauthenticated, there is no support for this contention. Defendants also point to Albert's involvement in Five Star as evidence of his control over Integrity. Albert has admitted to intending to be a stockholder in Five Star and therefore, would have played a different role in that corporation if it had ever gotten off the ground.
In Archie Neal's affidavit, he testified that Albert asked him to contact another investor to invest more money in Integrity to cover a bad check. Although this points to a more active role in Integrity than most investors, this action cannot be seen as harmful to Abney, Starkey, or Smythe.
V. Conclusion For the foregoing reasons, Defendants' Motion for Summary Judgment is GRANTED in part and DENIED in part and Plaintiff's Motion for Partial Summary Judgment is GRANTED. Judgment will be entered in favor of the Defendants on Counts II and IV and in favor of Defendants Starkey, Abney, and Smythe on Count III. Count III remains viable as to Integrity. Judgment will be entered in favor of Plaintiff Albert Clark on the counter claim. Because of the pendency of the common law fraud and check deception claims, a final judgment will not be entered until a disposition is reached on those claims as well. The claims are intertwined and the potential for multiple appeals from the same case can be avoided by withholding final judgment until all claims are resolved.