Fletcher v. Hoeppner Wagner & Evans et al

Filing 66

OPINION AND ORDER denying 46 Motion to Dismiss for Failure to State a Claim. Signed by Judge Rudy Lozano on 7/29/15. (ksp)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
PAUL FLETCHER,
Plaintiff,
vs.
HOEPPNER WAGNER & EVANS,
LLP, et al.,
Defendants.

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Cause No. 2:14-CV-231

OPINION AND ORDER
This matter is before the Court on the Defendant’s Motion to
Dismiss Counts II-IV of Plaintiff’s First Amended Complaint, filed
by Defendant, Wayne Golomb, on April 20, 2015 (DE #46).

For the

reasons set forth below, the motion to dismiss (DE #46) is DENIED.

DISCUSSION
Federal Rule of Civil Procedure 12(b)(6) allows a complaint to
be dismissed if it fails to “state a claim upon which relief can be
granted.”

Fed. R. Civ. P. 12(b)(6).

Allegations other than fraud

and mistake are governed by the pleading standard outlined in
Federal Rule of Civil Procedure 8(a), which requires a “short and
plain statement” that the pleader is entitled to relief.

However,

fraud and constructive fraud claims are subject to the heightened
Rule

9(b)

pleading

standards.

Cincinnati

Life

Ins.

Co.

v.

Grottenhuis, No. 2:10-cv-00205-LJM-WGH, 2011 WL 1107114, at *8
(S.D. Ind. Mar. 23, 2011) (it is “undisputed that the constructive
and actual fraud claims are subject to heightened Rule 9(b)
pleading standards.”).
In order to survive a Rule 12(b)(6) motion, the complaint
“must contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its face’.” Ashcroft
v. Iqbal, 129 S. Ct. 1937, 1949 (2009)(quoting Bell Atlantic Corp.
v. Twombly, 550 U.S. 544, 570 (2007)). All well-pleaded facts must
be accepted as true, and all reasonable inferences from those facts
must be resolved in the plaintiff’s favor.
521 F.3d 686, 692 (7th Cir. 2008).

Pugh v. Tribune Co.,

However, plaintiffs may plead

themselves out of court if the complaint includes allegations that
show they cannot possibly be entitled to the relief sought.
McCready v. eBay, Inc., 453 F.3d 882, 888 (7th Cir. 2006).

Facts
Plaintiff,

Paul

Fletcher

(“Fletcher”),

and

Scott

Taylor

(“Taylor”) were life-long close friends, who shared a common in
interest in automobiles.

(DE #38, First Am. Compl. ¶¶ 11, 13.)

Taylor was a mechanic who had performed automobile restoration work
for Defendant, Wayne Golomb (“Golomb”). (Id. ¶ 19.) Taylor did not
marry, and had no children.

(Id.

¶ 12.)

In 1998, Taylor

designated Fletcher as the sole beneficiary for all of Taylor’s

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investment accounts held at Fidelity Brokerage Services (“Fidelity
Accounts”).
$337,000.

(Id. ¶ 16.)
(Id. ¶ 34.)

Those accounts totaled approximately
In addition to the Fidelity Accounts,

Fletcher has alleged that Taylor also owned other investments held
in “certificates of deposit or otherwise.”

(Id. ¶¶ 15, 18.)

In 2001, Taylor was diagnosed with cancer.
April 2007, Taylor’s health worsened.

(Id. ¶ 14.) In

(Id. ¶ 17.)

Around that

time, Fletcher alleges Taylor told him Fletcher was the beneficiary
of his investment/retirement accounts.

(Id.)

Taylor did not want

the funds going to Fletcher to be a part of his probate estate
because he thought the funds would go mostly to attorneys and the
Government.

(Id.)

Fletcher alleges that Taylor told him and

several other friends that the total value of his investments was
just under $1,000,000, and that Fletcher was the sole beneficiary
thereto.

(Id. ¶¶ 15, 18.)

Prior to his death, Taylor entrusted Golomb, a long-term
client of Taylor and an attorney who was then retired, to manage
his financial accounts including the Fidelity accounts and other
investments which Fletcher alleges Taylor had told Fletcher he was
going to receive when Taylor died.

(Id. ¶ 20.)

While Fletcher

alleges upon information and belief that Golomb controlled Taylor’s
Fidelity accounts plus about $500,000 in maturing certificates of
deposit belonging to Taylor, and alleges Golomb had “full” and or
“trading authority” on the Fidelity Accounts, he also concedes he

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does not know the location of the funds or have any documentary
evidence supporting his allegation that Golomb is holding any such
funds.

(Id. ¶¶ 21, 89.)

Taylor died on September 23, 2008.
Taylor’s

death,

Fidelity

notified

(Id. ¶ 11.)

Fletcher

that

a

After

change

of

beneficiary had been executed on August 2, 2008, and Mark Zupan, a
childhood

acquaintance,

Fidelity Accounts.

was

now

the

beneficiary

on

Taylor’s

(Id. ¶ 33.)

Fletcher believes that Taylor’s change of beneficiary to the
Fidelity Account was obtained under fraudulent circumstances. (Id.
¶ 35.)

Plaintiff alleges Zupan had placed calls to Golomb and

Fidelity Investment around the time the beneficiary was changed.
(Id. ¶ 29.) At first, Golomb denied any communications with Zupan,
but Fletcher later learned Golomb was not truthful with him - and
that Golomb indeed had been communicating with Zupan around the
time the beneficiary change was made.

(Id. ¶ 37.)

Plaintiff

believes that Zupan and Golomb somehow induced, or acted in
collaboration with, a branch of Fidelity Brokerage Services LLC to
create and/or forge the change of beneficiary form governing
Taylor’s Fidelity Accounts without Taylor’s knowledge.
Fletcher

alleges

he

and

his

wife

called

Golomb,

and

(Id.)
Golomb

“affirmed to both Plaintiff and his wife that he understood
Plaintiff was to be Taylor’s beneficiary.”

(Id. ¶ 36.)

Fletcher notified Fidelity he believed the beneficiary change

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was obtained fraudulently, and Fidelity denied any fraudulent
activity.

(Id. ¶¶ 35, 38.)

Fletcher filed suit against Fidelity

and Zupan in state court in Crown Point, Indiana, Cause No. 45D110902-PL-00024,

captioned

Paul

Fletcher

v.

National

Financial

Services d/b/a Fidelity Investments and Mark Zupan (hereinafter
“state court action”).

(Id. ¶ 38.)

Plaintiff alleges Golomb had

access to and was managing Taylor’s financial accounts, which
Plaintiff believes included the Fidelity accounts as well as the
$500,000 in maturing certificates of deposits belonging to Taylor.
(Id. ¶¶ 21, 43.)

Fletcher’s attorney in the state court action

sent Golomb a letter inquiring about the accounts, but Fletcher
claims the letter went unanswered.

(Id. ¶¶ 44, 92.)

Fletcher alleges Golomb is withholding information about the
investment accounts.

(Id. ¶ 89.)

Fletcher claims Golomb has a

duty to communicate with him since the funds were entrusted to him
by Taylor, and because he was the intended beneficiary of the
funds. (Id. ¶¶ 89, 90.) Based on these allegations, Plaintiff has
asked the Court to find Golomb guilty of constructive fraud, and
subject

to

equitable

remedies

including

constructive trust, accounting and turnover.

the

imposition

of

a

(Id., Counts II-IV.)

The instant motion to dismiss seeks to dismiss Counts II-IV of the
First Amended Complaint.

Indiana Dead Man’s Statute

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Defendant Golomb argues that the Indiana Dead Man’s Statute
bars Fletcher from using his alleged dealings/conversations with
Taylor to support the allegations contained in his first amended
complaint.
The general purpose of the Dead Man’s Statute, Ind. Code § 3445-2-4, is to protect a decedent’s estate from spurious claims.
Gabriel v. Gabriel, 947 N.E.2d 1001, 1009 (Ind. Ct. App. 2011).
Before the statute will apply, “the party whose testimony is to be
excluded must be one ‘whose interest is adverse to the estate.’”
Id. (quoting Ind. Code § 34-45-2-4(d)(2).)

At this stage of the

proceedings, on a motion to dismiss, the Court cannot definitively
say that Fletcher has an interest “adverse to the estate.” Indeed,
Fletcher claims in his complaint that Taylor did not want the funds
he was leaving Fletcher to go through a probate estate, and that
the funds were intended to pass to Fletcher outside of probate.
(DE #38 ¶ 17).

Because at this stage it is unclear who is the

“estate,” and who might have an adverse interest to the estate, at
this point in the litigation, the Court will not bar allegations in
the complaint based on the Dead Man’s Statute.

Constructive Fraud
For constructive fraud, Plaintiff must plead: (1) a duty owing
by the party to be charged to the complaining party due to their
relationship; (2) violation of that duty by the making of deceptive

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material misrepresentations of past or existing facts or remaining
silent when a duty to speak exists; (3) reliance thereon by the
complaining party; (4) injury to the complaining party as a
proximate result thereof; and (5) the gaining of an advantage by
the party to be charged at the expense of the complaining party.
Demming v. Underwood, 943 N.E.2d 878, 892 (Ind. Ct. App. 2011)
(citing Rice v. Strunk, 670 N.E.2d 1280, 1284 (Ind. 1996)).

The

plaintiff has the burden of proving the first and last of these
elements.

Demming, 943 N.E.2d at 892.

In other words, to prove

constructive fraud, Plaintiff must show the existence of a duty
owed by Golomb to him because of their relationship, and that
Golomb gained an advantage.

See Morfin v. Estate of Martinez, 831

N.E.2d 791, 802 (Ind. Ct. App. 2005).

To survive a motion to

dismiss, Plaintiffs’ complaint must include “either direct or
inferential allegations respecting all” five of the elements.

See

Twombly, 550 U.S. at 562.
First,

Golomb

claims

that

Fletcher

has

failed

to

plead

sufficient factual allegations to show he is entitled to receive
any funds upon Taylor’s death.

(DE #47, pp. 10-13.)

Rule 9(b)

requires that, when pleading a claim sounding in fraud, “a party
must

state

fraud.”

with

particularity

the

Fed. R. Civ. P. 9(b).

circumstances

constituting

Although “particularity” is

somewhat flexible, a plaintiff usually must identify the person who
made the misrepresentation, the time, place, and content of the

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misrepresentation, and the way in which it was communicated to the
plaintiff.

Gen. Elec. Corp. v. Lease Resolution Corp., 128 F.3d

1074, 1078 (7th Cir. 1997). Fraud may be based “on information and
belief . . . so long as (1) the facts constituting the fraud are
not accessible to the plaintiff and (2) the plaintiff provides the
grounds for his suspicions.”

Pirelli Armstrong Tire Corp. Retiree

Med. Benefits Trust v. Walgreen Co., No. 10-1686, 2011 WL 183163,
at *4 (7th Cir. 2011) (citing Uni *Quality, Inc. v. Infotronx,
Inc., 974 F.2d 918, 924 (7th Cir. 1992); see also Bankers Trust Co.
v. Old Republic Ins. Co., 959 F.2d 677, 684 (7th Cir. 1992)).
Turning to the allegations in the complaint, this Court
believes the first amended complaint comports with Rule 9(b) by
putting Golomb on notice as to a specific misrepresentation or
omission.

Fletcher alleges that Golomb was entrusted by Taylor to

hold and manage almost $1,000,000, and to pass the funds on to
Fletcher outside of probate after his death.
21.)

(DE #38, ¶¶ 17, 20-

That instead of giving the funds to Fletcher after Taylor’s

death, Golomb has retained a significant portion of the funds, has
refused to provide any information to Fletcher about the funds
(despite Fletcher’s attempts to obtain information), and “affirmed
to both Plaintiff and his wife that he understood Plaintiff was to
be Taylor’s beneficiary.”

(Id. ¶¶ 36, 44, 87, 90, 96.)

At this

stage of the proceedings, and because Plaintiff alleges Golomb has
refused to turn over information about the funds or communicate

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about the funds (thus additional facts are not accessible to
Plaintiff), the allegations are sufficient to survive a motion to
dismiss.

See Pirelli, 2011 WL 183163, at *4.

Second, Golomb argues that Plaintiff has failed to allege the
first element, a duty owed by Golomb to Plaintiff.

Such a duty

results from a “confidential or fiduciary” relationship between the
parties.

McKibben v. Hughes, No. 34A02-1311-PL-988, 2014 WL

7212858, at *5 (Ind. Ct. App. Dec. 19, 2014). The relationship may
arise

“by

operation

of

law,”

such

as

when

parties

share

a

relationship like attorney and client, guardian and ward, or
principal

and

agent;

or,

the

relationship

may

arise

when

“confidence is reposed by one party in another with resulting
superiority and influence exercised by the other.”
In

this

case,

construing

all

inferences

Id.
which

may

be

reasonably drawn from the facts in the light most favorable to
Plaintiff, as this Court must, MDG Int’l, Inc. v. Australian Gold,
Inc., No. 1:07 CV 1096-SEB-TAB, 2008 WL 3982072, at *2 (S.D. Ind.
Aug. 22, 2008), the Court finds Fletcher has adequately pled

that

Golomb owed Taylor a fiduciary duty in managing the funds at issue.
Because Plaintiff has alleged that he was the intended third-party
beneficiary of those funds, he has pled facts establishing a cause
of action for constructive fraud.

See, e.g., Flaherty & Collins,

Inc. v. BBR-Vision 1, LP, 990 N.E.2d 958, 971 (Ind. Ct. App. 2013)
(“the promisor has a legal interest in performance in favor of the

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third party and in which the performance of the terms of the
contract between two parties must necessarily result in a direct
benefit to a third party which was so intended by the parties.”).

CONCLUSION
For the reasons set forth above, the motion to dismiss (DE
#46) is DENIED.

DATED:

July 29, 2015

/s/ RUDY LOZANO, Judge
United States District Court

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