Opinion
Cause No. IP99-1400-C-T/G
October 10, 2000
ENTRY ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
Plaintiffs, Arden Johnson and ASA Construction Management, Inc. ("ASA"), filed a Complaint against Defendant, Carl Olsen, containing three counts. Count I alleges a cause of action for fraud, Count II alleges conversion, and Count III alleges breach of fiduciary duty. Olsen moved for summary judgment on Counts II and III of Plaintiffs' Complaint. For the following reasons, Olsen's motion is granted in part and denied in part.
I. Facts
The facts, as presented to the court by the parties, are not entirely clear. The format of Olsen's "Facts" does not comply with Rule 56.1(f). Olsen's facts appear in paragraph format and are not numbered. Plaintiffs respond to Olsen's facts, however, they do not state whether they admit, deny or object to those facts. Instead, it appears that Plaintiffs, after reading an Olsen fact, respond to such fact by re-writing the fact to reflect Plaintiffs' point of view. Plaintiffs then set out Additional Material Facts, to which Olsen does not reply.
From the parties' discussion of the facts, the court determines the undisputed facts to be as follows: In December 1998 or January 1999, Plaintiffs and Olsen entered into discussions regarding the financing of a midget race car team for the 1999 racing season.
On January 12, 1999, Johnson deposited $100,000 into a bank account, the purpose of which is in dispute. Although, it is agreed that the money was to be used on race related items. Both Johnson and Olsen were authorized to draw upon the account. Krista Mathews, an ASA employee, posted transactions to the account upon the submission of receipts brought to her attention by Jenny Olsen. All cancelled checks were returned to ASA Motorsports.
While Olsen maintains the funds were to be used for sponsorship purposes, Plaintiffs maintain that the funds were to be used to purchase equipment necessary to start a race team.
Although both parties fail to discuss in their briefs the creation or purpose of ASA Motorsports, the Complaint states that ASA Motorsports is a motorsports racing team.
II. Discussion
Summary judgment is appropriate only when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. See e.g., King v. National Human Resource Comm., Inc., 218 F.3d 719, 723 (7th Cir. 2000); Fed.R.Civ.P. 56(c). "The burden is on the party moving for summary judgment to demonstrate the absence of a `genuine issue as to any material fact.'" Filipovic v. K R Express Sys., Inc., 176 F.3d 390, 395 (7th Cir. 1999) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). "To defeat a motion for summary judgment, the nonmoving party cannot rest on the mere allegations or denials contained in his pleadings, but must present sufficient evidence to show the existence of each element of its case on which it will bear the burden at trial." Id. (quotation omitted). The evidence must be considered in light most favorable to the non-moving party, and all doubts regarding the existence of material facts are to be resolved in favor of the nonmovant. See Ransom v. CSC Consulting, Inc., 217 F.3d 467, 468 (7th Cir. 2000); Doe v. R.R. Donnelley Sons Co., 42 F.3d 439, 443 (7th Cir. 1994).A. Conversion
Plaintiffs allege that by failing to account for certain funds and by failing to return certain assets, Olsen has exercised unauthorized control over ASA's property and has committed criminal conversion under section 35-43-4-3 of the Indiana Code. That section provides:
A person who knowingly or intentionally exerts unauthorized control over property of another person commits criminal conversion, a Class A misdemeanor.
Ind. Code § 35-43-4-3 (Michie 1998). Plaintiffs have elected to pursue their remedy under section 34-24-3-1, the Indiana crime victim's relief act, which allows a plaintiff who "suffers a pecuniary loss as a result of a violation of IC 35-43" to "bring a civil cause of action against the person who caused the loss[.]" Ind. Code § 34-24-3-1 (Michie 1998); see Gilliana v. Paniaguas, 708 N.E.2d 895, 899 (Ind.Ct.App. 1999) ("The Indiana crime victim's relief act allows a person who has suffered pecuniary loss as a result of a violation of criminal conversion to bring a civil action to recover the loss.").
In order to recover under the Indiana crime victim's relief act, "all elements of the alleged criminal act must be proven by the claimant." Gilliana, 708 N.E.2d at 899 (citation omitted). "In any criminal conversion action, criminal intent is an essential element which must be proven." Id. Therefore, Plaintiffs must prove that Olsen acted intentionally or knowingly when he allegedly exerted unauthorized control over Plaintiffs' property. To act intentionally means to engage in conduct with a conscious objective to do so. See id. (citing Ind. Code § 35-41-2-2). To act knowingly means to act with an awareness of a high probability that one is doing so. See id. (citing Ind. Code § 35-41-2-2).
Olsen asserts that he "did not knowingly or intentionally exert unauthorized control over the property of the plaintiffs." (Br. in Supp. at 2.) Olsen supports this assertion by directing the courts attention to Johnson's May 17, 1999, letter to Olsen, which, Olsen contends, "makes it clear that at best there was a misunderstanding over who owned the property which is the basis of this lawsuit." (Id.) The body of that letter provides in its entirety:
It is with deep regret that I accept your resignation from [ASA]. It is unfortunate that the race sponsorship did not work out. With no formal agreement in place, I understood [ASA] to be the owner of the race team. I established a checking account for the race season, purchased a trailer and a truck, as well as a luxury motor home for your use during the race season.
As a good faith gesture, at this time I would request that you return, at a minimum, one half of the monies extended to you, $40,000, or the race team assets in your possession, which were purchased with [ASA's] money. I would also request that the ASA Motorsports race suit be returned. Please respond to this request by May 21, 1999.
Plaintiffs concede that Olsen asserts ownership of the ASA Motorsports account and the race equipment purchased with the account's funds. Plaintiffs also concede that if Olsen's assertions are correct, there can be no conversion. However, Plaintiffs contend that until the issue of ownership is adjudicated, material issues of fact exist which preclude summary judgment for Olsen.
Plaintiffs, however, have presented no evidence that Olsen acted with the requisite criminal intent. The sole argument that Plaintiffs make in opposing summary judgment on Count II is, "[I]f the account and equipment was [sic] owned by Arden Johnson/ASA Construction Management, Inc. and Carl Olsen refused to account for all the funds and refused to return the equipment upon the request of Arden Johnson [Letter of Arden Johnson to carl [sic] Olsen dated may [sic] 17, 1999] then Carl Olsen knowingly or intentionally exercised unauthorized control over the property of another and committed conversion." (Br. in Opp'n at 5) (internal citation in original). As stated above, to defeat a motion for summary judgment, a nonmoving party "must present sufficient evidence to show the existence of each element of its case on which it will bear the burden at trial." Filipovic, 176 F.3d at 395 (quotation omitted). Plaintiffs have not indicated one single piece of evidence that supports the conclusion that Olsen intentionally or knowingly exercised unauthorized control over Plaintiffs' property. If anything, the evidence before the court suggests that Olsen believed that he owned the account at issue. (See Def.'s Resp. to Pl.'s Interrog. No. 3.) Such belief is directly contradictory with the mens rea that Plaintiffs must establish to succeed on this Count. As a result of Plaintiffs' lack of evidence on the element of intent, summary judgment in favor of Olsen on Count II is appropriate.
B. Breach of Fiduciary Duty
Plaintiffs allege that Olsen was the manager of ASA Motorsports and had the authority to draw on the bank account of ASA Motorsports. As such, Plaintiffs claim, Olsen owed a fiduciary duty to account for his use of the funds of ASA Motorsports. Plaintiffs maintain that Olsen breached his fiduciary duty by failing to account for his use of the funds and by using such funds for his personal benefit.
Olsen, in his motion for summary judgment, maintains that a fiduciary relationship was never formed because Olsen owed no special duty to the Plaintiffs. Olsen claims that he did not have a duty to provide an accounting of the funds withdrawn from the ASA Motorsports account as Plaintiffs' bookkeeper maintained the account and all cancelled checks were returned to Plaintiffs' place of business. Olsen does not respond to the claim that he employed ASA Motorsports's funds for his personal use. Plaintiffs argue in response that "Johnson placed his trust and confidence in Carl Olsen to properly manage ASA Motorsports because Arden Johnson had no personal knowledge of racing[,]" and a question of fact exists as to whether a fiduciary relationship existed. (Br. in Opp'n at 5-6).
Under Indiana law, a fiduciary obligation exists when "a relationship of trust and confidence exists between the parties[.]" Peoples Trust Bank v. Braun, 443 N.E.2d 875, 879 (Ind.Ct.App. 1983) (citation omitted). In People Trust, the court reiterated the factors necessary to establish a confidential relationship:
Although the existence of a confidential relationship depends upon the facts of each case, it can be generally stated that a confidential relationship exists whenever confidence is reposed by one party in another with resulting superiority and influence exercised by the other. Not only must there be confidence by one party in the other, the party reposing the confidence must also be in a position of inequality, dependence, weakness, or lack of knowledge. Furthermore, it must be shown that the dominant party wrongfully abused this confidence by improperly influencing the weaker so as to obtain an unconscionable advantage.
Id. (quoting Hunter v. Hunter, 283 N.E.2d 775, 779 (Ind.Ct.App. 1972) (internal citations omitted)). "Whether such a relationship exists is essentially a question of fact." Paulson v. Centier Bank, 704 N.E.2d 482, 490 (Ind.Ct.App. 1998) (citation omitted).
Facts do exist from which a reasonable jury could conclude that a confidential relationship existed between Plaintiffs and Olsen. It is undisputed that Johnson deposited $100,000 in a bank account and that both he and Olsen were authorized to draw upon the account. Plaintiffs, in their Statement of Additional Material Facts, assert that Olsen contributed no funds to the account. The general purpose of the account was to cover expenditures concerning the 1999 midget racing season. Plaintiffs assert that Johnson had no knowledge of midget racing, or any type of auto racing, and that Johnson relied on the knowledge and experience of Olsen. Olsen does not respond to these assertions. A reasonable jury could conclude that because Johnson contributed all of the funds to the account, permitted Olsen to draw on the account for racing expenditures, and knew nothing about racing but relied on the superior knowledge of Olsen, a confidential relationship existed between the parties. Because it is possible for a reasonable jury to conclude that a fiduciary relationship existed here, summary judgment on Count III is not appropriate.
Plaintiffs cite Olsen's response to Plaintiffs' third interrogatory as evidence of this fact. Plaintiff's third interrogatory reads: "Please state the basis upon which you claim you were the owner of the checking account at The National Bank of Indianapolis in the name of ASA Motorsports." Olsen responds: "My name is on the account. The account also states Carl Olsen DBA as ASA Motorsports." While this evidence may not be strong support for Plaintiffs' fact, Olsen does not asset in his brief that he contributed any funds to the account, nor does he reply to Plaintiffs' contention.
For the foregoing reasons, summary judgment in favor of Carl Olsen will be GRANTED as to Count II and DENIED as to Count III. Because other matters remain for trial on November 13, 2000, specifically Count I (fraud) and Count III (breach of fiduciary duty), no final judgment on Count II will be entered at this time.
ALL OF WHICH IS ORDERED this 10th day of October 2000.