Opinion
Cause No. IP97-1691-C-M/S.
February 2, 2002
Alvin J Katzman, Katzman Katzman Pylitt, Indianapolis, IN., for Plaintiffs.
Jeffrey O Meunier, Of Counsel With Kiefer McGoff, Indianapolis, IN, for Plaintiffs.
Richard L Scharpf, Greenwood, IN., for Plaintiffs.
Peter A Schroeder, Norris Choplin Schroeder, Indianapolis, IN., for Defendants.
ORDER ON DEFENDANTS' SECOND MOTION FOR SUMMARY JUDGMENT
This matter is before the Court on Defendants' Sharon Swarsensky Bilow ("Bilow") and Much Shelist Freed Denenberg Ament Bell Rubenstein, P.C. ("Much Shelist") (collectively referred to as "Defendants"), second Motion for Summary Judgment on Plaintiffs' Betty A. Lasiter ("Lasiter") and Betty Lasiter as the Personal Representative of the Estate of Richard L. Sharpf (collectively referred to as "Plaintiffs") fraud claim under Indiana law. This is the second time this particular claim has come before the Court on Defendants' Motion for Summary Judgment. The Court denied their first motion because of an apparent discrepancy in the amount of time billed to Plaintiffs and the amount of time indicated on Defendants' handwritten time sheets. Defendants have now produced additional documents that they claim explain away the inconsistencies. The Court will now consider the parties' contentions.
I. FACTUAL BACKGROUND
Lasiter hired Defendants in June 1993 to consult her with respect to a bankruptcy. There was no written fee agreement, but Lasiter agreed to pay Defendants $250 per hour. Bilow is an attorney licensed to practice law in the State of Illinois. That same year, Paul Gresk ("Gresk") — a bankruptcy trustee — filed an adversary proceeding against Lasiter's family regarding a claim of fraudulent conveyance of Lasiter's house. In February 1994, Lasiter once again hired Defendants to represent her family in the adversary proceeding. In October 1994, Gresk dismissed the adversary proceedings.
Lasiter and her husband then had Defendants pursue a civil claim against Gresk, Carl Grow ("Grow"), and attorney John Stewart ("Stewart"), for malicious prosecution. Grow apparently had been instrumental in causing Gresk to file the adversary claim. Defendants filed the malicious prosecution suit in state court, contending that Gresk, Grow, and Stewart had known from the outset that the adversary proceeding had no merit.
Defendants then withdrew their representation of Lasiter and her husband in late 1996. According to Plaintiffs, Defendants billed them every three to four months. Starting back in September 1994, and at the request of Defendants, Plaintiffs began making monthly payments of $5,000.
Plaintiffs contend that the time sheets that the attorneys prepared show far less time worked than what is listed on the invoices Plaintiffs received. Every attorney who worked on the Plaintiffs' file denies having any knowledge of false entries. The sum total of all bills sent to Plaintiffs was $179,389.64. Plaintiffs paid only $104,083.67, leaving $75,307.97 unpaid.
Plaintiffs have asserted a claim for fraud under Indiana law, claiming that Defendants intentionally "padded" their bills by charging them for more time than was reflected on their time sheets. Defendants deny any wrongdoing. Defendants have also asserted a counterclaim against Plaintiffs for the unpaid legal bills, and that claim remains pending before the Court.
II. STANDARDS A. SUMMARY JUDGMENT STANDARDS
As stated by the Supreme Court, summary judgment is not a disfavored procedural shortcut, but rather is an integral part of the federal rules as a whole, which are designed to secure the just, speedy, and inexpensive determination of every action. Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986); see United Ass'n of Black Landscapers v. City of Milwaukee, 916 F.2d 1261, 1267-68 (7th Cir. 1990), cert. denied, 111 S.Ct. 1317 (1991). Motions for summary judgment are governed by Rule 56(c) of the Federal Rules of Civil Procedure, which provides in relevant part:
The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
Once a party has made a properly-supported motion for summary judgment, the opposing party may not simply rest upon the pleadings but must instead submit evidentiary materials which "set forth specific facts showing that there is a genuine issue for trial." FED. R. CIV. P. 56(e). A genuine issue of material fact exists whenever "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). The nonmoving party bears the burden of demonstrating that such a genuine issue of material fact exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); Logan v. Caterpillar, Inc., 246 F.3d 912, 923 (7th Cir. 2001). It is not the duty of the court to scour the record in search of evidence to defeat a motion for summary judgment; rather, the nonmoving party bears the responsibility of identifying the evidence upon which he relies. Bombard v. Fort Wayne Newspapers, Inc., 92 F.3d 560, 562 (7th Cir. 1996). When the moving party has met the standard of Rule 56, summary judgment is mandatory. Celotex, 477 U.S. at 322-23; Shields Enters., Inc. v. First Chicago Corp., 975 F.2d 1290, 1294 (7th Cir. 1992).
In evaluating a motion for summary judgment, a court should draw all reasonable inferences from undisputed facts in favor of the nonmoving party and should view the disputed evidence in the light most favorable to the nonmoving party. Estate of Cole v. Fromm, 94 F.3d 254, 257 (7th Cir. 1996), cert. denied, 519 U.S. 1109 (1997). The mere existence of a factual dispute, by itself, is not sufficient to bar summary judgment. Only factual disputes that might affect the outcome of the suit in light of the substantive law will preclude summary judgment. Anderson, 477 U.S. at 248; JPM Inc. v. John Deere Indus. Equip. Co., 94 F.3d 270, 273 (7th Cir. 1996). Irrelevant or unnecessary facts do not deter summary judgment, even when in dispute. Clifton v. Schafer, 969 F.2d 278, 281 (7th Cir. 1992). "If the nonmoving party fails to establish the existence of an element essential to his case, one on which he would bear the burden of proof at trial, summary judgment must be granted to the moving party." Ortiz v. John O. Butler Co., 94 F.3d 1121, 1124 (7th Cir. 1996), cert. denied, 519 U.S. 1115 (1997).
B. FRAUD UNDER INDIANA LAW
Under Indiana law, to prove an actual fraud claim, a plaintiff must demonstrate: (1) a material misrepresentation of past or existing fact; (2) that the representation was untrue; (3) that the representation was made with knowledge of or in reckless ignorance of its falsity; (4) that the representation was made with the intent to deceive; (5) that the complaining party rightfully relied upon the representation; and (6) the representation proximately caused the injury or damage to the complaining party. Doe v. Howe Military School, et al., 227 F.3d 981, 990 (7th Cir. 2000) (citing Lawyers Title Ins. Corp. v. Pokraka, 595 N.E.2d 244, 249 (Ind. 1992)). Accord, Sample v. Kinser Insurance Agency, Inc., 700 N.E.2d 802, 804 (Ind.Ct.App. 1998).
III. DISCUSSION
The Court will first address an issue that Plaintiffs have raised regarding Defendants' alleged failure to produce documents. According to Plaintiffs, Defendants failed to produce the original detailed billing reports ("DBRs"), which contained the attorneys' handwritten notes and any changes. Although Plaintiffs had requested copies of those documents during discovery, Defendants initially responded that they were unable to locate them. According to Plaintiffs, this unexplained "loss" of critical documents entitles them to at least an inference that production of those original DBRs would have been unfavorable to Defendants.
In their reply brief, however, Defendants notified the Court that they had found the original DBRs and were producing them to Plaintiffs on or around October 19, 2001. See Defendants' Reply Brief at 5. According to Defendants, those original documents show nothing other than time that was written off before the invoices were sent to Plaintiffs. The Court assumes that to be the case, for Plaintiffs have had approximately four months to review those documents and have yet to file anything that disputes that description. Because Defendants have produced the original DBRs, the Plaintiffs' request for an inference that the documents were harmful to Defendants case is denied as moot.
What Plaintiffs are left with, at best, is an argument that there were mistakes and/or inconsistencies in the time sheets Defendants filled out and the invoices that they eventually generated and sent to Plaintiffs.
Defendants claim that Exhibit A of their appendix, which contains all of the billing statements and the underlying supporting documentation for each billing entry, resolves all previous inconsistencies in their billing practices.
Even assuming there were inconsistencies — which Defendants obviously still dispute — Plaintiffs have produced no evidence that the incorrect bills were the product of Defendants' intention to deceive them. Indeed, every attorney who worked on Plaintiffs' file has testified that he or she reviewed the entries for the work done on the file, that the entries reflect the time that he or she actually worked on the file, and that he or she was unaware of any fraudulent billing, overbilling, or "padding" of Plaintiffs' bills. See Ex. B-1 (Bilow Aff.); Ex. B-2 (Maria DiLorenzo Aff.); Ex. B-3 (Jablanka Petrovic Aff.); Ex. B-4 (Joanne Sarasin Aff.); Ex. B-5 (Anthony Valiulis Aff.); Charles F. Vihon Aff.); and Ex. B-6 (Stuart Widman Aff.).
Plaintiffs have provided no evidence to dispute these attorneys' sworn declarations that they had no intent to deceive them. The Court is aware that a witness' sworn testimony that he had no intent to deceive is not necessarily dispositive, especially if the other side can produce evidence that would somehow discredit that testimony and allow an inference of an intent to deceive. But Plaintiffs have failed to do that in this case. Instead, they argue in conclusory fashion that on nine unidentified occasions the Defendants' time sheets showed less time worked than appeared on the corresponding invoices. This conclusory statement, however, without reference to specific instances and/or documents showing that Defendants actually billed them for more time than was recorded on their time sheets, is insufficient to create a genuine issue of material fact for trial. See Albiero v. City of Kankakee, 246 F.3d 927, 933 (7th Cir. 2001) (conclusory statements, unsupported by the evidence of record, are insufficient to avoid summary judgment).
Plaintiffs do point to one invoice in particular that they found troublesome. According to Plaintiffs, the August 9, 1995, bill to them was for $7,363. The DBR for the same time period showed $8,401 due for 37.4 hours of work, while the time sheets showed 24.4 hours worked. This discrepancy, according to Plaintiffs, evidences fraud. When adding the hours worked on the handwritten time sheets in Defendants' Exhibit A, however, the Court found approximately 29 hours were documented. The invoice to Plaintiffs included $7,210 in fees, which amounts to an hourly rate of approximately $248.60 for the 29 hours of work. This is very close to the $250 hourly rate Plaintiffs agreed to pay Defendants. Without more, this cannot be evidence of Defendants' attempt to deceive Plaintiffs by fraudulently billing them.
The Court also reviewed another random invoice and compared it to the handwritten time sheets contained in Defendants' Exhibit A. For example, in the invoice dated December 12, 1996, Defendants billed Plaintiffs for 43.1 hours worked. The handwritten timesheets included with the invoice likewise documented 43.1 hours worked, so there is no discrepancy whatsoever in that billing cycle.
In sum, Plaintiffs simply have failed to produce any evidence of Defendants' intent to deceive them. Plaintiffs have not pointed the Court to any evidence that would allow an inference that the individual attorneys who worked on Plaintiffs' file had any intent to pad their bills or to otherwise mislead Plaintiffs. While the Court recognizes there may have been some mistakes made while transferring the attorneys' handwritten time entries over to a computer-generated invoice, that alone is insufficient to create a jury question on Plaintiffs' fraud claim. Because there is no evidence of an intent to deceive, Defendants are entitled to summary judgment. See Lawyers Title, 595 N.E.2d at 249 (noting that where trial court made no finding of intent to mislead, there was no support for judgment based on fraud). Accordingly, the Court GRANTS Defendants' Motion for Summary Judgment.