Elwell v. First Baptist Church of Hammond Inc, 2:16-cv-00158

Background

From 2006 Kimmel was employed by First Baptist Church to provide financial advice, debt counseling, budgeting, and investment planning to parishioners.
Beginning in 2006 Kimmel solicited investments in a Sure Line Acceptance collateralized note program; plaintiffs (Elwell and Baldwin families) invested substantial sums (hundreds of thousands).
The note program failed after Sure Line entered receivership in January 2012; Kimmel was indicted August 21, 2013 for conspiracy to commit wire and mail fraud.
Plaintiffs sued First Baptist asserting respondeat superior claims (Counts I–II) and a negligent retention claim (Count III), alleging Kimmel’s solicitation of the specific investment was outside the scope of employment and Church knew or should have known of his misconduct.
First Baptist moved to dismiss Count III under Rule 12(b)(6), arguing Kimmel’s conduct was within the scope of his employment (so negligent retention inapplicable) and alternatively that Count III is time‑barred.
The court denied the motion to dismiss Count III, finding plaintiffs pleaded sufficient factual matter to state a plausible negligent‑retention claim and the complaint did not show on its face that the statute of limitations had run.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Count III plausibly pleads negligent retention (i.e., Kimmel acted outside scope of employment)	Kimmel was hired to give general financial/advisory services; soliciting this specific note program was outside his employment and thus supports negligent retention	Solicitation of investments was incidental to Kimmel’s financial‑advice role and furthered Church business, so acts fell within scope of employment	Denied dismissal: complaint pleads sufficient facts to allow negligent‑retention claim (plausible that solicitation was outside scope)
Whether plaintiffs may plead negligent retention alternative to respondeat superior	Plaintiffs may plead alternative theories under Rule 8(d)(2)	N/A (defendant argued plaintiffs did not plead Count III as alternative)	Plaintiffs may plead alternative claims; Count III permissibly asserted as distinct tort
Whether the complaint fails Rule 8(a)(2) plausibility standard	Complaint contains factual allegations (hiring, duties, solicitation, investments, indictment, FBI contact) supporting a plausible claim	Complaint insufficient or conclusory under Iqbal/Twombly	Court applied Iqbal/Twombly and found allegations sufficiently factual and plausible; complaint survives 12(b)(6)
Whether Count III is barred by Indiana's two‑year statute of limitations	Plaintiffs allege discovery (FBI call) in late summer 2013; complaint does not show claim accrued outside limitations	Statute of limitations began when indictment/FBI contact occurred (Aug–summer 2013), so action time‑barred	Dismissal on statute grounds denied: face of complaint does not establish accrual beyond limitations; fact disputes left to discovery

Key Cases Cited

Ashcroft v. Iqbal, 556 U.S. 662 (pleading must contain factual allegations plausibly showing entitlement to relief)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (complaint must raise a plausible right to relief above speculative level)
Cincinnati Life Ins. Co. v. Beyrer, 722 F.3d 939 (Rule 8 and 10(b) aim to give defendants fair notice; complaints must be coherent)
Konkle v. Henson, 672 N.E.2d 450 (Indiana negligent‑retention elements and two‑year statute of limitations)
Grzan v. Charter Hosp. of Northwest Indiana, 702 N.E.2d 786 (recognition of negligent retention cause of action)
Barnett v. Clark, 889 N.E.2d 281 (scope of employment analysis; independent course of conduct not serving employer is outside scope)
Stropes v. Heritage House Childrens Ctr. of Shelbyville, 547 N.E.2d 244 (respondeat superior liability for acts within scope of employment)