Purcell v. Old National Bank
2011 Ind. App. LEXIS 1501
| Ind. Ct. App. | 2011Background
- Purcell and Knight formed Midwest Fulfillment, Inc. (MWF) which grew to include temporary labor services.
- In 2002 Purcell sold his stake to Knight and Stein; a redemption agreement allowed Purcell to regain control if MWF defaulted.
- MWF obtained a loan from Old National Bank (ONB); Purcell signed a subordination agreement subordinating his security interest.
- The redemption agreement defined a 1.0 current ratio as a default trigger; MWF’s ratio fell below 1.0 in early 2003.
- MWF closed in July 2003; ONB seized assets, leaving Purcell unpaid; Purcell sued ONB in 2004 for various wrongful acts.
- The trial court granted summary judgment for ONB in 2005 on grounds related to the subordination agreement; this court reversed on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty owed by ONB to Purcell? | Purcell—ONB owed a duty as subordinate creditor. | ONB—no general duty to a non-customer; no duty as subordinate creditor. | ONB did not owe Purcell a duty as subordinate creditor. |
| Whether ONB's alleged misrepresentations constitute actual fraud? | Stein's statements, under Howarth’s direction, misrepresented April 2003 figure. | No direct misrepresentation to Purcell; need for direct statement. | Question of material fact remanded to jury. |
| Whether ONB tortiously interfered with the redemption contract? | ONB induced breach of the redemption agreement between Purcell and MWF. | Need justification and intent; no clear proof. | Genuine issues of material fact preclude judgment; remand for jury. |
| Abuse of discretion on attorney’s fees denial? | Purcell’s claims not frivolous; Stein’s contradictory statements create material facts. | Stein’s statements show Purcell lacked basis to sue. | No abuse; denial of fees affirmed. |
Key Cases Cited
- Morgan Asset Holding Corp. v. CoBank, ACB, 736 N.E.2d 1268 (Ind. Ct.App. 2000) (no duty to subordinate creditors; noncustomer status limits duty)
- Maggart v. Freeman, 27 Ind. 531 (Ind. 1867) (fraud via statements to plaintiff through third party)
- Rice v. Strunk, 670 N.E.2d 1280 (Ind. 1996) (elements of actual fraud and reliance)
- Williams v. Cingular Wireless, 809 N.E.2d 473 (Ind. Ct. App. 2004) (negligence elements and duty analysis)
- Chapo v. Jefferson County Plan Comm'n, 926 N.E.2d 504 (Ind. Ct. App. 2010) (attorney's fees standard and abuse of discretion)