Rapkin Group, Inc. v. Cardinal Ventures, Inc., 29 N.E.3d 752

ECG and SCG were closely held LLCs whose physician shareholders (including Rapkin) and Cardinal (a corporate shareholder) owned the companies; management included CEO Winconek and CFO Carrick.
Audits in 2007–2009 revealed intentionally overstated receivables/inventory and that ECG/SCG were effectively insolvent; loans, not profits, funded salaries and dividends; Winconek and Carrick were fired and later criminally implicated.
Rapkin sued derivatively (on behalf of the LLCs) alleging fiduciary breach and fraud by Cardinal and others; initial direct claims were dismissed and the suit proceeded as derivative.
The trial court granted summary judgment for Cardinal; Rapkin appealed after this court’s prior decision affirmed summary judgment for individual directors Roch and Watkins (Rapkin I).
Rapkin designated new evidence (notably Winconek’s affidavit and Scanemeo’s affidavit) asserting Cardinal’s appointed director Gildersleve knew the companies were borrowing to pay dividends while encouraging physicians to buy shares from Cardinal.
The appellate court reversed summary judgment for Cardinal, finding the designated evidence created genuine issues of material fact about fiduciary breach and constructive fraud and remanded for trial.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Did Cardinal breach a fiduciary duty to the LLCs/shareholders?	Gildersleve (Cardinal’s director) knew loans funded dividends (2006–2009) yet encouraged physicians to buy Cardinal’s shares, failing to deal openly.	Evidence is vague/timing uncertain; prior explanations show sales were to improve relations and physicians wanted more shares.	Reversed: genuine factual dispute exists whether Cardinal, via Gildersleve, breached fiduciary duty; issue reserved for trial.
Did Cardinal commit constructive fraud on the physician shareholders?	By remaining silent about the companies’ insolvency and encouraging share purchases, Cardinal gained advantage while physicians relied to their detriment.	Plaintiff must prove reliance and advantage; defendant disputes sufficiency/credibility of evidence.	Reversed: designated evidence supports elements of constructive fraud (duty and advantage shown; other elements raise genuine issues).

Rapkin Grp., Inc. v. Roch, 6 N.E.3d 505 (Ind. Ct. App. 2014) (prior appellate decision addressing claims against individual directors)
G & N Aircraft, Inc. v. Boehm, 743 N.E.2d 227 (Ind. 2001) (fiduciary duties of directors and business judgment rule standard)
Hughley v. State, 15 N.E.3d 1000 (Ind. 2014) (summary judgment standard and caution against short-circuiting marginal cases)
Demming v. Underwood, 943 N.E.2d 878 (Ind. Ct. App. 2011) (elements and burdens for constructive fraud)
Farmers Elevator Co. of Oakville, Inc. v. Hamilton, 926 N.E.2d 68 (Ind. Ct. App. 2010) (elements of breach of fiduciary duty)
Rice v. Strunk, 670 N.E.2d 1280 (Ind. 1996) (framework for constructive fraud elements and burden shifting)