Thomas Rosenbaum v. Beau White, 2012 U.S. App. LEXIS 17184

In 2005, Seybold sought to form two LLCs (Seytron Property Holding and Seytron Investors No. 1) with investors contributing over $1 million.
Beaman and White, attorneys at a Indiana firm, drafted formation documents and related agreements for the LLCs.
At a seminar, White explained LLC protections and that the attorneys represented the group of investors; Seybold stated the attorneys represented Seytron and the investors alike.
Most investors never met the attorneys; they relied on Seybold, Whang, and Leggett for assurances about the attorneys’ role.
After formation, the attorneys’ involvement ended by mid-2005, while investments occurred through 2005–2006; investors later sued after Seybold’s plan failed.
District court granted summary judgment for the attorneys on all claims; plaintiffs appeal challenging the existence of a duty and related theories.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Did a legal duty exist between attorneys and investors?	Seytron investors relied on implied attorney-client relations for ongoing representation.	No individual attorney-client relationships; at most limited representation to Seytron entities.	No duty found; no implied personal attorney-client relationships.
Did Indiana Rules of Professional Conduct create a legal duty owed to investors?	Rules, especially Rule 4.3, create duties toward unrepresented investors.	Rules do not create civil liability or duties; only guidance for lawyers.	Rules do not create a legal duty; no duty to investors.
Does the absence of a duty defeat securities-fraud claims?	White’s seminar omissions and silence constituted fraud under securities laws.	No duty to speak to unrepresented investors; no fiduciary duty established.	No duty; securities-fraud claim fails.
Was there actual fraud by defendants?	Future-conduct statements and assurances constitute actual fraud.	The statements about future plans and intent cannot support actual fraud.	No actual fraud; statements concerned future conduct and were not misrepresentations of existing facts.
Did the plaintiffs prove civil conspiracy?	Defendants conspired with Seybold to commit torts related to the investments.	No evidence of concerted unlawful acts; defendants’ work was limited to formation of LLCs.	No civil conspiracy; plaintiffs failed to show concerted unlawful conduct.

Rice v. Strunk, 670 N.E.2d 1280 (Ind. App. Ct. 1996) (duty in professional-malpractice/constructive-fraud depends on relationship and foreseeability)
Campbell v. Eckman/Freeman & Assocs., 670 N.E.2d 925 (Ind. App. Ct. 1996) (duty factors include relationship, foreseeability, public policy)
Liggett v. Young, 877 N.E.2d 178 (Ind. 2007) (rules of professional conduct do not themselves create civil liability)
Chiarella v. United States, 445 U.S. 222 (1980) (omissions require a duty to speak; fiduciary duty needed)
Ackerman v. Schwartz, 947 F.2d 841 (7th Cir. 1991) (fiduciary duties arise from state law relationships)
Pokraka v. Lawyers Title Ins. Corp., 595 N.E.2d 244 (Ind. 1992) (presence of duties and misrepresentations in title insurance context)