Stephanie Hartmann and Eva Hartmann v. Prudential Insurance Company of America, Debra Hartmann, and Harvey Loochtan

Stephanie HARTMANN and Eva

Hartmann, Plaintiffs-

Appellants, COMPANY

PRUDENTIAL INSURANCE AMERICA, Hartmann,

OF Debra Loochtan,

Harvey Defendants-Appellees.

No. 92-3664. Appeals, Court

United States

Seventh Circuit.

Argued Sept. 1993.

Decided Nov. 1993.

Suggestion Rehearing En Banc

Denied Dec. 1993. POSNER, Judge, and

Before Chief CUDAHY, Judges. Circuit CUMMINGS POSNER, Judge. Chief equita- diversity for This suit for fraud and of an insurance contract ble reformation In grows out of a notorious murder. Hartmann, immigrant a German who Werner car busi- had made a fortune stereo ness, striptease he artist whom married nightclub she was met at a local where had performing. younger much than he. She was marriage soon on the rocks. In was Hartmann moved out of mar- 1981 Debra lover, her a tennis ital abode and with pro gun-store clerk —named Korabik. —and They to murder before he decided Werner He held at the time two could divorce her. $100,000 $150,- policies, for life insurance respectively, named Debra both which $150,000 beneficiary. policy sole Prudential, been issued one had another). (Debra in this case defendants his that he told a number of friends Werner beneficiary designation change wanted to previous make his two case, marriage, plaintiffs in this who are the place the beneficiaries in of Debra. policy had sold to The Prudential Loochtan, Harvey a Prudential Werner In agent, third March defendant. called Loochtan and told him he Werner $250,000. policy, third for wanted a insurance policy told friends would be Werner gave daughters. his Loochtan Werner an for arranged him application form and for (argued), B. David P. Jonathan Gilbert examination, he physical take Gilbert, IL, Chicago, Schippers, Schippers & afterward, Shortly passed. Debra Stephanie and Eva H. Vinson. for Hartmann ap- up at office showed (ar- Hasman, P. Joseph Steven Mandell J. form, signed by plication purportedly Werner Ross, Giffin, Peterson & gued), Sherri L. (almost certainly signature had been IL, Chicago, for Prudential Ins. of Amer- Co. forged). in and The form not been filled ica. do so and to write Debra asked Loochtan to Steinback, Steinbeck, Genson, Jeffrey B. beneficiary. space for the her name Martin, Kralovec, Gillespie Michael & J. $3,000 desk, asking placed in cash on his She Nash, (argued), Ford Lalich & B. James changing from prevent that he Werner IL, Krolovee, Chicago, Harvey Loochton. money beneficiary. pocketed the Loochtan way to her (ar- pointed out that the achieve Steinken, Panos P. Dean N. Richard policy, Block, IL, was to make her owner of Chicago, end gued), & De- Jenner change couldn’t the bene- since then Werner Hartmann. bra ficiary; and this was done. Prudential is- plaintiffs argue Prudential. The policy May. policies equitably sued should be reformed to carry out by changing Werner’s wishes Werner, consistent with Meanwhile his ex- beneficiary designation in wish, pressed trying change the bene- daughters, Debra to plain- Werner’s two the policies. ficiaries of his life insurance He secondary part tiffs. The of the suit —sec- $100,- agent the who had sold him the called ondary only not of because doubt as to the policy change 000 and told him he wanted to ability of two the individual defendants to daughters. beneficiary the from Debra to his satisfy a judgment substantial also be- agent form, him sent Werner com- way of cause in plaintiffs which the have it, pleted company duly and insurance framed their claim charges them — changed beneficiary designation. Wer- Debra and Loochtan having with defrauded request. ner called Loochtan with the same plaintiffs of their beneficial in interest Loochtan, sending instead of Werner the policies. two change beneficiary informing form him doubt, There despite is little Prudential’s policy that Debra be the owner of the arguments, Werner, daugh- Werner wanted his than rather called Debra and told to policies. ters be the beneficiaries both up signed her what Werner was to. This call had right change He the absolute to days, Werner’s death warrant. Within few $150,000 beneficiary 8, 1982, policy, which gunned had he June was machine already him, been issued to and he Korabik, úndoubt- probably by although no death — edly would making have succeeded in yet has one been tried for the murder —as he change had been for the nefarious stepped out shower. Loochtan, conduct of agent. Prudential’s As The two policies Prudential were double- policy, for the other we know that Prudential $800,000 indemnity policies. Debra claimed willing to issue it—Prudential issue violently. because her husband had died it; misconduct, and but for Loochtan’s Prudential, fraud, suspecting pay, refused to policy would have been issued to Werner and 1984, any In and Debra sued. before crimi- would have named his two as the instituted, proceedings nal had been Pruden- prob- beneficiaries. There is of course some $450,000. tial her settled with ability that changed Werner would have Debra, Korabik, finally and Loochtan were at signed mind the last and not minute brought 1989, justice in when federal mail form, application figure but it is too small to charges lodged against were them. any analysis in parties’ rights realistic pleaded guilty, being Loochtan and duties. murder, in eomplieit deemed Werner’s de Equitable reformation appropri is an Debra, spite tipping his call off was sen remedy ate when the conduct—often the years tenced to two in prison. The party fraudulent conduct —of one to a con others were convicted after a trial. Debra tract, in case through its prison years was sentenced to 22 Loochtan, agent causes the terms of the writ long Korabik 16. These re sentences materially ten contract to deviate what jury’s flected the finding that Werner’s mur agreed parties had to. Robacki All step der was a in the defendants’ scheme to Co., state Ins. 127 82 Ill.App.3d Ill.Dec. upheld defraud Prudential. We convic (1984); 468 N.E.2d 1254 tions sentences United States Hart Lakeside Townhouse Owners Briarcliffe mann, (7th Cir.1992). 958 F.2d 774 Wheaton, City Ill.App.3d Ass’n v. 170 The facts have we recited come 465, 470, 120 Ill.Dec. 524 N.E.2d transcript of the criminal trial. the On basis there; and cases cited Schons v. facts, judge of these the district in this civil Co., Ill.App.3d Monarch Ins. granted summary judgment suit for all the 289, 292, Ill.Dec. N.E.2d defendants. 4.3(7) Dobbs, § Dan B. Law Remedies (2d 1993). part p. The main problems the suit seeks recover ed. are There two $800,000, Prudential, policies, face plaintiffs’ amount of the case that, motive, police as where officer had it not dual lesser one

however. misconduct, lawfully arresting man his wallet. steals Werner been today: Beverages, he might Tippecanoe would have Inc. v. S.A El be alive Cf. killing Co., he succeeded Brewing supra, much less worth F.2d at 638. Aguila policies. out of the insurance cutting his wife entirely general But in when an acts would not if he were alive behalf, And doing things that could not on his own proceeds received merely interpreted as the over- possibly be beneficia- had been named ill-judged performance of his zealous possibility is that Werner ries. Another acting agent, scope he outside the duties as causes, died, but of natural agency principal is bound. and the policies his the value of have halved would Co., 423, Liberty Ins. 306 v. S.C. Vereen Life are at most But these the beneficiaries. (a 425, (App.1991) factually 412 429 S.E.2d damages, rather amount of issues about (Second) case); Agen- similar Restatement liability most” Prudential’s than about (1958). —“at 216, a, §cy p. 468 Loo- comment clear, though can even we it is not because acting only for himself and Debra. chtan was point, Prudential that find no cases favor, He Prudential no even ex ante uncertainty concerning should benefit (that is, regard happened to what without would have died in how Werner when and later), colluding by procure- her in the with agent ordinary its own course when by policy prevent- a and ment of fraudulent precipitating played a material role Wer- ing changing designation Werner and death. However premature ner’s violent beneficiary previous way In no policy. in his may liability if Prudential’s all this be—for thought to have fur- could Loochtan vicarious; is not an actual any is Prudential thering principal’s his business. It is may against re- wrongdoer; count and got if to sell more insurance than Prudential uncertainty against shall solving all it —we the second otherwise. Since Werner wanted choice of plaintiffs’ that see policy, could not have been hurt Prudential suit, ground of the a reformation as by playing straight with Werner. Loochtan’s by hope that it choice doubtless motivated (as was) badly by it But it could be hurt full give shot would them better agent collusion with Debra. The Loochtan’s $800,000 than some lesser amount rather betrayed principal. his Loochtan was sent to policies the actuarial value of based on prison defrauding for Prudential. named them as bene- them if the ficiaries, consequences their has for serious argue compa- that insurance The liability on Prudential. attempt to fix nies more careful the selection will even agents if supervision Prudential problem with the claim second acts. is held liable on basis requires imput is it that Prudential legitimate point arguing In make the so to Prudential. It ing Loochtan’s conduct is main, main, goal perhaps that a agent acts when an on behalf his true that superior respondeat doctrine of is to increase principal he even he principal, binds agents by principals. control of effective Lee his Heider v. exceeds instructions. States, 1207, v. 919 F.2d Konradi United Inc., Crafts, Ill.App.3d 245 wards Creative (7th Freeman, Cir.1990); v. Sullivan 498, 805, 488, 613 N.E.2d 184 Ill.Dec. (7th Cir.1991); 334, 336 Alan 944 F.2d O. Roppolo, City Chicago v. Liabili- Sykes, “The Boundaries of Vicarious 435, 443-44, Ill.App.3d 69 Ill.Dec. ty,” it 101 Harv.L.Rev. (1983); Tippecanoe Bev 878-79 N.E.2d by goal clear that would be served is not Co., Aguila Brewing erages, v. Inc. S.A El liability imposing on Prudential. Loochtan’s Cir.1987); Roberson 833 F.2d that, so unusual in the ab- misconduct was Corp., 912 F.2d 187-88 Bethlehem Steel (and none) evidence there is (7th Cir.1990). sence He be a collection on notice of his criminal princi agent and resort to methods that his suppose proclivities, it would be unrealistic to may pal not have authorized and monitoring screening forbidden; principal that careful nevertheless the it. agent agents prevented No deter- if the has a could bound. He is bound even by making vicariously wrong rent would be served held end liable done agent, liable in such a principal wrong situation. victim the was a stranger principal’s to the business. exception, There is an unmentioned parties, principal problem that a rule here is that while this is fraud, agent’s wrongdoing for an when hable case of anis unusual case of fraud agent acting wholly If rely for himself. because the victims did mis authority, agent, acting apparent representations com that constitute the fraud. party daughters rely mits a fraud a third who rea Werner’s did not on Loo sonably entering apparent authority believed he was into a ehtan’s to write an insur agent’s princi policy bona fide transaction with the ance as an for Prudential. Wer pal, chargeable relied,, principal with the ner plaintiff. his estate is not the detail, however, In fraud. the case that established the ex This is a and not be ception, cause, Ry., Gleason Seaboard Air Line argument we were told at without contradiction, 49 S.Ct. 73 L.Ed. 415 Werner’s are the (His employee only persons of the defendant railroad with claims to his estate. widow, Debra, forged lading a bank bill of draft would be disqualified presented rule, “murdering cotton and the documents to the heir” codified in Illinois at factor, 5/2-6.) plaintiff, paid a cotton who for the of a ILCS Proceeds life-insur cotton, employee’s policy bypass not exist. The ance the insured’s estate and himself, money go directly intention was to divert the to to the beneficiaries. is So it the appears plaintiffs, far daughters, so as he succeeded —the the who were defraud ed; opinion that suggest does not the railroad standing and beneficiaries have to sue any money. for received See also Ameri reformation of the insurance contract. Society Engineers, can Mechanical Inc. v. 6B John Alan Appleman Appleman, & Jean 556, 566-68, Hydrolevel Corp., § Law Insurance and Practice 1935, 1942-43, S.Ct. L.Ed.2d 330 But it was to them that Loochtan made Acceptance misrepresentations; National Co. v. Coal Producers pro and the cases that Inc., Ass’n, willingness 604 F.2d 542-43 Cir. ceed all from Gleason base their 1979); In Manage re Atlantic to respon Financial overlook the normal limitations (1st ment, Inc., Cir.1986); 784 F.2d superior agent’s deat on apparent the author Restatement, ity, §§ supra, 261-62. In one our principal’s or in terms on the interest line, England in in Accep fostering the cases New his customers’ trust in his Corp. agents’ reliability. tance v. American Mutual Ins. Mfrs. Co., 4 Mass.App. 344 N.E.2d fostered, Well, that trust be if (1976), aff'd, 373 Mass. 368 N.E.2d 1385 indirectly, by prece- the modest extension of agent the fraudulent was an insurance necessary bring dent to this suit under agent, as here. rule plaintiffs of Gleason. But the have idea any behind these cases seems to be the rule or mentioned cited of these principal agent may that a to They who arms de- cases that follow it. have by of being agent ceive—for was virtue an in deflected the true issue their case against by railroad in that malefactor Gleason decision cast their to empowered was to plaintiff equitable defraud the their as for claim one reformation $10,000, at the time a sum— rather considerable than one for fraud. Loochtan de- (as ought see), and, consequences by to be for the answerable frauded them shall we Gleason, of that deceit. The can result be reconciled extension of could principal imputed plain- with the rule that the to if is not liable Prudential. But fraud, agent’s they for done for for acts tiffs sued would have to estab- by noting principals damages, damages may, sole lish benefit that as a and those earlier, group long in the as benefit run their custom- we noted be much lower than the $800,000 principal they sought by denominating ers know that the stands behind the when, agent. The benefit is absent as the suit as one reformation. for beneficiaries, They change principal sought usual case which a is to want Cir.1992) plain- having paid reply in their brief the pro- charge Prudential —and beneficiary. any theory wrong actually relying Now it is to the tiffs disclaim ceeds money liable, amount of re- very liability that the doubtful of vicarious hold Prudential depend plaintiffs should though coverable and the various sections Gleason equita- they call their claim fraud whether that have cited create the Restatement we Equitable reformation. vicarious-liability ble rules. The failure to cite remedy frequently and here fraud. fatal; not of course the failure to Gleason is argue for equitable considerations Whatever authorities, any coupled explicit with an cite against awarding plaintiffs the full liability, Why fatal. disclaimer vicarious $800,000 though such an award would damaging made dis- so they off than would have make them better see, turn to claimer are about we we changing succeeded been had Werner their claim of fraud Debra and Loo- beneficiary equal should have designations chtan. claim is For weight however the labeled. argue that These defendants liability example, fact that Prudential’s claim them vitiated absence thought could be the basis for vicarious any of them made evidence that either equitable argument allowing powerful $800,000 (or, misrepresentation in law is from the what Prudential to deduct same, speak on the reformed in circumstances where would be due the failed $450,000 paid good misleading) plain policies the to either of the silence plaintiffs’ tiffs, to Debra Hartmann. directly indirectly. argument faith may equitable- have believed counsel may point, seem beside since defen the likeli- reformation route would enhance dants were convicted of a “scheme or artifice $800,000. winning of the entire hood their in the mail and to defraud” violation of wire 1341, §§ fraud 18 statutes. U.S.C. 1343. of need The choice that route statutes, however, These reach further than proved argue could have fatal. McNally law v. common fraud. United argue, though without and indeed do elabora States, 350, 356-57, 2875, 107 483 S.Ct. tion, claim of that their 2879-80, 97 L.Ed.2d 292 United Loochtan’s knowl should succeed because Dial, (7th 163, States v. 757 F.2d 170 Cir. Prudential, edge imputed principal. to his 1985). They may require misrep a not even agent’s knowledge it an And is true that fact, Driving of Pile v. resentation Atlas Co. principal if imputed to his Co., (8th 986, DiCon Financial 886 F.2d 991 provided trying principal, to his defraud Cir.1989), defining of common element party is not in with the the third cahoots Ohlendorf, law fraud. Redarowicz v. 92 Restatement, 282(2), § agent. supra, com 418, 171, 411, Ill.2d 65 441 N.E.2d Ill.Dec. 6, pp. f ment and illustration 611-15. This (1982). 324, present 331 ease is to be a variant of Gleason rule —which means Illinois, decided under the common law of Gleason, is, that the rationale as in however abandoning the that to which while doctrine Restatement, apparent authority, supra, misrepresentation a be actionable must be 282(2), f, 614; p. plain § comment plaintiff “privity made to of doctrine justify, despite made to tiffs have no effort —the gone permit fraud” —has not so far as to of any the absence of manifestation of Loo damages recovery someone who authority them, imposition chtan’s to misrepresentation learned of the at all. never liability They on Prudential. cite neither the Murphy-Knight, People ex rel. Peters v. 248 authority in sup nor Restatement other 875, 868, Ill.App.3d 187 Ill.Dec. passing imputed port of their reference to (even presum Illinois thus N.E.2d knowledge. press point to a Failure mentioned) ably yet buy prepared is not to the “fraud on support proper it is and to it with Levinson, it, theory Inc. authority the market” of Basic v. argument and forfeits Beard REMC, 405, 408-09 99 L.Ed.2d 194 Whitley County 485 U.S. 108 S.Ct. 840 F.2d (7th Cir.1988); (1988), complain Coffey under which an investor can v. Van Dorn Iron Works, (7th Cir.1986); misrepresentation F.2d a that caused the mar cf. of price to if he Magnant, Lett v. 965 F.2d ket stock fall even did not misrepresentation. There more required know about the should be us. eludes Harkins Fielder, notably Cal.App.2d misrepresentations to 310 P.2d were here — (in plaintiff held that the Prudential, could recov- form of mislead- but also intestacy er in a such case—an in silence) contest Werner, ing whom Loochtan to brother, by which the concealing decedent’s disloyal But Wer- concealed his behavior. the existence of other heirs from the admin- daughters misrep- ner’s did not learn estate, istrator of the decedent’s gypped proceedings. until the criminal resentations those heirs out of their fair share of the misrepre- They harmed not because the were estate. no We have reason to doubt anything sentations led them do different recovery Illinois would allow a similar they anyway done what would have case, as such this case. because father was murdered before he change beneficiary a Unfortunately could effect des- plaintiffs, for the they ignations. damages have conceded to recover they prove they were the market, in a ease of fraud Even policies— beneficiaries of Werner’s insurance knowledge plaintiff has mis indirect of the had in get other words re representation underlying or omission formed, as we held cannot As do. reacting change price, fraud. He is to a plaintiffs’ lawyer explained argument, change by misrepre was induced he believed that unless his clients were bene sentation, so he receives as were the dis policies they ficiaries signal misrepresentation tant and acts property sup kind interest that will response path to it. commu Without port a suit for fraud. That was incorrect. nication, indirect, however between the mis property One does need or contract representation plaintiff, and the the latter right damages to recover for fraud. The hardly can be said have relied torts, example common law of unlike misrepresentation, and thus to have been governing complaining law suits of denials of it. harmed Werner’s never did law, process require inju due does not anything misrepresentations because ry victim, specific to a interest of the tort misleading by the omissions defendants— property liberty. such process The due parted money, parted property, with specific deprivations clause enumerates job, agreed life, resigned marriage, they liberty, a or did remediable under it: are property: period. and any things The common law of of the other that victims of fraud specify torts not does the interests for which are induced to do to Par their detriment. damages enough can be recovered. It Parlette, Md.App. lette v. 88 A.2d 596 upon the victim a harm a suffered (1991); Torf, 669 Orlin v. 126 A.D.2d placed. dollar value can Plaintiffs in be (1987). They 513 N.Y.S.2d 870 lost a involving negligent cases intentional or inflic potential they benefit of which were unaware. tion of emotional distress do not suffer a loss unique In the unusual but not of facts liberty or property conventional case, however, present the concerns that words, they sense of these are neverthe courts to insist on a link led between suits; less allowed to maintain tort and like misrepresentation by and defendant defamation, plaintiffs wise suits for plaintiff the mind of present. are not reputation is property. not There is no dif is no misrepresenta- There doubt that See, e.g., May ferent rule in De v. fraud. plaintiffs complain tions of which the caused Roberts, 146, 149 (1881); 46 9 Mich. N.W. harm, despite having them no direct 191, 137 Till, Flaherty Minn. 815 v. 119 N.W. knowledge misrepresenta- indirect of the (1912); Campbell, v. Cal. 128 Work 164 Misrepresentations tions. made the de- Crowell, (1912); Pac. 943 Crowell v. 180 N.C. (the fendants to a stakeholder insurance 516, 105 206 Prosser and Keeton S.E. company) deprived plaintiffs of a valuable (5th § p. on the Law Torts 105 at 726 ed. misrepresentation, asset. There was and 1984). suggestions plain that the Occasional injury, causally loss,” there was and were prove “pecuniary tiff must a Restate (Second) through linked albeit and § the minds re- con ment Torts 525 sulting plaintiffs, why narrowly, tort actions of strue the too even we disre- seduction, district court and ground pressed quintessential- gard tort a would be case case, abandoned here —and either actionable fraud still ly nonpecuniary “ F.2d Larson, Wynalda, Ellis v. Un- of waiver. E. “Women many Jane states. (7th Cir.1993); Bernard v. United My Little, They Na- n. Call Good So derstand 1090, 1092-93 School, High F.3d Rethinking Township A Feminist ture “Deceit”’: Cir.1993). (7th steadily plaintiffs have Seduction,” 93 Golum.L.Rev. pig their fraud claim rides maintained that plaintiffs in this of course the But gyback on their claim loss. The fact pecuniary a did suffer case thus, clearly, lat falls with the all more result from the destruc did not loss ter. right, the sort property a while tion of They They had it backwards. pro in a important due thing that have based § is com should 42 U.S.C. case under cess fraud com claim Prudential on the in this common law pletely irrelevant only Debra. The mitted Loochtan and a recent amend It true that before case. 1346) properly sub (see liability to which Prudential § the mail and 18 U.S.C. ment vicarious ject the facts of this case is interpreted to ex on were fraud statutes wire knowledge liability, acts only harm was the based in which the cases clude Loochtan, liability is in no “intangible its and that community’s impairment a way plaintiffs’ having public dependent on the em right” to the honest services States, property right policies. in the insurance supra. McNally v. United ployees. that, mistakenly that the fraud already plaintiffs believed just this shows as we reforming policies to depended claim seen, cover the same do not these statutes (see beneficiaries, themselves as and be name ground the common law also United as (2d Miller, of that mistaken belief have disclaimed F.2d 1021-22 cause States By which, liability. disclaiming vicarious respect vicarious Cir.1993)), in this broader liability, disclaimed Gleason we discussed earlier in the one whereas them narrower, plaintiff its line. Their disclaimer disclaimed requires can out of court. the fraud inflicted a loss that show that (which adequate monetized with does happy This is are result. We of) high degree precision mean plaintiffs. But we sympathetic ease litigation. National Bank Union methods sympathetic in a case cannot have rule that Mosbacher, 1440, 1444 F.2d Cir. up a muddle in the appellant can serve us 1991). interest expectation The loss of hope our law will find that we or clerks or, here, intended-to-be- that the named in it a reversible error. One somewhere have in a life insurance named beneficiaries approach would be consequence of such an Its is a loss. value uncertain policy such to prudent appellees that would have brief date death is uncer the insured’s of because by appellants pressed not issues raised might the insured tain because appellate fasten on such a lest court the (again). But these changed the beneficiaries (non)issue judgment upend it and use to the depriving possibilities do not warrant the be even of the trial court. So briefs would bring right of to of such fraud his victim are, longer than and their focus even damages. tort suit and obtain consequence would more diffuse. Another lawyers disposed responsibility diminish the not to hold the be to would be We them, competition among since in and to reduce lawyer to a concession made plaintiffs’ tend side with the weaker argument. the court would to distracting atmosphere an oral anyway, at it in counsel even more than does searched his briefs this court But we have appealing more case. argument an that least when his was the hint of in vain for system unlike that of Continent can Our fraud Loochtan Debra case having judges over the geared to take of the claim survive the dismissal lawyers, even when result nothing. a case function There is This is Prudential. lawyers’ clients in district would be rescue ground of a abandoned neither any, remedy, ques- here, for sought nor of a mistakes. The to be revived court and CUDAHY, apparently tionable tactical decisions made Judge, Circuit concurring in part plaintiffs’ dissenting part. in in counsel this case lies elsewhere. disagree I with some reluctance with a analysis by masterful majority,

It is true that sometimes courts relieve seems to turn back moment truth parties consequences from the of their waiv- from its own conclusions. Based on Gleason ers, if the case not fall one even does within Ry., v. Seaboard Air Line 278 U.S. exceptions the established such as those (1929), S.Ct. 73 L.Ed. 415 majority jurisdiction comity. for issues of did We concludes that Prudential should both vi- that in a recent case where defendant cariously liable for Loochtan’s fraud as well court, an had waived issue the district but on equitable liable an theory fully it pure was a issue of briefed in our law knowledge imputed because Loochtan’s court could and we find “no reason to defer Prudential. its resolution to another case. There will no better time resolve the issue than now.” Admittedly, failed cite Corp. Corp., Amcast Industrial Detrex Gleason, they argued but vigorously that (7th Cir.1993). F.3d This is not Loochtan was Prudential’s and that case, famously such a case. Nor is it a most Loochtan “general agent” was a of Pruden Tompkins, Erie R.R. v. 304 U.S. 58 S.Ct. tial and therefore that actions “are bind 82 L.Ed. 1188 where a court ing upon it.” Appellant’s Br. at 9. Under precedent deeply decides to reexamine a so Gleason, simply Prudential was incorrect in litigant entrenched in the law that a relying on the fact that Loochtan could de so, challenge though, not think to imputation by acting adversely feat to his it— procedure Therefore, in Erie Court’s has not es- principal. simply there was no See, caped Henry e.g., criticism. Friend- J. waiver this No adversary claim. doubt the ly, system “In contemplates Praise the New Erie —and Federal the Truth will best Law,” Friendly, emerge Common lawyers. Benchmarks the combat “game” theory can be 171-72 and n. 71 carried too far. This is a ease Certainly, this is not the first lawyer case where the party which the for tells the judge’s research is better than that of the appellate court that he does base his litigants. Nor be unusual for a grounds (ground claim Y X and X that squarely presented court to decide an vicariously Prudential is liable for Looehtan’s issue — despite ques the fact and therefore insurance facts — perfect clarity. tion was not briefed equitably issued Prudential should be re- famously, Perhaps most Justice Brandéis had formed, Y ground that Loochtan’s fraud is declaring question no trouble that “the predicate actionable and so can be a decision” Erie R.R. Co. v. Tompkins, 304 though reformation even the fraud 64, 69, 817, 818, U.S. 58 S.Ct. 82 L.Ed. 1188 impair plaintiffs’ property rights), (1938) oft-challenged “whether doc independent the court’s research and (16 Pet.) 1, 10 Tyson [41 trine of Swift persuade lawyer reflection court (1842) disapproved,” L.Ed. 865 shall now be ] is wrong. grounds If reversal such despite the vitality fact that the continued proper, longer sys- no adversary we Tyson v. had neither nor been briefed Swift justice tem of in the federal courts. Erie, argued. Summary Briefs, See 64-69, U.S. at at 817-18.1 S.Ct. Affirmed. Lane, majority (1986); very Teague 1. The contends that Erie is a differ 90 L.Ed.2d 69 v. 489 U.S. precedent ent case because it involved "a so (1989); 109 S.Ct. 103 L.Ed.2d 334 deeply litigant entrenched in the law” that a al., Supreme Robert L. Stern et Court Practice challenge Maj. op. would be it. loathe ("But 1986) § 6.26 ed. where the Court Erie, very quoted 1215. first line of there believes is sufficient reason to address the above, precedent (Swift Tyson) to the refers v. as omission, point despite a its such as where basic Ohio, "oft-challenged". Mapp See also review, escape might may unfairness the Court 81 S.Ct. 6 L.Ed.2d 1081 that.”). just do Kentucky, Batson v. 476 U.S. S.Ct. respectfully I the ex- surely therefore dissent to free rest its here The court Gleason, tent indicated. without the benefit decision point. Be- exchange on this parties’ of the any- to believe that is no reason

cause there placed at unfair disadvan-

one has been analytical diligence and

tage by the court’s go permit plaintiffs to I

prowess, would equitable claim with the

forward

against Prudential.2 presents a Unfortunately, the fraud action Rodney TODD, Special as Administrator say I “unfortunate- problem. more difficult Tiffany Todd, Estate of of the have, certainly plaintiffs as ly” because the Plaintiff-Appellant, straightforward explains, majority against Debra and Loochtan. fraud action Maj. complication op. at 1213-14. BIC, S.A., and BIC SOCIETE rely plaintiffs here did is that Corporation, Defendants- However, anyone’s misrepresentation. as Appellees. out, maj. 1212-13, op. at majority points no re- law would doubt the Illinois common No. 92-1201. requirement that there be a lent in its strict Appeals, Court of United States misrepresenta- link between the defendant’s Seventh Circuit. plaintiffs loss. tion and Argued Sept. 1993. Nonetheless, persistent- plaintiffs have they ly, wrongfully, contended that Nov. 1993. Decided equitable refor- no fraud action without This not a case where the mation claim. strongest,

arguments are such for waiver parties unfairly one has been

as where

surprised or court has where district deliberately bypassed. But under (7th Cir.1988), Tripp, 863 F.2d 1356

Debbe v. plain rule in civil

there is no error cases and relieving plaintiffs

no apparent basis consequence the waiver. There is analysis plain suggestion

some that a error applied prevent “miscarriage

justice.” at 1362. See id. Since Debra co-conspirators in

Loochtan were Werner’s may verge

murder we indeed be on However, I “miscarriage”.

such a

press for such an outcome here. reformation, tial, (2) majority that without 2. contends it must find other- "standing” bring plaintiffs expressly a fraud action. disavowed lacked wise because encompass equita- winning argument. algebra is a case in But this does not "This (which perhaps party appellate lawyer ble reformation claim should which the tells Z). plaintiffs designated ground grounds that he does not base his claim on While court they surely (ground vicariously proposition, X X not cite Gleason for and Y that Prudential fraud, argument. ground Because the liable for Loochtan’s Y that did not "disclaim” throughout litigation though it did insisted Loochtan’s fraud actionable rights).” knowledge imputed to impair plaintiff's property Maj. below, (though admittedly op. explain agree reasons that the I at 1215. As I explores), majority persuasively majority grounds this claim not X and Y are waived. waived, (1) permitted and the should Plaintiff's counsel told court go ground. bringing a forward on this were not fraud action Pruden-

Case Details

Case Name: Stephanie Hartmann and Eva Hartmann v. Prudential Insurance Company of America, Debra Hartmann, and Harvey Loochtan

Court Name: Court of Appeals for the Seventh Circuit

Date Published: Dec 9, 1993

Citation: 9 F.3d 1207

Docket Number: 92-3664

Court Abbreviation: 7th Cir.