Supreme Court divided on whether man’s claims against bank can proceed

Two Indiana justices believed that a man’s actual fraud and tortious interference with contract claims against Old National Bank should go to trial, an opposite conclusion reached by their fellow justices.

Justices Frank Sullivan, Mark Massa and Steven David – who authored the majority opinion – found there wasn’t sufficient evidence presented by James Purcell to withstand a motion for judgment on the evidence by the bank on his claims of fraud, deception, and tortious interference with a contract.

Purcell had a security interest in Midwest Fulfillment, a company he established in 1998, that required if the company’s assets-to-liabilities ratio fell below a certain level for three consecutive months, Midwest Fulfillment would be in default and Purcell would gain 100 percent ownership of the company. He previously had sold his majority interest in the company.

Midwest got a line of credit from Old National Bank, which required Purcell to sign a subordination agreement making his security interest in the assets subordinate to Old National’s interest. Both Purcell and Old National received monthly financial statements from the company. A couple of years later, the company went out of business and Old National liquidated the assets.

Purcell sued Midwest, and during interrogation of Joseph Stein, a majority owner of the company, Stein testified as though an employee of Old National instructed Stein to make adjustments to the company’s balance sheets. These adjustments kept the company above the threshold ratio. Purcell then sued Old National for negligence, constructive fraud, actual fraud, deception and tortious interference with a contract. At this trial, Stein’s interrogatory answer was entered as proof that the bank employee instructed Stein to knowingly make false statements. Both the bank employee and Stein denied that the balance sheets were falsified at the bank’s direction.

The trial court granted Old National’s motion for judgment on the evidence on all claims, finding the bank owed no duty to Purcell. The Court of Appeals affirmed in part and reversed with respect to the fraud, deception, and tortious interference with a contract claims.

The majority affirmed the trial court, finding Purcell didn’t produce sufficient evidence to withstand the motion for judgment on the evidence on the claims of fraud, deception, and tortuous interference.

Justice Robert Rucker and Chief Justice Brent Dickson dissented regarding these claims because the majority affirmed the lower court on grounds the trial court didn’t reach, Rucker wrote. Also, the conflicting inferences from the evidence before the jury on Stein’s testimony precluded judgment on the evidence on these two claims.

The justices did all agree with the lower court’s judgment on the evidence regarding Purcell’s claims of negligence and constructive fraud. Purcell’s relationship with the bank as a subordinate creditor didn’t give rise to a duty of care required to prove these claims. They also affirmed the denial of attorney fees for Old National.