                                                                           FILED
                                                                      Oct 26 2018, 8:53 am

                                                                           CLERK
                                                                       Indiana Supreme Court
                                                                          Court of Appeals
                                                                            and Tax Court




ATTORNEYS FOR APPELLANT                                    ATTORNEYS FOR APPELLEES
Bryan H. Babb                                              Andrew W. Hull
V. Samuel Laurin                                           Jason L. Fulk
Christopher S. Roberge                                     HOOVER HULL TURNER LLP
Elizabeth A. Roberge                                       Indianapolis, Indiana
BOSE MCKINNEY & EVANS LLP
Indianapolis, Indiana


                                             IN THE
    COURT OF APPEALS OF INDIANA

BloomBank,                                                 October 26, 2018
Appellant-Plaintiff,                                       Court of Appeals Case No.
                                                           18A-PL-375
        v.                                                 Appeal from the Marion Superior
                                                           Court
United Fidelity Bank F.S.B.,                               The Honorable Heather A. Welch,
et al.,                                                    Judge
Appellees-Defendants.                                      Trial Court Cause No.
                                                           49D01-1606-PL-19471



Bailey, Judge.




Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018                            Page 1 of 41
                                            Case Summary
[1]   BloomBank, f/k/a Bloomfield State Bank, (“BloomBank”), a participant lender

      to a real estate developer, sued United Fidelity Bank F.S.B. (“UFB”), the

      primary lender, and Village Capital Corporation (“Village Capital”), a

      successive developer and affiliate of UFB, for allegedly fraudulently inducing

      BloomBank to sell its interest to UFB at a lower-than-market price, breaching

      the terms of the parties’ contract, and gaining unjust enrichment. BloomBank

      now appeals the trial court’s “Order Granting Defendants’ Motion to Dismiss

      [BloomBank’s] Third Amended Complaint.”


[2]   We affirm in part, reverse in part, and remand.



                                                     Issues
[3]   BloomBank raises the following four issues:


              I.       Whether BloomBank sufficiently pled a claim for
                       constructive fraud.


              II.      Whether BloomBank sufficiently pled a claim for actual
                       fraud.


              III.     Whether BloomBank sufficiently pled a claim for breach of
                       contract.


              IV.      Whether BloomBank sufficiently pled a claim for unjust
                       enrichment.



      Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018       Page 2 of 41
                             Facts and Procedural History
[4]   The relevant facts, as alleged in BloomBank’s Third Amended Complaint and

      attached exhibits, are as follows.1


[5]   On May 23, 2007, UFB agreed to loan $7.7 million (“the Loan”), secured by a

      mortgage on a residential development in Hamilton County called Anderson

      Hall (“the Property”), to Estridge Development Company, Inc. (“Estridge”).

      BloomBank and two other banks (collectively forming TriCapital, LLC and

      collectively referred to as “TriCapital participants”), agreed to provide

      approximately $3.275 million of the loan amount to UFB in exchange for a

      42.5287% interest in the profits and losses associated with the Loan (“the

      Participatory Interest”). BloomBank held a 40% interest in the TriCapital

      participation, for which BloomBank paid $1,309,883.96. The TriCapital

      participants and UFB memorialized their transaction in a Participation

      Agreement, executed on May 23, 2007.


[6]   The Participation Agreement (alternately referred to as the “contract”) between

      UFB and the TriCapital participants provided, in relevant part:




      1
         We review a dismissal under Rule 12(B)(6) de novo and accept as true the facts alleged in the complaint.
      Birge v. Town of Linden, 57 N.E.3d 839, 843 (Ind. Ct. App. 2016).

      Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018                              Page 3 of 41
                                           ARTICLE IV


                          ADMINISTRATION OF THE LOAN


        4.1 All Loan Documents shall be executed by the Borrower
        [Estridge] in favor of the Lender [UFB] and shall be held by the
        Lender as trustee for the Participant [TriCapital participants] to
        the extent of its Participatory Interest in the Loan. The Lender
        reserves the right, in its sole and absolute discretion, in such
        instance upon prior verbal notice, to be subsequently confirmed
        by written notice to the Participant, to enforce any and all of the
        obligations and liabilities of Borrower under the Loan or any of
        the Loan Documents … The Lender agrees that[,] without the
        prior written consent of the Participant, which consent shall not
        be unreasonably withheld or delayed, the Lender shall not … (d)
        realize on any collateral which may secure the Loan …


                                                  ***


        4.2 The Lender shall service the Loan in accordance with its
        usual and customary practice in the ordinary course of its
        business and will exercise care in the administration of the Loan
        as if it were an average prudent lender having made the entire
        Loan by itself. It is expressly understood and agreed that the
        Lender does not assume nor shall it be deemed to have any
        responsibility or liability to the Participant, either express or
        implied, for:


                                                  ***


        (b)   with Participant’s written consent, notice of which shall be
        promptly given, for any failure to realize upon any collateral for
        the Loan …



Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018           Page 4 of 41
                                                   ***


                The Participant expressly consents, acknowledges and
         agrees that the Lender shall have no liability to Participant for
         any actions the Lender takes in accordance with this Agreement
         with Participant’s prior consent.


         4.3 … The Lender shall promptly notify the Participant of
         events of which it has actual knowledge and which might
         materially adversely affect its interest …


                                                   ***


                                             ARTICLE X


                             MISCELLANEOUS PROVISIONS


                                                   ***


         10.12 The headings of the Articles in this Agreement are inserted
         solely for convenience of reference, and are not intended to
         govern, limit, or aid in the construction of any term or provision
         hereof.


                                                   ***


Appellant’s App. Vol. III, pp. 186-87, 193.2




2
  BloomBank also points to Article VIII, § 8.1(b), but does not pursue a claim on appeal that UFB violated
that provision. Perhaps that is because the body of that section expressly states that it relates to “matters

Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018                                Page 5 of 41
[7]   Because UFB was the lead lender and mortgagee, the TriCapital participants

      had no privity of contract with Estridge, no disclosed interest in the Loan, and

      no interest of public record in the Property. The TriCapital participants relied

      on UFB to provide them with timely and accurate information regarding the

      status of the Loan and the collateral securing repayment of the Loan, as

      contemplated in the Participation Agreement.


[8]   Estridge ultimately defaulted on the loan. On February 17, 2012, UFB filed a

      foreclosure action against Estridge. The participant lenders were required to

      contribute their pro rata share of all attorney’s fees, costs, and expenses incurred

      by UFB in enforcing the terms of the Loan documents and in realizing on the

      collateral pledged as security for repayment of the Loan. On May 15, 2013, a

      final judgment in the foreclosure case was entered in favor of UFB in the

      amount of $6,826,240.93.


[9]   On June 4, 2013, UFB filed a praecipe for a sheriff’s sale of the Property that

      was collateral for the Loan. On June 14, 2013, a competing lien holder in the

      foreclosure action, Marilyn Anderson (“Anderson”), filed a notice of appeal.

      Anderson did not post a bond or seek a stay of the sheriff’s sale. During this

      same time period, UFB and the TriCapital participants were engaged in

      negotiations regarding UFB’s possible repurchase of the participant lenders’

      interest in the Loan. On July 9, 2013, UFB offered to repurchase the TriCapital




      concerning the Borrower and the Loan…” id. at 191, and the Borrower and the Loan itself are not at issue in
      this case; it is only the sale of the collateral, after default on the Loan, that is at issue.

      Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018                            Page 6 of 41
       Participatory Interest for a total purchase price of $1,150,000.00, i.e., less than

       one-third of the original purchase price paid to UFB by the Tri-Capital

       participants for the Participatory Interest.


[10]   On July 31, 2013, Pat Pfeifer (“Pfeifer”), a representative of the TriCapital

       participants, wrote to Donald R. Neel (“Neel”), the President and Chief

       Executive Officer of UFB and Village Capital, a corporation located in

       Evansville and an affiliate of UFB. Pfeifer wrote the following regarding the

       TriCapital participants’ potential losses associated with acceptance of the UFB

       proposal to buy the Participatory Interest:


               We had two areas of concern we would like to address:


               1.       Written disclosure of any negotiations to sell the
                        note/collateral prior to sheriff sale[.]


               2.       Bid price – UFB has not disclosed what its bid offer [is] to
                        Tri-Capital; however, [i]f a bidder shows up and offers
                        $2.8MM or greater[,] we would be better off letting it sell
                        to that bidder than taking the offer of $1,150,00. If you
                        can please elaborate on your bid price and why.


       Appellant’s App. Vol. III at 247.


[11]   On August 1, 2013, there was a sheriff’s sale of the Property. UFB was the

       successful bidder for the Property in exchange for a judgment bid in the amount

       of $2,800,000.00, a sum millions of dollars lower than the Property’s actual

       value. That afternoon, Neel responded to Pfeifer’s inquiry in an email that

       stated, in relevant part:
       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018             Page 7 of 41
               We are able to represent that we had not entered into any
               negotiations to sell the note/collateral prior to the sheriff’s sale.
               We have received calls and inquiries requesting information
               about parts of the property (developed lots), but[,] based on the
               cloud of the Anderson situation[,] have not attempted to
               negotiate a sale. Your second item … is now moot given the
               results of the auction today….


       Id. at 246-47.


[12]   The following morning, August 2, Pfeifer sent Neel an email that stated in

       relevant part:


               We are seeking full disclosure of any offers, calls and inquiries.
               The purpose of which is [to] provide satisfaction that a
               discounted sale of the participation is done with full knowledge
               of any and all offers which may have caused the participants to
               reconsider the acceptance of a discount.


                                                         ***


               Lastly[,] I will put it this way, if the property were sold to a party
               for a price that would result in a smaller loss to the participant
               group and that conversation had begun prior to or during our
               acceptance of this discounted offer[,] then we would take issue
               that [sic] we had not been informed about it.


                                                         ***


       Id. at 246.


[13]   That afternoon, August 2, Neel responded to Pfeifer’s inquiry in an email that

       stated, in relevant part:

       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018             Page 8 of 41
        I will note below the parties (that we have record of) that have
        contacted UFB regarding [the Property], and the related
        litigation. … Only recently did our proposal advance with your
        group, and a price (that we believe is fair given the ongoing risk)
        was reached.


        1.      Due to the pending Anderson appeal, we are not now in a
        position to sell the entire property as we only have clear title on
        the eastern portion of the property. Resolution of the Anderson
        litigation[,] based on what we anticipate the Anderson’s strategy
        to be[,] could take several years.


        2.    By offering a fair price to the participants, UFB is
        providing an exit strategy for the participants while it takes over
        the remaining risk of the Anderson appeal and the risks of
        developing the balance of the lots.


                                                  ***


        4.     Interest and contacts regarding the property have involved
        the potential sale of individual or small groups of developed lots
        to builders….


                                                  ***


        Builders that have made inquiries (to confirm, NO OFFERS TO
        PURCHASE HAVE BEEN RECEIVED) as the pending
        Anderson appeal has created issues for the title company (I
        would note that all of the following builders are assuming[,] since
        we have now been successful at the sheriff’s sale[,] that we have
        clear marketable title which as to the west half of the property is
        not the case. …):


        1.       Weekley Homes

Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018           Page 9 of 41
               2.       Gradison Homes


               3.       Fischer Homes …


               4.       Drees Homes – bidder at sheriff’s sale


               5.       Estridge


               6.       M/I


       Id. at 245-46 (emphasis in original).


[14]   On August 19, 2013, the TriCapital participants and UFB executed a Loan

       Participation Purchase and Assumption Agreement (“Purchase Agreement”),

       pursuant to which the TriCapital participants sold their Participatory Interest to

       UFB for $1,240,000, of which BloomBank was entitled to 40% ($496,000). The

       August 1 and 2 emails, above, were attached to and incorporated by reference

       into the Purchase Agreement. The Purchase Agreement stated, in relevant part:


                                                         ***


               1.     Agreement to Purchase and Sell. … Seller [TriCapital
               participants] hereby agrees to sell, assign, transfer and convey to
               Buyer [UFB] on or before August 21, 2013, (the “Closing Date”),
               … the Participatory Interest….


                                                         ***


               3.3. No Recourse. Buyer is purchasing the Participatory
               Interest on an “as-is, where-is” basis, and without recourse.

       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018      Page 10 of 41
        Seller and Buyer have had the opportunity to engage legal
        counsel and have performed such due diligence that they deem
        necessary and appropriate in connection with the purchase and
        assignment contemplated hereunder.


                                                  ***


        3.4. Termination of Participation Agreement. The Closing of
        this transaction and execution and delivery of the Assignment
        attached hereto as Exhibit C shall constitute a termination of the
        Participation Agreement.


                                                  ***


        5.5. Buyer’s Representations Relating to Purchase Offer
        Negotiations and Settlement. Buyer represents to Seller, and
        Seller, in entering into this Agreement, is relying on this
        representation, that, except as disclosed in the e-mail of Don
        Neel dated August 2, 2013, which is attached hereto as Schedule
        D, that as of the Effective Date [August 19, 2013], Buyer has not
        (a) engaged in any negotiations with, or entered into any
        agreement with, any person … with regard to the sale or other
        transfer … of the real estate secured by the Loan …


                                                  ***


        7.2. Release by Seller. In consideration of the execution of this
        Agreement and the mutual promises contained herein, Seller …
        hereby irrevocably and unconditionally covenants not to sue and
        releases and forever discharges Buyer … of and from any and all
        actions … of any nature whatsoever … from the beginning of
        time to the date of this Agreement … arising from, resulting
        from, arising out of, caused by and/or related to the Loan, the
        Participation Agreement, or related to the facts, origination,

Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018      Page 11 of 41
               servicing, or circumstances of the Loan, Participation
               Agreement, or the Participatory Interest. This Release shall not
               release Buyer from its obligations under this Agreement and for
               the breach of any representations contained in this Agreement.


                                                         ***


       Id. at 235-36, 238-39.


[15]   On September 25, 2013—approximately thirty-seven days after the Effective

       Date of the Purchase Agreement—UFB settled the Anderson appeal. On

       December 2, 2013, that appeal was dismissed on the joint motion of the parties.

       The following day, UFB transferred title to the Property to its affiliate, Village

       Capital, by way of a quitclaim deed executed by Neel. Commencing in

       December 2013, Village Capital began selling lots within the Property to

       companies owned by and/or affiliated with Estridge and the Pedcor Companies

       (“PedCor”). Village Capital had received gross proceeds for such sales of

       approximately $9,513,540.00 as of August 31, 2016.


[16]   After selling its Participatory Interest to UFB, BloomBank discovered that UFB

       had actively discouraged one or more third parties from submitting bona fide

       bids at the sheriff’s sale in excess of the judgment bid submitted by UFB. UFB

       was aware that certain third parties were interested in acquiring the Property at

       the sheriff’s sale and were willing to place bids in excess of UFB’s judgment bid

       in order to purchase the Property. Instead of encouraging bids from such third

       parties, however, UFB purposefully discouraged such bids to secure UFB’s

       position as purchaser of the Property at the lowest possible price.

       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018        Page 12 of 41
[17]   BloomBank’s complaint alleges the following as an example. A representative

       of Drees Homes (“Drees”) was present at the sheriff’s sale, and actively bid for

       the Property. A representative of UFB discouraged Drees from continuing to

       bid, however, based upon UFB’s stated intention to outbid Drees regardless of

       amount. A third party bid in excess of UFB’s judgment bid would have yielded

       a higher recovery for the participant lenders, but UFB chose to act in direct

       derogation of the derivative rights of the participant lenders in the collateral

       securing repayment of the Loan.


[18]   After selling its Participatory Interest, BloomBank also discovered that,

       following the sheriff’s sale, and prior to the execution of the Purchase

       Agreement, UFB refused to entertain offers from one or more third parties

       interested in purchasing the Property from UFB. For example, on August 13,

       2013—almost two weeks after the sheriff’s sale and approximately six days

       before the execution of the Purchase Agreement—Joseph L. Gradison of

       Gradison Design-Build (“Gradison”) met with Bruce A. Cordingly of Pedcor

       and stated that he was interested in purchasing the Property. Pedcor is a large

       group of companies engaged in real estate investment, development, marketing,

       management, and finance. Pedcor Financial Bancorp is the ultimate parent of

       UFB. Mr. Cordingly refused to entertain any offer from Gradison, however,

       informing Gradison that the Property was not for sale. UFB failed to disclose

       to the TriCapital participants that the only reason UFB had not engaged in any

       negotiations regarding the sale or transfer of the Property was the fact that UFB

       refused to do so.


       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018        Page 13 of 41
[19]   On May 26, 2016, BloomBank filed a Complaint for Damages against UFB and

       Village Capital3. BloomBank subsequently filed two amended complaints.

       UFB moved to dismiss the Second Amended Complaint for failure to state a

       claim, and the trial court granted that motion on August 21, 2017. On August

       31, BloomBank filed its Third Amended Complaint. In addition to the facts as

       stated above, the Third Amended Complaint made the following allegations:


                 66. The refusal to entertain third party offers to purchase the
                 Property following the Sheriff’s sale was in direct derogation of
                 the participant lenders’ derivative rights in the collateral securing
                 repayment of the Loan.


                 67. UFB never disclosed to the participant lenders that UFB
                 had discouraged bidding at the Sheriff’s sale and also refused to
                 entertain third party offers to purchase the Property, despite
                 UFB’s contractual obligation to secure the participant lenders’
                 prior consent for not realizing on the collateral securing
                 repayment of the Loan.


                 68. UFB’s discouragement of bids at the Sheriff’s sale and
                 undisclosed refusal to entertain third party offers to purchase the
                 Property following the Sheriff’s sale constituted breaches of the
                 Participation Agreement in multiple respects, i.e., the failure to
                 administer the Loan consistent with a lender’s usual and
                 customary practices, failure to secure the participant lenders’
                 prior consent to not fully realizing on the collateral securing
                 repayment of the Loan, and failure to promptly notify the




       3
           We refer to UFB and Village Capital, collectively as defendants/appellees, as “UFB.”


       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018                        Page 14 of 41
        participant lenders of events materially adversely affecting their
        interests.


        69. In addition, UFB had a duty to not omit to state any
        material fact when conveying information to the participant
        lenders regarding the Loan—including during the course of
        negotiations regarding the potential repurchase by UFB of the
        participation interest.


        70. UFB never informed the participant lenders that UFB had
        discouraged bids at the Sheriff’s sale and subsequently refused to
        entertain third party offers to purchase the Property despite its
        contractual duty to do so and despite the participant lenders’
        unequivocal request for full disclosure of all “offers, calls and
        inquiries” as a prerequisite to execution of the Purchase
        Agreement.


        71. Instead, UFB knowingly and intentionally provided
        incomplete and misleading information that caused the
        participant lenders to believe that the pendency of the Anderson
        appeal had had a chilling effect on the market for the Property
        when, in fact, it was UFB’s own conduct that eliminated any
        market.


        72. By virtue of its status as lead lender, UFB was in
        possession of information not readily available to the participant
        lenders regarding the level of third party interest in the Property
        prior to and at the Sheriff’s sale, as well as the handling of
        “offers, calls and inquiries” directed solely to UFB following the
        Sheriff’s sale.


        73. In undertaking to provide information regarding these
        matters to the participant lenders, UFB was obligated to provide
        complete information.


Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018          Page 15 of 41
        74. UFB, however, knowingly and intentionally misled the
        participant lenders to believe that there was no current market for
        the Property, when in fact UFB had actual knowledge to the
        contrary and had taken affirmative steps to eliminate any third
        party interest in the Property.


        75. Neel’s communications would lead any reasonable
        participant lender to believe that title problems allegedly created
        by the pendency of the Anderson appeal chilled or eliminated
        any potential market for the Property and that there were no
        third parties interested in purchasing the Property as a whole.


        76. Although UFB’s representations (incorporated by
        reference and reaffirmed in the Purchase Agreement) that it had
        not received any “offers” and had not engaged in any
        “negotiations” may have been literally accurate, such
        representations were intentionally incomplete, deceptive, and
        misleading.


        77. In addition, UFB’s representation that UFB had only
        received inquiries regarding the purchase of individual or small
        groups of undeveloped lots, rather than the Property as a whole,
        was false.


        78. UFB purposefully created a false picture of the market for
        the Property and withheld information from the participant
        lenders in order to induce the participant lenders to execute the
        Purchase Agreement.


        79. Had UFB informed the participant lenders that UFB had
        not received any “offers” and had not engaged in any
        “negotiations” based upon UFB’s refusal to entertain offers or to
        engage in any negotiations, BloomBank (and likely the other
        participants) would not have agreed to execute the Purchase
        Agreement.

Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018       Page 16 of 41
        80. BloomBank and the other participant lenders reasonably
        relied on the information being provided by UFB, particularly in
        light of UFB’s contractual obligation to refrain from failing to
        realize on collateral without the participant lenders’ prior
        consent.


        81. The participant lenders were fraudulently induced by UFB
        into execution of the Purchase Agreement, resulting in
        substantial damages to BloomBank, and the purported release of
        UFB and its affiliates, including Village Capital, set forth therein
        is void.


        82. UFB was in exclusive possession of information not
        possessed by and not readily available to the participant lenders
        that was material to the participant lenders’ decision to execute
        the Purchase Agreement.


        83. UFB’s failure to disclose that superior knowledge to the
        participant lenders rendered the transaction represented by the
        Purchase Agreement inherently unfair.


        84. Even in the absence of any fiduciary obligations, UFB had
        the obligation to not act in a manner inconsistent with the
        participant lenders’ interests without their prior consent, and had
        the obligation not to withhold information from, or fail to
        disclose information to, the participant lenders necessary to make
        the information that was provided by UFB not misleading or
        inaccurate.


        85. By failing to make full disclosures to the participant
        lenders, UFB gained an advantage over the participant lenders at
        their expense.




Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018         Page 17 of 41
        86. Although UFB had the right to retain and develop the
        Property for its own benefit after the purchase of the Tri-Capital
        Participant Group’s interests, UFB did not have the right to
        surreptitiously and without disclosure, eliminate the market for
        the Property by its refusal to entertain offers in order to reduce
        the purchase price being paid by UFB to the Tri-Capital
        Participant Group for their interests.


        87. UFB’s undisclosed discouragement of bids at the Sheriff’s
        sale, refusal to entertain third party offers in excess of $2,800,000,
        and presentation of a misleading and incomplete portrait of the
        level of third party interest in the Property as a whole, amount to
        conduct so inherently unjust that BloomBank should be afforded
        a remedy under a theory of constructive fraud.


        88. Finally, after UFB repurchased the participation interest of
        the Tri-Capital Participant Group at an artificially and
        wrongfully suppressed repurchase price, UFB transferred title to
        the Property to its affiliate, defendant Village Capital.


        89. Village Capital continued the development and sale of the
        Property at a substantial profit at the instruction and on behalf of
        UFB.


        90. Village Capital’s retention of the benefit of having received
        title to the Property at the expense of BloomBank would be
        manifestly unjust.


        91. BloomBank is therefore entitled to a recovery from Village
        Capital for unjust enrichment.


Appellant’s App. Vol. III at 179-183.




Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018         Page 18 of 41
[20]   On October 12, 2017, UFB moved to dismiss BloomBank’s Third Amended

       Complaint on the ground that it failed to state a claim upon which relief could

       be granted, pursuant to Indiana Trial Rule 12(B)(6). Following briefing and

       oral argument by the parties, the trial court granted the motion to dismiss in an

       order dated February 12, 2017. BloomBank now appeals.



                                   Discussion and Decision
                                          Standard of Review
[21]   BloomBank challenges the trial court’s order dismissing its complaint. A Rule

       12(B)(6) motion to dismiss for failure to state a claim tests the legal sufficiency

       of the plaintiff’s claim, not the facts supporting that claim. Bellwether Prop., LLC

       v. Duke Energy Ind., Inc., 87 N.E.3d 462, 466 (Ind. 2017). We review a Rule

       12(B)(6) dismissal de novo, id., and we accept as true the facts alleged in the

       complaint, viewing the pleadings in the light most favorable to the nonmoving

       party, with “every reasonable inference construed in the nonmovant’s favor,”

       Birge v. Town of Linden, 57 N.E.3d 839, 843 (Ind. Ct. App. 2016). If a complaint

       “recounts sufficient facts that, if proved, would entitle the plaintiff to obtain

       relief from the defendant,” it states a claim upon which relief may be granted.

       Bellwether, 87 N.E.3d at 466; see also Chenore v. Plantz, 56 N.E.3d 123, 126 (Ind.

       Ct. App. 2016) (citation omitted) (“A complaint is sufficient and should not be

       dismissed so long as it states any set of allegations, no matter how unartfully

       pleaded, upon which the plaintiff could be granted relief.”). And, a “complaint



       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018        Page 19 of 41
       does not fail to state a claim merely because a meritorious defense may be

       available.” Bellwether, 87 N.E.3d at 466.


[22]   A dismissal of a complaint under Rule 12(B)(6) “is seldom appropriate.” McGee

       v. Kennedy, 62 N.E.3d 467, 471 (Ind. Ct. App. 2016). We review such motions

       “with disfavor because [they] undermine the policy of deciding causes of action

       on their merits.” Wertz v. Asset Acceptance, LLC, 5 N.E.3d 1175, 1178 (Ind. Ct.

       App. 2014) (citation omitted), trans. denied; see also Ind. Trial Rule 8(F) (“All

       pleadings shall be so construed as to do substantial justice, lead to disposition

       on the merits, and avoid litigation of procedural points.”).


[23]   We also review dismissal under Rule 12(B)(6) “under a stringent standard”

       because Indiana is a notice pleading state and, as such, requires only that a

       pleading4 contain (1) a short and plain statement of the claim, and (2) a demand

       for relief. Trail v. Boys & Girls Clubs of Nw. Ind., 845 N.E.2d 130, 135 (Ind. 2006)

       (citing T.R. 8(A)); see also Mizen v. State ex rel. Zoeller, 72 N.E.3d 458, 467 (Ind.

       Ct. App. 2017) (citation omitted) (noting Indiana’s trial rules “are designed to

       avoid pleading traps and, to the greatest extent possible, ensure that cases are

       tried on the issues that their facts present”), trans. denied. Thus, under notice

       pleading, “the sufficiency of the complaint depends upon whether the opposing

       party has been adequately notified concerning the operative facts of a claim so




       4
         “The ‘pleadings’ consist of a complaint and an answer, a reply to any counterclaim, an answer to a cross-
       claim, a third-party complaint, … an answer to a third-party complaint[,]” and “any written instruments
       attached to a complaint….” Graves v. Kovacs, 990 N.E.2d 972, 976 (Ind. Ct. App. 2013) (citing Indiana Trial
       Rule 9.2).

       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018                            Page 20 of 41
       as to be able to prepare to meet it.” Graves v. Kovacs, 990 N.E.2d 972, 976 (Ind.

       Ct. App. 2013). A complaint’s allegations are sufficient if they would “put a

       reasonable person on notice as to why a plaintiff sues.” Shields v. Taylor, 976

       N.E.2d 1237, 1244-45 (Ind. Ct. App. 2012) (noting that notice pleading is

       designed to “sweep away needless controversies that have occurred either to

       delay trial on the merits or to prevent a party from having a trial because of

       mistakes in statement”); see also KS&E Sports v. Runnels, 72 N.E.3d 892, 901

       (Ind. 2017) (quotation and citation omitted) (noting Indiana’s “liberal standard”

       of notice pleading “merely requires that a complaint ... put the defendant on

       notice concerning why it is potentially liable and what it stands to lose”).


[24]   There is an exception to Indiana’s liberal notice pleading requirements when a

       claim involves fraud. Indiana Trial Rule 9(B) requires that “[i]n all averments

       of fraud or mistake, the circumstances constituting fraud or mistake shall be

       specifically averred.” This means that, generally, “to allege fraud sufficiently,

       the pleadings must state the time, the place, the substance of the false

       representations, the facts misrepresented, and identification of what was

       procured by fraud.” Kapoor v. Dybwad, 49 N.E.3d 108, 120 (Ind. Ct. App.

       2015), trans. denied. However,


               the exact level of particularity that is required will necessarily
               differ based on the facts of the case. [W]hile we require a
               plaintiff claiming fraud to fill in a fairly specific picture of the
               allegations in her complaint, we remain sensitive to information
               asymmetries that may prevent a plaintiff from offering more
               detail.


       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018        Page 21 of 41
       Id. at 132 (internal quotations and citations omitted) (quoting Cincinnati Life Ins.

       Co. v. Beyrer, 722 F.3d 939, 948 (7th Cir. 2013)). For example, where “the heart

       of a constructive fraud claim based on a fiduciary duty is non-disclosure, … [it]

       is not an event that can be pled with specificity[; i]t is therefore sufficient simply

       to plead that the disclosure did not occur.” Id. at 135.


[25]   Here, BloomBank raised four claims in its Third Amended Complaint

       (hereinafter, “Complaint”): breach of contract, constructive fraud, actual fraud,

       and unjust enrichment. Its breach of contract claim is subject to notice pleading

       requirements. Its actual and constructive fraud claims must meet the more

       specific requirements for pleading fraud under Rule 9(B). And, because its

       unjust enrichment claim sounds in fraud, it too must meet the Rule 9(B)

       pleading requirements. See Kapoor, 49 N.E.3d at 132.


                                         Effect of the Release
[26]   BloomBank raises breach of contract claims based on UFB’s actions and

       omissions that allegedly violated certain provisions of the Participation

       Agreement. However, the Purchase Agreement into which the parties

       subsequently entered contained a “Release by Seller” (the “Release”) barring

       BloomBank from suing UFB for breach of the Participation Agreement.

       BloomBank maintains that the Release does not bar its breach of contract

       claims because BloomBank was fraudulently induced into executing the




       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018        Page 22 of 41
       Purchase Agreement containing the Release.5 Tru-Cal, Inc. v. Conrad Kacsik

       Instrument Sys., Inc., 905 N.E.2d 40, 44 (Ind. Ct. App. 2009) (“The general

       principle that fraud in the inducement vitiates a contract applies to releases.”),

       trans. denied. Thus, if BloomBank stated a claim for fraud—actual, constructive,

       or both—in that UFB fraudulently induced BloomBank to enter into the

       Purchase Agreement, then the Release in that agreement is not binding and

       does not bar BloomBank’s breach of contract claims. If, on the other hand,

       BloomBank failed to state a claim for fraud, its contract claims are barred by the

       Release. We, therefore, first address BloomBank’s fraud claims.


                                            Constructive Fraud
[27]   BloomBank asserted in its Complaint that UFB committed constructive fraud

       by fraudulently inducing the TriCapital participants (including BloomBank) to

       enter into the Purchase Agreement. Appellant’s App. Vol. III at 182.

       “[C]onstructive fraud arises by operation of law from a course of conduct

       which, if sanctioned by law, would secure an unconscionable advantage,

       irrespective of the existence or evidence of actual intent to defraud.” Rapkin

       Group, Inc. v. Cardinal Ventures, Inc., 29 N.E.3d 752, 759 (Ind. Ct. App. 2015),

       trans. denied. The elements of constructive fraud are: (i) a duty owed by the

       party to be charged to the complaining party due to their relationship; (ii)




       5
         The trial court did not address the issue of the Release in its order of dismissal. However, BloomBank
       raised the issue in its Complaint, Appellant’s App. Vol. III at 180-81, and the parties briefed the issue below,
       Appellant’s App. Vol. IV at 23, 118.

       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018                                Page 23 of 41
       violation of that duty by the making of deceptive material misrepresentations of

       past or existing facts or remaining silent when a duty to speak exists; (iii)

       reliance thereon by the complaining party; (iv) injury to the complaining party

       as a proximate result thereof; and (v) the gaining of an advantage by the party

       to be charged at the expense of the complaining party. Kapoor, 49 N.E.3d at

       124 (citing Rice v. Strunk, 670 N.E.2d 1280, 1284 (Ind. 1996)).


[28]   For purposes of constructive fraud, the existence of a duty may arise in two

       ways: (1) the existence of a fiduciary relationship; and (2) the case of a buyer

       and seller. Harmon v. Fisher, 56 N.E.3d 95, 99-100 (Ind. Ct. App. 2016).

       BloomBank has alleged a duty arising in both ways. However, the sole basis of

       its claim of a duty created by a fiduciary relationship is based on the terms of

       the Participation Agreement; i.e., the “plain terms” of that contract “established

       that UFB was the lead lender” who had a duty to keep BloomBank informed.

       Appellant’s Br. at 34-35, 39-41 (citing sections 4.1, 4.2, and 4.3 of the

       Participation Agreement). But it is well-established that contractual agreements

       do not give rise to a fiduciary relationship creating a duty and do not provide a

       basis for a constructive fraud claim. Allison v. Union Hosp., Inc., 883 N.E.2d 113,

       123 (Ind. Ct. App. 2008) (citing Morgan Asset Holding Corp. v. CoBank, ACB, 736

       N.E.2d 1268, 1273 (Ind. Ct. App. 2000)). Therefore, BloomBank did not state

       a claim for constructive fraud based on UFB’s alleged fiduciary duty.


[29]   BloomBank did, however, state a claim that UFB owed it a duty as the buyer in

       a buyer/seller relationship. “Where there is a buyer and a seller, one party may



       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018         Page 24 of 41
       possess some knowledge not possessed by the other.”6 Harmon, 56 N.E.3d at

       100. Thus, constructive fraud may arise in a buyer/seller relationship when: (1)

       a buyer makes unqualified statements7 to induce another to sell; (2) the seller

       relies upon the statements; and (3) the buyer has professed to the seller that he

       has knowledge of the truth of those statements. Am. Heritage Banco, Inc. v.

       Cranston, 928 N.E.2d 239, 247 (Ind. Ct. App. 2010). BloomBank alleged that

       (1) UFB made statements and omissions regarding third party interest in the

       Property (the truth of which were not within BloomBank’s knowledge at the

       time) in order to induce BloomBank to sell its Participatory Interest,

       Appellant’s App. Vol. III at 180-182; (2) BloomBank relied upon UFB’s

       statements/omissions, id. at 181; and (3) UFB represented that it had

       knowledge of the truth of its statements, id.


[30]   BloomBank also sufficiently alleged the second element of constructive fraud,

       i.e., that UFB violated its duty to BloomBank by making deceptive material

       misrepresentations of past or existing facts and remaining silent when it had a

       duty to speak. Although on August 2, 2013, UFB did disclose to BloomBank a

       list of builders who had “contacted” UFB about the Property or “made

       inquiries” about the Property, Appellant’s App. Vol. III at 245-46, BloomBank




       6
         In the usual case, it is the seller who has superior knowledge not possessed by a buyer. However, the
       opposite may also be true, as it is alleged in this case.
       7
          The “statement” may also be an omission to induce another to sell. See, e.g., Boots v. D. Young Chevrolet,
       LLC, 93 N.E.3d 793, 799 (Ind. Ct. App. 2018) (quotation and citation omitted) (“Fraud is not limited only to
       affirmative representations; the failure to disclose all material facts can also constitute actionable fraud.”),
       trans. denied.

       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018                               Page 25 of 41
       alleged that UFB falsely represented at the time of the Purchase Agreement that

       those inquiries were only regarding the purchase of portions of the property

       rather than the property as a whole. Id. at 181. Yet, BloomBank alleged that it

       later learned on its own that Drees Homes had bid on the whole Property at the

       sheriff’s sale, and Gradison had offered to purchase the Property after the

       sheriff’s sale. Id. at 178-79. BloomBank further alleged that UFB failed to

       disclose that it had discouraged other bids at the sheriff’s sale and that it had

       refused to entertain offers for purchase after the sheriff’s sale, and that these

       omissions gave the TriCapital participants a false view of the marketability

       and/or value of the Property. Id. BloomBank alleged that these

       misrepresentations and/or failures to disclose—the truth of which were not

       within BloomBank’s knowledge at the time—painted a false picture of the

       market for the Property, thereby inducing BloomBank to sell to UFB at a low

       price.


[31]   Moreover, BloomBank sufficiently alleged that UFB fraudulently induced it to

       enter into the purchase agreement by providing “incomplete and misleading

       information” about the Anderson appeal. Appellant’s App. Vol. III at 180.

       UFB’s statement that “[r]esolution of the Anderson litigation[,] based on what

       we anticipate the Anderson’s strategy to be[,] could take several years,” Id. at

       245, could be considered an opinion and, of course, “an action in fraud requires

       a misrepresentation of material fact,” not opinion. BSA Const. LLC v. Johnson,

       54 N.E.3d 1026, 1031 (Ind. Ct. App. 2016) (quotation and citation omitted),

       trans. denied. However, that statement is not the sole basis of BloomBank’s


       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018        Page 26 of 41
       claim. Rather, BloomBank specifically states in its complaint that it was UFB’s

       failure to provide additional information of which it had knowledge that

       constituted the fraudulent inducement. Appellant’s App. Vol. III at 180-81. As

       BloomBank’s complaint asserts, UFB settled the Anderson appeal only a little

       over a month after the date of the Purchase Agreement. Yet, the information

       UFB provided—or failed to provide—to BloomBank led it to believe that the

       property could not be sold for quite a while due to the Anderson appeal.

       Whether or not UFB actually had information about the Anderson appeal—

       such as negotiations to settle that appeal—that it withheld from BloomBank is

       not the issue to be determined at this beginning stage of the litigation. Rather,

       at this point, it is sufficient that BloomBank’s factual allegation that UFB

       withheld information about the Anderson appeal, if later proven true, would

       entitle BloomBank to relief on its constructive fraud claim. Bellwether, 87

       N.E.3d at 466.


[32]   BloomBank further alleged that it relied on UFB’s fraudulent representations

       and omissions. UFB contends that BloomBank could not rely upon UFB’s

       representations because BloomBank was a “sophisticated business entity” that

       gave a “warranty of due diligence” in section 3.3 of the Purchase Agreement. 8

       Appellee’s Br. at 29-30. However, UFB’s contention begs the question of

       whether UFB fraudulently induced BloomBank to enter into that agreement in



       8
         In section 3.3, BloomBank agreed that it “performed such due diligence that [it] deem[ed] necessary and
       appropriate in connection with the purchase and assignment contemplated hereunder.” Appellant’s App.
       Vol. III at 235.

       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018                            Page 27 of 41
       the first place. That agreement did not extinguish UFB’s alleged duty, in the

       buyer/seller context, to provide BloomBank with the material information that

       was solely within UFB’s knowledge before the parties entered into the Purchase

       Agreement, nor did it extinguish BloomBank’s alleged right to rely on UFB’s

       material representations as to such knowledge. Cranston, 928 N.E.2d at 247.


[33]   BloomBank also alleged that it suffered injury in the amount of the difference

       between the “full value”9 of the Participatory Interest and the amount UFB paid

       for the Participatory Interest. Id. at 181-83. And, finally, BloomBank alleged

       that UFB gained an advantage at BloomBank’s expense in that UFB obtained

       both the Property and the Participatory Interest for less than full value. Id. at

       175, 182.


[34]   BloomBank made the above allegations with enough specificity to meet the

       pleading requirements of Indiana Trial Rule 9(B). It gave specific examples of

       UFB’s discouragement of competitive bidding at the sheriff’s sale and its refusal

       to entertain offers to purchase after the sale. BloomBank: stated the time,

       place, and substance of two events10 that were material and that UFB failed to

       disclose to BloomBank; stated which facts UFB failed to disclose regarding



       9
         While the Complaint does not state what the “full value” of the Participatory Interest is, it does state that
       UFB purchased the Property for “a sum millions of dollars lower than the Property’s actual value.”
       Appellant’s App. Vol. III at 175. Of course, the value of the Property affected the value of the Participatory
       Interest. And we reiterate that, at this point in the proceedings—i.e., a dismissal before the parties have even
       had an opportunity to conduct discovery—we do not test the sufficiency of the facts, only the legal sufficiency
       of the claims. Bellwether, 87 N.E.3d at 466.
       10
         I.e., discouraging Drees Homes from bidding and refusing to entertain an offer to purchase from
       Gradison.

       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018                               Page 28 of 41
       those two events, which led to misrepresentations of the marketability of the

       Property; and identified what UFB procured by fraud—i.e., the difference

       between the “full value” of the Property and the Participatory Interest and what

       UFB paid for them.11 Id. at 175, 178-83. And, to the extent BloomBank

       alleged, but did not give specific examples of, UFB’s non-disclosures, “[non-

       disclosure] is not [always] an event that can be pled with specificity,” especially

       where, as here, the buyer is alleged to have superior if not exclusive knowledge

       of the facts relating to the expressions of interest in purchasing the Property.

       Kapoor, 49 N.E.3d at 135. Under such circumstances, it is “sufficient simply to

       plead that the disclosure did not occur.” Id.


[35]   Taking the facts alleged by BloomBank as true, as we must at this stage,

       BloomBank has stated a claim for constructive fraud, and the trial court erred in

       dismissing that claim. Bellwether, 87 N.E.3d at 466; Birge, 57 N.E.3d at 843.


                                                  Actual Fraud
[36]   BloomBank also alleged that UFB committed actual fraud to induce the

       TriCapital participants to enter into the Purchase Agreement. The elements of

       actual fraud are: (i) material misrepresentation of past or existing facts by the

       party to be charged (ii) which was false, (iii) which was made with knowledge




       11
           Thus, this case is different from Cranston, cited by the Appellees, in that the plaintiff/buyers in Cranston
       failed to identify what facts were known only by the seller/defendant that would have affected the buyers’
       decision to buy, and failed to show that they relied on the seller’s omissions. Cranston, 928 N.E.2d at 245.
       Moreover, Cranston was decided after a full bench trial, not in the context of a Rule 12(B)(6) dismissal where
       the alleged facts must be accepted as true and all reasonable inferences construed in the nonmovant’s favor.

       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018                                Page 29 of 41
       or reckless ignorance of the falseness, (iv) which was relied upon by the

       complaining party, and (v) which proximately caused the complaining party

       injury. Kapoor, 49 N.E.3d at 121 (citing Rice, 670 N.E.2d at 1289). Thus, the

       presence or absence of an intent to deceive is the essential element that

       distinguishes actual fraud from constructive fraud. Id.


[37]   As we note above, BloomBank has sufficiently alleged that UFB made false

       material misrepresentations or omissions upon which BloomBank relied and

       which caused BloomBank injury. We further hold that BloomBank sufficiently

       alleged that UFB did so with knowledge or reckless ignorance of the falseness

       of its representations. BloomBank alleged that UFB’s representative was at the

       sheriff’s sale and “actively” and “purposely discouraged” Drees Homes and

       others from bidding against UFB on the Property as a whole. Appellant’s App.

       Vol. III at 178. It further alleged that UFB knowingly failed to inform

       BloomBank of those actions. Thus, BloomBank alleged facts showing that

       UFB knew that it had discouraged other bidders but knowingly failed to

       disclose that information to BloomBank in order to induce BloomBank into

       accepting UFB’s offer to purchase BloomBank’s interest in the Property at a

       low price. Similarly, BloomBank alleged that UFB knew it was refusing to

       entertain offers to purchase the Property after the sale, and it gave the specific

       example of Gradison’s expression of interest in purchasing the Property.

       BloomBank further alleged that UFB knowingly failed to disclose that

       information to the TriCaptial participants. Thus, BloomBank alleged UFB’s

       intent to deceive with enough specificity to meet the pleading requirements of


       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018       Page 30 of 41
       Indiana Trial Rule 9(B), and the trial court erred in dismissing its actual fraud

       claim.


[38]   Because BloomBank stated a claim that UFB fraudulently induced BloomBank

       to enter into the Purchase Agreement, it has also stated a claim that the Release

       contained in that contract is invalid. Tru-Cal, Inc., 905 N.E.2d at 44. Thus, we

       proceed to BloomBank’s breach of contract claims.


                                           Breach of Contract
[39]   To prevail on a claim for breach of contract, a plaintiff must prove (1) the

       existence of a contract, (2) defendant’s breach of that contract, and (3) damages

       from the breach. E.g., Gerdon Auto Sales, Inc. v. John Jones Chrysler Dodge Jeep

       Ram, 98 N.E.3d 73, 78 (Ind. Ct. App. 2018), trans. denied. In its Complaint,

       BloomBank alleged, and it is not disputed, that the parties’ Participation

       Agreement was a contract. BloomBank further alleged that UFB breached

       sections 4.1, 4.2, and 4.3 of that contract, causing it damages.12 We address

       each allegation in turn.




       12
           There is no dispute that the Complaint alleges damages from a breach of contact. Appellant’s App. Vol.
       III at 183.

       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018                            Page 31 of 41
                                                Sections 4.1 and 4.2

                                        Usual and Customary Practices


[40]   BloomBank alleged in its Complaint that UFB’s discouragement of bids at the

       sheriff’s sale of the Property and refusal to entertain third party offers to

       purchase the Property after the sheriff’s sale violated section 4.213 of the contract

       by “fail[ing] to administer the Loan consistent with a lender’s usual and

       customary practices.” Appellant’s App. Vol. III at 179. However, that first

       sentence of section 4.2, by its express terms, applies only to servicing and

       administration of “the Loan.” The actions about which BloomBank complains

       occurred only after default on the Loan and in relation to realization on the

       collateral. Therefore, accepting BloomBank’s allegations as true, they still do

       not support the claim for breach of the first sentence of section 4.2 of the

       contract.




       13
           The trial court held that BloomBank failed to state a claim under sections 4.1, 4.2, and 4.3 of the
       Participation Agreement because those sections related only to the servicing and administration of the Loan,
       and BloomBank’s complaint relates to UFB’s conduct after default on the Loan and foreclosure. Appellant’s
       App., Vol. IV, at 187. In support of this holding, the trial court relied upon the heading of Article IV, i.e.,
       “Administration of the Loan.” Id. However, the trial court failed to consider section 10.12 of the
       Participation Agreement, which expressly states that the headings of the articles in the agreement “are not
       intended to govern, limit, or aid in the construction of any term or provision hereof.” Appellant’s App. Vol.
       III at 193. It is a well-settled principle of contract interpretation that, if the language in the contract is
       unambiguous, courts must adhere to the plain meaning of that language. E.g., Performance Serv., Inc. v.
       Hanover Ins. Co., 85 N.E.3d 655, 660 (Ind. Ct. App. 2017). Therefore, the trial court erred when it limited the
       construction of sections 4.1, 4.2, and 4.3 to administration of the Loan based on the heading of Article IV.
       Similarly, it is clear from the plain and unambiguous language of sections 1.1 and 3.4 of the parties’ Purchase
       Agreement that the requirements of the Participation Agreement did not expire until the Closing Date (i.e.,
       August 21, 2013) and delivery of the assignment of the Participation Interest. Appellant’s App. Vol. III at
       234-35. Therefore, the requirements of sections 4.1, 4.2, and 4.3 were in effect during the period of time at
       issue in the Complaint—i.e., after default on the Loan and before the execution of the Purchase Agreement.

       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018                               Page 32 of 41
                                              Realization on Collateral


[41]   BloomBank also alleged that “UFB never disclosed to the participant lenders

       that UFB had discouraged bidding at the Sheriff’s sale and also refused to

       entertain third party offers to purchase the Property, despite UFB’s contractual

       obligation to secure the participant lenders’ prior consent for not realizing on

       the collateral securing repayment of the Loan.” Id. BloomBank alleged that

       those actions violated sections 4.1 and 4.214 of the contract by “fail[ing] to

       secure the participant lenders’ prior consent to not fully realizing on the

       collateral securing repayment of the Loan.” Id.


[42]   It is clear from the face of the complaint that UFB did “realize on the

       collateral” when it sold the Property at a sheriff’s sale and paid $2,800,000 for

       it, and that BloomBank and the other participants were aware that UFB

       intended to do so.15 And BloomBank does not allege that it ever withheld its

       consent for such a sale. Rather, BloomBank contends that UFB violated the

       contract by withholding information that was necessary for the TriCapital

       participants to give “informed” consent to the realization. Appellant’s Br. at

       32.




       14
          Unlike the first sentence of section 4.2, the relevant language of section 4.1 and subsection (b) of 4.2 does
       not expressly limit its application to the servicing and administering of the Loan. Id. at 187.
       15
          See Pfeifer’s letter dated July 31, 2013, discussing the upcoming sheriff’s sale. Appellant’s App. Vol. III at
       247.

       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018                                 Page 33 of 41
[43]   The Complaint did not state that the Participation Agreement required

       “informed” consent, and the contract does not define the term “consent” as

       meaning “informed consent.” However, a contract need not define every term

       in order to state a claim for breach of contract, especially under the rules of

       notice pleading. Moreover, “it is a principle of contract interpretation that

       specific words and phrases cannot be read exclusive of other contractual

       provisions; rather, the parties’ intentions must be determined by reading the

       contract in its entirety and attempting to construe contractual provisions so as

       to harmonize the agreement.” Ambrose v. Dalton Const., Inc., 44 N.E.3d 707, 715

       (Ind. Ct. App. 2015) (internal quotations and citation omitted), trans. denied.

       BloomBank’s Complaint cited provision 4.3 of the Participation Agreement

       which required UFB to promptly notify the TriCapital participants of any

       events of which UFB had actual knowledge and which might materially

       adversely affect the TriCapital participants’ interests. Reading section 4.2 in

       conjunction with section 4.3, BloomBank stated a claim that the parties

       intended that UFB provide BloomBank and the other participants with all

       known information necessary to give informed consent to realization on the

       collateral. And BloomBank’s Complaint states that UFB failed to provide such

       information and gives specific examples of such failure.


[44]   Again, Indiana’s notice pleading rules merely require pleading the operative

       facts so as to place the defendant on notice as to the evidence to be presented at

       trial. Shields, 976 N.E.2d at 1245. Although BloomBank did not specifically

       state in its Complaint that the parties meant “consent” to mean “informed


       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018       Page 34 of 41
       consent,” BloomBank’s allegations that UFB had a contractual obligation to

       keep BloomBank informed and failed to do so were sufficient to put UFB on

       notice of BloomBank’s contention—i.e., that UFB violated the contract by

       failing to provide BloomBank with enough information to validly “consent” to

       UFB’s realization on the collateral. Given Indiana’s liberal standard of notice

       pleading, KS&E Sports, 72 N.E.3d at 901, we hold that the trial court erred in

       dismissing that claim.


                                                     Section 4.3

[45]   BloomBank alleged in its Complaint that, under section 4.3 of the contract,

       “UFB was obligated to promptly notify the participant lenders of any event that

       might materially adversely affect the participant lenders’ interests,” and it

       attached a copy of the contract containing that language. Appellant’s App. Vol.

       III at 173. BloomBank further alleged that UFB violated this section by failing

       to disclose to the participant lenders that UFB had discouraged bidding at the

       sheriff’s sale and that it had refused to entertain third party offers to purchase

       the Property. Id. at 179. And BloomBank gave specific examples of the failures

       to disclose the events that might have materially and adversely affected its

       interests. Id. at 178-79 (citing UFB’s discouragement of Drees Homes bidding

       at the sheriff’s sale and its refusal to entertain any offer from Gradison). Under

       the standards for notice pleading, BloomBank’s assertions were sufficient to put




       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018        Page 35 of 41
       UFB on notice of the claims against it. The trial court erred in holding that

       UFB failed to state a claim of breach of section 4.3 of the contract.16


                                             Unjust Enrichment
[46]   Finally, BloomBank alleged a claim of unjust enrichment against Village

       Capital, an affiliate of UFB.


                A claim for unjust enrichment “is a legal fiction invented by the
                common law courts in order to permit a recovery ... where the
                circumstances are such that under the law of natural and
                immutable justice there should be a recovery ...” Bayh v.
                Sonnenburg, 573 N.E.2d 398, 408 (Ind. 1991) (citation omitted).
                “A person who has been unjustly enriched at the expense of
                another is required to make restitution to the other.”
                RESTATEMENT OF RESTITUTION § 1 (1937). To prevail on
                a claim of unjust enrichment, a claimant must establish that a
                measurable benefit has been conferred on the defendant under
                such circumstances that the defendant’s retention of the benefit
                without payment would be unjust. Bayh, 573 N.E.2d at 408.


       Zoeller v. East Chicago Second Century, Inc., 904 N.E.2d 213, 220 (Ind. 2009).


[47]   Here, BloomBank alleged that the benefit conferred was Village Capital’s

       profits from the sale of the Property that UFB fraudulently obtained and then

       transferred to Village Capital, an “affiliate”17 of UFB. Appellant’s App. Vol. III



       16
          We note that the only basis for the trial court’s erroneous holding was its incorrect finding that section 4.3
       related only to the administration and servicing of the Loan, as noted in footnote 15, above.
       17
          An affiliate is defined as “[a] corporation that is related to another corporation by shareholdings or other
       means of control; a subsidiary, parent, or sibling corporation.” Affiliate, BLACK’S LAW DICTIONARY (10th
       ed. 2014).

       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018                                Page 36 of 41
       at 182-83. BloomBank further alleged that the benefit was conferred on Village

       Capital at BloomBank’s expense; that is, if UFB had not fraudulently obtained

       BloomBank’s Participatory Interest, BloomBank would still own that interest

       and be entitled to its share of the profits from the sale of the Property. Id. at

       182-83. And BloomBank alleged that Village Capital’s retention of the benefit

       without payment would be unjust because that benefit was obtained through its

       affiliate’s (UFB’s) fraudulent conduct. Id. at 182. BloomBank’s Complaint

       supports these allegations with detailed factual assertions regarding UFB’s

       fraudulent inducement to the TriCapital participants to enter into the Purchase

       Agreement at less than full value, id. at 178-83, and factual assertions that on

       December 3, 2013, Village Capital obtained the Property through a transfer

       from UFB and thereafter obtained substantial profit from the subsequent sale of

       that property, id. at 178, 182-83. BloomBank further alleged the specific

       amount of gross proceeds from the sales of the Property as of the date of the

       Complaint. Id. at 178. Thus, BloomBank has alleged a claim of unjust

       enrichment.


[48]   UFB contends that BloomBank failed to state a claim for unjust enrichment

       because BloomBank was not the entity that conferred the benefit on Village

       Capital and Village Capital did not request the benefit from BloomBank. It is

       true that, “[t]o recover under an unjust enrichment claim, a plaintiff must

       generally show that he rendered a benefit to the defendant at the defendant’s

       express or implied request….” Reed v. Reid, 980 N.E.2d 277, 296 (Ind. 2012).

       However, this Court has allowed a plaintiff to recover against a defendant for


       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018        Page 37 of 41
       unjust enrichment even when it was a third party that conferred the benefit on

       the defendant and the defendant did not request the benefit from the plaintiff.

       See Landers v. Wabash Center, Inc., 983 N.E.2d 1169, 1173-74 (Ind. Ct. App.

       2013) (allowing employer to recover under theory of unjust enrichment against

       wife of ex-employee who had stolen from employer and given stolen funds to

       wife); Dominiack Mech., Inc. v. Dunbar, 757 N.E.2d 186, 190-91 (Ind. Ct. App.

       2001) (allowing plaintiff corporation to proceed in unjust enrichment claim

       against party-goers who attended a party paid for with funds an ex-employee

       embezzled from the corporation); Paul v. I.S.I. Serv., Inc., 726 N.E.2d 318, 322

       (Ind. Ct. App. 2000) (company was entitled to preliminary injunction against

       wife of embezzling company co-owner under theory of unjust enrichment); see

       also Marquette Bank v. Brown, No. 4:14-cv-00034, 2015 WL 1505685, at *13

       (S.D. Ind. March 31, 2015) (holding that, under Indiana law, “recovery is

       possible against a defendant who was unjustly enriched by a misappropriation,

       even if the plaintiff did not intend to confer a benefit upon that defendant and

       that defendant was not personally responsible for the misappropriation”) (citing

       Paul, 726 N.E.2d at 322, and Dominiack Mech., 757 N.E.2d at 191).


[49]   The above holdings are consistent with the Restatement of Restitution and

       Unjust Enrichment. “If a third person makes a payment to the defendant to

       which (as between claimant and defendant) the claimant has a better legal or




       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018     Page 38 of 41
equitable right,[18] the claimant is entitled to restitution from the defendant as

necessary to prevent unjust enrichment.” R ESTATEMENT (THIRD) OF

RESTITUTION AND UNJUST ENRICHMENT: PAYMENT TO DEFENDANT TO

WHICH CLAIMANT HAS A BETTER RIGHT § 48 (AM. LAW INST. 2018).

Similarly, “if a third person makes a payment to the defendant in respect of an

asset belonging to the claimant,[19] the claimant is entitled to restitution from the

defendant as necessary to prevent unjust enrichment.” RESTATEMENT (THIRD)

OF RESTITUTION AND UNJUST ENRICHMENT: PAYMENT TO DEFENDANT IN

REPECT OF CLAIMANT’S PROPERTY § 47 (AM. LAW INST. 2018) (emphasis

added). Here, BloomBank alleged that third person purchasers made payments

to Village Capital in respect of the Property which equitably belonged to

BloomBank due to UFB’s alleged fraudulent actions resulting in UFB’s

purchase of that Property for less than its full value. Appellant’s App. Vol. III

at 182-83. And BloomBank alleged that it was therefore entitled to restitution

from Village Capital as necessary to prevent unjust enrichment. Id. at 183.

Thus, BloomBank stated a claim for unjust enrichment, and the trial court erred

in dismissing that claim.




18
   “[T]he words ‘better legal or equitable right’ refer to a paramount interest of a kind recognized in law or
equity.” RESTATEMENT (THIRD) OF RESTITUTION AND UNJUST ENRICHMENT: PAYMENT TO
DEFENDANT TO WHICH CLAIMANT HAS A BETTER RIGHT § 48 cmt. a (AM. LAW INST. 2018).
19
  “Ownership for this purpose may be legal or equitable…” RESTATEMENT (THIRD) OF RESTITUTION
AND UNJUST ENRICHMENT: PAYMENT TO DEFENDANT IN RESPECT OF CLAIMANT’S PROPERTY § 47
cmt. a (AM. LAW INST. 2018).

Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018                                Page 39 of 41
                                                 Conclusion
[50]   BloomBank failed to state a claim for constructive fraud based on UFB’s

       alleged fiduciary duty stemming from a contract, i.e., the Purchase Agreement.

       Allison, 883 N.E.2d at 123. However, BloomBank did state a claim for

       constructive fraud based on UFB’s duty as a buyer possessing knowledge not

       possessed by the seller, BloomBank. Harmon, 56 N.E.3d at 100. BloomBank

       also stated a claim for actual fraud, as it alleged facts that, if true, show that

       UFB knew it made false material misrepresentations or omissions in order to

       induce BloomBank to enter into the Purchase Agreement for the Property.

       Kapoor, 49 N.E.3d at 121. Furthermore, BloomBank stated its constructive and

       actual fraud claims with enough specificity to satisfy the requirements of Trial

       Rule 9(B).


[51]   Because BloomBank stated a claim that the Purchase Agreement was

       fraudulently induced, the Release in that document does not bar BloomBank’s

       breach of contract claims. Tru-Cal, 905 N.E.2d at 44. And BloomBank stated a

       claim that UFB breached sections 4.1 and 4.2 of the Participation Agreement

       by failing to provide BloomBank with enough information to validly consent to

       UFB’s actions regarding the realization on the collateral, i.e., the Property.

       BloomBank also stated a claim that UFB breached section 4.3 of the

       Participation Agreement by failing to disclose to the participant lenders that

       UFB had discouraged bidding at the sheriff’s sale and that it had refused to

       entertain third party offers to purchase the Property. However, BloomBank

       failed to state a claim that UFB’s actions violated the “usual and customary

       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018         Page 40 of 41
       practices” language of section 4.2, as that language expressly applied only to the

       servicing and administration of the loan.


[52]   Finally, BloomBank alleged, with enough specificity to state a claim for unjust

       enrichment against Village Capital, that Village Capital was unjustly enriched

       by UFB’s fraudulent actions in the purchase of the Property subsequently

       transferred to, and sold by, Village Capital. Zoeller, 904 N.E.2d at 220;

       RESTATEMENT (THIRD) OF RESTITUTION AND UNJUST ENRICHMENT:

       PAYMENT TO DEFENDANT IN REPECT OF CLAIMANT’S PROPERTY § 47 (AM.

       LAW INST. 2018).


[53]   Affirmed in part, reversed in part, and remanded.


       Mathias, J., and Bradford, J., concur.




       Court of Appeals of Indiana | Opinion 18A-PL-375 | October 26, 2018     Page 41 of 41
