MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be
                                                                              FILED
regarded as precedent or cited before any                                May 06 2019, 8:57 am

court except for the purpose of establishing                                  CLERK
                                                                          Indiana Supreme Court
the defense of res judicata, collateral                                      Court of Appeals
                                                                               and Tax Court
estoppel, or the law of the case.


ATTORNEY FOR APPELLANT                                   ATTORNEY FOR APPELLEES
R. Brian Woodward                                        Schuyler D. Geller
Merrillville, Indiana                                    Burke Costanza & Carberry, LLP
                                                         Merrillville, Indiana



                                           IN THE
    COURT OF APPEALS OF INDIANA

Kristie L. Stepanovich,                                  May 6, 2019
Appellant-Plaintiff,                                     Court of Appeals Case No.
                                                         18A-PL-2788
        v.                                               Appeal from the Lake Superior
                                                         Court
Susan Houchin, Individually,                             The Honorable Elizabeth F.
and Susan Houchin, O.D., P.C.,                           Tavitas, Special Judge
Appellees-Defendants.                                    Trial Court Cause No.
                                                         45D03-1708-PL-4



Riley, Judge.




Court of Appeals of Indiana | Memorandum Decision 18A-PL-2788 | May 6, 2019                       Page 1 of 21
                                 STATEMENT OF THE CASE

[1]   Appellant-Plaintiff, Kristie L. Stepanovich (Stepanovich), appeals the trial

      court’s Order dismissing her claims against Appellees-Defendants, Susan

      Houchin (Houchin) and Susan Houchin, O.D., P.C. (the P.C.) (collectively,

      Defendants).


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


                                                      ISSUE
[3]   Stepanovich presents three issues on appeal, which we consolidate and restate

      as: Whether the trial court improperly dismissed her contract and tort claims

      against Defendants because she had failed to state claims upon which relief

      could be granted.


                       FACTS AND PROCEDURAL HISTORY
[4]   Houchin was a licensed optometrist practicing in Crown Point, Indiana, whose

      professional practice was organized under the P.C. Houchin and Stepanovich

      were the equal co-owners of Envision Optical, Inc. (Envision Optical), 1 which

      provided non-medical services. Stepanovich was an employee of the P.C. as

      well as the registered agent and manager for Envision Optical. Stepanovich




      1
        This business was alleged to have been organized previously as a limited liability company or corporation
      under the names Family Optical Center, LLC, and Envision Optical Center, LLC. For simplicity’s sake we
      will refer to its final, corporate name of Envision Optical, Inc. (Envision Optical).

      Court of Appeals of Indiana | Memorandum Decision 18A-PL-2788 | May 6, 2019                     Page 2 of 21
      was separated from her employment with the P.C. in 2016. On February 24,

      2017, Stepanovich filed her Complaint, which she sought leave to amend once,

      raising contract, tort, and statutory wage claims against Defendants. On

      August 11, 2017, Defendants filed motions to dismiss those claims. On

      December 21, 2017, the trial court granted Defendants’ motions to dismiss.


[5]   On January 9, 2018, Stepanovich filed her Second Amended Complaint, raising

      claims of fraud, constructive fraud, Wage Payment Statute violations, breach of

      fiduciary duty, breach of contract, and quantum meruit. Stepanovich made the

      following relevant allegations in her Second Amended Complaint:


              7. On September 4, 2002, [Stepanovich and Houchin] executed
              an Operating Agreement.


              8. The Operating Agreement stated [Stepanovich and Houchin]
              would share in profits and losses equally.


              9. [Stepanovich and Houchin] agreed that all of the income and
              expenses would be allocated between [the] P.C. and [Envision
              Optical] so that the net profit would all be generated by [Envision
              Optical] and be split equally between them; and that all income
              and proceeds from any source would be divided among them
              equally.


              ****


              14. At all relevant times, [Stepanovich] was managing Envision
              Optical and certain non-medical profits were being split equally.




      Court of Appeals of Indiana | Memorandum Decision 18A-PL-2788 | May 6, 2019   Page 3 of 21
      (Appellant’s App. Vol. II, p. 20). Stepanovich also alleged that in September

      2016, Houchin informed her that Houchin was selling all of her patient files to

      another optometrist for an unspecified sum and that Houchin began to

      unilaterally liquidate and commandeer the assets of Envision Optical.


[6]   On February 5, 2018, Defendants filed motions to dismiss Stepanovich’s

      Second Amended Complaint, arguing that the trial court lacked jurisdiction

      over Stepanovich’s wage claims due to her failure to exhaust administrative

      remedies. Defendants appended an affidavit executed by Houchin (Houchin

      Affidavit) to their motion to dismiss the wage claims. On February 23, 2018,

      Stepanovich filed her Response to Defendants’ dismissal motions, including her

      own Verified Supplemental Affidavit. On May 3, 2018, the trial court held oral

      argument on Defendants’ motions to dismiss but accepted no new, substantive

      evidence. On August 2, 2018, the trial court issued its Order granting

      Defendants’ motions to dismiss. The trial court treated Defendants’ motions to

      dismiss as motions for summary judgment and entered the following relevant

      findings and conclusions:


              4. As to the Motion to Dismiss the Tort and Contract Claims,
              the [c]ourt finds as a matter of law (and as admitted by
              [Stepanovich]) that [Stepanovich] “was not a medical
              professional entitled to share in the P.C.’s profits.”


              5. As to the respective shareholders’ right to receive profits and
              proceeds of Envision Optical, Inc., the [c]ourt finds that Indiana
              statutes require liquidating corporations to distribute “remaining
              property among its shareholders according to their interests.” I.C. §
              23-1-45-5 (emphasis added). By her averment that she was a 50%

      Court of Appeals of Indiana | Memorandum Decision 18A-PL-2788 | May 6, 2019   Page 4 of 21
              shareholder in Envision Optical, Inc., [Stepanovich] establishes
              as a matter of law that she was only entitled to 50% of the profits,
              assets, and proceeds of Envision Optical, Inc., upon its
              liquidation and winding up. To the extent that the [Second
              Amended Complaint] seeks a different distribution, it fails, as a
              matter of law, to state a claim on which relief can be granted.


      (Appellant’s App. Vol. II, pp. 16-17) (emphasis in original, footnote omitted).

      The trial court found that no genuine issues of material fact existed and that

      Defendants were entitled to summary judgment as a matter of law.


[7]   Stepanovich now appeals. Additional facts will be provided as necessary.


                              DISCUSSION AND DECISION
                                            I. Procedural Posture

[8]   As a threshold issue, we must address the procedural posture of this case

      because it impacts the nature of our review. As noted by Stepanovich, “[t]he

      trial court’s order purported to grant [Defendants’] Motion to Dismiss pursuant

      to T.R. 56 because the parties considered materials outside the pleadings.”

      (Appellant’s Br. p. 10). Indiana Trial Rule 12 provides that a party who seeks

      to defend against a complaint with a 12(B)(6) motion to dismiss for failure to

      state a claim must file that motion “before pleading if a further pleading is

      permitted or within twenty [20] days after service of the prior pleading if none is

      required.” If a party asserting a 12(B)(6) defense presents matters outside the

      pleadings which are not excluded by the trial court, “the motion shall be treated

      as one for summary judgment and disposed of as provided in Rule 56.” T.R.

      12(B). Thus, a 12(B)(6) motion is only converted to a summary judgment

      Court of Appeals of Indiana | Memorandum Decision 18A-PL-2788 | May 6, 2019   Page 5 of 21
      motion if the defendant presents the trial court with matters outside the

      pleadings. See, e.g., Thomas v. Blackford Cty. Area Bd. of Zoning Appeals, 907

      N.E.2d 988, 990 (Ind. 2009) (noting that defendant’s 12(B)(6) motion which

      lacked supporting affidavits or other materials would not be treated as a motion

      for summary judgment). A motion made pursuant to Rule 12(B)(1) is not

      converted to a summary judgment motion when matters outside the pleadings

      are attached to it. Hill v. Beghin, 644 N.E.2d 893, 895 (Ind. Ct. App. 1994),

      trans. denied.


[9]   Stepanovich presented claims of fraud, constructive fraud, statutory wage

      violations, breach of fiduciary duty, breach of contract, and quantum meruit in

      her Second Amended Complaint. 2 Before filing an answer, Defendants moved

      the trial court pursuant to Rule 12(B)(1) to dismiss Stepanovich’s statutory

      wage claim for lack of subject matter jurisdiction. Attached to the 12(B)(1)

      motion were the Houchin Affidavit, Indiana Department of Workforce

      Development documents, and the Purchase Agreement for the sale of Envision

      Optical. In response to the 12(B)(1) motion, Stepanovich filed her Verified

      Supplemental Affidavit. Although this was styled as a supplemental affidavit,

      Stepanovich filed only one affidavit in the pleadings which followed the filing

      of her Second Amended Complaint.




      2
       Stepanovich does not appeal the trial court’s grant of summary judgment in favor of Defendants on her
      wage and quantum meruit claims.

      Court of Appeals of Indiana | Memorandum Decision 18A-PL-2788 | May 6, 2019                   Page 6 of 21
[10]   Contemporaneously with their 12(B)(1) motion, Defendants filed a motion

       pursuant to Rule 12(B)(6) seeking dismissal of Stepanovich’s fraud, constructive

       fraud, breach of fiduciary duty, breach of contract, and quantum meruit claims

       for failure to state a claim. Defendants did not attach any affidavits or other

       supporting materials to the 12(B)(6) motion, and Stepanovich filed none in

       response. Neither party produced a copy of the 12(B)(6) motion in its

       appendix, so there is no basis in the record for us to conclude that Defendants

       incorporated the affidavits filed in the 12(B)(1) pleadings into their 12(B)(6)

       motion. Defendants referred to the Houchin Affidavit once in their Reply in

       Support of their 12(B)(6) motion to dismiss, but this was to point out that “Dr.

       Houchin’s Rule 12(B)(1) affidavit is the exact same affidavit that she filed

       previously to challenge subject matter jurisdiction over [Stepanovich’s] wage

       claim . . .” and was not an express incorporation of the Houchin Affidavit into

       the 12(B)(6) motion. The trial court did not accept any substantive evidence at

       the hearing on the motions to dismiss, and, at the hearing, both parties treated

       the 12(B)(6) motion as a challenge to the sufficiency of the Second Amended

       Complaint, not a summary judgment motion.


[11]   Based upon Rule 12(B) and Defendants’ failure to support their 12(B)(6) motion

       with matters outside the pleadings, we conclude that the trial court erred when

       it treated Defendants’ 12(B)(6) motion as one for summary judgment. The

       improper conversion of a motion to dismiss to a motion for summary judgment

       is harmless where our review of the errors alleged is not altered, such as where

       the defense raised does not implicate the merits of the case. See Blair v. Blair,


       Court of Appeals of Indiana | Memorandum Decision 18A-PL-2788 | May 6, 2019   Page 7 of 21
       643 N.E.2d 933, 935 (Ind. Ct. App. 1994) (finding improper conversion to

       summary judgment of motion to dismiss for lack of subject matter and personal

       jurisdictions harmless). However, a motion to dismiss for failure to state a

       claim tests the legal sufficiency of the complaint, and the issue is whether the

       complaint establishes any set of circumstances under which the non-movant

       would be entitled to relief. Doe v. Adams, 53 N.E.3d 483, 491 (Ind. Ct. App.

       2016), trans. denied. Resolution of this issue does not entail going beyond an

       examination of the complaint at issue. Without deciding whether a plaintiff in

       like circumstances is always prejudiced, we conclude that Stepanovich was

       prejudiced here because, in reaching its decision, the trial court relied on her

       statement in her Memorandum in Reply to Defendants’ Motion to Dismiss 3

       that she “‘was not a medical professional entitled to share in the P.C.’s

       profits.’” (Appellant’s App. Vol. II, p. 16). This was not an allegation

       contained within the four corners of the Second Amended Complaint. We

       conclude, therefore, that the trial court’s error was not harmless.


[12]   We review de novo a trial court’s dismissal for failure to state a claim. Bellwether

       Props., LLC v. Duke Energy Ind., Inc., 87 N.E.3d 462, 466 (Ind. 2017). We also

       review a trial court’s grant of summary judgment de novo. Kerr v. City of South

       Bend, 48 N.E.3d 348, 352 (Ind. Ct. App. 2015). Given that our standards of

       review for motions to dismiss and for summary judgment provide for no




       3
        In its Order, the trial court referred to this as “Pl.’s Br. in Resp. to Mot. To Dismiss”. (Appellant’s App.
       Vol. II, p. 16).

       Court of Appeals of Indiana | Memorandum Decision 18A-PL-2788 | May 6, 2019                        Page 8 of 21
       deference to the trial court’s decision, and in the interests of judicial economy,

       we will determine whether Stepanovich’s Second Amended Complaint was

       subject to dismissal for failure to state a claim.


                                          II. Failure to State a Claim

[13]   As noted above, a dismissal motion for failure to state a claim tests the legal

       sufficiency of a plaintiff’s claim, not the adequacy of the facts supporting it.

       EngineAir, Inc. v. Centra Credit Union, 107 N.E.3d 1061, 1065 (Ind. Ct. App.

       2018). Dismissal motions are not favored by the law, and, as such, they are

       properly granted only when the allegations of the complaint present no possible

       set of facts upon which the plaintiff can recover. Id. Indiana is a notice

       pleading state that requires only that a complaint recite a short and plain

       statement of the claim and a demand for relief. BloomBank v. United Fid. Bank,

       F.S.B., 113 N.E.3d 708, 720 (Ind. Ct. App. 2018), trans. denied. When

       conducting a 12(B)(6) analysis, the facts alleged in the complaint are taken as

       true and are considered in the light most favorable to the nonmoving party,

       indulging every reasonable inference in the nonmoving party’s favor. Id. The

       pertinent inquiry is whether the opposing party has been adequately notified of

       the operative facts concerning the claim so as to be able to defend against it. Id.

       at 720-21. Put another way, the allegations contained in a complaint are

       sufficient if they would put a reasonable person on notice as to why they are

       being sued by the plaintiff. Id.


[14]   Although Indiana is a notice pleading state, claims of fraud are treated

       differently and are subjected to more stringent pleading requirements. Indiana

       Court of Appeals of Indiana | Memorandum Decision 18A-PL-2788 | May 6, 2019   Page 9 of 21
       Trial Rule 9(B) provides that “[i]n all averments of fraud or mistake, the

       circumstances constituting fraud or mistake shall be specifically averred.” To

       meet the heightened pleading requirements, the party raising the fraud claim

       must specifically allege the elements of fraud, the time, place and substance of

       false reports or facts that were misrepresented, and the identity of what was

       procured by the alleged fraud. Kapoor v. Dybwad, 49 N.E.3d 108, 132 (Ind. Ct.

       App. 2015), trans. denied. The exact level of particularity that is required will

       necessarily differ based on the facts of the case. Id. A plaintiff’s failure to plead

       her fraud complaint with specificity constitutes a failure to state a claim upon

       which relief may be granted. Id.


                                                      A. Fraud

[15]   The elements of fraud are: (i) material misrepresentations of past or existing

       facts by the party to be charged; (ii) which were false; (iii) which were made

       with knowledge or reckless ignorance of the falseness; (iv) were relied upon by

       the complaining party; and (v) proximately caused injury to the complaining

       party. CRIT Corp. v. Wilkinson, 92 N.E.3d 662, 670 (Ind. Ct. App. 2018). The

       presence or absence of the intent to deceive is the element that differentiates

       actual fraud from constructive fraud. Kapoor, 49 N.E.3d at 124.


[16]   Stepanovich alleged actual fraud as follows:


               22. [Stepanovich] incorporate[s] by reference paragraphs 1
               through 21 as stated herein[.]




       Court of Appeals of Indiana | Memorandum Decision 18A-PL-2788 | May 6, 2019   Page 10 of 21
        23. [Houchin] represented that [the] P.C. and Envision Optical
        were structured so that all profits, past, present and future, were
        split equally and so that valuations were equivalent.


        24. [Houchin] also represented that [Stepanovich] would be paid
        for the work completed on behalf of [the] P.C.


        25. [Houchin] made such statements knowing them to be false or
        recklessly without knowledge as to their truth or falsity.


        26. [Houchin’s] concealments, omissions, false statements of
        material information, and affirmative representations made to
        [Stepanovich] regarding the financial condition of Envision
        Optical were at all relevant times materially incomplete,
        misleading, and fraudulent misrepresentations.


        27. [Houchin] made such statements to induce [Stepanovich] to
        act upon them.


        28. [Houchin] made the foregoing misrepresentations, and
        omitted information intentionally, willfully, maliciously, with
        knowledge of or with the [sic] recklessness as to the materially
        incomplete, misleading, and fraudulent nature of the
        misrepresentations.


        29. [Stepanovich] justifiably relied upon [Houchin’s]
        representations.


        30. As a direct and proximate result of [Houchin’s] conduct,
        [Stepanovich] has suffered monetary damages.


(Appellant’s App. Vol. II, pp. 21-22).



Court of Appeals of Indiana | Memorandum Decision 18A-PL-2788 | May 6, 2019   Page 11 of 21
[17]   Thus, Stepanovich alleged that Houchin made concealments, omissions, false

       statements of material information, and affirmative representations regarding

       the financial condition of Envision Optical. As an example, Stepanovich

       alleged that Houchin represented to her that the P.C. and Envision Optical

       were structured so that all profits, past, present, and future, were split equally

       and so that the valuations of the two entities were equivalent. In the recitals of

       her Second Amended Complaint, Stepanovich alleged that she and Houchin

       had agreed to allocate all income and expenses between the P.C. and Envision

       Optical “so that the net profit would all be generated by [Envision Optical] and

       be split equally between them; and that all income and proceeds from any

       source would be divided among them equally.” (Appellant’s App. Vol. II, p.

       20).


[18]   Although Stepanovich argues that she only pleaded fraud as to Envision

       Optical, we agree with Defendants that at the root of Stepanovich’s allegation is

       a claim that the parties agreed that Stepanovich would share in the profits of the

       P.C. by funneling them into Envision Optical. In essence, Stepanovich would

       be participating in the P.C. as a shareholder. However, a professional

       corporation may issue shares to individuals only if that individual is authorized

       by Indiana or another state’s law to render a professional service. See Ind. Code

       § 23-1.5-3-1(a)(1). Stepanovich would only be able to enforce a profit-sharing

       agreement with the P.C. if she were professionally licensed to practice

       optometry. Stepanovich did not allege in her Second Amended Complaint that

       she was licensed to practice optometry in Indiana or any other state, and,


       Court of Appeals of Indiana | Memorandum Decision 18A-PL-2788 | May 6, 2019   Page 12 of 21
       therefore, she failed to state a claim for fraud upon which relief could be

       granted.


[19]   We also conclude that Stepanovich’s fraud allegations were not specifically

       pleaded, in that they do not allege when Houchin was alleged to have made

       these representations or how Houchin communicated these alleged

       representations to Stepanovich, either the method used to make the

       representations or the exact nature of what was represented. Although

       Stepanovich incorporated her previous recitations into her fraud claim, she did

       not attempt to tie those previous recitations to those contained in her fraud

       claim, and, in any event, those previous recitations themselves do not supply

       the required detail.


[20]   This court has recognized that some facts pertinent to a fraud claim may not be

       known to a plaintiff prior to filing her complaint. See Kapoor, 49 N.E.3d at 132

       (“we remain sensitive to information asymmetries that may prevent a plaintiff

       from offering more detail.”) (quotation omitted). However, these

       representations were alleged to have been made by Houchin directly to

       Stepanovich, and, thus, the details about when and how these representations

       were made were ostensibly known to Stepanovich when she filed her Second

       Amended Complaint. On appeal, Stepanovich addresses the adequacy of the

       allegations of her Second Amended Complain but does not acknowledge that a

       heightened pleading standard applied to her fraud claims. Due to this failure to

       specifically plead her allegations, Stepanovich also failed to state a claim for

       fraud. Kapoor, 49 N.E.3d at 132.

       Court of Appeals of Indiana | Memorandum Decision 18A-PL-2788 | May 6, 2019   Page 13 of 21
[21]   In addition, Stepanovich’s allegation that Houchin represented that she “would

       be paid” for work for the P.C. was subject to dismissal because it was not an

       alleged misrepresentation of past or existing fact. A fraud allegation may not be

       premised on a representation of future action or future conduct. See Kopis v.

       Savage, 498 N.E.2d 1266, 1272 (Ind. Ct. App. 1986) (holding that fraud “cannot

       be based on broken promises, unfulfilled predictions, or statements of existing

       intent which are not executed.”). Stepanovich’s claim that Houchin

       represented that she would be paid was at most a promise of future action that

       was also subject to dismissal for failure to state a claim.


                                               B. Constructive Fraud

[22]   The elements of constructive fraud are: “(i) a duty owing by the party to be

       charged to the complaining party due to their relationship; (ii) 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.” Earl v. State Farm Mut. Auto. Ins. Co., 91

       N.E.3d 1066, 1073 (Ind. Ct. App. 2018), trans. denied.


[23]   Stepanovich alleged constructive fraud as follows:


               31. [Stepanovich] incorporate[s] by reference paragraphs 1
               through 21 as stated herein.




       Court of Appeals of Indiana | Memorandum Decision 18A-PL-2788 | May 6, 2019   Page 14 of 21
        32. Because of their relationship as shareholders in a closely held
        corporation, [Houchin] had a fiduciary duty to [Stepanovich].


        33. [Houchin] violated that duty by making deceptive material
        representations of past or existing facts or remaining silent when
        [Houchin] had a duty to speak.


        34. [Houchin] committed numerous acts of constructive fraud,
        including but not limited to, the following:


        a. Selling entity assets without [Stepanovich’s] permission.


        b. Failing to split non-medical profits from entities equally.


        c. Failing to split any debts owed on behalf entities equally.


        d. Other ways not yet identified.


        35. While committing these acts of fraud, [Stepanovich] had a
        reasonable right to rely on the representations made to her by
        [Houchin].


        36. [Stepanovich] reasonably relied on the acts of [Houchin].


        37. As a proximate cause of [Houchin’s] actions, [Stepanovich]
        has suffered damages in the form of lost profits, wages, her time,
        and in other ways.


        38. As a proximate cause of [Houchin’s] actions, [Houchin] has
        gained an advantage at the expense of [Stepanovich].




Court of Appeals of Indiana | Memorandum Decision 18A-PL-2788 | May 6, 2019   Page 15 of 21
               39. [Stepanovich] has suffered and will continue to suffer severe
               irreparable damages as a result of [Stepanovich’s] reliance on the
               acts of fraud committed by [Houchin].


       (Appellant’s App. Vol. II, pp. 22-23).


[24]   Stepanovich alleged in her constructive fraud claim that Houchin had a

       fiduciary duty towards her and that “[Houchin] violated that duty by making

       deceptive material representations of past or existing facts or remaining silent

       when [Houchin] had a duty to speak.” (Appellant’s App. Vol. II, p. 22).

       Stepanovich then alleged three acts that she claimed constituted constructive

       fraud. As set forth above, inasmuch as the acts alleged consisted of an

       agreement to share in the profits of the P.C., Stepanovich failed to state a claim

       upon relief could be granted.


[25]   While the language of the constructive fraud claim tracks the language of this

       court’s decisions on constructive fraud, like Stepanovich’s fraud claim, this

       claim is not specifically pleaded in that it does not allege when Houchin made

       the deceptive material representations or remained silent when Houchin had a

       duty to speak or how she did so, either in manner or substance. This court has

       held that, where a failure to disclose information is the heart of a claim for

       constructive fraud, the non-disclosure is not an event that can be pleaded with

       specificity, and it is enough to simply plead that the disclosure did not occur.

       BloomBank, 113 N.E.3d at 721. However, Stepanovich pleaded non-disclosure

       in the alternative, and so we cannot say that it is the heart of the complaint.



       Court of Appeals of Indiana | Memorandum Decision 18A-PL-2788 | May 6, 2019   Page 16 of 21
[26]   Stepanovich further alleged that Houchin committed numerous acts of

       constructive fraud such as selling “entity” assets, failing to split non-medical

       profits from “entities” equally, and failing to split debts owed on behalf of

       “entities” equally. (Appellant’s App. Vol. II, p. 22). However, these

       allegations do not provide any detail about Houchin’s alleged deceptive

       material representations or silence, as they are not representations or omissions

       of speech. The acts alleged to have constituted constructive fraud are

       themselves not specifically pleaded, as Stepanovich does not specify to what

       entity or entities she is referring. Because of these defects and omissions,

       Stepanovich’s claim of constructive fraud was likewise subject to dismissal for

       its failure to state a claim.


                                           C. Breach of Fiduciary Duty

[27]   The elements of the tort of breach of fiduciary duty are: (i) the existence of a

       fiduciary relationship; (ii) a breach of the duty owed by the fiduciary to the

       beneficiary; and (iii) harm to the beneficiary. Jaffri v. JPMorgan Chase Bank,

       N.A., 26 N.E.3d 635, 639 (Ind. Ct. App. 2015). Shareholders in a closely-held

       corporation stand in a fiduciary relationship to each other. Barth v. Barth, 659

       N.E.2d 559, 561 (Ind. 1995). As such, they must deal fairly, honestly, and

       openly with the corporation and their fellow shareholders. McLinden v. Coco,

       765 N.E.2d 606, 615 (Ind. Ct. App. 2002).


[28]   Stepanovich alleged breach of fiduciary duty in relevant part as follows:




       Court of Appeals of Indiana | Memorandum Decision 18A-PL-2788 | May 6, 2019   Page 17 of 21
               49. As shareholders in a closely held corporation, [Stepanovich
               and Houchin] owed each other the utmost duty of good faith and
               fair dealing.


               50. As shareholders in a closely held corporation, a fiduciary
               relationship existed between [Stepanovich and Houchin].


               51. Houchin represented to [Stepanovich] that [the PC.] would
               pay all debts owed to Envision Optical.


               52. Houchin represented to [Stepanovich] that the profits and
               debts of Envision Optical would be shared equally upon
               dissolution.


               53. [Houchin’s] misrepresentation and failure to disclose
               information to [Stepanovich] constitutes breach of fiduciary duty
               to her partner.


               54. [Stepanovich] has been harmed by [Houchin’s] breach of her
               fiduciary duties.


       (Appellant’s App. Vol. II, p. 24).


[29]   Stepanovich alleged that (i) she and Houchin were in a fiduciary relationship

       because they were shareholders in a closely-held corporation; (ii) Houchin

       owed her a duty of good faith and fair dealing which she breached with

       misrepresentations and failure to disclose information; and (iii) she was

       damaged as a result of that breach. Although Houchin alleged a breach of

       misrepresentation and failure to disclose, our research uncovered no cases

       where this court applied the heightened pleading requirements applicable to


       Court of Appeals of Indiana | Memorandum Decision 18A-PL-2788 | May 6, 2019   Page 18 of 21
       fraud to a claim for breach of fiduciary duty, and so we find that these

       allegations recited the operative facts of a claim for breach of fiduciary duty and

       were not subject to dismissal for failure to state a claim.


[30]   As to the allegation of Paragraph 51 that Houchin represented that the P.C.

       would pay all debts owed to Envision Optical, we conclude that was an

       allegation of an agreement that could not be enforced, as set forth above. As

       such, that allegation did not state a claim upon which relief could be granted.

       However, Stepanovich’s allegation that Houchin represented to her that the

       profits and debts of Envision Optical would be shared equally upon dissolution

       was adequately pleaded, and she may proceed on that claim.


                                               D. Breach of Contract

[31]   The elements of a breach of contract claim are: (i) the existence of a contract;

       (ii) the defendant’s breach thereof; and (iii) damages. Murat Temple Ass’n, Inc. v.

       Live Nation Worldwide, Inc., 953 N.E.2d 1125, 1128-29 (Ind. Ct. App. 2011),

       trans. denied. Stepanovich made the following relevant allegations in her breach

       of contract claim:


               56. As shareholders in a closely held corporation, [Stepanovich
               and Houchin] agreed to share in the profits and losses of
               Envision Optical equally.


               57. [Houchin] and [the] P.C. breached this agreement by not
               paying Envision Optical the indebtedness owed by [the] P.C.,
               and by converting funds from Envision Optical for her own
               personal use.


       Court of Appeals of Indiana | Memorandum Decision 18A-PL-2788 | May 6, 2019   Page 19 of 21
               58. [Houchin] breached their agreement regarding the sharing in
               the profits and losses with Envision Optical upon dissolution,
               and by failing to allocate the proceeds of the sale of [the] P.C.
               and Envision [Optical] so that each received equal amounts.


               59. As a proximate result of [Houchin’s] breach, [Stepanovich]
               suffered and will continue to suffer irreparable damages as a
               result of the breaches of contract committed by [Houchin] and
               [the] P.C.


               60. [Stepanovich] is entitled to recover compensatory damages
               in an amount sufficient to compensate her for the damages and
               injuries caused by [Houchin’s] and [the] P.C.’s breach.


       (Appellant’s App. Vol. II, p. 25).


[32]   Thus, Stepanovich claimed that (i) an agreement to share profits and losses in

       Envision Optical existed between the two shareholders; (ii) Houchin breached

       this agreement in four ways: not paying Envision Optical the debt owed to it by

       the P.C., converting funds from Envision Optical, failing to share the profits

       and losses of Envision Optical upon dissolution, and failing to equally allocate

       the proceeds of the sales of the P.C. and Envision Optical; and (iii) damages

       were proximately caused by those breaches. We conclude that, under the

       regular notice pleading standard applicable to non-fraud claims, these

       allegations were adequately pleaded, except for the allegations based upon the

       alleged agreement to share the profits of the P.C. Thus, Stepanovich may

       proceed on her breach of contract claims based upon her allegations that

       Houchin converted funds from Envision Optical and failed to share the profits


       Court of Appeals of Indiana | Memorandum Decision 18A-PL-2788 | May 6, 2019   Page 20 of 21
       and losses equally from Envision Optical upon dissolution, inasmuch as they do

       not rely upon the alleged agreement to share in the profits of the P.C.


                                                 CONCLUSION
[33]   Based on the foregoing, we conclude that the trial court erred when it treated

       Defendants’ dismissal motion as a motion for summary judgment and that

       Houchin may proceed on her breach of fiduciary duty and contract claims that

       are not based upon the alleged agreement to share in the profits of the P.C.


[34]   Affirmed in part, reversed in part, and remanded for further proceedings.


[35]   Bailey, J. and Pyle, J. concur




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