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Justices base ruling on level of intent

March 20, 2012

The Indiana Supreme Court has determined that not enough evidence of intent existed for a judge to grant summary judgment for a bank alleging a business owner committed fraud.

In Harold J. Klinker v. First Merchants Bank, N.A., No. 01S04-1107-PL-438, the justices reversed an Adams Circuit Court ruling on fraud claims because genuine issues of material fact exist about whether the defendant acted with the requisite criminal intent.

The case involves a used car dealership manager in Decatur. In December 2008, First Merchants Bank discovered that 31 vehicles that the bank had loaned purchase money for weren’t in Harold Klinker’s possession and some had been transferred to another dealer. The bank sued Klinker on fraud.

When the bank moved for summary judgment, Klinker filed an affidavit stating that only 22 vehicles were “missing.” But the trial court refused to consider the document, reasoning that it had not been properly designated and that no genuine issue of material fact existed about the vehicles. The judge also determined Klinker had defaulted and acted with intent to commit fraud and granted summary judgment to the bank along with attorney fees and treble damages.

The Court of Appeals held the trial court had erred in refusing to consider Klinker’s, affidavit, but that summary judgment was proper because the affidavit consisted of self-serving statements unsupported by real evidence.

On transfer, the justices found that the bank’s evidence is not sufficient to warrant summary judgment on the element of intent. The trial court could have reasonably determined that only a simple breach of contract occurred rather than criminal fraud, regardless of how strong the evidence may have appeared, Justice Frank Sullivan wrote. The justices made a similar finding in regard to whether Klinker acted with the requisite intent under the state’s bank fraud statute.

The justices emphasized that they’re only determining whether summary judgment was proper, not the strength of the fraud evidence presented by the bank. The case is remanded for further proceedings at the trial level.



 

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