The Indiana Court of Appeals affirmed partial summary judgment for Noble Roman’s Inc. in-store franchisees’ claim
for constructive fraud because the franchisees’ then-attorney admitted that they were only pleading actual fraud against
the company and that admission is binding.
Heyser, et al. v. Noble Roman's, Inc., et al., No. 29A04-1002-PL-71, Kari Heyser and other franchisees of Noble
Roman’s asserted fraud and other claims against the pizza company and banks in relation to the franchisees’ agreements
to open restaurants that subsequently failed.
At a March 25, 2009, hearing, the trial court granted the banks’ motion to dismiss. At that hearing, the franchisees’
then-counsel told the court “We have not plead constructive fraud.”
Noble Roman’s later filed a motion for partial summary judgment, stating that the franchisees weren’t alleging
constructive fraud, but actual fraud, and many of the alleged fraud statements in the franchisees’ complaint and amendments
didn’t qualify as actual fraud. The franchisees’ filed a response asserting both actual and constructive fraud.
In September 2009, the trial court granted Noble Roman’s motion, finding the attorney’s statement at the March
2009 hearing regarding constructive fraud was binding and the franchisees are estopped from asserting they plead constructive
fraud in their complaint.
The Court of Appeals agreed with the trial court that the franchisees’ former attorney’s statement was binding,
citing several cases including Hockett v. Breunig, 526 N.E.2d 995, 998 (Ind. Ct. App. 1988).
On the record, the attorney unequivocally stated the franchisees’ fraud claims against the banks were based solely
on allegedly fraudulent representations by Noble Roman’s, with whom the banks allegedly acted in conspiracy; and the
franchisees were alleging actual fraud, not constructive fraud.
“Thus, the Franchisees’ then counsel admitted that the Franchisees were only pleading actual fraud against Noble
Roman’s, who was the only defendant that allegedly made fraudulent statements. That admission was binding upon the Franchisees
throughout the lawsuit,” wrote Senior Judge John Sharpnack.
The appellate court also remanded the cause for further proceedings.