A claim of securities fraud against an Indiana health company must proceed to trial after the Indiana Court of Appeals determined the trial court erred by striking a request for a jury trial without the consent of both parties.
On two occasions between 2007 and 2008, Cardinal Health Ventures sold shares of two medical clinics to Dr. Michael Scanameo, Carol Scanameo and Michael Scanameo, M.D. Inc. for roughly $542,400. But in 2013, the Scanameos sued Cardinal Health for securities fraud, alleging the health company knew the shares were “worthless” when it sold them.
In their complaint, the Scanameos sought to recover the sum paid, plus interest and attorney fees, and requested a jury trial. The Scanameos later moved to strike their request for a jury trial, arguing “that while a prior version of Indiana Code section 23-19-5-9 explicitly stated that claims brought under that statute could be decided by either a jury or the trial court, the amended version of the statute was not clear as to whether claims could still be determined by a jury or should only be tried by the court.”
After taking the matter under advisement, the Delaware Circuit Court granted the motion to strike. Cardinal Health brought an interlocutory appeal of that decision on the basis that it did not consent to the motion to strike, and the Indiana Court of Appeals agreed Wednesday that the case should be re-set for a jury trial.
In the opinion, Judge Cale Bradford pointed to language in I.C. 23-19-5-9 that allows a purchaser to recover the amount they paid for a security and “interest…, costs, and reasonable attorney’s fees determined by the court or arbitrator, … .” The language relating to attorney fees is set off by commas, which means that the option of using a court or arbitrator applies only to that section, not the statute as a whole, Bradford wrote.
Further, Bradford noted that United States district courts and the Supreme Court of the United States have previously held that securities fraud claims and claims seeking monetary compensation are appropriate for jury trials. That, coupled with the fact that Cardinal Health did not consent to the request to strike the jury trial, as is required by Indiana Trial Rule 38(D), made it erroneous for the trial court to grant the motion to strike.
The case of Cardinal Health Ventures, Inc. v. Michael Scanameo, M.D., Carol Scanameo, and Michael Scanameo, M.D., Inc., 18A02-1703-CT-487, was, thus, remanded to be re-set on the jury trial calendar.