Kelli J. Dugan, Appellant-Third-Party Plaintiff v. J. Keith Stucker and Jenna Spurrier, Appellees-Third-Party Defendants (2025)

MEMORANDUM DECISION ON REHEARING

[1] Kelli J. Dugan petitions for rehearing following our memorandum decision in Dugan v. Stucker, 24A-CC-919, 2025 WL 314114 (Ind. Ct. App. Jan. 28, 2025) (mem.). As we explained in our prior decision, Dugan had hired Thurston, Springer, Miller, Herd & Titak, Inc. (“Thurston Springer”) to provide her with financial and investment advice. Two Thurston Springer employees in particular, J. Keith Stucker and Jenna Spurrier, advised Dugan on her investments with Thurston Springer.

[2] As we further explained:

Dugan “completely relied on Stucker's and Spurrier's advice—and thus the advice of Thurston Springer—on how to manage, direct, and invest her funds.” Appellant's Br. at 12; see Appellant's App. Vol. 6, p. 8. In the spring of 2018, Stucker advised Dugan to invest in a local restaurant start-up called Pier 48. Dugan believed Stucker was advising her “in his capacity as [her] financial advis[o]r” with Thurston Springer. Appellant's App. Vol. 6, p. 9. Indeed, many of the ensuing investment meetings Dugan had with Stucker “were held ․ at the Thurston Springer offices in Indianapolis.” Id. During those meetings, Stucker provided Dugan with financial projections on the anticipated success of Pier 48.

Dugan agreed to invest “hundreds of thousands of dollars into Pier 48 after receiving [Stucker's] financial projections and reassurances that it was a good investment.” Id. at 10. Dugan's investments were transferred out of her “Thurston Springer accounts” and into “the Pier 48 accounts in multiple stages.” Id. Each time, Stucker would advise Dugan on how much to withdraw and from which account to make that withdrawal. Once she executed the necessary paperwork, “Thurston Springer arranged for the transfer of these funds.” Id. Dugan also executed a guaranty in the amount of $1.9 million in support of Pier 48's start-up. However, at no time did Stucker, Spurrier, or “anyone else at Thurston Springer” advise Dugan about the risks and benefits of her commitments to Pier 48 or whether her investments were consistent with her financial goals. Id. And, Dugan would later learn, Stucker was a founding member of Pier 48, although he did not disclose any conflict of interest to Dugan at the time of his investment advice.

Pier 48 struggled during the pandemic of 2020 and defaulted on its lease agreement. The holder of that agreement sought recourse by way of a civil complaint in the Hamilton Superior Court against Dugan as a Pier 48 guarantor. Dugan, in turn, filed a third-party complaint against Thurston Springer, Stucker, Spurrier, and others ․

Id. at *1 (alterations and some omissions in original). As relevant to the petition for rehearing, Dugan and Thurston Springer eventually entered into a settlement agreement and jointly moved to dismiss Thurston Springer with prejudice, which the trial court granted. However, that dismissal was limited to only Thurston Springer.

[3] That left pending Dugan's claims against Spurrier and Stucker, individually. The trial court dismissed Spurrier. In our prior decision, we affirmed that dismissal, and we decline to revisit that portion of our decision.

[4] The trial court also entered summary judgment for Stucker. As to that decision, we explained in relevant part as follows:

Our consideration of this issue begins from a premise that has not been given its due consideration by Dugan in this appeal: she has settled her claims with Thurston Springer. Thus, any claims she has remaining against Stucker must be outside the scope of his employment and in his personal capacity. Cf. Burton v. Benner, 140 N.E.3d 848, 852 (Ind. 2020) (explaining respondeat superior liability).

Dugan's three amended claims against Stucker are for constructive fraud, breach of fiduciary duty, and malpractice. There is no dispute between the parties that each of those three claims required Stucker to have owed a fiduciary duty to Dugan. Appellant's Br. at 39; Stucker's Br. at 39. In support of his motion for summary judgment to the trial court, Stucker conceded that, as “Dugan's Thurston Springer investment advis[o]r, Stucker owed Dugan a fiduciary duty with respect to Dugan's investments under the management of Thurston Springer ․” Appellant's App. Vol. 12, p. 219 (bold font removed). Relying on that statement on appeal, Dugan contends that the trial court erred as a matter of law when it failed to acknowledge Stucker's concession and the law underlying his concession and instead applied a different legal test to determine the existence of a duty. Appellant's Br. at 37-42.

In other words, Dugan's entire argument on the existence of a fiduciary duty owed to her by Stucker is premised on Stucker's recognition that, as a Thurston Springer employee, he did owe her a fiduciary duty. But Stucker's assertions to the trial court demonstrate that he owed her a duty only in his employment capacity and not in his personal capacity. Instead of designating evidence to the contrary, Dugan attempts to hold Stucker personally liable for conduct that was within the scope of his employment. Indeed, Dugan's own assertions to the trial court and on appeal are replete with her recognition that she believed, at all relevant times, that Stucker was advising her “in his capacity as [her] financial advis[o]r” with Thurston Springer. Appellant's App. Vol. 6, p. 9.

Accordingly, Stucker made a prima facie showing to the trial court that he did not owe a duty to Dugan in his personal capacity, and Dugan failed to rebut that showing. The trial court therefore properly entered summary judgment for Stucker ․

Id. at *4-5 (alterations and some omissions in original).

[5] On rehearing, Dugan asserts that her release of Thurston Springer was not a release of Stucker for acts within the scope of his employment, and she argues that our analysis that she cannot hold an employee individually liable for negligent acts that occur within the scope of his employment is contrary to law. In other words, she argues that employers and employees are jointly and severally liable for the employee's negligent acts within the scope of the employee's employment and, thus, the release of an employer from that liability is not a release of the employee.

[6] In support of her assertion, she cites Hogan v. Magnolia Health Systems 41, LLC, 161 N.E.3d 365, 370 (Ind. Ct. App. 2020), trans. denied. That opinion discusses in relevant part a 1968 opinion from our Court in Henry B. Steeg & Assocs., Inc. v. Rynearson, 143 Ind. App. 567, 569-71, 241 N.E.2d 888, 889-90 (1968). In Henry B. Steeg, we stated as follows:

Appellee's action against appellant [employer] proceeds on the theory of respondeat superior. The Indiana position with respect to the so-called doctrine of respondeat superior is well stated in Illinois, etc., R. Co. v. Hawkins, Admx. (1917), 66 Ind. App. 312, 317, 115 N.E. 613, 614, as follows:

under the doctrine of respondeat superior, the master or principal is chargeable with, and liable for, any negligent act committed by his agent or servant while such servant is acting in the course of his employment and in the line of his duty. In such cases both master and servant are liable for any injury and damages caused by such negligence, and either or both may be sued therefor at the option of the injured party.

Appellant contends that the Covenant executed by the appellee and appellant's employee is in the form of a release, the effect of which is to release both the appellant and its employee from liability. However, the Covenant expressly stated that the appellee reserved the right to sue any other person or persons on account of damages arising from the accident.

In Bedwell v. DeBolt (1943), 221 Ind. 600, 50 N.E.2d 875, the Supreme Court of Indiana stated:

It is well settled that all joint tort-feasors for an injury are discharged by the unqualified release of one. The amount of the consideration paid for such a release is immaterial so long as it is sufficient to support a contract and the transaction is not tainted by fraud or mistake. Likewise, full satisfaction of such a claim for damages by one of the tort-feasors operates to discharge all, though no release is executed. On the other hand, it is equally well settled that a covenant not to sue one tort-feasor does not bar an action against the others, but only operates as a satisfaction of the damages, pro tanto, as to the benefits received. But if the consideration paid for a covenant not to sue is full compensation for the injury, the liability is discharged as to all, regardless of the character of the instrument. And it may be added that under an answer of full satisfaction by a joint tort-feasor a defendant is entitled to a pro tanto credit for anything less than full payment which the plaintiff has received from that source.

This court is aware that the relationship between employer and employee under the doctrine of respondeat superior is not, under a strict definition, that of joint tort-feasors. However, it is well settled that the liability imposed in both instances is joint and several. In the opinion of this court the employer-employee relationship in the case at bar falls within the ambit of the phrase “joint tort-feasors” as used in the Bedwell case, supra.

Id. (cleaned up). That is, in Henry B. Steeg we concluded that an agreement to not sue the employee for negligent acts within the scope of employment did not operate as a release of those claims against the employer based at least in part on the express limitation in the agreement-not-to-sue that the agreement would apply only to the employee and to no one else. Id.

[7] A later panel of our Court concluded that the analysis in Henry B. Steeg was incorrect. In particular, in United Farm Bureau Mutual Insurance Co. v. Blossom Chevrolet, 668 N.E.2d 1289, 1291-92 (Ind. Ct. App. 1996), trans. denied, we explained:

Under the doctrine of respondeat superior,

the master or principal is chargeable with, and liable for, any negligent act committed by his agent or servant while such servant is acting in the course of his employment and in the line of his duty. In such cases both master and servant are liable for any injury and damages caused by such negligence, and either or both may be sued therefor at the option of the injured party․

Henry B. Steeg and Associates v. Rynearson, 143 Ind. App. 567, 569-70, 241 N.E.2d 888, 889 (1968), reh'g denied (quoting Illinois Cent. R. Co. v. Hawkins, 66 Ind. App. 312, 317, 115 N.E. 613, 614 (1917)). Thus, the master-principal and servant-agent are jointly and severally liable. It does not necessarily follow that they are joint tortfeasors.

The term “joint tortfeasors” ․ means “those who act together in committing wrong, or whose acts if independent of each other, unite in causing a single injury.”

Underlying the concept of joint tortfeasors is the principle that all joint tortfeasors are independently at fault for their wrongful acts. To the contrary, the principles of vicarious liability apply where only the agent has committed a wrongful act. The principal is without fault. The liability of the principal arises simply by the operation of law and is only derivative of the wrongful act of the agent.

It has been recognized in Indiana that the master and servant are not considered joint tortfeasors when the master is liable solely under the doctrine of respondeat superior. See Gomez v. Adams, 462 N.E.2d 212, 225 (Ind. Ct. App. 1984); Biel, Inc. v. Kirsch, 130 Ind. App. 46, 52, 153 N.E.2d 140, 143 (1958), trans. denied (1959). In Henry B. Steeg, however, the court, in determining whether a covenant not to sue the servant released the master, stated that[,] while the employer-employee relationship under the doctrine of respondeat superior was not one of joint tortfeasors under a strict definition, it was one of joint tortfeasors for purposes of determining whether a release of or covenant not to sue the servant discharged the master. 143 Ind. App. at 570-71, 241 N.E.2d at 890. The court concluded that the covenant not to sue did not release the master. Henry B. Steeg was decided when the release rule[, i.e., that the release of one joint tortfeasor would operate as a release of all joint tortfeasors,] was valid[,] and the court based its conclusion on the joint and several nature of the liability, which was an underlying principle of the release rule. That reasoning supports applying the release rule to the master-servant relationship because there is only one tortfeasor[ ] but no longer supports characterizing the relationship as one of joint tortfeasors. It is precisely because joint tortfeasors are no longer treated as a single entity that the release rule has been abrogated. Huffman[ v. Monroe Cnty. Cmty. Sch. Corp.], 588 N.E.2d [1264,] 1267 [(Ind. 1992)]. We disagree with the conclusion in Steeg that a master/servant relationship is one of joint tortfeasors and hold that the master/servant relationship under the doctrine of respondeat superior is not one of joint tortfeasors.

(Some quotation marks and citations omitted.) However, the panel in Blossom Chevrolet went on to conclude that an agreement to not sue an employee for negligent acts within the scope of employment operated as a waiver of claims against the employer for those acts under the doctrine of respondeat superior. Id. at 1292-93.

[8] As to that conclusion, our Supreme Court later disapproved of our Court's opinion in Blossom Chevrolet. See Pelo v. Franklin College of Ind., 715 N.E.2d 365, 366-67 (Ind. 1999). In Pelo, our Supreme Court made clear that Indiana law allows a plaintiff to “release[ ] one tortfeasor to pursue others who are potentially liable for the same injury.” Id. at 365 (emphasis added). But our Court has continued to apply the rationale underlying Blossom Chevrolet to hold that there can be no liability against the employer under the doctrine of respondeat superior when the underlying facts—rather than a release—do not show that the alleged negligence was committed by the employee within the scope of his employment. See, e.g., Comer-Marquardt v. A-1 Glassworks, LLC, 806 N.E.2d 883, 887-888 (Ind. Ct. App. 2004) (default judgment against employer must be set aside where no evidence of employee fault); Grzan v. Charter Hosp. of Nw. Ind., 702 N.E.2d 786, 792 (Ind. Ct. App. 1998) (summary judgment for the employee for acts within the scope of his employment meant that “no negligence can be imputed” to the employer).

[9] That brings us to Dugan's reliance on Hogan, which, in turn, relied on Henry B. Steeg. In Hogan, the plaintiff filed suit against the employer and an unknown employee for the unknown employee's allegedly negligent acts within the scope of the employee's employment. Outside the relevant statute of limitations, the plaintiff amended her complaint to specifically name the previously unknown employee. The employee moved to be dismissed on the theory that the amended complaint was brought against her outside of the statute of limitations, which motion the trial court granted. Thereafter, the employer moved for summary judgment on the theory that, with the employee having been dismissed, there could be no liability against it, either. The trial court agreed and entered summary judgment for the employer.

[10] We reversed the trial court's summary judgment for the employer and explained as follows:

The general rule is that vicarious liability can be imposed when an employer, who is not liable because of his own acts, is found responsible for the wrongful acts of his employee committed within the scope of employment. Barnett v. Clark, 889 N.E.2d 281, 283 (Ind. 2008). The employer and employee are jointly and severally liable: both the employer and employee are liable for any injury and damages caused by the employee's negligence, and either or both may be sued for such damages at the option of the injured party. Henry B. Steeg & Assocs., Inc. v. Rynearson, 143 Ind. App. 567, 241 N.E.2d 888, 889 (1968). For an employee's act to fall within the scope of employment, the act must be incidental to authorized conduct or further the employer's business to an appreciable extent. Knighten v. E. Chicago Housing Auth., 45 N.E.3d 788, 792 (Ind. 2015). An employer is not held liable under the doctrine of respondeat superior because it did anything wrong, “but rather because of the [employer's] relationship to the wrongdoer.” Walgreen Co. v. Hinchy, 21 N.E.3d 99, 107 (Ind. Ct. App. 2014) (internal quotation omitted), trans. denied. “[F]or respondeat liability to attach, there must also be underlying liability of the acting party.” Id. at 109.

[The employer here] claims that a plaintiff “cannot choose to sue ‘either’ an employer or employee under the theory of respondeat superior.” Contrary to [the employer's] assertion, a plaintiff does, in fact, have the option of suing either the employee, employer, or both. Henry B. Steeg & Assocs., Inc., 143 Ind. App. 567, 241 N.E.2d at 889․ As stated above, it is the employer's relationship to the wrongdoer that makes the employer liable. Hinchy, 21 N.E.3d at 107. An injured party's option to sue both essentially serves as a fail-safe for that plaintiff. If an employee is found to have been acting in the scope of employment, the plaintiff cannot recover from both the employee and employer. However, if the employee is found to be negligent but was not acting within the scope of employment, a plaintiff could still potentially obtain a judgment against the employee. Here, [p]laintiff filed suit against [the employer] within the statute of limitations and did not have to file suit against [the employee] or name her as a defendant in the first place. Therefore, [the employee's] dismissal as a defendant has no effect on [p]laintiff's respondeat superior action against [the employer]․ [Our jurisprudence] is clear that[,] where an employee has acted negligently, liability will be imputed to his or her employer by virtue of the employee/employer relationship because of the wrongful conduct. Where an employee is not negligent, his employer cannot be liable.

[The employee's] dismissal as a defendant does not extinguish [the employer's] potential liability arising from [the employee's] conduct. [The employer here] admits [the employee] was acting within the scope of her employment at the time of the incident and therefore, if the trier of fact determines that [the employee] acted negligently, her negligence will be imputed to [the employer] ․

Hogan, 161 N.E.3d at 370-71 (emphases added; citations to the record omitted; some alterations in original).

[11] Synthesizing the above authority demonstrates the following: as Henry B. Steeg and Pelo made clear, a plaintiff may file suit against both an employee and an employer for acts arguably within the scope of the employee's employment, and the plaintiff's release of the employee from liability for those acts is not a release of the employer from respondeat superior liability; as Blossom Chevrolet made clear, the ability to sue both the employee and the employer for employment-related acts and to hold the employer liable under respondeat superior for those acts is not a theory of joint liability but a theory of imputed liability; and, as Hogan made clear, filing suit against both the employee and the employer is not based on a theory of joint and several liability but on a theory of alternative liability—if the employee's act is in fact within the scope of the employment, “liability will be imputed” to the employer, and if the act is in fact not within the scope of employment, any judgment for the plaintiff would be “against the employee.” Id.; see also, e.g., Cox v. Evansville Police Dep't, 107 N.E.3d 453, 460 (Ind. 2018) (“For well over a hundred years, Indiana has recognized the doctrine of respondeat superior—Latin for ‘let the superior make answer.’ Under this doctrine, an employer is liable for employees’ tortious acts ․ if those acts occurred within the scope of employment.”) (emphasis added; citations omitted).

[12] That brings us to Dugan's argument on rehearing. She asserts that, while she released the employer, Thurston Springer, she did not release anyone else, and, thus, she may continue her action against the employee, Stucker, for acts that Stucker committed within the scope of his employment. But, as we held in our prior decision and the above authority confirms, Dugan's argument is mistaken. By releasing Thurston Springer of respondeat superior liability, she conceded that her claims against Stucker could not have been within the scope of his employment; otherwise, under Indiana law, the “employer is liable.” Cox, 107 N.E.3d at 460. That is, there is no separate and independent employee liability to the plaintiff for acts within the scope of the employee's employment; such liability “will be imputed” to the employer. Hogan, 161 N.E.3d at 370-71. Therefore, while we agree with Dugan that her release of Thurston Springer did not release claims against Stucker in his personal capacity—that is, for acts not within the scope of his employment—she did release her claims for acts within the scope of his employment because those acts are imputed to the employer. And, as we also explained in our prior decision, Dugan's claims against Stucker are wholly based on acts that were within the scope of his employment. Those claims were therefore not claims “against Stucker” personally but against Thurston Springer, and she has no remaining claims against Stucker.

[13] For all of these reasons, and with the above clarifications, we grant Dugan's petition for rehearing and affirm our prior decision.

Mathias, Judge.

Judges Brown and Kenworthy concur. Brown, J., and Kenworthy, J., concur.