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FOR PUBLICATION
ATTORNEYS FOR APPELLANTS: MARTIN T. FLETCHER, SR. DANIEL G. MCNAMARA DAVID E. BAILEY Eilbacher Fletcher, LLP Fort Wayne, Indiana ATTORNEYS FOR APPELLEES: DEBRA H. MILLER JAMES R. FISHER Miller & Fisher, LLC Indianapolis, Indiana

FILED
Jan 24 2008, 8:52 am
of the supreme court, court of appeals and tax court

IN THE COURT OF APPEALS OF INDIANA
AMERICAN HERITAGE BANCO, INC., ALAN W. SIDEL, and SHEILA SCHIMMELE, ) ) ) Appellants-Plaintiffs, ) ) vs. ) ) EARL FORD MCNAUGHTON, ) PAMELA S. MCNAUGHTON, ) GEORGE MCNAUGHTON, ) ) PARKWAY MISSION INDUSTRIAL ACCOMMODATIONS LLC, ) MACNEACHDAIN, INC, INVERARAY, INC., ) DUNDERADE, INC., SOUTHERN ) INDIANA HISTORICAL PRESERVATION, INC, ) BATTEN KILL, INC., ILLMONT PARKED ) PROPERTIES, INC., ANNE M. MOUNTS, ) TED W. WALTER, EARLFORD FOY ) MCNAUGHTON, DAVID G. SCHIMMELE, ) THOMAS L. CHRISTLIEF, NEIL L. ) PATTERSON, HAROLD A. ARNDT, ) CARL AKERS, JR., WILLIAM ROEBEL, ) JAMES PENNER, FREEMONT PLASTICS, ) INC., LYNDON TUCKER, JOHN PICHON, JR., ) and RICHARD WELLS. ) ) Appellees-Defendants. )

CLERK

No. 76A03-0706-CV-272

APPEAL FROM THE STEUBEN CIRCUIT COURT The Honorable Allen N. Wheat, Judge Cause No. 76C01-0603-PL-156

January 24, 2008

OPINION - FOR PUBLICATION

ROBB, Judge

Case Summary and Issue American Heritage Banco, Inc., ("AHB") appeals the trial court's partial dismissal of its claims against Fremont Plastics, Inc., and Lyndon Tucker, contending the trial court erred in determining that AHB had failed to state a claim upon which relief could be granted. Concluding that the trial court properly dismissed AHB's claims for fraud and civil conspiracy to commit fraud, but improperly dismissed AHB's claim for treble damages, we affirm in part and reverse in part. Facts and Procedural History The First National Bank of Fremont ("FNBF") was a wholly owned subsidiary of AHB from 1995 to 2005, at which time FNBF sold substantially all of its assets and liabilities to a bank in LaGrange, Indiana, and merged with AHB. AHB is a closely held corporation for which Earl McNaughton is the majority shareholder. McNaughton was also the president, chairman of the board of directors, and chief executive officer of FNBF. In 1997, FNBF gave Fremont Plastics1 a $100,000 revolving line of credit. Tucker is the president of Fremont Plastics.

1

In 1997, Fremont Plastics, Inc., was known as Hoosier Plastics, Inc.

2

On September 28, 2001, Fremont Plastics drew $100,000 on its line of credit. On that same date, Tucker signed a promissory note to FNBF for $75,020. The proceeds from the Fremont Plastics draw and the Tucker loan were used to purchase a $175,000 cashier's check from FNBF, signed by Thomas Christlieb, vice-president, senior lender, and director of FNBF, payable to another FNBF customer who had an outstanding loan with FNBF. On December 4, 2001, David Schimmele, vice-president of FNBF, signed a FNBF cashier's check from FNBF payable to John Pichon in the amount of $405,578.19. Pichon purchased another cashier's check in the amount of $151,481.61 with the proceeds of the first cashier's check. The proceeds from the second cashier's check were used on December 7, 2001, to pay down Fremont Plastics's loan by $75,326.03, and to pay off the Tucker loan. When new management took over FNBF, the series of loan transactions described above was reviewed2 and it was determined that the loans FNBF had made to Fremont Plastics and Tucker could not properly have been paid with proceeds from later loans. Accordingly, the entries reflecting that the Fremont Plastics and Tucker loans had been paid were reversed and the loans were reinstated as unpaid obligations. AHB filed its Second Amended Complaint on October 26, 2006. Count III of the complaint asserts claims against Fremont Plastics and Tucker, among others, for the transactions described above. Specifically, AHB alleged: 112. Each of the defendants named in this Count acted together in a concerted effort to defraud FNBF through their respective roles in the fraud and schemes detailed above. FNBF suffered damages as a result of this concerted and unlawful activity.
Several other loan transactions not immediately involving Fremont Plastics and Tucker were also reviewed at this time and give rise to other claims in AHB's Second Amended Complaint.
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113. FNBF was a state or federally chartered or federally insured financial institution. Each of the defendants named in this Count knowingly executed multiple schemes to obtain money from FNBF through false pretenses by participating in the transactions described in this Second Amended Complaint. FNBF suffered pecuniary loss as a result of the execution, or attempted execution, of the schemes. Defendants are therefore guilty of defrauding a financial institution, in violation of Ind. Code

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