## Facts

- Andrew C. Brown, a professional hockey player, retained Robert G. Woolf, an attorney and sports agent, to negotiate Brown’s playing contracts.
- Woolf negotiated Brown’s 1973–74 contract with the Pittsburgh Penguins; Brown then retained Woolf again before the 1974–75 season.
- In July 1974, the Penguins offered Brown a two-year contract for $80,000 per year.
- Brown rejected the Penguins’ offer and signed a five-year contract with the Indianapolis Racers on July 31, 1974, reportedly totaling $800,000; Woolf’s fee was 5% ($40,000).
- Brown alleged Woolf induced the Racers deal by misrepresenting the Racers’ financial stability and the security/advantages of the Racers contract terms.
- The Racers allegedly developed financial difficulties soon after, leading to renegotiations that reduced Brown’s compensation, including the loss of a retirement benefit.
- Brown alleged Woolf negotiated reductions affecting Brown while simultaneously seeking payment of Woolf’s own fee from the Racers.
- The Racers later defaulted; Brown asserted he received only $185,000 of the $800,000 promised, while Woolf received the full $40,000 fee.
- Brown sued for compensatory and punitive damages and sought imposition of a trust on the fee, alleging constructive fraud and breach of fiduciary duty under Indiana law.

## Issues

1. Whether genuine disputes of material fact existed on Brown’s claims that Woolf committed constructive fraud and breached fiduciary duties in negotiating the Racers contract and subsequent renegotiations, precluding summary judgment.
2. Whether Indiana law categorically bars punitive damages for constructive fraud and fiduciary-breach claims, or permits punitive damages upon proof of aggravated misconduct.

## Decision

- The court denied Woolf’s motion for summary judgment on the merits.
- The court denied Woolf’s motion for partial summary judgment aimed at eliminating the constructive-fraud theory and punitive-damages request.
- The court held the record contained genuine issues of material fact concerning what Woolf represented, what Woolf knew or should have known about the Racers’ finances, whether Brown relied on the alleged representations, and whether Woolf’s conduct caused Brown’s losses.
- The court held Indiana law does not impose a per se bar on punitive damages in constructive-fraud/fiduciary-duty cases; punitive damages may be available if the required showing is made at trial.

## Legal Principles

- An attorney-agent representing a professional athlete may owe fiduciary duties arising from a relationship of trust and confidence, including duties of loyalty and disclosure of material information.
- Under Indiana law, constructive fraud may arise from breach of duty in a fiduciary or confidential relationship and does not require proof of intent to deceive.
- Constructive fraud generally requires a duty arising from the relationship, a breach through misleading conduct or nondisclosure, reliance by the beneficiary, and resulting detriment or unconscionable advantage.
- Summary judgment is improper where, viewing the evidence in the nonmovant’s favor, reasonable factfinders could differ on material disputes relevant to duty, breach, reliance, causation, and damages.
- Under Indiana law, punitive damages may be awarded in tort actions, including constructive-fraud contexts, upon proof of conduct involving malice, fraud, gross negligence, or oppressiveness, and not mere mistake or honest error of judgment.

## Conclusion

The court allowed Brown’s constructive-fraud and fiduciary-duty claims to proceed because material factual disputes existed about Woolf’s representations, investigation, loyalty, and causation, and it ruled that Indiana law does not categorically foreclose punitive damages for constructive fraud where aggravated misconduct is proven.


Brown v. Woolf, 554 F. Supp. 1206 (S.D. Ind. 1983)