Whitesell Precision Components, Inc. v. Autoform Tool & Manufacturing, LLC , 110 N.E.3d 380 ( 2018 )

FILED
Aug 31 2018, 6:56 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEE
Andrew W. Hull A. Richard M. Blaiklock
Michael R. Limrick Charles R. Whybrew
Evan D. Carr LEWIS WAGNER, LLP
HOOVER HULL TURNER LLP Indianapolis, Indiana
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Whitesell Precision August 31, 2018
Components, Inc., Court of Appeals Case No.
Appellant-Plaintiff, 18A-PL-848
Appeal from the Marion Superior
v. Court
The Honorable Heather A. Welch,
Autoform Tool & Judge
Manufacturing, LLC, Trial Court Cause No.
Appellee-Defendant. 49D01-1610-PL-36015
Bailey, Judge.
Court of Appeals of Indiana | Opinion 18A-PL-848 | August 31, 2018 Page 1 of 14
Case Summary
[1] Whitesell Precision Components, Inc. (“Whitesell”) brings this interlocutory
appeal, pursuant to Indiana Appellate Rule 14(A)(5),1 challenging the trial
court’s refusal to dissolve a preliminary injunction compelling Whitesell to
provide automotive component parts to Autoform Tool & Manufacturing, LLC
(“Autoform”), pending resolution of the merits of litigation between the parties.
Whitesell presents the sole issue of whether the trial court abused its discretion
in refusing to dissolve the preliminary injunction issued pursuant to the parties’
agreement. We affirm.
Facts and Procedural History
[2] Whitesell is in the business of manufacturing and distributing engineered,
specialty, and standard components and parts used in various industries,
including in the assembly and manufacture of automobiles. 2 Autoform is in the
business of manufacturing components used in the assembly and manufacture
of automobiles. Autoform uses injector cups supplied by Whitesell to produce
fuel rail assemblies that Autoform sells to Hitachi America, Ltd. (“Hitachi”).
1
Indiana Appellate Rule 14(A)(5) provides: “Appeals from the following interlocutory orders are taken as a
matter of right … Granting or refusing to grant, dissolving, or refusing to dissolve a preliminary injunction[.]”
2
The facts are derived from the trial court’s order of January 5, 2017 granting Autoform a temporary
restraining order.
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Hitachi places fuel injectors into Autoform’s fuel rail assemblies, and the
finished products are installed into automobiles.
[3] Pursuant to direction from Hitachi, Autoform agreed in 2013 to use Whitesell
as its sole source of injector cups. Autoform utilizes a “just-in-time” inventory
system whereby parts are not stockpiled. The quantity of parts ordered at one
time may vary. In October of 2013, Whitesell provided Autoform a per-unit
quoted price of $2.470 for each injector cup, based upon a five-year quantity
estimate. In January of 2014, Autoform requested a price quote for lower-
volume shipments and Whitesell provided a quote of $2.958 for each injector
cup.
[4] On November 17, 2014, Autoform issued its first purchase order to Whitesell.
The purchase order listed the per unit price of $2.470. Whitesell filled the
purchase order. Autoform then issued subsequent purchase orders, each listing
the $2.470 price.
[5] On July 29, 2016, Whitesell issued an invoice to Autoform reflecting the $2.958
price. Whitesell also sought an alleged “payment shortfall” of $343,154.15.
Autoform did not pay the amount demanded and, on September 21, 2016,
Whitesell informed Autoform that shipments of the injector cups would cease
on October 1, 2016. That date was extended as the parties attempted to reach
an agreement. However, on December 22, 2016, Whitesell ceased its
shipments of injector cups to Autoform.
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[6] On December 27, 2016, Autoform filed a motion seeking a temporary
restraining order against Whitesell, and the trial court conducted a hearing on
January 4, 2017. At that hearing, Autoform advised the trial court that
Autoform’s supply of injector cups would likely be exhausted by the next day.
The next day, the trial court issued a temporary restraining order decreeing that
Whitesell was to be restrained from:
Refusing to supply the injector cups to Autoform pursuant to the
terms of Autoform Purchase Orders:
Taking any other action inconsistent with its obligations under
the terms of the Autoform Purchase Orders;
Refusing to allow Autoform to order injector cups pursuant to
the same protocol and terms that it had, including the $2.470 per-
unit price for injector cups;
Charging per-unit price of injector cups sold to Autoform in
fulfillment of Autoform’s Purchase Orders above $2.470; and
Applying and [sic] Terms and Conditions in addition to those
ordered by this Court.
(App. Vol. II, pg. 7).3
3
Autoform was ordered to post a bond of $50,000.00 plus additional amounts reflecting the price difference
of $0.298 per injector cup ordered.
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[7] After some continuances and discovery disputes, the trial court set the matter
for a preliminary injunction hearing. However, the parties reached an
agreement and submitted their stipulations to the trial court.4 On September 27,
2017, the trial court entered an Agreed Order vacating the court date and
converting the temporary restraining order to a preliminary injunction.5 In
relevant part, the Agreed Order provided:
The Court’s January 5, 2017, Temporary Restraining Order shall
remain in effect until the Court enters judgment after the bench
trial, except that Autoform is not required to post bond payments
for its actual requirements of injector cups ordered from
Whitesell through the time the Court enters judgment. By
agreeing to continue the preliminary injunction hearing, no party
waives any rights that it may have including the right to argue
that the contract between the parties has already expired or will
expire between the date of this order and the trial of this matter.
(App. Vol. II, pg. 166.)
[8] Thereafter, a dispute arose concerning the quality of the injector cups supplied
by Whitesell to Autoform. On October 5, 2017, the trial court issued a pre-trial
order providing that Autoform could debit Whitesell’s account for each
4
Black’s Law Dictionary defines “stipulation” as including “a voluntary agreement between opposing parties
concerning some relevant point,” for example, “the plaintiff and defendant entered into a stipulation on the
issue of liability.” (10th ed. 2014 Pg. 1641).
5
A temporary restraining order preserves “the status quo until a litigant’s application for a preliminary or
permanent injunction can be heard.” Blacks’s Law Dictionary (10th Ed. 2014 Pg. 1693).
Court of Appeals of Indiana | Opinion 18A-PL-848 | August 31, 2018 Page 5 of 14
defective injector cup delivered. Whitesell unsuccessfully sought to have the
language of the order modified or to have the order vacated.
[9] On February 12, 2018, Whitesell filed a motion to dissolve the preliminary
injunction. On March 5, 2018, the trial court conducted a hearing on several
pending matters, including the motion to dissolve the preliminary injunction.
No evidence was presented but argument of counsel was heard. On April 16,
2018, the trial court denied Whitesell’s motion. Whitesell appeals.
Discussion and Decision
Standard of Review
[10] We review a trial court’s decision to dissolve or refuse to dissolve a preliminary
injunction for an abuse of discretion. Hannum Wagle & Cline Eng’g, Inc. v.
American Consulting, Inc., 64 N.E.3d 863, 882 (Ind. Ct. App. 2016). A trial court
abuses its discretion when its decision is clearly against the logic and effect of
the facts and circumstances or if the trial court misinterprets the law. Aberdeen
Apts. v. Cary Campbell Realty Alliance, Inc., 820 N.E.2d 158, 163 (Ind. Ct. App.
2005), trans. denied. To the extent that the trial court engaged in fact-finding
with respect to the proper length of the injunction, we accord deference to facts
found. Hannum Wagle, 4 N.E.3d at 882. To the extent that the decision was
based upon contract interpretation, we apply a de novo standard of review. Id.
[11] Here, the preliminary injunction was entered due to the parties’ stipulation.
Generally, a stipulation may not be withdrawn without the consent of both
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parties or for cause. In the Matter of Ce.B., 74 N.E.3d 247, 250 (Ind. Ct. App.
2017). Typical grounds would include fraud, mistake, or undue influence and
do not include disadvantage to a party from the stipulation. Id.
Analysis
[12] At the hearing on Whitesell’s motion to dissolve the injunction, Whitesell
asserted “no evidentiary hearing is required at all,” Tr. at 116, but argued (1)
any emergency had passed because Autoform had adequate time to find an
alternate supplier6 and (2) continuation of the injunction was inequitable
because an imbalance of power had been created by the trial court’s subsequent
order that Autoform could debit the balance owed Whitesell for parts Autoform
considered defective. In denying Whitesell’s motion, the trial court stated in
relevant part:
First, Autoform’s [prior] testimony that it would take at least
twelve months to find an alternative supplier supports the
argument that Autoform would suffer irreparable harm if
Whitesell was allowed to stop shipping parts. The same risk of
harm exists today as it existed in January 2017. If Whitesell
could refuse to ship injector cups, Autoform cannot build its fuel
rail assemblies because there is no readily accessible alternative
source of the specific injector cups needed. Autoform would
have to close its fuel rail assembly line and lay off workers. . . .
To the extent the January 5 TRO restricts remedies which would
6
Whitesell referenced factual finding 26 of the trial court’s January 5, 2017 order, which stated: “Autoform
presented testimony that it would anticipate needing roughly twelve months to find a new source for injector
cups. While searching for a new supplier, Autoform could not carry on producing its product for Hitachi.”
(App. Vol. II, pg. 98.)
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normally be available to Whitesell by statute, such temporary
equitable measures are necessary to allow the parties to conduct
business as the Court addresses the merits of this case, which is a
position Whitesell approved when it entered into a joint
agreement with Autoform to allow the January 5 Order to be
entered as a preliminary injunction on September 27, 2017. . . .
It is because Whitesell has [an] avenue to recover its damages
that the Court finds keeping the January 5 TRO in place to be
proper.
Appealed Order at 7-9.
[13] Whitesell argues that the injunction is now “more extensive in scope than is
reasonably necessary to protect the interests of aggrieved parties,” Appellant’s
Brief at 17 (quoting Felsher v. Univ. of Evansville, 755 N.E.2d 589, 600 (Ind.
2001)). According to Whitesell, it was incumbent upon the trial court to require
Autoform to provide evidence of its current ability to re-source but the trial
court declined to do so and simply relied upon facts that existed in the past.
Whitesell largely ignores the fact that it agreed to the continuation of the
injunction until the resolution of the underlying litigation.
[14] Autoform contends that Whitesell stipulated to the entry of the preliminary
injunction, thus forfeiting its right to appeal the injunction, and that its motion
for dissolution is an attempt to collaterally attack the agreed order. Autoform
directs our attention to Kindred v. Townsend, 4 N.E.3d 793 (Ind. Ct. App. 2014),
in which a panel of this Court dismissed an interlocutory appeal upon
determining that the appellant had forfeited a right to appeal a preliminary
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injunction and then attempted to revive the forfeited right by filing a motion to
dissolve the injunction based on matters known when the preliminary
injunction was issued.
[15] In Kindred, the trial court had granted a preliminary injunction to prevent
damage to disputed property and neither party appealed. Id. at 794. Six
months later, the Kindreds moved to dissolve the preliminary injunction,
claiming that the other party lacked standing. Id. at 795. The trial court denied
the motion to dissolve and the Kindreds appealed. Id. This court
acknowledged that, at first glance, it appeared that the Kindreds were properly
appealing the denial by bringing an appeal as of right pursuant to Appellate
Rule 14(A)(5). Id. However, the Court also considered the appellee’s
contention that the motion to dissolve was “not based on any new facts or
circumstances that had arisen since the trial court’s entry of the preliminary
order.” Id.
[16] We found that the Kindreds had pursued a belated, collateral attack on the trial
court’s initial decision to enter an injunction, explaining:
Appellate Rule 14(A)(5) provides for an interlocutory appeal as
of right from orders denying a motion to dissolve a preliminary
injunction. However, if read broadly, this would permit a party
subject to a preliminary injunction to repeatedly bring motions to
dissolve a preliminary injunction and repeatedly appeal such
denials. Indeed, if we were to read Appellate Rule 14(A)(5) this
broadly, a party who forfeited the right to appeal from the entry
of the preliminary injunction could repeatedly resurrect their
right to appeal by simply filing a motion to dissolve the
injunction. Likewise, a party who forfeited the right to appeal a
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denial of a motion to dissolve a preliminary injunction could
resurrect their appeal by filing a repetitive motion to dissolve the
injunction. This would render the time limitations of Appellate
Rule 14(A) meaningless.
We therefore read Appellate Rule 14(A)(5) to mean that a party
who wishes to challenge the entry of a preliminary injunction
order (or the denial of a request for a preliminary injunction)
must initiate their appeal within thirty days of the trial court’s
order granting or denying the request for a preliminary
injunction. If a party fails to do so, it may not thereafter seek to
dissolve the preliminary injunction based upon grounds that were
known or knowable at the time of the entry of the preliminary
injunction, as this would simply be a belated, collateral attack on
the trial court’s initial decision to enter or deny the injunction.
To hold otherwise would allow limitless appeals based on the
same facts tried and decided to enter or deny a preliminary
injunction. On the other hand, if a party moves to dissolve a
preliminary injunction based upon a change in circumstances
since the entry of the injunction, and the trial court grants or
denies this motion, then the party has the right to appeal the trial
court’s order dissolving or refusing to dissolve the injunction.
Id. at 796.
[17] Whitesell’s claim that it is entitled to dissolution of the preliminary injunction
based upon the passage of sufficient time for re-sourcing is such a collateral
attack. When Whitesell stipulated with Autoform that the temporary
restraining order should be converted to a preliminary injunction, the parties
agreed to its duration, that is, until the litigation was resolved by trial. The
agreed order did not impose a time limit for Autoform to find a new supplier;
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indeed, Autoform was not obligated to re-source its needs.7 Whitesell cannot
now be heard to complain that the trial court abused its discretion with respect
to the proper length of the injunction.
[18] However, when the preliminary injunction was issued, Whitesell did not know
that Autoform would obtain an order specifically permitting debits to
Whitesell’s account for parts Autoform considered defective while Whitesell
was restrained from ceasing shipments. We cannot say that Whitesell forfeited
any right to argue before the trial court that this so changed the respective
obligations that the continuation of the injunction was inequitable. In
advancing its position, Whitesell did not present testimony or evidentiary
exhibits. On appeal, Whitesell alternately claims that new evidence was
unnecessary or that Autoform should have produced evidence. 8 Nonetheless, it
is apparent from the record of pre-trial orders that there had been a change in
circumstances relative to the parties’ business transactions. Whitesell asked the
trial court to consider the necessity for continuing the injunction given that, in
7
The efforts made by Autoform to re-source, if any, are not of record. However, Autoform has requested, in
a related motion, to be permitted to stop using Whitesell as its supplier of injector cups.
8
Whitesell asserts that it had an initial burden to show a change in circumstances but then Autoform needed
to produce evidence to justify continuation of the injunction. In making this argument as to burden of proof,
Whitesell does not acknowledge that it also stipulated that the temporary restraining order should be
converted to a preliminary injunction. The burden of producing evidence was upon Whitesell, which sought
to dissolve an agreed order. In re Ce.B., 74 N.E.3d at 247.
Whitesell also claims, in the Reply Brief, that the “only question” remaining before this Court is whether the
“key findings” of the appealed order lacked evidentiary support. Reply Brief at 20. But Whitesell fails to
explain how, if findings were set aside as clearly erroneous because they lacked evidentiary support, this
entitles Whitesell to dissolution of the injunction.
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Whitesell’s view, there was “an imbalance of power” 9 and the “emergency was
long over.” (Tr. at 105, 108.)
[19] The trial court’s order reflects its consideration of the threatened harm to each
party under the changed circumstances, including allowing Autoform to debit
Whitesell’s account. The trial court stated in relevant part:
Whitesell alleges that Autoform is deducting for parts that it
considers defective but have not been shown to be defective
pursuant to the standards of the agreement between them. This
leaves Whitesell being forced to accept an even lower amount of
money for shipments of parts due to Autoform’s unilateral
rejection of potentially good parts.
Whitesell and Autoform disagree over the extent to whose Terms
& Conditions should serve as the standard to determine whether
a part is defective. The issues over part quality are currently
pending on summary judgment. Until the Court can make
determinations regarding whose standards apply to part quality,
the Court must balance the harms of allowing Autoform to debit
for parts it subjectively believes are defective verses repealing the
January 5 TRO.
If the Court allows the current arrangement to continue, there is
a risk that Whitesell will be erroneously denied revenue if
Autoform is applying an overly-stringent standard. Whitesell has
stated that it has suffered hundreds of thousands of dollars in
damages just to this point. On the other hand, if Autoform is not
9
Autoform retained a right, under the UCC, to reject defective parts, although it might ultimately have to
pay damages. See Ind. Code § 26-1-2-601. Whitesell argued that it was barred by the injunction from
exercising its right to suspend performance or cancel the contract due to Autoform’s wrongful rejection of
parts and failure to make payment. See I.C. § 26-1-2-703.
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comfortable using Whitesell parts that Autoform believes do not
conform with required specifications, Autoform could have a fuel
rail shortage and be unable to fill its orders for Hitachi. Failure
to satisfy orders would have an impact on its subsequent dealings
with Hitachi, and Autoform could lose that business.
Again, the designations presented show that the balance of harms
weighs in favor of Autoform because of the irreparable harm that
could befall Autoform if it does not receive enough conforming
parts. The Court understands that Whitesell may feel aggrieved
by this stance as Autoform’s determination of part quality
governs for the purposes of determining the quantity of parts
required under the TRO; however, Whitesell has the opportunity
to seek any damages it may be incurring during this period
should the Court determine that Autoform’s assessment is
incorrect on summary judgment.
Appealed Order at 8-9.
[20] In short, the trial court found that Whitesell could be adequately compensated
by money damages if Autoform had acted wrongfully but, in the event
Whitesell had acted wrongfully, Autoform was at risk of suffering irreparable
harm – that which could not be adequately addressed by money damages. The
trial court’s decision is not clearly contrary to the facts and circumstances before
it.
Conclusion
[21] Whitesell has demonstrated no abuse of discretion in the trial court’s denial of
the motion to dissolve the preliminary injunction.
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[22] Affirmed.
Mathias, J., and Bradford, J., concur.
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