Otter Creek Trading Company, Inc., and Daniel Pohle v. PCM Enviro PTY, LTD

FILED
Jun 07 2016, 8:26 am
CLERK
ATTORNEY FOR APPELLANTS ATTORNEY FOR APPELLEE Indiana Supreme Court
Court of Appeals
and Tax Court
Leanna Weissmann Greg S. Morin
Lawrenceburg, Indiana Montgomery, Elsner & Pardieck, LLP
Seymour, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Otter Creek Trading Company, June 7, 2016
Inc., and Daniel Pohle, Court of Appeals Case No.
40A01-1509-MI-1432
Appellants-Defendants,
Appeal from the Jennings Superior
v. Court
The Honorable Matthew D. Bailey,
Special Judge
PCM Enviro PTY, LTD,
Cause No. 40D01-1410-MI-49
Appellee-Plaintiff.
Bradford, Judge.
Case Summary
[1] Appellant-Defendant Otter Creek Trading Company is operated by Appellant-
Defendant Daniel Pohle (collectively, “Defendants”) and manufactures and
sells lead smelters. Appellee-Plaintiff PCM Enviro PTY, LTD (“PCM”), is an
Australian company owned and operated by Craig Mitchell and his brother
Paul that recycles lead shot collected from shooting clubs. In 2014, Craig, in
his capacity as operator of PCM, arranged to purchase a smelter from Otter
Creek and paid for it in full. Defendants, however, did not ship the smelter or
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another part (purchased separately and called a Broekema belt) that Defendants
had offered to ship along with the smelter and which the defendant Pohle had
retrieved from a shipping company in Edinburgh, Indiana.
[2] PCM sued Defendants for breach of contract and for conversion of the
Broekema belt. Pohle, pro se, filed a letter with the trial court, alleging that
Defendants had no signed contract with PCM and that he had never driven to
Minnesota to collect the Broekema belt. After the trial court advised
Defendants to secure legal representation, they did for a time but filed no
further response to PCM’s complaint. Eventually, the trial court entered
default judgment against Defendants and held a hearing on damages. After the
hearing, the trial court ordered a total of approximately $147,000.00 in
damages, which included the price of the smelter, lost profits, the value of the
Broekema belt, and punitive damages for conversion. Defendants appeal,
contending that the trial court erred in entering default judgment, in denying
their motions to correct error and for relief from judgment, and in calculating
damages. Finding no error, we affirm.
Facts and Procedural History
[3] Otter Creek is an Indiana corporation operated by Pohle which manufactures
and sells lead smelters to customers outside the United States. PCM is an
Australian company owned and operated by Craig and his brother Paul that
recycles lead shot collected from shooting clubs. In July of 2014, Craig, in his
capacity as operator of PCM, arranged to purchase a smelter from Otter Creek
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and paid for it in full by July 31, 2014. Otter Creek, however, did not ship the
smelter. At some point before deciding not to ship the smelter, Pohle told PCM
that there would be room in the smelter packaging and invited PCM to ship
other items to Otter Creek so that they could be shipped with the smelter. PCM
desired to ship a part called a Broekema belt (purchased from a company in
Minnesota) along with the smelter, and, to that end, Pohle retrieved PCM’s
Broekema belt from the freight company in Edinburgh, Indiana. At one point,
Pohle refused to release the Broekema belt to a friend of Craig’s who had driven
from Wisconsin.
[4] On October 17, 2014, PCM filed its complaint against Defendants, alleging that
they had breached the contract for the purchase of the smelter and that they had
converted the Broekema belt:
COMPLAINT
Plaintiff, [PCM] complains of the Defendants … and alleges and
says:
I. PARTIES
1. [PCM] is now, and at all times mentioned in this
complaint was, a corporation duly organized and existing
under the laws of Australia, with their principal place of
business located in Melbourne, Victoria, Australia.
2. [Pohle] is currently a resident of the County of Jennings,
Indiana, and is president of [Otter Creek].
3. [Otter Creek] is now, and at all times mentioned in this
complaint was, a corporation duly organized and existing
under the laws of State of Indiana, with their principal
place of business located in Jennings County, Indiana, and
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is engaged in and is transacting business as a company in
Jennings County, Indiana.
II. COUNT I
BREACH OF CONTRACT
4. [Otter Creek], by its president, [Pohle], offered to
manufacture and provide a three (3) ton gas fired lead
smelter to PCM.
5. [PCM] accepted Defendant’s offer on or about July 5,
2014, to have Defendant manufacture a three (3) ton gas
fired lead smelter.
6. Plaintiff was to pay Defendant a total of $15,000.00 per
the terms of the contract with half the amount due initially
and the remaining half due upon completion of the
smelter.
7. Plaintiff complied with the terms of the contract and made
both payments representing $15,000.00 in total to Otter
Creek via wire transfer.
8. On August 7, 2014, [Otter Creek] sent a letter signed by
Pohle, as president, to PCM stating the three (3) ton gas
fired lead smelter was completed, tested and that they were
waiting on F.O.B. shipping instructions from PCM.
9. The August 7, 2014 letter also stated the $15,000.00 owed
by PCM had been paid.
10. [Defendants] have refused to release or ship the smelter
since this time even after shipping instructions were
supplied and repeated demands by PCM.
11. Pohle falsely claims that PCM and [Craig] intend to steal
his intellectual property by purchasing the smelter and
copying it.
12. [Defendants] have refused to return the $15,000.00 they
received to perform this contract to PCM.
13. [Defendants] have breached the contract with PCM by
their failure to perform their obligations under the
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contract, specifically, releasing and delivering the smelter
to PCM.
14. PCM has been materially damaged as a result of
[Defendants’] intentional breach of contract.
III. COUNT II
CONVERSION
15. The allegations of rhetorical paragraphs four through
fourteen are incorporated herein by reference.
16. PCM had contracted with a third party, Lead Us Reclaim,
LLC, of Augusta, Wisconsin, to purchase a Broekema
USA belt.
17. [Defendants] had agreed to ship the belt with the above-
mentioned smelter to PCM.
18. On August 5, 2014, Pohle drove to Broekema USA and
told them that he was picking up a belt to package with the
lead smelter that was to be shipped to PCM.
19. The Broekema belt was released to Pohle and he signed a
Conway Freight delivery receipt for the belt.
20. PCM had arranged for shipping for the lead smelter and
belt on three separate occasions but Pohle refused to
release the equipment and complete his performance of the
contract.
21. The belt in Pohle’s possession has never belonged to him
and he has refused to return or release the belt after
multiple demands by PCM and [Craig].
22. Pohle has intentionally converted the belt he was to ship
with the smelter to PCM by keeping the belt for his own
use and knowing he never ha[d] permission from PCM to
retain the belt.
23. Plaintiff has suffered significant loss and damage due to
the conversion of Plaintiff’s Broekema belt and money by
[Defendants].
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24. Defendants through conversion and theft have deprived
PCM of the entire value of the belt and equipment along
with all profits past and future.
WHEREFORE, Plaintiff, PCM, demands judgment against the
Defendants, in an amount adequate to fully and fairly
compensate him for his damages, prejudgment interest, punitive
and treble damages, attorney fees, the cost of this action, and for
all other appropriate relief.
Appellant’s App. pp. 23-25.
[5] On November 10, 2014, Defendants filed a letter with the trial court, which
stated, in part,
a) At no time has Otter Creek Trading Co., Inc. nor Daniel
L. Pohle ever entered into any signed agreement with any
Corporation, Company, Resident or Citizen of the
Country of Australia.
b) I, Daniel L. Pohle, did not travel to Minnesota where
Broekema USA is located in reference to any belt.
Appellant’s App. p. 26.
[6] On November 12, 2014, Defendants filed a discovery request with the trial
court requesting PCM’s articles of incorporation and Craig’s international
travel records, proof of residence, and address. On November 18, 2014, the
trial court urged Defendants to seek the assistance of counsel. On November
26, 2014, Defendants filed a letter thanking the trial court and informing it that
they would be retaining counsel and attempting to have the matter transferred
to federal court. On December 18, 2014, counsel for Defendants filed an
appearance and moved for a forty-five day extension of time within which to
answer PCM’s complaint, which motion the trial court granted. On December
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29, 2014, counsel for Defendants withdrew his appearance. Defendants filed
no further response to PCM’s complaint within the forty-five-day extension
period.
[7] On February 5, 2015, PCM moved for default judgment on the basis that
Defendants had not filed an answer to its complaint. That day, the trial court
entered default judgment in favor of PCM and ordered a hearing for the
purpose of setting damages. On May 22, 2015, the trial court held a hearing on
the issue of damages. On June 17, 2015, the trial court issued its judgment for
damages, finding that PCM had suffered damages of $15,000 for money
retained, $127,256.50 for lost profits, $1281.30 for money spent on the
converted Broekema belt, and $3000.00 in punitive damages, totaling
$146,537.80. That day, the trial court also denied Defendants’ motion to
dismiss PCM’s complaint. On July 17, 2015, Defendants filed a motion to
correct error and for relief from judgment, which the trial court denied.
[8] Defendants argue on appeal that (1) the trial court erred in entering default
judgment against them because they adequately answered PCM’s complaint,
(2) the trial court abused its discretion in denying their motion to correct error
and for relief from judgment, and (3) the trial court abused its discretion in
determining PCM’s damages. PCM responds that (1) the trial court properly
entered default judgment in its favor because Defendants filed multiple letters
with the trial court but never admitted or denied any of PCM’s allegations, (2)
the trial court did not abuse its discretion in denying Defendants’ motion to
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correct error and for relief from judgment, and (3) the trial court properly
awarded damages for lost profits to PCM.
Discussion and Decision
I. Whether the Trial Court Abused its Discretion in
Entering Default Judgment in Favor of PCM
[9] Indiana Rule of Trial Procedure 8(B) provides, in part, that “[a] responsive
pleading shall state in short and plain terms the pleader’s defenses to each claim
asserted and shall admit or controvert the averments set forth in the preceding
pleading.” Trial Rule 8(D) provides, in part, that “[a]verments in a pleading to
which a responsive pleading is required, except those pertaining to amount of
damages, are admitted when not denied in the responsive pleading.” “When a
party against whom a judgment for affirmative relief is sought has failed to
plead or otherwise comply with these rules and that fact is made to appear by
affidavit or otherwise, the party may be defaulted by the court.” Trial R. 55(A).
[10] “A judgment by default which has been entered may be set aside by the court
for the grounds and in accordance with the provisions of Rule 60(B).” Trial R.
55(C).
The trial court’s resolution of these questions, on both entering
and setting aside a default judgment, is a matter of discretion,
and we will reverse a ruling on these questions only for an abuse
of discretion. Taco Bell Corp. v. United Farm Bureau Mut. Ins. Co.
(1991), Ind. App., 567 N.E.2d 163, 165, trans. denied; [Green v.
Karol, 166 Ind. App. 467, 473, 344 N.E.2d 106, 110.] That is, we
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will reverse only “if the trial court’s decision is clearly against the
logic and effect of the facts and circumstances before the court, of
the reasonable, probable, and actual deductions to be drawn
therefrom.” Myers v. Myers (1990), Ind., 560 N.E.2d 39, 42.
State, Dep’t of Nat. Res. v. Van Keppel, 583 N.E.2d 161, 163 (Ind. Ct. App. 1991),
trans. denied.
A. Count I
[11] In Count I, PCM alleges that Defendants entered into a contract with PCM to
provide it a lead smelter in exchange for $15,000.00 and accepted payment, but
never delivered the smelter or returned payment. Defendants’ entire response
to these allegations was: “At no time has Otter Creek Trading Co., Inc. nor
Daniel L. Pohle ever entered into any signed agreement with any Corporation,
Company, Resident or Citizen of the Country of Australia.” Appellant’s App.
p. 26. Because this response neither confirms nor denies any of PCM’s specific
allegations, they are deemed admitted pursuant to Trial Rule 8(D). Moreover,
the response does not in any way directly respond to PCM’s contract claim, as
PCM did not allege that it had a signed contract with Defendants. Simply put,
even if we assume that Defendants have not ever entered into a signed
agreement with PCM or any other Australian company, that would not help
Defendants in this case because it does not represent a valid defense to PCM’s
contract claim. Although, in general, a valid contract for the sale of goods for
more than $500.00 must be in writing and signed by the party against whom
enforcement is sought, a contract that does not meet these requirements is
enforceable “with respect to goods for which payment has been made and
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accepted or which have been received and accepted[.]” Ind. Code §§ 26-1-2-
201(a), -201(c). The trial court did not abuse its discretion in entering default
judgment in favor of PCM on Count I.
[12] We are cognizant that Indiana has adopted the principles of notice pleading:
“All pleadings shall be so construed as to do substantial justice, lead to
disposition on the merits, and avoid litigation of procedural points.” Trial R.
8(f). That said, the defects in Defendants’ answer to PCM’s contract claim
were not merely of form; the content of the answer simply did not address any
of PCM’s actual allegations. Our research has uncovered no Indiana case
where a similarly non-responsive answer was deemed adequate under Trial
Rule 8(b), and, while recent cases directly on point cannot be found, our
conclusion is consistent with binding Indiana authority.
[13] In the 1895 case of Moore v. Morris, 142 Ind. 354, 41 N.E. 796 (Ind. 1895), the
appellees sued the appellants for fraud in the procurement of deeds from one of
the appellees to certain lands in Hamilton County when that appellee was
allegedly of unsound mind. Id. at 354, 41 N.E. at 796. Appellants’ response
was based chiefly on the allegation that appellants were residents of Marion
County and could not be sued in Hamilton County on a merely personal action.
Id. The Indiana Supreme Court found this response to be inadequate, as it did
not foreclose the possibility that appellants were Hamilton County residents
when the action was begun. Id. Put another way, the response in Moore did not
directly respond to the allegations in the complaint and therefore did not
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necessarily provide a defense to the complaint, even if the averment were
assumed to be true.
[14] In Wilson v. Evansville & Cleveland Railroad Co., 9 Ind. 510 (1857), a suit upon a
stock subscription, the complaint alleged that a Willard Carpenter had made the
stock subscription on behalf of the defendant, who later ratified it. Id. at 510.
The defendant answered, denying that he had made any stock subscription. Id.
The Indiana Supreme Court concluded that the answer was inadequate because
it was non-responsive:
In this case, however, it is plain that the answer does not meet
the allegations in the complaint. The latter avers that Willard
Carpenter subscribed, and the defendant afterwards ratified. The
former asserts that the defendant did not subscribe. It is true, the
legal effect of the ratification, if a valid one, would be to make
the defendant liable as a subscriber; but that liability, strictly
speaking, would arise from the ratification, not the making of a
subscription. The answer should have directly met the
allegations in the complaint. It impliedly admits them. It is a
kind of a negative pregnant.
Id. at 511. We see no way to meaningfully distinguish the instant case from the
binding precedent of Moore and Wilson. In failing to directly meet the
allegations in Count I, Defendants have impliedly admitted them.
B. Count II
[15] In Count II, PCM alleges that Defendants took possession of a Broekema belt
that it had purchased, retained possession without PCM’s permission, and have
refused to return the Broekema belt. Defendant Pohle’s response was “I,
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Daniel L. Pohle, did not travel to Minnesota where Broekema USA is located
in reference to any belt.” Appellant’s App. p. 26. Again, this response neither
confirms nor denies any of PCM’s allegations, which are therefore deemed
admitted. At most, Pohle denies that he traveled to Minnesota to collect the
Broekema belt, something that PCM did not specifically allege. In any event,
Defendants’ denial is hardly material, as the place where Pohle took possession
of the Broekema belt is not an element of conversion. Defendants do not deny
that they took possession of the Broekema belt or that they still have it. As with
PCM’s first claim, because Defendants’ response did not directly meet PCM’s
allegations, Defendants have impliedly admitted them. The trial court did not
abuse its discretion in entering default judgment in favor of PCM.
II. Whether the Trial Court Abused its Discretion in
Denying Defendants’ Motions to Correct Error and
Motion for Relief From Judgment
[16] “We review a denial of a request for new trial presented by a Trial Rule 59
motion to correct error or a Rule 60(B) motion for relief from judgment for
abuse of discretion.” Speedway SuperAmerica, LLC v. Holmes, 885 N.E.2d 1265,
1270 (Ind. 2008).
A trial court has abused its discretion only if its decision is clearly
against the logic and effect of the facts and circumstances before
the court or the reasonable inferences therefrom. The trial
court’s decision comes to us cloaked in a presumption of
correctness, and the appellant has the burden of proving that the
trial court abused its discretion. In making our determination,
we may neither reweigh the evidence nor judge the credibility of
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witnesses. Instead, we look at the record to determine if: “(a)
the trial court abused its judicial discretion; (b) a flagrant injustice
has been done to the appellant; or (c) a very strong case for relief
from the trial court’s [order] … has been made by the appellant.”
Volunteers of Am. v. Premier Auto Acceptance Corp., 755 N.E.2d 656, 658 (Ind. Ct.
App. 2001) (citations omitted).
A. Motion to Correct Error
[17] Most of Defendants’ specific arguments in this section boil down to claims that
they are entitled to relief based on the following, which Defendants seem to
characterize as claims of newly-discovered evidence: PCM did not legally exist
when it arranged to purchase the smelter from Defendants, PCM did not follow
Indiana law when filing its complaint against Defendants, and Defendants did
not ship the smelter to PCM due to Craig’s failure to adequately verify his
identity.
“Motions predicated upon newly discovered material evidence
are viewed with disfavor.” Kimmel v. State (1981), 275 Ind. 575,
418 N.E.2d 1152, 1157. Whether to grant a new trial on the
grounds of newly discovered evidence is within the discretion of
the trial court, and, on appeal from a denial of the motion, we
reverse only if the trial court could not reasonably have reached a
conclusion that, upon retrial, a different result was not probable.
Id.
Laudig v. Marion Cty. Bd. of Voters Registration, 585 N.E.2d 700, 712 (Ind. Ct.
App. 1992), trans. denied.
[18] In order to obtain relief on the basis of allegedly newly-discovered evidence,
Defendants would have to establish that: (1) the evidence has been discovered
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since the default; (2) it is material and relevant; (3) it is not cumulative; (4) it is
not merely impeaching; (5) it is not privileged or incompetent; (6) due diligence
was used to discover it in time for trial; (7) the evidence is worthy of credit; (8)
it can be produced on a retrial of the case; and (9) it will probably produce a
different result. See Wiles v. State, 437 N.E.2d 35, 39 (Ind. 1982).
[19] At the very least, Defendants do not claim, much less establish, that evidence
related to the three specific claims they make in this section was discovered
following the entry of default judgment against them on February 5, 2015.
Defendants do not claim that they were unaware of the facts underlying their
alleged concerns about PCM’s legal capacity to sue them in an Indiana court
before default judgment was entered. As for alleged concerns about the
sufficiency of Craig’s identification, these surfaced soon after PCM made its
final payment on the smelter according to Pohle’s own testimony at the
damages hearing. (Tr. 95-97).
[20] Moreover, Defendants have shown no likelihood of a different result were they
to obtain a reversal of the trial court’s default judgment. Defendants’ first
argument is based on the fact that PCM Enviro PTY LTD was not registered as
a proprietary Australian company until July 17, 2014, which is after PCM
agreed to purchase the smelter from Defendants. (Plaintiff’s Ex. 1). Although
Defendants suggest that this somehow undermines the validity of their contract
with PCM, we conclude that they have failed to establish that it does. PCM
Enviro was registered as a business name on January 3, 2013, as an entity being
held by the Treelawney Development Trust, which entity Craig testified he and
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Paul “turned … into a corporation” on July 17, 2014. Tr. p. 10. Contrary to
Defendants’ claims, the evidence seems to establish, at most, that the PCM
Enviro that contracted with Defendants was a predecessor in interest to the
PCM Enviro that sued them.
[21] Defendants also contend that PCM failed to follow Indiana law in pursuing its
lawsuit. Defendants rely on Indiana Code section 23-1-49-2(a), which provides
that “[a] foreign corporation transacting business in Indiana without a
certificate of authority may not maintain a proceeding in any court in Indiana
until it obtains a certificate of authority.” Subsection (c) of the same statute,
however, provides that
[a] court may stay a proceeding commenced by a foreign
corporation, its successor, or assignee until it determines whether
the foreign corporation or its successor requires a certificate of
authority. If it so determines, the court may further stay the
proceeding until the foreign corporation or its successor obtains
the certificate.
[22] While PCM did not originally have a certificate of authority, it obtained one on
May 21, 2015. Plaintiff’s Ex. 1. In any event, as Indiana Code section 23-1-49-
2(c) makes clear, PCM’s failure to obtain a certificate of authority had no effect
on the validity of its lawsuit nor did it have any effect on its outcome. The only
remedy Defendant would ever have been entitled to was a stay while PCM
obtained a certificate of authority, which is certainly not a different result.
[23] As for Defendants claim that they did not ship the smelter or Broekema belt
because Craig failed to adequately identify himself, we cannot say that
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Defendants have established that this argument would likely produce a different
result either. There is evidence that Craig and Paul went to some lengths to
comply with Pohle’s request to have Craig’s passport “certified” by the United
States Embassy in Australia and/or the Australian Government. When the
requested information was sent to Pohle, he still did not ship the smelter to
PCM. In other words, there is evidence in the record that Craig took
reasonable measures to identify himself to no avail. Moreover, there is also
evidence that Pohle’s request for identification was a mere pretext, his true
motivation for refusing to ship the smelter being fear of counterfeiting. Under
the circumstances, we cannot say that raising the identification issue would
have been likely to produce a different result. The trial court did not abuse its
discretion in denying Defendants’ motion to correct error.
B. Motion for Relief From Judgment
[24] Trial Rule 60(B) provides, in part, that “[o]n motion and upon such terms as are
just the court may relieve a party or his legal representative from a judgment,
including a judgment by default, for the following reasons: (1) mistake,
surprise, or excusable neglect[.]” “A motion for relief from a judgment under
T.R. 60(B) is addressed to the equitable discretion of the trial court.” Minnick v.
Minnick, 663 N.E.2d 1226, 1228 (Ind. Ct. App. 1996).
We review the grant or denial of … Trial Rule 60(B) motions for
relief from judgment under an abuse of discretion standard.
[Holmes, 885 N.E.2d at 1270]; Outback Steakhouse of Florida v.
Markley, 856 N.E.2d 65, 72 (Ind. 2006). On appeal, we will not
find an abuse of discretion unless the trial court’s decision is
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clearly against the logic and effect of the facts and circumstances
before it or is contrary to law. Miller v. Moore, 696 N.E.2d 888,
889 (Ind. Ct. App. 1998).
Cleveland v. Clarian Health Partners, Inc., 976 N.E.2d 748, 755 (Ind. Ct. App.
2012), trans. denied.
The burden is on the movant to demonstrate that relief under
T.R. 60(B) is both necessary and just. Fairrow v. Fairrow, 559
N.E.2d 597, 599 (Ind. 1990). Relief under T.R. 60(B) also
requires that the movant make a prima facie showing of a
meritorious defense for [reason (1)]. Smith v. Johnson, 711 N.E.2d
1259, 1265 (Ind. 1999). A meritorious defense refers to
“evidence that, if credited, demonstrates that a different result
would be reached if the case were retried on the merits and that it
is unjust to allow the default to stand.” Id.
In re Rueth Dev. Co., 976 N.E.2d 42, 51 (Ind. Ct. App. 2012), trans. denied.
[25] Much of what we said with regard to Defendants’ argument that the trial court
abused its discretion in denying its motion to correct error is relevant here.
Specifically, our conclusions about the three distinct defenses raised in that
argument are present here; namely, that Defendants have failed to establish that
any of them, if raised on retrial, would likely lead to a different result.
[26] Defendants, however, also argue that the overall equities of the case favor them
to the extent that reversal is warranted. We disagree with this assessment of the
record. Aside from the potential defenses mentioned above, which we have
already determined would be unlikely to produce a different result, Defendants
also suggest that they were misled about the case, implying that they were
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unaware default judgment had been entered against them on February 5, 2015,
until the hearing on damages on May 22, 2015.
[27] While Defendants may have been mistaken regarding the status of the case, we
cannot conclude that they were wrongfully misled. The chronological case
summary (“CCS”) contains several entries indicating both that default
judgment had been entered; the May 22, 2015, hearing was to determine
damages only; and Defendants were notified of all of the above. The CCS
indicates that default judgment was served on Pohle on February 11, 2015, and
the default judgment order scheduled a hearing on damages only. Defendants
do not claim that they were not served with the default judgment. Moreover,
although Defendants claim that their counsel did not know until just before the
damages hearing that he would be defending against a claim of over
$145,000.00, there does not seem to be any indication of such ignorance or
confusion in the record.
[28] Other circumstances weigh against Defendants. First and foremost, once
Defendants determined that they would not ship the smelter or Broekema belt
to PCM, they retained both PCM’s money and the belt. Even assuming that
Defendants had a legitimate reason to cancel the sale, they do not explain why
they did not simply refund PCM’s payment. Pohle also seems to be somewhat
less than forthright about his reason for refusing to ship the smelter to PCM,
blaming the whole incident on Craig’s alleged failure to establish his identity.
As we have mentioned, Pohle actually seemed motivated by his fear—of which
there is no evidence—that Craig intended to appropriate his intellectual
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property. Defendants have failed to establish that relief from the default
judgment entered against them is necessary and just.
III. Damages
[29] Defendants contend that the trial court abused its discretion in computing
damages, arguing that the amount awarded for lost profits was based on
speculation and in awarding punitive damages related to their conversion of the
Broekema belt.
A. Lost Profits
It is axiomatic that a party injured by a breach of contract may
recover the benefit of its bargain but is limited in its recovery to
the loss actually suffered. Fowler v. Campbell, 612 N.E.2d 596,
603 (Ind. Ct. App. 1993). A party injured by a breach of contract
may not be placed in a better position than it would have enjoyed
if the breach had not occurred. Id. A damage award must be
based upon some fairly defined standard, such as cost of repair,
market value, established experience, rental value, loss of use,
loss of profits, or direct inference from known circumstances. Id.
The damages claimed also must be the natural, foreseeable, and
proximate consequence of the breach. Id. The foreseeability of
damages is based upon facts known at the time of entry into the
contract, not facts existing or known at the time of the breach.
Berkel & Co. Contractors, Inc. v. Palm & Associates, Inc., 814 N.E.2d
649, 658-59 (Ind. Ct. App. 2004).
A party injured by a breach of contract may recover
consequential damages from the breaching party. Rockford Mut.
Ins. Co. v. Pirtle, 911 N.E.2d 60, 67 (Ind. Ct. App. 2009), trans.
denied. “Such consequential damages may include lost profits,
providing the evidence is sufficient to allow the trier of fact to
estimate the amount with a reasonable degree of certainty and
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exactness.” Clark’s Pork Farms v. Sand Livestock Systems, Inc., 563
N.E.2d 1292, 1298 (Ind. Ct. App. 1990). Consequential damages
may be awarded if the non-breaching party’s loss flows naturally
and probably from the breach and was contemplated by the
parties when the contract was made. Rockford, 911 N.E.2d at 67.
The party seeking such damages bears the burden of proving by a
preponderance of the evidence that the breach was the cause in
fact of its loss. Id. “This generally limits consequential damages
to reasonably foreseeable economic losses.” Id.
L.H. Controls, Inc. v. Custom Conveyor, Inc., 974 N.E.2d 1031, 1043 (Ind. Ct. App.
2012).
When the specific issue on review relates to a question of
inadequate or excessive damages, we will not reverse a damage
award if it is within the scope of the evidence before the trial
court, and we neither reweigh the evidence nor judge the
credibility of the witnesses. Randles v. Ind. Patient’s Comp. Fund,
860 N.E.2d 1212, 1230 (Ind. Ct. App. 2007), trans. denied.
Ponziano Const. Servs. Inc. v. Quadri Enterprises, LLC, 980 N.E.2d 867, 873 (Ind.
Ct. App. 2012).
[30] Craig testified that he communicated the importance of receiving the smelter
from Pohle, specifically, that PCM had just “done a deal” with a company
named Champion Ammunitions to provide lead ingots. Tr. p. 40. The contract
with Champion provided, inter alia, that PCM was to be paid a price tied to the
price of lead listed on the London Metal Exchange (“LME”) at the time. Craig
also testified that Defendants’ failure to deliver the smelter rendered them
unable to fulfill their contract with Champion. Finally, Craig introduced
evidence that, based on the LME price of lead at relevant times, the amounts of
lead that PCM anticipated delivering but did not, and PCM’s costs, PCM’s lost
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profits were $127,256.50. Defendants argue that Craig did not mitigate PCM’s
damages by failing to identify himself sufficiently and PCM’s valuation of the
lead it would have sold to Champion was artificially high. As we have
mentioned, Craig made reasonable efforts to comply with Defendants’ request
to identify himself. Moreover, Defendants’ argument regarding valuation
amounts to an invitation to reweigh the evidence heard and evaluated by the
trial court, which we will not do. Defendants have failed to establish that the
trial court abused its discretion in awarding damages for lost profits.
B. Punitive Damages
[31] Defendants claim that insufficient evidence supports the trial court’s award of
$3000.00 in punitive damages to PCM for Defendants’ conversion of the
Broekema belt.
The standard for determining if punitive damages were properly
awarded is whether, considering only the probative evidence and
the reasonable inferences supporting the judgment, a reasonable
trier of fact could find by clear and convincing evidence that the
defendant acted with malice, fraud, gross negligence or
oppressiveness which was not the result of a mistake of fact or
law, honest error of judgment, overzealousness, mere negligence,
or other human failing. Punitive damages may also be awarded
upon a showing of willful and wanton misconduct.
Punitive damages are those designed to punish the wrongdoer
and to discourage him and others from similar conduct in the
future. Because they are awarded in addition to damages that
compensate for the specific injury, the injured party has already
been awarded all that he is entitled to as a matter of law.
Therefore, the sole issue is whether the defendant’s conduct was
so obdurate that he should be punished for the benefit of the
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general public. Punitive damages are awarded upon a showing
of intentional conduct, which focuses on the defendant’s state of
mind.
INS Investigations Bureau, Inc. v. Lee, 784 N.E.2d 566, 582-83 (Ind. Ct. App.
2003) (citations omitted), trans. denied.
[32] Even if one takes Pohle’s professions of concern about Craig’s identity at face
value, this has nothing to do with the Broekema belt. Defendants took
possession of the Broekema belt and apparently kept it instead of allowing PCM
to arrange alternate shipping to Australia. Indeed, Pohle refused to release the
belt to Bill Moss, a friend of Craig’s that drove from Wisconsin on Craig’s
behalf to retrieve it. Defendants had no legitimate interest in the Broekema belt
which would justify refusing to release it to Moss. Given Pohle’s belief that
Craig was attempting to “clone” his smelter, tr. p. 97, the trial court could
reasonably infer that he harbored some malice toward Craig and PCM, which
motived his conversion of the Broekema belt. The record contains sufficient
evidence to sustain the trial court’s award of $3000.00 in punitive damages.
Conclusion
[33] We conclude that the trial court did not abuse its discretion in entering default
judgment in favor of PCM or in denying Defendants’ motions to correct error
and for relief from judgment. We further conclude that the trial court did not
abuse its discretion in determining PCM’s compensatory damages from lost
profit or punitive damages for Defendants’ conversion of the Broekema belt.
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The judgment of the trial court is affirmed.
Bailey, J., and Altice, J., concur.
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