The Care Group Heart Hospital v. Roderick J. Sawyer, M.D.

FILED
Jun 22 2017, 9:03 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE
John R. Maley Kevin W. Betz
Barnes & Thornburg LLP Sandra L. Blevins
Indianapolis, Indiana Benjamin C. Ellis
Betz + Blevins
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
The Care Group Heart Hospital, June 22, 2017
Appellant-Defendant, Court of Appeals Case No.
49A05-1603-PL-580
v. Appeal from the Marion Superior
Court
Roderick J. Sawyer, M.D., The Honorable David J. Dreyer,
Appellee-Plaintiff. Judge
Trial Court Cause Nos.
49D10-1208-PL-32513
49D10-1307-PL-28479
Brown, Judge.
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[1] The Care Group Heart Hospital (the “Hospital”) appeals from an order denying
its motion to dismiss issued on January 28, 2013, a final judgment entered on
February 18, 2016, and an order denying its motion to correct errors issued the
same day, in favor of Roderick J. Sawyer, M.D.1 The Hospital raises one issue
which we revise and restate as whether the trial court erred in denying the
Hospital’s motion to dismiss and in entering judgment in favor of Dr. Sawyer.
Additionally, Dr. Sawyer presents the following issues on cross-appeal:
I. Whether the court erred in granting partial summary judgment in
favor of the Hospital; and
II. Whether the court abused its discretion in awarding attorney fees to
Dr. Sawyer as a result of the Hospital’s misconduct during discovery.
We affirm in part, reverse in part, and remand.2
Facts and Procedural History
[2] Dr. Sawyer began practicing as a cardiologist in 1996 and became a
partner/shareholder of The Care Group (“TCG”) in 1999. In 2003, he became
a member of the Hospital when it was founded by physicians of TCG and St.
Vincent Health. On July 1, 2010, St. Vincent Health purchased the assets of
TCG, resulting in the formation of the St. Vincent Medical Group, Inc.
(“SVMG”). At that point, Dr. Sawyer became an employee of SVMG. On
1
Also named as defendants below are the St. Vincent Medical Group, Inc. and Christopher Hollon, M.D.
The St. Vincent Medical Group, Inc. does not appeal the judgment entered against it, and the jury found in
Dr. Hollon’s favor.
2
On May 23, 2017, we held oral argument in Indianapolis. We thank counsel for their well-prepared
advocacy.
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July 22, 2011, SVMG notified Dr. Sawyer by letter that his employment was
terminated, effective immediately. The letter stated:
The decision to terminate your [employment] was made due to
your continued failure to comply with SVMG’s policies,
guidelines and expectations around appropriate coding services
and medical record documentation, despite SVMG’s efforts to
help you improve. Further, as we have also discussed on several
occasions, your office management style and unprofessional
behavior has contributed to a dysfunctional work environment.
Appellant’s Appendix Volume 2 at 116.
[3] The relationship between Dr. Sawyer, SVMG, and the Hospital is governed by
three contracts. First, SVMG and Dr. Sawyer are parties to an employment
agreement (the “Employment Agreement”) regarding Dr. Sawyer’s
employment by SVMG as a cardiologist. Second is the Amended and Restated
Operating Agreement of the Hospital (the “Operating Agreement”), signed by
the Hospital’s secretary, which governs “certain aspects of the operations” of
the Hospital and sets forth “the rights and obligations of the Members,” which
included Dr. Sawyer. Id. at 118. Third, SVMG, Dr. Sawyer, and the Hospital
signed a “Joinder Agreement” regarding the redemption of Dr. Sawyer’s
membership interest in the Hospital in the event of the termination of his
employment. Id. at 114.
[4] The letter of July 22, 2011, stated that Dr. Sawyer’s employment under the
Employment Agreement was terminated pursuant to Section 4.2-2(a) and 4.2-
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2(i). Those provisions, as well as other relevant sections of the Employment
Agreement, are as follows:
ARTICLE IV
TERM AND TERMINATION
4.1 Term. This Agreement shall be effective as of the date of its
execution but the employment contemplated hereunder shall
begin on July 1, 2010 (“Physician’s Start Date”). The Agreement
shall have a term of ten (10) years beginning with Physician’s
Start Date. The Agreement shall automatically renew thereafter
for one (1) year terms . . . .
4.2 Termination. Notwithstanding Section 4.1, this Agreement
shall terminate on the occurrence of any of the following events:
*****
4.2-2 Immediate Termination for Cause. [SVMG] may
immediately terminate this Agreement at its sole option by
providing Physician written notice, upon the occurrence of
any of the following:
(a) any act or omission of Physician which, in
[SVMG’s] reasonable opinion, after consultation
with the Division (or as determined through the
Division’s peer review process for (i) the evaluation
of the qualifications, competence, or professional
conduct of a professional health care provider, or
(ii) the evaluation of patient care (collectively, the
“Peer Review Matters”), as set forth in I.C. § 34-
30-15-16), is grossly and materially contrary to the
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business interests, reputation or goodwill of
[SVMG];
*****
(i) in [SVMG’s] reasonable opinion, Physician
consistently fails to provide professional medical
services within the standard of care expected by
[SVMG];
*****
ARTICLE VIII
MISCELLANEOUS
8.14 Joinder Agreement re: SVHCI. If, as of the date of this
Agreement, Physician is a member of [the Hospital], as a
continuing condition of employment hereunder a Joinder
Agreement having the form attached hereto as Exhibit C shall
remain in effect as among Physician, [the Hospital], and
[SVMG].
Id. at 94-95, 103. Dr. Sawyer signed the Employment Agreement on May 10,
2010, and Richard I. Fogel, M.D., signed as CEO of SVMG on June 25, 2010.
[5] The Joinder Agreement provides as follows:
This Joinder Agreement is effective as of the 1st day of July, 2010,
by and among [SVMG], [the Hospital], and Roderick J. Sawyer,
M.D. (“Physician”).
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WHEREAS, [SVMG] and the Physician are parties to that
certain Physician Employment Agreement of even [sic] date
herewith (the “Agreement”); and
WHEREAS, Physician is a member of [the Hospital]; and
WHEREAS, [the Hospital] is a member of St. Vincent Heart
Center of Indiana, LLC (“SVHCI”); and
WHEREAS, the parties hereto desire that Physician and [the
Hospital] shall cause Physician’s membership interest in [the
Hospital] to be redeemed and Physician to no longer have any
continuing direct or indirect membership, ownership or
investment interest in SVHCI in the event that Physician’s
employment referenced in the Agreement is terminated for any
reason (other than a termination pursuant to Section 4.4(c)[3] of
the Agreement).
NOW THEREFORE, in consideration of the foregoing premises
and the mutual agreements and covenants contained herein, the
parties hereto agree as follows:
1. Mandatory Redemption. Within ninety (90) days of any
termination of employment between Physician and [SVMG] . . .
and provided that [the Hospital] then holds a membership
interest in SVHCI, Physician and [the Hospital] shall cause
Physician to be redeemed of his interest in [the Hospital] such
that, following such redemption, Physician shall have no
3
Section 4.4 of the Employment Agreement concerns voluntary termination of employment by the physician
on certain conditions, and subsection (c) addresses the termination or elimination of the cardiology division
or the TCG practice unit by SVMG.
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continuing direct or indirect membership, ownership or
investment interest in SVHCI.
Id. at 114. The Joinder Agreement stated that the parties executed the
agreement as of the date noted, July 1, 2010, and was signed by Richard I.
Fogel, M.D., FACC, as CEO of SVMG, James B. Hermiller, M.D., FACC,
FSCAI, as Board Chairman of the Hospital, and Dr. Sawyer.
[6] In addition, the relevant portions of the Hospital’s Operating Agreement are as
follows:
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and in consideration of becoming a Member of
the [Hospital], the Members . . . agree as follows:
ARTICLE I
DEFINITIONS AND GENERAL PROVISIONS
Section 1.1 Definitions. . . .
*****
“Involuntary Withdrawal” means, with respect to any Member,
the occurrence of any of the following events: . . . (v) the
termination of employment or any material agreement the
Member is a party to with [TCG] or, after the Acquisition Date,
SVMG.
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*****
ARTICLE III
MEMBERS AND CAPITAL STRUCTURE
*****
Section 3.2 Units Representing Interests. Interests in the
[Hospital] shall be represented by the Units held by each
Member. . . .
*****
Section 3.6 No Redemption Rights. Except as may otherwise
be specifically provided in this Agreement or be determined by
the Managers, no Member or former Member shall be entitled, at
or after the time the Member ceases to be a Member of the
[Hospital] or at any other time, to demand or receive from the
[Hospital] a return of any of the Member’s Capital Contributions
or the purchase or redemption of, or other payment for, the
Member’s Units or Interest.
*****
ARTICLE VIII
TRANSFERS AND WITHDRAWAL
*****
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Section 8.3 Involuntary Withdrawal. Immediately upon the
date of an Involuntary Withdrawal, the withdrawing Member
shall cease being a Member of the [Hospital] and all rights
associated with such membership shall terminate. The
involuntary withdrawing Member’s Interest shall be purchased
by the [Hospital] pursuant to Section 8.4 hereof.
Section 8.4 Payment to Withdrawing Member. . . . [I]f
withdrawal occurs after completion of three (3) years of
operation of the Heart Hospital, the [Hospital] shall pay a cash
amount equal to the greater of: (i) three (3) times the annual cash
flow distribution based on the average of the three (3) most recent
full fiscal years; or (ii) the value of Member’s Capital Account at
the point of withdrawal. . . .
*****
Section 8.8 Injunction. The parties recognize that a breach or
threatened breach by any Member of the Company of the
provisions of Article VIII will result in immediate and irreparable
injury to Company as to which there will be no adequate remedy
at law. Accordingly, Company shall in such event be entitled to
obtain temporary and permanent injunctive relief to enjoin or
restrain any such breach or threatened breach by any Member of
the Company and each such person hereby waives by
requirement that Company post any bond or security in such
event. Each party shall be entitled to pursue any other available
remedies in connection with a breach of this Agreement,
including recovery of monetary damages, and shall in any event
be entitled to cover from the non-prevailing party, reasonable
attorneys’ fees and costs incurred in the successful enforcement
of the provisions of this Agreement. The remedies herein
provided shall be cumulative and no one remedy shall be
construed as exclusive of any other or of any remedy provided by
law and failure of any party to exercise any remedy at any time
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shall not operate as a waiver of the right of such party to exercise
any remedy for the same or subsequent act at any time thereafter.
Id. at 118, 120, 123-124, 132-133, 136-137. The effective date of the Operating
Agreement is listed as May 3, 2010.
[7] Following Dr. Sawyer’s termination, Brian Morris, who was SVMG’s Chief
Financial Officer and a CPA, calculated Dr. Sawyer’s unit redemption payment
pursuant to Section 8.4 of the Operating Agreement, determining that the three
prior year distributions computation totaled $196,787, which was greater than
Dr. Sawyer’s capital account balance of $123,572. On March 15, 2012, Morris
sent Dr. Sawyer a redemption check in the amount of $196,787 and an attached
letter detailing the calculation.
[8] On August 29, 2012, Dr. Sawyer filed an Amended Complaint for Damages
and Demand for Jury Trial against SVMG and the Hospital alleging claims of
breach of contract, breach of duty of good faith and fair dealing, and tortious
interference with business relationships against SVMG and a claim of breach of
contract against the Hospital.4 The claim against the Hospital, listed as Count
II of the amended complaint, stated that: (1) the Joinder Agreement mandates
redemption of all interests in the Hospital within ninety days of any
termination; (2) the Operating Agreement, as amended, was adopted by the
4
On July 22, 2013, Dr. Sawyer filed a complaint against Christopher Hollon, M.D., under another cause
number. On July 23, 2015, that cause was consolidated with this case for jury trial.
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Hospital upon the acquisition by SVMG of TCG’s assets, and outlines each
Member’s interests in the Hospital; (3) the Hospital sent Dr. Sawyer a Unit
Redemption Agreement and check for $196,787, allegedly for the ten
membership unit interest in the Hospital, almost eight months after his
employment was terminated; (4) the $196,787 amount “is substantially less
than what [he] would have received had he remained employed by SVMG for
the duration of his Employment Agreement”; (5) such payment was well
outside the ninety-day time period; and (6) as a result the Hospital breached the
Joinder and Operating Agreements. Id. at 82.
[9] On October 22, 2012, the Hospital filed a motion for partial dismissal pursuant
to Ind. Trial Rule 12(B)(6) to dismiss Count II of the complaint “to the extent it
relates to the specific value of Plaintiff’s membership interest in [the Hospital]
as reflected on the redemption check remitted to him in March of 2012.” Id. at
144. In its brief in support of its motion, the Hospital asserted that Dr. Sawyer’s
argument amounts to a claim that he “was wronged because [the Hospital]
actually followed the language of the Operating Agreement, instead of ignoring
its precise valuation formula . . . and awarding [Dr. Sawyer] a higher amount
based on what he might have received if he had remained employed for the
duration of his Employment Agreement,” which has no basis in law or fact. Id.
at 151. It argued that it is possible that the ten-unit membership interest held by
Dr. Sawyer could have decreased in value were he to have remained employed
for the duration of the Employment Agreement. On November 20, 2012, Dr.
Sawyer filed a response in opposition to the Hospital’s motion to dismiss
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asserting that “[b]ecause SVMG and [the Hospital] are both parties to the
Joinder Agreement which required the redemption of Dr. Sawyer’s interest in
[the Hospital] upon the termination of his employment, SVMG’s wrongful
termination” and “breach of the Employment Agreement is also a breach by
[the Hospital] of the Joinder Agreement which is a part of the Employment
Agreement.” Id. at 161. On January 28, 2013, the court denied the Hospital’s
motion.
[10] On August 9, 2013, Dr. Sawyer filed a Motion to Compel Documents and
Interrogatory Responses from SVMG and the Hospital stating at the outset:
For over eight months, the Defendants have been stalling in
providing complete responses to Dr. Sawyer’s first set of
discovery requests, which were served November 5, 2012. After
months of extensions, the Defendants produced a limited amount
of information and documents in March 2013, and failed to
provide any substantive responses to the majority of [his]
requests, primarily on the basis of boilerplate objections, but also
on the basis of unsupported claims of privilege. And although
[he] sent a letter June 14, 2013 requesting supplementation and
clarification, the Defendants still have not provided any
additional substantive information or documents. Defendants’
delays and stalling tactics have caused progress in this case to
grind to a halt, and Court intervention is necessary to get it back
on track.
Appellee’s Appendix Volume 2 at 201-202. Dr. Sawyer also requested attorney
fees and costs associated with pursuing the motion.
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[11] On March 26, 2014, the Hospital filed a motion for partial summary judgment
and designation of evidence focused on Dr. Sawyer’s claim regarding the
Operating Agreement. The motion asserted that it “did what it was required to
do under the Operating Agreement: provide Dr. Sawyer a payout equal to the
value of his interest on the day that [SVMG] terminated his employment. [It]
performed in accordance with its obligations under the Operating Agreement.”
Appellant’s Appendix Volume 3 at 11. SVMG also filed a separate motion for
summary judgment that same day.
[12] On June 9, 2014, Dr. Sawyer filed his response to both defendants’ summary
judgment motions and designation of evidence. Regarding the Hospital’s
motion, Dr. Sawyer asserted that summary judgment was inappropriate
“because the redemption of his interests resulted from the wrongful termination
of his employment, and because the timeliness of redemption payments is
governed principally by the Operating Agreement.” Id. at 139. He argued that,
based upon the trend over the past eight years in which the value of the ten
member unit shares having never decreased, he “believes that the value of his
interest would have been much greater over the next nine years than the
$196,787 he received.” Id.
[13] On October 8, 2014, the court issued its Order Granting Plaintiff’s Motion to
Compel Documents and Interrogatory Responses from Defendants containing
numerous specific orders to supplement various interrogatories, to expressly
identify which documents were responsive to various discovery requests, and to
provide other substantive responses to document production requests within ten
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days of the order. The court also ordered that Dr. Sawyer “shall be, and hereby
is, awarded his costs and reasonable attorney fees associated with pursuing
Plaintiff’s Motion to Compel Documents and Interrogatory Responses from Defendants”
and that Dr. Sawyer shall submit his bill of costs within fourteen days.
Appellee’s Appendix Volume 5 at 154.
[14] On October 21, 2014, Dr. Sawyer filed his Motion for Contempt Hearing and
for new Deadline to Submit Bill of Costs and Response in Opposition to
Motion for Extension of Time stating that the court should set a contempt
hearing for SVMG and the Hospital’s failure to comply with the court’s order of
October 8, 2014, within ten days because their “intransigence serves only to
further delay resolution of this matter, and because the Defendants have
embraced a strategy of delay at every step in this litigation.” Id. at 178.
[15] The court held a hearing on April 15, 2015. On April 23, 2015, it issued its
Entry of April 23, 2015, stating as follows:
After hearing on pending motions was conducted April 15, 2015,
the Court finds:
*****
2. Regarding Plaintiff’s motions to compel, all pending motions
are consolidated with October 21, 2014 Plaintiff’s Motion for
Contempt Hearing and For New Deadline To Submit Bill of
Costs. The Court grants as follows:
a. Contempt by Defendant is found with respect to time
and delay of discovery responses.
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b. Any expenses, fees, or costs shall be determined when
submitted by [Dr. Sawyer].
Appellee’s Appendix Volume 7 at 77.
[16] On November 13, 2015, the court issued its Entry of Orders on Pending
Motions which granted the Hospital’s summary judgment motion with respect
to the Operating Agreement and “[d]enied [the motion] with respect to the
Joinder Agreement.”5 Appellant’s Appendix Volume 3 at 238.
[17] On January 11, 2016, the court commenced a jury trial. At the close of Dr.
Sawyer’s case-in-chief, the Hospital moved for judgment on the evidence under
Ind. Trial Rule 50 because “there has been no evidence presented today in any
form about Dr. Sawyer’s allegations regarding how [the Hospital] failed to meet
its obligations under that agreement, what [the Hospital’s] obligations were, or
any damages arising from any alleged breach . . . .” Transcript Volume 8 at
1839. The court denied the motion. At the end of trial, the Hospital renewed
its motion for a directed verdict because “there was no evidence of breach,” and
the court again denied the motion. Transcript Vol. 11 at 2646.
[18] On January 22, 2016, the jury entered a verdict in Dr. Sawyer’s favor and
against SVMG and awarded damages in the amount of $1,112,152. It found for
5
As observed above, the Hospital did not move for summary judgment with respect to the Joinder
Agreement.
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Dr. Sawyer and against the Hospital and awarded damages in the amount of
$470,000.
[19] On January 29, 2016, the Hospital filed a motion to correct error asserting that
there was no breach in calculating and paying the redemption amount of
$196,787. The Hospital’s motion requested that the court correct the jury’s
award by entering judgment on the evidence in the amount of $6,559.60, which
it stated was the amount properly recoverable as interest for the delay in paying
Dr. Sawyer.6 On February 18, 2016, the court entered judgment on the jury
verdicts and denied the Hospital’s motion to correct error.
[20] On March 28, 2016, Dr. Sawyer filed his Verified Petition for Damages
“pursuant to the Court’s October 8, 2014 Order Granting Plaintiff’s Motion to
Compel Documents and Interrogatory Responses From Defendants, and the Court’s
Entry of April 23, 2015” seeking damages in accordance with those orders.
Appellee’s Appendix Volume 8 at 140. In his verified petition, Dr. Sawyer
asserted that he “incurred hundreds of thousands of dollars of legal fees and
expenses” due to the defendants’ discovery misconduct and provided a
spreadsheet, attached as Exhibit 1, detailing those fees. Id. at 143. The verified
petition stated that the relevant attorney fees totaled $471,025.15 but that, “[i]n
6
The Hospital noted in its motion that “[t]he 12 month interest earned [at the statutory rate of eight percent]
on the total investment of $196,787 would be $15,742.96 or $1,311.92 per month. Five months of that
interest is therefore equal to $6,559.60.” Appellant’s Appendix Volume 4 at 36.
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the interests of justice and fairness,” Dr. Sawyer was willing to accept a total of
$450,000. Id. at 145.
[21] On May 18, 2016, SVMG, the Hospital, and Dr. Hollon filed their Defendants’
Responses to Plaintiff’s Verified Petition for Damages stating at the outset that
Dr. Sawyer, “based upon a very limited Order of the Court, has asked for
several hundred-thousand dollars, hoping that even a ‘compromise’ will reward
him with far more in attorney’s fees than he deserves.” Appellee’s Appendix
Volume 9 at 2. They asserted that Trial Rule 37 does not provide for the extent
of the fees requested by Dr. Sawyer, and that SVMG agrees to certain fees,
listed in the filing as Appendix A totaling $27,233.19. Regarding the Hospital,
the response stated that Dr. Sawyer “never identified an iota of discovery [it]
failed to produce. [The Hospital] respectfully requests that this Honorable
Court DENY [Dr. Sawyer’s] fee petition as to it individually.” Id. at 6. It also
noted that Dr. Sawyer was requesting fees for other unrelated matters, including
responding to a motion that he lost which was not related to the discovery
dispute, a qui tam lawsuit, agreed protective orders, peer review motions,
quashed depositions, expert witnesses, a motion for default judgment filed by
Dr. Sawyer which was denied, responding to motions for summary judgment
filed by SVMG, Dr. Hollon, and the Hospital, which were granted, and a
number of other matters enumerated in the filing.7 The defendants requested
7
The defendants broke Dr. Sawyer’s fee schedule down to appendices A through V related to each of the
categories identified in the response.
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that the court not grant any fees against Dr. Hollon or the Hospital and that it
“only grant those fees consistent with the Court’s prior order and [SVMG’s]
stipulation, and with Trial Rule 37 and controlling case-law.” Id. at 13.
[22] On June 30, 2016, the court entered an order which in relevant part granted Dr.
Sawyer’s verified petition in the amount of $27,233.19, without explanation.
Issue on Appeal
[23] The issue raised on appeal by the Hospital is whether the trial court erred in
denying the Hospital’s motion to dismiss and in entering judgment in favor of
Dr. Sawyer. We first address the Hospital’s motion to dismiss.
[24] A complaint may not be dismissed under Ind. Trial Rule 12(B)(6) for failure to
state a claim upon which relief can be granted unless it appears to a certainty on
the face of the complaint that the complaining party is not entitled to any relief.
McQueen v. Fayette Cnty. Sch. Corp., 711 N.E.2d 62, 65 (Ind. Ct. App. 1999),
trans. denied. We view motions to dismiss for failure to state a claim with
disfavor because such motions undermine the policy of deciding causes of
action on their merits. Id. When reviewing a trial court’s grant of a motion to
dismiss, we view the pleadings in a light most favorable to the nonmoving
party, and we draw every reasonable inference in favor of that party. Id. We
will not affirm a dismissal under Ind. Trial Rule 12(B)(6) unless it is apparent
that the facts alleged in the challenged pleading are incapable of supporting
relief under any set of circumstances. Id.
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[25] The Hospital argues that it followed the plain language of the Joinder
Agreement and the Operating Agreement in redeeming Dr. Sawyer’s ten-unit
membership interest and in valuing those shares pursuant to Section 8.4 of the
Operating Agreement. It asserts that Dr. Sawyer concedes that the calculation
is accurate and that he essentially argues “that the Employer’s wrongful
termination means that the Employer and the Hospital are accountable for the
alleged ‘loss of redemption value.’” Appellant’s Brief at 22. The Hospital
postulates that this argument is erroneous for three reasons. First, it asserts
that, under the Operating Agreement, withdrawal is automatic upon
termination “for any reason”8 and that it makes sense that physicians no longer
employed at the Hospital would not remain owners. Id. Second, the Hospital
notes that it and SVMG are separate entities and that Dr. Sawyer did not bring
a claim of tortious interference with his employment against the Hospital.
Third, it argues the plain language of the Operating Agreement, in Section 3.6,
does not allow for “an alleged ‘loss of redemption value.’” Id.
[26] Dr. Sawyer argues that “[b]ecause the Joinder Agreement and the Operating
Agreement were integrated into the Employment Agreement, [the Hospital]
breached the Joinder Agreement when it prematurely redeemed [his] unit
interests caused by SVMG’s breach of the Employment Agreement” in
wrongfully terminating him. Appellee’s Brief at 35 (footnote omitted). He
asserts that the Joinder Agreement “ensured that [he] would receive at least 10
8
We observe that this language is found in the Joinder Agreement, not the Operating Agreement.
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years of investment income from [the Hospital] unless he voluntarily quit his
employment or passed away.” Id. at 36. Dr. Sawyer maintains that the
contracts were executed as a part of, and in consideration for, the sale of his
physician practice to St. Vincent Hospital and that “[r]ather than pay [him] and
his partners the full value of [TCG] and [the Hospital], [he] received only a
partial payment over three years, and also received a guarantee of employment
and investment income for a period of no less than ten years.” Id. at 37. He
argues that while the Hospital was required to redeem his membership interest
upon a termination “in accordance with the Employment Agreement,” it was
not permitted to otherwise redeem his interest. Id. He contends that it was
therefore proper for the court to have allowed him to try this claim.
[27] The Hospital argues in its reply that Dr. Sawyer waived this issue by failing to
cite to any authority for his position. It states that Dr. Sawyer does not cite to
legal authority to demonstrate that the Hospital and SVMG “are somehow not
separate because there is some relation and common ownership” and that in
fact the Hospital, a limited liability company, and SVMG, a corporation, are in
fact separate, noting that Dr. Sawyer “was an owner in one and an employee of
the other.” Appellant’s Reply Brief at 13-14. The Hospital also asks this Court
to take judicial notice of the fact that, as demonstrated by filings with the
Indiana Secretary of State (submitted via addendum), SVMG and the Hospital
have “different principals, different addresses, and different registered agents.”
Id. at 14 n.2.
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[28] This question is one of contract interpretation. Generally, “[i]nterpretation of a
contract is a pure question of law and is reviewed de novo.” Dunn v. Meridian
Mut. Ins. Co., 836 N.E.2d 249, 252 (Ind. 2005). If its terms are clear and
unambiguous, courts must give those terms their clear and ordinary meaning.
Id. Courts should interpret a contract so as to harmonize its provisions, rather
than place them in conflict. Id. “A contract will be found to be ambiguous only
if reasonable persons would differ as to the meaning of its terms.” Beam v.
Wausau Ins. Co., 765 N.E.2d 524, 528 (Ind. 2002), reh’g denied; see also McDivitt v.
McDivitt, 42 N.E.3d 115, 117 (Ind. Ct. App. 2015) (a contract may be
ambiguous if its terms are susceptible to more than one interpretation and
reasonably intelligent persons would honestly differ as to its meaning), trans.
denied. A contract is not ambiguous merely because the parties disagree as to its
proper construction. Jernas v. Gumz, 53 N.E.3d 434, 444 (Ind. Ct. App. 2016),
trans. denied. When interpreting a contract, our paramount goal is to ascertain
and effectuate the intent of the parties. Id. This requires the contract to be read
as a whole, and the language construed so as not to render any words, phrases,
or terms ineffective or meaningless. Id. Rules of contract construction and
extrinsic evidence may be employed in giving effect to the parties’ reasonable
expectations. Id. at 444-445 (citing Lily, Inc. v. Silco, LLC, 997 N.E.2d 1055,
1064 (Ind. Ct. App. 2013) (citing Johnson v. Johnson, 920 N.E.2d 253, 256 (Ind.
2010), reh’g denied, trans. denied). When a contract’s terms are ambiguous or
uncertain and its interpretation requires extrinsic evidence, its construction is a
matter for the fact-finder. Id. at 445; see also McDivitt, 42 N.E.3d at 117 (when a
contract is ambiguous, extrinsic evidence may be examined to determine the
Court of Appeals of Indiana | Opinion 49A05-1603-PL-580 | June 22, 2017 Page 21 of 39
parties’ reasonable expectations). When a contract contains general and
specific provisions relating to the same subject, the specific provision controls.
Ryan v. Lawyers Title Ins. Corp., 959 N.E.2d 870, 875 (Ind. Ct. App. 2011).
[29] We are not persuaded by the Hospital’s argument that the language in the
Joinder Agreement that Dr. Sawyer’s membership interest be “redeemed” if his
“employment referenced in the [Employment] Agreement is terminated for any
reason” includes circumstances constituting a breach of the Employment
Agreement. Appellant’s Appendix Volume 2 at 114 (emphasis added). We
disagree with the Hospital’s suggestion that Dr. Sawyer’s request would have
the effect of his maintaining an ownership interest in the Hospital after he was
no longer employed by SVMG. Dr. Sawyer’s complaint requests consequential
damages, i.e., the benefit of his bargain, as a result of a breach by the Hospital
and not an order that the Hospital transfer his ownership interest back to him to
hold through the end of the ten-year term. See, e.g., L.H. Controls, Inc. v. Custom
Conveyor, Inc., 974 N.E.2d 1031, 1043 (Ind. Ct. App. 2012) (noting that “[a]
party injured by a breach of contract may recover consequential damages from
the breaching party,” that “[s]uch 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 exactness,” and that
“[c]onsequential 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”).
Court of Appeals of Indiana | Opinion 49A05-1603-PL-580 | June 22, 2017 Page 22 of 39
[30] Under the plain language of the Joinder Agreement, we find that the key phrase
is the reference to the “employment referenced in the [Employment] Agreement
[being] terminated . . . .” Appellant’s Appendix Volume 2 at 114. Grounds for
termination of Dr. Sawyer’s employment under the Employment Agreement is
specifically defined in Section 4.2 of that agreement, and the inclusion of this
phrase in the Joinder Agreement makes clear that termination under the terms of
the Employment Agreement is required to trigger mandatory redemption of Dr.
Sawyer’s interest in the Hospital, i.e., his ten membership units. The specific
reference in that same clause of the Joinder Agreement to Section 4.4(c) of the
Employment Agreement lends further support to this interpretation. Also, we
note that the Employment Agreement itself states that “as a continuing
condition of employment hereunder,” the Joinder Agreement “shall remain in
effect as among Physician, [the Hospital], and [SVMG].” Id. at 103 (emphasis
added).
[31] Under the plain language of the Joinder Agreement, signed by Dr. Sawyer and
representatives of SVMG and the Hospital, only after termination under the
terms of the Employment Agreement should the Hospital redeem Dr. Sawyer’s
membership interest, in which such redemption is governed by Section 8.4 of
the Operating Agreement. Redemption pursuant to this provision under other
circumstances would deprive Dr. Sawyer of the benefit of his bargain and
constitute a breach of the Joinder Agreement. Also, we are unpersuaded by the
Hospital’s assertion that Section 3.6 of the Operating Agreement, which limits
the right of a member such as Dr. Sawyer to receive a return of Capital Account
Court of Appeals of Indiana | Opinion 49A05-1603-PL-580 | June 22, 2017 Page 23 of 39
contributions or redemption of membership unit interest to those rights
specifically provided in the Operating Agreement (and found in Section 8.4),
impacts our analysis. We therefore conclude that the court did not err in
denying the Hospital’s motion to dismiss.
[32] To the extent the Hospital also challenges the court’s rulings on its motions for
judgment on the evidence under Ind. Trial Rule 50 and its motion to correct
error, we need not belabor the topic. Ind. Trial Rule 50 provides that a motion
for judgment on the evidence shall be granted “[w]here all or some of the issues
in a case . . . are not supported by sufficient evidence or a verdict thereon is
clearly erroneous as contrary to the evidence because the evidence is insufficient
to support it . . . .” Ind. Trial Rule 50(A). “Where the issue involves a
conclusion of law based on undisputed facts, the reviewing court is to determine
the matter as a question of law in conjunction with the motion for judgment on
the evidence, and to this extent, the standard of review is de novo.” Cavens v.
Zaberdac, 849 N.E.2d 526, 529 (Ind. 2006). Also, we generally review rulings
on motions to correct error for an abuse of discretion. Ind. Bureau of Motor
Vehicles v. Charles, 919 N.E.2d 114, 116 (Ind. Ct. App. 2009); Speedway
SuperAmerica, LLC v. Holmes, 885 N.E.2d 1265, 1270 (Ind. 2008), reh’g denied.
[33] The crux of the Hospital’s arguments regarding these motions is that Dr.
Sawyer did not present any evidence of breach of the Joinder Agreement where
it is undisputed that it redeemed Dr. Sawyer’s membership interest in the
amount of $196,787, following the formula provided in Section 8.4 of the
Operating Agreement. It does not challenge the jury’s verdict that SVMG
Court of Appeals of Indiana | Opinion 49A05-1603-PL-580 | June 22, 2017 Page 24 of 39
breached the Employment Agreement when it fired Dr. Sawyer. Having
concluded above that redemption by the Hospital of Dr. Sawyer’s ten-unit
membership interest under circumstances other than those constituting a
termination of Dr. Sawyer’s employment under the Employment Agreement
would be a breach of the Joinder Agreement, we conclude that the court did not
err in denying the Hospital’s motion for judgment on the evidence and its
motion to correct error.
Cross-Appeal Issues
I.
[34] The first issue on cross-appeal is whether the court erred in granting partial
summary judgment in the Hospital’s favor regarding the Operating Agreement.
We review an order for summary judgment de novo, applying the same standard
as the trial court. Hughley v. State, 15 N.E.3d 1000, 1003 (Ind. 2014). The
moving party bears the initial burden of making a prima facie showing that there
are no genuine issues of material fact and that it is entitled to judgment as a
matter of law. Manley v. Sherer, 992 N.E.2d 670, 673 (Ind. 2013). Summary
judgment is improper if the moving party fails to carry its burden, but if it
succeeds, then the nonmoving party must come forward with evidence
establishing the existence of a genuine issue of material fact. Id. We construe
all factual inferences in favor of the nonmoving party and resolve all doubts as
to the existence of a material issue against the moving party. Id.
Court of Appeals of Indiana | Opinion 49A05-1603-PL-580 | June 22, 2017 Page 25 of 39
[35] Dr. Sawyer argues that “[a]s with the Joinder Agreement, [the Hospital]
breached the Operating Agreement by prematurely redeeming [his] unit
interests when SVMG wrongfully terminated his employment in breach of his
10-year Employment Agreement, with more than nine years still remaining.”
Appellee’s Brief at 46. He asserts that the payment was untimely as it was
made outside the ninety-day period, that the Joinder Agreement “does not in
any way abrogate the Operating Agreement[] and instead reflects an exercise by
[the Hospital’s] Board of Managers to set a new (and faster) payment schedule
in accordance with Section 8.4 of the Operating Agreement,” and that such
untimely redemption breached not only the Joinder Agreement, but also the
Operating Agreement. Id. at 48.
[36] The Hospital points out that Dr. Sawyer does not cite to legal authority, and
argues that waiver notwithstanding, his argument fails because it is “the same
meritless argument [] offered as in response to the Hospital’s appeal of the
$470,000 judgment.” Appellant’s Reply Brief at 32. It states that it is
undisputed that withdrawal from the Hospital was automatic under the
Operating Agreement upon termination of employment, regardless of the
reason, and that there is no basis to rule that it breached the Operating
Agreement by allegedly prematurely redeeming Dr. Sawyer’s ten-unit
membership interest. It also argues that, to the extent Dr. Sawyer suggests that
the payment was untimely, he and Morris exchanged emails in March 2012 and
Dr. Sawyer did not raise the timeliness of the payment in that exchange and
Court of Appeals of Indiana | Opinion 49A05-1603-PL-580 | June 22, 2017 Page 26 of 39
that, at most, Dr. Sawyer is entitled to $6,559.60 as a statutory interest award,
rather than the $470,000 awarded by the jury.
[37] In his reply brief, Dr. Sawyer states that the Operating Agreement “both
permitted and required [the Hospital] to redeem Dr. Sawyer’s unit interests only
in the event that his employment was terminated in accordance with the
Employment Agreement.” Cross-Appellant’s Reply Brief at 8. He argues that
“[t]he Operating Agreement is silent as to the effect of a wrongful termination
on [his] unit interests,” and none of the contracts preclude “a recovery of lost
business equity income in the event of a premature redemption.” Id. at 9. He
contends that to ignore the interrelatedness of the three contracts “would render
the promise of 10 years of security to Dr. Sawyer in his business equity interests
completely illusory,” that “[n]ot only were the Employment Agreement and
Joinder Agreement executed in consideration for the sale of Dr. Sawyer’s
physician practice to St. Vincent Hospital, but the Operating Agreement was
itself amended to facilitate the sale.” Id. at 11 (citations omitted). Dr. Sawyer
argues that a breach of the Operating Agreement involves separate and distinct
damages, asserts that the damages awarded “were extremely conservative,” and
that “[m]ore important, however, the Operating Agreement includes an
attorney fee provision [in Section 8.8] – a category of damages that was not
available at trial.” Id. at 12-13.
[38] We find that the court did not err in granting partial summary judgment to the
Hospital as to its request for relief based upon the Operating Agreement. That
agreement, signed by the Hospital’s secretary, governs the Hospital’s operations
Court of Appeals of Indiana | Opinion 49A05-1603-PL-580 | June 22, 2017 Page 27 of 39
and sets forth the rights and obligations of the Members, including Dr. Sawyer.
Unlike the Employment Agreement and the Joinder Agreement, the Operating
Agreement is not a memorialization of an arms-length business transaction
between Dr. Sawyer, the Hospital, and SVMG for the sale of Dr. Sawyer’s
practice, but is instead a corporate-governing document. Indeed, while the
Operating Agreement was amended and restated to account for the sale to
SVMG, such agreement predated the sale, in which the previous version was
dated May 7, 2006.
[39] The relevant provision of the Operating Agreement, under Section 8.3, provides
that, in the event of an Involuntary Withdrawal, the Member’s interest shall be
paid pursuant to the formula set forth in Section 8.4. At no point has Dr.
Sawyer asserted that these provisions were not followed. As a practical matter,
SVMG would assert that a termination of Dr. Sawyer’s employment complied
with the Employment Agreement, and such termination would trigger
redemption of Dr. Sawyer’s membership interest. It was up to Dr. Sawyer to
challenge his termination in court and show that it did not comply with the
Employment Agreement. We concluded above that the full benefit of Dr.
Sawyer’s membership interest was protected from being deprived by improper
termination of his employment by the Joinder Agreement, observing that the
Employment Agreement itself states that “as a continuing condition of
employment hereunder,” the Joinder Agreement remains in effect. Appellant’s
Appendix Volume 2 at 103 (emphasis added). The Operating Agreement, by
Court of Appeals of Indiana | Opinion 49A05-1603-PL-580 | June 22, 2017 Page 28 of 39
contrast, merely sets forth the formula for how to calculate the redemption
payment in the event of an Involuntary Withdrawal.
[40] Dr. Sawyer seeks reversal of the court’s partial summary judgment order in
order to seek attorney fees under Section 8.8 of the Operating Agreement,
which in relevant part allows any Member or the Hospital “to pursue any other
available remedies in connection with a breach of this Agreement, including
recovery of monetary damages, and shall in any event be entitled to recover
from the non-prevailing party, reasonable attorneys’ fees and costs incurred in
the successful enforcement of the provisions of this Agreement.” Id. at 136-137.
Again, the relevant portion of the Operating Agreement provides the formula,
agreed upon by the Members, for how to pay a Member who is the subject of an
Involuntary Withdrawal. Dr. Sawyer does not challenge Brian Morris’s
calculation of the $196,787 redemption payment itself or the fact that such
payment was made.9 Consequently, we cannot say that the Hospital breached
the Operating Agreement.
[41] In short, it is the Joinder Agreement and not the Operating Agreement that
protected the benefit of Dr. Sawyer’s bargain, which includes his right to profits
in the form of investment income from his ten-unit membership interest in the
Hospital. The Operating Agreement merely provides a method for calculating
a payment that Dr. Sawyer, throughout the litigation and on appeal, maintains
9
Indeed, to the extent Dr. Sawyer brings up the fact that the payment was not made within ninety days, the
ninety-day timeframe for redemption is contained in the Joinder Agreement, not the Operating Agreement.
Court of Appeals of Indiana | Opinion 49A05-1603-PL-580 | June 22, 2017 Page 29 of 39
he should not have been paid. The trial court did not err in granting summary
judgment as to the Operating Agreement.
II.
[42] The next cross-appeal issue is whether the court abused its discretion in
awarding attorney fees to Dr. Sawyer as a result of the Hospital’s misconduct
during discovery. The rules of discovery are designed to “allow a liberal
discovery process, the purposes of which are to provide parties with information
essential to litigation of the issues, to eliminate surprise, and to promote
settlement.” Huber v. Montgomery Cnty. Sheriff, 940 N.E.2d 1182, 1185 (Ind. Ct.
App. 2010) (citing Hatfield v. Edward J. DeBartolo Corp., 676 N.E.2d 395, 399
(Ind. Ct. App. 1997), reh’g denied, trans. denied). “Trial courts exercise ‘broad
discretion’ in making discovery rulings.” International Business Machines Corp. v.
ACS Human Servs., LLC, 999 N.E.2d 880, 885 (Ind. Ct. App. 2013) (quoting
Vernon v. Kroger Co., 712 N.E.2d 976, 982 (Ind. 1999)), trans. denied. Thus, “an
appellate court will interfere only when the appealing party can show an abuse
of that discretion.” Id. “Discretion is a privilege afforded a trial court to act in
accord with what is fair and equitable in each case.” Id. (quoting Vernon, 712
N.E.2d at 982 (quoting McCullough v. Archbold Ladder Co., 605 N.E.2d 175, 180
(Ind. 1993))). An abuse of discretion occurs when the trial court’s decision is
clearly against the logic and effect of the facts and circumstances before the
court, or if it misinterprets the law. Id.
Court of Appeals of Indiana | Opinion 49A05-1603-PL-580 | June 22, 2017 Page 30 of 39
[43] “Because of the fact-sensitive nature of discovery issues, a trial court’s ruling is
given a strong presumption of correctness.” Id. (quoting Smith v. Smith, 854
N.E.2d 1, 4 (Ind. Ct. App. 2006)). This presumption extends as well to the trial
court’s determinations with respect to violations of discovery orders and
attendant sanctions, which should not be overturned “[a]bsent clear error and
resulting prejudice.” Id. (quoting Smith, 854 N.E.2d at 4 (citing, inter alia,
Vernon, 712 N.E.2d at 982)); see also Wright v. Miller, 989 N.E.2d 324, 330 (Ind.
2013) (“We presume that the trial court will ‘act in accord with what is fair and
equitable in each case,’ and thus we will only reverse ‘if the trial court’s decision
is clearly against the logic and effect of the facts and circumstances before the
court, or if the trial court has misinterpreted the law.’” (quoting McCullough, 605
N.E.2d at 180)). We are, as ever, mindful that “[t]he purpose of the discovery
rules is to allow for minimal trial court involvement and to promote liberal
discovery.” Whitaker v. Becker, 960 N.E.2d 111, 115 (Ind. 2012). When we
review for an abuse of discretion, we do not reweigh the evidence. Brightpoint,
Inc. v. Pedersen, 930 N.E.2d 34, 38 (Ind. Ct. App. 2010), trans. denied.
[44] “While the discovery process is intended to require little, if any, supervision or
assistance by the trial court, when the goals of this system break down, Indiana
Trial Rule 37 provides the trial court with tools to enforce compliance.” Huber,
940 N.E.2d at 1186 (citation and internal quotation marks omitted). Ind. Trial
Rule 37(B)(2) allows for sanctions for the failure to comply with a discovery
order. IBM, 999 N.E.2d at 891. “Such sanctions may include, for parties,
orders that preclude the introduction of evidence or limit the presentation of
Court of Appeals of Indiana | Opinion 49A05-1603-PL-580 | June 22, 2017 Page 31 of 39
claims or defenses.” Id. (citing T.R. 37(B)(2)(a)-(e)). In lieu of such procedural
sanctions, “the court shall require the party failing to obey the order or the
attorney advising him or both to pay the reasonable expenses, including
attorney’s fees, caused by the failure, unless the court finds that the failure was
substantially justified or that other circumstances make an award of expenses
unjust.” Id. (citing T.R. 37(B)(2)). “The trial rules do not require the
discovering party to have suffered substantial prejudice in order for sanctions to
be assessed” and, indeed, “the language of Trial Rule 37 uses the word ‘shall,’
that is, the rule requires the trial court to assess sanctions for disobedience
unless the defying party’s disobedience was substantially justified or sanctions
would otherwise be unjust.” Id. at 892.
[45] Dr. Sawyer asserts that the Hospital “engaged in systematic and pervasive
contempt of court through its discovery misconduct, doing as little as possible,
as late as possible.” Appellee’s Brief at 32. He argues that this Court should
reject the claim made in the response to his verified petition that the Hospital
“never identified an iota of discovery [it] failed to produce” because “[t]he trial
court already recognized [the Hospital’s] discovery misconduct, and determined
that an award of attorney fees and costs against [it] was appropriate.” Id. at 33.
He points to his motion to compel filed on August 9, 2013, which requested
that the court direct the defendants to provide responses to certain
interrogatories, and that it was the Hospital that objected to and refused to
answer some of the interrogatories at issue. He contends that we should not be
misled by the Hospital’s tactic of creating twenty-two separate groups of fees
Court of Appeals of Indiana | Opinion 49A05-1603-PL-580 | June 22, 2017 Page 32 of 39
because the Hospital’s “delay and contempt was systemic and pervasive.” Id. at
34. Dr. Sawyer also argues that, “[a]t a bare minimum,” we should award fees
associated with pursuing the Motion to Compel, in which the Hospital’s
“arbitrary division of the time entries” agreed that he “incurred $17,193.00
attempting to resolve his discover [sic] disputes without involving the court,” 10
and “incurred $21,047.39 in presenting his Motion to Compel to the [c]ourt.”11
Id. at 34-35. He states that these fees are wholly separate from the $27,233.19
awarded by the court and asks this court to grant fees in the amount of
$445,500, arriving at that amount by starting with $471,015.15, discounting
approximately five percent, then discounting an additional five percent, and
adding $18,000 “for fees incurred in pursuit of this Fee Petition.” Id. at 35 n.7.
[46] The Hospital argues that “Dr. Sawyer asks this Court to reweigh a lengthy,
complex discovery dispute involving primarily the Employer, who is not a party
to the appeal,” offering only “a sparse, six-paragraph argument with no citation
of legal authority” or the relevant standard of review and that waiver applies.
Appellant’s Reply Brief at 36-37. It asserts a trial court’s rulings are given a
strong presumption of correctness, that an abuse of discretion standard applies,
that this court recently declined to reweigh the evidence regarding attorney fees
10
These fees are contained in the response’s Appendix U, titled “Contested Fees Related to Discovery
Disputes Prior to Judge McCarty’s Order,” containing fees associated with the “discovery dispute” for dates
between December 7, 2012, and April 30, 2014. Appellee’s Appendix Volume 9 at 76-79.
11
These fees are contained in the response’s Appendix V, titled “Contested Fees Related to Motions to
Compel Prior to Judge McCarty’s Order,” containing fees associated with the “Motion to Compel” for dates
between August 8, 2013, and March 19, 2014. Appellee’s Appendix Volume 9 at 80-82
Court of Appeals of Indiana | Opinion 49A05-1603-PL-580 | June 22, 2017 Page 33 of 39
in IBM, 999 N.E.2d at 889, despite fully developed arguments in that case, and
that Dr. Sawyer has not met his burden. It states that “Dr. Sawyer asks this
reviewing Court to reweigh a complex discovery dispute that involves all
Defendants, not just the Hospital, and for which the trial court awarded [him] a
sanction of $27,233.19.” Id. at 39. The Hospital also argues that it “did not
agree” to fees incurred by Dr. Sawyer for pursuing his Motion to Compel, that
Appendix U “merely represents a partial list of contested time entries” totaling
$17,193, and that in fact in its response of May 17, 2016, the Hospital
“specifically asserted that the fee petition as to [it] should be denied.” Id. at 39
n.10.
[47] Dr. Sawyer argues in his reply that if this Court agrees that it “cannot or should
not ‘reweigh a complex discovery dispute,’” as termed by the Hospital, it
should direct the trial court to conduct a hearing for that purpose. Cross-
Appellant’s Reply Brief at 18. He states that the fact the Hospital does not
refute its categorization of fees supports an additional award, including the
$17,193 for attempting to resolve the discovery dispute without involving the
court and the $21,047.39 incurred in presenting his Motion to Compel. It also
states that the Hospital’s argument is misleading in that, while it did not agree
to pay such fees, it did not dispute that such fees were unearned, inaccurate, or
incomplete. He suggests that the Hospital now attempts to “disavow its own
classification of Dr. Sawyer’s verified attorney fees . . . .” Id. at 19. He further
argues that “[t]here is no language in the order, express or implied, that limits
[his] fee recovery for [the Hospital’s] discovery misconduct to only those fees
Court of Appeals of Indiana | Opinion 49A05-1603-PL-580 | June 22, 2017 Page 34 of 39
incurred after the order was entered.” Id. at 20. He asks this court to remand
with instructions to “either award all of [his] verified attorney fees, or to
conduct a hearing to determine the appropriate award.” Id. He also argues that
he did not waive his claim, that Appellate Rule 46(A)(8)(b) applies to an
appellant’s brief and his is an appellee’s brief filed under Rule 46(B), and that if
it does apply it “was an inadvertent omission of information . . . both provided
by [him] to the trial court and cited by [the Hospital] in Cross-Appellee’s
Response.” Id. at 21.
[48] To the extent the Hospital asserts waiver due to the failure of Dr. Sawyer to
recite the relevant standard of review or discuss relevant case law in his Cross-
Appellant’s Brief, we observe that a party risks waiver for failure to provide a
statement of the standard of review or discuss relevant authority in its brief. See
Ramsey v. Review Bd. of Workforce Dev., 789 N.E.2d 486, 490 (Ind. Ct. App. 2003)
(holding that the claimant’s substantial noncompliance with rules of appellate
procedure resulted in waiver of his claims on appeal); Loomis v. Ameritech Corp.,
764 N.E.2d 658, 668 (Ind. Ct. App. 2002) (holding argument waived for failure
to cite authority or provide cogent argument), reh’g denied, trans. denied.
However, whenever possible “‘we prefer to resolve cases on the merits’ instead
of on procedural grounds like waiver.” Pierce v. State, 29 N.E.3d 1258, 1267
(Ind. 2015) (quoting Roberts v. Cmty. Hospitals of Ind., Inc., 897 N.E.2d 458, 469
(Ind. 2008)). We will address the merits of a party’s claim unless we find
“noncompliance with the rule sufficiently substantial to impede our
consideration of the issue raised.” Id. (quoting Guardiola v. State, 268 Ind. 404,
Court of Appeals of Indiana | Opinion 49A05-1603-PL-580 | June 22, 2017 Page 35 of 39
406, 375 N.E.2d 1105, 1107 (Ind. 1978)). Under these circumstances, including
the otherwise-cogent argument provided by Dr. Sawyer, we elect to address his
argument.
[49] The record makes clear that counsel for the Hospital engaged in dilatory tactics
during discovery that the trial court determined could only be rectified by the
imposition of sanctions. Dr. Sawyer first raised problems with discovery about
a year into the litigation, on August 9, 2013, when he filed a Motion to Compel
Documents and Interrogatory Responses which alleged that defendants’
counsel had stalled in providing complete responses to discovery requests for
over eight months. The court ultimately agreed with Dr. Sawyer, issuing its
Order granting Plaintiff’s Motion to Compel Documents and Interrogatory
Responses on October 8, 2014 ordering compliance within ten days. The court
also awarded reasonable attorney fees associated with pursuing the motion and
asked Dr. Sawyer’s counsel to submit a bill of costs. Then, on October 21,
2014, Dr. Sawyer filed his Motion for Contempt Hearing and for new Deadline
to Submit Bill of Costs and Response in Opposition to Motion for Extension of
Time due to defendant counsel’s failure to comply with the court’s order.12 On
April 23, 2015, following a hearing, the court granted Dr. Sawyer’s motion
making a finding of contempt and stating that “[a]ny expenses, fees, or costs
12
As observed by Dr. Sawyer in his brief, the Hospital, SVMG, and Dr. Hollon were represented by the
same counsel in the proceedings before the trial court.
Court of Appeals of Indiana | Opinion 49A05-1603-PL-580 | June 22, 2017 Page 36 of 39
shall be determined when submitted by [Dr. Sawyer].” Appellee’s Appendix
Volume 7 at 77.
[50] Following the trial, Dr. Sawyer filed his Verified Petition for Damages
“pursuant to the Court’s October 8, 2014 Order Granting Plaintiff’s Motion to
Compel Documents and Interrogatory Responses From Defendants, and the Court’s
Entry of April 23, 2015” seeking damages in accordance with those orders.
Appellee’s Appendix Volume 8 at 140. In his petition, Dr. Sawyer submitted a
calculation of relevant attorney fees totaling $471,025.15 and requested
$450,000. SVMG, the Hospital, and Dr. Hollon filed their Defendants’
Responses to Plaintiff’s Verified Petition for Damages, in which the defendants
grouped the bill of costs submitted by Dr. Sawyer into twenty-two different
categories and agreed to certain fees, listed in the filing as Appendix A and
totaling $27,233.19. The response also requested that the court deny Dr.
Sawyer’s fee petition as to the Hospital individually. On June 30, 2016, in a
one-page order, the court in relevant part granted Dr. Sawyer’s verified petition
in the amount of $27,233.19, i.e., the amount identified by the Hospital’s
counsel as uncontested, without explanation.
[51] After a review of the record and the arguments of the parties, we find that the
court abused its discretion in issuing its Entry of June 30, 2016, when it relied
exclusively upon the Hospital’s calculation. As Dr. Sawyer observes in his
argument, we need not delve deep into the record to recognize that the award of
$27,233.19 is inadequate and does not reflect the depth of the abuse of the
discovery process exhibited by trial counsel for the Hospital, SVMG, and Dr.
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Hollon. For example, we agree with Dr. Sawyer that there is no discernable
reason the court did not award the fees listed in Appendix U, which is
comprised of fees directly associated with the discovery dispute but were for
services rendered prior to the court’s October 8, 2014 Order, totaling
$17,193.06. The court in its October 8, 2014 Order awarded to Dr. Sawyer
“costs and reasonable attorney fees associated with pursuing” his motion to
compel, which undeniably should include fees predating the order itself.
Appellee’s Appendix Volume 5 at 154 (emphasis added).
[52] The court’s failure to award the fees the Hospital grouped into Appendix U is
an example of fees to which Dr. Sawyer is entitled, and there may be others,
including some or all of the fees listed in the Hospital’s Appendix V chronicling
fees associated with pursuing the Motion to Compel itself that were incurred
prior to the court’s order.13 We reverse the court’s Entry of June 30, 2016, and
remand with instructions that the court review the fee listing submitted by Dr.
Sawyer and issue an appropriate award for discovery sanctions following its
13
The Hospital in its response to Dr. Sawyer’s petition asserts that some of the fees listed in Appendix V
include “time spent for discovery that was produced prior to the April 15 hearing and that is not subject to
the Court’s Order or Defendants’ stipulation.” Appellee’s Appendix 9 at 12. The Hospital also made the
claim that “[i]n fact, [Dr. Sawyer] did not identify any time related to a ‘motion to compel’ in his entries that
came after October of 2014, and only a handful subsequent to Judge McCarty’s Order.” Id. at 12-13. It is
unclear to this Court why the Hospital expected that Dr. Sawyer would incur attorney fees for work litigating
a motion that the trial court had already ruled on.
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rulings in the October 8, 2014 Order and the Entry of April 23, 2015. In
rendering its order, the court shall also apportion the sanctions appropriately.14
Conclusion
[53] For the foregoing reasons, we affirm the trial court’s denial of the Hospital’s
motion to dismiss, its judgment entered against the Hospital, and its grant of
partial summary judgment in favor of the Hospital, reverse the court’s Entry of
June 30, 2016 related to Dr. Sawyer’s Verified Petition for Damages regarding
attorney fees due pursuant to the discovery dispute, and remand for further
proceedings consistent with this opinion.
[54] Affirmed in part, reversed in part, and remanded.
May, J., and Pyle, J., concur.
14
To the extent that SVMG and Dr. Hollon are not involved in this appeal, we observe that Ind. Appellate
Rule 17(A) states that “[a] party of record in the trial court . . . shall be a party on appeal.”
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