BRADFORD, Judge.
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 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.
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.
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 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
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:
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.
On November 10, 2014, Defendants filed a letter with the trial court, which stated, in part,
Appellant's App. p. 26.
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 29, 2014, counsel for Defendants withdrew his appearance. Defendants filed no further response to PCM's complaint within the forty-five-day extension period.
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 correct error and for relief from judgment, and (3) the trial court properly awarded damages for lost profits to PCM.
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).
"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).
State, Dep't of Nat. Res. v. Van Keppel, 583 N.E.2d 161, 163 (Ind.Ct.App.1991), trans. denied.
In Count I, PCM alleges that Defendants entered into a contract with
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.
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 necessarily provide a defense to the complaint, even if the averment were assumed to be true.
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:
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.
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, 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.
"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).
Volunteers of Am. v. Premier Auto Acceptance Corp., 755 N.E.2d 656, 658 (Ind.Ct. App.2001) (citations omitted).
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
Laudig v. Marion Cty. Bd. of Voters Registration, 585 N.E.2d 700, 712 (Ind.Ct.App. 1992), trans. denied.
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 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).
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).
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 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.
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
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.
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 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.
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).
Cleveland v. Clarian Health Partners, Inc., 976 N.E.2d 748, 755 (Ind.Ct.App. 2012), trans. denied.
In re Rueth Dev. Co., 976 N.E.2d 42, 51 (Ind.Ct.App.2012), trans. denied.
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
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 unaware default judgment had been entered against them on February 5, 2015, until the hearing on damages on May 22, 2015.
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.
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 property. Defendants have failed to establish that relief from the default judgment entered against them is necessary and just.
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.
L.H. Controls, Inc. v. Custom Conveyor, Inc., 974 N.E.2d 1031, 1043 (Ind.Ct.App. 2012).
Ponziano Const. Servs., Inc. v. Quadri Enterprises, LLC, 980 N.E.2d 867, 873 (Ind.Ct.App.2012).
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 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.
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.
INS Investigations Bureau, Inc. v. Lee, 784 N.E.2d 566, 582-83 (Ind.Ct.App.2003) (citations omitted), trans. denied.
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.
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.
The judgment of the trial court is affirmed.
BAILEY, J., and ALTICE, J., concur.
