SJS Refractory Co. v. Empire Refractory Sales, Inc.
952 N.E.2d 758
| Ind. Ct. App. | 2011Background
- Empire Refractory Sales, SJS Refractory Co., Johnson, and Salwolke sued for conversion, fiduciary breach, and related claims.
- Empire alleged Johnson and Salwolke used Empire resources and personnel to form SJS and solicit Empire customers.
- Johnson and Salwolke, while at Empire, recruited employees and solicited long-time customers for SJS.
- Equity concerns included misappropriation of forms, tools, and inventory; some items were returned, others not.
- Trial court awarded damages for conversion and breach of fiduciary duty, and imposed sanctions and attorney fees.
- Appellants challenge the conversion damages, fiduciary-duty damages, punitive damages on fiduciary claims, and sanctions-related attorney fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Conversion judgment proper | Empire contends damages for returned property should be based on fair rental value, not doubled value. | Appellants argue returned property cannot sustain pecuniary loss; damages should use fair rental value and reduced other awards. | Reversed as to returned property damages; affirmed other conversion damages to the extent supported. |
| Fiduciary-duty damages and disgorgement | Empire seeks disgorgement of salaries/benefits and other losses due to breach and conspiracy. | Johnson and Salwolke challenge certain material-loss damages and misallocation of wages. | Disgorgement proper for January 2006 breach; reversed on $12,600 material-loss damages and affirmed other items; punitive damages reversed on fiduciary claim. |
| Punitive damages on fiduciary duty claim | Empire sought punitive damages for fiduciary breaches under conspiracy theory; trial argument tied to tortious interference claim. | Punitive damages not properly pleaded or tied to fiduciary claim; should be limited to tortious interference. | Reversed: punitive damages not proper on fiduciary-duty claim. |
| Attorney fees sanctions under Ind. Code § 34-52-1-1 | Empire seeks sanctions for bad-faith litigation; requests substantial fee award. | Appellants challenge the basis and amount of sanctions. | Sanctions award upheld; trial court did not abuse discretion. |
Key Cases Cited
- McLemore v. McLemore, 827 N.E.2d 1135 (Ind. Ct. App. 2005) (preponderance standard for civil conversion damages; requires causation of pecuniary loss)
- Nance v. Miami Sand & Gravel, LLC, 825 N.E.2d 826 (Ind. Ct. App. 2005) (damages for converted property returned measured by fair rental value)
- Court View Centre, LLC v. Witt, 753 N.E.2d 75 (Ind. Ct. App. 2001) (owner may testify to value of goods; purchase price admissible as evidence of value)
- Carpetland U.S.A. v. Payne, 536 N.E.2d 306 (Ind. Ct. App. 1989) (purchase price admissible as evidence of value of goods)
- Raess v. Doescher, 883 N.E.2d 790 (Ind. 2008) (preservation requirement for evidentiary error; objection at trial needed)
- 1st Source Bank v. Rea, 559 N.E.2d 381 (Ind. Ct. App. 1990) (punitive-damages pleading and amendment requirements; issues raised by consent)
- Huntington Mortgage Company v. DeBrota, 708 N.E.2d 160 (Ind. Ct. App. 1998) (conspiracy damages; joint tortfeasor liability)
- Kopka, Landau & Pinkus v. Hansen, 874 N.E.2d 1065 (Ind. Ct. App. 2007) (fiduciary-duty expectations for employees; loyalty breach rules)
- Wenzel v. Hopper & Galliher, P.C., 880 N.E.2d 996 (Ind. Ct. App. 2005) (disgorgement of improper remuneration for breach of fiduciary duty)
- Prime Mortgage USA, Inc. v. Nichols, 885 N.E.2d 628 (Ind. Ct. App. 2008) (allocation of attorney-fee recoveries under Crime Victim Relief Act; reasonableness standard)
- Knowledge A-Z, Inc. v. Sentry Insurance, 891 N.E.2d 581 (Ind. Ct. App. 2008) (multistep review for sanctions/fee awards; abuse of discretion final standard)
- Fisher v. Estate of Haley, 695 N.E.2d 1022 (Ind. Ct. App. 1998) (bad-faith standard for sanctions under Ind. Code § 34-52-1-1)