Techna-Fit, Inc. and Stuart Trotter v. Fluid Transfer Products, Inc.
2015 Ind. App. LEXIS 676
| Ind. Ct. App. | 2015Background
- Stuart Trotter founded Techna-Fit (CA) and later formed FTP with Michael Lang; Trotter then created an Indiana Techna-Fit and the companies became competitors.
- The parties executed a June 2012 Mutual Release and Stock Sale Agreement that (among other things) allowed “legitimate competition,” addressed customer data confidentiality, prohibited representing a continuing business relationship, and contained mutual releases contingent on no breach within 12 months.
- Disputes arose over FTP’s continued use of Techna-Fit’s parts-numbering system, customer confusion, and alleged conduct by Techna-Fit (poaching customers, copying product designs); FTP agreed to change numbering but conflict continued.
- Techna-Fit sued FTP (Lanham Act unfair competition, deception, conspiracy); FTP counterclaimed for breach of contract and third-partied Trotter for breach of contract, breach of fiduciary duty, defamation, and deception.
- After partial-summary-judgment skirmishing (court denied Techna-Fit’s later motion as repetitive under T.R. 53.4), a bench trial with an advisory jury found for FTP on most claims, awarding compensatory damages ($662,901.86 breach of contract; $125,000 fiduciary breach) and punitive damages ($1,500,000 against Trotter); trial court also awarded attorney’s fees to FTP.
- On appeal the court affirmed liability findings but reversed the punitive damages award (reducing it to $375,000) and reversed the attorney’s-fee award, otherwise affirming the judgment in part and reversing in part.
Issues
| Issue | Techna-Fit (Plaintiff) Argument | FTP (Defendant) Argument | Held |
|---|---|---|---|
| 1) Denial of Techna-Fit’s partial summary judgment as repetitive under T.R. 53.4 | Denial was reversible error; unopposed motion should have resulted in summary judgment on Lanham Act claim | Motion was repetitive; proper to deny under T.R. 53.4; trial evidence would have defeated summary judgment if FTP had been allowed to respond | Even if denial under T.R.53.4 was error, Techna-Fit cannot show substantial prejudice; no reversible error (no remand or entry of SJ) |
| 2) Exclusion of attorney–email communications | Emails show FTP’s failure to properly notify distributors and justify suit; exclusion prejudiced Techna-Fit | Emails are privileged communications or otherwise inadmissible | Court erred to the extent it excluded the emails as privileged (emails not privileged), but exclusion was harmless given stipulated facts and trial evidence |
| 3) Refusal of proposed jury instruction on absolute privilege for judicial statements | Instruction necessary because FTP emphasized Techna-Fit’s filing of suit as the basis for liability; refusal prejudiced Techna-Fit | Advisory jury only; bench judge decides law and is presumed to follow the law; any jury-instruction error cannot require reversal | No reversible error: bench trial with advisory jury; judge presumed to know the law and consider only proper evidence |
| 4) Mutual Release precluding FTP’s breach claims | Mutual Release’s “legitimate competition” clause permitted Techna-Fit’s conduct as a matter of law | Techna-Fit’s conduct went beyond legitimate competition (poaching customers, copying designs, filling FTP’s orders) | Whether conduct was legitimate competition is a fact question; trial evidence supports breach finding; appellate court will not reweigh evidence |
| 5) Size and calculation of punitive damages cap | Punitive cap should be based on compensatory damages tied to the fiduciary-duty claim only (punitive damages only pleaded for fiduciary breach) | Cap may be calculated against total compensatory award from all claims | Punitive damages must be limited to claims for which punitive relief was pleaded/tried; cap applies to compensatory damages for the fiduciary-duty claim; punitive reduced to $375,000 (3x $125,000) |
| 6) Award of attorney’s fees | Fees were not recoverable under contract; alternatively fees recoverable under statutory bad-faith sanction (I.C. §34-52-1-1(b)) | Fees recoverable as foreseeable consequential damages or under bad-faith statutory authority | Trial court erred: attorney’s fees are not recoverable as consequential contract damages absent statute/agreement; no adequate evidence of litigating in bad faith during the action; fee award reversed |
Key Cases Cited
- Moseley v. Secret Catalogue, Inc., 537 U.S. 418 (describing federal trademark law and Lanham Act background)
- Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844 (manufacturer liable for contributory trademark infringement when inducing or continuing supply to one it knows is infringing)
- Manley v. Sherer, 992 N.E.2d 670 (setting summary-judgment standard under Indiana law)
- SJS Refractory Co., LLC v. Empire Refractory Sales, Inc., 952 N.E.2d 758 (punitive damages must be tied to the claim for which punitive relief was sought; bad-faith fee-award standards)
- Thor Electric, Inc. v. Oberle & Associates, Inc., 741 N.E.2d 373 (Indiana authority rejecting recovery of attorney’s fees as consequential damages in breach of contract)