Opinion
21A-CP-858
05-18-2022
Arie Krakowski and Burr Held S.A.R.L., Appellants-Plaintiffs/Counterclaim Defendants, v. Metalloid Corporation, Fred Edwards, and Shrieve Chemical Products, LLC, f/k/a Shrieve Chemical Products, Inc., Appellees/Defendants.
ATTORNEY FOR APPELLANTS F. Anthony Paganelli Paganelli Law Group Indianapolis, Indiana ATTORNEYS FOR APPELLEES METALLOID CORPORAT ON AND FRED EDWARDS Mark J. Crandley Barnes & Thornburg LLP Indianapolis, Indiana D. Randall Brown Carrie M. Raver Fort Wayne, Indiana ATTORNEY FOR APPELLEE SHRIEVE CHEMICAL PRODUCTS, LLC Cathleen M. Shrader Barrett McNagny LLP Fort Wayne, Indiana
Pursuant to Ind. Appellate Rule 65(D), this Memorandum Decision shall not be regarded as precedent or cited before any court except for the purpose of establishing the defense of res judicata, collateral estoppel, or the law of the case.
Appeal from the Huntington Circuit Court The Honorable Jennifer L. DeGroote, Special Judge Trial Court Cause No. 35C01-1611-PL-624
ATTORNEY FOR APPELLANTS
F. Anthony Paganelli
Paganelli Law Group
Indianapolis, Indiana
ATTORNEYS FOR APPELLEES
METALLOID CORPORAT
ON AND FRED EDWARDS
Mark J. Crandley
Barnes & Thornburg LLP
Indianapolis, Indiana
D. Randall Brown
Carrie M. Raver
Fort Wayne, Indiana
ATTORNEY FOR APPELLEE
SHRIEVE CHEMICAL PRODUCTS, LLC
Cathleen M. Shrader
Barrett McNagny LLP
Fort Wayne, Indiana
MEMORANDUM DECISION
Weissmann, Judge.
[¶1] Throughout five years of litigation initiated by Arie Krakowski (Arie) and the company he indirectly owned, Burr Held S.A.R.L. (Burr Held), the pair obstructed discovery, defied court orders, and resisted depositions. The trial court twice sanctioned them for their bad faith, ordering them to pay a total of $28,000 in attorney fees. But they were undeterred.
[¶2] On the eve of Arie's deposition, which took months to schedule, his son, an attorney, suddenly claimed Arie was incompetent to testify. Given that Arie had recently engaged in mediation and signed a detailed affidavit only three weeks earlier, the trial court requested proof of his condition. The doctor hired by Arie's family provided an affidavit describing a cognitive disability unrelated to any known medical event. Yet, the affidavits of Arie's son and wife alleged a sudden decline. And the trial court soon learned that Arie had conducted business as usual by telephone during the period when he allegedly was cognitively impaired.
[¶3] The trial court dismissed the claims of Arie and Burr Held against Metalloid Corporation and its CEO, Fred Edwards. The court also entered default judgment on Metalloid and Edwards' counterclaims, awarding them damages, attorney fees, and prejudgment interest totaling $1.9 million. Arie and Burr Held appeal, raising many claims in their 113-page brief. We affirm the entry of dismissal and default judgment and the award of damages and attorney fees but remand the prejudgment interest award. We also affirm the trial court's earlier dismissal of another defendant, Shrieve Chemical Productions, for lack of personal jurisdiction.
Facts
[¶4] Arie is a mechanical engineer working in the lubricant industry. Metalloid is an Indiana corporation that previously was headquartered in Huntington, Indiana, until it moved to Sturgis, Michigan eleven years ago. Fred Edwards is Metalloid's CEO.
[¶5] Arie and Metalloid negotiated a contract (2004 agreement) giving Arie, as well as any parties he may "cooperate with," an exclusive right to sell certain Metalloid products and formulations in specific countries. They signed an addendum to the contract in 2009 that extended their agreement to at least December 23, 2019. The 2009 addendum provided that, "[f]or the avoidance of doubt, it is hereby clarified that the other provisions of the Agreement, which have not been amended in this Addendum above, have not been modified and are as set forth in the Agreement." App. Vol. II, p. 197.
[¶6] About a year later, Burr Held, a private French limited liability company, was established. Arie indirectly owns 91 percent of Burr Held, and Metalloid owns the remaining 9 percent. In 2011, Burr Held and Metalloid signed an agreement (2011 agreement) calling for Burr Held to sell certain Metalloid products and to pay Metalloid a royalty on those sales. In 2013, Metalloid also signed an agreement with Shrieve Products, Inc. (Shrieve), a Texas corporation, to sell Metalloid's products.
[¶7] A dispute arose. Arie and Burr Held claimed, in part, that the 2004 agreement granted Arie an exclusive license to sell all of the products Metalloid makes. Metalloid maintained that Arie was authorized to sell only certain products.
[¶8] In 2016, Arie and Burr Held (collectively, Krakowski) filed suit against Metalloid and Edwards (collectively, Metalloid), as well as against Shrieve. Krakowski claimed, among other things, breach of contract, intentional interference with contract, unjust enrichment, and various business interferences. Metalloid and Edwards counterclaimed for an accounting, breach of contract, injunctive relief, compensatory damages, and declaratory relief for unauthorized sales of Metalloid products by Krakowski.
Arie and Burr Held object to characterizing them collectively as Krakowski on appeal. We do so only for brevity and clarity and acknowledge that each had a separate agreement with Metalloid.
[¶9] The trial court dismissed the claims against Shrieve for lack of personal jurisdiction after finding that Shrieve lacked the necessary minimum contacts with Indiana. Krakowski then initiated a new lawsuit against Shrieve in Texas. That litigation remained pending at least through the conclusion of briefing in this appeal.
[¶10] Discovery in the Indiana litigation proved problematic, and ultimately Krakowski failed to produce some requested financial documents. The trial court sanctioned Krakowski twice, and they paid about $28,000 in sanctions. Two days before Arie was to be deposed in September 2020, after long delays in scheduling, counsel for Krakowski filed a motion for protective order staying Arie's deposition while he sought medical treatment for alleged diminished capacity. Attached to the motion were affidavits from Krakowski's counsel and from Arie's son, Rani Krakowski, an attorney who had been preparing Arie for the deposition. The motion and affidavits suggested Arie began having difficulties several weeks earlier, but his family realized only on August 29-30 that Arie's struggles were likely the product of a medical condition. Metalloid and Edwards objected, noting, in part, that the opposing side had agreed only two days earlier to produce Arie for a different deposition later in September. App. Vol. XII, p. 21.
[¶11] After an emergency hearing, the trial court granted the motion in part and ordered Krakowski to produce a report of Arie's condition from a licensed medical provider. By separate order that week, the trial court also directed Krakowski to produce many documents that they had failed to disclose in violation of the court's orders. Id. at 42-46. The court warned:
The Court has previously issued Orders to Compel on this longstanding discovery dispute and recently awarded attorney fees to Defendants as a sanction for Plaintiffs' failure to cooperate with certain portions of discovery. The Court has unmistakably tried to address the legitimate concerns of Defendants regarding the Plaintiffs' ongoing resistance to discovery. Plaintiffs find themselves in a situation where their continued refusal to cooperate can no longer be defended as having been caused by misunderstanding, circumstances related to the COVID-19 pandemic illness, or other potential reasonable excuses. Rather, Plaintiffs appear to be conducting themselves in a manner that is in blatant disregard of the Court's discovery Orders in an effort to delay or obstruct the rights of the Defendants in this case. This behavior must end or Plaintiffs risk facing further sanctions contemplated by Trial Rule 37(B).Id. at 45-46.
[¶12] On October 1, Metalloid and Edwards moved to show cause why Krakowski should not be held in contempt for failing to provide the documents that the trial court had ordered them to provide by September 28. Metalloid alternatively sought dismissal of Krakowski's claims and entry of default judgment on Metalloid's counterclaims. In response, the trial court again ordered Krakowski to produce within 14 days several documents or explain the absence in writing. After further disputes and multiple filings, the trial court sanctioned Krakowski by excluding evidence and ordering their payment of attorney fees of $26,273.25. The court noted in its order:
The Court finds that the Plaintiffs have continuously failed to respond to discovery and, inexplicably, have failed to ever request additional clarification or extensions of time from the Court. Explanations are never offered regarding the discovery disputes until after Defendants raise the issues with the Court through various Motions to Compel or Motions for Rule to Show Cause.App. Vol. XIII, pp. 167-68.
[¶13] On November 13, Metalloid filed a renewed motion to dismiss, alleging that Krakowski had misrepresented Arie's diminished capacity and that Arie was continuing to conduct Burr Held's business as usual. Attached to the motion was an affidavit from Anand Sharma, the owner of a lubricants and equipment manufacturing company in India. Sharma reported that Arie had called him two days earlier to determine whether Sharma's company would be ordering any products from Burr Held. Sharma also revealed that Arie had called him twice previously during the past few months and appeared normal during all of the calls. Id. at 203-05. Krakowski responded by challenging Sharma's credibility and suggesting that Arie's behavior on November 11 aligned with his diminished capacity.
[¶14] After a hearing, the trial court granted Metalloid's motion to dismiss the complaint filed by Krakowski, whom the trial court found deceptive. The court also granted default judgment to Metalloid and Edwards on their counterclaims. After a damages hearing, the trial court awarded Metalloid and Edwards about $1.9 million in damages, prejudgment interest, and attorney fees. It also permanently enjoined Arie and his two sons, Rani Krakowski and Gil Krakowski (who, like Rani, is an attorney), from continued sales of Metalloid products and disclosure of Metalloid's formulations.
Discussion and Decision
[¶15] Krakowski challenges, among other things, the trial court's determination of the discovery violation, its conduct of the damages hearing, and its determination of damages. We conclude that Krakowski has established no error except in the award of prejudgment interest, which we remand to the trial court for reconsideration.
I. Discovery Violation
[¶16] Krakowski claims the trial court erroneously imposed sanctions totaling about $28,000 because Krakowski established Arie's diminished capacity and unavailability for deposition. According to Krakowski, the trial court reached the opposite conclusion only by relying on an inadmissible and unreliable affidavit from Anand Sharma. Krakowski also maintains that Sharma's affidavit does not support a determination of fabrication or concealment regarding Arie's diminished capacity.
A. Standard of Review
[¶17] A trial court is vested with broad discretion in assessing and managing discovery matters. Nail v. Smith, 178 N.E.3d 801, 805 (Ind.Ct.App. 2021). Rulings on discovery issues will be reversed only when clearly against the logic and effect of the facts and circumstances before the court. Id. The party challenging the ruling must establish clear error and resulting prejudice. Towne & Terrace Corp. v. City of Indianapolis, 156 N.E.3d 703, 716 (Ind.Ct.App. 2020).
B. Sharma's Affidavit
[¶18] Krakowski claims Sharma's affidavit is "at best, inadmissible speculation." Appellants' Br., p. 47. Krakowski argues Sharma only spoke to Arie briefly, Sharma had a business relationship with Metalloid, attorney time records showed Sharma's affidavit was edited after it was signed, and Sharma was not qualified to offer an opinion on Arie's medical condition.
Krakowski objected to Sharma's affidavit on the basis of Indiana Evidence Rules 701 and 702 in the trial court, but Krakowski merely mentions that objection on appeal. If Krakowski is claiming a violation of those rules on appeal, Krakowski has waived the issue by failing to provide cogent argument supported by relevant authority. See Ind. Appellate Rule 46(A)(8)(a). We also note that the affidavits of Arie's son and wife- evidence that Krakowski credits as true-contained the same type of observations of Arie that Krakowski alleges are inadmissible and unreliable in Sharma's affidavit. App. Vol. XIII, pp. 203-5, 222-28, 236-38.
[¶19] Based on these arguments and others, Krakowski claims the trial court could have rejected Sharma's affidavit as incredible. See Indiana Evidence Rule 616 ("Evidence that a witness has a bias, prejudice, or interest for or against any party may be used to attack the credibility of the witness."). We agree. But the trial court also had the discretion to review this conflicting evidence and determine Sharma's affidavit was credible. Sharma's affidavit shows that he is a business associate of both Arie and Metalloid, that Arie called Sharma, and that Metalloid learned of the calls inadvertently. App. Vol. XIII, pp. 203-05. Krakowski's attacks on Sharma's affidavit are merely improper requests to reweigh the evidence. See Jamrosz v. Res. Benefits, Inc., 839 N.E.2d 746, 758 (Ind.Ct.App. 2005) (appellate courts neither reweigh the evidence nor judge witness credibility).
C. Sufficient Evidence
[¶20] Krakowski next claims the trial court's finding of a discovery violation is not supported by the evidence. Aside from repeating his unsuccessful attack on Sharma's affidavit, Krakowski also argues that the trial court erroneously considered Krakowski's record of violations. Krakowski views the dismissal as an improper "double-sanction," given that Krakowski had already paid the earlier discovery sanctions. Appellants' Br., p. 49. But Krakowski fails to explain or support the proposition that the trial court's imposition of multiple sanctions for continuing discovery abuses is prohibited. See generally App. R. 46 (requiring cogent argument and citation to authority in Appellants' brief). Progressive sanctions for continuing abuse of the discovery process are appropriate, although not required. Wright v. Miller, 989 N.E.2d 324, 328 (Ind. 2012).
[¶21] Krakowski also claims the trial court erroneously found that Krakowski had concealed Arie's diminished capacity. Arie's symptoms were not evident to his family and associates until late August 2020, according to Krakowski, and were not discussed with Krakowski's counsel until September 2, 2020. But the medical reports submitted by Krakowski showed no specifical medical event prompting the diminished capacity-a diagnosis that conflicts with Krakowski's claim of a sudden onset illness. App. Vol. XIII, pp. 229-35; App. Vol. XIV, pp. 52-53. Arie participated in mediation in late July 2020 and signed a detailed affidavit on August 11, 2020-less than three weeks before the allegations of diminished capacity. App. Vol. II, p. 127; App. Vol. XII, pp. 111-15.
After Krakowski claimed Arie suffered from diminished capacity, Krakowski submitted to the trial court a power of attorney that Arie granted to his sons. The power of attorney appears to have been executed in 2016, although the record before us is unclear on that point. App. Vol. XIII, p. 73, 85-90.
[¶22] At any rate, after learning that Arie phoned Sharma to solicit business and spoke normally during their nine-minute conversation, the trial court did not believe the medical reports any more than it believed the representations by Arie's family about his mental state. App. Vol. II, pp. 131-33. The medical reports were provided to "perpetuate a lie," the trial court found. Id. at 131. But even if the reports were accurate, the court determined they established Krakowski actively concealed Arie's diminished capacity until the eve of his deposition. Id. at 132-33. Either way, the court effectively found Krakowski had been deceptive and essentially gamed the judicial system through repeated delays, misrepresentations, and blatant disregard of court orders throughout the litigation-a conclusion that it was justified in finding based on the evidence before it.
[¶23] Contrary to Krakowski's claim, the trial court was not obligated to credit the medical reports over other evidence suggesting a ruse. See Noble Cnty. Highway Dep't v. Sorgenfrei, 163 Ind.App. 81, 321 N.E.2d 766, 769 (1975) (ruling that the court determines the weight of medical evidence and may affirm even when the weight of the evidence favors a different outcome); Cate v. State, 644 N.E.2d 546, 547 (Ind. 1994) (explaining that the Indiana Supreme Court has "never held expert testimony to be conclusive"). Krakowski has failed to establish the trial court's imposition of dismissal and default judgment as sanctions for Krakowski's discovery violations was clearly erroneous.
II. Damages Hearing
[¶24] Krakowski also claims the trial court's handling of the damages hearing was irregular. He contends he was entitled to a jury trial on damages and that the trial court's evidentiary rulings were faulty. We reject all of these claims.
A. Denial of Jury Trial
[¶25] Krakowski first asserts a jury should have determined the damages. Before the sanctions, the case had been set for jury trial as a result of timely demands for jury trial by both sides. After imposing the final discovery sanctions, the trial court vacated the jury trial, scheduled a bench trial for damages, and denied Krakowski's motion for jury trial on damages. App. Vol. XIV, pp. 20-29.
[¶26] Krakowski alleges that discovery sanctions imposed under Trial Rule 37(B)(2) cannot be "just," as that rule requires, unless a jury determines damages resulting from those sanctions. Appellants' Br., p. 51. Krakowski further notes Trial Rule 55(B), which provides that a court, after imposing default judgment, "may conduct such hearing or order such references as it deems necessary [to determine damages] and shall accord a right of trial by jury to the parties when and as required."
[¶27] As Krakowski acknowledges, we have determined that "Trial Rule 55's protection of the right to a jury trial is inapplicable" when determining damages for discovery sanctions imposed under Trial Rule 37. Prime Mortg. USA, Inc. v. Nichols, 885 N.E.2d 628, 645 (Ind.Ct.App. 2008). Furthermore, Trial Rule 37 does not mandate a hearing, much less a jury trial, on damages. Id. We reject Krakowski's attempt to distinguish Nichols and find the trial court did not abuse its discretion in denying a jury trial on damages. See id.
B. Disclosure of Evidence
[¶28] Krakowski next argues the trial court abused its discretion by allowing Metalloid to disclose its witness and exhibits lists only two days before the damages hearing. On January 14, 2021, Krakowski requested an order requiring Metalloid to submit its witness and exhibit lists to Krakowski at least 10 days before the damages hearing. Three days later, the trial court denied Krakowski's request, stating:
Defendants are not required to serve any witness and exhibit lists in advance of the damages hearing as the order directing such lists to be exchanged was under the Order Governing Jury Trial and the jury trial was previously vacated. The parties shall send to the Court and opposing party any evidence, exhibits or documents for use at the damages hearing at least two (2) business days before the proceeding.App. Vol. XIV, p. 29. Metalloid complied with the court's two-day deadline.
[¶29] Krakowski argues that the order made it so difficult to prepare for trial that Krakowski was "effectively ambushed" while attempting to "defend against Metalloid's voluminous evidence in support of its counterclaims." Appellants' Br, p. 53. Krakowski does not elaborate.
[¶30] Krakowski has established no error. Trial courts have broad discretion in managing discovery, and a party complaining about a discovery order must show prejudice before any abuse of discretion will be found. White-Rodgers v. Kindle, 925 N.E.2d 406, 411 (Ind.Ct.App. 2010); Ind. Trial Rule 61 ("The court at every stage of the proceeding must disregard any error or defect in the proceeding which does not affect the substantial rights of the parties."). Krakowski's vague and unsubstantiated allegations of prejudice are inadequate alone to satisfy the standard for an abuse of discretion. See Renover v. State, 460 N.E.2d 922, 934 (Ind. 1984) (finding no abuse of discretion where defendant failed to show prejudice).
C. Denial of Continuance
[¶31] Despite claiming that two business days' notice of Metalloid's exhibits was inadequate, Krakowski challenges the trial court's response to Krakowski's submission of exhibits less than two business days before the hearing. Krakowski's 259 exhibits arrived after 5 p.m. on the Thursday before the Monday morning hearing. App. Vol. XIV, p. 92. At 3:30 p.m. that Friday, the trial court ordered all of Krakowski's exhibits excluded because they were tardy. App. Vol. XIV, pp. 92, 94. Krakowski filed a motion to reconsider after business hours on Friday, and the trial court reversed its decision early Monday before the hearing. Tr. Vol. V, p. 36. Krakowski sought a brief continuance, as it was now permitted to introduce the previously excluded exhibits, but the trial court proceeded with the hearing.
[¶32] We review a trial court's ruling on a motion for continuance only for an abuse of discretion. Kimberlin v. DeLong, 637 N.E.2d 121, 128 (Ind. 1994). Krakowski claims that the trial court abused its discretion in denying the continuance because Krakowski focused weekend trial preparation on presenting Krakowski's case without the 259 exhibits. Krakowski does not elaborate or offer any other basis for finding he was prejudiced by the denial of the continuance, although he acknowledges he must show prejudice to prevail. Appellants' Br., p. 56 (citing Riggin v. Rea Riggin & Sons, Inc., 738 N.E.2d 292, 311 (Ind.Ct.App. 2000)).
Krakowski also cites the standard for determining when a denial of a motion for continuance is so arbitrary that it constitutes a denial of due process. Appellants' Br., pp. 56-57 (citing J.P. v. G.M., 14 N.E.3d 786, 790 (Ind.Ct.App. 2014)). Yet Krakowski does not otherwise mention a due process violation. If Krakowski intended to raise that claim, he has waived it by failing to offer cogent argument supported by citations to authority. See App. R. 46(A)(8)(a).
[¶33] Krakowski's mere allegation that his weekend preparation was impaired does not establish the prejudice necessary to establish an abuse of discretion. See Danner v. Danner, 573 N.E.2d 934, 937 (Ind.Ct.App. 1991) (no abuse of discretion where party's conclusory allegations failed to show prejudice); T.R. 61. When Krakowski moved for a continuance, the case had been pending more than four years, a damages hearing date had been in place for nearly two months, and the trial court had already granted Krakowski one continuance of the damages hearing due to a change in counsel. Given that millions of dollars were at stake, Krakowski reasonably would have prepared for the damages hearing with its own 259 exhibits before their after-hours exclusion the Friday before the hearing. And even absent a continuance, the trial court's reversal of its exclusion order should have enhanced Krakowski's presentation, not diminished it.
D. Edwards' Testimony
[¶34] Krakowski also attacks the trial court's admission of the live testimony and affidavits of Metalloid CEO Fred Edwards. Krakowski claims Edwards' affidavits were inadmissible hearsay. Krakowski also contends that both Edwards' affidavits and live testimony were inadmissible because Metalloid failed to establish a proper foundation for Edwards as an expert, disclose him as an expert witness, or prove Edwards' reasoning or methodology was scientifically valid and applicable to the case.
1. Hearsay
[¶35] Krakowski claims Edwards' affidavits were inadmissible hearsay because they were "not made by the declarant while testifying at the trial or hearing" and were "offered in evidence to prove the truth of the matter asserted." Ind. Evidence Rule 801(c). We presume a trial court's evidentiary rulings are correct, accord them great deference, and reverse only upon an abuse of that discretion. Stowers v. Clinton Cent. Sch. Corp., 855 N.E.2d 739, 748 (Ind.Ct.App. 2006); Rowe v. State, 717 N.E.2d 1262, 1264 (Ind.Ct.App. 1999). We will not find an abuse of discretion if the trial court's decision is sustainable on any ground. Gomez v. Gomez, 887 N.E.2d 977, 982 (Ind.Ct.App. 2008).
[¶36] In response, Metalloid cites Indiana Trial Rule 55, which specifies:
(A) Entry. 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.
(B) . . . If, in order to enable the court to enter judgment or to carry it into effect, it is necessary to take an account or to determine the amount of damages or to establish the truth of any averment by evidence or to make an investigation of any other matter, the court may conduct such hearing or order such references as it deems necessary . . . .
[¶37] Trial Rule 55 inherently permits the trial court to hear damages evidence by affidavit only. And Indiana Trial Rule 43(B) buttresses that authority, providing: "When a motion is based on facts not appearing of record[, ] the court may hear the matter on affidavits presented by the respective parties, but the court may direct the matter be heard wholly or partly on oral testimony or depositions." As no trial had occurred, Metalloid's motion seeking default judgment and damages was based largely on facts not appearing of record, meaning the trial court could accept both affidavits and live testimony in proceedings on that motion-including the damages hearing.
In any case, Edwards testified to some of the information in the exhibits, rendering them cumulative at least in part. The exhibits also largely fall within the recorded recollection exception to the hearsay rule. See Indiana Evidence Rule 803(5) (hearsay rule does not preclude admission of a record that is: 1) "on a matter the witness once knew about but now cannot recall well enough to testify fully and accurately"; 2) "was made or adopted by the witness when the matter was fresh in the witness's memory"; and 3) "accurately reflects the witness's knowledge."); Brane v. Roth, 590 N.E.2d 587, 591 (Ind.Ct.App. 1992) (finding admissible under Evidence Rule 803(5) an exhibit analyzing and correcting sales reports). Finally, to the extent the affidavits summarized unauthorized sales based on sales reports issued by Krakowski, the documents were admissible under Indiana Evidence Rule 1006, which specifies that a "proponent may use a summary, chart, or calculation to prove the content of voluminous writings, recordings, or photographs that cannot be conveniently examined in court."
2. Foundation
[¶38] Krakowski suggests Metalloid needed to establish and disclose Edwards as an expert before Edwards could testify by affidavit or in person as to Metalloid's damages. But such measures were not required. Edwards, as Metalloid's CEO, was a lay witness testifying from his personal knowledge of Metalloid's operations. "The primary difference between expert and lay testimony is that an expert is given the power to state an opinion based on facts of which he may or may not have personal knowledge." Johnson v. State, 380 N.E.2d 1236, 1238 (Ind. 1978). Lay witnesses such as Edwards may express an opinion if it is "rationally based on the witness's perception" and is "helpful to a clear understanding of the witness's testimony or to the determination of a fact in issue." Ind. Evidence Rule 701. An opinion must be based on reliable scientific principals only when "[e]xpert scientific testimony" is offered. Ind. Evidence Rule 702(b).
[¶39] If Edwards asserted an "opinion" about damages, Edwards' testimony was rationally based on his perceptions as a Metalloid officer and helped determine damages, which were in dispute. The trial court properly relied on it when determining Metalloid's damages. See Evid. R. 701; see generally, Courtview Ctr., L.L.C. v. Witt, 753 N.E.2d 75, 82 (Ind.Ct.App. 2001) (landowner may testify on the value of his land when proving damages if there is a basis for that valuation).
III. Calculation of Damages, Attorney Fees, and Prejudgment Interest
[¶40] Krakowski also challenges the trial court's awards of damages, attorney fees, and prejudgment interest.
A. Damages
[¶41] Krakowski claims the trial court erroneously calculated the damages by using the wrong formula, including sales for which Metalloid already had been compensated, and by entering judgment against Arie and Burr Held collectively. The determination of damages is within the sound discretion of the trial court. McLean v. Trisler, 161 N.E.3d 1259, 1270 (Ind.Ct.App. 2020), reh'g denied. We will not reverse an award of damages within the scope of the evidence. Id.
1. Formula
[¶42] Krakowski claims the trial court mistakenly awarded the "gross margin" of Krakowski's sales of Metalloid products after termination of the 2011 agreement. See generally App. Vol. II, p. 141. The trial court calculated that rate as "at least 40 percent" because when the 2011 agreement was in effect, Metalloid and Krakowski each were entitled to a 20 percent profit margin based on a royalty rate of "40% of net profit realized on each sale." Id. at 141-42. The court awarded Metalloid the entire 40 percent based on its view that Krakowski was not entitled to a 20 percent profit margin on unauthorized sales. Id. at 142.
[¶43] Citing Coffman v. Olson & Co., P.C., 906 N.E.2d 201, 209 (Ind.Ct.App. 2009), reh. denied, trans. denied, Krakowski contends Indiana requires a "net profits" calculation when a court intends to disgorge the offending party of ill-gotten funds. Coffman acknowledges that "lost profits" generally mean net-not gross-profits. Id. at 210. Yet Coffman nonetheless affirmed the trial court's award of damages equaling gross-not net-revenues for 13 months. Id. at 211. Coffman thus refutes the very proposition for which Krakowski cites it: that gross revenues are never appropriate disgorgement damages. Id. Regardless, Coffman involved the calculation of contract damages, and this case involves Krakowski's sales of Metalloid products unauthorized by any contract.
[¶44] Krakowski essentially argues that he has a right to recover his expenses in producing the unauthorized sales. But by investing in unauthorized sales, he risked losing whatever he contributed to that unsanctioned enterprise. Disgorgement damages are a form of equitable relief. State ex rel. Ind. State Bar Ass'n v. United Fin. Sys. Corp., 926 N.E.2d 8, 18 (Ind. 2010). These damages would be ineffective if the wrongdoer suffered only the loss of expected profits from the misconduct. See State ex rel. Ind. State Bar Ass'n v. Northouse, 848 N.E.2d 668, 674 (Ind. 2006) (noting that disgorgement damages are aimed at deterrence and would be much less effective if an offending party were permitted to retain fees collected for unauthorized services).
[¶45] Nevertheless, it appears Krakowski may have been allowed to retain some gross profits from the unauthorized sales, partly offsetting the overhead deductions Krakowski claims he should have received. Metalloid presented evidence suggesting Burr Held's actual gross profit margin at times was significantly more than 40 percent, although Burr Held need only pay 40 percent in damages. Tr. Vol. V, pp. 62-63; Tr. Vol. VII, pp. 5, 36-39.
2. Unauthorized Damages
[¶46] Krakowski also contends that the damages award improperly includes about $48,000 in authorized sales. According to Krakowski, the trial court erroneously relied on Edwards' damages calculations containing one sale of $38,156.28 occurring before the 2011 agreement expired on May 16, 2017, and six sales totaling $9,695.90 that occurred before the 2004 agreement expired on December 13, 2019. Krakowski does not elaborate other than to cite two pages of the transcript. Appellants' Br., pp. 68-69.
[¶47] The cited pages do not reflect Krakowski's figures. See Tr. Vol. VII, p. 34 (showing, among other things, six sales under the 2004 agreement with order dates preceding December 13, 2019, and totaling about $20,000); Tr. Vol. VII, p. 78 (showing sales under the 2011 agreement in May 2017 but not specifying the days on which those sales were made). As the brevity of Krakowski's argument leaves us unable to discern the specific sales of which Krakowski is complaining, and because breach of contract damages arose from some sales during the terms of the two contracts, Krakowski has failed to prove error. See App. R. 46(A)(8)(a) (requiring cogent argument); In re A.G., 6 N.E.3d 952, 957 (Ind.Ct.App. 2014) (we will not make arguments for party who offers non-cogent argument on appeal).
3. Breach of Contract Damages and Injunctive Relief Against Arie and Burr Held
[¶48] Krakowski also argues that the trial court erroneously ordered Burr Held to pay breach of contract damages to Metalloid. But the core of this argument is that Burr Held is not liable to Metalloid because the 2011 agreement between Burr Held and Metalloid is not relevant to this litigation. As Metalloid notes, the trial court, in its order imposing sanctions, entered judgment for Metalloid on its counterclaims, including an allegation that Burr Held breached the 2011 agreement. Appellees' Br., pp. 37-39. Given the trial court's entry of default judgment, the facts alleged in Metalloid's counterclaims were deemed admitted. McLean, 161 N.E.3d at 1270. The default judgment was a conclusive determination of Krakowski's liability on all of Metalloid's allegations in its amended complaint. See Nichols, 885 N.E.2d at 660. Krakowski therefore cannot raise substantive defenses, including any challenge to the relevancy of the 2011 agreement. Id.
[¶49] The same is true as to Krakowski's claim that the trial court erred in entering a permanent injunction against Arie and Burr Held aimed at protecting Metalloid's formulations from future disclosure or sale by Arie and Burr Held. Metalloid alleged in its amended counterclaim that its remedy at law was inadequate because Krakowski: 1) had continued to sell the Metalloid products after the agreements between them expired; and 2) had shared the Metalloid formulations with third parties without requiring confidentiality. App. Vol. VIII, pp. 190-198. As those allegations are accepted as true as a result of the default judgment, the trial court properly entered the permanent injunction. See McLean, 161 N.E.3d at 1270; Nichols, 885 N.E.2d at 660; see also Drees Co., Inc. v. Thompson, 868 N.E.2d 32, 41 (Ind.Ct.App. 2007) (ruling that permanent injunctions are within the discretion of the court and are aimed at prohibiting injurious interference with rights).
4. Personal Liability
[¶50] For similar reasons, we reject Krakowski's claim that the trial court erred in entering a judgment against both Arie and Burr Held when the unauthorized sales were by Burr Held. Although Arie owns the holding company that owns 91 percent of Burr Held, Krakowski claims the trial court had no basis for piercing the corporate veil and holding Arie personally liable for Burr Held's actions. But Metalloid's amended counterclaim sought to hold Arie personally liable for those sales. App. Vol. VIII, pp. 184-202. The trial court awarded default judgment to Metalloid on its counterclaims. It thus found Arie personally liable for breach of the 2011 agreement. This argument is another attempt by Krakowski to challenge liability by raising substantive defenses when only damages may be contested. See Nichols, 885 N.E.2d at 660.
B. Attorney Fees
[¶51] Krakowski challenges the trial court's award of $194,154.50 in attorney fees to Metalloid. Krakowski does not contend fees are unmerited. Instead, he claims only that the trial court's explanation is inadequate and leaves in question whether the award includes attorney fees incurred unrelated to the latest discovery violation. We review an attorney fee award under Indiana Trial Rule 37 for an abuse of discretion. Bacompt Sys. v. Ashworth, 752 N.E.2d 140, 146 (Ind.Ct.App. 2001). Krakowski's speculation about possible error is unfounded because the trial court made clear its reasonable basis for the $194,154.50 award.
[¶52] First, the trial court found Metalloid was entitled to attorney fees "[a]s a result of the extensive record of bad faith by the Krakowskis throughout this litigation to obstruct Defendants' discovery efforts and their defiant disregard of Court orders attempting to enforce discovery . . ." App. Vol. II, p. 147. Although Metalloid sought to recover all of its attorney fees in this litigation-nearly $2.5 million-the court reduced that amount to $194,154.50. Id. at 147-49.
[¶53] The trial court specified its award was limited to fees resulting from Metalloid's "extensive efforts needed to try and obtain complete discovery responses and depositions." Id. at 148. The trial court expressly excluded from that award: 1) $28,044.25 in fees previously paid by Krakowski as discovery sanctions; 2) $3,956.50 in fees that the trial court had already determined were unreasonable; and 3) costs incurred by Metalloid because the trial court could not discern if they were prompted by Krakowski's discovery violations. The trial court's detailed order accords with Trial Rule 37(B), which allows an order of reasonable attorney fees and expenses caused by a party's failure to obey a discovery order. Krakowski's attorney fees challenge has no merit.
C. Prejudgment Interest
[¶54] Krakowski challenges the award of prejudgment interest, as well. The trial court ruled:
43. Metalloid is also entitled to pre-judgment interest . . .
44. The outstanding amounts due and owing for wrongful sales after the terminations of the Krakowski Agreement and Burr Held Agreement are ascertainable by mere computation (total sales for a definitive time converted from Euros to U.S. Dollars and applying forty percent (40%) "gross margin."
45. Metalloid is entitled to pre-judgment (sic) interest at the rate of 8% per annum on the outstanding amounts due and owing for the wrongful sales by Krakowski and Burr Held, which the Court calculates to be $207,238.41.Id. at 161-62.
[¶55] The prejudgment interest award was improper and improperly calculated, according to Krakowski. The test for prejudgment interest is "whether the principal amount is ascertainable by mere computation"- that is, whether the damages are ascertainable in accordance with fixed rules of evidence and accepted standards of valuation. Hammes v. Frank, 579 N.E.2d 1348, 1357 (Ind.Ct.App. 1991) (citing Courtesy Enterprises, Inc. v. Richards Labs, 457 N.E.2d 572, 580 (Ind.Ct.App. 1983)). Prejudgment interest is proper only when "a simple mathematical computation is required." Id. (citing Thomas J. Henderson, Inc. v. Leibowitz, 490 N.E.2d 396, 400 (Ind.Ct.App. 1986)).
[¶56] The trial court's determination of damages is specific, but its award of prejudgment interest is not. The court did not specify how it reached the $207,238.41 figure, aside from saying that the interest rate was eight percent per annum. For instance, the order does not specify the period during which the interest applied. It also does not specify the method for applying the eight percent figure, given that the damages included unauthorized sales over several years. Metalloid suggests the trial court's calculations were based on the exhibits introduced during Edwards' testimony but goes no further in explaining how the trial court might have reached the $207,238.41 figure. We therefore remand this case to the trial court to reconsider its calculation of the prejudgment interest award. See Olcott Inter. & Co., Inc. v. Micro Data Base Sys., Inc., 793 N.E.2d 1063, 1079 (Ind.Ct.App. 2003) (remanding for recalculation of prejudgment interest where court based award on wrong period). \ IV. Injunction Against Arie's Sons
[¶57] In his final challenge to the Metalloid judgment, Krakowski contends the trial court lacked jurisdiction to enter injunctive relief against Arie's sons because they are not parties. But for that same reason, Krakowski's claim fails on appeal. Arie's sons did not appeal the judgment, and Krakowski cannot seek relief on their behalf in Krakowski's own appeal. See Simon v. Simon, 957 N.E.2d 980, 987 (Ind.Ct.App. 2011) (holding that a party cannot litigate rights belonging to another).
V. Dismissal of Claims Against Shrieve
[¶58] Krakowski next claims the trial court erroneously dismissed his claim against Shrieve for lack of jurisdiction. The trial court found Shrieve, a Texas corporation with its principal place of business in Texas, lacked the minimum contacts with Indiana necessary for personal jurisdiction. We agree and affirm the dismissal.
A. Standard of Review
[¶59] When a defendant challenges the existence of personal jurisdiction, the plaintiff must present evidence of the court's personal jurisdiction. Wolf's Marine, Inc. v. Brar, 3 N.E.3d 12, 15 (Ind.Ct.App. 2014). The defendant bears the ultimate burden of proving the lack of jurisdiction by a preponderance of the evidence unless apparent on the face of the complaint. Id. Whether personal jurisdiction exists is a question of law that this Court reviews de novo. LinkAmerica Corp. v. Albert, 857 N.E.2d 961, 965 (Ind. 2006). When personal jurisdiction requires factfinding-such as determining the extent of the defendant's contacts with the state-we accept such findings except where they are clearly erroneous. Brar, 3 N.E.3d at 15.
B. Personal Jurisdiction Overview
[¶60] Indiana courts may exercise personal jurisdiction over nonresident defendants in lawsuits "arising from the following acts committed by [the nonresident defendant] or [its] agent:
(1) doing any business in this state;
(2) causing personal injury or property damage by an act or omission done within this state;
(3) causing personal injury or property damage in this state by an occurrence, act or omission done outside this state if he regularly does or solicits business or engages in any other persistent course of conduct, or derives substantial revenue or benefit from goods, materials, or services used, consumed, or rendered in this state;
(4) having supplied or contracted to supply services rendered or to be rendered or goods or materials furnished or to be furnished in this state;
(5) owning, using, or possessing any real property or an interest in real property within this state . . .
In addition, a court of this state may exercise jurisdiction on any basis not inconsistent with the Constitutions of this state or the United States.Indiana Trial Rule 4.4.
[¶61] The Due Process Clause of the Fourteenth Amendment dictates that a state may exercise personal jurisdiction over a defendant only when the defendant has "certain minimum contacts with [the state] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" Int'l Shoe v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). This personal jurisdiction may be accomplished through either specific jurisdiction or general jurisdiction, but Krakowski concedes only specific jurisdiction is at issue. Appellants' Br., p. 95.
[¶62] Specific jurisdiction exists if the defendant's contacts with Indiana are not "continuous and systematic," but the controversy relates to or arises out of the defendant's contacts with Indiana. Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 414 n.8 (1984). Essentially, the defendant must have purposefully availed itself of the privilege of conducting activities within Indiana so that the defendant reasonably anticipates facing suit here. Link America Corp., 857 N.E.2d at 967 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474-75 (1985)).
C. Specific Jurisdiction
[¶63] Krakowski claims the trial court found no specific jurisdiction over Shrieve only by limiting its review of Shrieve's Indiana contacts to 2013 and later. Although the Shrieve Agreement was signed in 2013, when Metalloid was headquartered in Michigan, Krakowski claims the record shows that Metalloid was placing orders with Shrieve from Metalloid's former headquarters in Indiana as early as 2008. Krakowski also argues that Shrieve and Metalloid's mutual confidentiality agreement, executed in 2007, is at issue in this litigation. Finally, Krakowski claims that Shrieve met with Metalloid representatives in Indiana.
[¶64] As the trial court found, the raw materials Metalloid bought from Shrieve from 2008 to 2011 were shipped by Metalloid from Texas and only reached Indiana through Metalloid's actions. App. Vol. II, p. 92. Those materials were not used in the products that Metalloid sold to Shrieve to sell internationally beginning in 2014. Shrieve sold the products in China and India, not in Indiana.
[¶65] The "meeting" in Indiana was social: a dinner at a restaurant across the border in Indiana, occurring when Shrieve and Metalloid were meeting in Michigan. App. Vol. III, p. 91. The trial court specifically determined that Shrieve and Metalloid never met in Indiana-a finding supported by the record. App. Vol. II, p. 99. Regardless, the dinner is too tenuous a link to Indiana to generate personal jurisdiction over Shrieve. See McGee v. Int'l Life Ins. Co., 355 U.S. 220, 223 (1957) (ruling that a single contact with the forum state may be sufficient to establish specific jurisdiction over a defendant only if it creates a "substantial connection" with the forum state and the suit related to that connection). And the mutual confidentiality agreement between Shrieve and Metalloid was executed in Michigan and Texas, governed by Texas law, and predated the sales by Shrieve at the core of Krakowski's complaint against Shrieve.
[¶66] Based on this evidence, the court found that the alleged tortious acts by Shrieve occurred in Texas or another country and not in Indiana, and that Shrieve lacked the minimum contacts with Indiana necessary for personal jurisdiction. App. Vol. II, pp. 99-100. Krakowski has failed to establish that these findings are clearly erroneous. These findings establish that, although Shrieve's relationship with Metalloid began when Metalloid was headquartered in Indiana, Shrieve itself did not do business in Indiana and had no contacts with Indiana that related to Krakowski's litigation. As this controversy does not relate to or arise out of Shrieve's contacts with Indiana, the trial court lacked specific jurisdiction over Shrieve and properly dismissed Krakowski's claims against it for lack of personal jurisdiction. See Helicopteros Nacionales de Columbia, S.A., 466 U.S. at 414 n 8; Ind. Trial Rule 4.4.
Given this ruling, we need not address Shrieve's claim that Krakowski waived any error in the dismissal by later suing Shrieve in Texas courts.
[¶67] We affirm the trial court's judgments in all respects except as to its determination of prejudgment interest and remand the prejudgment interest judgment to the trial court for further proceedings consistent with this opinion.
As we affirm the sanctions of default judgment and dismissal, we do not address Krakowski's other arguments contesting liability.
Najam, J., and Vaidik, J., concur.