Jens Thogerson v. Millennium Trailers, Inc. (mem. dec.) ( 2015 )

MEMORANDUM DECISION
Oct 08 2015, 8:35 am
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.
ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE
Bradley J. Buchheit Stephen E. Schrumpf
Tucker Hester Baker & Krebs, LLC Peter G. DePrez
Indianapolis, Indiana Shelbyville, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Jens Thogerson, October 8, 2015
Appellant-Plaintiff, Court of Appeals Case No.
73A01-1503-MF-113
v. Appeal from the Shelby Circuit
Court.
The Honorable Charles D.
Millennium Trailers, Inc., O’Connor, Judge.
Appellee-Defendant. Cause No. 73C01-1008-MF-129
Shepard, Senior Judge
[1] Five years into the lawsuit Jens Thogerson filed against his former employer,
Thogerson has yet to produce the documents that underlie his claims or those of
the employer’s countersuit, as directed multiple times by Judge Charles
O’Connor and mediator Theodore Boehm.
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[2] Judge O’Connor finally concluded that this was not a failure to produce, but
rather a refusal. He dismissed Thogerson’s complaint, entered a default against
him on the counterclaims, and heard evidence on damages. We affirm.
Issues
[3] Thogerson raises two issues, which we restate as:
I. Whether the trial court abused its discretion in entering the
default, and
II. Whether the court’s award of damages to Millennium is
supported by the evidence.
Facts and Procedural History
[4] Millennium Trailers, Inc., sells custom trailers, and about eighty percent of its
business is generated online. It uses a database program to organize customer
information, including contact information and records of its interactions with
customers. Potential customers are automatically entered into the database
when they visit Millennium’s website and provide their contact information.
The program assigns new entries, or “leads,” to Millennium’s sales staff for
follow-up. Salespersons are authorized to edit entries as needed to reflect their
interactions with customers. In early 2010, the database contained over 19,000
entries.
[5] Thogerson worked for Millennium as a salesperson from September 1, 2009, to
May 27, 2010. He was paid on commission and sold fifty-six trailers for
Millennium.
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[6] About five months into his employment with Millennium, Thogerson started
his own trailer sales company, Custom Trailer Solutions, LLC (CTS). Like
Millennium, CTS generates most of its business through online contacts.
Thogerson sold trailers to seven customers through CTS while he worked for
Millennium. He found leads for CTS using Millennium’s customer data.
[7] For example, Millennium’s records indicate that Thogerson spoke with Ross
Larson on February 2, 2010, as a Millennium salesperson. On February 5,
Thogerson sold Larson a trailer, as owner of CTS. On February 10, he made a
notation on Millennium’s database that there was “nothing [he] could do”
because Larson had purchased a trailer elsewhere. Defendant’s Ex. D.
[8] As another example, the day after Thogerson quit Millennium, a man named
Morgan Brown called Millennium to ask when his trailer would be ready.
Millennium’s chief financial officer, William Mrozinski, learned that Brown
had purchased a trailer through CTS. Mrozinski had never heard of that
company and did not understand why Brown had called Millennium. He
telephoned Thogerson, who denied speaking with Brown or knowing anything
about CTS.
[9] Mrozinski examined the Indiana Secretary of State’s database of registered
businesses and discovered that Thogerson was CTS’s founder. When
Mrozinski called Thogerson again, Thogerson admitted “he had taken four
other names from our database, and that he would make restitution for what he
had taken from us.” Tr. p. 59.
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[10] Thogerson later admitted during responses to discovery that Millennium’s
database had provided him with Brown’s contact information as a possible lead
and that he had sold a trailer to Brown through CTS without Millennium’s
knowledge. Thogerson also admitted that he altered Brown’s information in
Millennium’s database so that Millennium could not contact Brown.
[11] CTS continued to operate, and Thogerson was its chief salesperson. From
February 2010 to July 2013, CTS sold trailers to 185 customers listed in
Millennium’s customer database.
[12] In August 2010, Thogerson sued Millennium, demanding payment of
commissions. Millennium counterclaimed, alleging conversion of proprietary
information, breach of fiduciary duty, and disclosure of trade secrets.
[13] Millennium sent Thogerson requests for discovery. Thogerson sought and
received two extensions of time to respond. Meanwhile, the court directed the
parties to mediation and appointed Theodore Boehm as mediator.
[14] In September 2011, Millennium sent a letter to Thogerson, noting that he had
provided incomplete responses to nine of its requests for production of
documents. Among other requests, Millennium asked for CTS’s records of
trailer sales from September 1, 2009 onward, Thogerson and CTS’s cell phone
and telephone records from the period when he worked for Millennium, and
correspondence between Thogerson or CTS and trailer manufacturers during
the time he worked for Millennium.
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[15] Two months went by. In November 2011, Millennium filed a motion to
compel, asking the trial court to order Thogerson to respond fully to its requests
for production. In response, Thogerson moved for a protective order. During a
hearing in December 2011, the parties told the court they had reached an
agreement on the discovery dispute. The parties agreed that Thogerson could
submit his discovery responses to Boehm. Appellant’s App. p. 52.
Millennium’s lawyer prepared a proposed joint order reflecting the parties’
agreement, but neither Thogerson nor his lawyer ever signed it. Id.
[16] The following spring, in April 2012, Millennium again moved to compel,
asserting that Thogerson had breached the agreement by failing to provide
discovery to the mediator. The trial court granted the motion, directing
Thogerson to give the documents to Boehm.
[17] Thogerson requested an extension, and on May 15, 2012, the court declared:
“[Thogerson] shall have 5 days from the date of this order to submit responsive
documents.” Id. at 6. On May 23, 2012, Thogerson filed a “Certificate of
Compliance,” certifying that the documents the court ordered Thogerson to
produce had been sent to the mediator. Id. at 56.
[18] On June 28, 2012, the parties met with Boehm, and Thogerson admitted he had
not given the mediator the requested documents, and the certificate of
compliance had been false. Id. at 60, 68. Boehm sent the parties a letter in
which he directed Thogerson to “provide a list of [CTS] revenue generating
transactions from inception to current date, identifying the customer, date and
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amount” on or before July 11. Id. at 67. Thogerson did not comply with this
directive.
[19] In October 2012, Millennium filed a Verified Motion for Discovery Sanctions.
Another three months went by. Thogerson had still not produced documents.
[20] As the lawsuit moved into its fourth calendar year, on January 23, 2013, the
trial court conducted a hearing on the request for sanctions.
[21] The court granted Millennium’s motion, noting that “no documents have been
produced” and that Thogerson “acknowledged sanctions were appropriate and
asked that they be in the form of a monetary assessment.” Appellant’s App. p.
68. Judge O’Connor rejected Thogerson’s request, having concluded that
Thogerson’s actions were actually a “refusal to comply.” Id. He noted
Thogerson’s repeated failure to follow directives from the court and the
mediator, and the false certification, which the court characterized as
“egregious conduct.” Appellant’s App. p. 70. As a result, the court dismissed
Thogerson’s complaint with prejudice, entered a default judgment against him
as to Millennium’s counterclaims, and scheduled a hearing to address
Millennium’s damages and monetary sanctions for Thogerson’s
noncompliance.
[22] More than two months later, on April 1, 2013, Thogerson’s new lawyer moved
to set aside the sanctions, saying that new counsel was “passingly familiar”
with the actions that had led up to them. Appellant’s App. p. 71. This would
have been a propitious moment to show up with the evidence in question. It
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was not to be. Counsel neither tendered any documents nor said anything in
his motion about complying with Thogerson’s discovery obligations should the
motion be granted. The court denied Thogerson’s motion and scheduled a
bench trial on damages.
[23] The court held a trial on Millennium’s counterclaims and issued an order with
findings of fact and conclusions of law on February 18, 2014, assessing
damages for conversion and breach of fiduciary duty. Thogerson filed a motion
to correct error. The trial court granted the motion and scheduled a new bench
trial on damages. After the new trial, the court entered judgment to
Millennium for the $4,400 in profit it lost on each of the 185 trailers Thogerson
sold to Millennium customers, plus $100,000 in exemplary damages, and
$1,000 in attorney fees. This appeal followed.
Discussion and Decision
I. Discovery Sanctions
[24] Thogerson argues that the trial court should not have denied his motion to set
aside default. The case was not fully adjudicated when Thogerson filed the
motion, so the issue is really whether the court erred by issuing discovery
sanctions in the form of dismissing Thogerson’s complaint and entering default
against him on Millennium’s counterclaims.
[25] If a party fails to obey an order to provide or permit discovery, a trial court may
impose sanctions, including “An order . . . dismissing the action or proceeding
or any part thereof, or rendering a judgment by default against the disobedient
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party.” Ind. Trial Rule 37(B)(2). In addition, 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.” Id.
[26] Trial courts possess wide discretion in dealing with discovery matters, and we
review a court’s decision regarding discovery sanctions only for an abuse of
discretion. Prime Mortg. USA v. Nichols, 885 N.E.2d 628 (Ind. Ct. App. 2008);
accord, Noble Cnty. v. Rogers, 745 N.E.2d 194 (Ind. 2001).
[27] Thogerson argues that the trial court’s dismissal of his complaint and entry of
default on Millennium’s counterclaims was unjust because the court did not
first warn him that his noncompliance could result in those outcomes. It is well
established that a court is not required to impose lesser sanctions prior to
applying sanctions like dismissal or default. Hatfield v. Edward J. DeBartolo
Corp., 676 N.E.2d 395 (Ind. Ct. App. 1997), trans. denied. While explicit
warnings about particular sanctions play a role in evaluating whether a trial
court exercised appropriate discretion, at the heart of the matter is whether the
offending party was afforded time to comply and understood that sanctions
could follow for continuing failure to perform. See Prime Mortg., 885 N.E.2d at
649.
[28] The record demonstrates that Thogerson repeatedly defied court orders and
mediator requests over a period of several years. Initially, Thogerson received
two extensions of time to respond to Millennium’s discovery requests, and
despite the extensions did not provide appropriate answers to nine requests for
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production. After Millennium filed its first motion to compel, Thogerson
represented to the trial court in December 2011 that he had reached an
agreement with Millennium and would turn over the documents to Boehm.
Thogerson did not produce any documents.
[29] Next, when Millennium filed a second motion to compel five months later, the
trial court granted the motion. After requesting and receiving a five-day
extension of the deadline, Thogerson filed a false certification with the trial
court stating that he had turned over the documents to Boehm.
[30] When the parties met with Boehm one month later, and Thogerson admitted
that he had not turned over any documents, Boehm issued a letter directing
Thogerson to again produce the documents, with a deadline of July 11. Once
again, Thogerson did not.
[31] Thogerson says that his noncompliance was his former attorney’s fault. He
argues that he should not be penalized for his lawyer “going rogue.”
Appellant’s Br. p. 17. Of course, appellate courts regularly say that a client is
bound by his attorney’s actions. See, e.g., Weinreb v. TR Developers, LLC, 943
N.E.2d 856 (Ind. Ct. App. 2011) (affirming denial of motion for relief from
judgment over claim that failure to respond to motion for summary judgment
was prior counsel’s fault, not attributable to client), trans. denied.
[32] To be sure, trial courts and appellate courts are reluctant to come down too
hard on clients, despite our regular recitation that they are bound by the acts of
counsel. Still, Thogerson is now on his third set of lawyers over five years, and
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as Judge O’Connor said, “no documents have been produced.” Appellant’s
App. p. 68. The second lawyers and the third lawyers have done nothing
concrete to make good on Thogerson’s long-standing obligations, though
avenues for doing so exist. Thogerson says he did not know much about his
first lawyer’s actions, which can occur, but the case record demonstrates that he
has known about his obligation to produce for at least thirty months, to no
effect.
[33] Based on Thogerson’s repeated noncompliance with the trial judge and
mediator’s orders over a good number of years, and his attempt to deceive the
court by filing a false certificate of compliance, we cannot conclude that the
court’s sanctions were an abuse of discretion. See Prime Mortg., 885 N.E.2d at
650 (affirming entry of default judgment as a discovery sanction where
defendant repeatedly failed to comply with orders regarding discovery and
submitted a false document to the court).
[34] Touching a point from Trial Rule 60 about setting aside defaults, Thogerson
says he had a meritorious claim for unpaid wages and a meritorious defense to
Millennium’s counterclaim for theft of a trade secret. Thogerson’s repeated and
willful noncompliance rendered it impossible for the trial court to address the
merits of his claims. Furthermore, with respect to Millennium’s counterclaims,
the trial court entered judgment on all three counterclaims (theft of a trade
secret, conversion, and breach of fiduciary duty). Thus, even if Thogerson had
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a valid defense to one of the counterclaims, the trial court’s judgment is still
1
supported by the remaining two.
II. Evidence to Support Damages Award
[35] Thogerson challenges the damages award, but he does not cite to any
authorities or critique any of the evidence heard by the trial court. As a result,
he has waived the claim for appellate review. See Dickes v. Felger, 981 N.E.2d
559 (Ind. Ct. App. 2012) (challenge to evidentiary ruling waived when
appellant failed to cite to authority or discuss the record).
[36] Indeed, Thogerson does not contest the trial court’s calculations. Instead, he
says that if the default is set aside and the case tried on the merits, the evidence
will point to a judgment in his favor.
[37] Both the trial judge and the mediator committed years to efforts at discovering
ahead of time what evidence Thogerson and this three sets of lawyers might
have in mind.
Conclusion
[38] For the reasons stated above, we affirm the judgment of the trial court.
1
In any event, there is ample evidence to support a conclusion that Millennium’s customer database, which
was built over time using a program purchased by Millennium and established over 19,000 privately-held
customer entries, constituted a trade secret as set forth in Indiana Code section 24-2-3-2 (1993). See Amoco
Prod. Co. v. Laird, 622 N.E.2d 912 (Ind. 1993) (a survey of potential petroleum fields, which took a great deal
of time and effort to develop, was a trade secret).
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[39] Affirmed.
Vaidik, C.J., and Bradford, J., concur.
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