Allen R. Stout v. Linda Zabona

CourtIndiana Court of Appeals
DecidedApril 9, 2012
Docket92A03-1105-CT-203
StatusUnpublished

This text of Allen R. Stout v. Linda Zabona (Allen R. Stout v. Linda Zabona) is published on Counsel Stack Legal Research, covering Indiana Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Allen R. Stout v. Linda Zabona, (Ind. Ct. App. 2012).

Opinion

FILED Pursuant to Ind.Appellate Rule 65(D), this Memorandum Decision shall not be regarded as precedent or cited Apr 09 2012, 9:37 am before any court except for the purpose of establishing the defense of res judicata, collateral estoppel, or the law CLERK of the supreme court, court of appeals and of the case. tax court

ATTORNEY FOR APPELLANT: ATTORNEY FOR APPELLEE:

DAVID W. STONE, IV BENJAMIN D. ICE Stone Law Office & Legal Research WILLIAM A. RAMSEY Anderson, Indiana Murphy Ice & Koeneman, LLP Fort Wayne, Indiana

IN THE COURT OF APPEALS OF INDIANA

ALLEN R. STOUT, et al., ) ) Appellants-Defendants, ) ) vs. ) No. 92A03-1105-CT-203 ) LINDA ZABONA, ) ) Appellee-Plaintiff. )

APPEAL FROM THE WHITLEY CIRCUIT COURT The Honorable James R. Heuer, Judge Cause No. 92C01-0909-CT-607

April 9, 2012

MEMORANDUM DECISION – NOT FOR PUBLICATION

BARNES, Judge Case Summary

Allen Stout appeals the jury‟s verdict and award of damages in favor of Linda

Zabona on her complaint for breach of contract, breach of fiduciary duty, conversion, and

tortious interference with a business relationship against Stout, Christopher Wheeler,

Stout, Wheeler & Zabona, LLP, and Stout & Wheeler, P.C. (collectively, “the

Defendants”). Stout also appeals the jury‟s verdict against the Defendants on their

counterclaim for breach of contract and breach of fiduciary duty. We affirm.

Issues

Stout raises seven issues, which we reorder, consolidate, and restate as:

I. whether public policy prohibits Zabona‟s recovery of damages;

II. whether Zabona forfeited her right to recover;

III. whether the jury was properly instructed;

IV. whether the damages award was proper; and

V. whether the jury‟s verdict on the Defendants‟ counterclaim is contrary to law.

Facts

Linda Zabona began working for Stout as a paralegal in 1995. In 1997, Zabona

went to law school and, after graduating, worked with Stout as an associate attorney. At

some point, Stout and Wheeler formed a partnership and, on December 24, 2003, Stout,

Wheeler, and Zabona executed a limited liability partnership agreement forming a

partnership named Stout, Wheeler & Zabona, LLP (“the Firm”). At some point, Zabona

became the managing partner of the Firm.

2 On June 27, 2007, Stout and Wheeler presented Zabona with a “Notice of

Partnership Liquidation,” which immediately terminated the partnership. Pl. Ex. 2. Stout

and Wheeler permitted Zabona to remove only a few personal items before requiring her

to leave the office. Eventually Zabona received client files and some final monetary

payments, and Stout and Wheeler formed a new partnership called Stout & Wheeler, PC.

On March 14, 2008, Zabona filed a complaint against Stout, Wheeler, Stout,

Wheeler & Zabona, LLP, and Stout & Wheeler, PC. In April 2009, she filed an amended

complaint alleging, among other things, breach of contract, breach of fiduciary duty,

conversion, and tortious interference with a business relationship. The Defendants

counterclaimed alleging that Zabona had embezzled, converted, or otherwise

misappropriated funds in breach of the terms of the partnership agreement and in breach

of her fiduciary duties. A jury found in favor of Zabona and against the Defendants on

Zabona‟s complaint and awarded Zabona $98,000 in damages. The jury found against

the Defendants on their counterclaim. Stout now appeals.1

Analysis

I. Public Policy

Stout argues that Zabona is not entitled to recover because she improperly billed

for her paralegal‟s time, she assisted her paralegal in the unlicensed practice of law, and

she improperly shared fees with a non-lawyer. According to Stout, Zabona violated law

and public policy, and the verdict improperly rewards her for such violations. Zabona

1 Stout appeals in his individual capacity. Based on our holding today, we need not address Zabona‟s request that we affirm the judgment against Stout, Wheeler, & Zabona, LLP, and Stout & Wheeler, LLP, regardless of our decision on Stout‟s appeal. 3 argues that, because the Defendants did not make this argument to the trial court, Stout is

barred from raising it on appeal. Indeed, “[a] party may not raise an issue for the first

time in a motion to correct error or on appeal.” Troxel v. Troxel, 737 N.E.2d 745, 752

(Ind. 2000).

However, as Stout points out, our supreme court has noted:

The rule that parties will be held to trial court theories by the appellate tribunal does not mean that no new position may be taken, or that new arguments may not be adduced; all it means is that substantive questions independent in character and not within the issues or not presented to the trial court shall not be first made on appeal. Questions within the issues and before the trial court are before the appellate court, and new arguments and authorities may with strict propriety be brought forward.

Wagner v. Yates, 912 N.E.2d 805, 812 n.1 (Ind. 2009). Citing Wheeler‟s trial testimony

that he had ethical concerns about Zabona‟s purported billing practices, that from his

perspective Zabona was fee sharing, and that Zabona‟s paralegal was doing work outside

of Zabona‟s purview, Stout asserts that the issue of the impropriety of recovering

improperly charged fees was raised at trial.

We disagree. Whether an award of damages to Zabona is contrary to public policy

is a substantive question independent in character from the Defendants‟ trial arguments

and is not properly raised for the first time on appeal. Although there is evidence of

Wheeler‟s concerns, the Defendants did not pursue this theory as an affirmative defense,

it was not addressed in the pre-trial order, and the jury was not instructed on it. This

4 issue is waived.2 See McGill v. Ling, 801 N.E.2d 678, 688 (Ind. Ct. App. 2004)

(concluding that an issue was waived because, “[i]f we were to adopt McGill‟s assertion

that a party does not waive a new argument raised for the first time on appeal simply

because there are facts in the summary judgment record to support that argument, that

would create an exception which swallows the waiver rule.”), trans. denied.

II. Forfeiture

Stout argues that, because of Zabona‟s allegedly illegal and unethical conduct and

because Zabona used her Firm credit card for personal charges, for gas for Firm

employees, and for a dryer for her paralegal, she has “been guilty of fraudulent actions

and has unclean hands . . . .” Appellant‟s Br. p. 16. Stout claims that Zabona‟s actions

were so egregious that she should be held to have forfeited any and all interest in the

partnership. In response, Zabona argues that this issue is waived because it was not

raised as an affirmative defense, it was not addressed in the pre-trial order, and the jury

was not instructed on it. Without any argument by Stout establishing that this issue has

not been waived, we must agree with Zabona that Stout may not pursue this theory of

unclean hands, fraud, and forfeiture for the first time on appeal. See Troxel, 737 N.E.2d

at 752.

III. Jury Instructions

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Allen R. Stout v. Linda Zabona, Counsel Stack Legal Research, https://law.counselstack.com/opinion/allen-r-stout-v-linda-zabona-indctapp-2012.