Archem, Inc. v. Simo

549 N.E.2d 1054, 1990 Ind. App. LEXIS 142, 1990 WL 10185
CourtIndiana Court of Appeals
DecidedFebruary 7, 1990
Docket03A01-8907-CV-263
StatusPublished
Cited by34 cases

This text of 549 N.E.2d 1054 (Archem, Inc. v. Simo) 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
Archem, Inc. v. Simo, 549 N.E.2d 1054, 1990 Ind. App. LEXIS 142, 1990 WL 10185 (Ind. Ct. App. 1990).

Opinion

ROBERTSON, Judge.

Appellant-plaintiff Archem, Inc. (Ar-chem) appeals from a jury verdict against it in favor of Gerald Simo (Simo), and from the trial court’s granting judgment on the evidence in favor of Simo.

We affirm.

Archem is a wholly-owned subsidiary of Share Corporation (Share) of Milwaukee, *1057 Wisconsin. Archem manufactures and distributes industrial chemical products. Share acquired Archem, an Arkansas corporation, in December, 1986.

In April, 1986, prior to Share’s acquisition of the “old” Archem, salesman Gerald Simo signed an independent distributorship agreement with old Archem, then headed by Stan Goss. At the time he agreed to sell old Archem’s products, Simo had worked for NCH, a competing business. His contract with NCH included a covenant not to compete. As a condition for Simo’s joining Archem, Goss agreed to pay any legal fees incurred by Simo in defending any lawsuit NCH might bring against Simo on the restrictive covenant. NCH did bring suit, naming Simo and Archem.

The parties were sharply divided on the factual issue of whether Share undertook to pay Simo’s attorney fees as part of its purchase agreement, or whether the “new” Archem agreed to pay Simo’s fees only after Simo agreed to work for the new Archem five years and to sell Archem products exclusively.

New Archem alleged that Simo made oral assurances that he would sell Ar-chem’s products exclusively for at least five years, and that upon that promise, counsel for new Archem drafted a contract in which Simo was to agree that he would repay attorney fees- expended by new Ar-chem in the NCH litigation if Simo ever breached his contract with new Archem. No written contract to sell exclusively was ever signed by Simo. In April, 1987, the NCH litigation was settled, and Share had paid over $31,000 in legal fees for Simo and old Archem. The record revealed that Share had made a practice of bringing litigation against former salespeople who left the company to induce them to stay.

In August, 1987, Simo ordered for a customer a product from Athea, also a subsidiary of Share and a manufacturer of chemicals, because new Archem did not have the product in its line. When Share officers heard of this, they told Carter Elliott, then a vice-president of the new Archem, to prevail upon Simo to sign a five-year contract or face a lawsuit demanding return of the $31,000 in fees that Share had paid on Simo’s behalf. Share hoped to make an example of Simo if he didn’t desist from selling competitors’ products. Upon learning that Simo had been selling chemical products manufactured by competitors, Share refused to fill Simo’s orders. When Simo refused to sign a contract with Share, Share filed suit against Simo for misrepresentation and unjust enrichment. A third count alleging breach of contract was added later.

Simo brought a counterclaim against Ar-chem, alleging several counts.

By the time the case reached the jury, the court had granted judgment in favor of Simo on Archem’s complaint, and only three of Simo’s counts remained to be decided by the jury: breach of contract, abuse of process and corrupt business influence. The jury found in favor of Simo on the breach of contract and abuse of process claims, awarding him $11,000 in compensatory damages and $750,000 in punitive damages.

The parties name six issues for our consideration:

1) whether the trial court erred in admitting evidence of Share’s financial position in this suit against Archem;
2) whether the trial court erred in admitting a videotaped deposition of Carter Elliott where Archem was unable to attend the deposition and was relegated to conducting its cross-examination over a speaker telephone;
3) whether the trial court erred when it denied Archem’s local counsel the opportunity to give the closing argument;
4) whether the punitive damages were excessive in proportion to compensatory damages;
5) whether judgment in favor of Simo was supported by the evidence; and
6) whether the trial court erred in granting judgment on the evidence against Archem.

I.

Essentially, Archem argues that financial documents of Share were inadmissi *1058 ble because no Indiana case has allowed evidence of the wealth of a parent corporation in assessing punitive damages against a subsidiary. However, in other contexts, Indiana courts have held that “the fiction of corporate entity may be disregarded where one corporation is so organized and controlled and its affairs are so conducted that it is, in fact, a mere instrumentality or adjunct of another corporation.” Feucht v. Real Silk Hosiery Mills, Inc. (1938), 105 Ind.App. 405, 12 N.E.2d 1019; General Finance Corp. v. Skinner (1981), Ind.App., 426 N.E.2d 77; Extra Energy Coal Co. v. Diamond Energy (1984), Ind.App., 467 N.E.2d 439.

As Archem fashions its argument concerning the admissibility of financial documents (and not the sufficiency of the evidence to sustain the jury verdict awarding the high punitive damages judgment), we need only determine whether there was a sufficient evidentiary basis for the court’s determination. Clark v. Walker Kurth Lumber Co. (1985), Tex.App., 689 S.W.2d 275; Miller v. Goodwin (1969), 246 Ark. 552, 439 S.W.2d 308. The economic wealth of a defendant is admissible evidence for the purpose of determining what amount of punitive damages would be appropriate to punish and deter the defendant. Allied Mills, Inc. v. P.I.G., Inc. (1983), Ind.App., 454 N.E.2d 1240. 1

Before admitting evidence of Share’s wealth, the court heard evidence that Paul Des Jardins was the only member of Ar-chem’s board of directors and he was chairman of the board of Share Corporation. Share filed consolidated tax returns, and Archem had not produced an annual report apart from the consolidated Share annual financial report. John Wright, who was a Share director, ran the Archem facility in Conway, Arkansas. Archem did not have its own in-house corporate counsel.

Identity of corporate officers is one consideration favoring piercing the corporate veil. Stacey-Rand, Inc. v. J.J. Holman (1988), Ind.App., 527 N.E.2d 726. The corporation’s filing a consolidated tax return is another factor. Extra Energy, supra. There was a sufficient evidentiary basis for admitting the evidence concerning Share, and allowing such evidence to go to the jury on the question of piercing the corporate veil. See Merriman v. Standard Grocery Company (1968), 143 Ind.App. 654, 242 N.E.2d 128

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Bluebook (online)
549 N.E.2d 1054, 1990 Ind. App. LEXIS 142, 1990 WL 10185, Counsel Stack Legal Research, https://law.counselstack.com/opinion/archem-inc-v-simo-indctapp-1990.