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

• Court: Indiana Court of Appeals
• Decided: October 8, 2015
• Docket: 73A01-1503-MF-113
• Status: Published

Opinion

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.

Court of Appeals of Indiana | Memorandum Decision 73A01-1503-MF-113 | October 8, 2015 Page 1 of 12 [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.

Court of Appeals of Indiana | Memorandum Decision 73A01-1503-MF-113 | October 8, 2015 Page 2 of 12 [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.

Court of Appeals of Indiana | Memorandum Decision 73A01-1503-MF-113 | October 8, 2015 Page 3 of 12 [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.

Court of Appeals of Indiana | Memorandum Decision 73A01-1503-MF-113 | October 8, 2015 Page 4 of 12 [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

Court of Appeals of Indiana | Memorandum Decision 73A01-1503-MF-113 | October 8, 2015 Page 5 of 12 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

Court of Appeals of Indiana | Memorandum Decision 73A01-1503-MF-113 | October 8, 2015 Page 6 of 12 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

Court of Appeals of Indiana | Memorandum Decision 73A01-1503-MF-113 | October 8, 2015 Page 7 of 12 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

Court of Appeals of Indiana | Memorandum Decision 73A01-1503-MF-113 | October 8, 2015 Page 8 of 12 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

Court of Appeals of Indiana | Memorandum Decision 73A01-1503-MF-113 | October 8, 2015 Page 9 of 12 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

Court of Appeals of Indiana | Memorandum Decision 73A01-1503-MF-113 | October 8, 2015 Page 10 of 12 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).

Court of Appeals of Indiana | Memorandum Decision 73A01-1503-MF-113 | October 8, 2015 Page 11 of 12 [39] Affirmed.

Vaidik, C.J., and Bradford, J., concur.

Court of Appeals of Indiana | Memorandum Decision 73A01-1503-MF-113 | October 8, 2015 Page 12 of 12