Stuart Reed and Michael Reed v. Michael Cassady

27 N.E.3d 1104, 2015 Ind. App. LEXIS 139, 2015 WL 1011302
CourtIndiana Court of Appeals
DecidedMarch 9, 2015
Docket49A05-1405-PL-220
StatusPublished
Cited by8 cases

This text of 27 N.E.3d 1104 (Stuart Reed and Michael Reed v. Michael Cassady) 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
Stuart Reed and Michael Reed v. Michael Cassady, 27 N.E.3d 1104, 2015 Ind. App. LEXIS 139, 2015 WL 1011302 (Ind. Ct. App. 2015).

Opinion

BROWN, Judge.

[1] Stuart Reed and Michael Reed (the “Reeds”) appeal the trial court’s order on April 22, 2014, related to certain discovery sanctions and contempt for failure to pay other previously-ordered sanctions. We affirm.

Facts and Procedural History

[2] On July 10, 2012, Michael Cassady filed a Verified Complaint for Damages and for Declaratory and Permanent In-junctive Relief against Stuart Reed, Michael Reed, Distinctive Transportation Services, Inc. (“DTS”), Specialty Transpor *1107 tation, LLC (“Specialty”), and Executive Coach, LLC (collectively, the “Defendants”). Cassady alleged that he is a shareholder of DTS, that Stuart Reed is a shareholder of DTS and its president and sole director and a member of Executive Coach, LLC, that DTS is a full-service transportation company, that DTS has three shareholders, and that Cassady owns forty percent of DTS, Stuart Reed owns fifty-one percent of DTS, and Michael Reed owns nine percent of DTS. Cassady alleged that the Reeds used their corporate control of DTS to divert profits from DTS to other companies and unlawfully used DTS’s assets for the benefit of other companies in which the Reeds had an ownership interest, that at one time, of the 136 cars that were titled to DTS, only seventy-nine were being used by DTS, that Cassa-dy objected to the misuse of DTS’s assets because it was causing DTS to lose significant profits and substantially impair the value of Cassady’s shares in DTS, and that, in retaliation against his objections, the Reeds decided to terminate Cassady’s employment with DTS and to distribute DTS’s assets to other companies controlled by the Reeds. Cassady asserted three counts of breach of fiduciary duty, inelud-' ing for oppressive conduct, corporate freeze out, and self-dealing, and counts of retaliatory discharge, breach of contract, and conversion, and he requested declaratory judgment.

[3] The Defendants filed counterclaims alleging in part that Cassady was negligent in his duties regarding the management of DTS and removed assets of DTS, and raising counts of breach of fiduciary duties and conversion.

[4] On April 30, 2013, Cassady filed a motion to compel discovery arguing that it had been since July 2012 that he served DTS with interrogatories and a request for production of documents, that DTS’s only response was evasive interrogatory answers and a stack of nearly 1,900 pages of largely nonresponsive paper documents, and that DTS refused to produce certain readily-available financial documents, tax returns, and responsive email messages. Cassady attached to his motion copies of the discovery requests, copies of DTS’s written discovery responses, and several letters by Cassady’s counsel regarding the discovery, among other documents.

[5] On May 14, 2013, DTS filed a response to Cassady’s motion to compel discovery arguing in part that it had bate-stamped the documents it produced and referred to bate numbers throughout its responses to aid review by Cassady’s counsel, that Cassady’s counsel had not raised any issues with the discovery responses for nearly six months, that Cassady’s counsel then sent twenty pages of demands and insisted they be met within eight days, that the motion to compel was wholly unnecessary and filed in bad faith, and that the court should award DTS attorney fees incurred in responding to the spurious motion.

[6] On July 24, 2013, the court held a hearing on Cassady’s motion to compel discovery, granted the motion, stated it wanted full and complete responses within thirty days, and scheduled a status conference for August 26, 2013. The court also discussed the scheduling of a deposition for October 2013 and stated that “some of the language in some of these motions could have been a poster child on both sides to show the young lawyers ... how not to behave.” Transcript at 40.

[7] The court held status conferences on August 26, 2013, and September 30, 2013. At the latter, the court stated that it was going to grant fees because the court’s “bark’s got to be backed up,” that it was going to award fees to Cassady in the amount of $10,000 for failure to comply, *1108 and that the amount .must be paid within thirty days. Id. at 126.

[8] An entry in the trial court’s chronological ease summary (“CCS”) dated October 4, 2013, stated:

Hearing Date: 09/30/2013
Matter come on for a hearing regarding plaintiff[’]s motion to compel; court finds that defs have still not complied and awards $10,000 for fees to plaintiff as a sanction for non compliance. Fee award to be paid within 30 days....

Appellants’ Appendix at 6. On October 4, 2013, the Defendants filed a motion to reconsider sanction, and on October 8, 2013, the court denied the motion. On October 30, 2013, DTS filed a notice of appeal under Court of Appeals Cause No. 49A05-1310-PL-528 (the “First Appeal”)with respect to the court’s September 30, 2013 sanction order.

[9] On December 19, 2013, Cassady filed a motion for hearing, and on February 7, 2014, the court held a hearing and set the matter for another status conference on February 26, 2014. On February 12, 2014, the court issued an order which provided that DTS was to produce certain responsive email messages, including ■emails of Stuart and Michael Reed, and other documents on or before February 17, 2014.

[10] On February 26, 2014, the trial court held the scheduled status conference at which Cassady’s counsel requested a monetary sanction of $30,000. The court stated to Defendants’ counsel that it was “at [its] wits’ end here,” that it thought “the only way to get your client’s attention is to impose sanctions for the discovery violations,” and that it was going to impose $30,000. Transcript at 250. The court also stated “I’m going to give you 90 [days]because I’m going to tell you what the next sanction that I’m going to consider is a default judgment” and “I’m hopeful that that will work but, you know, if we’re back here in 90 days and nothing’s done, it’s not going to be good.” Id. at 251-252. The CCS entry dated February 26, 2014, for the status conference indicates the court found that “Defendants have not timely complied with this Court[’]s February 12, 2014 Discovery Order and the Court imposes sanctions against the Defendants in the amount of $30,000” and “Court gives Defendants additional 90 days to comply with outstanding discovery_” Appellants’ Appendix at 10.

[11] On March 4, 2014, the court entered an order which stated that Cassady had moved “to sanction the Defendants for their ongoing failure to cooperate in discovery,” that the court “now GRANTS [Cassady’s] Motion in all respects,” and that “the Defendants shall, within thirty (30) days of the date of this Order, pay Plaintiff Michael Cassady the amount of thirty thousand [dollars] ($30,000) as a sanction for the Defendants’ ongoing failure to cooperate in discovery.” Id. at 134.

[12] On March 5, 2014, the Defendants filed a “Motion to Dismiss (Voluntary)” with this Court pursuant to Ind. Appellate Rule 36(A) requesting this Court “to dismiss this interlocutory appeal in its entirety.” Appellee’s Appendix at 18.

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27 N.E.3d 1104, 2015 Ind. App. LEXIS 139, 2015 WL 1011302, Counsel Stack Legal Research, https://law.counselstack.com/opinion/stuart-reed-and-michael-reed-v-michael-cassady-indctapp-2015.