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Filed: August 25, 1987.


APPEAL FROM THE HAMILTON SUPERIOR COURT NO. 2, The Honorable Jerry M. Barr, Presiding, No. 2S 83-378, No. 4-1084 A 292 in the Court of Appeals.

Dickson, J., Givan and Pivarnik, JJ., concur, Shepard, C.j., concurs in result with opinion, DeBRULER, J., concurs in result with opinion in which Shepard, C.j., concurs.

Author: Dickson



With this case we must address and balance the relationship between two countervailing considerations; a) the need to discourage abuse of appellate review which wastes limited judicial resources, and b) the chilling effect of sanctions upon legitimate and desirable appellate advocacy.

Appellant Paula K. Orr (Orr) originally filed a products liability suit on behalf of her minor daughter, seeking damages for injuries sustained while playing on a swingset manufactured by defendant-appellee Turco Manufacturing Company, Inc. (Turco). The trial court granted summary judgment, strictly applying the two year products liability statute of limitations, Ind. Code § 33-1-1.5-5. In its original opinion, which appears at 484 N.E.2d 1300, the Court of Appeals affirmed the trial court, but failed to address Turco's motion for attorney fees. This Court denied appellant's petition to transfer, whereupon the Court of Appeals issued an additional opinion, which appears at 496 N.E.2d 115, finding Orr's appeal to be "frivolous because wholly without merit, and thus presumptively taken in bad faith," 496 N.E.2d at 118, and imposed damages against the appellant pursuant to Appellate Rule 15(G) of the Indiana Rules of Procedure. Appellant's petition to transfer seeks our review of this decision.

The Rules of Appellate Procedure do not express any standard to determine whether appellate damages are appropriate.[Footnote 1] AR 15(G) simply provides:

If the court on appeal affirms the judgment, damages may be assessed in favor of the appellee not exceeding ten percent (10 % ) upon the judgment, in money judgments, and in other cases in the discretion of the court; and the court shall remand such cause for execution.

In general, a discretionary award of damages has been recognized as proper when an appeal is permeated with meritlessness, bad faith, frivolity, harassment, vexatiousness, or purpose of delay. Briggs v. Clinton County Bank & Trust Co. (1983), Ind.App., 452 N.E.2d 989, 1014. See also In re Guardianship of Posey v. Lafayette Bank & Trust Co. (1987), Ind., No. 23S01-8708-CV-771 (decided contemporaniously with the instant appeal); Marshall v. Reeves (1974), 262 Ind. 403, 316 N.E.2d 828; Annee v. State (1971), 256 Ind. 686, 274 N.E.2d 260 (on rehearing); Matter of Watson (1983), Ind.App., 449 N.E.2d 1156; Sandock v. Taylor Const. Co. (1981), Ind.App., 416 N.E.2d 882; Vandalia Railroad Co. v. Walsh (1909), 44 Ind. App. 297, 89 N.E. 320.

However, in exercising its discretionary power to award damages on appeal, an appellate tribunal must use extreme restraint. Notwithstanding the harmful delay occasioned by crowded judicial dockets and limited resources, we cannot fail to recognize that the imposition of punitive sanctions does have significant negative consequences. It may punish, and will deter, the proper exercise of a lawyer's professional responsibility to argue for modification or reversal of existing law. It will have a chilling effect upon the exercise of the right to appeal. It will discourage innovation and inhibit the opportunity for periodic reevaluation of controlling precedent.

At the time of this appeal, the actions of appellate counsel fell within the Code of Professional Responsibility.[Footnote 2] Canon 7 demanded that "A Lawyer Should Represent a Client Zealously Within the Bounds of the Law." Under Disciplinary Rule 7-102(A)(2), a lawyer was prohibited from advancing a claim or defense "that is unwarranted under existing law, except that he may advance such claim or defense if it can be supported by good faith argument for an extension, modification, or reversal of existing law."

The vitality of the law as a living institution rests largely upon its capacity to embrace and promote the opposing concepts of stability and growth. We are mindful of Dean Pound's aphorism: "Law must be stable and yet it cannot stand still," Pound, Interpretations of Legal History, p. 1, (1923).

To facilitate these objectives, we must invite, not inhibit, the presentation of new and creative argument. We therefore hold that punitive sanctions may not be imposed to punish lack of merit unless an appellant's contentions and argument are utterly devoid of all plausibility.[Footnote 3]

Orr had presented three issues in her original appeal: 1) the interpretation of the products liability statute of limitations; 2) the trial court's ruling excluding the legislative history of the product liability statute; and 3) the constitutionality of the ...

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