United States District Court, S.D. Indiana, New Albany Division
ENTRY ON DAMAGES
TANYA WALTON PRATT, District Judge.
This matter was before the Court for a damages hearing on February 14, 2014. Counter Claimant Harrison Manufacturing, LLC ("Child Craft") appeared by counsel S. Chad Meredith and W. Keith Ransdell. Counter Defendant Ron Bienias ("Mr. Bienias") appeared in person and pro se. The Court heard evidence and testimony and now makes the following determination of damages owed to Child Craft.
Prior to the instant proceedings, the Court entered default judgment for Child Craft against Counter Defendant JMB Manufacturing, Inc. ("Summit") and dismissed Summit's claims against Child Craft and other defendants. The Court then held a bench trial on Child Craft's negligent misrepresentation claim against Mr. Bienias. Thereafter, the Court entered its Findings of Fact and Conclusions of Law (Dkt. 234) in favor of Child Craft. Detailed facts are contained within that Entry, and further recitation is unnecessary here. The Court found that Mr. Bienias was liable under Indiana law for the tort of negligent misrepresentation. In so finding, the Court determined that: (1) Mr. Bienias, in the course of his profession, supplied false information for the guidance of others in their business transactions; (2) he failed to exercise reasonable care or competence in obtaining or communicating the information; (3) Child Craft justifiably relied upon the information supplied by Mr. Bienias; and (4) Child Craft suffered a pecuniary loss in an amount to be determined.
The Court then held a damages hearing to determine the extent of Child Craft's pecuniary loss caused by both Summit and Mr. Bienias. At the hearing, Mr. Bienias represented himself pro se. The Court heard testimony from Child Craft representative Doug Gessford ("Mr. Gessford"), Mr. Bienias, and Child Craft's damages expert David A. Parks ("Mr. Parks").
In Indiana, the elements of the tort of negligent misrepresentation are sourced from the Restatement (Second) of Torts § 552. Indiana courts have not explicitly discussed the standard for damages in a negligent misrepresentation case, but the Seventh Circuit in Trytko v. Hubbell, Inc., 28 F.3d 715, 722 (7th Cir. 1994), determined that the corresponding Restatement (Second) of Torts § 552B measure of damages was the appropriate starting point. Section 552B states:
(1) The damages recoverable for a negligent misrepresentation are those necessary to compensate the plaintiff for the pecuniary loss to him of which the misrepresentation is a legal cause, including
(a) the difference between the value of what he has received in the transaction and its purchase price or other value given for it; and
(b) pecuniary loss suffered otherwise as a consequence of the plaintiff's reliance upon the misrepresentation.
(2) the damages recoverable for a negligent misrepresentation do not include the benefit of the plaintiff's contract with the defendant.
Restatement (Second) of Torts § 552B (1977). Here, Child Craft seeks damages for its losses suffered as a consequence of its reliance on Mr. Bienias' misrepresentations. Child Craft also seeks punitive damages, which the Court addresses separately.
A. Losses Stemming from Mr. Bienias' and Summit's Misrepresentations
The evidence at the hearing established that Child Craft was initially funded in mid-2008 with $1.9 million in starting capital. By February 19, 2009, the company had depleted its available cash and an additional $2 million was contributed to Child Craft. Child Craft expended its capital and ceased operations on June 19, 2009. The Court previously found as a matter of law that Mr. Bienias supplied Child Craft with false misrepresentations that Child Craft relied upon. The Court also found that Child Craft did not receive any usable cribs from Summit and P.T. Cita, and did not sell ...