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Reed v. Cassady

Court of Appeals of Indiana

March 9, 2015

Stuart Reed and Michael Reed, Appellants-Defendants,
Michael Cassady, Appellee-Plaintiff

Page 1105

Appeal from the Marion Superior Court. The Honorable Robert R. Altice, Jr., Judge. Cause No. 49D05-1207-PL-27350.

ATTORNEY FOR APPELLANTS: Anthony B. Ratliff, Doninger Tuohy & Bailey LLP, Indianapolis, Indiana.

ATTORNEY FOR APPELLEE: Noah L. Gambill, Wagner, Crawford and Gambill, Terre Haute, Indiana.

Brown, Judge. Bailey, J., and Robb, J., concur.


Page 1106

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 Injunctive Relief against Stuart Reed, Michael Reed, Distinctive Transportation Services, Inc. (" DTS" ), Specialty Transportation,

Page 1107

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 Cassady 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. 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,

Page 1108

and that the amount must be paid within thirty days. Id. at 126.

[¶ 8] An entry in the trial court's chronological case 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 def's 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" ) ...

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