INTERNATIONAL BUSINESS MACHINES CORPORATION, Appellant/Cross-Appellee (Defendant/Plaintiff below),
v.
STATE of Indiana, acting ON BEHALF OF the INDIANA FAMILY & SOCIAL SERVICES ADMINISTRATION, Appellee/Cross-Appellant (Plaintiff/Defendant below).
Argued:
February 21, 2019
Modified on Rehearing: October 10, 2019
Appeal
from the Marion Superior Court, No. 49D01-1005-PL-21451, The
Honorable Heather A. Welch, Judge
ATTORNEYS
FOR APPELLANT: Jay P. Lefkowitz, Kirkland & Ellis LLP, New
York, New York, Paul D. Clement, Kirkland & Ellis LLP,
Washington, D.C., Andrew W. Hull, Laurie E. Martin, Hoover
Hull Turner LLP, Indianapolis, Indiana
ATTORNEYS
FOR APPELLEE: Peter J. Rusthoven, John R. Maley, J. Curtis
Greene, Meredith Thornburgh White, Barnes & Thornburg LLP,
Indianapolis, Indiana
ATTORNEYS
FOR AMICUS CURIAE, INDIANAPOLIS BAR ASSOCIATION: Tyler D.
Helmond, Voyles Vaiana Lukemeyer Baldwin & Webb,
Indianapolis, Indiana, Josh S. Tatum, Plews Shadley Racher &
Braun LLP, Indianapolis, Indiana, Joel M. Schumm,
Indianapolis, Indiana, Bryan H. Babb, Bose McKinney & Evans
LLP, Indianapolis, Indiana, Libby Y. Goodknight, Krieg
DeVault LLP, Indianapolis, IN
ATTORNEYS
FOR AMICUS CURIAE, DEFENSE TRIAL COUNSEL OF INDIANA: James D.
Johnson, Blair M. Gardner, Jackson Kelly PLLC, Evansville,
Indiana
On
Petition to Transfer from the Indiana Court of Appeals, No.
49A02-1709-PL-2006
David,
Justice.
Page 256
This
case comes before our Court for the second time and arises
out of a contract entered into between the State of Indiana,
acting on behalf of the Family and Social Services
Administration, and International Business Machines, Corp. to
modernize and improve Indianas welfare eligibility system.
We previously determined that IBM materially breached the
contract and remanded the matter to the trial court to
determine damages and appropriate offsets. After the
submission of evidence and a full-day hearing, the trial
court issued detailed findings and conclusions. It determined
that damages to the State resulting from the breach totaled
$128 million and that IBM was entitled to offsets in the
amount of $49,510,795, resulting in a final judgment of
$78,178,109 to the State.
Both
parties appealed, raising various issues. Today we address
one of the issues raised: whether IBM is entitled to
post-judgment interest on its $49.5 million damages award
running from the date of the original judgment in 2012 or
running from the judgment on remand. Finding that the
original 2012 judgment was not "final," we hold
that the post-judgment interest due to IBM runs from the
judgment on remand. We summarily affirm the Court of Appeals
on all other issues and affirm the trial court on all issues.
Facts and Procedural History
As this
Court explained in State v. International Business
Machines Corp., 51 N.E.3d 150, 152 (Ind. 2016)
("IBM I"):
This case involves a $1.3 billion Master Services Agreement
("MSA") entered into between the State of Indiana,
acting on behalf of the Family and Social Services
Administration ("State") and International Business
Machines, Corp. ("IBM") to modernize and improve
Indianas welfare eligibility system. Although the MSA was
supposed to last ten years, the State terminated it less than
three years in, citing performance issues on the part of IBM.
Both parties sued each other for breach of contract.
After
a six-week bench trial, the Marion Superior Court found that
the State failed to prove that IBMs breach of the MSA was
material and awarded IBM damages
Page 257
for assignment and equipment fees. It also awarded
termination payments and pre-judgment interest. Both parties
appealed. Ultimately, this Court reversed, in part, holding
that IBM materially breached the MSA. We reversed IBMs
termination payment and pre-judgment interest awards, but
affirmed its assignment and equipment fees in the amount of
$49,510,795. We remanded to the trial court with the
following instructions:
[W]e hold that IBM did materially breach the MSA through its
collective breaches in light of the MSA as [a] whole. We
therefore reverse the trial courts finding that IBM did not
materially breach the MSA. We summarily affirm the Court of
Appeals on all other issues including: affirming the trial
courts award of $40 million in assignment fees and
$9,510,795 in equipment fees to IBM, affirming the trial
courts denial of deferred fees to IBM, and reversing the
trial courts award of $2,570,621 in early termination close
out payments and $10,632,333 in prejudgment interest to IBM.
We also remand the case to the trial court to determine the
amount of fees IBM is entitled to for Change Orders 119 and
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