                                                                         FILED
                                                                    May 08 2020, 8:32 am

                                                                         CLERK
                                                                     Indiana Supreme Court
                                                                        Court of Appeals
                                                                          and Tax Court




ATTORNEYS FOR APPELLANT                                    ATTORNEYS FOR APPELLEE
Margaret M. Christensen                                    Christopher C. Murray
Andrew M. Pendexter                                        John A. Drake
Dentons Bingham Greenebaum, LLP                            Ogletree Deakins Nash Smoak &
Indianapolis, Indiana                                      Stewart, PC
                                                           Indianapolis, Indiana



                                            IN THE
    COURT OF APPEALS OF INDIANA

Robert Carmichael,                                         May 8, 2020
Appellant-Defendant,                                       Court of Appeals Case No.
                                                           19A-PL-1821
        v.                                                 Appeal from the Johnson Superior
                                                           Court
Separators, Inc.,                                          The Honorable Marla K. Clark,
Appellee-Plaintiff.                                        Judge
                                                           Trial Court Cause No.
                                                           41D04-1509-PL-91



Riley, Judge.




Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020                              Page 1 of 44
                                 STATEMENT OF THE CASE
[1]   Appellant-Defendant, Robert Carmichael (Carmichael), appeals following the

      trial court’s entry of default judgment and award of exemplary and

      compensatory damages against him and his co-defendants, Olice Monday

      (Monday) and Centrifuge Supplies, Inc. (CSI), (collectively, the Defendants),1

      in favor of Appellee-Plaintiff, Separators, Inc. (Separators).


[2]   We affirm.


                                                    ISSUES
[3]   Carmichael presents this court with four issues, which we consolidate and

      restate as the following three:


              (1) Whether the trial court’s entry of a default judgment against
                 Carmichael and his co-defendants as a sanction for spoliation
                 of evidence in contempt of its discovery orders was clearly
                 erroneous;


              (2) Whether the trial court properly denied Carmichael’s motion
                 for summary judgment; and


              (3) Whether the trial court’s award of exemplary and
                 compensatory damages was clearly erroneous.




      1
        The judgments and damages were entered against all the Defendants. Monday and CSI do not participate
      in this appeal.

      Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020                            Page 2 of 44
                       FACTS AND PROCEDURAL HISTORY
[4]   Separators was founded in 1985 and provides its customers with centrifuge

      services, equipment, and parts. Over the course of its corporate existence,

      Separators amassed a collection of reference materials pertaining to the

      provision and maintenance of centrifuges to its customers (the technical

      library). The technical library contained hundreds of original equipment

      manufacturer manuals (the manuals), some of which had been modified with

      notes regarding specific alterations to Separators’ customers’ centrifuges.

      Separators had converted the technical library to an electronic format, a

      laborious process that entailed manually scanning thousands of pages of

      documents. The technical library was password protected, and Separators did

      not allow the general public or its competitors to access it. In addition to the

      technical library, Separators stored other types of data on its computer network,

      including customer parts lists, customer quotes, and other sales and financial

      information. The Separators’ employee handbook provided that employees

      were not to copy any of Separators’ data files without the company’s

      permission.


[5]   From 2005 to 2013, Carmichael was the parts manager for Separators, a job

      which entailed interfacing with Separators’ customers on a regular basis.

      Separators had hired Monday in 2002, and he became Carmichael’s assistant in

      the parts department. Neither Carmichael nor Monday signed a non-compete,

      non-solicitation, or confidentiality agreement with Separators. In December

      2012, Carmichael formed CSI as a direct competitor to Separators. Carmichael

      Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020            Page 3 of 44
      was the president and sole shareholder of CSI. Carmichael formally resigned

      from Separators on March 8, 2013. Before he left the company, Carmichael

      copied hundreds of manuals from the technical library and subsequently copied

      those electronic files onto his CSI computer, all without Separators’ consent.


[6]   After Carmichael left, Monday became the manager of Separators’ parts

      department. On February 20, 2015, Monday left Separators to begin working

      for CSI as its vice president. Before he left Separators, and without the

      company’s consent, Monday copied thousands of data files relating to

      Separators’ business, including the manuals, sales documents, service parts lists,

      and customer quotes, onto a Seagate USB Device (Seagate USB) and a Pockey

      USB Device (Pockey USB). On February 23, 2015, Monday’s first day of work

      at CSI, Monday downloaded the data from the Seagate and Pockey USBs onto

      his CSI computer. Monday had internet-based data backup for his CSI

      computer on an ASUS WebStorage account (ASUS account), and he had

      another internet-based data storage account with Microsoft OneDrive

      (OneDrive account). Carmichael used a Western Digital Passport drive (WDP

      drive) to back-up financial data from his CSI computer prior to moving to an

      internet-based accounting system.


[7]   On September 14, 2015, Separators filed its Verified Complaint for Injunctive

      Relief and Damages (Complaint) alleging that the Defendants had copied and

      taken “Separators’ files containing proprietary and trade secret information

      including, but not limited to, parts lists, customer lists, supplier information,

      custom parts drawings, manuals, and financial reports[,]” and thus had

      Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020             Page 4 of 44
      “accessed, copied and used a significant portion of Separators’ technical,

      commercial, and financial library.” (Appellant’s App. Vol. III, pp. 40, 42).

      Separators raised claims of misappropriation of trade secrets pursuant to the

      Indiana Uniform Trade Secrets Act (IUTSA) (all Defendants); breach of

      fiduciary duty/duty of loyalty and computer trespass (Carmichael and

      Monday); and tortious interference with business relationships, unfair

      competition, unjust enrichment, conversion, theft, and civil conspiracy (all

      Defendants). In conjunction with its Complaint, Separators sought a temporary

      restraining order (TRO) on CSI’s unfairly competitive business activities.

      Separators also sought orders directing the preservation of evidence within the

      Defendants’ possession or control and for expedited discovery.


[8]   On September 14, 2015, the trial court issued a TRO that enjoined the

      Defendants from using Separators’ trade secrets and confidential information to

      compete against Separators. The trial court also issued its Order Preserving

      Electronic Evidence (OPEE) that directed the Defendants to


              preserve all electronically stored date in their possession, custody,
              or control relating to Separators, including emails or data that
              exists or existed (before being deleted) on any computer, laptop,
              PDA, backup tape, CD, DVD, USB drive, cloud storage, or
              other media (including all metadata and tags).


      (Appellant’s App. Vol. III, p. 157). The trial court ordered the Defendants to

      comply with Separators’ expedited discovery requests by September 22, 2015,

      and it set a hearing on Separators’ motion for a preliminary injunction for

      September 23, 2015.

      Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020            Page 5 of 44
[9]    On September 14, 2015, Carmichael was personally served with the Complaint,

       TRO, and OPEE at 6:00 p.m. Monday was with Carmichael when Carmichael

       was served. At 6:03 p.m. on September 14, 2015, approximately 100 files

       related to Separators were deleted from the Pockey USB. At 7:10 p.m. on

       September 14, 2015, after Monday had been personally served with the same

       documents, 1063 items related to Separators were deleted from the Seagate

       USB. Sometime after September 14, 2015, Carmichael deleted approximately

       twenty emails from his CSI computer that were potentially related to

       Separators.


[10]   On September 23, 2015, the trial court entered a stipulated preliminary

       injunction order (PI) which enjoined the Defendants from


               destroying, erasing, or otherwise making unavailable for further
               proceedings in this matter, any records or documents (data or
               information maintained in computer media, including
               Defendants’ personal computers, drives, email, and other media)
               in Defendants’ possession, custody, or control that were obtained
               from or derived from any Separators [] documents, data, records,
               or information.


       (Appellant’s App. Vol. III, p. 160). The PI also ordered the Defendants to

       produce their computers and electronic data storage devices, which, according

       to an agreed inspection order (AIO) entered in conjunction with the PI,

       included “any and all devices and media used to store electronic

       information[.]” (Appellant’s App. Vol. III, p. 164). These items were to be

       produced to computer forensics expert Rebecca Green (Green) for inspection.


       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020           Page 6 of 44
       Between September 22, 2015, which was the day before the hearing on

       Separators’ motion for a preliminary injunction, and September 24, 2015, the

       day that the Defendants’ computers, electronic data storage devices, and media

       were to be turned over to Green for inspection, at least 932 files relating to

       Separators were deleted from Monday’s CSI computer.


[11]   On September 24, 2015, in order to comply with the TRO, OPEE, PI, AIO,

       and the trial court’s order granting Separators’ expedited discovery requests

       (collectively, the discovery orders), Carmichael and Monday met with Green at

       the CSI business premises. While there, Green specifically asked Carmichael

       and Monday whether they had any internet-based data storage that was

       implicated by the discovery orders. Carmichael and Monday disclosed their

       internet-based accounting system and produced their CSI computers and the

       Seagate USB, but they failed to produce the WDP drive and failed to disclose

       the ASUS and OneDrive accounts. 2 On October 5, 2015, the day before the

       Pockey USB was scheduled to be turned over to Green for inspection,

       approximately 3000 images were uploaded onto the USB, rendering the

       previously-deleted data irretrievable.


[12]   As a result of her forensic investigation, Green discovered the deletions from

       the Seagate and Pockey USBs and the CSI computers, the existence of the




       2
         The trial court found that Carmichael also failed to disclose an additional internet-based data storage
       account at Dropbox, but it does not appear that the trial court relied upon the non-disclosure of that account
       in its conclusions of law sanctioning the Defendants.

       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020                                   Page 7 of 44
       undisclosed internet-based data storage sites and the WDP drive, and the

       overwriting of deleted data by images on the Pockey USB. On February 11,

       2016, Separators filed a motion for order to show cause seeking to have the

       Defendants held in contempt and sanctioned for violating the discovery orders

       by destroying and concealing evidence relevant to its claims. Among its

       requests for relief, Separators sought a default judgment against the Defendants

       on several of its claims the prosecution of which it alleged had been materially

       impeded by the Defendants’ actions.


[13]   On March 16, April 26, and May 17, 2016, the trial court held hearings on

       Separators’ rule to show cause motion. The Defendants did not dispute that

       they had copied Separators’ manuals before leaving the company and had

       downloaded the copied data onto CSI computers for their use, but they did

       dispute that any data they had taken constituted trade secrets or was proprietary

       to Separators. Carmichael admitted that he had deleted emails from his CSI

       computer after the discovery orders were entered, which he acknowledged

       made it difficult to determine whether the emails were Separators-related.

       Monday testified that, immediately upon learning of the lawsuit from

       Carmichael and after being personally served with the Complaint himself, he

       became anxious and deleted files from his CSI computer. However, Monday

       denied having possession of the Seagate and Pockey USBs on September 14,

       2015, the day that data had been deleted from those devices. Monday testified

       that the Seagate USB had been in the possession of his girlfriend and that the

       Pockey USB had been in the possession of his ex-wife, but he also related that


       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020         Page 8 of 44
       he did not inform his girlfriend or his ex-wife of the lawsuit until days after he

       was served with the Complaint. Monday further testified that he had met with

       his ex-wife on October 5, 2015, to download family photographs from the

       Pockey USB before producing it to Separators. Monday could not explain how

       the images were overwritten onto the Pockey USB. Neither Monday’s

       girlfriend nor his ex-wife testified at the hearings. Green provided expert

       testimony regarding her forensic examination and the loss of data from the

       Seagate and Pockey USBs and the CSI computers.


[14]   On November 8, 2016, the trial court issued its Order finding the Defendants in

       contempt. The trial court ruled that the Defendants had “acted in conspiracy

       with one another in violating the [c]ourt’s orders” by willfully deleting

       information from the Seagate and Pockey USBs and the CSI computers,

       attempting to hide the deletion of data on the Pockey USB by overwriting 3000

       images onto the device, and failing to disclose the existence of the internet-

       based locations of relevant electronic files. (Appellant’s App. Vol. II, p. 83). As

       a sanction for these discovery violations, the trial court entered a default

       judgment on Separators’ claims of misappropriation of trade secrets, breach of

       fiduciary duty/duty of loyalty, computer trespass, theft, conversion, and civil

       conspiracy. In addition to entering the default judgment against the

       Defendants, the trial court awarded Separators attorneys’ fees and costs for

       prosecuting its show-cause motion, and, in order to ensure that the Defendants

       did not violate its orders in the future, the trial court ordered that they would be

       subject to third-party oversight of their electronic data use for two years. The


       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020             Page 9 of 44
       Defendants did not seek to set aside the default judgment, and the parties

       continued to engage in discovery.


[15]   On October 31, 2017, Carmichael filed a motion for summary judgment

       arguing that Separators’ breach of fiduciary duty/duty of loyalty, computer

       trespass, conversion, theft, and civil conspiracy claims were barred by the

       applicable two-year statute of limitations. As part of its response, Separators

       argued that the entry of the default judgment precluded Carmichael’s motion

       for summary judgment. On March 8, 2018, after a hearing, the trial court

       denied Carmichael’s motion for summary judgment in an order addressing the

       merits of his arguments.


[16]   On March 19 through March 22, 2018, the trial court conducted a bench trial

       on Separators’ claims for exemplary and compensatory damages. Separators

       showed that, in addition to taking the manuals and other technical information

       that had been the subject of the discovery sanctions hearing, about two months

       before leaving Separators, Carmichael had created a contact list of 203 of

       Separators’ clients on his CSI computer, which, immediately after leaving the

       company, he had used to target and serve Separators’ customers. Carmichael

       had also taken requests for quotes from Separators which he had used to

       provide quotes for potential CSI customers. Carmichael and CSI had

       immediately begun using the manuals they had taken from Separators and had

       continued to use them in their ordinary course of business. CSI had been

       immediately profitable, which was highly unusual for a start-up company. By



       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020         Page 10 of 44
       2016, its annual net income was $1.4 million, and, as of April 2017, CSI had

       already generated total profits of $3.25 million for the year.


[17]   To support its claims for damages, Separators presented the expert testimony of

       certified public accountant (CPA) Rodney Crawford (Crawford). Crawford

       testified regarding the methods he used to calculate Separators’ lost profits and

       the amount lost, which he concluded was $8,680,447. Counsel for the

       Defendants cross-examined Crawford on these issues. CPA Daniel Gross

       (Gross) provided expert testimony for the Defendants. On the third day of trial,

       the trial court excluded evidence of any independent damages calculation done

       by Gross because the Defendants had not timely disclosed that opinion

       evidence to Separators. Gross’s testimony was limited to a critique of the facts

       and assumptions underpinning Crawford’s lost-profits calculations.


[18]   The parties engaged in post-trial briefing. In its submission to the trial court,

       Separators argued that it was entitled to compensatory damages for lost profits

       on its misappropriation of trade secrets, breach of fiduciary duty/duty of

       loyalty, computer trespass, conversion, theft, and conspiracy claims in the

       amount of $8,680,447. Separators claimed exemplary treble damages pursuant

       to the Indiana Crime Victim’s Relief Act (ICVRA), or, in the alternative, an

       award of exemplary doubled damages under the IUTSA.


[19]   On January 31, 2019, the trial court entered its Order on damages. The trial

       court found that CSI could not have obtained its unusual level of success

       without the data it had taken from Separators and that less than three percent of


       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020           Page 11 of 44
       its business had come from customers who had not previously been customers

       of Separators. The trial court further found that CSI had received a competitive

       advantage through its misappropriation of Separators’ data without having to

       incur the substantial costs and burdens Separators had. The trial court awarded

       Separators $8,680,447 in compensatory damages.


[20]   The trial court considered Separators’ request for treble exemplary damages

       under the ICVRA. While it found that the Defendants had wrongfully taken

       Separators’ property and had attempted to hide that fact by destroying evidence

       in violation of its discovery orders, it also found that many of the manuals were

       publicly available, it was industry practice for employees to compile technical

       information and take it with them as they moved to another employer, the parts

       industry was heavily-reliant on relationships, and that Carmichael’s relationship

       with some of Separators’ clients had likely enticed them to go to CSI. The trial

       court declined to enter treble damages but found that $3,000,000 in exemplary

       damages was warranted. The trial court found that, if it were not awarding

       damages under the ICVRA, it would have awarded the double damages

       Separators sought under the IUTSA, concluding that the Defendants had

       engaged in the type of willful and malicious misappropriation required to

       recover under the IUTSA. Based on its findings and conclusions, the trial court

       entered the following Order:


               [T]he [c]ourt hereby awards [Separators] damages as set forth
               above consisting of compensatory damages in the amount of
               $8,680,447.00 and exemplary damages pursuant to the [ICVRA]
               in the amount of $3,000,000.00.

       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020        Page 12 of 44
       (Appellant’s App. Vol. II, p. 112).


[21]   On March 5, 2019, Carmichael and CSI filed their Motion to Correct Error

       pursuant to Trial Rule 59 in which they requested, among other things, that the

       trial court vacate its November 8, 2016, default judgement, arguing that the trial

       court’s finding that Carmichael and Monday had conspired to violate the trial

       court’s discovery orders was a legal impossibility because, as agents of the same

       principal, CSI, they could not have been two separate entities who could have

       agreed to conspire. Carmichael and CSI later styled their motion as a Motion

       to Reconsider. On July 11, 2019, the trial court denied the Motion to Correct

       Error/Motion to Reconsider in an Order addressing the merits.


[22]   Carmichael now appeals. Additional facts will be provided as necessary.


                                DISCUSSION AND DECISION
                                              I. Standard of Review

[23]   Carmichael appeals following the trial court’s entry of special findings of fact

       and conclusions of law pursuant to Indiana Trial Rule 52(A). Therefore, we

       employ a two-tiered standard of review in which we will affirm if the evidence

       supports the findings and the findings support the judgment. Wysocki v. Johnson,

       18 N.E.3d 600, 603 (Ind. 2014). When conducting our review, we neither

       reweigh the evidence, nor do we reassess the credibility of the witnesses.

       Marion Cty. Auditor v. Sawmill Creek, LLC, 964 N.E.2d 213, 216 (Ind. 2012). We

       consider the evidence most favorable to the judgment, with all reasonable

       inferences drawn in favor of the judgment. Stout v. Underhill, 734 N.E.2d 717,

       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020          Page 13 of 44
       719 (Ind. Ct. App. 2000), trans. denied. We will not set aside the trial court’s

       findings or judgment unless they are clearly erroneous. Wysocki, 18 N.E.3d at

       603. Findings of fact are clearly erroneous only where they enjoy no factual

       support in the record, and a judgment is clearly erroneous if it applies an

       incorrect legal standard to properly-found facts. Id.


                                               II. Default Judgment

[24]   Carmichael challenges the trial court’s entry of the default judgment against

       him and his co-defendants, raising the same intracorporate conspiracy

       argument he raised in his Motion to Correct Error. Carmichael also argues that

       there was insufficient evidence that he had an agreement with Monday to

       violate the discovery orders, his individual conduct alone was inadequate to

       support the default judgment, and entry of the default judgment as a sanction

       for violating the discovery orders was an abuse of the trial court’s discretion.

       We address each of these arguments in turn.


                                            A. Intracorporate Conspiracy

[25]   Carmichael argues that the trial court’s finding that he and Monday conspired

       to violate the discovery orders was clearly erroneous because a conspiracy

       requires two entities to form an agreement, and, as agents of CSI, they were but

       one entity. Separators responds that Carmichael’s challenge to the default

       judgment is not properly before this court because Carmichael first challenged

       the default judgment via an Indiana Trial Rule 59 motion to correct error,

       rather than through a TR 60(B) motion to set aside the judgment. Carmichael



       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020           Page 14 of 44
       counters that Separators did not raise its TR 60(B) argument below and,

       therefore, it is waived.


[26]   We agree with Carmichael. TR 55 governing default judgments provides that

       “[a] judgment by default which has been entered may be set aside by the

       court for the grounds and in accordance with the provisions of Rule 60(B).”

       TR 60(B) motions are used to set aside default judgments entered as a

       sanction for discovery violations. See, e.g., Ameristar Casino E. Chicago, LLC v.

       Ferrantelli, 120 N.E.3d 1021, 1026 (Ind. Ct. App. 2019) (appeal from denial

       of defendant Ameristar’s TR 60(B) motion to set aside default judgment

       entered as sanction for discovery violations), trans. denied; Waterfield v.

       Waterfield, 61 N.E.3d 314, 331 (Ind. Ct. App. 2016) (noting that the appeal of

       a default judgment sanction for discovery violations was taken after the

       appellant’s TR 60(B) motion was denied), trans. denied. Be that as it may,

       Separators never raised this issue in the proceedings below. It is well-settled

       that “[i]ssues not raised at the trial court are waived on appeal.” Cavens v.

       Zaberdac, 849 N.E.2d 526, 533 (Ind. 2006) (citing Reemer v. State, 835 N.E.2d

       1005, 1007 n.4 (Ind. 2005); Ealy v. State, 685 N.E.2d 1047, 1050 (Ind. 1997)).

       We conclude that, by failing to raise its TR 60(B) argument to the trial court,

       Separators waived it. See id.

[27]   It is equally well-settled, however, that issues raised for the first time in a

       motion to correct error are waived. See O’Bryant v. Adams, 123 N.E.3d 689, 694

       (Ind. 2019) (finding waiver of an argument presented for the first time in a

       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020             Page 15 of 44
motion to correct error where O’Bryant failed to establish the argument had not

been available during the original proceedings); Fillmore LLC v. Fillmore Mach. &

Tool Co., 783 N.E.2d 1169, 1179 (Ind. Ct. App. 2003) (issue raised for the first

time in a motion to correct error waived where opposing party had no prior

notice of the issue, it not having been raised in the answer, as a counter-claim or

third-party complaint, in the parties’ agreed entry, or in the proposed findings of

fact and conclusions of law), trans. denied; Babinchak v. Town of Chesterton, 598

N.E.2d 1099, 1103 (Ind. Ct. App. 1992) (argument not raised or considered

before being raised in a motion to correct error was waived). Carmichael’s

intracorporate conspiracy argument was available to him at the commencement

of the instant litigation, but he did not raise it in his Answer to the Complaint,

in his written objection to the rule-to-show-cause motion or its supporting

memorandum, during the three hearings on the show-cause motion, or in his

proposed findings of fact and conclusions of law for the show-cause

proceedings. Indeed, this issue was not raised until after the trial court had

conducted a four-day bench trial on damages, the parties had engaged in post-

trial briefing, and the trial court had entered its Order on damages. The

argument Carmichael presents was not raised by the Defendants until they filed

their March 5, 2019, Motion to Correct Error. We conclude that Carmichael

waived this issue, and inasmuch as the trial court considered it in denying

Carmichael’s Motion to Correct Error, it should not have.




Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020          Page 16 of 44
                                                     B. Agreement

[28]   The trial court concluded that “Carmichael, Monday, and [CSI] have acted in

       conspiracy with one another in violating the [c]ourt’s orders.” (Appellant’s

       App. Vol. II, p. 83). Carmichael asserts that the evidence did not support the

       trial court’s determination that he and Monday conspired to violate the

       discovery orders because there was no evidence of an agreement between them

       to do so. As a general principle, “[a] civil conspiracy is a combination of two or

       more persons engaging in a concerted action to accomplish an unlawful

       purpose, or to accomplish some lawful purpose by unlawful means.” Hardy v.

       South Bend Sash & Door Co., Inc., 603 N.E.2d 895, 902 (Ind. Ct. App. 1992).

       The elements of an action for civil conspiracy are an object to be accomplished,

       a meeting of the minds on the object or course of action, one or more overt acts,

       and damages proximately caused by those acts. 16 Am. Jur.2d Conspiracy § 51.

       “While an agreement between the parties is a necessary element of civil

       conspiracy, such agreement need not extend to all the details of the

       conspiratorial scheme.” Id. In addition,


               [i]t is not necessary in order to establish a conspiracy that there
               be direct evidence of an agreement. Rather, a civil conspiracy
               may be asserted through circumstantial evidence or by averment
               of isolated or independent facts susceptible of an inference of
               concurrence of sentiment.


       Miller v. Central Ind. Com. Found., 11 N.E.3d 944, 963 (Ind. Ct. App. 2014)

       (citations omitted), trans. denied. Because conspiracies are usually formed in

       secret and are consequently seldom supported at trial by direct testimony, it is

       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020           Page 17 of 44
       particularly necessary and proper to permit them to be inferred from

       circumstances. Smith v. Fiscus, 62 Ind. App. 156, 160, 111 N.E. 203, 204 (Ind.

       1916). When multiple parties are found to have conspired to commit civil

       contempt, each participant in the conspiracy may be held responsible as a joint

       tortfeasor for damages caused by the wrongful or contemptuous acts, regardless

       of the degree of active participation. Bottoms v. B&M Coal Corp., 405 N.E.2d 82,

       90 (Ind. Ct. App. 1980).


[29]   Here, the evidence supported the trials court’s determination that Carmichael

       and Monday conspired to violate the trial court’s discovery orders in order to

       frustrate Separators’ ability to successfully prosecute its Complaint. The

       discovery orders contained clear directives: The Defendants were not to

       destroy, or render unavailable, any data relevant to Separators, and they were

       to produce all devices and internet-based accounts used to store data related to

       Separators. Carmichael and Monday had a long history of working together at

       Separators and admittedly removed data from Separators without Separators’

       express consent before leaving that company. Carmichael is the president and

       sole shareholder of CSI, and Monday is CSI’s vice president. Carmichael and

       Monday subsequently uploaded the data they had taken from Separators onto

       their CSI computers and into internet-based data storage accounts. Carmichael

       was first served with the TRO, OPEE, and the Complaint that named the

       Defendants in a suit based on their taking Separators’ data without Separators’

       consent. According to Carmichael, Monday was with him at Carmichael’s

       home when Carmichael was served. Within three minutes of Carmichael being


       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020        Page 18 of 44
       served, 100 files were deleted from the Pockey USB. The reasonable inference

       to be made from these facts and circumstances was that Carmichael and

       Monday agreed that part of their efforts to defend the allegations contained in

       the Complaint would be to eliminate evidence in their possession that could

       prove Separators’ claims. The subsequent deletions of data from the Seagate

       USB and the CSI computers, the concealment of the internet-based data storage

       accounts and the WDP device, and the overwriting of deleted data on the

       Pockey USB were other acts in furtherance of that agreement. In light of this

       evidence that Carmichael and Monday had both been named in Separators’

       Complaint, they were physically together when the data deletion began, the

       suspicious timing of the first deletion from the Pockey USB so quickly after

       Carmichael was served with the Complaint, and the subsequent deletions and

       overwriting that occurred just before discovery was to be produced, we cannot

       conclude that the trial court’s determination that Carmichael and Monday

       conspired to violate the discovery orders was clearly erroneous. See Wysocki, 18

       N.E.3d at 603.


[30]   Carmichael’s sole argument on this point is that a finding of a conspiracy based

       on an agreement between him and Monday was “counterintuitive” because

       Monday deleted data from the two USBs and his CSI computer and overwrote

       images onto the Pockey USB, whereas Carmichael “merely deleted only 20

       ‘potentially responsive’ emails” from his CSI computer. (Appellant’s Br. p. 25).

       Carmichael essentially argues that he could not have agreed to violate the

       discovery orders because Monday performed more overt acts than he in


       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020        Page 19 of 44
       furtherance of the conspiracy. This argument is unpersuasive because it

       overlooks evidence that Carmichael also failed to disclose the WDP drive and

       because crediting his argument would entail us reweighing the evidence

       presented to the trial court, which is contrary to our standard of review. See

       Marion Cty. Auditor, 964 N.E.2d at 216.


                                          C. Carmichael’s Individual Acts

[31]   Carmichael next asserts that his individual acts of deleting his emails and failure

       to disclose the WDP drive could not support a finding by the trial court that he

       had intentionally violated the discovery orders. This argument is premised on

       Carmichael’s contention that Monday’s acts could not be attributed to him as a

       co-conspirator. Because we have already concluded that the trial court’s

       determination that the Defendants conspired to violate the discovery orders was

       not clearly erroneous, we do not address Carmichael’s contention that his

       individual acts alone were insufficient to support the entry of the default

       judgment.


                                         D. Default Judgment as Sanction

[32]   Carmichael next contends that the trial court abused its discretion when it

       entered the default judgment against him and his co-defendants after

       concluding that they were in contempt of the discovery orders and had

       destroyed and hidden evidence. Trial courts have the inherent power to punish

       litigants in order to maintain the dignity of the court, secure obedience to

       process and rules, rebuke interference with the orderly conduct of business, and

       to punish unseemly behavior. City of Gary v. Major, 822 N.E.2d 165, 169 (Ind.

       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020          Page 20 of 44
       2005). As part of that inherent power, a trial court may impose sanctions to

       protect the discovery process. Noble Cty. v. Rogers, 745 N.E.2d 194, 198 (Ind.

       2001). In addition, Indiana Trial Rule 37(B)(2) provides that if a party fails to

       obey a discovery order, a trial court “may make such orders in regard to the

       failure as are just,” including entering a default judgment against the offending

       party. It is within the trial court’s sound discretion to select the appropriate

       sanction for discovery violations, and, thus, we review the trial court’s decision

       only for an abuse of that discretion. Whitaker v. Becker, 960 N.E.2d 111, 115

       (Ind. 2012). “Trial judges stand much closer than an appellate court to the

       currents of litigation pending before them, and they have a correspondingly

       better sense of which sanctions will adequately protect the litigants in any given

       case, without going overboard, while still discouraging gamesmanship in future

       litigation.” Id. In addition, “the purpose of sanctioning discovery violations is

       not merely to penalize those whose conduct may be deemed to warrant such a

       sanction, but to deter those who might be tempted to such conduct in the

       absence of such a deterrent.” Id. (quotation and citation omitted).


[33]   Here, the trial court determined that Carmichael and Monday had deleted

       evidence from the Pockey and Seagate USBs, their CSI computers, including

       emails, and had concealed the existence of the WDP device and the internet-

       based data storage accounts, thereby engaging in spoliation. See WESCO Dist.,

       Inc., v. ArcelorMittal Ind. Harbor LLC, 23 N.E.3d 682, 702 (Ind. Ct. App. 2014)

       (“Spoliation of evidence is the intentional destruction, mutilation, alteration, or

       concealment of evidence.”), trans. dismissed. Our supreme court has noted that


       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020           Page 21 of 44
“[c]ourts uniformly condemn spoliation. [I]ntentional destruction of potential

evidence in order to disrupt or defeat another person’s right of recovery is highly

improper and cannot be justified.” Gribben v. Wal-Mart Stores, Inc., 824 N.E.2d

349, 354 (Ind. 2005) (quotation omitted, emphasis added). Our supreme court

has provided the following guidance on the appropriateness of sanctions for

spoliation:


        Determining whether sanctions are warranted and, if so, what
        they should include, requires a court to consider both the
        spoliating party’s culpability and the level of prejudice to the
        party seeking discovery. Culpability can range along a
        continuum from destruction intended to make evidence
        unavailable in litigation to inadvertent loss of information for
        reasons unrelated to the litigation. Prejudice can range along a
        continuum from an inability to prove claims or defenses to little
        or no impact on the presentation of proof. A court’s response to
        the loss of evidence depends on both the degree of culpability and
        the extent of prejudice. Even if there is intentional destruction of
        potentially relevant evidence, if there is no prejudice to the
        opposing party, that influences the sanctions consequence. And
        even if there is an inadvertent loss of evidence but severe
        prejudice to the opposing party, that too will influence the
        appropriate response, recognizing that sanctions (as opposed to
        other remedial steps) require some degree of culpability.


Howard Reg’l Health Sys. v. Gordon, 952 N.E.2d 182, 189-90 (Ind. 2011) (quoting

Rimkus Consulting Grp., Inc. v. Cammarata, 688 F.Supp.2d 598, 613 (S.D. Tex.

2010)). In light of this guidance, we will examine the trial court’s findings and

conclusions regarding the Defendants’ culpability in the spoliation as well as

the prejudice resulting to Separators.


Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020                 Page 22 of 44
                                                     1. Culpability

[34]   The trial court entered the following relevant findings and conclusions

       regarding the Defendants’ culpability in the spoliation:


               55. The [c]ourt finds that the above-referenced deletions were an
               attempt by the Defendants to prevent data and other evidence
               from being discovered in this litigation.


               ****


               87. Based on the facts found above, the [c]ourt concludes that
               the Defendants have engaged in contempt.


               ****


               92. The Defendants have failed to meet their burden of showing
               that their violations of the [c]ourt’s clear orders were not willful.
               To the contrary, the evidence shows the opposite. The
               Defendants deleted Separator[s’] data despite having notice [of]
               the very subject of the lawsuit filed against them concerned what
               data they had taken and what they had done with it.


               ****


               96. The Defendants’ actions were deliberate and willfully
               disregarded the explicit instructions of the [c]ourt’s [discovery
               orders]. As such, and to prevent further irreparable harm, the
               Defendants will be held in contempt, and appropriate remedies
               and sanction will now issue.


               97. The [c]ourt finds that the Defendants have engaged in the
               willful, bad-faith, intentional destruction of evidence.


       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020             Page 23 of 44
               98. Separate from the [c]ourt’s express orders, the Defendants
               were under an obligation to preserve potentially relevant
               evidence. They did the opposite and intentionally deleted data
               that they knew might be used to support [Separators’] claims
               against them.


               99. The Defendants’ actions were egregious and were intended
               to interfere with [Separators’] claims against the Defendants and
               with the orderly administration of justice by this [c]ourt.


       (Appellant’s App. Vol. II, pp. 73, 82-84). The trial court found that the

       Defendants should not be permitted to benefit by their destruction of evidence

       and that fairness required that default judgment be entered against them.


[35]   The evidence showed that despite the clear directives of the trial court’s

       discovery orders, the Defendants destroyed and concealed data relevant to

       Separators’ claims. The destruction was swift and continuing. The first

       deletion from the Pockey USB occurred just three minutes after Carmichael

       was served with the Complaint, TRO, and OPEE, and over 1000 additional

       files were deleted from the Seagate USB shortly after Monday was served. The

       subsequent spoliation occurred just before the Defendants were to produce

       evidence relevant to Separators’ discovery requests: Almost 1000 files were

       deleted from Monday’s CSI computer between September 22 and September

       24, 2015, the date the computer was to be turned over to Green for

       examination, and approximately 3000 images were overwritten onto the

       Pockey USB on October 5, 2015, the day before it was produced. Carmichael

       deleted responsive emails from his CSI computer, and the Defendants also


       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020          Page 24 of 44
       failed to disclose relevant internet-based data storage accounts and the WDP

       device. Despite Green’s expert testimony concerning the substance and timing

       of the deletions, Monday offered implausible denials of responsibility. For his

       part, Carmichael admitted that deleting emails from his CSI computer made it

       difficult to discern if they were Separators-related.


[36]   Carmichael only challenges his culpability for these actions with the same

       arguments we have already found to be unpersuasive elsewhere, namely that

       Monday’s spoliation was improperly attributed to Carmichael and that his own

       individual conduct was inadequate to support the entry of a default judgment.

       However, as a co-conspirator, Carmichael was equally liable for Monday’s acts

       of spoliation. See Bottoms, 405 N.E.2d at 90. There is no other reasonable

       inference to be made from the substance, timing, multiplicity of these actions

       but that Carmichael and Monday sought to frustrate Separators’ ability to prove

       its claims. This degree of spoliation represents the apex of the spoliation

       culpability continuum and has been strongly condemned by our supreme court.

       See Howard Reg’l Health Sys., 952 N.E.2d at 189-90; Gribben, 824 N.E.2d at 354.

       While it is the regular practice of trial courts to fashion progressive sanctions

       leading up to a dismissal or default judgment when it is possible to do so,

       imposing intermediate sanctions is not obligatory when a party’s behavior is

       particularly egregious. See Prime Mortgage USA, Inc. v. Nichols, 885 N.E.2d 628,

       649-651 (Ind. Ct. App. 2008) (holding that the defendant’s production of a

       forged shareholder agreement during discovery merited the sanction of a default

       judgment, a sanction that is most often invoked where a party commits perjury


       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020           Page 25 of 44
       or destroys or doctors evidence); Whitaker, 960 N.E.2d at 116-17 (upholding the

       entry of default judgment as sanction for car accident plaintiff’s late and

       misleading discovery response that he had no planned treatment for his spine

       when, in fact, surgery had been planned that would obscure the source of his

       claimed injuries); Whitewater Valley Canoe Rental, Inc. v. Bd. of Franklin Cty.

       Comm’rs, 507 N.E.2d 1001, 1007-08 (Ind. Ct. App. 1987) (holding that entry of

       default judgment against Whitewater was proper where trial court found that it

       had either destroyed or failed to produce documents which it had earlier

       claimed were too burdensome to produce and had motioned to protect).


[37]   We agree with the trial court that Carmichael’s and Monday’s conduct was

       egregious and demonstrated a flagrant disregard for the trial court’s discovery

       orders and the judicial process. This is precisely the type of discovery

       misconduct that should be sanctioned by default so as to discourage other

       litigants from attempting it. See Whitaker, 960 N.E.2d at 115. Accordingly, we

       find no clear error in the trial court’s findings and conclusions, and we further

       conclude that it was within the trial court’s discretion to enter a default

       judgment given the high degree of Carmichael’s shared culpability.


                                                      2. Prejudice

[38]   The trial court’s findings regarding prejudice to Separators concentrated on the

       data deletions, as opposed to the concealment of the WDP drive and the

       internet-based data storage accounts, and so we will focus our analysis there as

       well. The trial court entered findings of fact generally consistent with Green’s

       trial testimony. The trial court found that the overwriting of the 3000 image
       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020            Page 26 of 44
       files onto the Pockey USB likely made relevant data forever irretrievable. The

       932 files that were deleted from Monday’s CSI computer were not recoverable

       beyond the names of the files. Although Green was able to recover the names

       of many files that had been deleted from the USBs and the CSI computers,

       much relevant evidence had been destroyed, including additional filenames, the

       contents of the files, and metadata showing how the files that been used,

       transferred, or copied. There may have been additional files relevant to

       Separators that had been totally deleted such that Green could not recover the

       filenames or even determine how many had been deleted. The trial court

       quoted one of Green’s reports and found that the spoliation had “‘certainly

       destroyed relevant evidence.’” (Appellant’s App. Vol. II, p. 72).


[39]   The trial court entered the additional following relevant findings and

       conclusions regarding the prejudice resulting to Separators as a result of the

       spoliation:


               51. The acts of deleting data from the Pockey USB device, the
               Seagate USB device, and the [CSI] computers have destroyed
               evidence potentially relevant in this litigation and hindered the
               forensic investigation. These actions added layers of complexity
               that have increased the amount of time and reconstruction efforts
               required of Green in conducting her forensic investigation. . . .


               ****


               53. The deletion of evidence described above obstructs Green’s
               ability to conduct a complete analysis of the electronic storage
               devices to identify all of the Separators [] data that the
               Defendants copied and to determine how the Defendants used
       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020            Page 27 of 44
        that data. That deletion therefore interferes with [Separators’]
        ability to discover those facts and use them to support its claims
        against the Defendants and interferes with the [c]ourt’s ability to
        decide these issues.


        ****


        100. The Defendants’ deletions risk causing substantial prejudice
        to Separators [] in prosecuting its claims.


        ****


        102. The Defendants’ deletions and anti-forensic activity have
        resulted in some data being irretrievably lost.


        103. The Defendants’ deletion of data thus impairs Separators []
        ability to go to trial on the following claims: [misappropriation
        of trade secrets, computer trespass, theft, conversion, and breach
        of fiduciary duty/duty of loyalty].


        104. The existing evidence shows that the Defendants copied
        hundreds or thousands of Separators [] computer files onto [the
        Pockey and Seagate USBs] and transferred them to [CSI’s]
        computers. To determine the Defendants’ liability and damages
        for computer trespass, misappropriation, theft, conversion, and
        breach of their fiduciary duty and duty of loyalty, this [c]ourt
        must know what computer files that the Defendants improperly
        copied and what Defendants did with these computer files.


        105. Indeed, the Defendants have already made clear that they
        intend to defend this lawsuit in part by disputing exactly which
        type of files they took. For example, the Defendants have argued
        in their briefing and at the hearings that they took only [the]


Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020           Page 28 of 44
               manuals from Separators [] and they dispute whether such
               manuals may be treated as Separators[’] property.


               106. However, the Defendants’ deletion of many of the
               electronic files, including the deletion of metadata and the
               deletion of some files irretrievably and completely, deprives this
               [c]ourt of evidence showing all of the files that the Defendants
               copied and of evidence showing when and how the Defendants
               used those files in operating their new competing business.


       (Appellant’s App. Vol. II, pp. 71-72, 84-87) (record citations and footnote

       omitted, emphasis in the original).


[40]   In assessing whether prejudice resulting from discovery violations merits the

       entry of a default judgment, we consider how the violation impacted the non-

       violating party’s ability to bring or defend claims. Howard Reg’l Health Sys., 952

       N.E.2d at 189-90. In Whitaker, 960 N.E.2d at 114, 117, our supreme court

       upheld the trial court’s determination that default was merited where

       Whitaker’s obfuscation during discovery about having cervical spine fusion

       surgery impacted the only real issue in the case, namely whether his surgery

       was prompted by the collision at the base of the lawsuit or by a pre-existing

       condition. Similarly, in Prime Mortgage, 885 N.E.2d at 651, we upheld a trial

       court’s entry of default judgment against the defendant for submitting a forged

       shareholder agreement during discovery because that forgery went to the heart

       of the shareholders’ dispute and caused the plaintiff-shareholder to change her

       theory of the case. Entry of a default judgment has also been found to be

       warranted where discovery violations resulted in difficulty to the opposing party


       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020          Page 29 of 44
       in preparing for trial and additional expense. See Sahara Mart, Inc. v. Ind. Dep’t

       Revenue, 114 N.E.3d 36, 50 (Ind. Tax Ct. 2018) (concluding that defendant-

       taxpayer’s perjury and witness-tampering in a sales-tax proceeding impeded

       trial preparation and caused the Department to expend time and money

       gathering and presenting evidence to support its rule-to-show-cause motion).


[41]   Here, Carmichael and Monday admitted that they had taken data from

       Separators, but they claimed that they had only taken the manuals which they

       contended were not trade secrets or proprietary to Separators. Separators

       disputed that Carmichael and Monday took only the manuals. It alleged in its

       Complaint that the Defendants had taken other materials such as “parts lists,

       customer lists, supplier information, custom parts drawings, manuals, and

       financial reports[,]” and thus had “accessed, copied and used a significant

       portion of Separators’ technical, commercial, and financial library.”

       (Appellant’s App. Vol. III, pp. 40, 42). In order to prosecute these claims, it

       was essential for Separators to know the totality of the data taken and how it

       had been used by the Defendants. Therefore, the trial court’s conclusion that

       the partial and complete deletions of data from the USBs and CSI computers

       interfered both with Separators’ ability to proceed on its claims and with the

       trial court’s ability to decide the case was not clearly erroneous. In addition, as

       in Sahara Mart, the spoliation necessitated a forensic investigation by Green,

       added layers of complexity to her investigation, and resulted in show-cause

       proceedings, causing Separators delay and additional litigation expenses.




       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020          Page 30 of 44
[42]   Regarding the issue of prejudice, Carmichael merely argues that any prejudice

       flowing to Separators was caused by Monday’s actions which could not be

       imputed to him and that his individual conduct caused no prejudice, arguments

       we find to be unpersuasive because of the trial court’s finding that he conspired

       with Monday. Carmichael also quotes Nagel v. Northern Indiana Public Service

       Company, 26 N.E.3d 30, 39 (Ind. Ct. App. 2015), trans. denied, for the

       proposition that “[i]n determining the appropriateness of default judgment as a

       [] sanction, there is a marked preference in Indiana for deciding disputes on

       their merits, especially in cases involving material issues of fact, substantial

       amounts of money, or weighty policy determinations.” (Appellant’s Br. p. 50-

       51). In support of this argument, Carmichael identifies what he contends were

       issues of material fact concerning his defense that the manuals were not trade

       secrets or proprietary to Separators. What this argument overlooks is that the

       Defendants’ own acts of spoliation rendered the material issues of fact

       pertaining to Separators’ claims—what data the Defendants took and how they

       used it—incapable of being fully known, and therefore, resolved. We

       acknowledge that a substantial amount of money is involved in this case, in

       excess of $11,000,000. However, Prime Mortgage illustrates that this court will

       uphold the entry of default judgment as a sanction for discovery violations in

       cases which involve substantial sums of money where the conduct at issue was

       egregious and material prejudice has been shown. 885 N.E.2d at 672

       (upholding default judgment entered as a sanction and damages award in

       excess of $8,000,000). Carmichael does not identify any weighty policy



       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020            Page 31 of 44
       determinations for us that would render the default judgment entered in this

       case inappropriate.


[43]   We recognize that Carmichael and Monday were not completely successful in

       their spoliation efforts and that Separators was still able to gather some

       evidence that large numbers of its manuals as well as some other types of

       documents had been taken. Thus, Separators was not entirely precluded from

       pursuing its claims. The trial court assessed the degree of prejudice to

       Separators, and, together with its findings and conclusions regarding the

       Defendants’ culpability, determined that the default judgment was warranted.

       This court has observed that “the culpability versus prejudice balancing act,

       namely, the prejudice to the non-spoliating party versus the culpability of the

       spoliating party, is best left to the trial court.” Northern Ind. Pub. Serv. Co. v.

       Aqua Envtl. Container Corp., 102 N.E.3d 290, 304 (Ind. Ct. App. 2018). The trial

       court entered findings and conclusions which were supported by the evidence

       and which in turn supported its determination that a default judgment was

       merited based on the Defendants’ culpability and the prejudice resulting from

       their actions. Therefore, we conclude that its determination was not clearly

       erroneous. See Wysocki, 18 N.E.3d at 603.


                                             III. Summary Judgment

[44]   Carmichael next contends that the trial court erred when it denied his October

       31, 2017, motion for summary judgment on Separators’ fiduciary duty/duty of

       loyalty, computer trespass, conversion, theft, and civil conspiracy claims in

       which he argued that those claims were barred by the applicable two-year

       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020              Page 32 of 44
       statute of limitations. Carmichael did not move for summary judgment on any

       claims that were not already subject to the default judgment. Separators

       responds that Carmichael improperly moved for summary judgment after the

       trial court had entered the default judgment. Therefore, as a threshold issue, we

       must determine whether Carmichael’s argument is properly before us.


[45]   On March 8, 2018, after a hearing, the trial court denied Carmichael’s summary

       judgment motion in an order addressing the merits of his statute of limitations

       arguments. In a footnote the trial court observed the following:


               The parties disagree about whether Carmichael is entitled to
               move for summary judgment at this stage of the proceedings, in
               light of the default judgment entered against him on some of
               Separators[’] claims. For purposes of this Order, the [c]ourt
               assumes without deciding that Carmichael’s motion is timely, as
               his motion fails on the merits. However, language in Prime
               Mortgage, 885 N.E.2d at 639 seems to suggest otherwise.


       (Appellant’s App. Vol. X, p. 144).


[46]   On appeal, Carmichael joins the trial court’s suggestion that this court’s

       decision in Prime Mortgage provides authority for a litigant to pursue summary

       judgment proceedings on claims subject to a default judgment entered as a

       sanction for discovery violations. We disagree, given the circumstances of this

       case. In Prime Mortgage, plaintiff Nichols, who held a fifty per cent interest in

       Prime, filed an action for the appointment of a receiver and the dissolution of

       the closely-held corporation when she and the only other shareholder, Law,

       were unable to agree on a buyout for Nichols. 885 N.E.2d at 637. Law

       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020          Page 33 of 44
       responded that Nichols did not have a fifty per cent interest in Prime, as he had

       issued stock to two other persons pursuant to an agreement he claimed Nichols

       had signed which authorized the stock issue. Id. Nichols amended her

       Complaint to add a claim of breach of fiduciary duty against Law for allegedly

       improperly inducing her to sign the agreement. Id. However, Nichols

       subsequently determined through discovery that Law had forged her signature

       on the agreement, causing her to file a third amended Complaint alleging the

       forgery and seeking treble damages against Law and his co-defendant Prime

       pursuant to the ICVRA. Id. at 637-38. The defendants moved for summary

       judgment, arguing that the Crime Victims Statute count was barred by the

       statute of limitations. Id. at 638. The trial court denied that motion. Id.

       Nichols then sought sanctions against the defendants for Law’s submission of

       the forged agreement during discovery. Id. The trial court granted Nichols’

       sanctions motion, dismissed the defendants’ counterclaims and granted

       summary judgment on some, but not all, of Nichols’s claims. Id. The trial

       court later entered treble damages in favor of Nichols in excess of $8,000,000.

       Id.


[47]   On appeal, the Prime Mortgage court considered whether the defendants were

       able to appeal the denial of their motion for summary judgment after the trial

       court had entered a default judgment against them as a sanction for their

       discovery conduct. Id. at 638-39. The Prime Mortgage court concluded that it

       was possible because the trial court had not stricken the defendants’ answers

       and affirmative defenses upon entering the default judgment. Id. at 639. The

       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020         Page 34 of 44
       court also found it significant that the entire summary judgment proceedings

       were concluded before the trial court’s entry of the default judgment. Id. The

       court, therefore, addressed the merits of the statute of limitations argument. Id.


[48]   Prime Mortgage is distinguishable on its facts from the instant case. Here,

       although the trial court did not strike his answer and affirmative defenses in

       conjunction with the default judgment, Carmichael did not file his summary

       judgment motion until after the trial court had entered its default judgment

       sanction, and, thus, the significant procedural rationale set out in Prime

       Mortgage is not present here. More importantly, we believe that the nature of a

       default judgment entered as a sanction for discovery violations, as opposed to a

       default judgment entered for other reasons such as a failure to appear and

       answer a complaint, precludes subsequent procedural attacks such as the one

       mounted by Carmichael in this case. The trial court was authorized by TR

       37(B)(2) to enter default judgment as a sanction for violations of its discovery

       orders. We find nothing in TR 37 or indeed in any other Indiana Trial Rule

       which would permit a defendant to challenge a discovery violation sanction

       through a motion alleging a procedural defense to the underlying claims of the

       complaint. Thus, it is of no moment that Separators still had three active

       claims, which it subsequently dismissed, and the trial court had not yet entered

       final judgment when Carmichael filed his summary judgment motion.


[49]   Trial courts are permitted to exercise their contempt powers to promote orderly

       discovery and punish discovery violations so that others are not tempted to

       engage in like conduct. See City of Gary, 882 N.E.2d at 169; Whitaker, 960

       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020          Page 35 of 44
       N.E.2d at 115. To allow such a procedural attack on a trial court’s sanction

       would be to seriously undermine the ability of trial courts to exercise their

       contempt powers to further those ends. In reaching our conclusion, we express

       no opinion on the availability of summary judgment proceedings following the

       entry of default judgment for other reasons. Because we conclude that

       Carmichael’s summary judgment arguments are not properly before us, we do

       not address them further.


                                                   IV. Damages

[50]   Carmichael challenges the trial court’s award of exemplary and compensatory

       damages. The computation of damages is a matter within the sound discretion

       of the trial court. Fischer v. Heymann, 12 N.E.3d 867, 870 (Ind. 2014). Where

       the trial court has entered special findings pursuant to TR 52(A) and the issue

       on review relates to the award of damages, the award should not be reversed if

       it is within the scope of the evidence before the trial court. Int’l Bus. Machs.

       Corp. v. State on behalf of Ind. Family & Soc. Servs. Admin., 124 N.E.3d 1187, 1189-

       90 (Ind. 2019).


                                               A. Exemplary Damages

[51]   Carmichael argues that the trial court improperly awarded exemplary damages

       under the IUTSA because the trial court’s findings that he and his co-

       defendants acted willfully and maliciously, as required for exemplary damages

       under the IUTSA, were unsupported by evidence in the record. However, the

       factual premise of Carmichael’s argument is inaccurate. The trial court

       awarded exemplary damages under the ICVRA, not the IUTSA. The trial

       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020            Page 36 of 44
       court entered findings indicating that if it were not awarding damages under the

       ICVRA, Separators would be entitled to damages under the IUTSA due to the

       Defendants’ willful and malicious conduct, but its Order entering “exemplary

       damages pursuant to the [ICVRA] in the amount of $3,000,000.00” is clear and

       explicit regarding the grounds for the exemplary damages award. (Appellant’s

       App. Vol. II, p. 112). Carmichael does not challenge any of the findings and

       conclusions supporting the trial court’s award of damages under the ICVRA.

       Therefore, we do not address Carmichael’s argument on this issue further.


                                             B. Compensatory Damages

[52]   The trial court entered compensatory damages for Separators’ lost profits on its

       misappropriation of trade secrets, breach of fiduciary duty/duty of loyalty,

       computer trespass, conversion, theft, and civil conspiracy claims. The trial

       court entered the following relevant conclusions regarding compensatory

       damages:


               4. As a general rule, “[t]ort damages do not require absolute
               certainty” and lost profits need not “be ascertainable with
               absolute certainty.” Columbus Medical Services Organization, LLC v.
               Liberty Health Care Corp., 911 N.E.2d 85, 96 (Ind. Ct. App. 2009).
               The Indiana Court of Appeals “will affirm a damage award for
               lost profits as long as there [is] some evidence on which to base
               an award for [the] anticipated profits.” Id. at 97 (internal
               quotations omitted).


               ****




       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020          Page 37 of 44
        19. Separators supported its calculation of its lost profits with the
        opinion and testimony of an expert witness, [] Crawford, a
        [CPA].


        20. To prepare his lost profit calculations, Crawford analyzed
        both Separators’ and CSI’s respective financial information and
        the trend in Separators’ parts sales before and after Carmichael
        began operating CSI in March 2013. He also identified
        overlapping customers between the two companies. Crawford
        determined how much of Separators’ lost sales overlapped with
        CSI’s gained sales by confirming they involved the same
        customers. Crawford determined that substantially all of the sales
        gained by CSI were with prior-Separators customers – in the
        years 2013-2017 over 90% of CSI’s parts sales were directly to
        customers that were prior or current Separators customers.


        21. To calculate Separators’ lost profits, Crawford started by
        determining Separators’ lost sales.


        22. Crawford calculated Separators’ average annual sales to each
        customer that it lost to CSI during the period before the customer
        switched to CSI. Crawford determined that Separators’ historical
        growth trend was 5.87% based on Separators’ parts sales between
        2006 and 2012.


        23. Crawford applied that rate to Separators’ average parts sales
        for each of the overlapping customers to calculate what
        Separators’ expected sales to those customers would have been
        from 2013 on. Crawford then subtracted the amount of
        Separators’ actual sales to the “overlapping” customers from the
        amount of its expected sales to those customers to determine the
        amount of Separators’ lost sales to those customers.


        24. Following identification of Separators’ lost sales, Crawford
        applied a profit margin to them. Crawford then determined the

Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020            Page 38 of 44
               appropriate damages period, selecting a period that starts at the
               date of the wrongful act and continues until operations return to
               normal. In Crawford’s view, Separators’ operations had still not
               returned to “normal” as of the date of trial because its parts sales
               in 2016 were only $3.1 million, whereas in 2012, before
               Defendants’ misconduct, they were $5.1 million. Crawford
               therefore calculated damages through the most recent date for
               which he had financial data.


               25. Crawford then calculated Separators’ lost profits by
               multiplying the lost sales to the overlapping customers by the
               relevant profit margin.


               26. Based on these figures, Crawford determined that Separators
               suffered lost profits in the amount of $6,804,693.00 through April
               2017, with the calculation through trial putting the figure at
               $8,680,447.00.


               27. The Court finds this methodology sound and Crawford’s
               testimony to be credible.


       (Appellant’s App. Vol. II, pp. 101, 104-05). Crawford testified to the facts and

       calculations that were summarized in the trial court’s conclusions. In light of

       this evidence which supported the trial court’s conclusions, none of which

       Carmichael specifically challenges on appeal, we cannot say that the trial

       court’s determination of Separators’ compensatory damages for lost profits is

       clearly erroneous. See Int’l Bus. Machs. Corp., 124 N.E.3d at 1189-90.


[53]   Despite the evidence supporting the trial court’s findings and conclusions,

       Carmichael argues that the trial court awarded damages “without allowing

       Carmichael a full opportunity to present evidence of Separators’ own causation

       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020            Page 39 of 44
       of its lost profits that it sought to recover as damages.” (Appellant’s Br. p. 62).

       Carmichael does not further explain how he was impeded in his effort to

       present evidence of Separators’ own culpability in its lost profits. We note that

       Carmichael and his co-defendants did not elect to have Gross prepare an

       independent damages calculation in time for presentation at trial, Gross offered

       expert testimony on behalf of the Defendants, and the Defendants cross-

       examined Crawford and Separators’ other witnesses pursuant to their theory of

       the case and damages. Accordingly, we find no merit in this argument.


[54]   Carmichael also argues that “the trial court’s finding essentially concludes that

       CSI’s success was based solely on its use of the [m]anuals, despite ample

       undisputed evidence to the contrary.” (Appellant’s Br. p. 62). In support of

       this contention, he directs our attention to evidence in the record that he feels

       demonstrated that not all of CSI’s success was attributed to its use of the

       manuals taken from Separators, such as his pre-existing business relationships

       with Separators clients, CSI’s lower overhead and prices, and the fact that he

       had no agreement-not-to-compete with Separators. Carmichael contends these

       factors should have resulted in some unspecified reduction in Separators’ claim

       for damages. We find these arguments unpersuasive for at least two reasons.

       Carmichael mischaracterizes the trial court’s findings and conclusions, in that it

       did not find that CSI’s success was based solely on its use of the manuals.

       Rather, it merely found that CSI “could not have obtained the success it did

       without the data that was misappropriated from Separators” which included

       not only the manuals but also a client contact list, requests for quotes, and other


       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020           Page 40 of 44
       information. (Appellant’s App. Vol. II, p. 99). In addition, Carmichael’s

       arguments are unavailing because they entail our consideration of evidence that

       does not support the trial court’s findings and conclusions, and are, therefore,

       contrary to our standard of review. See Stout, 734 N.E.2d at 719.


[55]   Lastly, Carmichael challenges Crawford’s methodology and the factual bases

       for his damages calculations. Carmichael argues that Crawford’s method was

       flawed because he erroneously assumed that all of Separators’ clients lost to CSI

       would do business with Separators on a yearly basis, all of Separators’ lost

       clients did business with CSI because CSI used Separators’ data, and

       Separators’ financial losses were exclusively the result of CSI’s illegitimate

       competition. Carmichael also contends that Crawford failed to consider a

       variety of factors in his computations, including Separators’ high employee

       turn-over, Separators’ decline in sales before CSI began competing, CSI’s better

       pricing that lured Separators’ customers, the importance of Carmichael’s

       established business relationships and expertise, and the fact that Carmichael

       had no agreement-not-to-compete with Separators.


[56]   In Bowden v. Agnew, 2 N.E.3d 743, 749-50 (Ind. Ct. App. 2014), this court

       affirmed the award of compensatory damages where the defendants, the

       Bowdens, challenged the basis for plaintiff Agnew’s expert’s calculation of

       profits for purposes of a compensatory damages award. Agnew and the

       Bowdens had entered into a business venture wherein they agreed to split their

       net profits equally. Id. at 745. In order to cover expenses in another, unrelated

       business venture, without Agnew’s consent, the Bowdens assigned all of the

       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020          Page 41 of 44
profits from their venture with Agnew to a third party. Id. at 746. At trial on

Agnew’s claims for, among other things, breach of fiduciary duty and civil

conspiracy, Agnew presented the expert testimony of a CPA to support his

claim to his share of the improperly-assigned profits totaling $1,754,278. Id.

at 747. The Bowdens did not offer any expert testimony but had a

spreadsheet admitted into evidence that showed that the venture had actually

resulted in a net loss. Id. The trial court fully credited the testimony and

damages calculations of Agnew’s CPA and awarded Agnew $1,754,278 in

compensatory damages. Id. On appeal, the Bowdens challenged the trial

court’s damages award, arguing that the CPA had not requisitioned

information from the Bowdens and had excluded entire categories and time

periods of expenses from his profitability calculations. Id. at 749. After

rejecting the Bowden’s argument that the CPA’s opinion had an insufficient

factual basis, the Court found that the Bowdens were essentially challenging

the weight that the trial court should have afforded the CPA’s testimony. Id.

at 750. The Court observed that

        [the CPA] was thoroughly cross-examined at trial and steadfastly
        stood by his calculations. Aware of the challenges asserted by
        the Bowdens, the trial court expressly found [the CPA’s]
        testimony credible, explained in detail its reliance on the expert’s
        calculations, and concluded in part:


                 66. No particular degree of certainty is required in
                 awarding damages so long as the amount awarded is
                 supported by the evidence and not based merely on


Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020           Page 42 of 44
                        speculation or conjecture. JKL Components Corp. v. Insul-
                        Reps, Inc., 596 N.E.2d 945, 954 (Ind. Ct. App. 1992).


                        67. Plaintiffs have readily met this burden of proof. [The
                        CPA] provided the Court with a detailed report and
                        testimony regarding Agnew's measure of damages. [The
                        CPA’s] measure of damages was supported by the
                        evidence and is neither speculative nor based upon
                        conjecture.


               The Bowdens, who have not directly challenged any of the trial
               court's specific findings or conclusions, have failed to establish
               that the trial court's reliance on [the CPA’s] expert testimony
               regarding damages was clearly erroneous.


       Id.


[57]   Like the defendants in Bowden, Carmichael’s challenges essentially assail the

       weight that the trial court accorded to Crawford’s expert testimony. However,

       Carmichael and his co-defendants thoroughly cross-examined Crawford at trial

       regarding his calculations, and they presented all of these same challenges to the

       trial court through Gross’s expert testimony. Here, as in Bowden, the trial court

       noted that Indiana law did not require absolute certainty in damages

       calculations, it specifically found Crawford’s testimony to be credible, and it

       cited Crawford’s methods and conclusions in reaching its damages

       determination. Accordingly, we find that Carmichael has failed to establish

       that the trial court’s findings and conclusions supporting its award of

       compensatory damages based on Crawford’s calculations were clearly

       erroneous. See id.

       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020              Page 43 of 44
                                              CONCLUSION
[58]   Based on the foregoing, we conclude that the trial court’s findings and

       conclusions supporting the entry of a default judgment against Carmichael as a

       sanction were not clearly erroneous and that Carmichael’s summary judgment

       arguments are not properly before us. We also conclude that the trial court’s

       awards of exemplary and compensatory damages in favor of Separators were

       supported by the evidence and were not clearly erroneous.


[59]   Affirmed.


[60]   Mathias, J. and Tavitas, J. concur




       Court of Appeals of Indiana | Opinion 19A-PL-1821 | May 8, 2020           Page 44 of 44
