MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be
regarded as precedent or cited before any
                                                                              FILED
court except for the purpose of establishing                           May 21 2019, 7:42 am

the defense of res judicata, collateral                                       CLERK
                                                                          Indiana Supreme Court
estoppel, or the law of the case.                                            Court of Appeals
                                                                               and Tax Court




ATTORNEYS FOR APPELLANTS                                   ATTORNEYS FOR APPELLEE
Robert L. Burkart                                          Jason M. Massaro
Jean M. Blanton                                            Indianapolis, Indiana
L. Katherine Boren                                         Robert S. Daniels
Evansville, Indiana                                        Daniels G. Kerns
                                                           Fishers, Indiana



                                            IN THE
    COURT OF APPEALS OF INDIANA

Bioconvergence, LLC and Alisa                              May 21, 2019
K. Wright, individually,                                   Court of Appeals Case No.
Appellants/Defendants-                                     18A-PL-1351
Counterclaimants,                                          Appeal from the Marion Superior
                                                           Court
        v.
                                                           The Honorable Gary L. Miller,
                                                           Judge
Kathryn S. Eddy,
                                                           Trial Court Cause No.
Appellee/Plaintiff-Counterclaim                            49D03-1211-PL-45456
Defendant.



Tavitas, Judge.




Court of Appeals of Indiana | Opinion 18A-PL-1351 | May 21, 2019                                  Page 1 of 23
                                                Case Summary
[1]   BioConvergence, LLC (“BioC”) and Alisa K. Wright (collectively, “the

      Defendants”) appeal the trial court’s entry of default judgment in favor of

      Kathryn S. Eddy (“Eddy”) and the trial court’s dismissal with prejudice of the

      Defendants’ counterclaim as discovery violation sanctions. We affirm in part

      and reverse in part.


                                                        Issues
[2]   The Defendants raise the following issues:


                 I. Whether the Defendants were denied due process when the
                 trial court found them to be in contempt based on Eddy’s
                 unverified contempt motion.


                 II. Whether the trial court’s dismissal of Defendants’
                 counterclaims was an unjust discovery violation sanction.


                 III. Whether the trial court’s entry of default judgment was an
                 unjust discovery violation sanction.


                                                        Facts 1
[3]   This case involves a plethora of discovery disputes, violations, requests for

      contempt findings and sanctions, and gamesmanship that ensued after the

      employer-employee relationship of the parties soured. The relevant facts are as




      1
          We heard oral argument of the parties on March 28, 2018.


      Court of Appeals of Indiana | Opinion 18A-PL-1351 | May 21, 2019             Page 2 of 23
      follows: Wright is the majority owner and chief executive officer of BioC 2,

      headquartered in Bloomington, Indiana. Wright’s ex-husband, Lance, was

      BioC’s chief operating officer. In 2004, Eddy contracted to provide consulting

      advice to BioC and, in 2006, Eddy began serving on BioC’s board of advisors.


[4]   In December 2010 or January 2011, Eddy purchased 371.429 ownership shares

      of BioC for $52,000.00, or $140.00 per share, the unit price that was designated

      by Defendants and approved by BioC’s accounting firm. In March 2011, Eddy

      accepted a position as BioC’s chief financial officer. That Fall, Defendants

      tasked Eddy with performing a new stock valuation. Eddy concluded that the

      unit price of the ownership shares should be $70.00; however, Defendants

      elected to maintain the $140.00 unit price. In December 2011, Eddy bought

      seventy-one more ownership shares at the $140.00 unit price.


[5]   In May 2012, Defendants terminated Eddy’s employment, which triggered

      BioC’s option to repurchase Eddy’s ownership shares pursuant to BioC’s

      operating agreement. In July 2012, Defendants repurchased Eddy’s ownership

      shares for $15.50 per share. 3 On November 27, 2012, Eddy sued Defendants

      for actual and constructive fraud; breach of contract; breach of fiduciary duty;

      criminal deception; defamation per se; defense and indemnification; specific

      performance; violations of the Indiana Uniform Securities Act; and willful




      2
       BioC is a service provider to the life sciences industry and provides contract services, including
      development, production, testing, supply chain, and consulting services, to the pharmaceutical industry.
      3
          Defendants aver that BioC’s accounting firm generated the $15.50 unit price pursuant to a new valuation.


      Court of Appeals of Indiana | Opinion 18A-PL-1351 | May 21, 2019                                  Page 3 of 23
      misconduct and recklessness. On January 18, 2013, Defendants

      counterclaimed for breach of contract; conversion; criminal deception;

      defamation; intentional infliction of emotional distress; and negligence.


[6]   The discovery disputes at issue involve Eddy’s requests (1) for an executed

      medical release from Wright for mental health records from the Wrights’

      marriage counselor, Carol Bither; and (2) for non-party production of

      documents from Defendants’ expert witness, Gary Kleinrichert of FTI.


[7]   On May 12, 2015, Eddy filed motions for orders to release Wright’s mental

      health records and to compel production of mental health records. Eddy

      argued that Wright “placed her mental health at issue [ ] by claiming [ ]severe

      emotional distress and mental anxiety”; and “any such records are crucial to

      Eddy’s defense of Wright’s Counterclaims[.]” Appellants’ App. Vol. V pp. 28,

      30. On July 30, 2015, the trial court ordered Wright to execute any necessary

      medical release forms within ten days. Wright failed to execute the release that

      Eddy’s counsel provided.


[8]   On September 9, 2015, Eddy served a nonparty request for production of

      documents upon Bither and successfully obtained Bither’s notes. When Eddy

      subsequently sought to take Bither’s deposition, Bither’s counsel refused to

      allow Bither to testify because Wright had not executed a medical release.


[9]   On June 16, 2017, Eddy filed an unverified motion for contempt and sanctions

      (“First Contempt Motion”) in which Eddy alleged that Wright violated the trial

      court’s July 30, 2015, order by failing to timely execute a medical release. On

      Court of Appeals of Indiana | Opinion 18A-PL-1351 | May 21, 2019         Page 4 of 23
       July 3, 2017, Wright responded 4 that the trial court’s order: (1) required her to

       sign a medical release for Bither’s notes; (2) did not require her to sign a broad

       release for unlimited testimony; and (3) imposed no deposition obligation.


[10]   At the close of a final pretrial conference (“FPTC”) on July 10, 2017, Eddy

       supplied the trial court with a medical release form for Wright to sign. The trial

       court initialed the release and ordered Wright to sign it after the FPTC. Wright

       did not sign the release after the FPTC. Three days later, on July 13, 2017,

       Wright delivered to Eddy a signed, yet modified, version of the release that still

       bore the trial court judge’s initials. 5


[11]   On July 14, 2017, the trial court, sua sponte, continued the trial for one year

       and ordered the parties into mediation to resolve all pending issues. On July

       25, 2017, the trial court denied all pending motions stating, “[I]n the event

       mediation of the pending issues between the parties is unsuccessful, the parties

       may refile any requests they have.” Appellants’ App. Vol. X p. 143. After the

       trial court vacated the trial setting, Wright revoked her executed, modified

       medical release. The parties met for mediation as scheduled; however, they did




       4
         Wright also argued that the Bither deposition did not occur because Eddy failed to obtain a medical release
       from Lance as Bither requested.
       5
        Defendants maintain that Wright merely filled out the medical release consent form that Wright was given;
       that the form had a blank space for the service recipient’s address, in which Wright entered her attorneys’
       contact information, and a blank space designated for the purpose for which the released information was to
       be used, in which Wright entered “that the release was solely for the purposes of allowing for Bither’s
       deposition to be taken in this case, which was to be kept confidential pursuant to the trial court’s protective
       order.” See Appellants’ Br. pp. 23-24. Wright also included a warning “that any violations of the protective
       order by Eddy and/or her agents would be ‘prosecuted to the fullest extent of the law.’” Id.

       Court of Appeals of Indiana | Opinion 18A-PL-1351 | May 21, 2019                                   Page 5 of 23
       not settle all pending matters. In the meantime, Eddy continued to try to obtain

       a signed release from Wright.


[12]   After Defendants disclosed their expert witnesses, including Kleinrichert of

       FTI, Eddy served subpoenas on Defendants’ experts on January 31, 2017.

       Defendants objected on February 13, 2017. The experts’ responses to the

       subpoenas were due on March 6, 2017. On March 1, 2017, Defendants moved

       for a protective order to shield their experts, including FTI, from Eddy’s

       subpoenas. On March 15, 2017, Eddy filed a motion to compel non-party

       discovery on Defendants’ testifying experts, including Kleinrichert and FTI,

       and a motion for leave to serve non-party discovery upon the testifying experts.


[13]   After a hearing on April 11, 2017, the trial court denied Defendants’ motion for

       protective order, granted Eddy’s motion to compel, and ordered Defendants’

       testifying expert witnesses to produce the requested documents by April 26,

       2017 (“April 11, 2017 order”). FTI did not produce the documents on April 26,

       2017. Instead, counsel for FTI notified Eddy, in writing, that the trial court’s

       April 11, 2017 order did not require FTI to produce all responsive documents.


[14]   On May 1, 2017, FTI provided 2,500 responsive documents to Defendants for

       review; however, Eddy contends that FTI produced only a subset of those

       responsive documents because Defendants prevented FTI from making a full

       production. On May 11, 2017, counsel for FTI conceded that Eddy was

       entitled to the withheld documents. On May 15, 2017, Defendants filed a

       motion to determine compliance with the trial court’s April 11, 2017 order.


       Court of Appeals of Indiana | Opinion 18A-PL-1351 | May 21, 2019         Page 6 of 23
       Defendants asked the trial court to find that BioC complied with the April 11,

       2017 order and that the remaining documents were “appropriately withheld.”

       Id. The trial court subsequently ordered that “all documents should be

       discovered,” with limited exceptions for privileged, proprietary, and

       confidential information. Appellants’ App. Vol. IX p. 165.


[15]   On May 17, 2017, Eddy sought sanctions against Defendants for, among other

       things, improper interference with FTI’s compliance with the April 11, 2017,

       order. In motions filed on July 7 and July 10, 2017, Eddy moved to exclude

       Kleinrichert’s testimony, documents, opinions, or other evidence and moved to

       strike Kleinrichert and any documents produced by FTI from Defendants’

       witness and exhibit lists. Thereafter, on February 9, 2018, Defendants

       withdrew Kleinrichert as an expert witness. After mediation efforts failed,

       Defendants notified Eddy that the missing FTI documents would not be

       produced and stated that the documents were no longer relevant because

       Defendants had withdrawn Kleinrichert.


[16]   On February 23, 2018, Eddy filed another unverified contempt motion for

       sanctions (“Second Contempt Motion”), which encompassed the Bither and

       FTI discovery disputes. 6 On May 3, 2018, the trial court conducted a hearing



       6
        We refer to this contempt motion as the “Second Contempt Motion” to mirror the trial court’s amended
       order. As to the Bither dispute, Eddy alleged that Wright and BioC improperly altered a court order by
       modifying the court-initialled Bither release and flouted the trial court’s authority by subsequently revoking
       the release. As to the FTI dispute, Eddy alleged that Defendants improperly interfered with FTI’s
       compliance with the trial court’s April 11, 2017, order by failing to produce all responsive documents and by
       misrepresenting to the trial court that all responsive documents were produced. Eddy sought production of
       the omitted FTI documents, dismissal of Defendants’ counterclaim, and fees.


       Court of Appeals of Indiana | Opinion 18A-PL-1351 | May 21, 2019                                  Page 7 of 23
on Eddy’s Second Contempt Motion and other pending motions. The trial

court’s May 11, 2018, amended order provided, in relevant part:


            2. Plaintiff’s First Motion for Sanctions was a request for
            contempt because Ms. Wright refused to honor this Court’s July
            30, 2015, Order that Ms. Wright execute a Release so as to allow
            the deposition of Ms. Bither to occur.


                                                       *****


            6. Instead of executing the Release as Ordered in Court, Ms.
            Wright refused to sign the release approved by the Court and
            instead, among other things, submitted a modified version
            despite the Release bearing the signature[ 7] of the Judge,
            effectively altering a Court Order.


                                                       *****


            8. The Order continuing the trial date did not void all prior Orders
            of this Court, including the Order compelling Ms. Wright to sign
            the Release.


            9. [ ] Wright is in contempt of this Court for [(i)] her failure to
            comply with this Court’s July 2015, Order and June 27, 2[017],
            Order, (ii) for [Wright]’s improper modification of the initialed
            Release, and (iii) the continued and blatant discovery abuses well
            documented in this case in the record.


                                                       *****




7
    The release at issue bore the trial court judge’s initials.


Court of Appeals of Indiana | Opinion 18A-PL-1351 | May 21, 2019              Page 8 of 23
               12. In this case, Ms. Wright has continued to flaunt [sic] this
               Court’s authority by failing to comply with its Orders and her
               willful refusal to cooperate has caused delay in the parties[’]
               completing discovery and preparing this matter for trial.


               13. Ms. Wright has been held in contempt on a prior occasion
               where the Court ordered her to comply and took the matter of
               attorney fees as a sanction under advisement. This did not deter
               her.


               14. As a result of Alisa Wright’s contempt and the failure of other
               sanctions to force her to comply, the Court ORDERS judgment
               be entered against [ ]Wright, and for the Plaintiff, Kathryn Eddy
               on the Plaintiff’s complaint and further orders [ ] Wright’s
               counterclaim be dismissed with prejudice.


               15. [BioC] is in contempt of this Court for its continuing failure
               to comply with the Court’s Order requiring the production of
               missing FTI documents.


                                                      *****


               17. As a result of the contempt and the failure of other sanctions
               to force [BioC] to comply, the Court ORDERS judgment be
               entered against [BioC], and for the Plaintiff, Kathryn Eddy on
               the Plaintiff’s complaint and further orders [BioC]’s counterclaim
               be dismissed with prejudice. [ ]


       Appellants’ App. Vol. II pp. 85-88 (emphasis in original). Defendants appeal.


                                                     Analysis
[17]   Defendants argue that the trial court abused its discretion in dismissing their

       counterclaim with prejudice and entering default judgment in favor of Eddy as
       Court of Appeals of Indiana | Opinion 18A-PL-1351 | May 21, 2019             Page 9 of 23
       discovery violation sanctions. “We assign the selection of an appropriate

       sanction for a discovery violation to the trial court’s sound 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. Accordingly, we review a

       trial court’s sanction only for an abuse of its discretion. Id. An abuse of

       discretion occurs when the trial court’s judgment is clearly against the logic and

       effect of the facts and circumstances. Clements v. Hall, 966 N.E.2d 757, 759

       (Ind. Ct. App. 2012), trans. denied.


                                                  I.      Due Process

[18]   First, Defendants allege that the trial court improperly found them in indirect

       contempt based upon allegations in Eddy’s unverified contempt motion and,

       thereby, denied them due process of law. Civil contempt consists of failing to

       do something that a court in a civil action has ordered to be done for the benefit

       of an opposing party. Jones v. State, 847 N.E.2d 190, 199 (Ind. Ct. App. 2006)

       (citing Cowart v. White, 711 N.E.2d 523, 530 (Ind. 1999)). A party who has

       been injured or damaged by the failure of another to conform to a court order

       may seek a finding of contempt. Cowart, 711 N.E.2d at 530.


[19]   “A court’s inherent civil contempt powers are both coercive and remedial in

       nature.” S.W. ex rel. Wesolowski v. Kurtic, 950 N.E.2d 19, 22 (Ind. Ct. App.

       2011). In a civil contempt proceeding, the primary objective is not to punish,
       Court of Appeals of Indiana | Opinion 18A-PL-1351 | May 21, 2019         Page 10 of 23
       but, rather, to coerce action or to compensate the aggrieved party. Cowart, 711

       N.E.2d at 530. Whether a party is in contempt is left to the discretion of the

       trial court. Id. We reverse a trial court’s finding of contempt only if there is no

       evidence or inferences drawn therefrom that support the contempt finding. Id.


[20]   Defendants contend, and we agree, that the trial court found willful

       disobedience of the court’s orders, or indirect contempt, here. The trial court

       stated in its amended order that Defendants “fail[ed] to comply with [its] July

       2015, Order, and June 27, 2017, Order[.]” There are two types of contempt—

       indirect and direct. 8 “Willful disobedience of any lawfully entered court order

       of which the offender had notice is indirect contempt.” Akiwumi v. Akiwumi, 23

       N.E.3d 734, 737 (Ind. Ct. App. 2014); see Ind. Code § 34-47-3-1; see also Ind. Tr.

       R. 37(B)(2)(d) (providing that a party’s failure to make or cooperate in

       discovery may be regarded as an act of indirect contempt).


[21]   In cases of indirect contempt, it is well-settled that:


                [B]oth the Fourteenth Amendment and provisions of the Indiana
                Code demand certain procedural safeguards upon an allegation
                of “indirect” contempt . . . . The Fourteenth Amendment
                requires, as a baseline, that the accused receive notice of the



       8
         Direct contempt involves “actions occurring near the court that interfere with the business of the court, and
       of which the judge has personal knowledge.” Reynolds v. Reynolds, 64 N.E.3d 829, 832 (Ind. 2016), (citations
       omitted). “In cases of direct contempt, we accept as true the statement entered of record by the trial court;
       however, we examine the record to determine whether the acts recorded do, in fact, constitute contempt.”
       Hopping v. State, 637 N.E.2d 1294, 1295 n.1 (Ind. 1994) (citation omitted); see Holly v. State, 681 N.E.2d 1176,
       1178 (Ind. Ct. App. 1997) (affirming direct contempt finding where defendant directed profanity at trial
       court).




       Court of Appeals of Indiana | Opinion 18A-PL-1351 | May 21, 2019                                  Page 11 of 23
               contempt allegations against him and have a reasonable
               opportunity to defend against those allegations through a fair,
               public hearing that affords the right to counsel and the chance to
               testify and call witnesses. In Indiana, before indirect contempt
               proceedings may commence, the trial court must receive a
               verified information that sets forth the facts alleged to constitute
               contempt. I.C. § 34-47-3-5. Once the trial court has received a
               verified information, the court may then initiate further
               proceedings by issuing a rule to show cause. . . . .


       Hunter v. State, 102 N.E.3d 326, 330 n.3 (Ind. Ct. App. 2018) (citations

       omitted).


[22]   Indiana Code Section 34-47-3-5 provides:


               (a) In all cases of indirect contempts, the person charged with
               indirect contempt is entitled:


                        (1) before answering the charge; or


                        (2) being punished for the contempt;


               to be served with a rule of the court against which the contempt
               was alleged to have been committed.


               (b) The rule to show cause must:


                        (1) clearly and distinctly set forth the facts that are alleged
                        to constitute the contempt;


                        (2) specify the time and place of the facts with reasonable
                        certainty, as to inform the defendant of the nature and
                        circumstances of the charge against the defendant; and

       Court of Appeals of Indiana | Opinion 18A-PL-1351 | May 21, 2019               Page 12 of 23
                         (3) specify a time and place at which the defendant is
                         required to show cause, in the court, why the defendant
                         should not be attached and punished for such contempt.


                (c) The court shall, on proper showing, extend the time provided
                under subsection (b)(3) to give the defendant a reasonable and
                just opportunity to be purged of the contempt.


                (d) A rule provided for under subsection (b) may not issue until
                the facts alleged to constitute the contempt have been:


                         (1) brought to the knowledge of the court by an
                         information; and


                         (2) duly verified by the oath of affirmation of some officers
                         of the court or other responsible person.


[23]   It is undisputed here that Eddy’s various contempt motions were unverified.

       Defendants cite Indiana Bureau of Motor Vehicles v. Charles, 919 N.E.2d 114, 118

       (Ind. Ct. App. App. 2009) (“BMV”), for the proposition that “an unverified

       petition cannot serve as a basis for indirect contempt.” 9 Appellants’ Br. p. 18.




       9
         In BMV, after Charles’ driver’s license was suspended, she obtained a hardship license. At the time, the
       BMV required persons with hardship licenses to obtain high-risk insurance. The trial court waived the high-
       risk insurance requirement for Charles; however, BMV officials still required Charles to purchase high-risk
       insurance. Charles subsequently filed an unverified petition for rule to show cause that the BMV should be
       held in contempt for failing to honor the trial court’s order. After a hearing, the trial court found the BMV to
       be in contempt and ordered the BMV to reimburse Charles. Due to a procedural issue, the trial court vacated
       its initial contempt order; however, the trial court subsequently found the BMV to be in contempt.

       On appeal, we concluded that: (1) the trial court found the BMV to be in indirect contempt; and (2) an
       unverified petition cannot serve as a basis for a rule to show cause. In support, we cited Indiana Code
       Section 34-47-3-5(d)(2) for the proposition that “an indirect contempt order may not issue until the facts
       alleged to constitute contempt have been ‘duly verified by the oath or affirmation of some officers of the court
       or other responsible person.’” BMV, 919 N.E.2d at 118 (quoting I.C. § 34-47-3-5(d)(2)). Our review of the
       record further established that neither party presented any witnesses, and the only admitted exhibit was a

       Court of Appeals of Indiana | Opinion 18A-PL-1351 | May 21, 2019                                  Page 13 of 23
       We have previously held, however, that “not every technical requirement of the

       indirect contempt statute must be followed, so long as the contempt defendant’s

       due process rights are respected.” In re Contempt of Wabash Valley Hosp., Inc.,

       827 N.E.2d 50, 63 (Ind. Ct. App. 2005).


[24]   Indiana Trial Rule 61 provides:


               No error in either the admission or the exclusion of evidence and
               no error or defect in any ruling or order in anything done or
               omitted by the court or by any of the parties is ground for
               granting relief under a motion to correct errors or for setting aside
               a verdict or for vacating, modifying or otherwise disturbing a
               judgment or order or for reversal on appeal, unless refusal to take
               such action appears to the court inconsistent with substantial
               justice. The court at every stage of the proceeding must disregard
               any error or defect in the proceeding which does not affect the
               substantial rights of the parties.


[25]   In Mariga v. Flint, 822 N.E.2d 620, 632-33 (Ind. Ct. App. 2005), trans. denied, a

       panel of this court held that failure to properly caption and verify a contempt

       petition did not affect the substantial rights of the parties. See In Re Paternity of

       J.T.I., 875 N.E.2d 447, 451 (Ind. Ct. App. 2007) (“Our courts have found . . .

       that strict compliance with the statute may be excused if ‘it is clear the alleged

       contemnor nevertheless had clear notice of the accusations against him or




       BMV employee’s affidavit alleging defective service. We found that, “[o]ther than the one exhibit, the
       transcript contain[ed] only argument from counsel . . . .” Id. at 117. We reversed and remanded, concluding
       that the trial court erred in making the contempt finding.




       Court of Appeals of Indiana | Opinion 18A-PL-1351 | May 21, 2019                              Page 14 of 23
       her[.]’”); see also Reynolds v. Reynolds, 64 N.E.3d 829, 833 (Ind. 2016) (citing

       Stanke v. Swickard, 43 N.E.3d 245, 249 (Ind. Ct. App. 2015) (“[D]ue process is

       only denied when neither a court order nor a motion for rule to show cause

       contain sufficient factual detail about the allegations of contempt. Here,

       Defendants allege no denial of notice or the opportunity to be heard. We do

       not find that Wright’s substantial rights were affected by Eddy’s failure to verify

       her Second Contempt Motion. Any error from Eddy’s omission is harmless.


                                     II.      Discovery Violation Sanctions

[26]   Next, we turn to Defendants’ contentions that the trial court imposed excessive

       discovery violation sanctions. “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.” Whitaker v. Becker, 960 N.E.2d 111, 115

       (Ind. 2012). Thus, we review a trial court’s sanction only for an abuse of its

       discretion. Id.


[27]   As our Supreme Court has stated:

               The purpose of the discovery rules is to allow for minimal trial court
               involvement and to promote liberal discovery. Although concealment
               and gamesmanship were [once] accepted as part and parcel of the
               adversarial process, we have unanimously declared that such tactics no
               longer have any place in our system of justice. Today, the purpose of
               pretrial discovery is to make a trial less a game of blindman’s
               bluff and more a fair contest with the basic issues and facts
               disclosed to the fullest practicable extent.

       Court of Appeals of Indiana | Opinion 18A-PL-1351 | May 21, 2019             Page 15 of 23
               In service of that goal, Indiana Trial Rule 37(B)(2)(c) expressly
               provides that a trial court may impose sanctions, including
               outright dismissal of the case or default judgment, if a party fails
               to comply with an order to compel discovery. As the U.S.
               Supreme Court has explained, 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. at 115 (emphasis added) (citations and quotations omitted).


[28]   A trial court has inherent power to maintain its dignity, secure obedience to its

       process and rules, rebuke interference with its conduct of business, and punish

       unseemly behavior. Wright v. Miller, 989 N.E.2d 324, 331 (Ind. 2013).

       Although discovery is designed to be self-executing, when the goals of the

       system break down, Trial Rule 37 provides the trial court with tools to enforce

       compliance. Hatfield v. Edward J. DeBartolo Corp., 676 N.E.2d 395, 399 (Ind. Ct.

       App. 1997).


[29]   Trial Rule 37(B) provides:


                (B) Failure to Comply with Order.


                         (2) Sanctions by Court in Which Action is Pending. If a party .
                        . . fails to obey an order to provide or permit discovery. . . ,
                        the court in which the action is pending may make such
                        orders in regard to the failure as are just, and among others
                        the following:


                                 ...

       Court of Appeals of Indiana | Opinion 18A-PL-1351 | May 21, 2019              Page 16 of 23
                                   (c) An order striking out pleadings or parts thereof,
                                   or staying further proceedings until the order is
                                   obeyed, or dismissing the action or proceeding or any
                                   part thereof, or rendering a judgment by default against
                                   the disobedient party;


                                   ...


                In lieu of any of the foregoing orders or in addition thereto, the
                court shall require the party failing to obey the order or the
                attorney advising him or both to pay the reasonable expenses,
                including attorney’s fees, caused by the failure, unless the court
                finds that the failure was substantially justified or that other
                circumstances make an award of expenses unjust.


       Ind. Trial Rule 37 (emphasis added).


                                 A. Dismissal of Defendants’ Counterclaim

[30]   Defendants argue that the trial court abused its discretion by dismissing their

       counterclaim as a discovery violation sanction because the trial court did not

       expressly warn them that it was considering these sanctions; and the trial

       court’s entry of dismissal was unjust. 10




       10
          Specifically, Defendants assert that: (1) “the trial court did not expressly warn [them] that failure to comply
       with any order might result in dismissal and/or default judgment”; (2) any court order that they violated was
       violated “based on reasonable, good-faith disputes regarding what was required”; (3) “[a] judgment of fraud,
       constructive fraud, securities fraud, and willful misconduct . . . may have far-reaching consequences . . .
       which significantly affect [Defendants’] business operations”; (4) the sanction order would impose liability
       upon Defendants for a securities fraud claim that Eddy previously withdrew and now seeks to resurrect based
       upon the sanction order; (5) Defendants have legitimate defenses to Eddy’s claims, including Eddy’s
       admissions, pursuant to Defendants’ requests for admissions, that “directly contradict[ ]” Eddy’s claims; and
       (6) the potential damages award to Eddy in excess of one million dollars would adversely impact BioC’s
       business operations and “result in far greater losses.” Appellants’ Br. pp. 37, 38, 40, 41.


       Court of Appeals of Indiana | Opinion 18A-PL-1351 | May 21, 2019                                    Page 17 of 23
[31]           . . .[W]hile the trial courts generally “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.”
               Whitaker, 960 N.E.2d at 116; . . . Prime Mortg. USA, Inc. v. Nichols,
               885 N.E.2d 628, 649 (Ind. Ct. App. 2008) (quoting Charnas v.
               Estate of Loizos, 822 N.E.2d 181, 185 (Ind. Ct. App. 2005), trans.
               not sought ) (“In determining whether a sanction is just, we
               recognize that ‘[a]lthough a default judgment plays an important
               role in the maintenance of an orderly, efficient judicial system as
               a weapon for enforcing compliance with the rules of procedure
               and for facilitating the speedy determination of litigation, in
               Indiana there is a marked judicial deference for deciding disputes
               on their merits and for giving parties their day in court, especially
               in cases involving material issues of fact, substantial amounts of
               money, or weighty policy determinations.’” Additionally, we
               caution against an overly formulaic approach to determining
               when the behavior of a party or counsel warrants the drastic
               sanction of dismissal.


       Wright, 989 N.E.2d at 327-28 (most internal citations and footnotes omitted).


[32]   “When deciding whether a sanction is just, this court has routinely considered

       whether [the] offending party was afforded time to comply and understood that

       sanctions could follow for continuing failure to perform.” Prime Mortg., 885

       N.E.2d at 649 (affirming entry of default judgment as a discovery sanction

       where defendant repeatedly failed to comply with orders regarding discovery

       and submitted a false document to the court); see id. at 650 (“Indeed, we have

       held that a sanction is not unjust when two conditions are met: ‘(1) the party in




       Court of Appeals of Indiana | Opinion 18A-PL-1351 | May 21, 2019           Page 18 of 23
       question was given additional time within which to respond and was expressly

       warned in advance that an ultimate sanction would be entered if he failed to

       comply, and (2) no response or request for additional time was timely made and

       no reason excusing a timely response is demonstrated.’”).


[33]   It is well settled that a trial court may dismiss a matter outright (1) where a

       party fails to timely respond to discovery; (2) where a party violated the trial

       court’s order compelling discovery by failing to respond; or (3) where a party

       responded to discovery in an incomplete or misleading way. BMV, 919 N.E.2d

       at 116. Rule 41(E) allows for dismissal for failure to comply with the trial rules,

       which include the discovery rules.


[34]   As to the Bither deposition, the record here establishes that the trial court

       ordered Defendants to execute a medical release no less than three times;

       Defendants repeatedly showed disdain for the court’s authority; Defendants

       were undeterred by monetary sanctions; Defendants persisted in parsing the

       language of the trial court’s orders and debating if any of the trial court’s

       unequivocal orders regarding the Bither deposition actually ordered Defendants

       to comply; and, despite the trial court giving Wright numerous occasions to

       comply, the Bither deposition still had not occurred at the time of the hearing

       on Eddy’s Second Contempt Motion. 11




       11
         We will not dignify Wright’s contention that Eddy and the trial court somehow failed to realize that Wright
       tendered a complying release nearly three years earlier. By this ruse, Defendants illustrated better than Eddy
       could the extent to which Defendants’ brinksmanship knows no bounds.

       Court of Appeals of Indiana | Opinion 18A-PL-1351 | May 21, 2019                                Page 19 of 23
[35]   As to the FTI document production, the record establishes the following: (1)

       the trial court compelled Defendants to produce all documents responsive to

       Eddy’s FTI subpoena; (2) FTI provided Defendants with all responsive

       documents; (3) Defendants produced only a subset of the responsive FTI

       documents; (4) the trial court entered a second order compelling Defendants to

       produce all documents, except privileged documents, and found Defendants to

       be in contempt; (5) Defendants later represented, falsely, that all responsive FTI

       documents had been produced; and (6) counsel for Defendants subsequently

       notified FTI, in writing, that Defendants would not authorize FTI’s full

       compliance with the court’s order. Wright and BioC, thus, interfered with

       FTI’s compliance with the trial court’s order. Faced with Defendants’ blatant

       disregard of the trial court’s authority, and Wright’s sabotaging of multiple

       scheduled Bither depositions, and Defendants’ interference with FTI’s

       compliance with court orders, we find no abuse of discretion in the trial court’s

       dismissal of Defendants’ counterclaim as a discovery violation sanction.


                             2. Entry of Default Judgment in Eddy’s Favor

[36]   Next, we address the trial court’s entry of default judgment in favor of Eddy as

       a discovery violation sanction for Defendants’ conduct of discovery. A trial

       court may enter default judgment (1) where a party fails to timely respond to

       discovery; (2) where a party violated the trial court’s order compelling discovery

       by failing to respond; or (3) where a party responded to discovery in an

       incomplete or misleading way. BMV, 919 N.E.2d at 116; see Ind. R. 55 (“When

       a party against whom a judgment for affirmative relief is sought has failed to

       Court of Appeals of Indiana | Opinion 18A-PL-1351 | May 21, 2019        Page 20 of 23
       plead or otherwise comply with these rules and that fact is made to appear by

       affidavit or otherwise, the party may be defaulted by the court.”).


[37]   At issue here is not whether the trial court impermissibly entered default

       judgment as a discovery sanction pursuant to authority granted by Trial Rule

       37(B) but, rather, whether doing so was unjust.


               In determining the appropriateness of default judgment as a
               discovery 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.’” Wright v. Miller, 989 N.E.2d 324, 328
               (Ind. 2013) (quoting Charnas v. Estate of Loizos, 822 N.E.2d 181,
               185 (Ind. Ct. App. 2005)). Courts should not apply an “overly
               formulaic approach” in deciding whether to impose the “drastic
               sanction” of default judgment in the case of a discovery violation.
               If possible, trial courts should impose sanctions that have a
               minimal effect on the evidence presented at trial and should not
               impose sanctions at all if the circumstances indicate that
               sanctions would be unjust. We presume that a trial court will act
               in accord with what is fair and equitable in each case.


       Nagel v. Northern Indiana Public Service Co., 26 N.E.3d 30 39-40 (Ind. Ct. App.

       2015) (internal citations omitted).


[38]   While we understand the trial court’s exasperation with Defendants’ discovery

       abuses, given well-settled Indiana authority, we nevertheless must take issue

       with its entry of the “drastic” default judgment sanction here inasmuch as the

       instant case involves (1) material issues of fact, (2) substantial amounts of

       money, and (3) “weighty policy determinations” and, therefore, is among the


       Court of Appeals of Indiana | Opinion 18A-PL-1351 | May 21, 2019         Page 21 of 23
       cases that Indiana courts favor deciding on their merits. See id.; see also Wright,

       989 N.E.2d at 328.


[39]   We initially note that Eddy did not request entry of default judgment as relief in

       her Second Contempt Motion. Moreover, we find persuasive Defendants’

       contentions that the trial court’s entry of default judgment: (1) “entered

       judgment on claims for fraud, constructive fraud, securities fraud, and willful

       misconduct which may have serious consequences for BioC and [Wright]’s

       business operations”; (2) “impose[d] liability on [Defendants] for a [securities]

       claim that Eddy previously withdrew”; (3) “prevented [Defendants] from

       advancing their . . . legitimate defenses to Eddy’s claims”; and (4) pose[ ]

       “potential harm to BioC’s business operations” as the judgment could result in

       significant financial losses. Appellants’ Br. pp. 38, 39, 41. Further, the record

       does not support a finding that Defendants were expressly warned in advance

       that an ultimate sanction of default judgment would be entered if they failed to

       comply. See Prime Mortg., 885 N.E.2d at 650.


[40]   For these reasons, we deem the trial court’s entry of default judgment to be an

       unjust sanction as applied in this case; and we find that the trial court abused its

       discretion in imposing that “drastic sanction.” See Nagel, 26 N.E.3d at 39-40

       (“If possible, trial courts should impose sanctions that have a minimal effect on

       the evidence presented at trial and should not impose sanctions at all if the

       circumstances indicate that sanctions would be unjust.”).




       Court of Appeals of Indiana | Opinion 18A-PL-1351 | May 21, 2019          Page 22 of 23
                                                  Conclusion
[41]   Despite the fact the contempt motion was unverified, Defendants were not

       denied due process. The trial court did not abuse its discretion in dismissing

       Defendants’ counterclaim as a discovery violation sanction but did abuse its

       discretion in entering default judgment. We affirm in part and reverse in part.


[42]   Affirmed in part and reversed in part.


       Baker, J., and Bradford, J., concur.




       Court of Appeals of Indiana | Opinion 18A-PL-1351 | May 21, 2019       Page 23 of 23
