Court of Appeals of Indiana | Memorandum Decision 49A02-1502-CC-113 | November 19, 2015 Page 1 of 7

MEMORANDUM DECISION

Pursuant to Ind. Appellate Rule 65(D), 

this Memorandum Decision shall not be 

regarded as precedent or cited before any 

court except for the purpose of establishing 

the defense of res judicata, collateral 

estoppel, or the law of the case.

ATTORNEY FOR APPELLANT

Emerito F. Upano

Indianapolis, Indiana

ATTORNEY FOR APPELLEE

Jeffrey S. Zipes

Coots, Henke & Wheeler, P.C.

Carmel, Indiana

I N T H E

COURT OF APPEALS OF INDIANA

Roger Tolentino and Repto, Inc.,

Appellants-Plaintiffs,

v.

Sheldon J. Hermann and Cheryl 

A. Hermann,

Appellees-Defendants

November 19, 2015

Court of Appeals Case No.

49A02-1502-CC-113

Appeal from the Marion Superior 

Court

The Honorable Heather Welch, 

Judge

Trial Court Cause No.

49D01-1403-CC-6959

Bailey, Judge.

Case Summary

[1] Appellants/Plaintiffs/Counter-Claim Defendants Roger Tolentino and Repto, 

Inc. (collectively, “Repto”) appeal an order for the payment of attorney fees to 
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Defendants/Counterclaimants Sheldon and Cheryl Hermann (collectively, “the 

Hermanns”) as a sanction under Indiana Trial Rule 37. We affirm.

Issues

[2] Repto presents two issues for review:

I. Whether the trial court abused its discretion by ordering 

Repto to produce business tax returns; and

II. Whether the trial court abused its discretion by ordering 

Repto to pay attorney fees of $1,000.00.

Facts and Procedural History

[3] On February 25, 2013, the Hermanns purchased a laundromat from Repto, and 

executed a promissory note in the principal sum of $109,900.00. On March 7, 

2014, Repto filed a complaint alleging that the Hermanns had defaulted on the 

promissory note. The Hermanns answered the complaint and filed 

counterclaims against Repto for actual fraud, constructive fraud, and deception.

[4] The Hermanns served Repto with a request for production of documents, 

seeking corporate documents including financial statements and federal and 

state tax returns for “Mr. Klean Laundry and Discount Tobacco since 2010.” 

(App. at 43.) Repto produced some financial documents. However, with 

respect to the requested tax returns, Repto responded: “Information regarding 

tax returns ... is privileged under federal and state law.” (App. at 45-46.) The 

Hermanns filed a motion to compel production.
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[5] The trial court conducted a hearing on January 28, 2015. Repto argued that its 

tax returns were privileged and that discovery of the returns would not lead to 

admissible evidence because the Hermanns had admitted to execution of the 

promissory note and acknowledged the recitation of language therein. The trial 

court rejected these contentions, ordered Repto to produce the tax returns, and 

imposed a discovery sanction of $1,000.00. Following the denial of a motion 

for reconsideration, Repto appealed.

Discussion and Decision

Standard of Review

[6] Indiana Appellate Rule 14(A)(1) provides for an interlocutory appeal as a 

matter of right from an order “for the payment of money.” An order for the 

payment of attorney fees as a sanction under Indiana Trial Rule 37 is one 

example of an order “for the payment of money” which triggers the application 

of Appellate Rule 14(A)(1). Huber v. Montgomery Cnty. Sheriff, 940 N.E.2d 1182, 

1184 (Ind. Ct. App. 2010). The trial court has broad discretion when ruling on 

discovery issues; we will reverse only upon a showing that the trial court has 

abused its discretion. Id. at 1185. An abuse of discretion occurs when the trial 

court’s decision is clearly against the logic and effect of the facts and 

circumstances before the court or when the trial court has misinterpreted the 

law. Id.
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Abuse of Discretion – Order for Production of Documents

[7] Repto argues that business tax returns are privileged pursuant to 26 U.S.C. § 

6103(a), providing:

No officer or employee of the United States, [and] no officer or 

employee of any State shall disclose any return or return 

information obtained by him in any manner in connection with 

his service as such an officer or an employee[.]

Repto contends that the trial court misconstrued the law when it determined 

that the provision did not apply to the instant discovery dispute. The 

Hermanns respond that even a cursory reading of the language reveals that it 

governs the conduct of government employees. We agree. Repto has not 

shown that the trial court misapprehended the law by concluding that 26 

U.S.C. § 6103(a) did not categorize tax returns as privileged documents for 

discovery purposes. 

[8] Repto nonetheless suggests that, once the litigant’s tax information has been 

disclosed to a government employee, it is privileged unless the “litigant himself 

tenders an issue as to the amount of his income.” (Appellant’s Brief at 9 (citing 

Kingsley v. Delaware, Lackawanna & Western Railroad, 20 F.R.D. 156, 158

(S.D.N.Y. 1957)). Repto asserts that the income of the laundromat was not 

placed in issue by its complaint, and that the income is wholly irrelevant after 

the Hermanns admitted to execution of the promissory note and acknowledged 

the language of the integration clause representing that the agreement was the 

entire agreement and understanding of the parties.
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[9] Indiana Trial Rule 26(B) provides:

Parties may obtain discovery regarding any matter, not 

privileged, which is relevant to the subject-matter involved in the 

pending action, whether it relates to the claim or defense of the 

party seeking discovery or the claim or defense of any other 

party, including the existence, description, nature, custody, 

condition and location of any books, documents, or other 

tangible things and the identity and location of persons having 

knowledge of any discoverable matter. It is not ground for 

objection that the information sought will be inadmissible at the 

trial if the information sought appears reasonably calculated to 

lead to the discovery of admissible evidence.

[10] Repto has insisted that its complaint on the promissory note did not place the 

business income at issue and the Hermanns admitted the execution of the 

promissory note and its key provisions. However, this does not render the tax 

returns outside the scope of discovery. The Hermanns alleged that Repto had 

fraudulently induced them to purchase the laundromat by misrepresenting the 

income potential, a claim Repto largely ignores. 

[11] The scope of permissible discovery is broad, including that which “appears 

reasonably calculated to lead to the discovery of admissible evidence.” Id. See 

Hatfield v. Edward J. DeBartolo Corp., 676 N.E.2d 395, 399 (Ind. Ct. App. 1997) 

(recognizing that the rules of discovery are designed to “allow a liberal 

discovery process, the purposes of which are to provide parties with information 

essential to litigation of the issues, to eliminate surprise, and to promote 

settlement”), trans. denied. Repto has not shown that the trial court abused its 

discretion by ordering the disclosure of business tax returns.
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Abuse of Discretion – Attorney’s Fees

[12] Indiana Trial Rule 37 provides for an award of sanctions related to a motion to 

compel:

If the motion is granted, the court shall, after opportunity for 

hearing, require the party or deponent whose conduct 

necessitated the motion or the party or attorney advising such 

conduct or both of them to pay the moving party the reasonable 

expenses incurred in obtaining the order, including attorney’s 

fees, unless the court finds that the opposition to the motion was 

substantially justified or that other circumstances make an award 

of expenses unjust.

The award of sanctions is mandatory, subject only to a showing that the losing 

party’s conduct was substantially justified, or that other circumstances make an 

award of expenses unjust. Huber, 940 N.E.2d at 1186. A party is substantially 

justified in resisting discovery if reasonable persons could conclude that a 

genuine issue existed as to whether a person was bound to comply with the 

requested discovery. Id.

[13] Repto makes a cursory argument that its opposition to the motion to compel is 

substantially justified because its claim of privilege was not “frivolous, 

unreasonable, groundless, or litigated in bad faith.” (Appellant’s Brief at 15.) 

Repto does not otherwise develop an argument as to substantial justification or 

unjustness of the award. Repto has not shown that the trial court abused its 

discretion by ordering a mandatory sanction in compliance with Trial Rule 37.
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Conclusion

[14] Repto has not demonstrated that the trial court abused the broad discretion 

accorded to the trial court in discovery matters.

[15] Affirmed.

Baker, J., and Mathias, J., concur.