I N T H E

Indiana Supreme Court

Supreme Court Case No. 19S-PL-19

International Business Machines Corporation,

Appellant/Cross-Appellee

(Defendant/Plaintiff below),

-vState of Indiana, acting on behalf of the Indiana

Family & Social Services Administration

Appellee/Cross-Appellant

(Plaintiff/Defendant below).

Argued: February 21, 2019 | Originally Decided: June 26, 2019

Modified on Rehearing: October 10, 2019

Appeal from the Marion Superior Court 

No. 49D01-1005-PL-21451

The Honorable Heather A. Welch, Judge

On Petition to Transfer from the Indiana Court of Appeals 

No. 49A02-1709-PL-2006

Opinion on Rehearing by Justice David

Chief Justice Rush and Justice Goff concur.

Justice Slaughter concurs in part and dissents in part with separate opinion.

Justice Massa not participating.
Indiana Supreme Court | Case No. 19S-PL-19 | October 10, 2019 Page 2 of 9

David,Justice.

This case comes before our Court for the second time and arises out of a 

contract entered into between the State of Indiana, acting on behalf of the 

Family and Social Services Administration, and International Business

Machines, Corp. to modernize and improve Indiana’s welfare eligibility 

system. We previously determined that IBM materially breached the 

contract and remanded the matter to the trial court to determine damages

and appropriate offsets. After the submission of evidence and a full-day 

hearing, the trial court issued detailed findings and conclusions. It 

determined that damages to the State resulting from the breach totaled

$128 million and that IBM was entitled to offsets in the amount of

$49,510,795, resulting in a final judgment of $78,178,109 to the State.

Both parties appealed, raising various issues. Today we address one of 

the issues raised: whether IBM is entitled to post-judgment interest on its

$49.5 million damages award running from the date of the original 

judgment in 2012 or running from the judgment on remand. Finding that 

the original 2012 judgment was not “final,” we hold that the postjudgment interest due to IBM runs from the judgment on remand. We 

summarily affirm the Court of Appeals on all other issues and affirm the 

trial court on all issues.

Facts and Procedural History

As this Court explained in State v. International Business Machines Corp., 

51 N.E.3d 150, 152 (Ind. 2016) (“IBM I”):

This case involves a $1.3 billion Master Services Agreement 

(“MSA”) entered into between the State of Indiana, acting on

behalf of the Family and Social Services Administration 

(“State”) and International Business Machines, Corp. (“IBM”) 

to modernize and improve Indiana’s welfare eligibility system. 

Although the MSA was supposed to last ten years, the State
Indiana Supreme Court | Case No. 19S-PL-19 | October 10, 2019 Page 3 of 9

terminated it less than three years in, citing performance issues

on the part of IBM. Both parties sued each other for breach of

contract.

After a six-week bench trial, the Marion Superior Court found that the 

State failed to prove that IBM’s breach of the MSA was material and

awarded IBM damages for assignment and equipment fees. It also

awarded termination payments and pre-judgment interest. Both parties

appealed. Ultimately, this Court reversed, in part, holding that IBM

materially breached the MSA. We reversed IBM’s termination payment 

and pre-judgment interest awards, but affirmed its assignment and

equipment fees in the amount of $49,510,795. We remanded to the trial 

court with the following instructions:

[W]e hold that IBM did materially breach the MSA through its 

collective breaches in light of the MSA as [a] whole. We 

therefore reverse the trial court's finding that IBM did not 

materially breach the MSA. We summarily affirm the Court of 

Appeals on all other issues including: affirming the trial court's

award of $40 million in assignment fees and $9,510,795 in 

equipment fees to IBM, affirming the trial court's denial of

deferred fees to IBM, and reversing the trial court's award of

$2,570,621 in early termination close out payments and

$10,632,333 in prejudgment interest to IBM. We also remand

the case to the trial court to determine the amount of fees IBM

is entitled to for Change Orders 119 and 133, and for 

calculation of the parties' damages consistent with this opinion, 

including any appropriate offsets to the State as a result of

IBM's material breach of the MSA.

Id. at 168-169.

On remand, the trial court held a full-day hearing and considered both 

pre-hearing briefs and post-hearing submissions. It issued an 83-page 

order awarding the State $128 million in damages and credited IBM

$49,510,795 for assignment and equipment fees this Court upheld plus the
Indiana Supreme Court | Case No. 19S-PL-19 | October 10, 2019 Page 4 of 9

amount of fees for the change orders (an amount agreed to via stipulation

of the parties). The trial court denied IBM’s request for post-judgment 

interest on the $49.5 million-dollar award for assignment and equipment 

fees. Thus, IBM was ordered to pay the State $78.2 million, after offsets.

Both parties again appealed. IBM argued: 1) it is entitled to postjudgment interest on the fees upheld by this Court in IBM I; 2) the trial 

court erred by setting aside the factual findings of the original trial court; 

and 3) the trial court erred by holding IBM responsible for the costs of

implementing a different and more expensive welfare system than the one 

contemplated by the MSA. For its part, the State argued it was entitled to 

additional damages resulting from the breach.

The Court of Appeals affirmed in part, reversed in part, and remanded

with instructions. Int’l Bus. Machines Corp. v. State on behalf of Indiana

Family & Soc. Servs. Admin., 112 N.E.3d 1088 (Ind. Ct. App. 2018) (“IBM

II”). It rejected both of the State’s requests for additional damages and

concluded that IBM was entitled to post-judgment interest on the $49.5 

million damages award that survived IBM I.

Both parties sought transfer. The Indianapolis Bar Association’s

Appellate Practice Section and the Defense Trial Counsel of Indiana 

(DTCI) have filed amici briefs in support of transfer on the post-judgment 

interest issue. We granted transfer thereby vacating the Court of Appeals

opinion. Ind. Appellate Rule 58(A). We write only to address the postjudgment interest issue. We summarily affirm the other portions of the 

Court of Appeals opinion and affirm the trial court on all issues.

Standard of Review

Here, the trial court has made special findings pursuant to Indiana Trial 

Rule 52(A). As such, a reviewing court may affirm the judgment on any 

legal theory supported by the findings. G & N Aircraft, Inc. v. Boehm, 743 

N.E.2d 227, 234 (Ind. 2001) (citations omitted). Further, [w]hen the 

specific issue on review relates to the award of damages, a damage award

should not be reversed if it is within the scope of the evidence before the 

trial court.” Id. (quoting Dunn v. Cadiente, 516 N.E.2d 52, 54 (Ind. 1987)).
Indiana Supreme Court | Case No. 19S-PL-19 | October 10, 2019 Page 5 of 9

However, the right to post-judgment interest arises as a matter of

statutory law. Tincher v. Davidson, 784 N.E.2d 551, 553 (Ind. Ct. App. 

2003). The meaning of a statute is a question of law which we review de 

novo. ESPN, Inc. v. Univ. of Notre Dame Police Dep't, 62 N.E.3d 1192, 1195 

(Ind. 2016).

Discussion and Decision

IBM argues that it is entitled to post-judgment interest on its $49.5 

million award as entered by the trial court and affirmed by this Court in 

IBM I. Our Court of Appeals agreed. It applied Beam v. Wausau Ins. Co., 

765 N.E.2d 524 (Ind. 2002) and found that the “one constant” in the case 

was the award of assignment and equipment fees to IBM. Int'l Bus. 

Machines Corp., 112 N.E.3d at 1103. While it is true that this award has

remained unchanged from the original judgment until present, we do not 

find Beam to be applicable to these facts and circumstances.

In Beam this Court looked at Indiana Code section 24-4.6-1-101 and

addressed whether post-judgment interest on a modified award runs on

the amount after modification by the reviewing court or the original 

amount. Beam, 765 N.E.2d at 534. Indiana Code section 24-4.6-1-101 

provides that post-judgment interest accrues back to the "date of the 

return of the verdict or finding of the court until satisfaction. . . ." The 

operative language in Beam is that when:

a judgment is reversed on appeal and remanded to the trial 

court for the entry of a new judgment, post-judgment interest 

accrues from the date the trial court enters the new judgment.

* * *

[But] where a money judgment has been modified on appeal 

and the only action necessary in the trial court is compliance 

with the mandate of the appellate court, interest on the 

judgment as modified runs from the date of the original 

judgment.
Indiana Supreme Court | Case No. 19S-PL-19 | October 10, 2019 Page 6 of 9

Beam, 765 N.E.2d at 534-535. (citation omitted).

We found that because we modified the amount of damages but did

not reverse judgment for plaintiff, post-judgment interest ran from the 

date of the original verdict on the modified amount. Id. at 534.

But here, it is not Indiana Code section 24-4.6-1-101

1

that governs, but 

Indiana Code section 34-13-1-6 because we are dealing with a sum of 

money due from the State. It provides:

Whenever, by final decree or judgment, a sum of money is

adjudged to be due any person from the state, an execution

shall not issue but the judgment shall draw interest at an 

annual rate of six percent (6%) from the date of the 

adjournment of the next ensuing session of the general 

assembly until an appropriation is made by law for the 

payment and the judgment is paid.

The relevant inquiry in Beam was whether the judgment was only 

modified or reversed entirely, and pursuant to the statute, post-judgment 

interest was due from the “date of the return of the verdict or finding of

the court.” Ind. Code § 24-4.6-1-101. Here, the relevant inquiry pursuant 

to Indiana Code section 34-13-1-6 is whether there was a final decree or 

judgment. A final judgment "disposes of all issues as to all parties thereby 

ending the particular case." Georgos v. Jackson, 790 N.E.2d 448, 451 (Ind. 

2003).

At the time of remand, all the issues were not disposed of as this

Court's opinion in IBM I did two things: 1) it reversed the trial court on

the issue of whether IBM's breach of the MSA was material; and 2) 

remanded to the trial court to calculate appropriate damages as well as

offsets. While IBM wants us to consider its suit against the State separate 

and apart from State's suit, the two arise out of the same facts and

1

Ind. Code § 24-4.6-1-101 begins with qualifying language that it applies “[e]xcept as

otherwise provided by statute. . . .”
Indiana Supreme Court | Case No. 19S-PL-19 | October 10, 2019 Page 7 of 9

circumstances and are inextricably tied. Case law is clear that a final 

judgment disposes of “all issues as to all parties.” Id. (quoting Indiana 

Appellate Rule 2(H) (emphasis added). Not all the issues as to all parties

were resolved at the time of remand and further, what was due and owed

to IBM was necessarily contingent upon what damages were due the State 

for the breach. IBM could have recovered money from the State if the 

State’s damage award was less than what was awarded to IBM or IBM

award could have simply been applied to offset what was owed to the 

State. In Beam, we stated the rationale for awarding post-judgment 

interest as if the date of the original judgment when it has not been 

reversed: it "compensates plaintiffs for the loss of money that has been 

determined to be have rightfully belonged to them throughout the time of

the pending appeal." Beam, 765 N.E.2d at 534. Here, there is no money 

that rightfully belonged to IBM as the amount awarded to it may have 

been and ultimately was, only an offset to what IBM owes the State. 

Accordingly, looking at the statute, our case law and the facts of this case, 

post-judgment interest going back to the original judgment is

inappropriate.

Conclusion

We hold that the post-judgment interest due to IBM stems from the 

judgment on remand. Under Indiana Code section 34-13-1-6, the 

judgment "draw[s] interest at an annual rate of six percent (6%) from the 

date of the adjournment of the next ensuing session of the general 

assembly...." Following the judgment in this case on August 4, 2017, the 

next ensuing session of the General Assembly adjourned on March 14, 2018. 

Therefore, the post-judgment interest due to IBM runs from March 14, 2018. 

We summarily affirm the Court of Appeals on all other issues and affirm the 

trial court on all issues. 

Rush, C.J., and Goff, J., concur. 

Slaughter, J., concurs in part and dissents in part with separate opinion. 

Massa, J., not participating. 
Indiana Supreme Court | Case No. 19S-PL-19 | October 10, 2019 Page 8 of 9

A TTOR N EYS FOR AP P EL LA N T

Jay P. Lefkowitz 

Kirkland & Ellis LLP 

New York, New York

Paul D. Clement 

Kirkland & Ellis LLP 

Washington, D.C.

Andrew W. Hull 

Laurie E. Martin

Hoover Hull Turner LLP

Indianapolis, Indiana

A TT OR N EYS FOR AP P ELLE E

Peter J. Rusthoven 

John R. Maley

J. Curtis Greene

Meredith Thornburgh White 

Barnes & Thornburg LLP 

Indianapolis, Indiana

ATTORNEYS FOR AMICUS CURIAE, INDIANAPOLIS BAR 

AS SOCIATION

Tyler D. Helmond

Voyles Vaiana Lukemeyer Baldwin & Webb 

Indianapolis, Indiana

Josh S. Tatum

Plews Shadley Racher & Braun LLP

Indianapolis, Indiana

Joel M. Schumm 

Indianapolis, Indiana

Bryan H. Babb

Bose McKinney & Evans LLP 

Indianapolis, Indiana
Indiana Supreme Court | Case No. 19S-PL-19 | October 10, 2019 Page 9 of 9

Libby Y. Goodknight 

Krieg DeVault LLP 

Indianapolis, IN

A TT OR N EYS FOR AM IC US CU RIA E, DEFE NS E TRI AL COU NS EL

OF I N DIA N A

James D. Johnson 

Blair M. Gardner 

Jackson Kelly PLLC 

Evansville, Indiana
Slaughter, J., concurring in part, dissenting in part.

The Court summarily affirms an award of $125 million to the State as

direct damages resulting from IBM’s breach of contract to update 

Indiana’s welfare system. A central premise of the appellate ruling we

affirm is that the “Modernization” approach required by the parties’

Master Services Agreement is “essentially the same” as the more 

expensive “Hybrid” approach the State eventually implemented. IBM v. 

State, 112 N.E.3d 1088, 1101 (Ind. Ct. App. 2018), trans. granted. I am

unable to join the Court’s summary affirmance because the record

establishes that the Agreement required IBM to implement only 

Modernization and not Hybrid. Thus, I would treat the State’s additional 

costs to implement Hybrid not as direct damages subject to a $125-million 

cap but as consequential damages subject to a $3-million cap. On the 

separate issue of post-judgment interest, I join the Court.

I.

The State’s original plan for updating what then-Governor Mitch 

Daniels called “America’s worst welfare system” was to adopt a 

“modernized” system based on remote eligibility. State v. IBM, 51 N.E.3d

150, 153 (Ind. 2016). Needy Hoosiers would apply for welfare benefits

using the internet or accessing a call center without the need for face-toface meetings with a case worker. Id. An applicant’s eligibility would then 

be decided through a centralized process statewide rather than in local 

county welfare offices. Id.

After months of negotiations, in December 2006 the State contracted

with IBM to establish Modernization—a centralized system with call 

centers to process welfare applications. Id. This arrangement also would

allow remote electronic access to the system, provide a paperless

document system, implement tools to lower fraud and improve Indiana’s

poor welfare-to-work record, and reduce administrative costs. Id. The 

parties’ ten-year, billion-dollar-plus Agreement was more than 160 pages

long with extensive attachments, including exhibits, schedules, and

appendices, addressing all aspects of the parties’ business relationship. Id. 

The Agreement also included a change-order procedure by which the
Indiana Supreme Court | Case No. 19S-PL-19 | October 10, 2019 Page 2 of 4

parties could agree for IBM to take on additional work—not required

under the original Agreement—for additional pay. Id. at 165.

Problems with Modernization arose as soon as the system was first 

rolled out to a limited pilot area. Id. at 155. Some of the problems were 

attributed to the economic downturn in 2008 as welfare applications

increased dramatically. Id. And that same year, the State faced a series of 

natural disasters that also strained the system. Id. Throughout the project, 

the State used the change-order process eleven times to expand the scope 

of IBM’s work under the Agreement. Id. at 156. But problems persisted, 

and in October 2009 the State notified IBM it would be terminating the 

Agreement for cause effective in December 2009. Id. at 157. Just before 

announcing the termination, the State adopted a “Plan B” approach to

welfare modernization—a decentralized model requiring additional 

personnel and physical space. Id.

[In September 2009], the State decided to change approaches

and adopt a hybrid approach to welfare modernization, 

referred to by the parties as “Plan B.” Plan B moved away from

the centralized call center and moved eligibility determinations

back to the local office, increasing face-to-face contact between 

clients and staff.

Id. The State initially asked IBM to implement its Plan B—“Hybrid”—

system via the change-order process, but the parties were unable to agree 

on the price for IBM to take on these additional services. Id. After the 

termination, the State incurred substantial additional costs associated with 

implementing Hybrid.

Our initial opinion agreed with the State that IBM had materially 

breached the Agreement by failing to deliver the Modernization system

the State had procured, thus entitling the State to recoup damages

resulting from the breach. Id. at 168-69. On remand, the trial court 

awarded $125 million in direct damages for the State’s increased costs

associated with the transition to Hybrid and an additional $3 million in 

consequential damages. 112 N.E.3d at 1095. As to damages, the court of
Indiana Supreme Court | Case No. 19S-PL-19 | October 10, 2019 Page 3 of 4

appeals affirmed. Id. at 1105-06. And today our Court summarily affirms

the court of appeals.

II.

The Agreement did not require IBM to incur the Hybrid-related costs of

renting additional space, hiring additional personnel, and renegotiating 

subcontracts with subcontractors already under contract to implement 

Modernization. And the parties’ conduct reflects as much. It is telling that 

the State initially asked IBM to implement Hybrid via change order. By 

entering into the change-order process, the State all but admits that 

Hybrid is outside the scope of contracted services. Parties do not negotiate 

proposed changes to an agreement that already requires those things.

The court of appeals thus erred in treating the State’s additional costs to 

implement Hybrid as “reprocurement costs”—a defined term under the 

Agreement. Such costs are the “reasonable costs and expenses” the State 

incurs to “procure services similar to the applicable terminated Services . .

. to the extent such costs and expenses would not have otherwise been 

incurred by the State but for the Termination”. The State’s posttermination costs of transitioning its welfare-reform system from

Modernization to Hybrid were not costs to “reprocure” anything; the 

additional Hybrid services had never been “procured” from IBM in the 

first place. Only Modernization had been procured from IBM, but IBM did

not deliver, so it was in material breach. Thus, it was not IBM’s breach but 

the State’s decision to switch to the different, more expensive Hybrid

system that caused the State to incur these additional expenses. The State’s

additional, Hybrid-related costs are at most consequential damages, not 

direct damages.

One result of the court of appeals’ ruling is that the State is better off 

than if IBM had not breached. To be sure, the State is entitled to the benefit 

of its bargain with IBM. It can recover the damages caused by IBM’s

breach—i.e., the difference between what IBM had to provide under the 

Agreement and what IBM actually delivered. But the State is not entitled

to a windfall. It cannot recover costs for additional services beyond what 

the Agreement required. Because I disagree with the court of appeals’
Indiana Supreme Court | Case No. 19S-PL-19 | October 10, 2019 Page 4 of 4

award of damages attributable to IBM’s breach, I respectfully dissent from

our Court’s summary affirmance of that portion of the appellate opinion.

III.

Finally, though the Court’s summary affirmance benefits the State in 

the short term, the longer-term consequence of our ruling for the State’s

future procurement efforts may not be so favorable. It will come as little 

surprise if prospective vendors respond to today’s ruling in one of two

ways. Either they will not do business with the State at all, thus reducing 

the supply of those willing to contract with the State. Or they will include

a risk premium in their contracts to cover the unknown costs of fulfilling 

obligations beyond what they agreed to. Either way, the State and its

taxpayers may soon learn that the future cost of obtaining third-party 

services will be higher—perhaps appreciably so—than otherwise. The 

magnitude of the increased cost may not be knowable, but it is a cost 

nonetheless.