Court Opinion

ID: 4233010
Source: CourtListenerOpinion
Date Created: 2017-12-28 16:10:32.184668+00
Date Added: 2024-06-11T14:43:16.812695
License: Public Domain

FILED
                                                                    Dec 28 2017, 9:11 am

                                                                         CLERK
                                                                     Indiana Supreme Court
                                                                        Court of Appeals
                                                                          and Tax Court

ATTORNEYS FOR                                        ATTORNEYS FOR APPELLEES/CROSS-
APPELLANT/CROSS-APPELLEE                             APPELLANTS
Thomas W. Vander Luitgaren                           Timothy H. Button
Emily M. Gettum                                      Laura S. Reed
Greenwood, Indiana                                   Justin O. Sorrell
                                                     Riley Bennett Egloff LLP
                                                     Indianapolis, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

Jeff West,                                                December 28, 2017

Appellant/Defendant/Cross-                                Court of Appeals Case No.
                                                          41A01-1701-CT-182
Appellee/Counterclaim Plaintiff,
                                                          Appeal from the Johnson Superior
                                                          Court
        v.
                                                          The Honorable Marla Clark, Judge
J. Greg Allen Builder, Inc., and                          Trial Court Cause No.
Princeton Homes,                                          41D04-1102-CT-14

Appellees/Plaintiffs/Cross-
Appellants/Counterclaim Defendants,

        and

Greg Allen,
Cross-Appellant/Counterclaim
Defendant.

Bradford, Judge.

Court of Appeals of Indiana | Opinion 41A01-1701-CT-182 | December 28, 2017                  Page 1 of 23
                                           Case Summary
[1]   Appellant/Defendant/Cross-Appellee/Counterclaim Plaintiff Jeff West served

      as president of J. Greg Allen Builder, Inc. (“GABI”), beginning in 2002 and

      Princeton Homes (“Princeton”) beginning in 2008. Appellees/Plaintiffs/Cross-

      Appellants/Counterclaim Defendants GABI and Princeton were founded and

      owned by Cross-Appellant/Counterclaim Defendant Greg Allen (collectively,

      “Cross-Appellants”). While president of GABI and Princeton, West, with the

      assistance in some cases of Kim Hutchinson, directed multiple unauthorized

      payments to himself and others, oversaw multiple unauthorized transfers of

      funds from Princeton to GABI, borrowed money from GABI that he did not

      repay, failed to maintain proper records, and caused GABI to fail to fulfill

      certain contractual obligations. After discovering West’s activities, Allen sent a

      letter to GABI’s and Princeton’s subcontractors, suppliers, and certain

      customers indicating that West and Hutchinson had withdrawn company funds

      for their own use and disguised the withdrawals as payments to a lumber

      company.

[2]   In February of 2011, Princeton and GABI sued Hutchinson and West, making

      claims against West for violating GABI’s employee manual, conversion, theft,

      unfair competition, negligence, tortious interference with a business

      relationship, usurpation of corporate opportunity, misappropriation of trade

      secrets, unjust enrichment, and fraud. West filed a countersuit against Cross-

      Appellants for, inter alia, defamation. Following trial, a jury found in favor of

      GABI and against West on the theft claim in the amount of $4000.00 and on

      Court of Appeals of Indiana | Opinion 41A01-1701-CT-182 | December 28, 2017   Page 2 of 23
      the breach of fiduciary duty claim in the amount of $220,000.00. The jury also

      found in favor of West on his defamation counterclaim, awarding him

      presumed damages of $50,000.00 against each Cross-Appellant and punitive

      damages in the amount of $300,000.00 against Allen, which the trial court later

      reduced to $150,000.00. West contends that there is insufficient evidence to

      sustain the jury’s verdict against him for breach of fiduciary duty or the amount

      of damages awarded on that claim. Cross-Appellants contend that there is

      insufficient evidence to sustain the jury’s verdict against them for defamation or

      the award of punitive damages against Allen. While we disagree with the first

      three contentions, we agree that there is insufficient evidence to sustain the

      award of punitive damages against Allen.

                             Facts and Procedural History
[3]   Allen founded GABI in 1986 and Princeton in the late 1990s. GABI built

      custom homes, and Princeton built semi-custom homes. Allen was president of

      GABI until West became president in 2002. West also became president of

      Princeton in December 2008. West hired Kim Hutchinson to be his assistant,

      type contracts and specifications, perform basic accounting and data entry,

      issue checks, and keep the books for GABI and Princeton.

[4]   As president of GABI and Princeton, West’s responsibilities included

      supervising employees (including Hutchinson) meeting with customers, making

      sales, managing customer relationships, creating budgets, controlling budgets

      and costs, overseeing the construction process, bidding on construction projects,

      Court of Appeals of Indiana | Opinion 41A01-1701-CT-182 | December 28, 2017   Page 3 of 23
      obtaining bids from subcontractors and suppliers, forecasting annual overhead,

      reviewing reports of income and expenses, approving bills, and providing

      monthly financial reports to Allen. West received compensation from GABI of

      $338,367.80 during that time period.

[5]   During West’s presidency, GABI and Princeton both used an accounting

      software system called “Timberline.” Hutchinson was the primary employee

      who input data into Timberline for both GABI and Princeton. West prepared

      financial statements, such as balance sheets, which Hutchinson then typed into

      the computer system. With some regularity, Allen received reports generated

      by the Timberline system, and his knowledge of the condition of GABI was

      limited to what West reported. Bills that came in for GABI and Princeton were

      separated by company and job and sent to Hutchinson, who provided them to

      West for approval. It was West’s responsibility to direct Hutchinson which bills

      to pay, after which Hutchinson would issue the checks.

[6]   West resigned from GABI and Princeton on June 3, 2010. Brent Glover

      resigned a couple weeks later. Hutchinson resigned on August 27, 2010. After

      West left, an internal investigation began in June of 2010. This investigation

      uncovered numerous accounting discrepancies and financial irregularities.

[7]   For example, before the end of December 2009, Allen sent an email to all

      company employees stating that there would be no bonuses that year.

      However, on December 29, 2009, Hutchinson, at West’s direction, issued

      bonus checks, including a $2000.00 check to West, a $1000.00 check to

      Court of Appeals of Indiana | Opinion 41A01-1701-CT-182 | December 28, 2017   Page 4 of 23
      Hutchinson, and a $1000.00 check to Glover. At West’s direction, these bonus

      checks were posted from the construction account (not payroll) and were posted

      in Timberline as if they had been written to Carter Lee Lumber Company.

      Furthermore, approximately twenty additional unauthorized checks worth

      approximately $80,000.00 or $90,000.00 were written to West from the

      construction account. All of the checks were concealed by having been falsely

      posted in the Timberline system. While Hutchinson was under West’s

      supervision, similar checks were issued to Hutchinson totaling over $400,000.00

      and were also concealed by being falsely posted as payments to Carter Lee.

[8]   It was discovered that files were missing numerous documents and records,

      including purged checks. Almost all of the checks that were missing were

      posted in the Timberline system as being paid to Carter Lee. It also was

      discovered that health insurance costs had been paid out of GABI’s

      construction account as direct costs when they should have been paid and

      characterized as indirect costs. Numerous unauthorized inter-company

      transfers were uncovered, namely fifteen to sixteen unauthorized transfers from

      Princeton to GABI between December 2008 and June 2010, totaling

      approximately $655,000.00, for which the proper procedures were not followed.

      All of these funds were transferred directly from Princeton to GABI, in

      contravention of established company policy.

[9]   Accounting discrepancies were discovered relating to homes which had been

      built for West and his son, Evan. The investigation revealed that a promissory

      note related to West’s house existed which had not repaid, and about which

      Court of Appeals of Indiana | Opinion 41A01-1701-CT-182 | December 28, 2017   Page 5 of 23
       Allen had been unaware. Further, in August 2009, Allen discovered that West,

       without Allen’s knowledge or approval, had begun building a home in

       downtown Indianapolis for West’s son, Evan. When Allen asked West about

       the home, West admitted it was for his son, and asked for an employee

       discount, which Allen granted on the condition that West get accounting

       personnel from another division to watch the books to avoid preferential

       treatment. West built the home, but never obtained the required oversight from

       another accounting division. West also made numerous improvements to

       Evan’s home, which were not indicated in the budget presented to Allen and

       were not charged to Evan. As of West’s resignation from GABI on in June

       2010, GABI still was owed approximately $58,000.00 for Evan’s home and

       approximately $54,000.00 for West’s home.

[10]   Serious accounting discrepancies were uncovered regarding amounts due to

       subcontractors and suppliers. Soon after West’s resignation, GABI began

       receiving phone calls from subcontractors and suppliers, asking for the money

       they were owed. Further investigation revealed that many of GABI and

       Princeton’s records were inaccurate, including balance sheets, records of

       outstanding debt, and accounts payable. For example, the accounts-payable

       records consistently under-reported the amounts owed to subcontractors and

       suppliers, in some cases by as much as ninety percent. The amount owed to

       Carter Lee Lumber was under-reported by approximately $300,000.00, the

       amount owed to Collins Drywall approximately $160,000.00, and the amounts

       owed to several other subcontractors were under-reported as well. Allen ended

       Court of Appeals of Indiana | Opinion 41A01-1701-CT-182 | December 28, 2017   Page 6 of 23
       up using $803,000.00 of his personal funds to cover the shortfall. As of West’s

       resignation, GABI owed its subcontractors and suppliers approximately $2.4

       million, all of which debt had been incurred before West’s resignation.

       Moreover, on December 15, 2009, when Allen met with West to discuss cash

       flow, West informed Allen that he projected $465,000.00 of gross profit. As it

       happened, there was no meaningful profit.

[11]   On October 1, 2009, Mark and Alicia Fujihara entered into a contract to buy

       their first home from GABI. At closing in June of 2010, the Fujiharas asked

       whether they would receive documentation proving they owned their home,

       and West informed them that Hutchinson was working on the deed and would

       send it to them later. The Fujiharas did not receive a deed at closing, or even

       shortly after. Instead, after closing, the Fujiharas received demand letters from

       contractors who had not been paid by GABI under West’s watch, which forced

       GABI to retroactively pay the contractors. Further, in breach of its contract

       with the Fujiharas (again under West’s watch), GABI failed to provide the

       Fujiharas with title insurance. Allen himself was forced to provide personal

       funds of approximately $65,000.00 to pay for the lot on which the Fujiharas’

       home had been built so that GABI could give a deed to the Fujiharas.

[12]   After West’s departure, Allen and other staff discussed with Hutchinson the

       unpaid promissory note and the unpaid vendor invoices, at which point

       Hutchinson responded that she was just doing what West told her to do. On

       June 30, 2010, Hutchinson prepared and signed a statement (“the Statement”).

       In the Statement, Hutchinson admits that West directed her in late 2009 to

       Court of Appeals of Indiana | Opinion 41A01-1701-CT-182 | December 28, 2017   Page 7 of 23
       write checks to herself, Glover, and West as bonuses and to book those

       payments as payments to Carter Lee Lumber to conceal the payments from

       Allen. Hutchinson also admits West directed her to make draws of

       approximately $625,000.00 on Princeton’s line of credit, and rather than use

       those funds for Princeton jobs as they were drawn, to transfer those funds to

       GABI to pay its expenses, and to conceal the payments. West also instructed

       Hutchinson not to tell Allen that GABI was operating at a substantial loss and

       had incurred and accumulated substantial unpaid bills. Hutchinson later

       testified that she signed the Statement despite believing it to contain falsehoods.

[13]   Following these discussions with Hutchinson, Allen confronted West about

       what he had done. Allen presented West with a document showing what Allen

       knew about as of that date, and substantiating amounts West should pay back

       to Allen and GABI. In total, Allen asked him to pay back $196,546.00. When

       Allen showed West the Statement, he agreed that he would pay the amounts

       back.

[14]   Following that interaction, Allen discovered that West owed GABI and/or

       Allen approximately $303,862.61, including: $56,765.00 for the promissory

       note on West’s personal home; $82,448.76 for interest on the promissory note

       through September 10, 2010; $55,000.00 which was underpaid on West’s son’s

       home; and $2199.00 in interest due for using company money for an extra five

       months after closing on West’s son’s home without Allen’s knowledge. On

       January 18, 2011, Allen issued a letter through GABI and Princeton (“the

       Letter”) to those entities’ subcontractors, suppliers, and certain customers in

       Court of Appeals of Indiana | Opinion 41A01-1701-CT-182 | December 28, 2017   Page 8 of 23
       Marion and Johnson Counties, indicating that West and Hutchinson had

       engaged in a mismanagement scheme, including financial misreporting and

       unauthorized withdrawal of company funds.

[15]   On February 8, 2011, Princeton and GABI filed suit, asserting four claims

       against Hutchinson and eleven claims against West, namely, for violating

       GABI’s employee manual, conversion, theft, unfair competition, negligence,

       tortious interference with a business relationship, usurpation of corporate

       opportunity, misappropriation of trade secrets, unjust enrichment, and fraud.

       On April 1, 2011, West filed a counterclaim against GABI and Princeton for

       breach of settlement agreement and contribution and filed a wage claim. West

       also asserted a claim for defamation against all Cross-Appellants. On

       September 8, 2011, West moved to dismiss the fraud and unjust enrichment

       claims, which motion was granted as to the unjust enrichment claim and denied

       as to fraud.

[16]   On October 13, 2015, West moved for summary judgment on all remaining

       claims against him. On November 30, 2015, GABI and Princeton voluntarily

       dismissed the following claims against West: violation of GABI’s employee

       manual, unfair competition, tortious interference with a business relationship,

       usurpation of corporate opportunity, and misappropriation of trade secrets. On

       February 10, 2016, the Court granted summary judgment in favor of West on

       the negligence claim and denied summary judgment as to the claims for breach

       of fiduciary duty, theft, conversion, and fraud.

       Court of Appeals of Indiana | Opinion 41A01-1701-CT-182 | December 28, 2017   Page 9 of 23
[17]   Jury trial began on October 31, 2016, and concluded on November 10, 2016.

       The jury found in favor of West on fraud, conversion, and his counterclaim of

       contribution, awarding him $9135.35 against Princeton. The jury also found in

       favor of West on his defamation counterclaim, awarding him presumed

       damages of $50,000.00 against each Cross-Appellant and punitive damages in

       the amount of $300,000.00 against Allen, which the trial court later reduced to

       $150,000.00. Finally, the jury found in favor of GABI and against West on the

       theft claim in the amount of $4000.00 and on the breach of fiduciary duty claim

       in the amount of $220,000.00.1

                                  Discussion and Decision
                                                  Appeal Issues

[18]   West appeals from the trial court’s denial of his motion to correct error.

               In general, we review a trial court’s ruling on a motion to correct
               error for an abuse of discretion. Hawkins v. Cannon, 826 N.E.2d
658, 661 (Ind. Ct. App. 2005), trans. denied. However, to the
               extent the issues raised by the City are purely questions of law,
               our review is de novo. See Ind. BMV v. Charles, 919 N.E.2d 114,
               116 (Ind. Ct. App. 2009) (“Although rulings on motions to
               correct error are usually reviewable under an abuse of discretion
               standard, we review a case de novo when the issue … is purely a
               question of law.”)[.]

       1
         The jury also found in favor of GABI and Princeton and against Hutchinson for breach of fiduciary duty,
       awarding GABI and Princeton $500,000.00 and $100,000.00 in damages, respectively. Hutchinson does not
       participate in this appeal.

       Court of Appeals of Indiana | Opinion 41A01-1701-CT-182 | December 28, 2017                  Page 10 of 23
       City of Indpls. v. Hicks, 932 N.E.2d 227, 230 (Ind. Ct. App. 2010), trans. denied.

       So, to the extent that West’s claims present questions of law, we will review

       them de novo.

                      I. Whether Sufficient Evidence Supports
                         the Jury’s Verdict Against West for
                         Breach of Fiduciary Duty to GABI
[19]   The jury found that West breached his fiduciary duty to GABI and awarded it

       $220,000.00 in damages. West argues that GABI introduced insufficient

       evidence to sustain the verdict. “Upon appellate review the standard by which

       the sufficiency of the evidence is measured is that such evidence must have the

       fitness to induce conviction; it must be adequate to support a conclusion in the

       mind of reasonable persons.” Beaman v. Hedrick, 146 Ind. App. 404, 405, 255
N.E.2d 828, 829 (1970). “When a party seeks to reverse an adverse judgment

       on the basis of insufficient evidence,” the court will not weigh the evidence or

       assess witness credibility. Beck v. Mason, 580 N.E.2d 290, 291(Ind. Ct. App.

       1991) (citing In re Paternity of Tompkins, 542 N.E.2d 1009, 1013 (Ind. Ct. App.

       1991)). Rather, the court “will look to the evidence most favorable to the

       judgment and all reasonable inferences to be drawn therefrom, and will affirm if

       there is substantial evidence of probative value to support the judgment.” Id.

[20]   “Substantial evidence” is defined as “[a]dequate to support a conclusion[.]”

       Haney v. Meyer, 139 Ind. App. 663, 668, 215 N.E.2d 886, 889 (1966). When the

       court uses the term “probative value” it has been said that it means “evidence

       having quality of proof and having fitness to induce conviction.” Id. (citing
       Court of Appeals of Indiana | Opinion 41A01-1701-CT-182 | December 28, 2017   Page 11 of 23
       McCague v. N.Y., Chicago & St. Louis R.R. Co., 225 Ind. 83, 89, 71 N.E.2d 569,

       571 (1947)). Where there is no evidence to support the verdict of the jury on a

       material point, it is well-settled that the judgment will not be allowed to prevail.

       Michalik v. Pazdur, 105 Ind. App. 325, 328, 13 N.E.2d 870, 872 (1938).

[21]   “A claim for breach of fiduciary duty requires proof of three elements: (1) the

       existence of a fiduciary relationship; (2) a breach of the duty owed by the

       fiduciary to the beneficiary; and (3) harm to the beneficiary.” Farmers Elevator

       Co. of Oakville v. Hamilton, 926 N.E.2d 68, 79 (Ind. Ct. App. 2010), trans. denied.

       “The standard imposed by a fiduciary duty is the same whether it arises from

       the capacity of a director, officer, or shareholder in a close corporation.” G & N

       Aircraft, Inc. v. Boehm, 743 N.E.2d 227, 240 (Ind. 2001) (citing Hartung v.

       Architects Hartung/Odle/Burke, Inc., 157 Ind. App. 546, 552, 301 N.E.2d 240,

       243 (1973)). “‘The fiduciary must deal fairly, honestly, and openly with his

       corporation and fellow stockholders. He must not be distracted from the

       performance of his official duties by personal interests.’” Id. (quoting Hartung,

       157 Ind. App. at 552, 301 N.E.2d at 243).

[22]   We have little trouble concluding that the jury heard sufficient evidence to

       sustain its verdict that West breached his fiduciary duty to GABI. The record

       contains evidence that, at West’s direction, unauthorized bonus checks were

       issued to himself, Hutchinson, and another employee, despite Allen’s previous

       instruction that none of his entities were to issue bonuses. Also at West’s

       direction, the true nature of these bonus checks was concealed in GABI’s

       accounting software, with the checks made to look as if they had been issued to

       Court of Appeals of Indiana | Opinion 41A01-1701-CT-182 | December 28, 2017   Page 12 of 23
       a lumber supplier. All told, twenty additional unauthorized checks, totaling

       $80,000.00 to $90,000.00, were written to West, and were similarly concealed.

       Unauthorized health insurance costs were also paid out of GABI’s construction

       account and had been improperly accounted for.

[23]   The record also contains evidence tending to show that despite Allen allowing

       West essentially interest-free credit to build his own home, and in allowing

       West to build his son a home for a discounted rate, West did not pay back the

       more than $100,000.00 he owed to GABI and/or Allen. In fact, when asked by

       Allen whether he had paid the more than $50,000.00 balance on his home,

       West falsely replied that he had, when he had not. West even exceeded the

       budget which had been authorized, causing additional expense and damage to

       GABI.

[24]   The jury heard evidence that West consistently and severely under-reported the

       amounts owed by GABI. As of West’s resignation from GABI and Princeton,

       subcontractors and suppliers were owed approximately $2.4 million by GABI,

       of which debt Allen personally paid approximately $803,000.00. West

       specifically had instructed Hutchinson to not inform Allen that GABI was

       operating at a substantial loss and had substantial unpaid bills.

[25]   Finally, the jury heard evidence that West failed to fulfill his duties as president

       by allowing GABI to breach its contracts. For example, although contractually-

       bound to provide a deed and title insurance to the Fujiharas for their newly-

       built home, West participated in the closing and allowed it to proceed without

       Court of Appeals of Indiana | Opinion 41A01-1701-CT-182 | December 28, 2017   Page 13 of 23
       the deed, title insurance, or land having been procured. Further, West allowed

       closing to proceed without having fully paid all subcontractors and suppliers,

       leaving GABI to make up the shortfall. This evidence provides ample support

       for the jury’s finding that West breached his duty to deal fairly, honestly, and

       openly with GABI. The jury’s verdict that West breached his fiduciary duty to

       GABI is supported by more than sufficient evidence.

                  II. Whether Sufficient Evidence Supports the
                      Jury’s Award of $220,000.00 to GABI
[26]   West also challenges the sufficiency of the evidence to sustain the jury’s award

       of $220,000.00 to GABI.

               We apply a “strict standard” when we review an appellate claim
               that a jury’s damages award was excessive. Id. “A jury’s
               determination of damages is entitled to great deference when
               challenged on appeal.” Sears Roebuck and Co. v. Manuilov, 742
N.E.2d 453, 462 (Ind. 2001).
                    Damages are particularly a jury determination. Appellate
                    courts will not substitute their idea of a proper damage
                    award for that of the jury. Instead, the court will look only
                    to the evidence and inferences therefrom which support
                    the jury’s verdict. We will not deem a verdict to be the
                    result of improper considerations unless it cannot be
                    explained on any other reasonable ground. Thus, if there
                    is any evidence in the record which supports the amount of
                    the award, even if it is variable or conflicting, the award
                    will not be disturbed.
               Id. (quoting Prange v. Martin, 629 N.E.2d 915, 922 (Ind. Ct. App.
               1994), reh’g denied, trans. denied). When considering a claim of an
               excessive jury verdict, we [do not] reweigh the evidence, and we
               “look only to the evidence and the reasonable inferences
       Court of Appeals of Indiana | Opinion 41A01-1701-CT-182 | December 28, 2017   Page 14 of 23
               therefrom which uphold the verdict.” Lutheran Hosp. of Indiana,
               Inc. v. Blaser, 634 N.E.2d 864, 873 (Ind. Ct. App. 1994), reh’g
               denied. “To warrant reversal, the award ‘must appear to be so
               outrageous as to impress the Court at “first blush” with its
               enormity.’” Ritter, 745 N.E.2d at 844 (quoting Kimberlin v.
               DeLong, 637 N.E.2d 121, 129 (Ind. 1994) (quoting New York Cent.
               R.R. Co. v. Johnson, 234 Ind. 457, 127 N.E.2d 603 (1955)), reh’g
               denied, cert. denied).
       Reed v. Bethel, 2 N.E.3d 98, 113–14 (Ind. Ct. App. 2014).

[27]   We also have little trouble concluding that the jury’s award of damages is

       amply supported by the record. At the very least, the jury heard evidence that

       West was breaching his fiduciary duties from 2008 to 2010, a period for which

       he received approximately $339,000.00 in compensation. Because an

       appropriate remedy for breach of fiduciary duty can include return of

       compensation for the period of breach, the return of West’s compensation

       supports the jury’s award by itself. See SJS Refractory Co., LLC v. Empire

       Refractory Sales, Inc., 952 N.E.2d 758, 768 (Ind. Ct. App. 2011) (“The remedy

       for the breach of a fiduciary duty is requiring the agent to disgorge all

       compensation received during the period of employment in which the agent

       was also breaching his fiduciary duty.”).

[28]   In any event, the jury also heard evidence that West directed as much as

       $90,000.00 in unauthorized payments to himself and others from GABI funds.

       The record contains evidence that GABI owed subcontractors and suppliers

       $2.4 million when West left GABI, a situation caused by West providing false

       accounts-payable reports. It is reasonable to conclude that at least some of this

       Court of Appeals of Indiana | Opinion 41A01-1701-CT-182 | December 28, 2017   Page 15 of 23
       debt would not have been incurred without West’s breach of his fiduciary duty.

       The jury heard evidence that West owed approximately $300,000.00 to GABI,

       only some of which was paid back. Although we do not have a detailed

       accounting of the jury’s calculations, we conclude that the award of

       $220,000.00 to GABI is amply supported by the record.

                                              Cross-Appeal Issues

           III. Whether Sufficient Evidence Supports the Jury’s
             Verdict Against Cross-Appellants for Defamation
[29]   A defamatory communication is one that “tend[s] to harm a person’s reputation

       by lowering the person in the community’s estimation or deterring third persons

       from dealing or associating with the person.” Rambo v. Cohen, 587 N.E.2d 140,

       145 (Ind. Ct. App. 1992), trans. denied. “Whether [a communication] is

       defamatory ‘depends, among other factors, upon the temper of the times, the

       current of contemporary public opinion, with the result that words, harmless in

       one age, in one community, may be highly damaging to reputation at another

       time or in a different place.’” Journal-Gazette Co., Inc. v. Bandido’s, Inc., 712
N.E.2d 446, 451 n.6 (Ind. 1999) (citations omitted). In order to maintain an

       action for defamation, the plaintiff must demonstrate (1) a communication with

       defamatory imputation, (2) malice, (3) publication, and (4) damages. Id.

       “Whether a communication is defamatory or not is a question of law for the

       court, unless the communication is susceptible to either a defamatory or

       nondefamatory interpretation—in which case the matter may be submitted to

       the jury.” Kelley v. Tanoos, 865 N.E.2d 593, 596 (Ind. 2007) (citation omitted).

       Court of Appeals of Indiana | Opinion 41A01-1701-CT-182 | December 28, 2017   Page 16 of 23
[30]   West’s defamation counterclaim against Cross-Appellants was based entirely

       upon the Letter, which Allen wrote and sent through GABI and Princeton on

       January 18, 2011 to customers, subcontractors, and suppliers in Marion and

       Johnson Counties. The Letter contains the following allegation, which the

       parties seem to agree is the most serious against West:

               After [West’s and Hutchinson’s] departure[s], I learned that both
               homebuilding companies they managed were in substantial
               arrears to several of their suppliers and subcontractors.… We
               discovered through a recent and on-going audit that [West and
               Hutchinson] collectively made over 100 unauthorized
               withdrawals from company funds which total in excess of One
               Million Dollars. Most of these unauthorized withdrawals were
               check payments posted in the accounting system as if those check
               payments were being made to suppliers or subcontractors when
               in fact the corresponding checks were being written by
               [Hutchinson] to herself and [West].
       Plaintiff’s Exs. 68, 69. West’s counterclaim alleged, inter alia, that Cross-

       Appellants published the Letter “with the intent to charge West with the offense

       of embezzlement and/or theft of money.” Appellee’s App. p. 19.

[31]   Cross-Appellants contend that the jury’s verdict against them for defamation

       cannot stand because the jury’s verdict on the breach of fiduciary duty and theft

       claims conclusively establish that the statements in the Letter are true. Article I,

       section 10, of the Indiana Constitution provides that “[i]n all prosecutions for

       libel, the truth of the matters alleged to be libellous, may be given in

       justification.” We have recognized that

       Court of Appeals of Indiana | Opinion 41A01-1701-CT-182 | December 28, 2017   Page 17 of 23
                as a general proposition, proof of the truth of an alleged
                defamation has been held to be a complete defense to a civil
                action for libel. Palmer v. Adams, (1894) 137 Ind. 72, 36 N.E. 695,
                citing Ind. Const., art. 1, s 10. See also 18 I.L.E. Libel and
                Slander s 62 (1959). We also observe, however, that whenever
                the question arises, the defamer bears the burden of proof on this
                issue of fact, since ‘truth’ is an affirmative defense to a claim for
                libel. Weenig v. Wood, [169 Ind. App. 413, 440, 349 N.E.2d 235,
                251 (1976)]. Moreover, when an alleged defamer … appeals a
                negative judgment on the issue of truth, a Court on appeal may
                hold in his favor only if it determines no reasonable trier of fact
                could have decided his accusations were untrue. Id.
       Elliott v. Roach, 409 N.E.2d 661, 681 (Ind. Ct. App. 1980) (footnote omitted).

[32]   Cross-Appellants’ argument is, essentially, that the jury rendered inconsistent

       verdicts that must be reconciled.2 Specifically, Cross-Appellants point to the

       jury’s verdicts of breach of fiduciary duty and theft in favor of GABI and

       against West as proof that the allegations in the Letter are all “true.” “The Law

       indulges every reasonable presumption in favor of the legality of jury verdicts,

       and corrective action should only be taken when the verdict or verdicts are

       ‘inconsistent because [of] a logical or legal impossibility.’” Tincher v. Davidson,

       2
         Cross-Appellants do not argue that West’s defamation claim must fail because he failed to show malice,
       even though they argue in the next section that the award of punitive damages against Allen must be reversed
       for that reason. This is, perhaps, because the allegations against West seem to clearly qualify as libel per se.
       As Judge Faulconer of this court explained, the law presumes damages in cases of defamation per se, which
       includes “[w]ords in the form of libel which, on their face, without resort to extrinsic facts or circumstances,
       that is to say, ‘per se,’ tend to degrade another person, impeach his honesty, integrity, or reputation, or bring
       him into contempt, hatred, ridicule, or causes him to be shunned or avoided.” Gibson v. Kincaid, 140 Ind.
       App. 186, 201, 221 N.E.2d 834, 843 (1966) (Faulconer, J., concurring in result). While a communication
       that contains libel per se would seem to relive a plaintiff of the burden of proving malice, it does not
       necessarily follow that malice is automatically presumed for purposes of punitive damages in such a case. In
       any event, we address Cross-Appellants’ arguments as stated.

       Court of Appeals of Indiana | Opinion 41A01-1701-CT-182 | December 28, 2017                        Page 18 of 23
       762 N.E.2d 1221, 1226 (Ind. 2002) (quoting Indpls. Newspapers, Inc. v. Fields, 259
N.E.2d 651, 668 (Ind. 1970)).3

[33]   The most damning accusation against West in the Letter is that he and

       Hutchinson collectively made over 100 unauthorized withdrawals of over one

       million dollars disguised as payments to suppliers or subcontractors. The only

       fair reading of this is that Cross-Appellants were essentially accusing West (and

       Hutchinson) of stealing over one million dollars from GABI and Princeton.

       Cross-Appellants’ argument that the jury’s verdicts are fatally inconsistent must

       fail, however. The jury found that West’s breach of fiduciary duty caused

       GABI $220,000.00 in damages, which is far less than the over one million

       dollars that he was alleged to have stolen. Similarly, the jury found that West’s

       theft from GABI was $4000.00, again falling far short of rendering the

       accusation against him “true,” even if added to the damages for breach of

       fiduciary duty. Put another way, the jury could have found that West “stole”

       $224,000.00 from GABI but that Cross-Appellants defamed him by alleging

       that he stole far more. Because the jury’s verdicts are not inconsistent based on

       logical or legal impossibility, Cross-Appellants have failed to establish that the

       jury’s verdict that they defamed West must be overturned on that basis.

       3
         This proposition is still good law in a civil context. We note, however, that in a somewhat recent criminal
       case, the Indiana Supreme Court held that “inconsistent jury verdicts are not subject to appellate review[.]”
       Beattie v. State, 924 N.E.2d 643, 649 (Ind. 2010).

       Court of Appeals of Indiana | Opinion 41A01-1701-CT-182 | December 28, 2017                     Page 19 of 23
                 IV. Whether Sufficient Evidence Supports the
                     Jury’s Award of Punitive Damages to
                       West from Allen for Defamation
[34]   The jury awarded $50,000.00 in presumed damages to West for Allen’s

       defamation and $300,000.00 in punitive damages, later reduced to $150,000.00.

       The standard for review of a verdict on an award of punitive damages is

       whether a reasonable trier of fact could find by clear and convincing evidence

       that the defendant acted with malice, fraud, gross negligence, or oppressiveness

       that was not the result of a mistake of fact or law, honest error of judgment,

       overzealousness, mere negligence, or other human failing. Budget Car Sales v.

       Stott, 662 N.E.2d 638, 639 (Ind. 1996). Punitive damages are awarded upon a

       showing of intentional conduct which focuses on the defendant’s state of mind.

       Peterson v. Culver Educ. Found., 402 N.E.2d 448, 458 (Ind. Ct. App. 1980).

[35]   Allen contends that the record contains insufficient evidence to sustain the

       jury’s finding that he acted with actual malice4 in publishing the Letter.

                Actual malice must be shown by clear and convincing evidence.
                Actual malice exists when the defendant publishes a defamatory
                statement with knowledge that it was false or with reckless
                disregard of whether it was false or not. Reckless conduct is not
                measured by whether a reasonably prudent man would have
                published, or would have investigated before publishing. To
                demonstrate reckless disregard, there must be sufficient evidence
                to permit the conclusion that the defendant in fact entertained

       4
         West argues only that the jury properly found actual malice on Allen’s part and does not allege that the
       record would support findings of fraud, gross negligence, or oppressiveness.

       Court of Appeals of Indiana | Opinion 41A01-1701-CT-182 | December 28, 2017                      Page 20 of 23
               serious doubts as to the truth of his publication or proof that the
               false publication was made with a high degree of awareness of
               their probable falsity. Hence, a defendant’s actual state of mind
               is a critical factor in the analysis. A defendant’s state of mind is a
               subjective fact and may be shown by indirect or circumstantial
               evidence.
               The question of whether there is sufficient evidence to support a
               finding of actual malice is a question of law to be determined by
               the court. This rule is premised on two important considerations:
               (1) the national commitment to the free exchange of ideas, as
               enshrined in the First Amendment and (2) the recognition that
               judges as expositors of the Constitution have a duty to
               independently decide whether the evidence in the record is
               sufficient to cross the constitutional threshold that bars the entry
               of any judgment that is not supported by clear and convincing
               proof of actual malice. We [have already] discussed … the need
               to conduct an examination of the factual record in full. In an
               independent review, each piece of evidence may be considered
               cumulatively.
       Journal-Gazette Co. v. Bandido’s, Inc., 712 N.E.2d 446, 456 (Ind. 1999) (citations

       and quotation marks omitted).

[36]   We conclude that there is insufficient evidence to sustain a finding, by clear and

       convincing evidence, that Allen had actual malice when defaming West. The

       only evidence West points to relates to a June 30, 2010, encounter between

       Allen and Hutchinson, during which Hutchinson signed the Statement, which

       indicated that she had acted under West’s direction. See Defendant’s Ex. K.

       West first argues that Hutchinson’s testimony that she believed the Statement to

       contain falsehoods is evidence of Allen’s actual malice. Hutchinson’s belief

       that the statement was false—even if this is true—has nothing to do with

       whether Allen believed it to be false, and so does not support a finding of actual
       Court of Appeals of Indiana | Opinion 41A01-1701-CT-182 | December 28, 2017   Page 21 of 23
       malice. West also points to Hutchinson’s testimony that Allen hugged her after

       she signed the Statement and told her, “I’m not going to do anything to you,

       this is all about [West], I’m going to get [West,]” and claims that this is clear

       proof of Allen’s malicious intent. We conclude that this testimony is no more

       probative of actual malice than Hutchinson’s uncommunicated beliefs

       regarding the falsity of the Statement. Allen’s stated desire to “get” West in no

       way indicates a belief that the Statement was false or that Allen harbored a

       reckless disregard for its truth. On the whole, Allen’s behavior during the

       meeting with Hutchinson (and throughout the rest of the case) was entirely

       consistent with a firm belief that the allegations against West were true, leaving

       no impression of a belief that they were false. Because we conclude that there is

       insufficient evidence to sustain the jury’s finding that Allen acted with actual

       malice, we reverse its award of punitive damages to West.5

                                                Conclusion
[37]   We conclude that sufficient evidence supports (1) the jury’s finding that West

       breached his fiduciary duty to GABI, (2) the jury’s award to GABI of

       $220,000.00 for West’s breach of his fiduciary duty, and (3) the jury’s finding

       that Cross-Appellants defamed West in the Letter. We also conclude, however,

       5
         Because we conclude that the jury’s award of punitive damages was unsupported by sufficient evidence, we
       need not reach Allen’s argument that presumed damages do not qualify as compensatory damages for
       purposes calculating the maximum award of punitive damages.

       Court of Appeals of Indiana | Opinion 41A01-1701-CT-182 | December 28, 2017                  Page 22 of 23
       that the jury’s award of $150,000.00 in punitive damages to West based on

       Allen’s defamation is not supported by sufficient evidence.

[38]   We affirm the judgment of the trial court in part and reverse in part.

       Robb, J., and Crone, J., concur.

       Court of Appeals of Indiana | Opinion 41A01-1701-CT-182 | December 28, 2017   Page 23 of 23