Court Opinion

ID: 4506088
Source: CourtListenerOpinion
Date Created: 2020-02-10 16:05:31.927902+00
Date Added: 2024-06-11T15:04:15.148825
License: Public Domain

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be                                         FILED
regarded as precedent or cited before any                                Feb 10 2020, 10:09 am

court except for the purpose of establishing                                  CLERK
the defense of res judicata, collateral                                   Indiana Supreme Court
                                                                             Court of Appeals
                                                                               and Tax Court
estoppel, or the law of the case.

ATTORNEY FOR APPELLANT                                   ATTORNEY FOR APPELLEE
Christopher M. Gilley                                    Christopher P. Jeter
Anderson, Indiana                                        Fishers, Indiana

                                           IN THE
    COURT OF APPEALS OF INDIANA

Nathaniel McKeon,                                        February 10, 2020
Appellant-Defendant,                                     Court of Appeals Case No.
                                                         19A-PL-1538
        v.                                               Appeal from the Hamilton
                                                         Superior Court
The George Insurance Agency,                             The Honorable Jonathan M.
Inc.,                                                    Brown, Judge
Appellee-Plaintiff.                                      Trial Court Cause No.
                                                         29D02-1709-PL-8524

Tavitas, Judge.

Court of Appeals of Indiana | Memorandum Decision 19A-PL-1538 | February 10, 2020                 Page 1 of 11
                                             Case Summary
[1]   Nathaniel McKeon appeals the trial court’s award of damages to The George

      Insurance Agency, Inc. (“Company”). We affirm and remand.

                                                     Issues
[2]   McKeon raises two issues, which we restate as:

              I.       Whether the trial court properly excluded testimony during
                       the damages hearing.

              II.      Whether the trial court properly calculated damages owed
                       to the Company.

      On cross-appeal, the Company argues that it should be awarded appellate

      attorney fees.

                                                     Facts
[3]   The Company is an independent insurance agency with its principal office in

      Hamilton County. McKeon entered into an independent subcontractor

      agreement (“Agreement”) with the Company on July 1, 2012 and acted as an

      insurance agent for the Company. The Agreement included provisions

      regarding McKeon’s non-disclosure of confidential information, a non-piracy

      provision, and a non-competition agreement for two years in certain counties of

      Indiana. The Agreement also included a provision for attorney fees for the

      prevailing party in the event of legal action between the parties.

      Court of Appeals of Indiana | Memorandum Decision 19A-PL-1538 | February 10, 2020   Page 2 of 11
[4]   In February 2017, McKeon resigned as an independent subcontractor for the

      Company. McKeon then began working as an insurance agent at a competing

      business, Voldico, Inc., and used the Company’s confidential information to

      solicit clients of the Company.

[5]   In September 2017, the Company filed a complaint against McKeon for breach

      of the non-competition clause of the Agreement; breach of the non-piracy

      clause of the Agreement; breach of the non-disclosure of information clause of

      the Agreement; and attorney fees for breach of the Agreement.1 The Company

      provided McKeon with requests for admissions, which McKeon did not answer

      in a timely manner and were deemed admitted pursuant to Indiana Trial Rule

      36.

[6]   In March 2018, the Company filed a motion for summary judgment. The

      Company designated evidence: (1) that McKeon breached the Agreement by

      taking thirty-two clients, totaling $18,607.51 in lost annual commissions; (2)

      that “it is custom for an agent who wants to buy another agent’s book of

      business or clients to pay three times the value of the commission to acquire

      that book of business or client”; and (3) that the breach had cost the Company

      over $55,822.52, by using a multiplier of three times the annual commissions,

      and the damages were “increasing monthly.” Appellant’s App. Vol. II p. 55.

      1
       The Complaint also included a claim against Voldico. Voldico was not involved in the summary judgment
      proceedings or damages hearing, and we do not address it further.

      Court of Appeals of Indiana | Memorandum Decision 19A-PL-1538 | February 10, 2020          Page 3 of 11
      Summary Judgment Exhibit 5 to the designation detailed the lost client

      accounts and losses of commissions.

[7]   McKeon filed a motion to withdraw and to amend his admissions, which the

      trial court granted. McKeon also filed an “Objection to the Motion for

      Summary Judgment.” Id. at 90. In the objection, McKeon mentioned his

      pending motion to withdraw and to amend his admissions, but he failed to

      designate any evidence in support of his objection and failed to request an

      extension of time.

[8]   After a hearing in December 2018, the trial court entered an order granting the

      Company’s motion for summary judgment and scheduled a hearing on

      damages. At the evidentiary hearing regarding damages, Gregory George,

      owner of the Company, testified that, in the insurance industry, when an

      account is sold, it is sold “for a multiplier over just the annual commission.”

      Tr. Vol. II pp. 42-43. According to George, “personal lines accounts could sell

      for anywhere between [a multiplier of] three and three and a half, and a

      commercial account could sell between [a multiplier of] two and three quarters

      and three and a quarter.” Id. at 42. During George’s testimony, Plaintiff’s

      Exhibit 1 was admitted over McKeon’s objection. The spreadsheet was a

      revision of Exhibit 5 from the summary judgment pleadings and detailed

      alleged lost client accounts and commissions in the amount of $19,112.46.

      George, however, testified that Plaintiff’s Exhibit 1 was incorrect because he

      discovered that one of the clients “didn’t go with [McKeon], but [the client] still

      has a personal relationship with [McKeon].” Id. at 39.

      Court of Appeals of Indiana | Memorandum Decision 19A-PL-1538 | February 10, 2020   Page 4 of 11
[9]    During cross-examination, McKeon attempted to question George regarding

       whether individual client accounts listed on Plaintiff’s Exhibit 1 amounted to a

       breach of the Agreement. The Company argued that the hearing was simply to

       determine damages, not relitigate whether McKeon breached the Agreement.

       The trial court noted that McKeon had the opportunity to designate evidence

       regarding the individual clients during the summary judgment proceeding but

       failed to do so. The trial court sustained the Company’s objection to McKeon’s

       line of questioning.

[10]   Michael Cox, owner of Werner Cox Insurance Services, which is another

       insurance company in the area, also testified regarding multipliers for the sale of

       insurance accounts. According to Cox, insurance accounts sell for “anywhere

       from one and a half on the very, very low side to three and a quarter, three and

       a half, possibly.” Id. at 71.

[11]   McKeon also testified at the damages hearing and attempted to testify regarding

       the individual clients listed on Plaintiff’s Exhibit 1 and Summary Judgment

       Exhibit 5. The Company objected, and the trial court again sustained the

       Company’s objection to the line of questioning.

[12]   After the damages hearing, the trial court entered an order finding that the

       Company “has been damaged in the amount of $55,822,53, due to [McKeon’s]

       breach of the Agreement.” Appellant’s App. Vol. II p. 10. The trial court also

       awarded the Company $9,863.43 in attorney fees pursuant to the written

       provisions of the Agreement, for a total of $65,685.96, plus eight percent

       Court of Appeals of Indiana | Memorandum Decision 19A-PL-1538 | February 10, 2020   Page 5 of 11
       interest. McKeon now appeals the trial court’s order regarding the damages

       hearing. McKeon does not appeal the summary judgment order.

                                                    Analysis
                              I. Exclusion of Evidence Regarding Breach

[13]   McKeon challenges the exclusion of evidence at the damages hearing. The

       admission and exclusion of evidence falls within the sound discretion of the

       trial court, and we review the admission of evidence only for an abuse of

       discretion. Reed v. Bethel, 2 N.E.3d 98, 107 (Ind. Ct. App. 2014). An abuse of

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

       effect of the facts and circumstances before it. Id.

[14]   McKeon argues that the trial court abused its discretion by limiting his cross-

       examination of George and McKeon’s direct testimony regarding the individual

       accounts the Company alleged to be taken by McKeon. The context in which

       McKeon attempted to present this evidence is determinative here. The

       Company filed its motion for summary judgment and designated evidence that

       McKeon breached the Agreement. Part of the designated evidence was

       Summary Judgment Exhibit 5, which listed the clients taken by McKeon.

       McKeon did not designate any evidence in response, and the trial court granted

       summary judgment to the Company and set the matter for a damages hearing.

[15]   During the evidentiary damages hearing, the Company admitted Plaintiff’s

       Exhibit 1, which included additional clients not listed on Summary Judgment

       Exhibit 5. Through the cross-examination of George and the direct

       Court of Appeals of Indiana | Memorandum Decision 19A-PL-1538 | February 10, 2020   Page 6 of 11
       examination of McKeon, McKeon then sought to challenge the evidence that

       he took the individual clients from the Company. The trial court, however, had

       already granted summary judgment regarding McKeon’s breach of the

       Agreement. McKeon was, in effect, attempting to introduce evidence that he

       did not breach the Agreement after he had failed to designate such evidence in

       response to the Company’s motion for summary judgment. See Murphy v.

       Curtis, 930 N.E.2d 1228, 1234 (Ind. Ct. App. 2010) (“[A] party who does not

       respond to a motion for summary judgment may be limited to the facts

       established by the movant’s submissions.”), trans. denied.

[16]   The only issue to be determined at the damages hearing was the amount of

       damages owed by McKeon for the breach. Under these circumstances, we

       cannot say that the trial court abused its discretion by limiting McKeon’s line of

       questioning during George’s cross-examination and McKeon’s direct

       examination.

                                        II. Calculation of Damages

[17]   Next, McKeon argues that the trial court erred in calculating the damages owed

       to the Company. The computation of damages is a matter within the trial

       court’s sound discretion. Knapp v. Estate of Wright, 76 N.E.3d 900, 909 (Ind. Ct.

       App. 2017). trans. denied. We will not reverse a damages award on appeal

       unless it is based on insufficient evidence or is contrary to law. Id. “In

       determining whether an award is within the scope of the evidence, we may not

       reweigh the evidence or judge the credibility of witnesses.” Id.

       Court of Appeals of Indiana | Memorandum Decision 19A-PL-1538 | February 10, 2020   Page 7 of 11
[18]   The Agreement provided that:

               Subcontractor covenants and agrees that if Subcontractor shall
               breach any of the provisions of Section 7, 8, and 9 of this
               Agreement, the Agency shall be entitled to . . . repayment of all
               profits, compensation, commissions, remuneration, or other
               benefits that Subcontractor directly or indirectly has realized
               and/or may realize arising out of, or in connection with, any
               such breach. These remedies shall be in addition to, and not in
               limitation of, any other rights or remedies to which the Agency is
               or may be entitled at law, in equity, or under this Agreement.

       Appellant’s App. Vol. II p. 63.

[19]   A party injured by a breach of contract may recover the benefit of its bargain

       but is limited in its recovery to the loss actually suffered. L.H. Controls, Inc. v.

       Custom Conveyor, Inc., 974 N.E.2d 1031, 1043 (Ind. Ct. App. 2012). A damage

       award must be based upon some fairly defined standard, such as cost of repair,

       market value, established experience, rental value, loss of use, loss of profits, or

       direct inference from known circumstances. Id. An award of lost profit

       damages is proper if the evidence is sufficient to allow the trier of fact to

       estimate the amount with a reasonable degree of certainty and exactness. Id.

[20]   Lost profits need not be proved with mathematical certainty and are not

       impermissibly uncertain where there is testimony that, while not sufficient to

       put the amount beyond doubt, is sufficient to enable the factfinder to make a

       fair and reasonable finding as to the proper damages. Id. Any doubts and

       uncertainties as to proof of the exact measure of damages must be resolved

       Court of Appeals of Indiana | Memorandum Decision 19A-PL-1538 | February 10, 2020   Page 8 of 11
       against the defendant; however, an award of damages for lost profits cannot be

       based upon mere conjecture or speculation. Id.

[21]   McKeon argues that the trial court erred by using a multiplier of three times the

       annual commission in calculating the damages. McKeon contends that use of

       the multiplier resulted in the award of speculative damages. McKeon also

       argues that compensatory damages “must be confined to the actual damages

       sustained.” Appellant’s Br. p. 10.

[22]   George presented evidence that McKeon took clients from the Company that

       generated annual commissions totaling at least $18,607.51. 2 George testified

       that, in the insurance industry, when an account is sold, it is sold “for a

       multiplier over just the annual commission.” Tr. Vol. II pp. 42-43. According

       to George, “personal lines accounts could sell for anywhere between [a

       multiplier of] three and three and a half, and a commercial account could sell

       between [a multiplier of] two and three quarters and three and a quarter.” Id. at

       42.

[23]   Cox, the owner of another insurance company in the area, also testified

       regarding multipliers for the sale of insurance accounts. According to Cox,

       insurance accounts sell for “anywhere from one and a half on the very, very low

       2
         At the end of the damages hearing, the Company stated: “If the Court would prefer just to - for purposes of
       making the record clean on the summary judgment issue to use Exhibit 5 of our summary judgment motion,
       which I think is - includes one account less, the times three book value is $55,822.53. We’d be okay with
       that.” Tr. Vol. II p. 85. Consequently, we use Summary Judgment Exhibit 5 in reviewing the damages
       award.

       Court of Appeals of Indiana | Memorandum Decision 19A-PL-1538 | February 10, 2020                Page 9 of 11
       side to three and a quarter, three and a half, possibly.” Id. at 71. The Company

       requested a multiplier of three, and the trial court included this multiplier in its

       damages award.

[24]   Such damages for lost profits need not be proven with exact certainty. The

       damages awarded by the trial court were supported by the evidence and were

       not speculative. The Company presented evidence that the industry standard

       for purchasing insurance accounts includes the use of a multiplier of annual

       commissions. The Company then presented evidence on a range of multipliers

       that are used in such circumstances. Although the trial court had a range of

       multipliers presented by the evidence, the trial court chose to use a multiplier of

       three, which was within the scope of the evidence. The annual commissions of

       accounts taken by McKeon amounted to $18,607.51. Using a multiplier of

       three, the trial court properly calculated damages of $55,822.53, plus attorney

       fees.3 As such, the trial court did not abuse its discretion in calculating the

       damages award as a result of McKeon’s breach of the Agreement.

                                           III. Appellate Attorney Fees

[25]   The Company requests that we remand to the trial court for the award of

       appellate attorney fees. The Agreement at issue here included a provision for

       attorney fees for the prevailing party in the event of legal action between the

       parties. The Company is the prevailing party here and, accordingly, we remand

       3
           McKeon does not appear to contest the award of attorney fees in the amount of $9,853.43.

       Court of Appeals of Indiana | Memorandum Decision 19A-PL-1538 | February 10, 2020              Page 10 of 11
       to the trial court for the calculation and award of appellate attorney fees to the

       Company.

                                                 Conclusion
[26]   The trial court did not abuse its discretion by excluding certain evidence during

       the damages hearing, and the trial court did not abuse its discretion in

       calculating damages awarded to the Company. The Company, additionally, is

       entitled to the award of appellate attorney fees pursuant to the Agreement, and

       accordingly, we remand to the trial court for calculation of such attorney fees.

       We affirm and remand.

[27]   Affirmed and remanded.

       Najam, J., and Vaidik, J., concur.

       Court of Appeals of Indiana | Memorandum Decision 19A-PL-1538 | February 10, 2020   Page 11 of 11