Court Opinion

ID: 4516191
Source: CourtListenerOpinion
Date Created: 2020-03-13 17:03:38.819667+00
Date Added: 2024-06-11T10:44:58.909132
License: Public Domain

FILED
                                                                       Mar 13 2020, 9:30 am

                                                                            CLERK
                                                                       Indiana Supreme Court
                                                                          Court of Appeals
                                                                            and Tax Court

ATTORNEY FOR APPELLANT                                     ATTORNEYS FOR APPELLEES
Steven P. Lammers                                          Benjamen W. Murphy
Mandel Horn & Rauch, P.C.                                  Griffith, Indiana
Carmel, Indiana                                            C. Anthony Ashford
                                                           Ashford Law Group
                                                           Valparaiso, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

Staff Source, LLC,                                         March 13, 2020
Appellant-Plaintiff,                                       Court of Appeals Case No.
                                                           19A-PL-1569
        v.                                                 Appeal from the Lake Superior
                                                           Court
Christine A. Wallace, Milan                                The Honorable Calvin D.
Kesic, Slobodan Kesic, The                                 Hawkins, Judge
Resolve Group, LLC, and                                    Trial Court Cause No.
Resolve HR, LLC,                                           45D02-1804-PL-32
Appellees-Defendants.

Brown, Judge.

Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020                             Page 1 of 29
[1]   Staff Source, LLC (“Staff Source”), appeals the trial court’s order granting the

      motion for attorney fees filed by Milan Kesic, Slobodan Kesic, the Resolve

      Group, LLC, Resolve HR, LLC, and Christine Wallace (collectively,

      “Defendants”), and the order finding that Defendants were entitled to a certain

      amount of fees. Defendants request appellate attorney fees. We affirm the

      orders of the trial court, grant Defendants’ request for appellate attorney fees,

      and remand.

                                       Facts and Procedural History

[2]   In a letter dated June 20, 2005, Mirko Marich of Staff Source wrote to Christine

      Wallace, referenced Wallace’s vast industry experience and proposed an

      “Independent Contractor working relationship whereby [she] essentially will

      work without any Supervision from the Staff Source office.” Exhibits Volume

      II at 83.

[3]   In a memo dated June 2, 2006, Christian Flores of Staff Source wrote Wallace,

      thanked her for her hard work, and outlined a compensation package including

      a base salary and commission. Wallace worked as an employee for about a

      year or less until Staff Source moved an internal person into that role.

[4]   On June 19, 2007, Staff Source and Wallace signed a document titled

      “Employment Agreement” which provided in part:

              1. EMPLOYER hereby employs EMPLOYEE in the capacity of
              SALES or such other capacity as EMPLOYER shall direct; and
              EMPLOYEE hereby accepts such employment upon the terms
              and conditions hereinafter set forth.

      Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020         Page 2 of 29
           2. The parties jointly acknowledge their relationship as one of
           employment-at-will, and that this Agreement does not confer or
           infer any rights to continued employment. EMPLOYER or
           EMPLOYEE may terminate this relationship at any time with or
           without cause.

                                                *****

           9. In consideration of the services to be rendered by
           EMPLOYEE, EMPLOYER shall pay EMPLOYEE
           compensation as set forth in Exhibit A “EMPLOYEE
           Compensation” attached hereto and forming a part hereof.[ 1]
           This compensation may change or be modified, at the sole
           discretion of EMPLOYER, whenever EMPLOYER deems
           necessary.

                                                *****

           15. The nature of the system and methods in EMPLOYER’s
           business is such that EMPLOYEE will be placed in a close
           business and personal relationship with the customers of
           EMPLOYER and be privy to confidential customer usage and
           rate information. Accordingly, during the term of this
           Agreement and for a period of one (1) year immediately
           following the termination of EMPLOYEE’s employment, for
           any cause whatsoever, so long as EMPLOYER continues to
           carry on the same business, said EMPLOYEE shall not, for any
           reason whatsoever, directly or indirectly, for himself or on behalf
           of, or in conjunction with, any other person, persons, company,
           partnership, corporation or business entity:

                   (i) Call upon, divert, influence or solicit or attempt to call
                   upon, divert, influence or solicit any employee, customer
                   or customers of EMPLOYER;

1
    Wallace testified that Exhibit A was never attached to the Employment Agreement.

Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020                     Page 3 of 29
                 (ii) Divulge the names and addresses of any information
                 concerning any customer of EMPLOYER;

                 (iii) Disclose any information or knowledge relating to
                 EMPLOYER, including but not limited to,
                 EMPLOYER’s system or method of conducting business
                 to any person, persons, firms, corporations or other entities
                 unaffiliated with EMPLOYER, for any reason or purpose
                 whatsoever;

                 (iv) Own, manage, control, be employed by, participate in
                 or be connected in any manner with the ownership,
                 management, operation or control of the same, similar or
                 related line of business as that carried on by EMPLOYER
                 within a radius of twenty-five (25) miles from
                 EMPLOYEE’s home office or within a radius equivalent
                 to EMPLOYEE’s defined territory, whichever is greater.

        The time period covered by the covenants contained herein shall
        not include any period(s) of violation of any covenant or any
        period(s) of time required for litigation to enforce any covenant.

        If the provisions set forth in Paragraph 15 are determined by a
        court of competent jurisdiction to be too broad to be enforceable,
        then the parties agree the area and/or length of time shall be
        reduced to such areas and times as the court shall deem
        enforceable.

        The covenants as set forth in this Paragraph 15 shall be construed
        as an agreement independent of any other provision in this
        Agreement and the existence of any potential or alleged claim or
        cause of action of EMPLOYEE against EMPLOYER, whether
        predicted [sic] on this Agreement or otherwise, shall not
        constitute a defense to the enforcement by EMPLOYER of the
        covenants contained herein. An alleged or actual breach of the
        Agreement by EMPLOYER shall not be a defense to
        enforcement of the provisions of Paragraph 15.

Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020           Page 4 of 29
      Exhibits Volume II at 12-13 (some capitalization omitted).

[5]   Staff Source provided Wallace a 1099 Form listing her nonemployee

      compensation for years 2014, 2015, 2016, and 2017.

[6]   In April 2017, Wallace became the subject of an IRS audit related to 2015 and

      2016 and an issue arose regarding her status as an independent contractor of

      Staff Source.

[7]   At some point, Staff Source and Wallace signed a document titled “Working

      Agreement” which provided in part:

              In an effort to formally define the terms of our working
              relationship, we submit the following:

              Position: Independent Sales Contractor

              Regardless of the title used to define your association with Staff
              Source, your position will be as an independently contracted
              Sales Representative. As such, Staff Source will not be
              responsible for payroll deductions, unemployment liability,
              workman’s compensation insurance, nor contribute to social
              security or Medicare.

              Commission:

              In consideration of any contracts Staff Source secures as a result
              of your sales efforts, Staff Source will pay as a commission the
              following . . . .

                                                     *****

              The relationship hereby established is that of an Independent
              Sales Representative. The Representative is neither an employee
              of Staff Source nor a legal representative and may not assume

      Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020           Page 5 of 29
               any obligation of any kind (without prior approval of Staff
               Source), implied or expressed on behalf of Staff Source.

               Staff Source will reimburse for pre-approved marketing related
               expenses. Also, an auto allowance of $350.00/month and a
               $50.00/month mobile phone reimbursement will be paid
               monthly for the prior month’s expenses.

               Either party may terminate this agreement at any time without
               notice.

      Id. at 15 (italics omitted). The document listed a handwritten date of June 19,

      2007, after the signatures of Kari Marich of Staff Source and Wallace.

      According to Wallace, the IRS auditor asked Staff Source to provide

      documentation, she signed the document without dating it in 2017 during the

      course of the audit, and the dates were subsequently added by Kari. 2

[8]   Beginning in December 2016, Wallace began to have issues in her arrangement

      with Staff Source under the new ownership of Mirko. In an email from Kari to

      Wallace on November 30, 2017, Kari wrote in part: “You’re an independent

      contractor and I cannot dictate to you how much time you should spend at the

      office.” Id. at 169.

[9]   In a letter dated January 5, 2018, Wallace informed Mirko and Kari that day

      would be her last as an independent sales contractor for Staff Source. On

      2
       When Mirko was asked if the testimony that the document was backdated was correct, he answered: “Was
      that it was dated, but it was part of the original agreement, but it was dated.” June 6, 2019 Transcript 156.

      Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020                                Page 6 of 29
       January 23, 2018, Mirko sent Wallace an email which stated she was in breach

       of Paragraph 15. Wallace replied stating “per legal counsel consulted prior to

       resignation,” the signed contract containing Paragraph 15 was null and void

       because she was an independent contractor and not an employee and she would

       “not ‘go after’ accounts of Staff Source.” Id. at 187. Mirko responded and

       stated he was “well aware of the Independent Contractor status and well aware

       of the terms of the Employment Agreement which specifically states you are

       ‘referred’ to as an ‘EMPLOYEE’.” Id. at 188. He also stated that “neither

       document exudes [sic] the terms of the other, rather they collectively address all

       the terms.” Id.

[10]   On April 9, 2018, Staff Source filed a Complaint for Preliminary and

       Permanent Injunction and Damages against Wallace, Milan, Slobodan, and the

       Resolve Group, LLC and alleged: Count I, breach of contract; Count II,

       violation of the Indiana Uniform Trade Secrets Act; Count III, tortious

       interference with a contract; Count IV, tortious interference with business

       relationships; Count V, damages arising from civil conspiracy; Count VI, unjust

       enrichment; and Count VII, preliminary and permanent injunction.

[11]   A letter dated April 13, 2018, from Staff Source’s counsel to Wallace, Milan,

       Slobodan, and the Resolve Group, LLC, referred to the June 19, 2007

       document titled “Employment Agreement,” Id. at 11, as the “Non-Compete,

       Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020        Page 7 of 29
       Non-Solicitation and Confidentiality Agreement.” 3 Id. at 79. The letter stated

       in part: “We understand Ms. Wallace will attempt to claim that the Agreement

       is unenforceable because she is referred to as ‘employee’ in the Agreement,

       however, Ms. Wallace signed the Agreement and agreed to its terms.” Id. It

       also asserted that “the fact that Ms. Wallace was an independent sales

       contractor for Staff Source does not make the covenants in the Agreement

       unenforceable.” Id.

[12]   On May 30, 2018, Milan, Slobodan, and the Resolve Group, LLC filed an

       answer and requested that Staff Source “be liable for paying said defendants’

       attorney fees and costs.” Appellant’s Appendix Volume II at 97. On June 11,

       2018, Wallace filed her answer and requested that Staff Source be liable for

       paying her attorney fees.

[13]   On June 14, 2018, the court granted Staff Source’s motion for leave to file an

       amended complaint. On June 15, 2018, Staff Source filed a Motion for

       Clarification and to Further Amend Complaint by Interlineation. That same

       day, Staff Source filed a Motion to Inspect Wallace’s Laptop Computer and

       Smart Phone. On June 19, 2018, the court granted Staff Source’s motion to

       further amend the complaint by interlineation. Specifically, the court ordered

       that “Plaintiff’s Amended Complaint for Preliminary and Permanent

       3
        During the direct examination of Wallace, Staff Source’s counsel referred to Paragraph 15 of the
       Employment Agreement as the “non-compete, non-solicitation, confidentiality agreement.” July 23, 2018
       Transcript at 30.

       Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020                          Page 8 of 29
       Injunctions and Damages filed June 13, 2018 is hereby AMENDED BY

       INTERLINEATION such that Count I of the Amended Complaint includes

       the allegation that Defendant, Christine A. Wallace, breached the terms of the

       subject Non-Compete, Non-Solicitation and Confidentiality Agreement with

       Plaintiff due to her actions with the Resolve Group, LLC and/or Resolve HR,

       LLC.” Id. at 180. That same day, the court granted Staff Source’s motion to

       inspect Wallace’s computer and phone.

[14]   On June 27, 2018, Wallace filed a Motion for Emergency Hearing on Plaintiff’s

       Request for Preliminary Injunctive Relief and asserted “Staff Source’s baseless

       claims are effectively doing what the alleged Employment Agreement cannot

       do: restraining [her] ability to earn a livelihood via frivolous litigation based

       upon an alleged Employment Agreement governing an admittedly non-existent

       employment relationship.” Id. at 183. That same day, the court granted

       Wallace’s motion and scheduled a hearing for July 2, 2018. On June 28, 2018,

       Staff Source filed an Emergency Motion to Continue July 2, 2018 Hearing and

       to Compel Discovery Responses and to Compel Defendant Wallace’s

       Cooperation with Inspection and Copying of her Smart Phone and Laptop

       Computer. On July 2, 2018, the court entered an order continuing the July 2,

       2018 hearing and compelling Wallace’s cooperation with the June 19, 2018

       order.

[15]   Meanwhile, on June 29, 2018, Milan, Slobodan, and the Resolve Group filed

       an answer to Staff Source’s amended complaint. They requested that Staff

       Source “be liable for paying said defendants’ attorney fees and costs.” Id. at

       Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020          Page 9 of 29
       222. On July 10, 2018, Wallace filed an answer to Staff Source’s amended

       complaint for preliminary and permanent injunction and damages and

       requested that Staff Source be ordered to pay her attorney fees.

[16]   On July 11, 2018, the court entered an agreed scheduling order which set a

       hearing on Staff Source’s claims for injunctive relief for July 23, 2018. On July

       16, 2018, Staff Source filed an Injunction Hearing Brief. That same day, Milan,

       Slobodan, the Resolve Group, LLC, and Resolve HR, LLC, filed a Pre-Hearing

       Brief Respecting Plaintiff’s Requests for Injunctive Relief.

[17]   On July 23, 2018, the court held a hearing. Wallace indicated she had twenty-

       five years of experience in the staffing business before becoming an independent

       contractor with Staff Source in 2005, she began a partial salaried employment

       position with Staff Source in June 2006 that involved managing employees, she

       returned to being an independent contractor, and she did not receive additional

       compensation with respect to entering into the Employment Agreement. She

       stated she began having issues in her contractor arrangement with Staff Source

       in 2016. When asked if she took any property from Staff Source from the time

       she decided she was leaving until the time she left, she answered, “Absolutely

       not.” July 23, 2018 Transcript at 84. When asked about Exhibit EE, a prospect

       list, she stated she obtained the information for the prospect list by phone or by

       research or possibly by the leads that may have been given to her by the

       recruiters. With respect to Exhibit FF, a prospect list, she ensured she had not

       received a commission for any of the prospects listed before sending the

       prospect email. She testified that when she began working with Resolve HR,

       Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020       Page 10 of 29
       she, Milan, and Dan 4 worked together to ensure she was not “going after actual

       clients that [she] worked with Staff Source” as a matter of professional courtesy.

       Id. at 86.

[18]   The court admitted her non-employee compensation 1099 forms for years 2014

       through 2017. Wallace testified that she never received a W-2 as an employee

       at any point from 2014 through 2017. With respect to the June 19, 2007

       Employment Agreement, Wallace testified that she did not become an

       employee following the agreement, she never received an Exhibit A referenced

       in the agreement, she was not an employee in 2017, 2016, 2015, or 2014, and

       had not been an employee since 2006.

[19]   At the end of the hearing, Staff Source’s counsel stated that Staff Source agreed

       to dismiss Count VII with prejudice and intended to proceed to a jury trial on

       the remaining counts. That same day, the court granted the dismissal of Count

       VII of Staff Source’s complaint with prejudice.

[20]   On July 30, 2018, the court entered a case management order providing that all

       discovery be completed by January 8, 2019, all dispositive motions be filed by

       February 8, 2019, and scheduling a jury trial for May 20, 2019 as the primary

       date and April 8, 2019 as the secondary date. 5

       4
           On appeal, Staff Source refers to Slobodan as Dan.
       5
        The court’s order states: “This matter is set for JURY trial as follows: 2nd – APRIL 8, 2019; PRIMARY –
       MAY 20, 2019 at 8:30 a.m.” Appellant’s Appendix Volume III at 48.

       Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020                           Page 11 of 29
[21]   In February 2019, Staff Source’s counsel emailed Defendants’ counsel a

       proposed stipulation and order of dismissal. Defendants’ counsel returned the

       stipulation after deleting a sentence that stated each party would bear their own

       attorney fees.

[22]   On March 4, 2019, Staff Source filed a “Trial Rule 41(A) Stipulation to

       Voluntary Dismissal of Plaintiffs’ Claims, With Prejudice” asserting that all

       parties “stipulate and agree to the Plaintiff’s voluntary DISMISSAL of ALL of

       its claims against all Defendants, WITH PREJUDICE.” Appellant’s Appendix

       Volume III at 49 (some capitalization omitted). On March 5, 2019, the court

       entered an order dismissing Staff Source’s claims against Defendants with

       prejudice.

[23]   On May 6, 2019, Defendants filed a joint motion for attorney fees pursuant to

       Ind. Code § 34-52-1-1. On May 8, 2019, Staff Source filed a response. On May

       30, 2019, Defendants filed a reply which was struck as untimely.

[24]   On June 6, 2019, the court held a hearing on the motion for attorney fees. After

       some discussion, the court stated that “[i]t was obvious that Ms. Wallace was

       not an employee.” June 6, 2019 Transcript at 122. The court went on to hear

       testimony.

[25]   On June 10, 2019, the court entered an order granting the motion for attorney

       fees. Specifically, the court stated:

               As a preliminary matter, the Court finds that because all of
               Plaintiff’s claims were dismissed with prejudice, Defendants were

       Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020     Page 12 of 29
        the prevailing parties pursuant to I.C. 34-52-1-1(b). See Northlake
        Nursing & Rehab. Ctr., L.L.C. v. Ind. Dep’t of Health, 34 N.E.3d 268,
        274 (Ind. Ct. App. 2015) (a dismissal with prejudice is a dismissal
        and judgment on the merits); See also Ilagan v. McAbee, 634
N.E.2d 827, 829 (Ind. Ct. App. 1994) (a voluntary dismissal with
        prejudice operates as a common law retraxit, wherein the plaintiff
        openly and voluntarily renounces its suit court; such a dismissal
        is “on the merits”, is conclusive of the rights of the parties; and
        operates as res judicata to all issues that could have been litigated);
        See also D.S.I. v. Natare Corp., 742 N.E.2d 15[] (Ind. Ct. App.
        2000) (A party may be construed as prevailing for purposes of
        I.C. 34-52-1-1(b), under an agreed entry or stipulation, so long as
        it resolved the dispute generally in the favor of the one requesting
        attorney fees and altered the litigants’ legal relationship in a way
        favorable to the requesting party)[, reh’g denied, trans. denied].

        This Court further finds that Defendants’ Joint Motion was
        timely made, as a claim for attorney fees under I.C. 34-52-1-1
        does not accrue until the party “prevails”, and Indiana Courts
        have consistently held that the “standard procedure” for seeking
        attorney fees is to petition the court after the case is resolved on
        its merits. Storch v. Provision Living, LLC, 47 N.E.3d 1270, 1275
        (Ind. Ct. App. 2015[]) Furthermore, the Supreme Court has held
        that there is no strict time limit for filing a request for fees after
        judgment, although it is “in some sense an equitable petition, and
        it might be that an extremely tardy request should fall on deaf
        ears due to lack of notice or staleness.” R.L. Turner Corp. v. Town
        of Brownsburg, 963 N.E.2d 453 (Ind. 2012). Notably, Plaintiff has
        offered no explanation of any prejudice incurred by Defendants’
        filing the Joint Motion 60 days after Dismissal opposed to say 45
        days after Dismissal.

        Plaintiff suggests that perhaps it would not have dismissed its
        case at all had it realized Defendants intended to seek attorney
        fees following dismissal. However, Defendants’ response to such
        suggestion is well-taken. Plaintiff sought to dismiss all of its
        claims on the eve of the jury trial setting, with prejudice.

Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020          Page 13 of 29
        Assuming that the claims were groundless and/or frivolous,
        which is required for an award of attorney fees, should the
        Defendants have refused the offer and demanded that the jury
        trial over such claims be had? Here, the Defendants were in a
        position to mitigate the damages caused by a purported
        groundless and/or frivolous lawsuit by stipulating to the
        dismissal with prejudice of all claims, while refusing to agree that
        the parties would pay their own attorney fees. It is undisputed
        that Plaintiff originally requested the stipulation provide that the
        parties would pay their own attorney fees, and that Defendants
        refused to agree to that provision, and it was removed.
        Furthermore, there were no settlement agreements or releases
        requested or negotiated prior to dismissal. Moreover, the
        suggestion that Plaintiff was prejudiced because it may have
        persisted with its purportedly groundless and/or frivolous claims
        to trial is equally unavailing. Accordingly, Joint Motion was
        timely and properly made.

             Defendants’ Entitlement to Attorney Fees Based Upon a
                     Groundless and Frivolous Complaint

        Defendants presented evidence and testimony to support its
        claim for attorney fees. By stipulation of the parties, certain
        exhibits from the Injunction Hearing were again admitted into
        evidence on Defendants’ Joint Motion. The testimony, as well as
        documentary evidence established the following facts:

                                               *****

        15. Accordingly, all of Plaintiff[’]s claims based upon the
        purported breach of the Employment were groundless as “no
        facts exist which support the legal claim relied on and presented
        by the losing party”, Plaintiff. See Kahn v. Cundiff, 533 N.E.2d
164, 170 (Ind. Ct. App. 1989), summarily aff’d by 543 N.E.2d 627
        (Ind. 1989).

        16. Furthermore, Plaintiff attempted to breath[e] life into its
        groundless claims by making material misrepresentations of fact

Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020        Page 14 of 29
        and fabricating an exhibit to the Complaint. Although the
        “Working Agreement” was admittingly signed by Wallace in
        2017 after an audit, Plaintiff admittingly backdated the document
        ten years earlier to June of 2007, for the sole purpose of claiming
        that the Employment Agreement and the independent contractor
        “Working Agreement” were part of the same contract. Plaintiff’s
        counsel continued to argue the same at the Injunction Hearing
        and even at the hearing on Defendants’ Joint Motion.
        Accordingly, Plaintiff[’]s Complaint was not only groundless, but
        also fraudulent.

        17. Moreover, Plaintiff’s claims were frivolous as it appears that
        they were made “primarily for the purpose of harassing or
        maliciously injuring” Wallace, as follows:

                 a. Plaintiff is in the staffing business, and despite their
                 attempts to muddy the same, its principals were well-
                 aware of the difference between an employment and
                 independent contractor relationship. In fact, their industry
                 is based upon that difference.

                 b. Prior to her resignation, the principals of Plaintiff
                 readily acknowledged Wallace status as independent
                 contractor.

                 c. Several [m]onths prior to filing its lawsuit, Wallace
                 made clear to Plaintiff’s principals that the Employment
                 Contract was “null and void” because she was an
                 independent contractor, however, she would avoid
                 personally “going after” Plaintiff’s customers as a
                 courtesy.

                 d. Despite the same, and even after acknowledging his
                 understanding that Wallace was an independent
                 contractor, Mirko Marich threatened “severe financial
                 consequences” if she continued to do business with his
                 former business partners.

Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020          Page 15 of 29
                 e. Plaintiff filed a seven-count Complaint against
                 defendants on April 12, 2018, and thereafter, sent
                 defendants a “Cease and Desist” letter, essentially
                 demanding that Wallace immediately be removed from
                 her position with Resolve Group. However, the “Cease
                 and Desist Letter” also conspicuously includes a footnote
                 stating “We understand that Ms. Wallace will attempt to
                 claim that the Agreement is unenforceable because she is
                 referred to as an [‘]employee[’] in the Agreement,
                 however, Ms. Wallace signed the Agreement and agreed
                 to its terms”.

                 f. In response to the “Cease and Desist Letter”, counsel for
                 Defendants advised counsel for Plaintiff, in writing, that
                 all defendants disputed the enforceability of the terms of
                 the Employment Agreement, as Wallace had been
                 removed from her employment position with Plaintiff
                 prior to 2008, and remained an independent contractor for
                 Plaintiff for ten years prior to moving on with her career.

                 g. During the Injunction Hearing, this Court made clear
                 that Employment Agreement was conditioned upon an
                 employment relationship, and therefore the Covenants
                 could not extend more than one year following the end of
                 the employment relationship between Plaintiff and
                 Wallace.

                 h. Accordingly, Plaintiff dismissed the claim for injunctive
                 relief but refused the request of Wallace’s attorney to
                 dismiss the claim for breach of contract, and the case was
                 set for a jury trial.

                 i. On February 19, 2019, less than two months prior to the
                 trial setting, Plaintiff’s counsel sent an email finally
                 offering to dismiss all claims with prejudice.

                 j. Only after Defendants filed their Joint Motion did
                 Plaintiff finally identify what it claimed to be “protected

Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020             Page 16 of 29
                 trade secrets” that were purportedly misappropriated by
                 Wallace. At [the] hearing, the evidence showed that there
                 was no factual basis for the misappropriation of trade
                 secret claim, either, The “Prospect List” was nothing more
                 than a list of potential customers, compiled and prepared
                 by Wallace as an independent contractor of Plaintiff on
                 her home computer and thereafter emailed to Plaintiff in
                 order to invite those “prospects” to an open house. Not
                 only was there no basis to the claim that this was a
                 “protected trade secret”, the document was
                 unquestionably Wallace’s own work product for which she
                 was never paid by Plaintiff.

        18. In the interim, all Defendants were forced to retain counsel to
        defend against a groundless seven-count, seventeen page
        Complaint; to cooperate with intrusive discovery that included
        turning over and forensically copying the contents of Wallace’s
        private laptop and cell phone; and to appear for hearing and
        defend against Plaintiff[’]s groundless claims for injunctive relief.

        19. Furthermore, this Court has been compelled to waste
        valuable judicial time and resources dealing with Plaintiff[’]s
        claims, which were clearly groundless and frivolous at their
        filing.

        20. While this Court is hesitant to award attorney fees pursuant
        to 34-52-1-1(b), this is precisely the type of situation that calls for
        an award of attorney fees, as Defendants were forced to defend
        against a seven-count Complaint that was entirely groundless,
        frivolous and even fraudulent at its inception. See Charles Downey
        Family Ltd. P’ship v. S & V Liquor, Inc., 880 N.E.2d 322, 328-329
        (Ind. Ct. App. 2008)[, trans. denied].

                               Conclusions of Law and Order

        After weighing the evidence presented to this Court at hearing,
        Defendants have established their burden of proof that
        Plaintiff[’]s Complaint and all of its corresponding claims were

Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020           Page 17 of 29
               both groundless and frivolous, and this Court hereby Orders that
               Defendants shall be entitled to an award of reasonable attorney
               fees. Defendants shall have up to and including July 1, 2019 to
               provide this Court with a factual basis for the amount of attorney
               fees and costs claimed.

       Appellant’s Appendix Volume III at 158-165 (some bold and underlining

       omitted).

[26]   On August 21, 2019, the court held a hearing. That same day, the court entered

       an order finding that Milan, Slobodan, the Resolve Group, LLC, and Resolve

       HR, LLC were entitled to an award of attorney fees and costs in the amount of

       $51,135, and Wallace was entitled to an award of attorney fees and costs in the

       amount of $25,128.38.

                                                     Discussion

                                                           I.

[27]   The first issue is whether the trial court abused its discretion in ordering Staff

       Source to pay Defendants’ attorney fees. Ind. Code § 34-52-1-1 provides:

               (a) In all civil actions, the party recovering judgment shall
               recover costs, except in those cases in which a different provision
               is made by law.

               (b) In any civil action, the court may award attorney’s fees as part
               of the cost to the prevailing party, if the court finds that either
               party:

                        (1) brought the action or defense on a claim or defense that
                        is frivolous, unreasonable, or groundless;

       Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020         Page 18 of 29
                          (2) continued to litigate the action or defense after the
                          party’s claim or defense clearly became frivolous,
                          unreasonable, or groundless; or

                          (3) litigated the action in bad faith.

                  (c) The award of fees under subsection (b) does not prevent a
                  prevailing party from bringing an action against another party for
                  abuse of process arising in any part on the same facts. However,
                  the prevailing party may not recover the same attorney’s fees
                  twice.

[28]   In discussing a prior version of the statute, the Indiana Supreme Court stated

       that the statute “strikes a balance between respect for an attorney’s duty of

       zealous advocacy and ‘the important policy of discouraging unnecessary and

       unwarranted litigation.’” 6 Mitchell v. Mitchell, 695 N.E.2d 920, 924 (Ind. 1998)

       (quoting Kahn v. Cundiff, 533 N.E.2d 164, 170 (Ind. Ct. App. 1989), adopted by

       543 N.E.2d 627, 629 (Ind. 1989)). “Subsections (b)(1) and (b)(2) of the statute

       focus on the legal and factual basis of the claim or defense and the arguments

       supporting the claim or defense.” Id. “In contrast, subsection (b)(3) – ‘litigated

       the action in bad faith’ – by its terms requires scrutiny of the motive or purpose

       of the non-prevailing party.” Id. The Indiana Supreme Court held:

       6
           The Court was examining Ind. Code § 34-1-32-1, which similarly provided:

                  (b)     In any civil action, the court may award attorney’s fees as part of the cost to the
                          prevailing party, if it finds that either party:

                          (1)      brought the action or defense on a claim or defense that is frivolous,
                                   unreasonable, or groundless;
                          (2)      continued to litigate the action or defense after the party’s claim or
                                   defense clearly became frivolous, unreasonable, or groundless; or
                          (3)      litigated the action in bad faith.

       Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020                                   Page 19 of 29
               More precisely,

                        bad faith is not simply bad judgment or negligence.
                        Rather, it implies the conscious doing of a wrong because
                        of dishonest purpose or moral obliquity. It is different
                        from the negative idea of negligence in that it contemplates
                        a state of mind affirmatively operating with furtive design
                        or ill will.

       Id. (quoting Watson v. Thibodeau, 559 N.E.2d 1205, 1211 (Ind. Ct. App. 1990)

       (quoting Young v. Williamson, 497 N.E.2d 612, 617 (Ind. Ct. App. 1986), reh’g

       denied, trans. denied)). The Court also explained:

               This Court has observed in related contexts that the legal process
               “must invite, not inhibit, the presentation of new and creative
               argument” to enable the law to grow and evolve. Orr v. Turco
               Mfg. Co., 512 N.E.2d 151, 153 (Ind. 1987) (setting forth standard
               for punitive sanctions for frivolous appellate claims). To be sure,
               application of the statutory authorization for recovery of
               attorney’s fees . . . must leave breathing room for zealous
               advocacy and access to the courts to vindicate rights. Kahn, 533
N.E.2d at 170. Courts must be sensitive to these considerations
               and view claims of “frivolous, unreasonable, or groundless”
               claims or defenses with suspicion.

       Id. at 925.

[29]   Ind. Code § 34-52-1-1(b) “places an obligation on litigants to investigate the

       legal and factual basis of the claim when filing and to continuously evaluate the

       merits of claims and defenses asserted throughout litigation.” Landmark Legacy,

       LP v. Runkle, 81 N.E.3d 1107, 1116-1117 (Ind. Ct. App. 2017) (quoting Gen.

       Collections, Inc. v. Decker, 545 N.E.2d 18, 20 (Ind. Ct. App. 1989)). “A claim is

       Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020         Page 20 of 29
       ‘frivolous’ if it is made primarily to harass or maliciously injure another; if

       counsel is unable to make a good faith and rational argument on the merits of

       the action; or if counsel is unable to support the action by a good faith and

       rational argument for extension, modification, or reversal of existing law.”

       Kitchell v. Franklin, 26 N.E.3d 1050, 1057 (Ind. Ct. App. 2015) (citing Wagler v.

       W. Boggs Sewer Dist., Inc., 980 N.E.2d 363, 383 (Ind. Ct. App. 2012), reh’g denied,

       trans. denied, cert. denied, 571 U.S. 1131, 134 S. Ct. 952 (2014)), trans. denied. “A

       claim is ‘unreasonable’ if, based on the totality of the circumstances, including

       the law and facts known at the time, no reasonable attorney would consider the

       claim justified or worthy of litigation.” Id. “A claim is groundless if no facts

       exist which support the legal claim relied on and presented by the losing party.”

       Purcell v. Old Nat. Bank, 972 N.E.2d 835, 843 (Ind. 2012). “However, the law is

       settled that a claim is neither groundless nor frivolous merely because a party

       loses on the merits.” Kitchell, 26 N.E.3d at 1057. “Bad faith is demonstrated

       where the party presenting the claim is affirmatively operating with furtive

       design or ill will.” Id.

[30]   “The trial court’s decision to award attorney’s fees under § 34-52-1-1 is subject

       to a multi-level review: the trial court’s findings of facts are reviewed under the

       clearly erroneous standard and legal conclusions regarding whether the

       litigant’s claim was frivolous, unreasonable, or groundless are reviewed de

       novo.” Purcell, 972 N.E.2d at 843 (citing R.L. Turner Corp. v. Town of

       Brownsburg, 963 N.E.2d 453, 457 (Ind. 2012)). “[T]he trial court’s decision to

       award attorney’s fees and any amount thereof is reviewed for an abuse of

       Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020         Page 21 of 29
       discretion.” Id. “A trial court abuses its discretion if its decision clearly

       contravenes the logic and effect of the facts and circumstances or if the trial

       court has misinterpreted the law.” Id. “Covenants not to compete are in

       restraint of trade and are not favored by the law.” Harvest Ins. Agency, Inc. v.

       Inter-Ocean Ins. Co., 492 N.E.2d 686, 688 (Ind. 1986). “They are strictly

       construed against the covenantee and enforced only if reasonable.” Id.

[31]   To the extent Staff Source argues that the court adopted Defendants’ proposed

       findings and conclusions wholesale, we observe that “[w]hen a trial court

       accepts verbatim a party’s proposed findings of fact and conclusions thereon,

       that practice ‘weakens our confidence as an appellate court that the findings are

       the result of considered judgment by the trial court.’” Cty. of Lake v. Pahl, 28
N.E.3d 1092, 1100 (Ind. Ct. App. 2015) (quoting In re Marriage of Nickels, 834
N.E.2d 1091, 1096 (Ind. Ct. App. 2005) (quoting Cook v. Whitsell-Sherman, 796
N.E.2d 271, 273 n.1 (Ind. 2003))), reh’g denied, trans. denied. It is not

       uncommon or per se improper for a trial court to enter findings that are

       verbatim reproductions of submissions by the prevailing party. Id. Although

       we by no means encourage the wholesale adoption of a party’s proposed

       findings and conclusions, the critical inquiry is whether such findings, as

       adopted by the court, are clearly erroneous. Id. We also note, while Staff

       Source asserts that the trial court entered its August 21, 2019 order verbatim

       from Defendants’ counsel, the two documents are not identical. The proposed

       order in the Appellant’s Appendix differs from the court’s order in some

       respects including that the proposed order requested fees of $52,560 and

       Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020          Page 22 of 29
       $27,103.38 and the court’s order awarded fees in the amount of $51,135 and

       $25,128.38. See Appellant’s Appendix Volume III at 204-208.

[32]   Staff Source argues that: (A) Defendants were not prevailing parties; (B) it was

       unfairly prejudiced by Defendants’ motion for attorney fees filed sixty-two days

       after dismissal; (C) its claims were not frivolous, unreasonable, or groundless;

       and (D) Defendants presented insufficient evidence regarding their fees. 7

       A. Prevailing Parties

[33]   In D.S.I. v. Natare Corp., 742 N.E.2d 15, 24 (Ind. Ct. App. 2000), reh’g denied,

       trans. denied, the Court held that “a party is a ‘prevailing party’ within the

       meaning of IC § 34-52-1-1, if that party successfully prosecutes its claim or

       asserts its defense,” “the requisite successful litigation must culminate in a

       judgment,” and “the judgment . . . may take the form of an agreed entry or

       stipulation, so long as it resolved the dispute generally in the favor of the one

       requesting attorney fees and altered the litigants’ legal relationship in a way

       favorable to the requesting party.”

[34]   The record reveals the parties’ attorneys filed a stipulation to dismiss Staff

       Source’s claims with prejudice, and the court entered an order approving the

       dismissal and dismissing the claims with prejudice. “We have held that ‘a

       7
         Staff Source argues that the trial court improperly considered caselaw cited in Defendants’ May 30, 2019
       Reply that was struck by the court for being untimely. Staff Source cites McGill v. Ling, 801 N.E.2d 678, 683
       (Ind. Ct. App. 2004), reh’g denied, trans. denied, which stated that “practitioners of the law know the effect of a
       trial court’s decision to grant [a motion to strike]: any materials stricken, whether arguments or evidence, will
       not be considered by either the trial court or this court on appeal.” We cannot say McGill precludes a trial
       court from considering caselaw merely because it was included in a brief which was struck by the court.

       Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020                                   Page 23 of 29
       dismissal with prejudice constitutes a dismissal on the merits and is therefore

       conclusive of the rights of the parties and res judicata as to the questions that

       might have been litigated.’” Northlake Nursing & Rehab. Ctr., L.L.C. v. State Dep’t

       of Health, 34 N.E.3d 268, 274 (Ind. Ct. App. 2015) (quoting Baker & Daniels, LLP

       v. Coachmen Indus., Inc., 924 N.E.2d 130, 135 n.5 (Ind. Ct. App. 2010), trans.

       denied; and citing Ilagan v. McAbee, 634 N.E.2d 827, 829 (Ind. Ct. App. 1994)).

       The dismissal with prejudice in this case was a judgment on the merits and

       resolved the dispute generally in favor of Defendants and altered the litigants’

       legal relationship in a way favorable to Defendants. We conclude under the

       circumstances of this case that Defendants are prevailing parties. 8 See id.

       (“Consequently, the dismissal with prejudice was a judgment rendered on the

       merits.”); Kahn v. Cundiff, 543 N.E.2d 627, 629 (Ind. 1989) (affirming the grant

       of attorney fees under Ind. Code § 34-1-32-1 after the plaintiff moved to dismiss

       the case).

       B.       Prejudice

[35]   Staff Source argues it was unfairly prejudiced by Defendants’ petition for

       attorney fees filed sixty-two days after dismissal because there was not sufficient

       notice by Defendants to seek fees.

       8
         To the extent Staff Source cites Reuille v. E.E. Brandenberger Const., Inc., 888 N.E.2d 770 (Ind. 2008), we note
       that Reuille did not address Ind. Code § 34-52-1-1, but addressed an issue of contract interpretation.

       Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020                                  Page 24 of 29
[36]   “[T]rial courts must use their discretion to prevent unfairness to parties facing

       petitions for fees.” R.L. Turner Corp., 963 N.E.2d at 460. “A request for

       attorneys’ fees almost by definition is not ripe for consideration until after the

       main event reaches an end.” Id. “Entertaining such petitions post-judgment is

       virtually the norm.” Id. “To be sure, a request for fees is in some sense an

       equitable petition, and it might be that an extremely tardy request should fall on

       deaf ears due to lack of notice or staleness.” Id.

[37]   In their May 30, 2018 answer and June 29, 2018 answer to the amended

       complaint, Milan, Slobodan, and the Resolve Group requested that Staff Source

       be liable for paying their attorney fees. In Wallace’s June 11, 2018 answer, she

       requested that Staff Source be liable for paying her attorney fees. In her July 10,

       2018 answer to the amended complaint, Wallace again requested that Staff

       Source be ordered to pay her attorney fees. In Wallace’s June 27, 2018 motion

       for emergency hearing, she asserted “Staff Source’s baseless claims are

       effectively doing what the alleged Employment Agreement cannot do:

       restraining [her] ability to earn a livelihood via frivolous litigation based upon

       an alleged Employment Agreement governing an admittedly non-existent

       employment relationship.” Appellant’s Appendix Volume II at 183. Staff

       Source states Defendants’ counsel returned the stipulation dismissing the case

       and deleted a sentence stating that each party would bear the party’s own

       attorneys’ fees. Under these circumstances, we cannot say Defendants’ petition

       for attorney fees came as a shock to Staff Source. See R.L. Turner Corp., 963

       Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020        Page 25 of 29
N.E.2d at 460 (holding that, in light of the record, “the Town’s renewed

       petition for attorneys’ fees could hardly have come as a shock to Turner”).

       C.      Claims Frivolous, Unreasonable, or Groundless

[38]   Staff Source asserts its claims were not frivolous or groundless. Without

       citation to the record, it asserts there was a factual dispute of whether Wallace

       was an employee when she signed the applicable agreement and whether her

       compensation as an independent contractor was attached to the applicable

       agreement. Defendants argue all of Staff Source’s claims except for Count II,

       violation of the Indiana Uniform Trade Secrets Act, were based upon a

       purported breach of the Employment Agreement.

[39]   Even assuming that the “Employment Agreement” was effective in 2007,

       Paragraph 15 limited the time of the agreement by providing that “during the

       term of this Agreement and for a period of one (1) year immediately following

       the termination of EMPLOYEE’s employment . . . .” Exhibits Volume II at 12.

       Wallace testified that her employment relationship with Staff Source ended

       many years prior to 2018. The record contains 1099 forms for 2014, 2015,

       2016, and 2017, which indicate Staff Source listed her compensation as

       nonemployee. Wallace testified she was exclusively a 1099 independent

       contractor for at least nine tax years prior to leaving Staff Source as an

       independent contractor. She also testified that the Working Agreement she

       signed in 2017 had nothing to do with the Employment Agreement she signed

       in 2007. Mirko testified that he could not find the Working Agreement in Staff

       Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020           Page 26 of 29
       Source’s records and that Wallace asked somebody from Staff Source to sign it

       during her IRS audit, which indicates that the Working Agreement was

       backdated by Staff Source.

[40]   The record and the court’s findings support that the Employment Agreement

       had expired years prior to Wallace’s termination of her relationship with Staff

       Source and that Staff Source backdated the Working Agreement. We conclude

       that Staff Source’s claims regarding breach of the Employment Agreement and

       tortious interference by Milan, Slobodan, and the Resolve Group with Staff

       Source’s contractual relationship and business relationship with Wallace were

       frivolous, unreasonable, or groundless. The trial court did not abuse its

       discretion by ordering Staff Source to pay Defendants’ attorney fees.

       D.      Sufficient Evidence of Fees

[41]   Staff Source argues that Defendants did not submit the required evidence of the

       nature of legal services and reasonableness of the fee. It asserts the Defendants

       provided no third-party objective evidence of the nature of legal services and the

       reasonableness of the fee requested. It also asserts the court erred in awarding

       fees incurred after the March 5, 2019 dismissal.

[42]   In support of their claim for attorney fees, Defendants submitted the Attorney

       Fee Request for Milan, Slobodan, the Resolve Group, LLC, and Resolve HR,

       LLC, which contained the affidavits of two attorneys including the amounts of

       billable time and a description of the work, and the Attorney Fee Request for

       Wallace containing the affidavits of two attorneys and billing sheets. This

       Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020      Page 27 of 29
       evidence was sufficient to support the trial court’s determination of the amount

       of the attorney fees award. We note that the awarded fees are equal to the

       amounts requested in the Attorney Fee Request for Defendants Milan,

       Slobodan, the Resolve Group, LLC, and Resolve HR, LLC, and the Attorney

       Fee Request for Wallace, and do not include the supplemental fees mentioned

       in the supplemental affidavits of Defendants’ counsel. We cannot say the court

       abused its discretion.

                                                          II.

[43]   With respect to Defendants’ request for appellate attorney fees, Ind. Appellate

       Rule 66(E) provides that this Court “may assess damages if an appeal, petition,

       or motion, or response, is frivolous or in bad faith. Damages shall be in the

       Court’s discretion and may include attorneys’ fees.” Our discretion to award

       attorney fees under Ind. Appellate Rule 66(E) is limited to instances when “an

       appeal is permeated with meritlessness, bad faith, frivolity, harassment,

       vexatiousness, or purpose of delay.” Thacker v. Wentzel, 797 N.E.2d 342, 346

       (Ind. Ct. App. 2003). To prevail on a substantive bad faith claim, a party must

       show that the appellant’s contentions and arguments are utterly devoid of all

       plausibility. Id. Procedural bad faith occurs when a party flagrantly disregards

       the form and content requirements of the rules of appellate procedure, omits

       and misstates relevant facts appearing in the record, and files briefs written in a

       manner calculated to require the maximum expenditure of time both by the

       opposing party and the reviewing court. Id. at 346-347. In light of Staff

       Source’s appellate briefs and arguments, we conclude that Defendants are

       Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020       Page 28 of 29
       entitled to appellate attorney fees, and we remand to the trial court to determine

       the proper amount of the attorney fees.

[44]   For the foregoing reasons, we affirm the trial court’s orders, grant Defendants’

       request for appellate attorney fees, and remand for a determination of their

       reasonable appellate attorney fees.

[45]   Affirmed and remanded.

       Baker, J., and Riley, J., concur.

       Court of Appeals of Indiana | Opinion 19A-PL-1569 | March 13, 2020      Page 29 of 29