COA rules dispute over agreement with former Celadon Group must move to Delaware courts

The Court of Appeals of Indiana has reversed a decision against the now-bankrupt Celadon Group, forcing a trucking company that tried to purchase certain assets from the Indianapolis-based business to refile its complaint in the state of Delaware.

TA Dispatch sued four former executives from the Celadon Group, including CEO Paul Svindland, after an agreement to purchase certain commercial interests from Celadon fell apart. The parties entered into their contract in April 2019, and Celadon filed for Chapter 11 bankruptcy in December of that year.

In the complaint filed in March 2021, TA Dispatch claimed the purchase agreement was doomed to fail because the defendants wanted a cash infusion to pay the business’s debt and, therefore, “painted a picture of the Celadon Companies during negotiations that had little basis in reality.”

The plaintiff alleged the former Celadon officials engaged in negligent misrepresentation of several facts relating to the sale of Celadon’s commercial interests to TA Dispatch; statutory suppression of various relevant material facts; and tortious interference with a contractual relationship.

However, the executives — Svindland, CEO from July 2017 to January 2020; Kathryn Wouters, vice president of finance and treasurer; Chase Welsh, vice president of risk management, general counsel and corporate secretary; and Jon Russell, president and chief operating officer until September 2019 — pushed back using the forum-selection clause contained in the purchase agreement. Under that provision, the parties had agreed that if any legal dispute arose over the purchase contract, the case would be handled by either a federal or state court in the state of Delaware.

The executives filed a motion to have the matter transferred to the Delaware state court system or, in the alternative, to dismiss the complaint.

In a one-page order issued in January, Hamilton Superior Judge Jonathan Brown denied the defendants’ motion.

Celadon officials then turned to the Court of Appeals, which reversed and instructed the trial court to grant the motion without prejudice so that TA Dispatch has the opportunity to refile the case in Delaware.

Before the Indiana appellate panel, TA Dispatch argued the forum-selection clause did not apply. Namely, the company asserted, the underlying lawsuit raises tort claims that are outside the reach of the purchase agreement.

The Court of Appeals pointed to precedent from other courts, including American Patriot Insurance Agency, Inc. v. Mutual Risk Management, Ltd., 364 F.3d 884, 888 (7^th Cir. 2004), which rejected similar arguments in other disputes over forum-selection clauses.

Specifically, the appellate court noted that even though TA Dispatch and Celadon could have included limits on the types of claims covered by their forum-selection clause, they did not. In fact, Article 5 of the purchase agreement encompasses all claims and not just contact claims.

“TA Dispatch’s claims, which alleged inaccurate representations made during the negotiation of the Purchase Agreement that were allegedly relied on by TA Dispatch in agreeing to the Purchase Agreement, undoubtedly relate to the subject matter of the Purchase Agreement and the sale of the Celadon property,” Chief Judge Cale Bradford wrote for the court. “TA Dispatch’s claims were therefore brought pursuant to the Purchase Agreement and are covered by the forum-selection clause.”

The case is Paul Svindland, Kathryn Wouters, Chase Welsh, and Jon Russell v. TA Dispatch, LLC, 22A-CT-774.

This is the second court victory for former leaders of the Celadon Group. In August, federal fraud charges against two executives — Eric Meek and Bobby Peavler — were dismissed in the U.S. District Court for the Southern District of Indiana.