Former employers lose again in breach-of-confidentiality appeal, but attorney fees partially overturned

A breach-of-confidentiality dispute between concrete-industry employees and their former employer returned to the Court of Appeals of Indiana for a second time but largely yielded the same result on Tuesday. However, one of the companies did score a partial win as the COA overturned an award of attorney fees.

The parties to the dispute included County Materials Corp., which produces precast concrete structures, and Central Processing Corporation, which is a “management services corporation” that provides workers for several businesses, including County.

In December 2014, County purchased the assets of Independent Concrete Pipe Company, which had owned plants in Indianapolis and Maxwell.

Ryan Gookins and Richard Rectenwal were both longtime ICPC employees. Following the purchase, ICPC terminated its employees, but Central hired several of them.

Gookins, Rectenwal and Central’s other new employees appeared at the Maxwell plant shortly after the purchase for an employee onboarding process shortly, which included the execution of confidentiality agreements with Central. But both Gookins and Rectenwal left their jobs soon after the company changed hands.

Gookins then approached Bill Zausch, a co-owner of Utility Pipe Sales of Indiana, about entering the precast concrete structures industry. In the summer of 2015, Zausch joined Gookins and Rectenwal on a site visit to the Horn Precast, a company that was in bankruptcy. Zausch and others later purchased Horn Precast’s assets.

In January 2016, Zausch, Gookins and Rectenwal, along with others, incorporated Indiana Precast. Zausch became Precast’s president while Gookins became the vice president and Rectenwal became general manager.

Subsequently, managers at County and Central — identified by the COA as the “purchasers” — noticed that several key employees had quit working at the Maxwell facility and were working at Precast. County’s productivity suffered during this time, and the purchasers attributed this slowdown in part to the loss of the employees and allegations that Precast had poached customers.

The purchasers sued Gookins, Rectenwal and Precast in 2017, raising numerous claims for breach and tortious interference. Following an October 2018 trial, the Hancock Superior Court granted the Precast parties’ motion for judgment on the evidence for all Central’s claims and on County’s punitive claims, and a jury ruled for the Precast parties on County’s remaining claims. An appeal ensued.

Meanwhile, each of the Precast parties had filed separate motions for attorney fees, claiming that all but one of the purchasers’ claims “were frivolous, groundless, unreasonable and litigated in bad faith.” The court granted the Precast parties’ requests in three separate orders, but those orders were subsequently vacated due to the pending appeal.

The COA dismissed the pending appeal in May 2019, and the Precast parties moved for the trial court to reinstate the prior fee orders.

The trial court granted the Precast parties’ request, then held an evidentiary hearing and issued a final judgment in favor of the Precast parties, determining the purchasers were jointly and severally liable for $655,642.66 in attorney fees.

The purchasers filed a combined motion to correct error under Indiana Trial Rule 59 and a motion for relief from judgment under Trial Rule 60(B)(3), basing their requests in part on 100 pages of emails and attachments sent and received by Gookins, Rectenwal, other Precast personnel and outside parties. The purchasers later supplemented their motion, adding a claim for relief under Trial Rule 60(B)(2).

The trial court issued an order denying the purchasers’ motion to correct error and motion for relief from judgment in September 2020. In an August 2021 opinion, the COA affirmed for Precast.

Then, in a second opinion published Tuesday, the COA addressed the issues of the attorney fees and the entry of final judgment in favor of the Precast parties.

Addressing the attorney fees first, the appellate court partially reversed, overturning the award against County — but not Central.

“Despite the necessity of proving damages, Central conceded during trial in response to questions from the trial court that, as far as Central’s claims were concerned, ‘financial damages would not be’ at issue,” Senior Judge Ezra Frielander wrote for the COA. “… By contrast, County did not submit any judicial admissions, and we reach a different result on the question of whether the trial court erred by not reversing its prior orders to County to pay the Precast parties’ legal fees.

“… (C)ontrary to the trial court’s findings that County presented absolutely no evidence to support its claims, County did present some evidence in support of its claims, in the form of nine witnesses and dozens of exhibits,” Friedlander continued. “Unlike Central, County did present evidence that the Precast parties’ alleged misconduct had caused County to suffer financial harm.”

But the appellate court reached a different conclusion as to the denial of the purchasers’ motion to set aside final judgment.

“We affirm the trial court’s refusal to set aside its final judgment as to Central because Central admitted during trial that it had suffered no financial harm as a result of the Precast parties’ actions. In the absence of any damages, all of Central’s claims presented at trial must fail,” Friedlander wroted. Nothing in the Purchasers’ joint motion to correct error and motion for relief from judgment contradicts or retracts Central’s judicial admission at trial. As a result, there were no grounds for the trial court to vacate its directed judgment against Central and in favor of the Precast parties.

Likewise, “… County failed to show that it was entitled to relief under Indiana Trial Rule 59 or Indiana Trial Rule 60(B)(2) for newly discovered evidence,” Friedlander continued. “Further, County did not demonstrate that the Precast parties’ conduct rose to the level of fraud or other misconduct under Indiana Trial Rule 60(B)(3).

“We need not address whether County had a meritorious claim or defense for purposes of Trial Rule 60(B)(2) or (3). The trial court did not abuse its discretion in denying County’s request … to set aside the jury’s verdict and schedule a new trial.”

The case is County Materials Corp. and Central Processing Corp. v. Indiana Precast, Inc., Ryan S. Gookins, and Richard A. Rectenwal, III, 20A-PL-1683.