Int'l Bus. Machs. Corp. v. State on behalf of Indiana Family & Social Services Administration

138 N.E.3d 255

INTERNATIONAL BUSINESS MACHINES CORPORATION, Appellant/Cross-Appellee (Defendant/Plaintiff below),

v.STATE of Indiana, acting ON BEHALF OF the INDIANA FAMILY & SOCIAL SERVICES ADMINISTRATION, Appellee/Cross-Appellant (Plaintiff/Defendant below).

Supreme Court Case No. 19S-PL-19

Supreme Court of Indiana.

Argued: February 21, 2019

Filed: June 26, 2019

Modified on Rehearing: October 10, 2019

On Petition to Transfer from the Indiana Court of Appeals, No. 49A02-1709-PL-2006

David, Justice.

This case comes before our Court for the second time and arises out of a contract entered into between the State of Indiana, acting on behalf of the Family and Social Services Administration, and International Business Machines, Corp. to modernize and improve Indiana's welfare eligibility system. We previously determined that IBM materially breached the contract and remanded the matter to the trial court to determine damages and appropriate offsets. After the submission of evidence and a full-day hearing, the trial court issued detailed findings and conclusions. It determined that damages to the State resulting from the breach totaled $128 million and that IBM was entitled to offsets in the amount of $49,510,795, resulting in a final judgment of $78,178,109 to the State.

Both parties appealed, raising various issues. Today we address one of the issues raised: whether IBM is entitled to post-judgment interest on its $49.5 million damages award running from the date of the original judgment in 2012 or running from the judgment on remand. Finding that the original 2012 judgment was not "final," we hold that the post-judgment interest due to IBM runs from the judgment on remand. We summarily affirm the Court of Appeals on all other issues and affirm the trial court on all issues.

Facts and Procedural History

As this Court explained in State v. International Business Machines Corp. , 51 N.E.3d 150, 152 (Ind. 2016) ("IBM I"):

This case involves a $1.3 billion Master Services Agreement ("MSA") entered into between the State of Indiana, acting on behalf of the Family and Social Services Administration ("State") and International Business Machines, Corp. ("IBM") to modernize and improve Indiana's welfare eligibility system. Although the MSA was supposed to last ten years, the State terminated it less than three years in, citing performance issues on the part of IBM. Both parties sued each other for breach of contract.

After a six-week bench trial, the Marion Superior Court found that the State failed to prove that IBM's breach of the MSA was material and awarded IBM damages for assignment and equipment fees. It also awarded termination payments and pre-judgment interest. Both parties appealed. Ultimately, this Court reversed, in part, holding that IBM materially breached the MSA. We reversed IBM's termination payment and pre-judgment interest awards, but affirmed its assignment and equipment fees in the amount of $49,510,795. We remanded to the trial court with the following instructions:

[W]e hold that IBM did materially breach the MSA through its collective breaches in light of the MSA as [a] whole. We therefore reverse the trial court's finding that IBM did not materially breach the MSA. We summarily affirm the Court of Appeals on all other issues including: affirming the trial court's award of $40 million in assignment fees and $9,510,795 in equipment fees to IBM, affirming the trial court's denial of deferred fees to IBM, and reversing the trial court's award of $2,570,621 in early termination close out payments and $10,632,333 in prejudgment interest to IBM. We also remand the case to the trial court to determine the amount of fees IBM is entitled to for Change Orders 119 and 133, and for calculation of the parties' damages consistent with this opinion, including any appropriate offsets to the State as a result of IBM's material breach of the MSA.

Id. at 168-169.

On remand, the trial court held a full-day hearing and considered both pre-hearing briefs and post-hearing submissions. It issued an 83-page order awarding the State $128 million in damages and credited IBM $49,510,795 for assignment and equipment fees this Court upheld plus the amount of fees for the change orders (an amount agreed to via stipulation of the parties). The trial court denied IBM's request for post-judgment interest on the $49.5 million-dollar award for assignment and equipment fees. Thus, IBM was ordered to pay the State $78.2 million, after offsets.

Both parties again appealed. IBM argued: 1) it is entitled to post-judgment interest on the fees upheld by this Court in IBM I; 2) the trial court erred by setting aside the factual findings of the original trial court; and 3) the trial court erred by holding IBM responsible for the costs of implementing a different and more expensive welfare system than the one contemplated by the MSA. For its part, the State argued it was entitled to additional damages resulting from the breach.

The Court of Appeals affirmed in part, reversed in part, and remanded with instructions. Int'l Bus. Machines Corp. v. State on behalf of Indiana Family & Soc. Servs. Admin. , 112 N.E.3d 1088 (Ind. Ct. App. 2018) ("IBM II"). It rejected both of the State's requests for additional damages and concluded that IBM was entitled to post-judgment interest on the $49.5 million damages award that survived IBM I.

Both parties sought transfer. The Indianapolis Bar Association's Appellate Practice Section and the Defense Trial Counsel of Indiana (DTCI) have filed amici briefs in support of transfer on the post-judgment interest issue. We granted transfer thereby vacating the Court of Appeals opinion. Ind. Appellate Rule 58(A). We write only to address the post-judgment interest issue. We summarily affirm the other portions of the Court of Appeals opinion and affirm the trial court on all issues.

Standard of Review

Here, the trial court has made special findings pursuant to Indiana Trial Rule 52(A). As such, a reviewing court may affirm the judgment on any legal theory supported by the findings.

G & N Aircraft, Inc. v. Boehm , 743 N.E.2d 227, 234 (Ind. 2001) (citations omitted). Further, [w]hen the specific issue on review relates to the award of damages, a damage award should not be reversed if it is within the scope of the evidence before the trial court." Id. (quoting Dunn v. Cadiente , 516 N.E.2d 52, 54 (Ind. 1987) ). However, the right to post-judgment interest arises as a matter of statutory law. Tincher v. Davidson , 784 N.E.2d 551, 553 (Ind. Ct. App. 2003). The meaning of a statute is a question of law which we review de novo . ESPN, Inc. v. Univ. of Notre Dame Police Dep't , 62 N.E.3d 1192, 1195 (Ind. 2016).

Discussion and Decision

IBM argues that it is entitled to post-judgment interest on its $49.5 million award as entered by the trial court and affirmed by this Court in IBM I. Our Court of Appeals agreed. It applied Beam v. Wausau Ins. Co. , 765 N.E.2d 524 (Ind. 2002) and found that the "one constant" in the case was the award of assignment and equipment fees to IBM. Int'l Bus. Machines Corp. , 112 N.E.3d at 1103. While it is true that this award has remained unchanged from the original judgment until present, we do not find Beam to be applicable to these facts and circumstances.

In Beam this Court looked at Indiana Code section 24-4.6-1-101 and addressed whether post-judgment interest on a modified award runs on the amount after modification by the reviewing court or the original amount. Beam, 765 N.E.2d at 534. Indiana Code section 24-4.6-1-101 provides that post-judgment interest accrues back to the "date of the return of the verdict or finding of the court until satisfaction...." The operative language in Beam is that when:

a judgment is reversed on appeal and remanded to the trial court for the entry of a new judgment, post-judgment interest accrues from the date the trial court enters the new judgment.

* * *

[But] where a money judgment has been modified on appeal and the only action necessary in the trial court is compliance with the mandate of the appellate court, interest on the judgment as modified runs from the date of the original judgment.

Beam , 765 N.E.2d at 534-535. (citation omitted).

We found that because we modified the amount of damages but did not reverse judgment for plaintiff, post-judgment interest ran from the date of the original verdict on the modified amount. Id. at 534.

But here, it is not Indiana Code section 24-4.6-1-101¹ that governs, but Indiana Code section 34-13-1-6 because we are dealing with a sum of money due from the State. It provides:

Whenever, by final decree or judgment, a sum of money is adjudged to be due any person from the state, an execution shall not issue but the judgment shall draw interest at an annual rate of six percent (6%) from the date of the adjournment of the next ensuing session of the general assembly until an appropriation is made by law for the payment and the judgment is paid.

The relevant inquiry in Beam was whether the judgment was only modified or reversed entirely, and pursuant to the statute, post-judgment interest was due from the "date of the return of the verdict or finding of the court."

Ind. Code § 24-4.6-1-101. Here, the relevant inquiry pursuant to Indiana Code section 34-13-1-6 is whether there was a final decree or judgment. A final judgment "disposes of all issues as to all parties thereby ending the particular case." Georgos v. Jackson , 790 N.E.2d 448, 451 (Ind. 2003).

At the time of remand, all the issues were not disposed of as this Court's opinion in IBM I did two things: 1) it reversed the trial court on the issue of whether IBM's breach of the MSA was material; and 2) remanded to the trial court to calculate appropriate damages as well as offsets. While IBM wants us to consider its suit against the State separate and apart from State's suit, the two arise out of the same facts and circumstances and are inextricably tied. Case law is clear that a final...