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Pursuant to Ind.Appellate Rule 65(D), this Memorandum Decision shall not be regarded as precedent or cited before any court except for the purpose of establishing the defense of res judicata, collateral estoppel, or the law of the case.

ATTORNEYS FOR APPELLANTS: JOHN J. MORSE NATHAN D. FOUSHEE Morse Foushee, P.C. Indianapolis, Indiana

ATTORNEY FOR APPELLEES: THOMAS T. WELLMAN Thompson Law Office Connersville, Indiana

IN THE COURT OF APPEALS OF INDIANA
ALAN KEARNS, Appellant-Intervening PlaintiffIntervention Counter-Defendant, and TECHNOLOGY & NETWORK SPECIALISTS, INC., Appellant-Defendant, vs. TECHNOLOGY AND NETWORK SERVICES, Appellee-Plaintiff-Intervention Counter-Plaintiffs. and JOHN PAYNE, ROBERT E. WALLACE, Appellee-Intervention DefendantsIntervention Counter-Plaintiffs. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

No. 29A02-0512-CV-1217

APPEAL FROM THE HAMILTON SUPERIOR COURT The Honorable William J. Hughes, Judge The Honorable David K. Najjar, Magistrate Cause No. 29D03-0408-PL-726

July 10, 2007 MEMORANDUM DECISION - NOT FOR PUBLICATION

RILEY, Judge

STATEMENT OF THE CASE Appellant-Intervening Plaintiff and Counter-Defendant, Alan Kearns (Kearns), along with Appellant-Defendant, Technology & Network Specialists, Inc. (TN Specialists) (collectively, Appellants), appeal the trial court's judgment and award of treble damages to Appellee-Plaintiff and Intervening Counter-Plaintiff, Technology and Network Services (TN Services), and Appellees-Intervening Defendants and Intervening Counter-Plaintiffs, John Payne (Payne) and Robert Wallace (Wallace) (collectively, Appellees). We affirm in part, reverse in part, and remand with instructions. ISSUES Appellants raise five issues on appeal, which we restate as the following two issues: (1) Whether the trial court erred in finding that TN Specialists and Kearns, individually, committed criminal conversion against TN Services; and (2) Whether the trial court erred in failing to make particular Findings of Fact.
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FACTS AND PROCEDURAL HISTORY 1 The State of Indiana developed a program to provide Internet access and related services to the State's Women, Infant and Children Program (WIC Program). Initially, the State contracted with Covanys to provide the services. Covanys then subcontracted a portion of the services to Wallace's company, QUIK Internet (QUIK). QUIK further subcontracted the broadband services to TN Specialists, a company owned equally by Payne and Kearns. Subsequently, on October 16, 2003, Wallace, Payne, and Kearns entered into an Agreement, thereby creating TN Services, each with a one-third ownership interest. Every month, the three individuals received approximately one-third of TN Services' net profit from servicing the WIC Program. However, as early as February of 2004, TN Specialists began paying lesser amounts to TN Services than the amounts pursuant to the parties' agreement. In addition, during the parties' association, Kearns and Payne decided to purchase a boat for use by TN Specialists. Due to Payne's poor credit, TN Specialists obtained a loan in Kearns' name to finance its purchase of the boat. Both TN Specialists and TN Services

contributed monthly payments to the boat, claiming it as a business expense. In the summer of 2004, Wallace learned that TN Specialists and Kearns were fraudulently billing the State by double-charging the State for services through Covanys. Thereafter, Wallace states that he terminated the TN Services agreement for cause, but continued to

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We hereby deny Appellants' Motion to Strike Brief of Appellee, John Payne. However, we do admonish Payne for submitting a Brief that fails to comply with the Indiana Appellate Rules in several respects. In particular, we advise Payne to consult Ind. Appellate Rules 43 and 46(8)(a).

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work with Payne to provide services under the State's original contract with Covanys until the Covanys contract expired in August of 2004. On August 20, 2004, TN Services filed a Complaint for Temporary Restraining Order (TRO) and Breach of Contract against TN Specialists and numerous other defendants, including Sprint and Verizon Wireless. On the same date, the trial court issued a TRO. On September 9, 2004, Kearns filed a Complaint against Appellees, alleging breach of fiduciary duties, conversion, unjust enrichment, and offenses against property. On October 7, 2004, Kearns' Complaint was consolidated with the Complaint filed by TN Services. On October 25, 2004, Appellees filed an Answer and

Counterclaim against Kearns. On November 17, 2004, Kearns filed his Answer to the Counterclaim. On August 31, 2005, a bench trial was held. At the conclusion of the trial, the trial court ordered the parties to submit proposed findings of fact and conclusions of law. On November 23, 2005, the trial court issued its Findings of Fact and Judgment, stating: FINDINGS OF FACT AND CONCLUSIONS THEREON 1. The State of Indiana [(the State)] contracted with Covansys to provide Internet access and related services (the "Network Services") for the State's Women, Infant and Children Program ("WIC Program"). 2. [Wallace] and his company, [QUIK] Internet [(QUIK)] subcontracted with Covansys to provide the Network Services for the WIC Program. 3. Wallace and [QUIK] then subcontracted [TN Specialists] to provide the Network Services for the WIC [P]rogram. Specifically, [QUIK] continued to provide the dial-up portion of the Network Services and TN Specialists [provided] the broadband portion of the Network Services. The broadband portion of the Network Services was more profitable than the dial-up portion.
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4. TN Specialists is jointly and equally owned by [Payne] and [Kearns]. 5. At Wallace's request and because TN Specialists had the more profitable portion of the Network Services, Wallace, Payne, and Kearns began associating together to provide the Network Services for the WIC Program. 6. Subsequent to [QUIK] entering into its contract with Covansys, [QUIK] became [TN Services]. The proposed corporate By-Laws for TN Services establish Wallace, Payne, and Kearns as the shareholders of TN Services, each with a one[-]third ownership interest in the company. In October 2003, Wallace and Kearns executed the TN Services' ByLaws. Payne did not sign the document. 7. Despite Payne having not signed TN Services' By-Laws, Wallace, Kearns, and Payne continued to associate with one another as TN Services pursuant to the terms of the By-Laws, with each of them receiving one[-]third of TN Services' profits generated by providing the Network Services for the WIC Program. This amount was about [$5,000.00] per person per month. 8. By virtue of the parties' relationships, all three individuals owed each other duties of utmost honesty, loyalty, good faith, and fair dealing. 9. Beginning in February [of] 2004 and continuing until the agreements between TN Services and TN Specialists were terminated in August of 2004, TN Specialists did not pay to TN Services the full amounts due pursuant to the agreements each month. A total of $6,500.00 due to TN Services was converted by TN Specialists. 10. TN Services is entitled to recover treble damages for the funds converted by TN Specialists. 11. During the period of time that TN Services was under its contract with Covansys and providing services to [the State] through its WIC [P]rogram, several instances of fraudulent acts were committed against the State with regard to services provided by TN Services through their association with TN Specialists. Specifically, broadband lines were routed incorrectly and the State was being billed for services it was not receiving.

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12. During the pendency of this action, Wallace and TN Services have expended funds to salvage telephone/internet lines, and in some cases reconnect the same in order to avoid disconnection of the WIC [P]rograms' systems. Wallace and TN Services have also been required to post a bond to insure their actions consistent with the [c]ourt's orders. These sums are due to the actions of Kearns and TN Specialists, and should be reimbursed. 13. Payne and Kearns decided to purchase a boat to use while entertaining TN Specialists' clients. 14. Because Payne had poor credit, TN Specialists obtained a loan to purchase the boat in [Kearns'] name. Wallace subsequently agreed that Kearns should be reimbursed this expense from the profits of the partnership. 15. From August 2002 until August 2004, TN Specialists and TN Services made the $237.66 monthly loan payments on the boat, listing the same as a business expense. No payments have been made by the partnership since that time. Kearns has made all the payments and he should be reimbursed for those. The total amount is $3,089.58. The boat should be sold. Until it is sold TN Services should keep [current] all payments remaining on the boat loan. In the event that the boat sells for less than is owed on it, TN Services shall pay said deficiency. 16. Based upon the conflicting evidence, the [c]ourt cannot find by a preponderance of the evidence [] that any of the parties can prevail on any other of their claims. 17. The [c]ourt did previously find, that due to Payne's contempt of the [c]ourt's discovery orders, Payne would be responsible for Kearns' attorney fees. The [c]ourt assesses the value of such contempt at $7,500.00 which shall be payable to John Morse. . . . Judgment is entered in favor of TN Services and [Wallace] and against [Kearns] and TN Specialists in the amount of $19,500 ($6,500.00 x 3). . . . Judgment is entered in favor of TN Services and [Wallace,] and against [Kearns] and TN Specialists in the amount of $1,200.00 ($750.00 reconnection fees and $450.00 replevin bond premiums). Total Judgment in favor of TN Services and [Wallace,] and against

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[Kearns] and TN Specialists is $20,700.00 with prejudgment interest accruing from August 20, 2004, until paid, at the rate of 8% per year. . . . Judgment is entered in favor of [Kearns] and against [Wallace] and TN Services in the amount of $3,089.58 with prejudgment interest accruing from August 20, 2004, until paid, at the rate of 8% per year. . . . the boat at issue in this matter shall be sold, either at auction, or to a purchaser at a price agreed upon by all parties. The costs of the auction shall be borne by TN Services. TN Services shall be responsible for any and all payments remaining on the boat until such time as the boat is sold and title transferred. In the event the boat is sold for less than is owed on the boat, TN Services shall be responsible for paying any remainder. . . . [Payne] shall pay to John Morse the amount of $7,500.00 as sanctions for his contempt in this action. Such amount shall be entered as a judgment of record and shall accrue interest, until paid, at the rate of 8% per year. (Appellant's App. pp. 10-14). Kearns and TN Specialists now appeal. Additional facts will be provided as necessary. DISCUSSION AND DECISION I. Standard of Review When the trial court enters findings of fact and conclusions thereon, we apply the following two-tiered standard of review: whether the evidence supports the findings and whether the findings support the judgment. Cash in a Flash, Inc./Hobart v. Hoffman, 841 N.E.2d 644, 647 (Ind. Ct. App. 2006). The trial court's findings and conclusions will be set aside only if they are clearly erroneous, that is, if the record contains no facts or inferences supporting them. Id. A judgment is clearly erroneous when a review of the record leaves us with a firm conviction that a mistake has been made. Id. We neither
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reweigh the evidence nor assess the credibility of witnesses, but consider only the evidence most favorable to the judgment. Id. II. Criminal Conversion and Treble Damages A. TN Specialists' Liability First, disputing the existence of the mens rea element of conversion, TN Specialists asserts that the evidence is insufficient to prove that it knowingly or intentionally converted money owed to TN Services. At most, TN Specialists contends it breached its contract with TN Services. Therefore, TN Specialists argues that the trial court erred in awarding treble damages to TN Services. Ind. Code

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