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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.

FILED
Dec 05 2008, 9:03 am
of the supreme court, court of appeals and tax court

CLERK

APPELLANT PRO SE: FRED PFENNINGER Pfenninger & Associates Indianapolis, Indiana

ATTORNEY FOR APPELLEES: ROBERT E. SHIVE Emswiller Williams Noland & Clarke Indianapolis, Indiana

IN THE COURT OF APPEALS OF INDIANA
FRED PFENNINGER and CUMMINS MICHIGAN, INC.,1 ) ) ) Appellants, ) ) vs. ) ) GREAT LAKES DRILLING, INC. and ) DIVERSIFIED BLAST HOLE, DRILLING, INC., ) ) Appellees. )

No. 49A05-0803-CV-133

APPEAL FROM THE MARION SUPERIOR COURT The Honorable Kenneth H. Johnson, Judge Cause No. 49D02-0107-CP-1024

December 5, 2008 MEMORANDUM DECISION - NOT FOR PUBLICATION BAILEY, Judge

1

Cummins Michigan, Inc. is not seeking relief on appeal. Pursuant to Indiana Appellate Rule 17(A), however, a party of record in the trial court is a party on appeal.

Case Summary Appellant Fred Pfenninger appeals sanctions imposed by the trial court for Pfenninger's conduct as an attorney in a lawsuit involving Appellees Great Lakes Drilling, Inc., and Diversified Blast Hole, Drilling, Inc. (collectively, "Diversified"). We affirm in part, reverse in part, and remand. Issues Pfenninger raises a laundry list of issues2 on appeal, which we consolidate and restate: I. II. Whether the trial court judge was required to recuse himself; Whether he was denied due process because he did not receive notice of the second hearing regarding attorney's fees; and Whether the trial court abused its discretion in imposing a trebled sanction against Pfenninger. Facts and Procedural History This is the second appeal of this case. In the prior appeal, another panel of this Court delineated the underlying facts as follows: Diversified is a drilling company that uses big drill rigs to drill into bedrock. Diversified took one of its engines into Cummins for repairs, and a dispute arose over the propriety and cost of the repairs. On July 10, 2001, Cummins filed suit against Diversified for non-payment of the repair bill. Cummins and Diversified entered into settlement negotiations, and they reached an oral agreement on August 18, 2003. The following day, Diversified sent to Cummins a check for $16,555 and a letter memorializing the settlement agreement as follows:

III.

Pfenninger lists issues of whether Diversified did not support its claims for attorney's fees and whether the attorney's fees awarded were excessive. However, in the argument section of his appellate brief, Pfenninger simply sets out these issues without developing any argument with citations to authority and the record. Therefore, Pfenninger has waived these issues for failing to develop a cogent argument. See Ind. Appellate Rule 46(A)(8)(a).

2

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(1) Cummins may pick up the engine core at issue in this case from Diversified's place of business . . . on or after September 15, 2003, with prior notice to Diversified. Alternately, and at Cummins['s] option, Diversified will pay Cummins Five Hundred Dollars ($500.00) on or before September 15, 2003, and retain the engine core; (2) Following Cummins'[s] receipt of the core, or its election to receive payment form Diversified as set forth above, Diversifed may, at its option, order one (1) reconditioned industrial diesel engine during the calendar year 2003 from Cummins. Cummins shall provide that engine at their cost to Diversified. . . . (3) Diversified may, at its option, order one (1) reconditioned industrial engine during the calendar year 2004 from Cummins. Cummins shall provide that engine at their cost to Diversified. . . . ... (6) Following a signed, written agreement incorporating the above terms and conditions, the parties shall execute a mutual release and joint stipulation of dismissal regarding the pending claims and counterclaims. Appellant's App. p. 10-11. Cummins cashed the enclosed check on August 22, 2003. On August 29, 2003, Cummins filed a notice of settlement with the trial court. Diversified prepared a draft of the settlement agreement, signed it, and mailed it to Cummins on September 8, 2003. Unbeknownst to Diversified, the settlement agreement contained a scrivener's error, which indicated that both reconditioned engines could be purchased by Diversified during the calendar year 2003. Diversified's attorney, Stephen Sellmer, called Cummins's attorney, Fred Pfenninger, eight or nine times between September 26, 2004, and December 3, 2004, and sent a letter to discuss the settlement agreement. But Pfenninger did not return the phone calls or respond to the letter, and Cummins did not sign the settlement agreement. On December 17, 2003, Diversified filed a motion to enforce the settlement agreement and for sanctions. Thereafter, on February 6, 2004, Cummins signed the settlement agreement. During the week of February 6, 2004, Sellmer first noticed the scrivener's error. Sellmer called Pfenninger to inform him of the error, which made the settlement agreement invalid because the time had already passed to exercise the option to purchase the refurbished engines under the signed agreement. Sellmer proposed that he redraft the settlement agreement so that it would comply with the terms and spirit of the original agreement. On February 12, 2004, Sellmer sent to Pfenninger a revised settlement agreement, allowing Diversified to purchase two reconditioned engines from Cummins at cost during the calendar year 2004. Sellmer called Pfenninger's office four or five times between February 12, 2004, and March 5, 2004, and Pfenninger informed Sellmer that he had not been able to reach his client to get the settlement agreement signed. Cummins did not sign the revised settlement 3

agreement. On March 31, 2004, the trial court held a hearing on Diversified's motion to enforce the settlement agreement and for sanctions. At the hearing, no witnesses were called; only Sellmer and Pfenninger spoke, and they were not sworn in. On May 5, 2004, the trial court entered its judgment in favor of Diversified, enforcing the revised settlement agreement and awarding $1,700 in attorney's fees to Diversified because Cummins "unreasonably and groundlessly continued this litigation" by failing to sign the settlement agreement. Appellant's App. p. 20. Cummins Michigan, Inc. v. Great Lakes Drilling, Inc., No. 49A02-0407-CV-610, slip op. at 2-4 (Ind. Ct. App. Sept. 29, 2005). This Court affirmed the trial court, including the award of attorney's fees. Furthermore, that panel also granted the request for appellate attorney's fees based on its conclusion that Cummins Michigan's appeal was frivolous. The case was then remanded for the calculation of the appellate fees. On remand, the trial court held a hearing on the calculation of appellate attorney's fees and Diversified's motion for rule to show cause, which alleged that Cummins Michigan refused to honor the settlement agreement. The hearing was held on October 24, 2005. The trial court found that Diversified twice attempted to obtain a reconditioned engine from Cummins Michigan. When the president of Diversified travelled to the former site of Cummins Michigan, the place of business was occupied by Cummins Bridgeway ("Bridgeway"). The Bridgeway employees with whom Diversified spoke had previously worked for Cummins Michigan. After Diversified's second attempt to obtain a reconditioned engine in March of 2005, it was informed by Bridgeway personnel that Bridgeway would no longer do business with Diversified. The trial court concluded that Cummins Michigan was in contempt of the order to provide the reconditioned engines as well as the order requiring the reimbursement of $1700 in attorney's fees. 4

During this hearing the trial court elicited answers from Cummins Michigan's counsel, Pfenninger, as to why the company had not honored the settlement agreement. Pfenninger explained to the court that, while he had been Cummins Michigan's counsel since 2001, the company had since gone out of business. Furthermore, Pfenninger alleged that he had been unable to contact any representative of the company since January 2005. However, Pfenninger offered that he had been in contact with Bridgeway and that Bridgeway was now willing to sell the reconditioned engines and warranties to Diversified. Despite having information of this offer, Pfenninger professed ignorance as to the relationship between Cummins Michigan and Bridgeway. Finally, Pfenninger revealed that he had delivered the original settlement check, payable to Cummins Michigan, to NCO Financial Systems, Inc. The trial court's order, entered on December 22, 2005, directed a judgment of $24,079.93 against Cummins Michigan. Of that judgment, the trial court made Cummins Michigan's attorney, Pfenninger, jointly and severally liable for $9079.93 due to Pfenninger's misconduct. On January 23, 2006, Cummins Michigan filed a motion to correct error as to the October 24th Order. Diversified filed a motion to strike, which was granted by the court, due to the lack of timeliness of the motion to correct error. On March 24, 2006, Cummins Michigan filed a motion for relief of judgment pursuant to Trial Rule 60(B)(3). Attached to the motion were five affidavits of Bridgeway employees that claimed that Diversified never made requests to purchase reconditioned engines. Based on the assertions in the affidavits, Cummins Michigan accused the owner of Diversified of lying under oath at the October 24, 2005 hearing and requested relief from the judgment as well as attorney's fees. 5

On March 29, 2006, Diversified filed a motion to establish authority pursuant to Indiana Code Section 33-43-1-6.3 The trial court granted the motion, requiring a response by April 20, 2006. On April 25, 2006, Pfenninger filed his response that "[His law firm] was hired to represent its client Cummins Michigan Inc. by NCO Financial Systems Inc. which was acting as agent for Cummins Michigan Inc." Appellant's Appendix at 116. Only Pfenninger's signature was on the filing. Subsequently, Diversified filed a motion for a stay of the proceedings until Pfenninger complied with the trial court's order to establish authority. Pfenninger then filed a similar response with the purported signature of Cummins Michigan's CFO. Diversified then filed a motion to strike Pfenninger's response because the signature of the CFO was illegible. The motion noted that such an assertion contradicted Pfenninger's prior statements that Cummins Michigan was out of business since at least January of 2005 and that Pfenninger had been unable to contact any of the employees. The motion also noted that the response did not contain any contact information for Cummins Michigan or its CFO. The trial court granted the motion to strike and continued the stay of proceedings. On November 28, 2006, Diversified filed a Motion for Sanctions pursuant to Trial Rule 37(B) against Pfenninger for failure to respond to interrogatories and a request for production of documents. Diversified also filed a Verified Motion to Enforce Judgment By Proceedings Supplemental. On December 14, 2006, Pfenninger filed his third Authority of
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"The court or judge may . . . require an attorney to produce and prove the authority under which the attorney appears. The court may stay all proceedings by the attorney on behalf of the party for whom the attorney

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Representation, notarized and signed by Kenneth Clark, CFO, of Cummins Michigan Inc. nka K & S Property Inc. Based on a motion to enforce judgment by Diversified, the trial court ordered Kenneth Clark to appear at a hearing on January 16, 2007, to answer questions of the assets of Cummins Michigan. On January 8, Pfenninger filed a notice of depositions of Bridgeway employees to take place on the 12th in Michigan. That same day, Diversified moved to quash the notice of depositions and requested sanctions against Pfenninger. Diversified noted that the

Bridgeway employees were available at the time of the October 2005 hearing and that Bridgeway was not a party to the action. Diversified alleged that Pfenninger set these depositions to annoy and burden Diversified as well as relitigate resolved issues. Diversified requested sanctions against Pfenninger for continuing to litigate in bad faith. After the trial court set a hearing for the pending motions, Pfenninger filed a notice of deposition of Diversified's president as well as a request for production of documents. Diversified moved to quash these discovery requests and again requested sanctions against Pfenninger. Pfenninger then filed a motion for continuance of the hearing set for February 26. The trial court denied the motion for continuance and granted Diversified's motions to quash. Pfenninger filed another motion for continuance, which was granted and the hearing was rescheduled for March 19, 2007. At the hearing, Diversified informed the trial court that it had entered into a settlement agreement with K&S Property, Inc., f/k/a Cummins Michigan Power, Inc. and that the only outstanding issues were regarding Pfenninger's conduct. Apparently, Pfenninger provided

assumes to appear until the attorney produces and proves authority to appear." Ind. Code

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