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COA reverses treble damages in business deal gone bad

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A trial court erred in awarding treble damages to an Indiana man who entered into a business venture with a North Carolina couple that ended up costing him more than $1 million in money owed to him, the Indiana Court of Appeals concluded Thursday.

E.J. Agnew and Golden-AGI LLC sued Joel and Ruby Bowden and their companies, Golden Companies Inc. and Golden Purchasing and Staffing, after learning that he was owed profits from the Bowdens from a joint business venture they entered into to develop business with U.S. auto and truck producers and arrange for the production and delivery of parts from overseas manufacturers.

They entered into the 50/50 ownership deal in 2004 that created Golden AGI LLC. They were to split profits from a deal with a manufacturer in India, but Agnew later earned the Bowdens, who lived in North Carolina, used money from the India deal to pay off debts in a separate deal supplying parts to Cummins. He also learned that Golden AGI income and expenses were comingled with that of other Golden entities and that the Bowdens never intended to operate GAGI as a functional business entity.

Agnew sued for money damages in 2009; the Bowdens sought dismissal for lack of personal jurisdiction, which was denied. At the bench trial, Agnew’s expert David DeWitt, a licensed CPA, testified regarding the profits derived from the India deal. He said Agnew’s share was at least $1,754,278, which is the amount the trial court awarded to Agnew. The trial court also awarded treble damages based on the conclusion the Bowdens committed conversion. The Bowdens appealed.

“The Bowdens’ wrongful failure to distribute net revenue in accordance with the 50/50 agreement constitutes a failure to pay a debt, not criminal conversion. The money withheld from Agnew was not a separate, specifically identifiable chattel,” Judge Ezra Friedlander wrote in Joel Bowden, Ruby Bowden, Golden Companies, Inc., and Golden Purchasing and Staffing, Inc. v. E.J. Agnew and Golden-AGI, LLC, 49A05-1301-PL-23. As such, the trial court erred in awarding treble damages under I.C. 34-24-3-1. The judges ordered the judgment reduced to the original $1.75 million awarded to Agnew.

The Court of Appeals found the trial court’s reliance on DeWitt’s expert testimony regarding damages was not erroneous and that the Indiana courts have personal jurisdiction over the North Carolina couple in their individual capacities.
 

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