Summary judgment inappropriate in light of pending discovery

Noting a pending discovery may still turn up answers, the Indiana Court of Appeals overturned a summary judgment and allowed a feud between former business partners to continue.  

Michael Kent Smith filed a complaint against his former business partner Thomas Taulman II and other employee-shareholders in T.K.O. Enterprises after he was fired. He alleged Taulman and the shareholders breached their fiduciary duties and committed fraud by failing to disclose the company’s financial outlook during the December 2009 board of directors meeting.

The defendants called Kent Smith’s first discovery request overly broad but after reaching an agreement, responded by producing more than 10,000 pages of documents. However, during depositions, Kent Smith learned the shareholders had not fully responded to his document request so he filed two supplement discovery requests.

The defendants agreed to turn over the additional information but five days later they filed a motion for summary judgment. During the extension of time Kent Smith was given to respond to the defendant’s motion, he filed a motion to compel discovery.

At a subsequent hearing, the Hendricks Superior Court granted the summary judgment and denied Kent Smith’s motion to compel.

Kent Smith appealed, claiming the trial court abused its discretion by denying his motion. He pointed to the dispositions which revealed the defendants had not complied with his first request for documents.

The Indiana Court of Appeals agreed in Michael Kent Smith v. Thomas L. Taulman II, et al., 32A01-1402-PL-78. It reversed the trial court’s entry of summary judgment on Kent Smith’s claims against Taulman for alleged breach of fiduciary duties as well as his claims against Taulman and the shareholders for actual fraud.

“It is not for the trial court or this court to assume that the pending discovery, once produced, will fail to support (Kent Smith’s) allegations,” Judge Edward Najam wrote for the court. “All that matters for the instant proceedings is that (Kent Smith’s) requests were relevant to the arguments made on summary judgment on the issues discussed above and that (Kent Smith’s) pursuit of discovery has been reasonably diligent. Accordingly, the trial court abused its discretion when it denied (Kent Smith’s) motion to compel.”


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