Arthur R. Baxter, Jr. -- Indiana Attorney At Law

Indiana Supreme Court Monthly Wrap Up
February, 2006

In The Coca-Cola Company v. Babyback's International Inc., the Indiana Supreme Court issued a wide-ranging opinion concerning an alleged strategic "alliance" between a bottling company and a purveyor of barbeque meat. The bottling company and the meat company talked about selling their respective products out of common refrigerators at groceries throughout the nation. The decision is noteworthy for at least three distinct holdings. First, the court held that the oral arrangement between the bottling company and the meat company was not sufficiently written down, despite a sixteen-point fax that offered some details of the parties' discussion. The court relied on the Statute of Frauds which will permit enforcement of an oral agreement where there is at least some written memorialization of the oral agreement. Because the fax contained language to the effect that the parties had made "strides" towards coming to an agreement but had not reached an "absolute agreement," the court found the arrangement described in the fax amounted only to negotiations and not a contract.

The Coca-Cola Company case is also important because of its decision on the meat company's claim that Coke USA had committed tortious interference with the contractual relationship between the bottling company and the meat company. The meat company alleged that Coke USA, without legal justification, instigated the bottling company's decision to walk away from the "alliance" with the meat company. The court found that there was evidence in the record that Coke USA withheld information from the meat company and staved off the meat company's efforts to approach a competitor of Coke USA. Because of this evidence, the court allowed the case against Coke USA to go forward on the issue of justification. The court equated justification with the term "fair and reasonable under the circumstances," even though earlier cases had suggested only spiteful or malum in se actions would negate justification.

Finally, the Coca-Cola case squarely and unequivocally aligned Indiana law with the majority view that part performance of a multi-year oral contract will not operate as an exception to the Statute of Frauds' requirement that oral contracts with a duration exceeding one year must be in writing.



The case of In re Guidant Shareholders Derivative Litigation is consistent with the small but growing trend towards curtailing the right of shareholders to institute a shareholders derivative lawsuit without first employing the preliminary step of making a demand for action on the board of directors. Under the Indiana Business Corporation Act, Ind. Code 23-1-17-1 et seq., a shareholder is generally required to make such a demand before bringing a case in the right of a corporation. The shareholders in In re Guidant alleged that the directors had engaged in misconduct in bringing about felony convictions for Guidant, but the shareholders did not first make a demand for action. Indiana law provides an exception to the general rule requiring a demand: if the demand would be futile, then no demand is required. The court noted that elevan states had recently adopted provisions making demand mandatory in all cases, except where their was an emergency. Citing Ind. Code 23-1-32-4(c), the court concluded that a corporation by establishing a review committee may bar a derivative lawsuit where the review committee determines not to pursue the lawsuit, provided the review committee does not have an interst in the outcome and acts in good faith. A properly appointed review committee would have the authority to dismiss a derivative lawsuit, even if notice to the directors was not required.



Ind. Trial Rule 60(B) authorizes a trial judge to "relieve" a party from an adverse "entry of default." Additionally, T.R. 60(B) empowers the trial court to relieve an aggrieved party from a "final" order or from a "final judgment," including a judgment by default. In Allstate v. Fields, Allstate Insurance Company refused to comply with certain unspecified trial court orders, and as a result the trial court entered a default judgment against Allstate on the issue of liability only but preserved the issue of damages for a later trial. Allstate took no steps to initiate an interlocutory appeal under Ind. App. Rule 14. Instead, Allstate cited the T.R. 60(B) reference to "entry of default" and pursued an appeal under T.R. 60. The Indiana Supreme Court rejected this approach. The court held that T.R. 60 affords no basis for relief from trial court entries of default on less than all issues. Because of what it called "fairness," and because the earlier version of T.R. 60 specifically referred to "final . . . default," the court concluded that only final entries of default are covered by T.R. 60 and dismissed Allstate's appeal.

In Keaton and Keaton v. Keaton, the court dealt with a situation where two businesses were using the same name. One business, a law firm, used the name Keaton and Keaton, P.C. The other business, also a law firm, used the name Keaton and Keaton. The P.C. operated mostly in Rushville, Indiana. The other firm operated mostly in Fort Wayne, Indiana. The evidence of confusion in the marketplace was limited to two isolated instances where mail was sent to the wrong firm and a third incident where a court clerk asked if the Rushville Keaton was related to the Fort Wayne Keaton. There was no evidence that either firm was intentionally attempting to hold itself out as affiliated with the other, nor was there any evidence that either firm was claiming its work was that of the other. Defining the tort of "passing off" as the intentional misrepresentation of goods or services as those of another, the court found that the trial court properly entered judgment against the Rushville Keaton on his claim of "passing off." The court also noted that a case of "trade name infringement" has no requirement of a deliberate intention to deceive. All that is required is a showing of confusion in the marketplace. A trade name includes a name or symbol that is distinctive of a person's business and identifies that business and distinguishes it from others. Once a trade name has acquired "secondary meaning" and is uniquely associated with a business, then the courts will protect it. The court concluded that there was insufficient evidence that the name Keaton was uniquely associated with the Rushville firm.

In Auto-Owners v. Harvey, the insurance company insured the defendant. The defendant and a 16 year old girl on the banks of the Wabash River engaged in sexual intercourse, but then the girl told the defendant to stop. When the defendant demanded the girl tell him what was wrong, she twice pushed him away. When she came at him a third time, the defendant, on purpose, then pushed her. She fell onto some rocks and rolled into the river and drowned. The girl's parents sued the defendant for wrongful death. The defendant's insurance policy covered damages caused by an "occurrence" which the policy defined as an "accident." The trial court, on summary judgment, found a question of fact as to whether the drowning constituted an "accident" within the meaning of the insurance policy. The Indiana Supreme Court agreed. The court stated that a lack of intentionality was implicit in the term "accident." The court went on to find that an accident is an unexpected happening without intention or design. The court acknowledged that, because of the defendant's intent, it was no accident that the defendant pushed the girl. The fact that she fell on rocks and into the river and then drowned, however, may have been "unexpected and unintentional." When the policy can be read in two differing ways, the court said it will give the benefit of the doubt to coverage. Interestingly, in sending the case back to the trial court for further proceedings, the court rejected the approach taken in the oft-cited Red Ball Leasing v. Hartford Accident & Indem. Co., 915 F.2d 306, 312 (7th Cir. 1990) and its progeny.



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