Jackson v. Russell, 1-385A63

Citation498 N.E.2d 22
Decision Date01 October 1986
Docket NumberNo. 1-385A63,1-385A63
PartiesC.W. JACKSON, Defendant/Third-Party Plaintiff-Appellant, v. George E. RUSSELL, Plaintiff-Appellee, and PPG Industries, Inc., Third-Party Defendant-Appellee.
CourtCourt of Appeals of Indiana

Robert J. DuComb, Jr., Sacks, Tierney & Kasen, P.A., Phoenix, Ariz., Stephen F. Burns, Burns & Clark, Indianapolis, for defendant/third-party plaintiff-appellant.

Robert F. Zoccola, Alan S. Brown, Locke, Reynolds, Boyd & Weisell, Indianapolis, Thomas A. Whitsitt, Giddings, Whitsitt, Baker & McClure, Lebanon, for George E. Russell.

Allen F. Wharry, Martin & Wharry, Lebanon, Charles W. Kenrick, Stephen C. Kifer, Dickie, McCamey & Chilcote, P.C., Pittsburgh, Pa., for PPG Industries, Inc.



C.W. Jackson appeals a jury verdict against him for breach of duty in a joint venture, tortious interference with a contract, constructive fraud, and criminal mischief. In addition, Jackson appeals the trial court's failure to declare a mistrial following the disqualification of his lead counsel. We affirm.


In 1970, George E. Russell became president of Como Plastics Corporation (Como) in Columbus, Indiana, upon his father's death. Como, a family owned and operated business, manufactured plastic injection molded products. In 1972, Russell accepted an offer to sell Como to PPG Industries, Inc. (PPG) of Pittsburgh, Pennsylvania. The company would be operated in Columbus as a wholly-owned subsidiary of PPG, with Russell serving as its president and chief operating officer. In 1975, PPG merged Como with two other companies forming a new division to be known as the Plastic Fabrication Division (PFD) and appointed Russell vice-president and general manager of the division.

In 1979, Russell learned of a decision by PPG to sell the PFD. Feeling that division losses were largely the result of developmental programs focused on other divisions, Russell believed reorganization of the PFD would produce enormous potential for success. Russell also felt a western facility was necessary, and to that end travelled to Phoenix, Arizona.

While in Phoenix, Russell met C.W. Jackson and explained his plans to purchase the PFD. Russell gave Jackson a copy of his confidential business plan for his proposed new business, Polycorp, Incorporated (Polycorp). On June 23, 1980, F.B. O'Neil, vice-president of corporate development for PPG, terminated negotiations with Russell On July 20, 1980, Jackson proposed to Russell, by telephone, that they enter into a joint venture to acquire the PFD. According to their plan, Russell would negotiate the purchase of the PFD for $6.5 million and Jackson would provide the financing. A corporation would be formed to operate the business with Russell as chief officer, with Russell owning two-thirds ( 2/3) and Jackson owning one-third ( 1/3). The two men would form a partnership to own the real estate on an equal basis, with Jackson managing the partnership.

effective June 30, 1980, and informed Russell that PPG intended to cease operations at PFD and liquidate it. Meanwhile, through a series of phone calls, Jackson and Russell discussed financing for the purchase of the PFD. Jackson visited the PFD plant in Columbus, Indiana.

Russell and his attorney, Stephen Dutton, met with Jackson and his attorney Robert Kassing, of Bose, McKinney, and Evans (Bose) on July 23, 1980, and the terms of the agreement were confirmed orally. The parties also discussed control of the corporation in the event of default and a potential buy-sell arrangement. Jackson made an alternate buy-sell suggestion that Russell felt was economically unfair and so the parties used the original corporation and partnership divisions.

On August 19, 1980, Russell executed a Letter of Intent prepared by Dutton which Jackson executed the following day. This letter reiterated, outlined, and enunciated the prior oral understandings between Jackson and Russell, generally serving as a "roadmap" to the agreement. Earlier, on August 15, 1980, PPG and Russell had entered into a Restated Agreement for acquisition of the PFD with closing set for September 30, 1980. After the parties executed the Letter of Intent, Russell forewent all other financing.

From July 24, 1980, through September 24, 1980, attorneys for Jackson and Russell discussed and negotiated preparation of the documents necessary to complete the transaction. On September 24, 1980, the attorneys met to examine the documents and Dutton again rejected Kassing's alternate proposal for pricing the buy-sell agreement. On the day the documents were to be exchanged, September 26, 1980, Bose was not finished with their share of the work and so Russell's attorney completed all the documents. Meanwhile, on September 17, 1980, Dutton had executed Polycorp's Articles of Incorporation with Russell as sole shareholder and director. Also, during September Russell had appeared before the economic development commissions in Columbus, Indiana, and Newton, North Carolina, to present his plan in hopes of obtaining financing through use of industrial revenue bonds.

Closing was scheduled for September 30, 1980. Prior to this, Dutton, Kassing, David Wills, another Bose attorney, Jackson and others met at the Bose offices to review documents. Only two or three of the ten to twelve documents were in final form. Negotiations reached an impasse when Jackson's attorneys again insisted on an alternative buy-sell agreement. Viewing this as an attempt to alter the deal, Dutton left telling Kassing and Jackson he would have to discuss the problem with Russell. Shortly thereafter, Jackson telephoned Russell at Dutton's office and informed Russell that he was quitting the deal.

Jackson then summoned Thomas Butera (Butera), an attorney for PPG who was attending a meeting there, into his office and informed him that the deal with Russell was "off" and that he was interested in purchasing the PFD for himself. Butera advised Jackson that no one from PPG's Indianapolis division had authority to accept such a proposal. Butera left and reported Jackson's proposal to his superiors. Thereafter, Jackson telephoned Dutton's office and told H. Kennedy Linge, PPG's attorney in charge of the sale, that he wanted to purchase the PFD himself. Linge advised Jackson that since Russell had brought Jackson into the deal, PPG would not deal with Jackson.

Part of the assets of the PFD to be acquired by Polycorp was Ideal Mold.

PPG was interested in this being sold immediately and Russell needed the estimated $572,000 which the sale would generate for Polycorp. Hence, Russell assigned the right to sell Ideal Mold to PPG. As consideration for this assignment, PPG agreed: that it would not sell the PFD to Jackson; that it would sell the PFD to Russell on the same terms if he obtained financing and would credit the sale of Ideal Mold to the purchase price; and that Russell and PPG would keep each other mutually informed of their efforts. Ideal Mold was sold on October 1, 1980, while Russell renewed his efforts to obtain financing for the purchase of the remainder of the PFD.

Upon returning to Phoenix, Jackson telephoned the president of PPG and again expressed his desire to purchase the PFD. Linge and another PPG representative met with Jackson and Kassing in Phoenix and reached a tentative agreement with terms virtually identical to those previously negotiated by Russell. When PPG advised Jackson that it would not sell to him unless he provided PPG with protection against possible legal action by Russell, Jackson agreed to indemnify PPG. Jackson, in turn, requested assurance from PPG that it had no obligation to sell the PFD to Russell.

Russell learned of PPG's dealings with Jackson and protested to PPG and Jackson, believing he still possessed rights under the Restated Agreement to buy the PFD. Russell proceeded with his financing efforts, meeting with potential financiers and with PPG representatives in Pittsburgh. However, while the potential financiers indicated that the possibility of obtaining financing was promising they were not ready to set a closing date.

Meanwhile, PPG approved the sale of the PFD to Jackson because he had the money and could close the deal promptly. The sale agreement was virtually identical to the previous one between PPG and Russell. On October 20, 1980, PPG notified Russell of the sale to Jackson and terminated Russell's employment according to his desire in the event the PFD was sold.

Closing did not occur as scheduled because Jackson reneged on his promise to indemnify PPG against action by Russell. Instead, Jackson demanded indemnity from PPG. Jackson finally agreed to drop his indemnity demand when PPG agreed to reduce the purchase price by $100,000.00. The sale then closed about November 7, 1980. The financing changed only in that Russell's name was removed from the loan and guarantees and Jackson's name was substituted for Polycorp's in the industrial revenue bond applications.

After October 20, 1980, PPG approached Russell asking him to give up his claim against PPG. An agreement was negotiated whereby Russell relinquished his claim against PPG and agreed not to pursue action which would block the sale to Jackson. This agreement reserved Russell's right to sue Jackson for monetary damages. Russell received $120,000.00 as consideration, representing $25,000 from his pension fund and $95,000.00 which he paid to others for expenses and fees incurred in his efforts to acquire the PFD.

In 1981, Russell filed this civil action for damages. Russell alleged Jackson was guilty of tortious interference with contract relations, constructive fraud, breach of a fiduciary duty to a coventurer, breach of the criminal mischief statute, conspiracy, breach of contract, theft, and conversion; Russell also sought to recover on a theory of promissory estoppel. Jackson filed a third-party claim...

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13 cases
  • Fognani v. Young
    • United States
    • Colorado Supreme Court
    • February 14, 2005
    ...a result "would swallow the rule by providing incentives for counsel to accumulate the financial hardship"); accord Jackson v. Russell, 498 N.E.2d 22, 30 (Ind.Ct.App. 1986). Perhaps directed at avoiding such an outcome, Rule 3.7's comment describes as a relevant factor weighing in favor of ......
  • PPG Industries, Inc. v. Russell
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    ...to Mr. Jackson's third-party complaint. The trial court decision was affirmed by the Indiana court of appeals. See Jackson v. Russell, 498 N.E.2d 22 (Ind.Ct.App.1986). C. This Basing jurisdiction on diversity, PPG's complaint in this action alleged that Mr. Russell violated the covenant whe......
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    ...of damages. Id. A jury may consider lost profits only if there is sufficient evidence to prevent mere speculation. Jackson v. Russell (1986), Ind.App., 498 N.E.2d 22, 38, reh. denied, trans. denied, relying on Prudential Insurance Co. v. Executive Estates, Inc. (1977), 174 Ind.App. 674, 369......
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