World Productions, Inc. v. Capital Imp. Bd. of Managers of Marion County
| Citation | 514 N.E.2d 634 |
| Decision Date | 26 October 1987 |
| Docket Number | No. 29A02-8702-CV-56,29A02-8702-CV-56 |
| Parties | WORLD PRODUCTIONS, INC., Appellant (Defendant Below), v. CAPITAL IMPROVEMENT BOARD OF MANAGERS OF MARION COUNTY, Indiana, Appellee (Plaintiff Below). |
| Court | Indiana Appellate Court |
Charles B. Huppert, Daniel B. Altman, Huppert & Altman, Indianapolis, for appellant.
John P. Price, David O. Tittle, Grace M. Curry, Bingham Summers Welsh & Spilman, Indianapolis, for appellee.
World Productions, Incorporated, by interlocutory appeal, seeks reversal of the Hamilton Circuit Court's judgment dismissing two counts of its complaint against the Capital Improvement Board of Managers of Marion County, Indiana.
The issues certified for review are:
1) whether an action for tortious interference with a contractual relationship exists by the breaching party against an alleged inducing third party; and
2) whether punitive damages may be assessed against the Capital Improvement Board of Managers of Marion County?
We affirm.
The Capital Improvement Board of Managers of Marion County, (C.I.B.), created by IC 36-10-9-3 (Burns Supp. 1987), is responsible for operating the Indiana Hoosier Dome and Convention Center located in Indianapolis, Indiana. On January 22, 1985, World Productions, Incorporated (W.P.I.) contracted with the C.I.B. to use those facilities during January of 1986. W.P.I. initiated this action against the C.I.B. when the convention facilities allegedly were not made available as agreed. W.P.I. sought punitive damages for breach of contract in Count I of its complaint. In Count III, W.P.I. sought damages against the C.I.B. for tortiously interfering with its ancillary contractual obligations to various exhibitors. W.P.I. seeks reversal of the trial court's dismissal of these counts.
W.P.I.'s claim for tortious interference with a contractual remedy was properly dismissed by the trial court. As a basis for its claim, W.P.I. alleged the C.I.B.'s fraudulent breach of its contract with W.P.I. caused W.P.I. to breach its ancillary contracts with exhibitors. However, an action for tortious interference with a contractual right is not available to the party in breach.
Claise v. Bernardi (1980), Ind.App., 413 N.E.2d 609, 612 (emphasis added). Hence, the dismissal of Count III was proper.
The trial court properly dismissed W.P.I.'s claim for punitive damages against the C.I.B. for breach of contract because the C.I.B. is a governmental entity immune from punitive damages.
The Tort Claims Act 1 prohibits the assessment of punitive damages against governmental entities. However, the Act "applies only to a claim or suit in tort," IC 34-4-16.5-1 (Burns 1986). Generally, punitive damages are not recoverable in breach of contract actions except where the conduct of the party breaching the contract independently constitutes the elements of a commonlaw tort. An exception to the general rule exists whenever elements of fraud, malice, gross negligence or oppression mingle in the controversy. Vernon Fire and Casualty Ins. Co. v. Sharp (1976), 264 Ind. 599, 349 N.E.2d 173. "[W]hen it appears from the evidence as a whole that a serious wrong, tortious in nature, has been committed ... only when these factors coalesce will the independent tort requirement be abrogated, and the allowance of punitive damages be sustained." Canada Dry Corporation v. Nehi Beverage Company, Inc. of Indianapolis (1983 7th Cir.), 723 F.2d 512, 524 citing Vernon, 264 Ind. at 608, 349 N.E.2d at 180. Additionally, in order for punitive damages to be awarded in a contract action, it must appear "that the public interest will be served by the deterrent effect punitive damages will have upon future conduct of the wrongdoer and parties similarly situated." Travelers Indemnity Co. v. Armstrong (1982), Ind., 442 N.E.2d 349, 358; citing Vernon, 264 Ind. at 608, 349 N.E.2d 173.
Because it is not always necessary to establish the existence of an independent tort to sustain a claim for punitive damages in a contract action, it is not a foregone conclusion that the Tort Claims Act governs the result in this case, even assuming, that the C.I.B. is a governmental entity. Nevertheless, the assessment of punitive damages against governmental entities contravenes Indiana public policy regardless of whether a tort or contract theory of recovery is asserted. In Department of Natural Resources v. Evans (1986), Ind.App., 493 N.E.2d 1295, 1303, this court elaborated:
Therefore, the dispositive issue before us is whether the C.I.B. is a governmental entity. If so, it is exempt from punitive damages irrespective of the general applicability of the Tort Claims Act. If not, punitive damages could be assessed depending on W.P.I.'s evidence. Although, State v. Denny (1980), 273 Ind. 556, 406 N.E.2d 240, negates the need for this court to determine whether W.P.I.'s claims are subject to the Tort Claims Act, the Act's definition of "governmental entity" illustrates the legislative notion of the meaning of the terms. IC 34-4-16.5-2 (Burns Supp.1987) states in relevant part:
"(c) 'Governmental entity' means the state or a political subdivision of the state....
....
(f) 'Political subdivision' means a:
(1) County;
(2) Township;
(3) City;
(4) Town;
(5) Separate municipal corporation;
(6) Special taxing district;
(7) State college or university;
(8) City or county hospital;
(9) School corporation; or
(10) Board or commission of one (1) of the entities listed in subdivisions (1) through (9).
(g) 'State' means Indiana and its state agencies.
(h) 'State agency' means a board, commission, department, division, governmental subdivision including a soil and water conservation district, bureau, committee, authority, military body, or other instrumentality of the state. However, the term does not include a political subdivision."
Just as the Tort Claims Act exempts "governmental entities" from liability in certain tort claims, the Occupational Safety and Health Act of 1970, 29 U.S.C. Sec. 652(5), exempts the state and political subdivisions of the state from its purview. In Brock v. Chicago Zoological Society (1986 7th Cir.) 820 F.2d 909, the court employed a two-part inquiry to decide whether the Chicago Zoological Society, which operates the Brookfield Zoo, was a governmental entity. The case provides this court with authoritative guidance in making the basal determination of whether the C.I.B. is a governmental entity.
Under the terms of the inquiry, "any entity that is '(1) created directly by the State, so as to constitute a department or administrative arm of the government, or (2) administered by individuals who are controlled by public officials and responsible to such officials or...
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