Bailey, J.
Case Summary
Dennis R. Nail (“Nail”) brings an interlocutory appeal of the trial court order finding him in violation of a discovery order and imposing sanctions for that violation.
We affirm.
….
Attorney’s Fees Sanction for Discovery Violation
Nail asserts that the trial court abused its discretion when it ordered him to pay Smith’s attorney’s fees as a sanction for Nail’s discovery violations, pursuant to Trial Rule 37. [Footnote omitted.] Nail points out that Smith did not pay the fees for his lawyer, who was in-house counsel employed by Insurance Co. Nail maintains that the attorney’s fees order was therefore an “unjust” “windfall” to Insurance Co. because Insurance Co. would pay the lawyer her salary whether she was working on this case or not. Nail Br. at 15.
Trial Rule 37(B)(2) allows a trial court to impose sanctions, including attorney’s fees, if a party fails to comply with an order compelling discovery. The purpose of sanctioning discovery violations is two-fold: to penalize those who violate the discovery rules and to “‘deter those who might be tempted to such conduct in the absence of such a deterrent.’” Whitaker v. Becker, 960 N.E.2d 111, 115 (Ind. 2012) (quoting Nat’l Hockey League v. Metro Hockey Club, Inc., 427 U.S. 639, 643 (1976)). Compensating a party for fees that should never have been incurred is only an incidental purpose of sanctions in the form of attorney’s fees. Textor v. Bd. of Regents of N. Ill. Univ., 711 F.2d 1387, 1396 (7th Cir. 1983).
Here, the trial court award’s award of attorney’s fees to Smith serves the purposes of discovery sanctions; it punishes Nail for his violation of a discovery order and is designed to deter such conduct in the future. Nail’s assertion that the award is unjust because it does not compensate Smith directly for fees paid to his attorney ignores the primary purposes of discovery sanctions. [Footnote omitted.]
Moreover, it is not “unjust” to order as a discovery sanction the payment of attorney’s fees incurred by in-house counsel simply because that counsel was paid a salary. See Sahara Mart, Inc. v. Ind. Dep’t of State Revenue, 114 N.E.3d 36, 49 (Ind. Tax Ct. 2018) (noting the “only limitation on [a] court in determining an appropriate sanction is that the sanction must be just” (quotation and citation omitted)). Neither party points to legal authority directly addressing such an order, and we find no such state caselaw. However, the federal courts have directly addressed the issue of a sanction in the form of an attorney’s fees award to those with in-house counsel. In Wisconsin v. Hotline Indus., Inc., the Seventh Circuit addressed a contention that the State did not incur any reasonable attorney’s fees because its lawyers already were on the government payroll as salaried employees. The Court noted that “salaried government lawyers, like in-house and non-profit counsel, do incur expenses if the time and resources they devote to one case are not available for other work.” 236 F.3d 363, 365 (7th Cir. 2000); see also Textor v. Bd. of Regents of N. Ill. Univ., 711 F.2d 1387, 1396-97 (7th Cir. 1983) (noting, in response to the “faulty assumption that in-house counsel would do nothing that would benefit [the party entitled to fees] had they not been involved in th[e] litigation,” that a “more realistic assessment of the situation would indicate that for every hour in-house counsel spent on th[e] case [the party entitled to fees] lost an hour of legal services that could have been spent on other matters”).
We agree with the reasoning in Hotline Indus. and Textor. That reasoning is consistent with the punishment and deterrent purposes of sanctions under Trial Rule 37. And, as the trial court noted, to deny reimbursement of the attorney’s fees under these circumstances would thwart those purposes because a party who violated the discovery rules would never be sanctioned with an attorney’s fees award so long as the opposing party was represented by in-house counsel. See Hotline Indus., 236 F.3d at 366 (“To deny reimbursement under these circumstances would indirectly penalize the institution, be it public or private, for providing its own legal counsel throughout a case.”); Textor, 711 F.2d at 1397 (noting refusal to award attorney fees as sanctions when in-house counsel represents the opposing party “would either force th[e opposing party] to abandon in-house counsel for a more inefficient system or leave them open to [sanctionable behavior] by unscrupulous counsel undeterred by the threat of a fee award”).
The trial court did not abuse its discretion when it sanctioned Nail for his discovery violation by awarding Smith his reasonable attorney’s fees.
Conclusion
The trial court acted within its discretion when it found that Nail violated the discovery rules and imposed sanctions for that violation in the form of attorney’s fees to Smith’s counsel.
Affirmed.
Crone, J., and Pyle, J., concur.