Court Opinion

ID: 9742988
Source: CourtListenerOpinion
Date Created: 2023-08-26 21:23:49.18859+00
Date Added: 2024-06-11T12:22:24.251330
License: Public Domain

BAKER, Judge,
dissenting.
I certainly agree that not all neglect is excusable. However, under these cireum-stances, I must dissent from the majority's determination that the trial court was correct in refusing to set aside the default judgment that had been entered against Delphi.
As our Supreme Court has observed, a trial court's ruling on the denial of a motion to set aside a default judgment is entitled to substantial deference. Allstate Ins. Co. v. Watson, 747 N.E.2d 545, 547 (Ind.2001). By the same token, an abuse of discretion may occur where the trial court misapplied the law or its decision is clearly against the logic and effect of the facts and cireumstances before it. Baxter v. State, 734 N.E.2d 642, 645 (Ind.Ct.App.2000). Also, default judgments are not generally favored, and any doubt of its propriety must be resolved in favor of the defaulted party. Watson, 747 N.E.2d at 547. And the preferred policy of this State is that courts should decide a controversy on its merits Pitts v. Johnson County, 491 N.E.2d 1013, 1015 (Ind.Ct.App.1986). That said, the trial court's discretion should be exercised in light of the disfavor in which default judgments are held. Watson, 747 N.E.2d at 546. A default judgment is considered an extreme remedy and is available only where a party fails to defend or prosecute a suit. Id. And a default judgment should not be a trap to be set by counsel to catch unsuspecting litigants. Id.
Pursuant to Indiana Trial Rule 60(B)(1), a default judgment may be set aside in cases of "mistake, surprise or excusable neglect." Smith v. Johnston, 711 N.E.2d 1259, 1262 (1999). Instances of exeusable neglect include a breakdown in communication that results in a party's failure to appear. Id. A breakdown in communica*270tion resulting in a party's failure to answer the complaint creates excusable neglect and a situation in which a default judgment must be set aside. Id. Also, a party has the right to rely upon representations of opposing counsel. Fire Ins. Exch. v. Bell, 643 N.E.2d 310, 313 (Ind.1994). A default judgment is appropriate only when a party has not appeared in person or by counsel and, if there is a lawyer known to represent the opposing party in the matter, counsel made a reasonable effort to contact that lawyer. Smith, 711 N.E.2d at 1264.
Here, the record shows that the communication between Delphi and C.T.-its registered agent-unquestionably broke down. As the majority acknowledges, C.T. had employed-and subsequently fired-Heck, the employee who signed the certified mail receipt for the complaint and summons. The uncontroverted evidence is that Heck failed to comply with C.T\s normal processes for forwarding these documents to Delphi.
Contrary to the trial court's determination that Delphi engaged in some "tactical" decision not to appear and answer the complaint in October 2000, thus risking a default judgment, there is nothing in the record suggesting that Delphi expected to prevail in this litigation by doing nothing and not answering the complaint. Also, inasmuch as Delphi had appointed C.T. as its agent for service of process, I believe that it reacted appropriately when it learned of the status conference in the case under the belief that it had not been served. Delphi also reasonably retained its belief that it had not been served after Orlik's counsel did not initiate the status conference with the trial court.
Given these circumstances, I am of the view that State Farm Mut. Auto. Ins. Co. v. Hughes, 808 N.E.2d 112 (Ind.Ct.App.2004), should control the outcome here. In Hughes, the plaintiffs were involved in an automobile collision and had uninsured motorist coverage through State Farm. The plaintiffs' counsel filed a complaint and, at some point, moved for a default judgment against an uninsured motorist.
Counsel informed State Farm that the lawsuit had been filed, but he did not tell the company about the pending motion for a default judgment. Id. at 114. State Farm filed a motion to intervene and told the plaintiffs' counsel of its desire to be kept abreast of further proceedings. While State Farm could have discovered the pending motion for a default judgment against the uninsured motorist by examining the trial court's docket, it did not.
At some point, the trial court scheduled a hearing on the motion to intervene and notified State Farm of the date. It then granted the plaintiffs' motion to continue the hearing. In the ensuing delay, the trial court held a status conference in the matter and entered a default judgment against the uninsured motorist. No one had notified State Farm about the status conference before it had actually taken place. Id. at 115.
When State Farm eventually learned of the default judgment, it moved to set it aside so that it could defend its rights under the uninsured motorist policy. The trial court granted State Farm's original motion to intervene, but it denied the motion to set aside the default judgment. We reversed, finding-among other things-that the plaintiffs' counsel was under an obligation to inform State Farm about the lawsuit, as well as the intention to seek a default judgment. Id. at 116-17.
In this case, Kendall, the attorney who represented Orlik, did attempt to notify Delphi of the existence of the lawsuit. But in response to Delphi's statement that it knew nothing about the lawsuit, Orlik's counsel first indicated that he had mailed the complaint to Kuplicki but that the envelope containing the complaint had been *271returned unopened. Additionally, Orlik's counsel did not place the call for the status conference, and he did not inform Delphi of his intent to move for a default judgment. In essence, there was no additional effort on the part of Orlik's counsel either to notify Delphi that service had been perfected on C.T. or to notify Delphi that he intended to move for the default. Given these circumstances, I am of the view that it was reasonable for Delphi to believe that Orlik's counsel had not yet served Delphi but that he would eventually perfect service. More to the point, Delphi had appointed C.T. as its agent for service of process, and I believe that it reacted appropriately when it learned of a pre-trial conference in a case in which it believed it had not been served. And Delphi reasonably retained its belief that it had not been served after Orlik's counsel did not initiate the pretrial conference call to the trial court.
In sum, I do not believe that Delphi was duty-bound to do more than it already did. Hence, I vote to reverse the denial of Delphi's motion to set aside the default judgment.