Court Opinion

ID: 4112441
Source: CourtListenerOpinion
Date Created: 2016-12-30 17:06:53.49513+00
Date Added: 2024-06-11T07:46:12.284359
License: Public Domain

FILED
                                                           Dec 30 2016, 5:59 am

                                                                CLERK
                                                            Indiana Supreme Court
                                                               Court of Appeals
                                                                 and Tax Court

ATTORNEY FOR APPELLANT                                    ATTORNEYS FOR APPELLEES
Mark J. Crandley                                          Linda George
Barnes & Thornburg LLP                                    Kathleen A. Farinas
Indianapolis, Indiana                                     Todd Barnes
                                                          Sarah Broderick
                                                          George & Farinas, LLP
                                                          Indianapolis, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

Dalton Corporation,                                       December 30, 2016
Appellant-Defendant,                                      Court of Appeals Case No.
                                                          49A02-1604-MI-836
        v.                                                Appeal from the Marion Superior
                                                          Court
Larry Myers and Loa Myers,                                The Honorable Timothy W.
Appellees-Plaintiffs.                                     Oakes, Judge
                                                          Trial Court Cause No.
                                                          49D02-1405-MI-14372

Robb, Judge.

Court of Appeals of Indiana | Opinion 49A02-1604-MI-836 | December 30, 2016           Page 1 of 9
                                   Case Summary and Issue
[1]   Dalton Corporation (“Dalton”) appeals the trial court’s denial of its motion to

      set aside a default judgment, raising two issues for our review, which we

      consolidate and restate as whether the trial court abused its discretion in

      denying Dalton’s motion. Concluding the trial court did not abuse its

      discretion in denying Dalton’s motion to set aside default judgment, we affirm.

                               Facts and Procedural History
[2]   Neenah Enterprises, Inc. (“NEI”) is Dalton’s parent company. NEI’s general

      counsel monitors and manages legal matters for NEI’s subsidiaries, including

      Dalton.1 In 2013, Robert Gitter was employed by NEI as the corporate

      controller, designating him as NEI’s contact for receipt of service with Dalton’s

      registered agent in Indiana, Corporation Service Company (“CSC”). Up until

      2013, CSC transmitted service to NEI and its subsidiaries by certified mail. In

      2013, however, CSC began providing service to NEI and its subsidiaries via e-

      mail and Gitter did not inform NEI’s general counsel of this change. In late

      2013, NEI hired John Laskey as its corporate controller and Gitter notified

      CSC of this change. During this transition, Gitter failed to inform Laskey that

      CSC only sent notice of service by e-mail and Laskey would be the only

      individual receiving e-mails from CSC.

      1
          Dalton does not have its own in-house counsel.

      Court of Appeals of Indiana | Opinion 49A02-1604-MI-836 | December 30, 2016   Page 2 of 9
[3]   On April 30, 2014, Larry Myers and his wife, Loa, filed a complaint against

      numerous product manufacturers and landowners, including Dalton, alleging

      negligence. The Myerses served CSC and CSC forwarded notice of the lawsuit

      to Laskey via e-mail. Laskey did not forward notice of the lawsuit to NEI’s

      general counsel and Dalton did not file an appearance or any responsive

      pleadings. On September 24, 2014, the Myerses filed a Motion for Default

      Judgment and served Dalton with the motion via CSC. On October 3, 2014,

      the trial court granted the motion and entered default judgment against Dalton.

      Counsel for the Myerses then sent a letter and a copy of the trial court’s order to

      CSC.

[4]   Over fourteen months later, NEI received a paper copy of the service list from

      another defendant’s pleading in this cause and realized the Myerses named

      Dalton as a defendant. After looking into the matter, Dalton filed an

      appearance and a Motion for Relief from Default Judgment on December 23,

      2015. Specifically, Dalton sought equitable relief from the judgment pursuant

      to Indiana Trial Rule 60(B)(8), claiming a meritorious defense and listing

      equitable considerations it contends support setting aside the default judgment,

      including the “confluence of circumstances” leading to default. Appellant’s

      Appendix at 137. Following a hearing on the motion, the trial court issued an

      order denying Dalton’s motion, reasoning Dalton’s Rule 60(B)(8) motion

      sounded in a Rule 60(B)(1) motion and was thus time-barred. Notwithstanding

      this conclusion, the trial court further concluded the circumstances leading to

      Court of Appeals of Indiana | Opinion 49A02-1604-MI-836 | December 30, 2016   Page 3 of 9
      default—coupled with each party’s equitable considerations—did not justify

      granting Dalton equitable relief under Rule 60(B)(8). This appeal ensued.

                                 Discussion and Decision
                                     A. Standard of Review
[5]           The decision whether to set aside a default judgment is given
              substantial deference on appeal. Our standard of review is
              limited to determining whether the trial court abused its
              discretion. An abuse of discretion may occur if the trial court’s
              decision is clearly against the logic and effect of the facts and
              circumstances before the court, or if the court has misinterpreted
              the law. . . . A cautious approach to the grant of motions for
              default judgment is warranted in “cases involving material issues
              of fact, substantial amounts of money, or weighty policy
              determinations.” In addition, the trial court must balance the
              need for an efficient judicial system with the judicial preference
              for deciding disputes on the merits. Furthermore, reviewing the
              decision of the trial court, we will not reweigh the evidence or
              substitute our judgment for that of the trial court. Upon a motion
              for relief from a default judgment, the burden is on the movant to
              show sufficient grounds for relief under Indiana Trial Rule 60(B).

      Huntington Nat. Bank v. Car-X Assoc. Corp., 39 N.E.3d 652, 655 (Ind. 2015)

      (alterations in original) (citations omitted).

                                       B. Trial Rule 60(B)(8)
[6]   Trial Rule 55(A) authorizes a trial court to enter default judgment against a

      party for failure to file a responsive pleading. Once a default judgment is

      entered, the defaulting party may seek to have the judgment set aside in

      Court of Appeals of Indiana | Opinion 49A02-1604-MI-836 | December 30, 2016   Page 4 of 9
accordance with Trial Rule 60(B). Ind. Trial R. 55(C). Rule 60(B) provides, in

relevant part,

        On motion and upon such terms as are just the court may relieve
        a party or his legal representative from a judgment, including a
        judgment by default, for the following reasons:

        (1) mistake, surprise, or excusable neglect;
        ***
        (8) any reason justifying relief from the operation of the
        judgment, other than those reasons set forth in sub-paragraphs
        (1), (2), (3), and (4).

        The motion shall be filed within a reasonable time for reasons
        (5), (6), (7), and (8), and not more than one year after the
        judgment, order or proceeding was entered or taken for reasons
        (1), (2), (3), and (4). A movant filing a motion for reasons (1), (2),
        (3), (4), and (8) must allege a meritorious claim or defense.

Indiana courts have long discussed the difference between Rule 60(B)(1) and

Rule 60(B)(8):

        The trial court’s residual powers under subsection (8) may only
        be invoked upon a showing of exceptional circumstances justifying
        extraordinary relief. Among other things, exceptional
        circumstances do not include mistake, surprise, or excusable
        neglect, which are set out in T.R. 60(B)(1). In this respect, we
        have explained: “T.R. 60(B)(8)[,] is an omnibus provision which
        gives broad equitable power to the trial court in the exercise of its
        discretion . . . . Nevertheless, under T.R. 60(B)(8), the party
        seeking relief from the judgment must show that its failure to act
        was not merely due to an omission involving the mistake,
        surprise, or excusable neglect. Rather some extraordinary
        circumstances must be demonstrated affirmatively. This

Court of Appeals of Indiana | Opinion 49A02-1604-MI-836 | December 30, 2016     Page 5 of 9
         circumstance must be other than those circumstances
         enumerated in the preceding subsections of T.R. 60(B).”

Brimhall v. Brewster, 864 N.E.2d 1148, 1153 (Ind. Ct. App. 2007) (emphasis

added) (quoting Ind. Ins. Co. v. Ins. Co. of N. Am., 734 N.E.2d 276, 279-80 (Ind.

Ct. App. 2000), trans. denied), trans. denied. Thus, in order to prevail under Rule

60(B)(8), the movant must 1) allege sufficient grounds showing exceptional

circumstances justify relief from the operation of the judgment other than those

set forth in Rule 60(B)(1)-(4), 2) allege a meritorious defense, and 3) file the

motion within a reasonable time. In determining whether exceptional

circumstances warrant setting aside a default judgment, the trial court may also

consider the equitable considerations set forth by each party. See Huntington, 39
N.E.3d at 658-59 (remanding to the trial court to evaluate the defaulting party’s

equitable considerations under Rule 60(B)(8), including the party’s valid

meritorious defense, substantial interest in the real estate through its mortgage,

“excusable reason” for untimely responding, quick action to set aside the

default judgment, significant loss if the default judgment is not set aside, and

minimal prejudice to the opposing party should the case be reinstated). Despite

the numerous arguments raised by each party on appeal, we need only address

whether the trial court erred in concluding Dalton did not present exceptional

circumstances justifying equitable relief under Rule 60(B)(8).2

2
 We note both parties dedicate much of their briefs to arguing whether the trial court erred in interpreting
Dalton’s motion as a request for relief under Rule 60(B)(1) instead of under Rule 60(B)(8) and both parties
acknowledge Dalton cannot prevail under Rule 60(B)(1) because it did not file its motion to set aside the

Court of Appeals of Indiana | Opinion 49A02-1604-MI-836 | December 30, 2016                         Page 6 of 9
[7]   At the outset, we interpret Dalton’s argument as an invitation for this court to

      reweigh the evidence and substitute our judgment for the trial court’s judgment,

      which we will not do. See id. at 655. In any event, we note the circumstances

      leading to Dalton’s default judgment were due entirely to a breakdown of

      communication between only those who work for Dalton and NEI; CSC

      properly forwarded service and no other parties outside of Dalton and NEI are

      responsible for Dalton’s failure to appear and timely file any responsive

      pleadings. The circumstances are not exceptional, and consistent with the trial

      court, we are not persuaded the remaining equitable considerations noted by

      Dalton justify setting aside the default judgment.3 The trial court did not err in

      default judgment within one year of the entry of the default. See Ind. Trial Rule 60(B). Stated differently, the
      parties dispute whether Dalton is attempting to, and can, re-couch the factual scenario presented in this case
      as a Rule 60(B)(8) motion instead of a Rule 60(B)(1) motion. Regardless of the trial court’s conclusion that
      Dalton’s motion properly falls under Rule 60(B)(1) thereby time-barring Dalton from seeking relief from the
      default judgment, we note the trial court still addressed the merits of Dalton’s claim under Rule 60(B)(8),
      considered Dalton’s equitable considerations and argument that the events leading to default were
      exceptional circumstances, and concluded Dalton did not present any exceptional circumstances justifying
      equitable relief. Given our ultimate conclusion the trial court did not abuse its discretion in denying Dalton
      equitable relief under Rule 60(B)(8), we find it unnecessary to determine whether the trial court erred in
      interpreting Dalton’s motion as a request for relief under Rule 60(B)(1).
      3
        In its motion for relief from the default judgment and at a hearing on the matter, Dalton notes two equitable
      considerations it contends support setting aside the default judgment: 1) the allegation the Myerses’ claims
      have failed against most other defendants, and 2) the lack of prejudice suffered by the Myerses if the case
      were to be reinstated. In response to the first consideration, we simply note the fact the Myerses’ claims have
      failed against some defendants is not dispositive of whether Dalton is liable for Larry’s injuries and such an
      argument is best addressed under a meritorious defense analysis, an analysis we deem unnecessary for
      purposes of this appeal. See infra note 4. As to the lack of prejudice, we agree with the Myerses’ assertions
      that they would suffer some prejudice if the case were to be reinstated, given the fact the Myerses have gone
      through much of the pre-trial phase with those defendants not in default and the fact the Myerses’ case
      against Dalton is still in its infancy. However, even assuming the Myerses would not suffer prejudice if the
      case is reinstated, this sole equitable consideration, coupled with no exceptional circumstances warranting
      relief, is insufficient for us to conclude the trial court abused its discretion in denying Dalton relief from the
      default judgment.

      Court of Appeals of Indiana | Opinion 49A02-1604-MI-836 | December 30, 2016                           Page 7 of 9
      concluding Dalton did not present exceptional circumstances justifying

      equitable relief. 4

[8]   In addition, we take this opportunity to further acknowledge the fact our courts

      favor deciding cases on the merits and prefer attorneys work together prior to

      one party seeking to hold another in default. See id. at 659 (recommending

      lawyers “pick up a phone and remind [opposing] counsel of an imminent

      deadline” rather than wait for the opposing party to be in default). However, it

      does not appear there was any contact between the Myerses’ counsel and

      Dalton’s counsel prior to the Myerses filing the complaint. Thus, it is unlikely

      the Myerses’ counsel even knew the identity of Dalton’s counsel. In addition,

      the Myerses properly served Dalton via CSC, and when Dalton neither filed an

      appearance nor any pleadings, the Myerses still waited nearly three months

      before filing their motion for default judgment. Because Dalton did not file an

      appearance, it is likely the Myerses knew only how to contact Dalton via its

      registered agent, CSC, and the Myerses sent copies of the complaint, motion for

      default judgment, and the trial court’s order granting default judgment to CSC,

      all of which were forwarded to Dalton. We are therefore hard-pressed to

      believe the Myerses could have done anything more to put Dalton on notice.

[9]   In sum, the trial court properly considered the parties’ equitable considerations

      and concluded Dalton did not present exceptional circumstances to warrant

      4
        For this reason, we need not determine whether Dalton filed its motion within a reasonable time or alleged
      a meritorious defense. See Ind. Trial R. 60(B).

      Court of Appeals of Indiana | Opinion 49A02-1604-MI-836 | December 30, 2016                       Page 8 of 9
       setting aside the default judgment pursuant to Rule 60(B)(8). We see no error

       and conclude the trial court did not abuse its discretion in denying Dalton’s

       motion to set aside the default judgment.

                                                Conclusion
[10]   The trial court did not abuse its discretion in denying Dalton’s motion to set

       aside the default judgment. Accordingly, we affirm.

[11]   Affirmed.

       Mathias, J., and Brown, J., concur.

       Court of Appeals of Indiana | Opinion 49A02-1604-MI-836 | December 30, 2016   Page 9 of 9