Court Opinion

ID: 4122280
Source: CourtListenerOpinion
Date Created: 2017-02-01 16:08:07.429019+00
Date Added: 2024-06-11T09:13:57.795345
License: Public Domain

FILED
                                                    Feb 01 2017, 5:37 am

                                                         CLERK
                                                     Indiana Supreme Court
                                                        Court of Appeals
                                                          and Tax Court

ATTORNEY FOR APPELLANT                                       ATTORNEYS FOR APPELLEE
Bruce P. Clark                                               Duke T. Escue
Bruce P. Clark & Associates                                  Walter J. Alvarez
Saint John, Indiana                                          Walter J. Alvarez, P.C.
                                                             Crown Point, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

Menard, Inc.,                                                February 1, 2017
Appellant-Defendant,                                         Court of Appeals Case No.
                                                             45A03-1606-CT-1283
        v.                                                   Appeal from the Lake County
                                                             Circuit Court
Reba Lane,                                                   The Honorable George Paras,
Appellee-Plaintiff.                                          Judge;
                                                             The Honorable Robert Vann,
                                                             Magistrate
                                                             Trial Court Cause No.
                                                             45C01-1308-CT-128

May, Judge.

Court of Appeals of Indiana | Opinion 45A03-1606-CT-1283 | February 1, 2017              Page 1 of 16
[1]   Menard, Inc. (“Menard”) appeals the denial of its motion to set aside the

      default judgment entered in favor of Reba Lane when Menard failed to appear

      or defend itself against her personal injury suit. As we conclude the trial court

      did not abuse its discretion in denying Menard’s motion to set aside the default

      judgment, we affirm.

                             Facts and Procedural History
[2]   On August 29, 2013, Lane filed a personal injury claim against Menard alleging

      she suffered injuries as a result of a malfunctioning shopping cart at the Menard

      store in Gary, Indiana. On September 16, 2013, Lane sent a summons to

      Menard’s former registered agent, CT Corporation. On September 24, 2013,

      CT Corporation sent Lane correspondence indicating:

              Menard Inc. is inactive on the records of the State of [Indiana].
              Our services for this entity have also been discontinued for more
              than five (5) years and, as such, we no longer maintain an active
              record of this entity. Since we have no address to which to
              forward this process, we have not done so.

      (App. Vol. II at 68.)

[3]   On September 19, 2013, Sergeant Brian Coubal with the Lake County Sheriff’s

      Department served the summons at the Menard store in Gary, Indiana. The

      summons was addressed to “Attn: Highest Executive Officer Found on

      Premises.” (Id. at 10.) Sergeant Coubal also mailed, via certified mail with

      return receipt requested, a copy of the summons to the store’s address with the

      Court of Appeals of Indiana | Opinion 45A03-1606-CT-1283 | February 1, 2017   Page 2 of 16
      same direction to deliver it to the highest executive officer found on the

      premises, and Sergeant Coubal received the return receipt. 1

[4]   On January 7, 2014, Lane filed a Request for Entry of Default Judgment

      because Menard had not answered her complaint. The trial court granted her

      request on March 17, 2014, and held a damages hearing on May 15, 2014. On

      May 29, 2014, the trial court awarded $500,000.00 in damages to Lane and

      entered judgment therefor.

[5]   On July 25, 2014, Lane filed a Motion to Enforce Judgment by Proceedings

      Supplemental. Lane sent a copy of that motion to the Menard store address in

      Gary, Indiana, via regular mail. On August 19, 2014, counsel for Menard

      entered an appearance and filed a motion to set aside default judgment, arguing

      the default judgment was void under Indiana Trial Rule 60(B)(6) for lack of

      personal jurisdiction based on several alleged defects in service; was “tainted”

      by attorney misconduct under Trial Rule 60(B)(3) and the Indiana Rules of

      Professional Conduct; and was a product of excusable neglect under Trial Rule

      60(B)(1). (App. Vol. II at 25.)

      1
        The Chronological Case Summary indicates the summons and complaint were delivered to the local
      Menard store via certified mail on September 24, 2016. Under “Comment” the court noted, “Signature
      Illegible.” (App. Vol. II at 9.)

      Court of Appeals of Indiana | Opinion 45A03-1606-CT-1283 | February 1, 2017                 Page 3 of 16
[6]   The parties filed reply and supplemental briefs for almost a year. The trial court

      held oral argument on the matter on June 4, 2015. On May 6, 2016, the trial

      court denied Menard’s motion to set aside default judgment.

                                  Discussion and Decision
[7]   A default judgment “is an extreme remedy and is available only where that

      party fails to defend or prosecute a suit.” Smith v. Johnston, 711 N.E.2d 1259,

      1264 (Ind. 1999). “A judgment by default which has been entered may be set

      aside by the court for the grounds and in accordance with the provisions of

      [Trial Rule] 60(B).” Ind. Trial Rule 55(C). “In general, we review a trial

      court’s denial of a motion to set aside judgment for an abuse of discretion, and

      in so doing, determine whether the trial court’s judgment is clearly against the

      logic and effect of the facts and inferences supporting the judgment.” LePore v.

      Norwest Bank Indiana, N.A., 860 N.E.2d 632, 634 (Ind. Ct. App. 2007).

                                               Service of Process

[8]   Trial Rule 60(B)(6) allows for relief from a default judgment if a judgment is

      void. Our standard of review regarding the trial court’s decision on a Trial Rule

      60(B)(6) motion is well-settled:

              [A] trial court has no discretion on how to rule on a Trial Rule
              60(B)(6) motion once a judgment is determined to be either void
              or valid. If a judgment is void, the trial court cannot enforce it
              and the motion under 60(B)(6) must be granted; if a judgment is
              valid, the trial court cannot declare it void and the motion must
              be denied.

      Court of Appeals of Indiana | Opinion 45A03-1606-CT-1283 | February 1, 2017   Page 4 of 16
       Anderson v. Wayne Post 64, 4 N.E.3d 1200, 1205 (Ind. Ct. App. 2014), trans.

       denied. One reason a judgment may be void is for inadequate service on a

       defendant. Id. at 1206.

[9]    The Fourteenth Amendment to the United States Constitution “requires that in

       order for constructive notice of a lawsuit to be sufficient, a party must exercise

       due diligence in attempting to locate a litigant’s whereabouts.” Munster v. Groce,

       829 N.E.2d 52, 60 (Ind. Ct. App. 2005). A party must provide “notice

       reasonably calculated, under all the circumstances, to apprise interested parties

       of the pendency of the action and afford them an opportunity to present their

       objections.” Id. (quoting Mullane v. Central Hanover Bank & Trust Co., 339 U.S.

       306, 314 (1950)). “No summons or the service thereof shall be set aside or be

       adjudged insufficient when either is reasonably calculated to inform the person

       to be served that an action has been instituted against him, the name of the

       court, and the time within which he is required to respond.” Ind. Tr. R.

       4.15(F).

[10]   Trial Rule 4.6(A)(1) states, in relevant part, 2 “Service upon an organization

       may be made as follows: (1) In the case of a domestic or foreign organization

       upon an executive officer thereof[.]” The “executive officer” of a domestic or

       foreign organization includes

       2
        The other portions of Trial Rule 4.6(A) concern service to other types of businesses and governmental
       entities.

       Court of Appeals of Indiana | Opinion 45A03-1606-CT-1283 | February 1, 2017                     Page 5 of 16
               the president, vice president, secretary, treasurer, cashier,
               director, chairman of the board of directors or trustees, office
               manager, plant manager, or subdivision manager, partner, or
               majority shareholder. For purposes of service of process, notice
               and other papers, the term includes the personal secretary of any
               of the foregoing persons or any person employed under or with
               any of the foregoing persons and who is entrusted with
               responsible handling of legal papers, and any person employed in
               the organization if such person promptly delivers the papers
               served to one of the foregoing.

       T.R. 83(2).

[11]   Service upon an organization under Trial Rule 4.6(A) “shall be made on the

       proper person in the manner provided by these rules for service upon

       individuals[.]” T.R. 4.6(B). Service upon an individual may be completed by:

               (1) sending a copy of the summons and complaint by registered
               or certified mail or other public means by which a written
               acknowledgment of receipt may be requested and obtained to his
               residence, place of business or employment with return receipt
               requested and returned showing receipt of the letter; or

               (2) delivering a copy of the summons and complaint to him
               personally; or

               (3) leaving a copy of the summons and complaint at his dwelling
               house or usual place of abode; or

               (4) serving his agent as provided by rule, statute or valid
               agreement.

       Court of Appeals of Indiana | Opinion 45A03-1606-CT-1283 | February 1, 2017   Page 6 of 16
       T.R. 4.1(A). Further, when a person other than the individual who is

       authorized to receive service of process accepts service, that person is

               under a duty to:

               (1) promptly deliver the papers to that person;

               (2) promptly notify that person that he holds the papers for him;
               or

               (3) within a reasonable time, in writing notify the clerk or person
               making the service that he has been unable to make such delivery
               of notice when such is the case.

       T.R. 4.16(B).

[12]   Here, Lane served Menard at their local store via process server Sergeant

       Coubal. Sergeant Coubal stated in his deposition he had been a process server

       for approximately six years and had served hundreds of subpoenas. He stated

       in his affidavit, when serving business entities, “it is my usual and customary

       practice as a process server to personally hand deliver the summons,

       complaints, and all other attached legal documents upon the appropriate

       and/or designated employees of said businesses, corporations or other

       organizations; specifically, the manager and/or highest executive officer

       found.” (App. Vol. II at 151.) The summons designated as evidence included a

       stamp signed by Sergeant Coubal certifying he served the summons on

       September 18, 2013. Sergeant Coubal also indicated he sent the summons via

       certified mail and received a signed return receipt. Both the summons Sergeant

       Court of Appeals of Indiana | Opinion 45A03-1606-CT-1283 | February 1, 2017   Page 7 of 16
       Coubal delivered and the summons sent certified mail were addressed to “Attn:

       Highest Executive Officer Found on Premises.” (Id. at 10.)

[13]   Menard claims it did not receive the summons delivered by Sergeant Coubal or

       the summons sent by Sergeant Coubal via certified mail. Menard argues

       Sergeant Coubal’s service of process was not reasonably calculated to reach the

       highest executive officer found on the Menard premises because, via affidavit,

       fourteen Menard employees indicated they had not received the summons and

       that non-managerial staff “were not authorized, entrusted, or expected to accept

       legal papers on behalf of Menard and were not instructed, taught, trained or

       otherwise made aware on how to handle lawsuits if served by the sheriff or

       process server.” (App. Vol. III at 229.) In addition, Menard points to Sergeant

       Coubal’s affidavit in which he stated:

               That although I do not have an independent recollection or
               memory of the specific individuals(s) upon whom I would have
               personally hand delivered the summons, complaint, and other
               legal documents at issue to: [sic] I did personally hand deliver the
               summons, complaint, and other legal documents to the
               appropriate and/or designated employee(s), namely the manager
               or highest executive officer found, at the Menard store[.]

       (App. Vol. II at 152.)

[14]   In support of their argument Sergeant Coubal’s service of process was

       inadequate despite the stamp indicating he delivered the summons to the

       Menard’s store and sent a copy of the same via certified mail for which he

       received a return receipt, Menard relies primarily on Swiggett Lumber Const. Co.,

       Court of Appeals of Indiana | Opinion 45A03-1606-CT-1283 | February 1, 2017   Page 8 of 16
       Inc. v. Quandt, in which our court held Swiggett’s request for relief from

       judgment was appropriate because Hall, Swiggett’s registered agent, had not

       been properly served the summons and complaint. 806 N.E.2d 334, 337 (Ind.

       Ct. App. 2004). Menard focuses on the facts surrounding the personal service

       of a Swiggett employee:

               Quandt contends that copy service at the business to an
               unidentified employee of Swiggett, who represented that he
               understood the nature of the summons and agreed to deliver the
               documents to Hall, constituted service reasonably calculated to
               inform Hall that an action had been instituted against Swiggett.
               We cannot agree.

       Id.

[15]   However, this narrow reading of Swiggett ignores the complete holding of the

       case, as we concluded service to Swiggett was inadequate because Quandt did

       not comply with all of the requirements of Trial Rule 4.1(B), which requires

       “the person making such service ‘shall’ mail a copy of the summons to the

       defendant’s last known address.” Id. (quoting T.R. 4.1(B)). While our court

       highlighted “the rules do not contemplate that an unidentified employee of

       unknown position within a corporation is authorized to accept service of

       process for the corporation’s registered agent[,]” id. at 338, it noted Swiggett

       was distinct from Washington v. Allison, 593 N.E.2d 1273, 1276 (Ind. Ct. App.

       1992), in which “copy service was followed by mailing a copy of the summons

       to the defendant in an attempt to comply with [Trial Rule] 4.1(B).” Swiggett,

       806 N.E.2d at 338 n.4.

       Court of Appeals of Indiana | Opinion 45A03-1606-CT-1283 | February 1, 2017   Page 9 of 16
[16]   In Washington, like in the case before us, copies of the summons and complaint

       were served personally at the defendant’s office and via mail as required by

       Trail Rule 4.1(B). 593 N.E.2d at 1276. “Service of process that is reasonably

       calculated to inform, consistent with the letter of Trial Rule 4.15(F), is

       sufficient even if it fails to actually inform the party to which it is directed.”

       Swaim v. Moltan Co., 73 F.3d 711, 721 (7th Cir. 1996), cert. denied sub nom Gurley

       v. Swaim, 517 U.S. 1244 (1996). Sergeant Coubal followed the letter of Trial

       Rule 4.1(B) as evidenced by the copy of the summons with the stamp indicating

       he delivered the summons and complaint, and the return receipt for the copy of

       the summons and complaint sent by certified mail; thus, we cannot say the trial

       court abused its discretion when it denied Menard’s motion to set aside default

       judgment based on the adequacy of Lane’s service of process. 3

                                              Notification of Attorney

[17]   Under Trial Rule 60(B)(3), “the court may relieve a party . . . [from] a judgment

       by default” when that party demonstrates “(3) fraud (whether heretofore

       denominated intrinsic or extrinsic), misrepresentation, or other misconduct of

       3
         Menard also argues service was inadequate because Lane completed service by mail to the wrong registered
       agent and should have done further research to determine the correct registered agent to send service to.
       Menard designated a copy of the Secretary of State’s page for the correct registered agent, as well as the
       information about Menard’s registered agent in its home state of Wisconsin. However, as Lane served the
       summons and complaint on the local office of the corporation pursuant to the requirements of Trial Rule
       4.6(A)(1), she was not required to serve the registered agent. See T.R. 4.6(A)(1) (“In the case of a domestic or
       foreign organization upon an executive officer thereof, or if there is an agent appointed or deemed by law to
       have been appointed to receive service, then upon such agent.”) (emphasis added); see also Volunteers of
       America v. Premier Auto Acceptance Corp., 755 N.E.2d 656, 659 (Ind. Ct. App. 2001) (“service upon the local
       office of an organization is effective service upon the organization”).

       Court of Appeals of Indiana | Opinion 45A03-1606-CT-1283 | February 1, 2017                       Page 10 of 16
       an adverse party.” Menard alleged misconduct by Lane’s attorney in its

       memorandum in support of its motion to set aside the default judgment:

       “despite having litigated cases against Menard in this area in the past, plaintiff’s

       counsel made no attempt to contact Menard or the firms that commonly

       represent it and which have worked with plaintiff’s counsel in the past,

       regarding the Motion for Default Judgment.” (App. Vol. II at 36.) In support

       of that contention, Menard designated two affidavits from two attorneys from

       two different firms who had represented Menard in the past in actions brought

       by the law firm representing Lane.

[18]   Menard likens the facts here to those in Smith, 711 N.E.2d at 1264, wherein our

       Indiana Supreme Court held service was inadequate because the plaintiff,

       Johnston, did not serve the summons and complaint on Smith’s attorney. In

       that case, Johnston filed a medical malpractice complaint against Smith before

       the Indiana Department of Insurance. Id. at 1261. After the Indiana

       Department of Insurance panel found in favor of Johnston, his counsel sent

       Smith’s counsel a letter with a settlement offer. Smith’s counsel, Locke

       Reynolds Boyd & Weisell (“Locke Reynolds”), rejected Johnston’s settlement

       offer via letter shortly before Johnston filed suit against Smith.

[19]   The complaint was served on Smith at his place of business by certified mail

       and a scrub nurse signed for the summons. Smith did not file an appearance or

       answer in the action, and approximately six weeks after filing his complaint,

       Johnston moved for default judgment. The trial court entered default judgment

       Court of Appeals of Indiana | Opinion 45A03-1606-CT-1283 | February 1, 2017   Page 11 of 16
       in favor of Johnston and ordered damages in the amount of $750,000 plus costs

       of $2,407.

[20]   Six days after the trial court’s order, Smith’s attorney from Locke Reynolds

       filed an appearance and a notice of intent to file a motion to set aside the

       default judgment. Smith subsequently filed a motion to set aside default

       judgment, alleging excusable neglect under Trial Rule 60(B)(1) and attorney

       misconduct under Trial Rule 60(B)(3). The trial court denied Smith’s motion.

[21]   On appeal, Smith argued the failure of Johnston’s attorney, Neiswinger, to

       provide a copy of the complaint or summons to Locke Reynolds when

       Neiswinger knew Locke Reynolds represented Smith “was misconduct

       warranting relief from the default judgment.” Id. at 1262. Johnston argued

       Neiswinger did not have a duty under the Trial Rules to provide a copy of the

       complaint or summons to Smith’s attorney, only to Smith, because he was the

       party. Our Indiana Supreme Court explained, citing the Indiana Rules of

       Professional Responsibility:

               The Rules are guidelines for lawyers and do not spell out every
               duty a lawyer owes to clients, the court, other members of the bar
               and the public. The preamble to the Rules is clear that “[t]he
               Rules, do not, however, exhaust the moral and ethical
               considerations that should inform a lawyer, for no worthwhile
               human activity can be completely defined by legal rules.” Thus
               lawyers’ duties are found not only in the specific rules of conduct
               and rules of procedure, but also in courtesy, common sense and
               the constraints of our judicial system. As an officer of the Court,
               every lawyer must avoid compromising the integrity of his or her
               own reputation and that of the legal process itself. These

       Court of Appeals of Indiana | Opinion 45A03-1606-CT-1283 | February 1, 2017   Page 12 of 16
               considerations alone demand that Neiswinger take the relatively
               simple step of placing a phone call to Locke Reynolds before
               seeking a default judgment.

               In addition, [Indiana Professional Responsibility] Rule 8.4(d)
               explicitly states that it is professional misconduct for a lawyer to
               engage in conduct that is prejudicial to the administration of
               justice. The administration of justice requires that parties and
               their known lawyers be given notice of a lawsuit prior to seeking
               a default judgment. A default judgment is appropriate only
               where 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 had made reasonable effort to contact that
               lawyer.

       Id. at 1263-4 (internal citations omitted). The Court further noted Neiswinger’s

       misconduct implicated “overriding considerations of confidence in our judicial

       system and the interest of resolving disputes on their merits.” Id. at 1261-62.

[22]   However, Smith is distinguishable. In this case, Menard indicated in its

       memorandum in support of its motion to set aside the default judgment,

       “despite having litigated cases against Menard in this area in the past, plaintiff’s

       counsel made no attempt to contact Menard or the firms that commonly

       represent it and which have worked with plaintiff’s counsel in the past,

       regarding the Motion for Default Judgment.” (App. Vol. II at 36.) In support

       of that contention, Menard designated two affidavits from two attorneys from

       two different firms who had represented Menard in the past in actions brought

       forth by the law firm representing Lane.

       Court of Appeals of Indiana | Opinion 45A03-1606-CT-1283 | February 1, 2017   Page 13 of 16
[23]   In Smith, Locke Reynolds represented Smith in legal proceedings directly

       related to the complaint filed by Johnston. The parties, facts, and attorneys

       were the same throughout. Here, there were at least two law firms that had

       represented Menard in the past, and neither indicated it was involved in

       litigation surrounding this particular incident. We cannot agree with Menard

       that Lane’s counsel was under a duty to notify multiple law firms of this

       litigation simply because Lane’s counsel knew those firms had represented

       Menard in other unrelated litigation. The trial court did not abuse its discretion

       when it denied Menard’s motion for relief of judgment based on alleged

       misconduct by Lane’s attorney.

                                                Excusable Neglect

[24]   Under Trial Rule 60(B)(1), a default judgment may be set aside for “mistake,

       surprise, or excusable neglect.” There are no fixed standards “to determine the

       bounds of ‘mistake, surprise or excusable neglect.’” Indiana Dept. of Nat. Res. v.

       Van Keppel, 583 N.E.2d 161, 162 (Ind. Ct. App. 1991), trans. denied. Menard

       argues the trial court abused its discretion when it denied its motion to set aside

       default judgment because there existed excusable neglect. Menard contends,

       “assuming that service had been perfected on an unidentified employee of

       Menard, there must have been some issue with communicating that fact to the

       appropriate individual.” (Br. of Appellant at 24.)

[25]   In support of their argument, Menard cites Nw. Nat. Ins. Co. v. Mapps, 717

       N.E.2d 947, 956 (Ind. Ct. App. 1999), and Smith, 711 N.E.2d at 1262.

       However, those cases actually support the premise a breakdown in
       Court of Appeals of Indiana | Opinion 45A03-1606-CT-1283 | February 1, 2017   Page 14 of 16
       communication is not excusable neglect. In Mapps, our court concluded it was

       not excusable neglect when Northwestern did not file an answer to Mapps’

       complaint because the regional manager had notice of the claim and was

       responsible for ensuring Northwestern’s interests were protected after the agent

       assigned the case was terminated and the office closed. 717 N.E.2d at 956. In

       Smith, our Indiana Supreme Court stated it was “neglect, but not excusable

       neglect,” 711 N.E.2d at 1262, when Smith “was aware that the person who had

       normally received the mail was no longer doing so and had simply failed to

       read his mail.” Mapps, 717 N.E.2d at 956.

[26]   Here, we have concluded Menard received service of process via personal

       delivery to the local Menard store and via certified mail to that store. The

       subsequent location of the summons and complaint is irrelevant and can be

       attributed to neglect, though not excusable neglect, by the Menard employee(s)

       who received the information and did not pass it to the appropriate person or

       act upon it. The trial court did not abuse its discretion when it denied Menard’s

       motion for relief from judgment based on excusable neglect.

                                                Conclusion
[27]   Lane attempted service of her complaint and summons in multiple ways, all of

       which conformed with the requirements of the Indiana Trial Rules.

       Additionally, Lane’s attorney did not engage in misconduct when she did not

       notify the two law firms who had represented Menard in the past. Finally, the

       Court of Appeals of Indiana | Opinion 45A03-1606-CT-1283 | February 1, 2017   Page 15 of 16
       breakdown in communication between Menard employees regarding the

       summons and complaint was not excusable neglect. Accordingly, we affirm.

[28]   Affirmed.

       Kirsch, J., and Crone, J., concur.

       Court of Appeals of Indiana | Opinion 45A03-1606-CT-1283 | February 1, 2017   Page 16 of 16