Opinion
24A-CT-208
07-10-2024
Gulf Coast Development Corporation and Island Development Corporation, Appellants-Defendants v. Kimberly Meador, Appellee-Plaintiff
ATTORNEYS FOR APPELLANTS Scott E. Andres Christopher J. Appel Charles J. Maiers Due Doyle Fanning &Alderfer, LLP Indianapolis, Indiana ATTORNEYS FOR APPELLEE Joshua A. Atkinson Coldren, Frantz &Sprunger Portland, Indiana Cady R. Wilson Sprunger &Sprunger Berne, Indiana
Pursuant to Ind. Appellate Rule 65(D), this Memorandum Decision is not binding precedent for any court and may be cited only for persuasive value or to establish res judicata, collateral estoppel, or law of the case.
Appeal from the Allen Superior Court The Honorable Craig J. Bobay, Judge Trial Court Cause No. 02D02-2303-CT-000185
ATTORNEYS FOR APPELLANTS Scott E. Andres Christopher J. Appel Charles J. Maiers Due Doyle Fanning &Alderfer, LLP Indianapolis, Indiana
ATTORNEYS FOR APPELLEE Joshua A. Atkinson Coldren, Frantz &Sprunger Portland, Indiana Cady R. Wilson Sprunger &Sprunger Berne, Indiana
MEMORANDUM DECISION
Felix, Judge.
Statement of the Case
[¶1] In March 2023, Kimberly Meador sued Gulf Coast Development Corporation ("Gulf Coast") and Island Development Corporation ("Island") (collectively, the "Developers") for injuries she sustained from falling at a Culver's restaurant owned by Gulf Coast. After the Developers did not timely respond to Meador's lawsuit, Meador filed a motion for default judgment, which was granted. Gulf Coast received all filings from this case, but it did not read any of them until mid-September 2023, after Meador had initiated proceedings supplemental. The Developers subsequently filed a motion to set aside the default judgment, which the trial court denied. The Developers now appeal, raising two issues for our review that we revise and restate as the following single issue: Whether the trial court abused its discretion by denying the Developers' motion to set aside the default judgment.
[¶2] We affirm. Facts and Procedural History
[¶3] Gulf Coast is a holding company that owns the Culver's restaurant located at 3510 East Dupont Road, Fort Wayne, Indiana. Casual Custard Concepts, Inc. ("Casual") operates that restaurant. According to the Developers, Island "neither owns nor operates the subject restaurant," Appellants' Am. App. Vol. II at 57 n.1, but Island's registered address is the same as the restaurant's address and Gulf Coast's principal office address, and both entities share the same president and registered agent.
[¶4] In late November 2022, Meador was at the Culver's restaurant located at 3510 East Dupont Road when she slipped and fell. Meador spoke with representatives from Culver's shortly after the incident and sent a preservation letter in mid-December. On March 3, 2023, Meador filed her complaint for negligence against the Developers. On March 8 and 17, respectively, Gulf Coast and Island received service of the complaint and summons via certified mail; however, neither filed an appearance, responsive pleadings, or otherwise defended the action. On April 20, 2023, Meador filed a motion for default judgment. On May 31, 2023, the trial court held a hearing on Meador's motion, but the Developers did not attend. On June 1, 2023, the trial court granted Meador's motion and entered a $50,000 judgment against the Developers jointly and severally.
[¶5] On August 16, 2023, Meador filed verified motions for proceedings supplemental against the Developers. The next day, the trial court granted Meador's motions and set a hearing. On September 15, 2023, six days before the hearing on Meador's motions, the Developers filed their appearances, a motion to continue the upcoming hearing, and a notice of their intent to file a motion to set aside the default judgment. On September 22, 2023, the Developers filed their motion to set aside the default judgment pursuant to Indiana Trial Rule 60(B), alleging that their failure to appear in the case "was excusable" and they had "a meritorious defense" to Meador's claims. Appellants' Am. App. Vol. II at 55, 58.
[¶6] In support of their motion, the Developers submitted only the affidavit of Sandy Geisler, the secretary of Gulf Coast. Geisler averred that "Casual and its sister restaurant have been sued twice in Allen County for personal injury" and that when she received the complaints and summonses in those two cases, she had "immediately turned them into [her] insurance carrier." Appellants' Am. App. Vol. II at 65-66. Geisler claimed that she "had never heard" of Meador's lawsuit until September 13, 2023, when she received an order to appear at the proceedings supplemental hearing. Id. at 66. According to Geisler, she then "went back through [her] records, and [she] found several pleadings in the Meador case, including the Complaint, the Motion for Default Judgment, and the Motion for Proceedings Supplemental." Id. Geisler asserted that those filings "were placed in an area of [her] office where [she] had put pleadings [she] had received in the other two lawsuits," so she "erroneously assumed that the pleadings from the Meador lawsuit were pleadings from the other two lawsuits"; consequently, Geisler "did not properly review" the filings in this case. Id. Additionally, Geisler stated that "it is [her] belief that the accident was caused by Ms. Meador's own fault as we take great pride in the appearance and safety at our restaurants." Id.
[¶7] On December 6, 2023, the trial court heard argument on the Developers' motion to set aside the default judgment. On December 28, 2023, in a well written order, the trial court denied the Developers' motion to set aside the default judgment, finding that the Developers' neglect of Meador's lawsuit had not been excusable and that they had not made a prima facie showing of a meritorious defense to Meador's claims. This appeal ensued.
Discussion and Decision
The Trial Court Did Not Abuse Its Discretion by Denying the Developers' Motion to Set Aside the Default Judgment
[¶8] The Developers claim that the trial court abused its discretion when it denied their motion to set aside the default judgment. We give substantial deference to a trial court's decision whether to set aside a default judgment "because any determination of excusable neglect, surprise, or mistake must turn upon the unique factual background of each case." Huntington Nat'l Bank v. Car-X Assoc. Corp., 39 N.E.3d 652, 655 (Ind. 2015) (quoting Kmart Corp. v. Englebright, 719 N.E.2d 1249, 1253 (Ind.Ct.App. 1999)). The trial court must also "balance the need for an efficient judicial system with the judicial preference for deciding disputes on the merits." Id. (quoting Englebright, 719 N.E.2d at 1253). We thus review a trial court's decision whether to set aside a default judgment for an abuse of discretion. Id. (quoting Englebright, 719 N.E.2d at 1253). An abuse of discretion occurs when "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." Id. (quoting Englebright, 719 N.E.2d at 1253). We do not "reweigh the evidence or substitute our judgment for that of the trial court." Id. (quoting Englebright, 719 N.E.2d at 1253). The movant bears the burden of demonstrating sufficient grounds for relief under Trial Rule 60(B). Id. (quoting Englebright, 719 N.E.2d at 1253).
[¶9] The Developers moved to set aside the default judgment pursuant to Trial Rule 60(B)(1). Under that rule, "a trial court may relieve a party from a default judgment for 'mistake, surprise, or excusable neglect' if the party files a motion within one year of the judgment and alleges a meritorious claim or defense." Huntingon Nat'l Bank, 39 N.E.3d at 655 (quoting Ind. Trial Rule 60(B)(1)). A Trial Rule 60(B)(1) motion is "[a]ddressed to the trial court's equitable discretion" because such a motion "does not attack the substantive, legal merits of a judgment, but rather addresses the procedural, equitable grounds justifying the relief from the finality of a judgment." Id. (quoting Englebright, 719 N.E.2d at 1254).
[¶10] The Developers specifically argue that the trial court erred when it determined that the Developers did not carry their burdens of establishing excusable neglect and of making a prima facie showing of a meritorious defense. We address each argument in turn.
Although Trial Rule 60(B)(1) allows a defendant to challenge a default judgment based upon "mistake, surprise, or excusable neglect," the Developers only challenge the default judgment against them based upon excusable neglect.
Excusable Neglect
[¶11] "[T]here is no general rule as to what constitutes excusable neglect under Trial Rule 60(B)(1)," so "[e]ach case must be determined on its particular facts." Huntington Nat'l Bank, 39 N.E.3d at 655 (second alteration in original) (quoting Englebright, 719 N.E.2d at 1254). Here, the particular facts are that Geisler was responsible for receiving and handling legal mail for Gulf Coast and Casual and that she took no action on the pleadings in this case until mid-September 2023 because she assumed the court documents she received in this case were filings in the other two lawsuits against Casual.
[¶12] The Developers argue that these facts demonstrate a breakdown in communications that amounts to excusable neglect. A breakdown in communication may constitute excusable neglect in certain circumstances, such as when "the unchallenged credible testimony establishes a breakdown in communication which results in a party's failure to appear for trial." Whittaker v. Dail, 584 N.E.2d 1084, 1087 (Ind. 1992); see also Boles v. Weidner, 449 N.E.2d 288 (Ind. 1983); Flying J, Inc. v. Jeter, 720 N.E.2d 1247, 1248, 1250 (Ind.Ct.App. 1999). However, if the defaulted party's delay in defending an action is "wholly attributable to [its] inattentiveness," then "no true breakdown in communication between agents of the party that caused the party's failure to appear" has occurred, and there is no excusable neglect on these grounds. Huntington Nat'l Bank, 39 N.E.3d at 657; see also Smith v. Johnston, 711 N.E.2d 1259, 1262 (Ind. 1999).
[¶13] The Developers contend that the facts here are substantially similar to those in Whelchel v. Community Hospitals of Indiana, Inc., 629 N.E.2d 900 (Ind.Ct.App. 1994). In Whelchel, Community Hospitals of Indiana, Inc. sued Whelchel in Marion County, for which she received the complaint and summons. Id. at 902. The same day that Whelchel received the initial filings for Community's lawsuit against her, she also received a summons to appear in Hamilton County Small Claims Court. Id. Whelchel sent all the legal documents she received to her counsel via facsimile, but she did not understand that "these legal documents related to separate actions against her." Id. Community obtained a default judgment against Whelchel after she failed to defend the action. Id. When Whelchel eventually appeared in Community's action against her and filed a motion to set aside the default judgment, Whelchel's attorney filed an affidavit in which he averred that
his office was contacted to represent Whelchel in an action brought by Community. Whelchel thereafter sent the materials to counsel via facsimile, and based on said materials, counsel was alerted only to the Hamilton County action. Counsel appeared and defended the Hamilton County action. Immediately upon being notified by Whelchel of the default judgment in the Marion County action, counsel entered an appearance in her behalf and filed the motion for relief from default judgment based on his excusable neglect with respect to his belief that only one action was pending against his client.Id. The Whelchel court determined that these facts established a breakdown in communication that constituted excusable neglect. Id. at 903. In particular, that panel observed that "neither Whelchel nor her counsel was aware of the pending lawsuit in Marion County" and that it was reasonable to assume that Whelchel's counsel would have appeared in the Marion County case brought by Community if not for the misunderstanding. Id.
[¶14] There are two key differences between the facts here and the facts in Whelchel. First, Whelchel was an individual, 629 N.E.2d at 902, not a corporate entity as are the Developers, see Huntington Nat'l Bank, 39 N.E.3d at 658 (quoting Security Bank &Trust Co. v. Citizens Nat. Bank of Linton, 533 N.E.2d 1245, 1247 (Ind. Ct. App 1989)) (concluding a bank "underst[ands] perfectly the ramifications of foreclosure suits and summons"). Second, Whelchel read the legal documents she received from lawsuits and promptly took action, id.; she did not wait months to review those documents and take action thereon like the Developers did here. In other words, Whelchel did all she knew how to do: she read her mail, promptly notified her attorney of Community's lawsuit, and sent the legal paperwork she received to her attorney via facsimile. Id. However, due to a facsimile error or her legal counsel's misunderstanding of the documents, Whelchel did not appear in Community's action against her until after Community obtained a default judgment. Id. By contrast, the Developers failed to review the filings they received from Meador's lawsuit because they assumed those documents were from two other lawsuits against Casual. It was not until months later that the Developers finally read their mail and realized the documents they had ignored were from Meador's lawsuit. Thus, the facts in Whelchel are readily distinguishable from the facts of this case, and the Developers' reliance thereon is unavailing.
[¶15] Meador contends that the facts here are substantially similar to those in Smith v. Johnston, 711 N.E.2d 1259 (Ind. 1999) and Huntington National Bank v. Car-X Association, Corp., 39 N.E.3d 652 (Ind. 2015). In Smith, Johnston sued Smith and Smith Surgical Group for medical malpractice. 711 N.E.2d at 1261. After the medical review panel process completed, Johnston sued Smith and Smith Surgical Group in Marion County, for which both Smith and Smith Surgical Group received the complaint and summons at Smith Surgical Group's offices. Id.
However, . . . the office manager was in the process of leaving the Group and was not in the office during the time the lawsuit was filed and the trial court entered the default judgment. Because the office manager was away, the scrub nurse, who did not normally receive mail, placed the summonses on Smith's desk. Smith did not see the summonses until after the default judgment was entered.Id. at 1262.
[¶16] Our Supreme Court determined that these facts did not establish excusable neglect because "Smith was aware that the person who normally handled legal mail was no longer doing that job. Nonetheless, Smith ignored his mail, including the summonses and motion for default." Smith, 711 N.E.2d at 1261. In reaching this conclusion, our Supreme Court observed that in cases where excusable neglect had occurred, "the defendants did all that they were required to do but subsequent misunderstandings as to the assignments given to agents of the defendants resulted in the failure to appear." Id. Conversely, in Smith, "Smith knew his mail was unattended and accepted the risk of adverse consequences." Id.
[¶17] Similarly, in Huntington National Bank, Car-X sued to foreclose a judgment lien and named Huntington National Bank as a defendant to answer for any interest it may have because of its mortgage on the subject property. 39 N.E.3d at 654. Huntington received service of the complaint and summons the day after Car-X filed suit, but the Huntington employee who typically received service of process for the bank was away on maternity leave and her replacement let the documents sit on his desk and did not refer the case to counsel until after Huntington's deadline to answer had passed. Id. Car-X obtained a default judgment against Huntington, and Huntington filed a motion to set aside that judgment. Id. Our Supreme Court concluded that Huntington's failure to defend the action was due to its own inattentiveness and no true breakdown in communication occurred; rather, Huntington subjected itself to a default judgment because its employee let the filings "sit on his desk until the time to respond had pas[sed]." Id. at 658. Additionally, our Supreme Court noted that "[a] savvy, sophisticated bank exceedingly familiar with foreclosure actions that fails to respond to a complaint and summons for no reason other than an employee's disregard of the mail cannot successfully allege a breakdown in communication sufficient to establish excusable neglect." Id.
[¶18] The facts here are appreciably similar to those in Smith and Huntington National Bank. The Developers are corporate entities and Geisler, who was responsible for the mail, failed to review the filings she received in this case. Geisler's responsibilities included receiving the mail just like the employees in Smith and Huntington National Bank. Geisler, in her capacity as a corporate employee, was familiar with personal injury lawsuits, yet she chose to ignore her mail based on her assumption that Meador's filings were filings from two other pending personal injury actions. As our Supreme Court explained in Smith, 711 N.E.2d at 1262, and reiterated in Huntington National Bank, 39 N.E.3d at 658 (quoting Smith, 711 N.E.2d at 1262), "The judicial system simply cannot allow its processes to be stymied by simple inattention." Based on the foregoing, we conclude that the trial court did not err by finding that the Developers' neglect of Meador's lawsuit was not excusable neglect under Trial Rule 60(B)(1). See Huntington Nat'lBank, 39 N.E.3d at 657-58; Smith, 711 N.E.2d at 1262.
Meritorious Defense
[¶19] Assuming arguendo that the Developers were able to establish excusable neglect, they also had to make a prima facie showing that they had a meritorious defense to Meador's claims. That is, they did not need "to prove a meritorious defense but 'need only present evidence that, if credited, demonstrates that a different result would be reached if the case were retried on the merits and that it is unjust to allow the judgment to stand.'" Inspire Outdoor Living v. Norris, 193 N.E.3d 428, 430-31 (Ind.Ct.App. 2022) (quoting Outback Steakhouse of Fla., Inc. v. Markley, 856 N.E.2d 65, 73-74 (Ind. 2006)) (citing Logansport/Cass Cnty. Airport Auth. v. Kochenower, 169 N.E.3d 1143, 1148-49 (Ind.Ct.App. 2021)). Conclusory statements do not suffice to make this prima facie showing. Kochenower, 169 N.E.3d at 1148.
[¶20] The Developers assert they made a prima facie showing that they have a meritorious defense to Meador's claims. In support of this assertion, the Developers argue that the facts in Shane v. Home Depot USA, Inc., 869 N.E.2d 1232 (Ind.Ct.App. 2007), are analogous to the facts here. In Shane, Shane sued Home Depot after he allegedly tripped over an electrical service panel in Home Depot's parking lot. Id. at 1233. Shane obtained a default judgment against Home Depot, and Home Depot claimed that judgment should be set aside for excusable neglect and because it had a meritorious defense. Id. In support of its motion to set aside the default judgment, Home Depot submitted an affidavit from its attorney containing photographs of the area where Shane tripped, an emergency medical services report and a nursing note from a local hospital regarding Shane's injuries, and a discharge diagnosis concerning Shane's medical problems unrelated to the fall. Id. at 1236-37. Another panel of this court determined that Home Depot's counsel's affidavit was sufficient to make a prima facie showing of a meritorious defense, especially in light of "the short time between [counsel's] receipt of the case and the hearing," which was approximately one month. Id. at 1238.
[¶21] The Developers submitted only Geisler's affidavit in support of their motion to set aside the default judgment, and that affidavit contains only one allegation in support of their argument that they have a meritorious defense: "With regard to the substance of the [sic] Ms. Meador's Complaint, it is [Geisler's] belief that the accident was caused by Ms. Meador's own fault as we take great pride in the appearance and safety at our restaurants." Appellants' Am. App. Vol. II at 66. The trial court determined that "this single, conclusory, self-serving statement is insufficient to establish a prima facie meritorious defense of comparative fault." Id. at 9 (emphasis in original). In addition, the Developers had approximately three months between their attorneys' receipt of this case and the hearing on their motion to set aside the default judgment. Nonetheless, the Developers only pointed to Geisler's belief about the merits of Meador's lawsuit and did not present any evidence that demonstrates a different result would be reached if this case was tried on its merits. Therefore, we cannot say the trial court erred by finding that the Developers failed to make a prima facie showing of a meritorious defense to Meador's claims. See Shane, 869 N.E.2d 1236-38; Smith, 711 N.E.2d at 1265.
Conclusion
[¶22] In sum, the trial court did not err by finding that the Developers failed to establish excusable neglect and that they failed to make a prima facie showing of a meritorious defense. Accordingly, the trial court did not abuse its discretion by denying the Developers' motion to set aside the default judgment. We therefore affirm the trial court's decision.
[¶23] Affirmed.
Riley, J., and Kenworthy, J., concur.