Opinion
22A-SC-2719
03-29-2023
Joe's, Inc., Appellant, v. Robert Adamczyk and Oscar Lopez, Jr., Appellees.
Attorney for Appellant Steven W. Etzler Etzler Lawhead Legal Group Crown Point, Indiana Attorney for Appellee Charles F.G. Parkinson Harris Welsh & Lukmann Chesterton, 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 Appellate Rule 65(D), this Memorandum Decision is not binding precedent for any court and may be cited only for persuasive value or to establish res judicata, collateral estoppel, or law of the case.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 Porter Superior Court The Honorable Christopher A. Buckley, Judge Trial Court Cause No. 64D04-1806-SC-2321
Attorney for Appellant Steven W. Etzler Etzler Lawhead Legal Group Crown Point, Indiana
Attorney for Appellee Charles F.G. Parkinson Harris Welsh & Lukmann Chesterton, Indiana
MEMORANDUM DECISION
BAILEY, JUDGE
Case Summary
[¶1] Joe's Inc. ("Joe's") appeals the small claims court's denial of Joe's motion to set aside the default judgment entered against it in an action filed by Robert Adamczyk and Oscar Lopez, Jr. (collectively, "the Employees"). Joe's presents one issue for our review, namely, whether the court erred when it denied Joe's motion to set aside the default judgment. We reverse and remand with instructions.
Facts and Procedural History
[¶2] On June 14, 2018, the Employees filed a notice of claim against Joe's in small claims court. In that notice, the Employees asserted that Joe's owed them "for wages and unpaid expenses related to employment." Appellant's App. Vol. 2 at 2. In particular, they asserted that Joe's owed Adamczyk $2,034.57 and Lopez $2,446.53. The Employees also each filed an affidavit of debt in which they reiterated the amount they believed Joe's owed them. The court scheduled an initial hearing on the claim for August 17.
[¶3] On August 9, Steven Etzler filed his appearance on behalf of Joe's. That same day, he filed a motion to continue the initial hearing. On Joe's motion, the court issued an order in which it rescheduled the initial hearing for October 5. Joe's failed to appear at the hearing. As a result, the Employees filed a motion for default judgment against Joe's. Joe's responded and asserted that its "counsel did not receive notice of the October 5, 2018, hearing" and that a default judgment "would not be appropriate." Appellant's App. Vol. 2 at 10. In support of its motion, Joe's submitted the affidavit of Etzler in which Etzler affirmed that neither he nor his assistant "received notice through the court's docket system, Odyssey[,] or in any other manner of the October 5, 2018, hearing date that was issued by the court." Id. at 12.
[¶4] On October 8, the court denied the Employees' motion but indicated that it would grant the motion "upon receipt of affidavit of good service." Id. at 14 (capitalization removed). On October 12, the attorney for the Employees submitted an affidavit to the court in which he indicated that he had received a notification via email indicating that the initial hearing had been rescheduled for October 5. He further indicated that the "notification states that the Other Party noticed was attorney Steven Wayne Etzler." Appellees' App. Vol. 2 at 5. The court did not take any action at that time.
[¶5] In June 2022, the court, on its own motion, scheduled a hearing pursuant to Trial Rule 41(E). In response, on September 1, the Employees filed a second motion for default judgment. In that motion, they again asserted that Joe's had failed to appear at the October 5, 2018, initial hearing. The court held the Trial Rule 41(E) hearing on September 2, and Joe's failed to appear. The court granted the Employees' motion for default judgment on September 13, 2022.
[¶6] On October 6, Joe's filed a motion to set aside the default judgment. Joe's reasserted that it had not received notice of the October 5, 2018, hearing date and that there was no "actual proof of service." Appellant's App. Vol. 2 at 23 (emphasis removed). The court denied Joe's motion to set aside default judgment without a hearing. This appeal ensued.
Discussion and Decision
[¶7] Joe's appeals the small claims court's denial of its motion to set aside the default judgment. As this Court has previously stated:
The party moving to set aside the judgment has the burden to establish grounds for relief from default (i.e., "good cause"). All Season Exteriors, Inc. v. Randle, 624 N.E.2d 484 (Ind.Ct.App. 1993). In order to obtain relief, the movant must ordinarily establish, by affidavit or introduction of evidence at a hearing, a factual basis for relief and a meritorious defense. Sears v. Blubaugh, 613 N.E.2d 468 (Ind.Ct.App. 1993), trans. denied. The movant may, however, also meet its burden by showing that the default judgment should not have been granted in the first place. Ultimately, the court's decision whether to set aside the default judgment is reviewed for an abuse of discretion, which will be found only where the court's action was clearly against the logic and effect of the circumstances or the court misinterpreted the law. King v. United Leasing, Inc., 765 N.E.2d 1287 (Ind.Ct.App. 2002).KOA Properties LLC v. Matheison, 984 N.E.2d 1255, 1258 (Ind.Ct.App. 2013).
[¶8] We first address Joe's claim on appeal that the court erred when it entered the default judgment in the first place. In particular, Joe's contends that the entry of default judgment was improper because the Employees had failed to establish a prima facie case for recovery. However, Joe's did not raise this as a ground for relief to the small claims court. Indeed, in its motion to set aside the default judgment, Joe's simply asserted that the default judgment was improper because Joe's "did not receive notice of the October 5, 2018, hearing" and because the Employees were "unable to provide actual proof of service." Appellant's App. Vol. 2 at 23 (emphasis in original). Joe's did not make any argument that the Employees had failed to establish a prima facie case for recovery. "'An appellant who presents an issue for the first time on appeal and under these circumstances waives the issue for purposes of appellate review.'" KOA Properties LLC, 984 N.E.2d at 1258 (quoting Breneman v. Slusher, 768 N.E.2d 451, 463 (Ind.Ct.App. 2002)). Because Joe's failed to raise this issue to the trial court, it is waived. See id. (holding that, because the appellant had failed to raise the issue of whether default judgment was improper on the ground that the plaintiff had failed to establish a prima facie case for recovery, the appellant had waived its claim on appeal).
[¶9] Next, Joe's contends that the court erred when it denied Joe's motion to set aside the default judgment without a hearing. In particular, Joe's asserts that a local rule requires the court to hold a hearing when a party files a motion to set aside default judgment. As this Court has recently discussed:
"Indiana trial courts may establish local rules for their own governance so long as the local rules do not conflict with the rules established by this Court or by statute." Gill v. Evansville Sheet Metal Works, Inc., 970 N.E.2d 633, 646 (Ind. 2012) (citations omitted). "As a general matter, local rules are procedural and 'are intended to standardize the practice within that court, to facilitate the effective flow of information, and to enable the court to rule on the merits of the case.'" Id. (quoting Meredith v. "
court and all litigants subject to the local rules are bound by them." Id.Ameristar Casino East Chicago, LLC v. Ferrantelli, 120 N.E.3d 1021, 1027-28 (Ind.Ct.App. 2019).
[¶10] To support its assertion that a local rule required the court to hold a hearing, Joe's directs us to Porter County Local Rule 1500.50. That rule provides that a "default judgment may be set aside according to the procedure set forth in [Small Claims Rule] 10(C): (1) Expedited Hearing. An expedited hearing on such a motion to set aside default judgment shall be set on the Judge's calendar. . . ." LR64-SC11-1500.50 (emphasis added). Based on that rule, Joe's contends that the "customary meaning of the word 'shall' is mandatory" and, as such, that the local rule "requires that a hearing be scheduled[.]" Appellant's Br. at 7. In response, the Employees assert that the local rule "permits the trial court to hold a hearing on a motion to set aside a default judgment, but does not require the trial court to hold a hearing." Appellees' Br. at 10 (emphasis in original).
[¶11] We must agree with Joe's. The local rule is clear. The court "shall" set a hearing on the motion to set aside default judgment. LR64-SC11-1500.50. Contrary to the Employees' assertion on appeal, there is nothing merely permissive about that language; rather, a hearing is mandatory. Had the drafters of the local rule wanted to make a hearing optional, they could have used the word "may" instead of "shall." But it did not. And once the mandatory language was included in the local rule, the court and all parties were bound by it. See Ferrantelli, 120 N.E.3d at 1028.
[¶12] Still, the Employees appear to contend that, because the small claims rules do not require a hearing on a motion to set aside a default judgment, the local Porter County rules also cannot require it. The Employees are correct that all small claims proceedings in the Porter Superior Court shall be governed by both the Small Claims Rules promulgated by the Supreme Court and the local rules. See LR64-SC00-1000.10. Further, in any instance where the local rules "conflict with the rules of the Indiana Supreme Court, the latter shall control." Id. In other words, if there is a conflict between the local rules and the Small Claims Rules, the Small Claims Rules govern, and the local rule does not apply.
[¶13] Indiana Small Claims Rules 10(C) provides that, "[u]pon good cause shown the court may, within one year after entering a default judgment, vacate such judgment and reschedule the hearing on the original claim." The Employees contend that the "rule does not require the trial court to conduct a hearing on a motion to vacate a default judgment and should control." Appellees' Br. at 11 (emphasis in original). The Employees are correct that there is no requirement in the small claims rules for a small claims court to hold a hearing on a motion to set aside a default judgment. However, we hold that the small claims rule and the local rule do not conflict. Indeed, the local rule clearly requires a court to hold a hearing on motion to set aside a default judgment. And, as the Employees acknowledge, "nothing in S.C.R. 10(C) requires (or even mentions) a hearing on a motion to set aside default." Id. at 10. Because the small claims rules do not mention, let alone prohibit, a small claims court from holding a hearing on a motion to set aside default judgment, the two rules are not in conflict, and the local rule requiring a hearing applies.
[¶14] The Employees next contend that, if the rules require the court to hold a hearing, Joe's "is estopped from relief on appeal" because Joe's failed to request a hearing on its motion. Appellees' Br. at 12. To support their claim, the Employees rely on Porter County Local Rule 3300.20, which provides that all motions "shall be set for hearing at the time of their filing. It shall be the responsibility of the movant or the movant's attorney to secure the date of such hearing" from the court. LR64-TR05-3300.20. However, we first note that that is a local rule governing the civil plenary docket, not the small claims docket. And the relevant small claims rule simply provides that an expedited hearing on a motion to set aside default judgment "shall be set on the Judge's calendar." LR64-SC00-1500.50. There is no requirement in that rule for the movant to secure the hearing date or request a hearing. Instead, the rule simply requires the court to schedule a hearing.
There are a few exceptions to that rule, none of which are relevant here.
[¶15] In any event, even if we assume for sake of argument that Local Rule 3300.20 applies, Joe's requested a hearing in its motion to set aside the default judgment against it. In particular, at the end of its motion, Joe's moved the court to grant Joe's motion to set aside default judgment, "set this matter for a hearing on the merits," and for all other just and proper relief. Appellant's App. Vol. 2 at 23. While that request could be interpreted as one for a hearing on the merits of the Employees' initial claim, it can also be interpreted as a request for a hearing on the merits of Joe's motion to set aside the default judgment. Based on that request and the clear requirement that a court set a hearing on a motion to set aside a default judgment, we hold that Joe's is not estopped from asserting that the court was required to hold a hearing on its motion.
[¶16] It is the burden of Joe's, as the party moving to set aside the judgment, to establish a ground for relief from default. See KOA Properties, LLC, 984 N.E.2d at 1258. To obtain relief, Joe's must "establish, by affidavit or introduction of evidence at a hearing, a factual basis for relief and a meritorious defense." Id. Because the court granted the Employees' second motion for default judgment without the required hearing, Joe's did not have the opportunity to establish the factual basis for relief.
Conclusion
[¶17] In sum, Joe's has waived any claim on appeal that the entry of default judgment was improper. However, the court was required by the local rules to hold a hearing on Joe's motion to set aside the default judgment. Because the court did not hold a hearing on Joe's motion, we reverse the court's denial of Joe's motion and remand with instructions for the court to hold a hearing, at which Joe's can have the opportunity to establish a factual basis for relief.
[¶18] Reversed and remanded with instructions.
Brown, J., and Weissmann, J., concur.