FRONT ROW MOTORS, LLC, and Jerramy Johnson, Appellants (Defendants below), v. Scott JONES, Appellee (Plaintiff below).
No. 49S02-1311-PL-758.
Supreme Court of Indiana.
March 27, 2014.
7 N.E.3d 753
Robert Edward Duff, Indiana Consumer Law Group/Law Office of Robert E. Duff, Lebanon, IN, Attorney for Appellee.
RUCKER, Justice.
A car dealership appeals the denial of its motion to set aside default judgment. We conclude the trial court lacked jurisdiction over the dealership at the time the default was entered and therefore reverse the trial court‘s judgment.
Facts and Procedural History
Jerramy1 Johnson is a car dealer and the owner of Front Row Motors, LLC.
After Johnson failed to respond to the amended complaint, Jones moved for a hearing on default judgment and damages. Notice of the hearing was served on Johnson at his business address as well as his home address. The record would later reveal Jones was aware that Johnson was still in the custody of the Hamilton County Community Corrections facility. At a hearing where neither of the defendants nor counsel on their behalf appeared, the trial court awarded damages in favor of Jones and against Johnson and Front Row Motors “jointly and severally” in the amount of $34,616.73. App. at 61.
Thereafter counsel re-entered his appearance for Front Row Motors and also entered his appearance for Johnson individually. Represented by counsel, defendants moved to set aside the default judgments based on “Imperfect Service of Process.” App. at 63. Among other things the motion alleged “the Default Judgment is void as a matter of law” citing
[T]he essence of your argument is that when the Plaintiff filed their Motion for Hearing on a Default Judgment Damages, their certificate of service was to Front Row Motors, care of the registered agent, at [Johnson‘s home address] at a time when they knew that
Mr. Johnson was in custody in Hamilton County, and ... service to Jerramy Johnson at [Johnson‘s business address]. *
*
*
So that they, knowing he was at neither one of those places, that‘s where their certificate of service went[.]
Tr. at 64-65. To which counsel replied: “That[‘s] correct.” Tr. at 65.
Jones conceded that whether valid service was made on Johnson in his individual capacity was “a very close question” and thus did “not object to the judgment against Jerramy Johnson personally being set aside.” App. at 101. However, with respect to Front Row Motors Jones contended it was not entitled to service during the period in which the company was unrepresented; service of the various pleadings during this period of time was made at one or more of the three different addresses associated with Johnson and/or Front Row Motors; and there was no evidence that Johnson, while incarcerated at the corrections facility, was not being forwarded the mail sent to his other addresses. See Tr. at 71-73.
The trial court entered an order setting aside the default judgment as against Johnson because “Plaintiff did not object to the default judgment against Jerramy Johnson personally being set aside.” App. at 8 (Order on Def.‘s Mot. to Set Aside Default J. at 1). As for Front Row Motors the trial court denied the motion on grounds that Defendants’ argument “is not well taken.” Id.
Johnson and Front Row (collectively “Appellants“) timely appealed arguing the trial court abused its discretion in failing to set aside the default judgment as to Front Row.3 Jones responded with a motion to dismiss the appeal on grounds that the trial court‘s order was neither a final judgment nor an appealable interlocutory order. Appellants filed a memorandum in response and Jones filed a brief in reply. In unpublished orders the Court of Appeals granted Jones’ motion, declared the appeal “dismissed with prejudice” and denied rehearing. See Front Row Motors, LLC v. Jones, No. 49A02-1206-PL-502 (Ind.Ct.App. Feb. 15 and Apr. 22, 2013). Appellants sought transfer which this Court granted by order dated November 14, 2013 thereby assuming jurisdiction over this appeal. See
Discussion
I. Appellate Jurisdiction
In support of his motion to dismiss this appeal Jones argued: “Because the judgment against Jerramy Johnson was set aside, the trial court‘s order did not dispose of all claims as to all parties and therefore was not a final appealable judgment.” Pl‘s Mot. to Dismiss at 1 (citations omitted). Jones also contended: “Appellants did not pursue this appeal as an interlocutory appeal pursuant to
A judgment as to one or more but fewer than all of the claims or parties is final when the court in writing expressly determines that there is no just reason for delay, and in writing expressly directs entry of judgment, and an appeal may be taken upon this or other issues resolved by the judgment; but in other cases a judgment, decision or order as to less than all the claims and parties is not final.
As we declared in Martin v. Amoco Oil Co., 696 N.E.2d 383, 385 (Ind.1998), “[a] judgment or order as to less than all the issues, claims, or parties in an action may become final only by meeting the requirements of
At first blush it would appear the trial court‘s order in this case was indeed not final. By granting in part and denying in part Appellants’ motion to set aside the default judgments, the trial court adjudicated “less than all the claims and parties.”
In the case before us Appellants’ motion to set aside the default judgments entered against them invoked several grounds for relief under
II. Merits of The Appeal
“Upon appellate review of a refusal to set aside a default judgment, the trial court‘s ruling is entitled to deference and will be reviewed for abuse of discretion.” Allstate Ins. Co. v. Watson, 747 N.E.2d 545, 547 (Ind.2001). However, the trial court‘s discretion “should be exercised in light of the disfavor in which default judgments are held.” Id. “Indiana law strongly prefers disposition of cases on their merits.” Coslett, 798 N.E.2d at 861. And “[a]ny doubt of the propriety of a default judgment should be resolved in favor of the defaulted party.” Id.
We also note Jones has not filed a brief in support of the trial court‘s judgment. See supra note 4. When the Appellee fails to submit an answer brief “we need not undertake the burden of developing an argument on the [A]ppellee‘s behalf.” Trinity Homes, LLC v. Fang, 848 N.E.2d 1065, 1068 (Ind.2006). Instead “we will reverse the trial court‘s judgment if the appellant‘s brief presents a case of prima facie error.” Id. “Prima facie error in this context is defined as, ‘at first sight, on first appearance, or on the face of it.‘” Id. (quoting Santana v. Santana, 708 N.E.2d 886, 887 (Ind.Ct.App. 1999)).
In this case at the hearing on the motion to set aside the default judgments neither side called witnesses nor introduced exhibits into evidence. Rather the trial court entertained arguments of counsel. And counsel for Appellants specifically represented: “He [Johnson] did not have, he [Johnson] did not have notice....” Tr. at 65. Further, there appears to be no dispute that (a) Jones knew Johnson was the registered agent of Front Row Motors, LLC, (b) Jones knew that at the time he purportedly sent notice to Johnson of the default damages hearing, Johnson was in the custody of the Hamilton County Corrections facility, and (c) despite this knowledge Jones did not serve Johnson at the facility. For example the record shows on May 18, 2011 Jones served by U.S. Mail a copy of his amended complaint upon Johnson as “Registered Agent of Front Row Motors, LLC” at Johnson‘s home address; and upon Johnson in his individual capacity at his home address, his business address, as well as the address of the Hamilton Community Corrections Facility. App. at 55. But on June 29, 2011, when Jones served notice of the motion for default judgment and damages hearing, he did so only at Johnson‘s home and business addresses. See App. at 58. When the trial court specifically asked counsel for Jones, “[s]o you were aware that he was in community corrections” counsel responded, “I think that‘s a reasonable inference from that ... that we were.” Tr. at 77.
On a motion to set aside a default judgment, the burden is on the movant to show sufficient grounds for relief. Stidham v. Whelchel, 698 N.E.2d 1152, 1156 (Ind.1998) (citation omitted).
As we have observed: “[N]otice should be such as is reasonably calculated to inform defendant of the pending proceedings.” In re Adoption of L.D., 938 N.E.2d 666, 671 (Ind.2010) (quoting Mueller v. Mueller, 259 Ind. 366, 287 N.E.2d 886, 889 (1972)); see also Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 315 (1950) (“[W]hen notice is a person‘s due, process which is a mere gesture is not due process. The means employed must be such as one desirous of actually informing the absentee might reasonably adopt to accomplish it.“). Before the trial court Jones implied that Johnson had actual knowledge of the hearing and thus Front Row was entitled to no relief. See Tr. at 72. But “[a]ctual knowledge of the pending lawsuit derived from sources other than service is not relevant to the question whether the manner of service satisfies due process.” Washington v. Allison, 593 N.E.2d 1273, 1275 (Ind.Ct.App.1992) (citation omitted); accord Hardy v. Maldonado, 632 N.E.2d 381, 382 (Ind.Ct.App.1994) (“Due process requires service of notice in a manner that is reasonably calculated to inform the defendant of the pending lawsuit. Actual knowledge derived from a source other than service of process does not satisfy the due process requirement.” (citing Washington, 593 N.E.2d at 1275)).
On the record before us Front Row Motors has made a prima facie showing that Jones’ service of process was a mere gesture not calculated to inform it of the default damages hearing. Because Front Row Motors did not receive notice of the hearing, the default judgment entered against it was void for want of jurisdiction. The trial court thus abused its discretion in denying Front Row Motor‘s motion to set aside the judgment.
Conclusion
We reverse the judgment of the trial court and remand this cause for further proceedings.
DICKSON, C.J., and DAVID, MASSA and RUSH, JJ., concur.