Thе HUNTINGTON NATIONAL BANK, Appellant, v. CAR-X ASSOCIATES CORP., Appellee.
No. 64A04-1405-MF-227.
Court of Appeals of Indiana.
Dec. 2, 2014.
22 N.E.3d 687
Christopher M. Keefer, Sopko, Nussbaum, Inabnit & Kaczmarek, South Bend, IN, Attorney for Appellee.
BROWN, Judge.
The Huntington National Bank (“Huntington“) appeals the trial court‘s denial of its motion to set aside default judgment in favor of Car-X Associates Corp. (“Car-X“). Huntington raises one issue, which we restate as whether the court erred or abused its discretion in denying its motion to set aside default judgment. We reverse and remand.
FACTS AND PROCEDURAL HISTORY
On January 8, 2014, Car-X filed a complaint to foreclose a judgment lien it had obtained in 2013 against real property owned by Susanne and Terry Wood in the amount of $200,359.90 plus fees, costs, and post-judgment interest. The complaint named Huntington as a defendant because Huntington held a mortgage on the property which secured a loan to the Woods made in 2005 in the original principal amount of $310,500. The complaint and summons were served upon Huntington‘s registered agent for service of process by certified mail on January 27, 2014.
Paul Burnside was the Foreclosure Supervisor for Huntington. In his affidavit, Burnside stated he received service of Car-X‘s complaint on or about January 28, 2014, and referred the matter to counsel on February 25, 2014. Burnside further stated that the individual in his department who typically received service of process for Huntington was on a medical leave of absence when Huntington received service; that in addition to his regular duties he was assisting the individual who typically received service of process for Huntington during her leave of absence; that his regular duties included supervision of Huntington‘s pre-sale foreclosure staff, review of daily reports and updates, oversight of the foreclosure attorney network, and daily review of compliance with investor and governmental guidelines; and that he received the summons in the case but due to the volume of his regular duties was unable to timely refer the matter to counsel.
On February 25, 2014, Car-X moved for default judgment against Huntington. On February 27, 2014, the trial court granted Car-X‘s motion and spеcifically found that “Car-X‘s interest in and to the real estate ... is prior and superior to any and all interests, estates, rights, titles, claims, liens, and/or encumbrances of Huntington.” Appellee‘s Appendix at 50. The practical result of the default judgment was to make Huntington‘s mortgage subordinate to the judgment lien of Car-X. On March 14, 2014, counsеl for Huntington filed an appearance, an answer, and a motion to set aside the default judgment. After conducting a hearing, the trial court denied Huntington‘s motion on April 24, 2014. Huntington now appeals.
DISCUSSION
The issue is whether the trial court erred or abused its discretion in denying Huntington‘s motion to set aside default judgment under
Huntington contends in part that the trial court erred in finding that its delay was not the result of excusable neglect.
Car-X responds that the trial court did not abuse its discretion in entering default judgment аnd that the record demonstrates the court weighed the facts of the case. Car-X argues that Huntington is a large bank which had staffed at a minimum an employee and supervisor charged with, among other things, receiving service of process and overseeing the foreclosure attorney network. Car-X notes that the court found Huntington‘s neglect was not excusable under the circumstances and that there is nothing in the record demonstrating that it abused its discretion in doing so. Car-X also states that Huntington asserts for the first time in its appellant‘s brief that the employee was out on maternity leave1 and that it would seem this employee would have had ample time to make all arrangements relative to her workload including receiving and handling of service of process.
Default judgments are not favored in Indiana. Shane v. Home Depot USA, Inc., 869 N.E.2d 1232, 1234 (Ind.Ct.App.2007). Any doubt as to the propriety of a default judgment must be resolved in favor of the defaulted party. Watson, 747 N.E.2d at 547. “Moreover, no fixed rules or standards have been establishеd because the circumstances of no two cases are alike.” Kmart v. Englebright, 719 N.E.2d 1249, 1253 (Ind.Ct.App.1999) (citing Siebert Oxidermo, Inc. v. Shields, 446 N.E.2d 332, 340 (Ind.1983)), trans. denied. “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.‘” Id. (citing Green v. Karol, 168 Ind.Aрp. 467, 473-474, 344 N.E.2d 106, 110-111 (1976)). In addition, the trial court must balance the need for an efficient judicial system with the judicial preference for deciding disputes on the merits. Id.
The entry of a default judgment is authorized by
There is no general rule as to what constitutes excusable neglect under
(a) absence of a party‘s attorney through no fault of party; (b) an agreement made with oppоsite party, or his attorney; (c) conduct of other persons causing party to be misled or deceived; (d) unavoidable delay in traveling; (e) faulty process, whereby party fails to receive actual notice; (f) fraud, whereby party is prevented from appearing and making a defense; (g) ignorance of the dеfendant; (h) insanity or infancy; (i) married women deceived or misled by conduct of husbands; (j) sickness of a party, or illness of member of a family.
Id. (citing Cont‘l Assurance Co. v. Sickels, 145 Ind.App. 671, 675, 252 N.E.2d 439, 441 (1969)). “Although a default judgment plays an important role in the maintenance of an orderly, efficient judicial system as a weapon for enforcing compliance with the rules of procedure and for facilitating the speedy determination of litigation, in Indiana there is a marked judicial deference for deciding disputes on their merits and for giving parties their day in court, especially in cases involving material issues of fact, substantial amounts of money, or weighty policy determinations.” Charnas v. Estate of Loizos, 822 N.E.2d 181, 184-185 (Ind.Ct.App.2005).
Even though there is a technical default, the non-defaulting party is not entitled to a judgment by default as a matter of right. Green, 168 Ind.App. at 473, 344 N.E.2d at 110. This court has considered the amount of money involved, the material issues of fact accompanying the allegations, the short length of the delay, and lack of prejudice to the non-movant by the delay in concluding that a trial court did not abuse its discretion in allowing a case to be heard on the merits. See id. at 475, 344 N.E.2d at 111.
Here, Huntington‘s deadline to file a responsive pleading to Car-X‘s complaint to foreclose a judgment lien was February 19, 2014, twenty-three days after service of the complaint on January 27, 2014. See
In order to obtain relief under
In its motion to set aside default judgment, Huntington stated that its meritorious claim and defense is that it holds a first mortgage on the property, recorded in October 2005, that is a superior interest to the judgment lien of Car-X which was entered in July 2013. Huntington attached to its mоtion to set aside default judgment the instruments upon which its allegations are based, including the October 2005 promissory note and the mortgage securing the loan. The mortgage is file-stamped showing it was recorded in the Porter County Recorder‘s Office on October 19, 2005, as instrument number 2005-032035. Huntington has alleged that the result of the proceedings would be different if the default judgment were set aside and thus has established a meritorious claim or defense.
Finding that Huntington has established that it was entitled to relief from the default judgment by demonstrating excusable neglect and a meritorious defense, we conclude the trial court abused its discretion in denying Huntington‘s
CONCLUSION
For the foregoing reаsons, we reverse the judgment of the trial court and remand for further proceedings consistent with this opinion.
Reversed and remanded.
BRADFORD, J., concurs.
BARNES, J., dissents with separate opinion.
I understand the reasoning of my colleagues in the majority here. I respectfully do not agree with it. I do not believe that Huntington proved that excusable neglect led to its delay in responding to Car-X‘s complaint, as required to grant a motion for relief from judgment under
The record before us indicates that the person at Huntington who was designated to receive pleadings of the type filed here was unavailable to discharge her duties for some period of time because of maternity leave. Huntington evidently failed to take аdequate steps to cover these duties in her absence. The time period for responding to the complaint ran and, although Huntington acted fairly promptly after the error was discovered, it still was at least twenty days after the deadline when it did so.
To me, this case is virtually indistinguishable from Smith v. Johnston, 711 N.E.2d 1259 (Ind.1999), where our supreme court addressed a very similar fact pattеrn and held it did not establish excusable neglect. In that case, a doctor was timely served with notice of a medical malpractice complaint. The doctor‘s office manager ordinarily handled legal affairs, but he was out of the office and in the process of quitting his job when the complaint was received and signed for by a nurse. The nurse placed the complaint on the doctor‘s desk, but the doctor did not look at it until after default judgment was entered. The doctor moved for relief from judgment, which the trial court denied.
Our supreme court rejected the doctor‘s claim that his failure to read the complaint in a timely fashiоn constituted excusable neglect under
This is neglect, but not excusable neglect as the term appears in Rule 60(B)(1). 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 mоtion for default. We do not agree that the failure of Smith to read his mail amounts to a breakdown in communication sufficient to qualify as excusable neglect under Trial Rule 60(B)(1). Smith‘s case is distinguishable from our previous decisions finding excusable neglect for a breakdown in communication. In those cases the defendants did all thаt they were required to do but subsequent misunderstandings as to the assignments given to agents of the defendants resulted in the failure to appear. In Whittaker [v. Dail, 584 N.E.2d 1084 (Ind.1992)], the insurance adjuster believed she had employed an attorney to defend the insured but the attorney thought he was to institute a declaratory judgment against the insured. 584 N.E.2d at 1086; see also Boles v. Weidner, 449 N.E.2d 288, 290 (Ind.1983) (breakdown in communicаtion between the independent agent and the insurance agency). Here, Smith knew his mail was unattended and accepted the risk of adverse consequences. The judicial system simply cannot allow its processes to be stymied by simple inattention. There may be cases where a trial court will find excusable neglect based on similar omissions due to external pressures on a sympathetic defendant, but it was not an abuse of the trial court‘s discretion to refuse to do so here.
Smith, 711 N.E.2d at 1262. The Smith court went on to hold that the doctor was entitled to relief from judgment under
Excusable neglect to me is just that: excusable neglect, not just neglect. It is something that can be explained by an unusual, rare, or unforeseen circumstance, for instance. One employee‘s maternity leave is not such a circumstance and should not be used as an excusе for delaying judicial proceedings beyond the clear deadlines set by our Trial Rules, especially where a large and sophisticated party such as Huntington is concerned. I would defer to the trial court‘s exercise of its discretion in this matter, and I vote to affirm its denial of Huntington‘s motion for relief from judgment.