Gallant Insurance Co. v. Toliver

695 N.E.2d 592, 1998 WL 289558

• Court: Indiana Court of Appeals
• Decided: May 27, 1998
• Docket: 49A05-9704-CV-123
• Status: Published

Opinions

SHARPNACK, Chief Judge.

Gallant Insurance Company (“Gallant”) appeals the denial of its motion to set aside the default judgment in the case of Leah Toliver against Thomas Rickelman for damages resulting from a car accident. The sole issue for our review is whether the trial court erroneously denied the motion. We reverse.

The relevant facts are undisputed. In August of 1995, Toliver was a passenger in a car that was struck by Rickelman. Mary Ann Walden, Toliver’s mother and the driver of the car in which Toliver was riding, carried automobile insurance with Gallant which included uninsured motorist coverage. On August 30, 1995, attorney James Ludlow notified Gallant that he represented Toliver. Ludlow stated that he thought Rickelman was uninsured and that he would be making an uninsured motorist claim with Gallant on behalf of Toliver. Gallant responded that it had to receive further proof that Rickelman was uninsured before it would do anything with Toliver’s claim.

On September 26, 1995, Toliver filed a complaint against Rickelman. Thereafter, Ludlow informed Gallant in a letter dated October 10, 1995, that he “commenced a lawsuit against Mr. Rickelman with the intent of subpoenaing him for a deposition.... Once I take Mr. Rickelman’s deposition, I will then apprise you of what he states with reference to his automobile insurance.” Record, p. 72. On November 14,1995, Toliver filed a motion for default judgment on the basis that Riek-elman had not appeared in the case. The trial court granted the motion and set a hearing to determine damages. After the hearing, the trial court entered a final judgment against Rickelman for $50,000.

On May 14, 1996, Gallant appeared in the case, filed a motion to intervene, and filed a motion to set aside the default judgment. On May 15, 1996, the trial court granted the motion to intervene. On October 28, 1996, Toliver responded to Gallant’s motion to set aside the default judgment. The trial court later denied the motion.

The sole question for our review is whether the trial court erroneously denied Gallant’s motion to set aside the default judgment. It has long been the law in this state that “[w]here a plaintiff with uninsured motorist coverage sues an uninsured motorist without naming the insurer as a party defendant, the insurer is allowed to intervene to protect its interests.” Stewart v. Walker, 597 N.E.2d 368, 371 (Ind.Ct.App.1992), reh’g denied. In addition, Ind. Trial Rule 24(C) expressly recognizes the right of a party to intervene after judgment for the purposes of presenting a motion for relief from judgment under T.R. 60. To set aside a judgment, the trial court must be satisfied as to one of the reasons enumerated in T.R. 60(B), including:

“(1) mistake, surprise, or excusable neglect;

* ❖ * *

(3) fraud ..., misrepresentation, or other misconduct of an adverse party[.]”

In addition to establishing one of the grounds for relief under T.R. 60(B), a party seeking to set aside a default judgment has the burden of establishing that a meritorious defense to the claim exists. Bennett v. Andry, 647 N.E.2d 28, 34 (Ind.Ct.App.1995). A meritorious defense is defined as enough admissible evidence to indicate that if the case were retried on the merits, a different result would be reached and that an injustice would be foisted upon the defaulted party if the judgment were allowed to stand. Id. Appellate -review of the refusal to set aside a default judgment is limited to determining whether there has been an abuse of discrer tion. Id. at 31.

Gallant contends that the motion for relief from judgment should have been granted because it established that its failure to intervene was a result of either mistake, surprise, or excusable neglect under T.R. 60(B)(1) or a misrepresentation or other misconduct by an adverse party under T.R. 60(B)(3). In support of its argument, Gallant cites two cases dealing with misrepresentations from attorneys. See Condon v. Patel, 459 N.E.2d 1205 (Ind.Ct.App.1984); Carvey v. Indiana Nat’l Bank, 176 Ind.App. 152, 374 N.E.2d 1173 (1978).

In Condon, the plaintiffs attorney deceived an insurance representative as to the purpose of a lawsuit. Specifically, the plaintiffs attorney said he filed suit to protect the statute of limitations and that he would allow an indefinite extension of time to answer the suit. Later, the attorney went back on his word and defaulted the defendant. On appeal, this court set aside the default because the insurance company reasonably relied on the representations of the opposing counsel. Condon, 459 N.E.2d at 1207.

Likewise, in Carvey, a default judgment was set aside because the plaintiffs attorney misrepresented the purpose of the lawsuit. Carvey, 374 N.E.2d at 1173. Specifically, Carvey and the plaintiffs attorney had settled a dispute between them before a suit was filed. However, several other parties were not cooperating. Therefore, the plaintiffs attorney informed Carvey that he was going to file a suit in order to pursue the uncooperative paries. The plaintiffs attorney also told Carvey that he did not need to defend the matter. Carvey relied on that representation. However, the attorney went back on his word and defaulted Carvey when Carvey failed to appear. These facts caused this court “grave concern,” and we set aside the default judgment. Id. at 1179-1180. This eourt held:

“[I]n light of the substantial amount of money involved, the material issues of facts surrounding the -possible release of one or more co-guarantors, the short length of the delay, and the unrefuted averments concerning questionable conduct on the part of attorneys representing Indiana National, we hold that the Trial Court abused its discretion and committed reversible error when it refused to set aside the default judgment after all facts were revealed to it.”

Id. at 1180.

In both Condon and Carvey, this court emphasized the importance of reliable communication from attorneys. In those cases, attorneys made misrepresentations concerning the cases upon which other parties relied to their detriment. As our supreme court has stated, “[t]he reliability of lawyers’ representations is an integral component of the fair and efficient administration of justice ... [t]he law should promote lawyers’ care in making statements that are accurate and trustworthy and should foster the reliance upon such statements by others.” Fire Insurance Exchange v. Bell, 643 N.E.2d 310, 312 (Ind.1994).

In the present case, Ludlow sent a letter to Gallant stating in part:

“I have commenced a lawsuit against Mr. Rickelman with the intent of subpoenaing him for a deposition. At this deposition, I will thus inquire as to whether or not he had liability insurance at the time of the accident. ' For your information, I have inclosed a file-marked copy of a Summons and Complaint which has been filed against Mr. Rickelman on Ms. Toliver’s behalf. Once I take Mr. Riekelman’s deposition, I will then apprise you of what he states with reference to his automobile insurance.”

Record, p. 72. Relying on this representation, Gallant took no action in the case; We recognize that Ludlow’s representation does not constitute an express promise not to proceed with the ease before speaking to Gallant. However, the clear implication of the representation is that nothing more was going to happen with respect to Gallant until Ludlow took the deposition of Rickelman. Although Ludlow generally would not be obligated to keep Gallant informed of the progress in the case, his representation to Gallant that he intended to depose Rickelman and that he would inform Gallant of Rickelman’s insurance status created a duty to keep Gallant apprised of any change in his intentions with respect to proceeding with the case. Gallant need not establish that Ludlow intentionally mislead it, only that it was justified in assuming nothing was going to happen in the case until further notice by Ludlow. Therefore, we conclude that Gallant reasonably relied on Ludlow’s representation and, therefore, satisfied the requirements of T.R. 60(B)(1) in showing excusable neglect.¹

Moreover, Gallant established that it had a meritorious defense. As we previously stated, a meritorious defense is defined as enough admissible evidence to indicate that if the ease were retried on the merits, a different result would be reached and that an injustice would be foisted upon the defaulted party if the judgment were allowed to stand. Bennett, 647 N.E.2d at 34. First, at the time of the damages hearing on December 1,1995, the evidence presented established that To-liver’s medical expenses totaled $610.25. Nonetheless, the trial court awarded damages of $50,000. As such, Gallant raises a reasonable defense of challenging the evidence to support the damages award. In addition, the evidence in the record indicates that Toliver did not again seek medical treatment for injuries sustained in the accident until May 23, 1996, some nine months after the accident. In fact, Dr. Don Jardine, an orthopaedist, stated that Toliver “apparently is quite intent upon her studies and schooling and has postponed any evaluation and care for this back pain for fear of losing time in school.” Record, p. 181. This gap in seeking treatment raises a legitimate question as to whether Toliver failed to mitigate her damages by failing to seek treatment. Indiana Code § 34-4-33-3 provides that any fault chargeable to the claimant diminishes proportionately the amount awarded as compensatory damages. Fault, as outlined in I.C. § 34-4-33-2, includes a claimant’s unreasonable failure to mitigate her damages. Therefore, given the difference in the medical expenses presented and the judgment received, along with .Toliver’s apparent failure to mitigate her damages, Gallant has presented a meritorious defense to support its motion to set aside the default judgment. See Bennett, 647 N.E.2d at 34.

In sum, we recognize that generally a party who intervenes after the judgment is bound by the judgment and is not permitted to relitigate matters already determined in the case. See Panos v. Perchez, 546 N.E.2d 1253, 1254-1255 (Ind.Ct.App.1989). However, in this case, Gallant established that it was entitled to relief from the judgment because of excusable neglect and á meritorious defense.² Therefore, the trial court abused its discretion in denying Gallant’s motion to set aside the default judgment. See Bennett, 647 N.E.2d at 34. Accordingly, we reverse the judgment of the trial court.

Reversed.

RUCKER, J., concurs. BARTEAU, J., dissents with opinion.

1 . Because we conclude that Gallant established it was entitled to relief from the default judgment under T.R. 60(B)(1), we need not address whether it also satisfied T.R. 60(B)(3).

2 . Toliver maintains that Gallant is bound by the judgment obtained against Rickelman because it did not intervene before the judgment. In support of her position,, Toliver relies upon Bennett v. Andry, 647 N.E.2d 28 (Ind.Ct.App.1995) and Stewart v. Walker, 597 N.E.2d 368 (Ind.Ct.App.1992). Although this court concluded that the motions to set aside the default judgments in those cases should not be granted, they are not dispositive of the issue before us today. In those cases, this court decided that the parties seeking relief from judgment had failed to satisfy the requirements of T.R. 60(B). Because the parties were not entitled to relief from judgment, it necessarily followed that they were bound by the judgment entered before they intervened. Here, we find that Gallant intervened and is entitled to relief from judgment. As a result, Gallant is entitled to relitigate some of the issues, such as damages, as an original party to the suit.