John M. Hauber, not Individually but as Chapter 13 Trustee for the Bankrupt Estate of Abreena Townsend v. Michael Muncy and Lutherstock Properties, LLC (mem. dec.)

• Court: Indiana Court of Appeals
• Decided: August 18, 2020
• Docket: 19A-CT-2890
• Status: Published

Opinion

MEMORANDUM DECISION Pursuant to Ind. Appellate Rule 65(D), this Memorandum Decision shall not be FILED regarded as precedent or cited before any Aug 18 2020, 8:36 am court except for the purpose of establishing the defense of res judicata, collateral CLERK Indiana Supreme Court estoppel, or the law of the case. Court of Appeals and Tax Court

ATTORNEYS FOR APPELLANT ATTORNEY FOR APPELLEE Robert D. King, Jr. Jeremy M. Noel David R. Thompson Indianapolis, Indiana The Law Office of Robert D. King, Jr., P.C. Indianapolis, Indiana

IN THE COURT OF APPEALS OF INDIANA

John M. Hauber, not August 18, 2020 Individually but as Chapter 13 Court of Appeals Case No. Trustee for the Bankrupt Estate 19A-CT-2890 of Abreena Townsend, Appeal from the Marion Superior Appellant-Plaintiff, Court The Honorable Timothy W. v. Oakes, Judge

Michael Muncy and Lutherstock The Honorable Caryl F. Dill, Magistrate Properties, LLC, Trial Court Cause No. Appellees-Defendants 49D02-1704-CT-14744

Crone, Judge.

Court of Appeals of Indiana | Memorandum Decision 19A-CT-2890 | August 18, 2020 Page 1 of 9 Case Summary [1] Postal carrier Abreena Townsend was bitten by a dog while delivering mail to

an Indianapolis residence. John M. Hauber, acting as the Chapter 13 trustee

for Townsend’s bankruptcy estate, filed a negligence action against Michael

Muncy, whom Townsend believed to be the dog’s owner, and Lutherstock

Properties, LLC (Lutherstock), as owner and landlord of the residence. 1

Townsend sought and was granted a default judgment against both defendants.

Lutherstock filed a motion to set aside default judgment, which the trial court

granted. Townsend now appeals the trial court’s ruling. Finding that the trial

court acted within its discretion in setting aside default judgment against

Lutherstock, we affirm.

Facts and Procedural History [2] In January 2017, Townsend was delivering mail to an Indianapolis residence

when she was bitten by a dog that was running loose on the property. She filed

a negligence action against Muncy, as the alleged owner of the dog. She filed

an amended complaint against Muncy, as the dog’s alleged owner, and

Lutherstock, as owner of the property, claiming that each knew or should have

known that the dog had dangerous propensities and that each failed to secure or

1 Townsend filed her first complaint individually against only Muncy. She filed an amended complaint under the name of Hauber, as trustee for her pending bankruptcy proceedings, naming both Muncy and Lutherstock as defendants. On May 21, 2019, the United States Bankruptcy Court, Southern District of Indiana, dismissed Townsend’s bankruptcy case. Appellant’s App. Vol. 2 at 50. She appears individually in this appeal.

Court of Appeals of Indiana | Memorandum Decision 19A-CT-2890 | August 18, 2020 Page 2 of 9 supervise the dog and failed to warn her concerning the dog. She also alleged

negligence per se, based on the defendants’ alleged violations of a local

ordinance prohibiting domesticated animals from roaming at large.

[3] On April 12, 2017, service of process was attempted by certified mail on

Lutherstock at the address listed in its corporate documents and on Muncy at

his last known address. Both were returned as undeliverable. On September

11, 2018, Townsend filed a praecipe for summons service by publication on

both defendants. On October 18, 2018, Townsend filed a proof of notice by

publication, pursuant to which each defendant was given thirty days to respond.

Neither of the defendants appeared or filed a responsive pleading. On January

17, 2019, Townsend filed a motion for default judgment against both

defendants pursuant to Indiana Trial Rule 55. On February 6, 2019, the trial

court granted her motion for default judgment and scheduled a hearing on the

issue of damages.

[4] On October 7, 2019, Lutherstock filed a motion to set aside default judgment

pursuant to Indiana Trial Rule 60(B)(4), claiming a meritorious defense. The

motion was accompanied by an affidavit from Lutherstock’s owner and sole

member, Alfred Warren, averring that he had no actual knowledge of

Townsend’s action until after default judgment was entered, that the address to

which the summons and complaint were sent was not current for Lutherstock

or for himself individually, that Lutherstock owned the property and had leased

it to three tenants on the date of the dog bite, that Muncy was not one of those

Court of Appeals of Indiana | Memorandum Decision 19A-CT-2890 | August 18, 2020 Page 3 of 9 tenants and had never been a tenant of Lutherstock, and that Warren had never

heard of Muncy and had never given consent for a pet on the leased premises.

[5] Following a hearing, the trial court issued an order granting Lutherstock’s

motion to set aside default judgment. Townsend now appeals. Additional facts

will be provided as necessary.

Discussion and Decision [6] Townsend asserts that the trial court erred in granting Lutherstock’s Trial Rule

60(B) motion to set aside default judgment. “Default judgment is an extreme

remedy and …. whenever possible, courts should decide cases on their merits.”

Citimortgage, Inc. v. Barabas, 975 N.E.2d 805, 812 (Ind. 2012) (citations omitted).

Any doubt concerning the propriety of the default judgment must be resolved in

favor of the defaulted party. Kretschmer v. Bank of America, N.A., 15 N.E.3d 595,

601 (Ind. Ct. App. 2014), trans. denied (2015). When reviewing a trial court’s

ruling on a motion to set aside default judgment, we apply an abuse of

discretion standard. Speedway SuperAmerica, LLC v. Holmes, 885 N.E.2d 1265,

1270 (Ind. 2008). An abuse of discretion occurs where the trial court’s decision

is clearly against the logic and effect of the facts and circumstances before it or if

the trial court has misinterpreted the law. Fields v. Safway Grp. Holdings, LLC,

118 N.E.3d 804, 809 (Ind. Ct. App. 2019), trans. denied. When a Trial Rule

60(B) motion involves a request to set aside a default judgment, the trial court’s

discretion should be exercised in light of the disfavor in which default

Court of Appeals of Indiana | Memorandum Decision 19A-CT-2890 | August 18, 2020 Page 4 of 9 judgments are generally held. Seleme v. JP Morgan Chase Bank, 982 N.E.2d 299,

303 (Ind. Ct. App. 2012), trans. denied (2013).

[7] Trial Rule 60(B) provides a mechanism for obtaining relief from default

judgment under certain limited circumstances, and the burden is on the movant

to establish grounds for such relief. Seleme, 982 N.E.2d at 303. Trial Rule 60(B)

states in pertinent part,

On motion and upon such terms as are just the court may relieve a party or his legal representative from a judgment, including a judgment by default, for the following reasons:

….

(4) entry of default judgment or judgment by default was entered against such party who was served only by publication and who was without actual knowledge of the action and judgment, order or proceedings;

…. or

(8) any reason justifying relief from the operation of the judgment, other than those reasons set forth in sub-paragraphs (1), (2), (3), and (4).

The motion shall be filed within a reasonable time for reasons (5), (6), (7), and (8), and not more than one year after the judgment, order or proceeding was entered or taken for reasons (1), (2), (3), and (4). A movant filing a motion for reasons (1), (2), (3), (4), and (8) must allege a meritorious claim or defense.

Court of Appeals of Indiana | Memorandum Decision 19A-CT-2890 | August 18, 2020 Page 5 of 9 Lutherstock based its motion on sub-paragraph (4) and therefore was required

to file the motion within the required time limit, to make a prima facie showing

of a meritorious defense, and to demonstrate a lack of actual knowledge of the

action until after default judgment was entered. First Chicago Ins. Co. v. Collins,

141 N.E.3d 54, 62 (Ind. Ct. App. 2020).

[8] At the hearing on Lutherstock’s motion to set aside default judgment,

Townsend focused her argument on the timing of Lutherstock’s motion,

claiming that it was untimely filed because it was filed more than a year after

she served notice by publication. Her argument is misplaced. Trial Rule 60(B)

specifies that the party seeking relief from judgment under sub-paragraph (4)

shall file its motion “not more than one year after the judgment, order or

proceeding was entered.” (Emphases added.) The trial court entered default

judgment on February 6, 2019, and Lutherstock timely filed its Trial Rule

60(B) motion on October 7, 2019.

[9] Lutherstock also was required to make a prima facie showing of a meritorious

defense to the underlying action. A meritorious defense refers to “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 default to stand.”

Smith v. Johnston, 711 N.E.2d 1259, 1265 (Ind. 1999). The underlying action

against Lutherstock is a negligence claim based on the acts of a presumed

tenant’s dog. To prevail against a landowner/landlord for the acts of a tenant’s

dog, the plaintiff must prove that the landowner retained control over the leased

property and that the landowner had actual knowledge of the tenant’s dog’s

Court of Appeals of Indiana | Memorandum Decision 19A-CT-2890 | August 18, 2020 Page 6 of 9 dangerous propensities. Morehead v. Deitrich, 932 N.E.2d 1272, 1276 (Ind. Ct. App.

2010), trans. denied (2011).

[10] In analyzing whether Lutherstock articulated a meritorious defense and

whether it had actual knowledge of the action, we refer to the attached affidavit

of Warren, Lutherstock’s sole member and registered agent. In his affidavit,

Warren averred as follows: that he had no actual knowledge of the pending

action until after the court issued the default judgment; that the address to

which the summons and complaint were sent was neither the current business

address of Lutherstock nor his personal address; that Lutherstock owned the

property where the dog bite allegedly occurred but did not retain any possession

or control over the property; that Warren never entered the leased property

without notice; that the property had no common areas; that Muncy was never

Lutherstock’s tenant; that Warren had never heard of Muncy; that the tenants

on the date of the incident were John Edwards, Sean Miller, and Hubert Cox II;

that Warren had never given consent for a pet on the premises; and that he was

never put on notice of any pet there. Appellant’s App. Vol. 2 at 36-38. As

reflected in Warren’s affidavit, Lutherstock neither retained control over the

leased property nor had actual knowledge of the presence of any dog there, let

alone one with dangerous propensities. Moreover, Warren expressly averred

that as Lutherstock’s sole member and registered agent, he did not have actual

knowledge of the underlying action until after default judgment was entered.

Thus, Lutherstock made a prima facie showing of a meritorious defense and

established a lack of actual knowledge of the action.

Court of Appeals of Indiana | Memorandum Decision 19A-CT-2890 | August 18, 2020 Page 7 of 9 [11] Townsend claims that Lutherstock is not entitled to relief from judgment

because it failed to update its registered agent’s address with the secretary of

state’s office as required by statute. See Ind. Code § 23-0.5-4-7(a) (if registered

agent changes name, address, or email, agent shall deliver to secretary of state a

statement of such change, specifying name of entity and both old information

and changes to that information). Lutherstock acknowledges that it did not

update its registered agent’s address but maintains that relief from default

judgment nevertheless was appropriate because it was without actual

knowledge of the action, articulated a meritorious defense, and was actually

“served only by publication” under Trial Rule 60(B)(4), the last of which

Townsend does not dispute.

[12] With the foregoing in mind, we address Townsend’s claim that granting

Lutherstock relief from her default judgment will result in an injustice because

she now knows the true identity of the tenants (as listed in Warren’s affidavit)

and is time-barred from pursuing them. However, Townsend is the one who

named Muncy as a defendant based on her assumptions that he was the dog’s

owner and that he was a tenant of Lutherstock. These mistaken assumptions

were not attributable to Lutherstock. Unfortunately for Townsend, she now

owns a default judgment against a defendant whose whereabouts are unknown.

But she is not without a remedy against Lutherstock, should she be able to

prove her case against it on the merits.

[13] In short, Lutherstock lacked actual knowledge of the action at the time default

judgment was entered, timely filed its motion to set aside default judgment, and

Court of Appeals of Indiana | Memorandum Decision 19A-CT-2890 | August 18, 2020 Page 8 of 9 made a prima facie showing of a meritorious defense to the underlying

negligence action. We therefore conclude that the trial court acted within its

discretion in setting aside default judgment against Lutherstock. In affirming

the trial court, we by no means condone an entity’s failure to update its contact

information with the secretary of state’s office. However, we are mindful of the

strong disfavor in which default judgments are held and the trial court’s ensuing

duty to exercise its discretion in accordance with Indiana’s well-settled

preference for hearing cases on the merits. Seleme, 982 N.E.2d at 303.

Consequently, we affirm.

[14] Affirmed.

Bailey, J., and Altice, J., concur.

Court of Appeals of Indiana | Memorandum Decision 19A-CT-2890 | August 18, 2020 Page 9 of 9