Kathy Phariss, Clara Phariss by Next Friend of, Kathy Phariss v. Sara Haynes, Rick Doepping Personally and d/b/a Shangri-La Farms (mem. dec.)

• Court: Indiana Court of Appeals
• Decided: September 16, 2016
• Docket: 64A03-1603-CT-572
• Status: Published

Opinion

MEMORANDUM DECISION FILED Pursuant to Ind. Appellate Rule 65(D), Sep 16 2016, 10:00 am this Memorandum Decision shall not be regarded as precedent or cited before any CLERK Indiana Supreme Court court except for the purpose of establishing Court of Appeals and Tax Court

the defense of res judicata, collateral estoppel, or the law of the case.

ATTORNEY FOR APPELLANT ATTORNEY FOR APPELLEE, Robert A. Plantz RICK DOEPPING Robert A. Plantz & Associates, LLC Robert Stoner Merrillville, Indiana Stoner Law Office Valparaiso, Indiana

IN THE COURT OF APPEALS OF INDIANA

Kathy Phariss, Clara Phariss by September 16, 2016 Next Friend of, Kathy Phariss, Court of Appeals Cause No. Appellants, 64A03-1603-CT-572 Appeal from the Porter Superior v. Court The Honorable Roger V. Bradford, Sara Haynes, Rick Doepping Judge Personally and d/b/a Shangri-La Trial Court Cause No. Farms, 64D01-1506-CT-5549 Appellees.

Barnes, Judge.

Court of Appeals of Indiana | Memorandum Decision 64A03-1603-CT-572 | September 16, 2016 Page 1 of 11 Case Summary [1] Clara Phariss and her mother and next friend Kathy Phariss appeal the trial

court’s order setting aside a default judgment against Sara Haynes. We reverse

and remand.

Issue [2] The sole issue is whether there was a sufficient evidentiary basis for the trial

court to set aside the default judgment.

Facts [3] On June 29, 2015, the Pharisses filed a complaint against Haynes and Rick

Doepping. Doepping was named as a defendant both individually and d/b/a

Shangri-La Farms. The facts as alleged in the complaint are that Haynes was

either self-employed or worked for Doepping/Shangri-La Farms as a horse

trainer. Kathy bought a thoroughbred horse for eight-year-old Clara, and they

hired Haynes to train the horse. The complaint asserts that Haynes abused the

horse while training it and caused it severe injuries. The Pharisses sought

$50,000 in damages for Haynes’s maltreatment of the horse.

[4] Doepping/Shangri-La Farms timely answered the complaint, but Haynes did

not. On August 25, 2015, the Pharisses filed a motion for default judgment

against Haynes. The trial court granted the motion on August 28, 2015,

entering judgment against Haynes for $50,000.

Court of Appeals of Indiana | Memorandum Decision 64A03-1603-CT-572 | September 16, 2016 Page 2 of 11 [5] On October 6, 2015, Haynes filed a motion to set aside the default judgment

under Indiana Trial Rule 60(B). In the unverified motion, Haynes’s attorney

stated that Haynes was in the process of moving to North Carolina when the

complaint was filed and that her husband, a licensed attorney, had received a

copy of the complaint but neglected to respond to it, contrary to Haynes’s

expectation. The motion also asserted that Haynes had taken no malicious

action nor had any intent to harm the horse, but rather had acted properly at all

times, and that the horse was still being ridden regularly. The motion also

stated that Haynes could provide evidence to refute the Pharisses’ allegations if

given the chance and that a damages award of $50,000 was unconscionable.

No affidavits were attached to the motion to set aside.

[6] The trial court held a hearing on the motion to set aside on January 21, 2016.

Haynes did not personally appear at the hearing. Her attorney presented

argument regarding setting aside the default judgment, which essentially

consisted of re-reading the statements in the motion to set aside. The Pharisses

objected to the trial court’s consideration of such statements, asserting that they

did not constitute evidence. Counsel for Doepping/Shangri-La Farms also

argued in favor of setting aside the default judgment, contending it would be

more difficult to obtain discovery from Haynes if she was no longer a party in

the case. The trial court ultimately concluded that it was “in the best interest of

everyone concerned to have this default judgment set aside.” Tr. p. 11. The

Pharisses now appeal.

Court of Appeals of Indiana | Memorandum Decision 64A03-1603-CT-572 | September 16, 2016 Page 3 of 11 Analysis [7] Before turning to the merits of this case, we note that Haynes has not filed an

appellee’s brief. Doepping/Shangri-La Farms have done so, essentially arguing

on behalf of Haynes. Doepping/Shangri-La Farms assert at the outset that we

should dismiss this appeal for lack of jurisdiction because the trial court’s ruling

setting aside default judgment was not a final appealable judgment and was not

interlocutory as of right. See Bacon v. Bacon, 877 N.E.2d 801, 804-05 (Ind. Ct.

App. 2007) (dismissing appeal where there was neither final judgment nor

interlocutory order that was appealable as of right), trans. denied. However,

Indiana Appellate Rule 2(H)(3) includes within its definition of “final

judgment” an order that is “deemed final under Trial Rule 60(C).” Trial Rule

60(C) expressly provides, “A ruling or order of the court denying or granting

relief, in whole or in part, by motion under subdivision (B) of this rule shall be

deemed a final judgment, and an appeal may be taken therefrom as in the case

of a judgment.” Thus, we have jurisdiction to entertain this appeal.

[8] We give deference to a trial court’s ruling on a motion to set aside default

judgment, and we will review such a ruling for an abuse of discretion. Front

Row Motors, LLC v. Jones, 5 N.E.3d 753, 758 (Ind. 2014). Such discretion on the

trial court’s behalf generally should be exercised in disfavor of default

judgments. Id. Any doubts about the propriety of default judgment “‘should be

resolved in favor of the defaulted party.’” Id. (quoting Allstate Ins. Co. v. Watson,

747 N.E.2d 545, 547 (Ind. 2001)).

Court of Appeals of Indiana | Memorandum Decision 64A03-1603-CT-572 | September 16, 2016 Page 4 of 11 [9] Haynes moved to set aside the default judgment under Trial Rule 60(B)(1) for

“mistake, surprise, or excusable neglect.” A motion to set aside under this

provision must allege a meritorious claim or defense to the judgment. Ind.

Trial Rule 60(B). A party moving to set aside a default judgment pursuant to

Trial Rule 60(B) bears the burden of showing sufficient grounds for relief. Id.

“‘The catalyst needed to obtain the proper relief is some admissible evidence

which may be in the form of an affidavit, testimony of witnesses, or other

evidence obtained through discovery[.]’” State Farm Fire & Cas. Co. v. Radcliff,

18 N.E.3d 1006, 1016-17 (Ind. Ct. App. 2014) (quoting Natare Corp. v. Cardinal

Accounts, Inc., 874 N.E.2d 1055, 1059 (Ind. Ct. App. 2007) (in turn citing Bross v.

Mobile Home Estates, Inc., 466 N.E.2d 467, 469 (Ind. Ct. App. 1984))), trans.

denied. When relief from default judgment is sought, the movant must

ordinarily by affidavit or by introducing evidence at a hearing conducted on the

motion establish a factual basis for the claimed ground for relief and establish

that he or she has a meritorious defense. Sears v. Blubaugh, 613 N.E.2d 468,

469-70 (Ind. Ct. App. 1993), trans. denied.1

[10] As noted by the Pharisses, Haynes presented no admissible evidence in support

of her motion to set aside default judgment. The only grounds for the motion

1 There is an exception to this rule in small claims cases. See Sears, 613 N.E.2d at 470. Under Indiana Small Claims Rule 10(C), a trial court may only enter default judgment after first being assured that the plaintiff has presented a prima facie case; if a defendant moving to set aside a default judgment in a small claims case can show that the plaintiff failed to meet this prima facie burden, a default judgment must be set aside, even without meeting the ordinary requirements of Trial Rule 60(B). See id. This case was not a small claims case, and so this exception does not apply.

Court of Appeals of Indiana | Memorandum Decision 64A03-1603-CT-572 | September 16, 2016 Page 5 of 11 were stated in her attorney’s unverified pleading, which were again related by

the attorney at the hearing while not under oath.2 Haynes did not personally

appear and testify at the hearing on the motion to set aside, nor did she execute

an affidavit in support of the motion. Unsworn statements and unverified

pleadings “‘constitute no proof of the facts they allege.’” Hardiman v. Hardiman,

152 Ind. App. 675, 680, 284 N.E.2d 820, 823 (1972) (quoting Wabash Smelting,

Inc. v. Murphy, 134 Ind. App. 198, 206, 186 N.E.2d 586, 590 (1962) (overruled on

other grounds by McKinley v. Rev. Bd., 152 Ind. App. 269, 283 N.E.2d 395 (1972)).

“‘Self-serving statements or declarations by the party or his attorney not under

oath cannot constitute any evidence of the facts they allege.’” Id.

[11] Doepping/Shangri-La Farms contend that the unverified statements contained

within the motion to set aside should have been sufficient to have the default

judgment vacated. They argue that requiring a movant to present some

admissible evidence to support a motion to set aside default judgment

constitutes a re-writing of Trial Rule 60(B) and that the rule does not expressly

contain any such requirement. Regardless, the rule has been consistently

interpreted for decades by the courts of this state to have such a requirement.

See, e.g., Bross, 466 N.E.2d at 469. The Indiana Supreme Court has never

questioned that interpretation or the requirement that a motion to set aside

2 Under Indiana Trial Rule 11(A), an unverified pleading means only that the attorney has read the pleading and that, to his or her knowledge, there is good ground to support the pleading and that it is not interposed for delay. By contrast, the facts or matters stated or alleged in a verified pleading may be admitted as evidence “when it is so provided in these rules, by statute or other law, or to the extent the writing or signature expressly purports to be made upon the signer’s personal knowledge.” T.R. 11(C).

Court of Appeals of Indiana | Memorandum Decision 64A03-1603-CT-572 | September 16, 2016 Page 6 of 11 default judgment must be supported by some quantum of admissible evidence.

We continue to adhere to that requirement today. Because Haynes did not

support her motion to set aside with any admissible evidence, the trial court

abused its discretion in setting aside the default judgment.

Conclusion [12] The trial court abused its discretion in setting aside the default judgment in

favor of the Pharisses and against Haynes. We reverse the granting of that

motion and remand for further proceedings.

[13] Reversed and remanded.

Riley, J., concurs.

Bailey, J., concurs and dissents with separate opinion.

Court of Appeals of Indiana | Memorandum Decision 64A03-1603-CT-572 | September 16, 2016 Page 7 of 11 IN THE COURT OF APPEALS OF INDIANA

Kathy Phariss, Clara Phariss by Next Friend of, Kathy Phariss, Appellants, Court of Appeals Cause No. v. 64A03-1603-CT-572

Sara Haynes, Rick Doepping Personally and d/b/a Shangri-La Farms, Appellees.

Bailey, Judge, concurring in part and dissenting in part with separate

opinion.

[14] I concur with the majority’s conclusion that because Haynes failed to support

her motion with admissible evidence of excusable neglect, the trial court abused

its discretion in setting aside the default. However, because the measure of

damages in this case was not certain and liquidated, the trial court should have

held a damages hearing before entering judgment in the sum of $50,000.

Accordingly, I would reinstate the entry of default, but would set aside the

damages portion of the judgment and on remand instruct the court to hold a

damages hearing at which Haynes may appear and defend.

[15] Default judgments consist of two stages: (1) the entry of default, and (2) the

entry of appropriate relief including damages. Stewart v. Hicks, 182 Ind. App.

Court of Appeals of Indiana | Memorandum Decision 64A03-1603-CT-572 | September 16, 2016 Page 8 of 11 308, 395 N.E.2d 308, 312 (Ind. Ct. App. 1979). “It is well established that

where there is a default judgment, the plaintiff must provide proof as to the

amount of the judgment.” Prime Mortg. USA, Inc. v. Nichols, 885 N.E.2d 628,

656 (Ind. Ct. App. 2008). Where the action is for a sum certain and liquidated,

the final judgment can be entered and no hearing on damages is necessary.

Stewart, 395 N.E.2d at 312. However, if judgment is that one party is defaulted

and the amount of damages is unliquidated or not otherwise determined, the

defaulted party may still appear and be heard as to the amount of damages. Id.

[16] In their complaint, the Pharisses alleged that Haynes abused their horse and

caused it physical injuries. The complaint sought judgment “in an amount to

be determined by the trier of fact, together with punitive and exemplary

damages, a reasonable attorney’s fee, the costs of this action, and all other just

and proper relief[.]” (App. 8.) When the Pharisses moved for default

judgment, they requested $50,000 in damages. As evidence of damages, they

attached three photos of the horse’s injuries and Kathy Phariss’s sworn

affidavit, which stated:

Inclusive of (a) the fair market value of the horse, (b) the costs incurred for medical attention, (c) lost work, (e) [sic] retraining, and other miscellaneous consequential damages associated with this matter, my damages exceed $50,000. However, for the purpose of concluding this matter at the stage of these default judgment proceedings, I waive any claims above $50,000 and state my claim at this stage to be $50,000.

(App. 14.) The trial court entered judgment for $50,000, plus interest and costs.

Court of Appeals of Indiana | Memorandum Decision 64A03-1603-CT-572 | September 16, 2016 Page 9 of 11 [17] This Court has previously held that a trial court was not required to hold a

damages hearing where the damages – fifty percent of attorney fees recovered

from two lawsuit settlements – were contractual and readily identifiable

through simple mathematical calculation. Fitzpatrick v. Kenneth J. Allen &

Assocs., P.C., 913 N.E.2d 255, 269 (Ind. Ct. App. 2009). On the other hand, in a

contract case where the trial court entered, then set aside, a default judgment for

$50,000, this Court reinstated the default, but remanded for a damages hearing

because $50,000 was more than four times the contract price and there was no

further evidence in the record to support the $50,000 award. Stewart, 395

N.E.2d at 313-14.3

[18] Here, the trial court, without first holding a hearing, entered default judgment

for the Pharisses in the sum of $50,000 based on three photos of a horse’s

injuries and Kathy Phariss’s self-serving affidavit that she suffered more than

$50,000 in damages, but would waive any claims above that amount. Unlike in

a contract action for a specific sum, damages allegedly flowing from the abuse

of a horse are not certain or liquidated. Further, I believe three photos and a

conclusory affidavit proposing a $50,000 settlement are insufficient proof to

either support the trial court’s default judgment award or dispense with the

necessary damages hearing. Accordingly, while I would reinstate the entry of

3 In Stewart, the Court held that Indiana Trial Rule 60(B)(8) (permitting relief for “any other reason justifying relief from the operation of the judgment”) provided the trial court authority to set aside only the damages portion of the judgment. Stewart, 395 N.E.2d at 313. Although in this case Haynes’s motion primarily focused on Trial Rule 60(B)(1), she also invoked Trial Rule 60(B)(8) in both her motion and at the hearing.

Court of Appeals of Indiana | Memorandum Decision 64A03-1603-CT-572 | September 16, 2016 Page 10 of 11 default, I would set aside the damages portion of the judgment and on remand

instruct the court to hold a damages hearing at which Haynes may appear and

defend.

Court of Appeals of Indiana | Memorandum Decision 64A03-1603-CT-572 | September 16, 2016 Page 11 of 11