Perfect North Slopes, Inc. v. Nicholas A. Searcy

• Court: Indiana Court of Appeals
• Decided: October 15, 2013
• Docket: 15A05-1305-CT-204
• Status: Unpublished

Opinion

Pursuant to Ind.Appellate Rule 65(D), this Memorandum Decision shall not be regarded as precedent or cited before any Oct 15 2013, 9:15 am court except for the purpose of establishing the defense of res judicata, collateral estoppel, or the law of the case.

ATTORNEY FOR APPELLANT: ATTORNEYS FOR APPELLEE:

MICHAEL C. PEEK LARRY J. WAGNER Christopher & Taylor NOAH L. GAMBILL Indianapolis, Indiana Wagner Crawford & Gambill Terre Haute, Indiana

IN THE COURT OF APPEALS OF INDIANA

PERFECT NORTH SLOPES, INC., ) ) Appellant-Defendant, ) ) vs. ) No. 15A05-1305-CT-204 ) NICHOLAS A. SEARCY, ) ) Appellee-Plaintiff. )

APPEAL FROM THE DEARBORN SUPERIOR COURT The Honorable Jonathan N. Cleary, Judge Cause No. 15D01-1211-CT-58

October 15, 2013

MEMORANDUM DECISION – NOT FOR PUBLICATION

RILEY, Judge STATEMENT OF THE CASE

Appellant-Defendant, Perfect North Slopes, Inc. (North Slopes), appeals the trial

court’s denial of its motion to set aside default judgment entered at the request of

Appellee-Plaintiff, Nicholas A. Searcy (Searcy).

We affirm.

ISSUE

North Slopes raises two issues, one of which we find dispositive and which we

restate as: Whether the trial court abused its discretion by refusing to set aside the default

judgment.

FACTS AND PROCEDURAL HISTORY

On the evening of January 20, 2012, North Slopes, a snow sports recreation

facility located in Dearborn County, Indiana, remained open for night skiing. Searcy, a

customer at the facility, slipped and fell from the ski lift chairs, sustaining serious injuries

which required surgery. On February 29, 2012, Searcy’s counsel sent a letter to North

Slopes, advising it of his client’s fall and injuries and requesting North Slopes to inform

its insurance carrier of the incident. Searcy received no response. On March 15, 2012,

Searcy sent a second letter to North Slopes indicating that “[i]f we have not heard from

you or your insurance carrier within the next fourteen (14) days, we will file suit without

further notice.” (Appellant’s App. p. 61).

On March 19, 2012, Searcy received a letter from Dylan West (West), Senior

Claims Specialist with Willis of New Hampshire, Inc., notifying him that West

2 represented North Slopes’ general liability carrier. In his letter, West requested

additional information to evaluate Searcy’s claim on its merits. On March 21, 2012,

Searcy responded with some of the requested additional information.

On June 4, 2012, Searcy sent copies of incurred medical expenses to West and

also asked him to confirm North Slopes’ general liability policy limits. On June 12,

2012, West replied to Searcy, advising him of the policy limits. However, Searcy never

received this letter. On August 27, 2012, Searcy sent another letter to West indicating

that he had yet to be advised of North Slopes’ policy limits. No response was received.

Thereafter, on October 27, 2012, Searcy sent a third request to West to confirm North

Slopes’ liability policy limits. Again, West did not reply.

On November 30, 2012, Searcy filed a Complaint against North Slopes alleging

negligence for failing to maintain the premises in a reasonably safe condition for its

invitees. North Slopes’ registered agent was served with the Complaint by summons,

sent by certified mail. North Slopes failed to answer Searcy’s Complaint. On January 7,

2013, Searcy filed a motion for default judgment, which the trial court granted on

February 7, 2013. The trial court’s Order also scheduled a separate hearing on the issue

of damages.

On March 1, 2013, North Slopes, by counsel, filed an appearance as well as a

motion to set aside the default judgment based on Indiana Trial Rule 60(B)(1). On April

9, 2013, the trial court summarily denied North Slopes’ motion without a hearing.

North Slopes now appeals. Additional facts will be provided as necessary.

DISCUSSION AND DECISION

3 North Slopes contends that the trial court abused its discretion when it denied the

motion to set aside the default judgment pursuant to Indiana Trial Rule 60(B)(1) for

excusable neglect based on a breakdown in communication.

Pursuant to Indiana’s trial rules, once entered, a default judgment may be set aside

because of mistake, surprise, or excusable neglect so long as the motion to set aside the

default judgment is entered not more than one year after the judgment and the moving

party also alleges a meritorious claim or defense. Ind. Trial Rule 55(C); 60(B)(1).

Instances of excusable neglect include a breakdown in communication that results in a

party’s failure to appear. Smith v. Johnson, 711 N.E.2d 1259, 1262 (Ind. 1999). When

deciding whether or not a default judgment may be set aside because of excusable

neglect, the trial court must consider the unique factual background of each case because

“no fixed rules or standards have been established as the circumstances of no two cases

are alike.” Siebert v. Oxidermo, Inc., v. Shields, 446 N.E.2d 332, 340 (Ind. 1983)

(quoting Grecco v. Campbell, 386 N.E.2d 960, 961 (Ind. Ct. App. 1979)). Though the

trial court should do what is “just” in light of the facts of the individual case, that

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

held. Sears Roebuck and Co. v. Soja, 932 N.E.2d 245, 249 (Ind. Ct. App. 2010), trans.

denied.

On appeal, a trial court’s decision to set aside a default judgment is entitled to

deference and is reviewed for an abuse of discretion. Id. Any doubt of the propriety of a

default judgment should be resolved in favor of the defaulted party. Id. Although a

default judgment plays an important role in the maintenance of an orderly, efficient

4 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. Id. at 185.

In several cases we have confronted the propriety of setting aside default

judgments when a defendant’s insurer or insurance agent is notified but counsel fails to

timely appear and answer. In Boles v. Weidner, 449 N.E.2d 288 (Ind. 1983), our supreme

court affirmed a trial court’s judgment to set aside a default judgment, finding excusable

neglect where the defendant passed the summons and complaint on to his independent

insurance agent, to be forwarded on to the insurer. Id. at 290. The court held that “since

[the defendant] did not hear from anyone, and had taken the steps expected of him, it

certainly is reasonable for the trial court to find there was excusable neglect justifying

setting aside the default judgment.” Id. at 291.

In Siebert Oxidermo, Inc. v. Shields, 446 N.E.2d 332 (Ind. 1983), the trial court

refused to set aside a default judgment where the defendant had forwarded the “suit

papers” to its insurance agent, who failed to get them to the proper insurance carrier on

time. Id. at 334. The court affirmed, observing that the trial court could have based a

finding of excusable neglect or mistake upon the apparent misunderstanding between the

defendant and its insurance agent but chose not to do so, and noting, “[m]ore

significantly, under the evidence it was not compelled to do so.” Id. at 340.

5 More recently, in Sears Roebuck and Co. v. Soja, 932 N.E.2d 245 (Ind. Ct. App.

2010), trans. denied, we affirmed the trial court’s refusal to set aside a default judgment

entered against Sears. After Sears forwarded Soja’s complaint to its claims adjuster, the

claims adjuster contacted the general counsel of Razor, who was required to defend and

indemnify Sears in the lawsuit. Id. at 247. General counsel, after waiting to get a written

tender from the claims adjuster officially informing him of the duty to defend, never

directed an attorney to enter an appearance for Sears as no written tender was ever

received. Id. Even though we noted that a miscommunication occurred between the

claims adjuster and legal counsel early on in the proceedings, we concluded that the

claims adjuster’s subsequent conduct “amounted to inattention” as she waited more than

seven months to do any follow-up on the suite or even confirm that counsel had indeed

appeared for Sears Id. at 250.

Accordingly, in two of these three cases, Boles and Siebert Oxidermo, the courts

deferred to the decision of the trial court in ruling upon a motion to set aside a default

judgment. And in Sears, we found that the facts compelled a finding of inattentiveness,

not excusable neglect. Thus, to resolve this appeal, the overriding issue is whether the

circumstances of this case require us to conclude that the trial court abused its discretion

by refusing to set aside its prior default judgment. In accord with our disfavor of default

judgments, our preference for disposition of cases on their merits, and our deference to

the trial court’s decision in ruling upon motions to set aside default judgments, the

controlling question is not whether there has been a “breakdown in communication” but

6 whether there is “even slight evidence of excusable neglect.” Coslett v. Weddle Bros.

Const. Co, Inc., 798 N.E.2d 859, 862 (Ind. 2003).

Here, North Slopes argues that it handled the suit in accordance with its internal

office procedure. Bev Weaver (Weaver), North Slopes’ office manager, affirmed that

any mail directed to North Slopes’ registered agent would be placed in the agent’s mail

basket, who after checking his mail would, in turn, give the documents to the Director of

Snow Sports and Safety. The Director would then hand the documents to Weaver to

notify West, who would retain counsel to defend North Slopes. Weaver represented that

Searcy’s file, an expandable folder on Weaver’s desk, was opened in March 2012, upon

receipt of Searcy’s counsel’s letter. Pursuant to the customary proceedings, Weaver

stated that she faxed this letter to West.

Weaver noted in her affidavit that an employee, Stephanie Nutley (Nutley), signed

for a “certified mail document” and placed it in the registered agent’s mail basket.

(Appellant’s App. p. 45). The registered agent attested that he “never saw the lawsuit,

Summons or Complaint.” (Appellant’s App. p. 43). Weaver also stated that she never

saw the Complaint until she received the default judgment on February 13, 2013. After

faxing the Order to West, she “looked into the Searcy folder on [her] desk” where she

found a copy of the Complaint. (Appellant’s App. p. 45). She then surmised that “Rather

than go through normal procedure someone put the Summons and Complaint in the

folder on my desk.” (Appellant’s App. p. 45).

Meanwhile, the communication between West and Searcy had stalled. On June 4,

2012, Searcy requested West to confirm North Slopes’ general liability policy limits.

7 Even though West alleges that he responded to Searcy with the information, Searcy never

received a reply.

Although West’s nonresponsiveness to Searcy’s counsel is a contributing factor in

the filing of the Complaint, we find that North Slopes’ handling of the Complaint is the

immediate cause of the “breakdown of communication” as it triggered North Slopes’

non-appearance in the cause. See Smith, 711 N.E.2d at 1262. The affidavits submitted

by North Slopes in support of its motion to set aside raise more questions than answers.

Nutley never submitted an affidavit. While Weaver’s affidavit states that Nutley

remembered placing the letter in the registered agent’s mail basket, the registered agent

denied ever having seen it. Weaver’s statement of finding the Complaint in the folder on

her desk gives rise to the inference that the certified mail had been opened, but there is no

indication as to who opened it. It is North Slopes’ burden to establish excusable neglect.

Based on the facts before us, we conclude that North Slopes failed this burden.1

CONCLUSION

Based on the foregoing, we conclude that the trial court properly denied North

Slopes’ motion to set aside default judgment pursuant to T.R. 60(B)(1).

Affirmed.

ROBB, C. J. and KIRSCH, J. concur

1 Because we do not find excusable neglect, we do not need to analyze whether North Slopes presented a meritorious defense.