Sportsman's Paradise, Inc. v. Sports Center, Inc.

424 N.E.2d 1073, 1981 Ind. App. LEXIS 1612

• Court: Indiana Court of Appeals
• Decided: August 25, 1981
• Docket: No. 3-1080A327
• Status: Published

Opinions

HOFFMAN, Presiding Judge.

This consolidated appeal arises from the trial court’s entry of default judgments in favor of The National Bank and Trust Company of South Bend. The defendants in the three actions are: Sportsman’s Paradise and Howard F. Harris, president; Sports Center, Inc. and Howard F. Harris, president; and Bonnie L. Harris and Howard F. Harris. (Hereinafter “Harris” refers to the corporations and the Harrises.) Harris asserts as error the trial court’s rulings striking his answers and counterclaims and entering default judgments in favor of the Bank.

The record reveals the following:

Novembei 7, 1979: Complaints filed by Bank.

November 27, 1979: Answers were due from Harris. (Ind. Rules of Procedure, Trial Rule 6(C)).¹ None filed.

December 5, 1979: Attorney Robert L. Stephan entered appearance on behalf of Harris.

December 19, 1979: Bank filed motions for summary judgment, with supporting affidavits.

January 9, 1980: Harris filed affidavits in opposition to motions for summary judgment.

January 10, 1980: Hearing had on motions for summary judgment.

January 29, 1980: Harris, without leave of the court, filed answers and counterclaims and moved to consolidate the cases.

February 14,1980: Bank filed motions to strike Harris’s answers and counterclaims.

February 28, 1980: Harris filed briefs in opposition to motions to strike.

February 29, 1980: Court denied Bank’s motions for summary judgment; court granted Bank’s motions to strike Harris’s answers and counterclaims; Bank filed motions for default.

March 7, 1980: Harris filed motions to reconsider the motions to strike answers and counterclaims; motions for enlargement of time to file answers and counterclaims; motions in opposition to Bank’s motions for default application and to allow filing of answers and counterclaims.

March 13,1980: Hearing had on all pending matters and then continued.

March 17, 1980: Harris given additional day to file brief.

March 18, 1980: Harris filed brief.

May 27, 3.980: Court denied all Harris’s motions and granted Bank’s TR. 55(B) motions for default.

Indiana Rules of Procedure, Trial Rule 55(A) provides:

“Entry. When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise comply with these rules and that fact is made to appear by affidavit or otherwise, the party may be defaulted.” (Emphasis added.)

Indiana Rules of Procedure, Trial Rule 55(B) provides in pertinent part:

“. . . If the party against whom judgment by default is sought has appeared in the action, he, (or, if appearing by a representative, his representative) shall be served with written notice of the application for judgment at least three [3] days prior to the hearing on such applica-tion_”

In Hiatt v. Yergin (1972), 152 Ind.App. 497, at 509, 284 N.E.2d 834, at 841, this Court held:

“A delinquent party only need be nimble enough to plead or otherwise comply with the rules within the three-day period in order to avoid the default question entirely. Yergin wisely filed a responsive pleading on May 4, the very day Hiatt filed the Application for Default Judgment. Thus the question became moot even before a hearing could be held under the three-day notice requirement.”

To the extent that Hiatt permitted a party to file an untimely answer as a matter of right, subsequent to a motion for default judgment, it was overruled by Clark Co. St. Bank v. Bennett et al. (1975), 166 Ind.App. 471, 336 N.E.2d 663.

See also: Erdman v. White (1980), Ind. App., 411 N.E.2d 653; Snyder v. Tell City Clinic (1979), Ind.App., 391 N.E.2d 623.

The issue in these cases was whether the three-day notice requirement contained in TR. 55(B) could operate to allow a party further time in which to plead and thereby entirely avoid the issue of default. In deciding that issue, the Court in Clark Co. St. Bank, supra, 336 N.E.2d at 667, stated:

“Our interpretation of the purpose of the three day notice requirement is to provide the defaulting party with the opportunity to appear and demonstrate to the court reasons why its discretion should be exercised in favor of proceeding to trial on the merits.”

The issue in the present case is totally distinct from the issue decided in the above-cited cases. Here, Harris filed his answers 31 days before the motions for default were filed. The critical issue therefore is not whether the three-day notice requirement may extend the time for filing an answer, but rather, does a party have a right to file an answer, beyond the 20 days provided for in TR. 6, but before a motion for default is filed.

Trial Rule 55(A) specifically provides that a party may be defaulted if it “has failed to plead or otherwise comply with these rules and that fact is made to appear by affidavit or otherwise[.]” (Emphasis added.) If an answer is filed before the motion for default, it is virtually impossible for the moving party to establish that the other party “has failed to plead.” The crucial time for determining whether a party has in fact failed to plead is at the time the motion for default is filed. Although it is true that a party may be defaulted for otherwise failing to comply with the trial rules, the fact that TR. 55(A) uses the phrase “failed to plead” indicates that any answer filed before the motion for default is sufficient to avoid default. This is true even though the answer is untimely filed pursuant to TR. 6.

This interpretation of TR. 55 does no harm to the provisions of TR. 6. Trial Rule 6(B), providing for enlargement of time, would continue to be of major importance. A party could continue to request an enlargement of time either prior, or subsequent, to the expiration of a time limitation. This would assure a party that a motion for default could not be granted. A party may forego this procedure however and thereby assume the risk that the opposing party will file a motion for default at the earliest possible time.

One of the primary objectives behind the promulgation of TR. 55 was to allow for the enforcement of a timely litigation process for the purpose of avoiding procedural delay. Payne v. Doss (1976), 170 Ind.App. 652, 354 N.E.2d 346. In view of the fact that the motions for default were not filed until 31 days after the answers were filed, together with the fact that the Bank’s motions for summary judgment, which were totally unrelated to the failure to timely file answers, were pending when the answers were filed, it is obvious that the untimely answers were not responsible for any such delay. The late filings were therefore harmless. In light of the “marked judicial preference 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[,]” (footnotes and citation omitted), Green v. Karol (1976), 168 Ind.App. 467, at , 344 N.E.2d 106, at 110, the trial court committed reversible error in striking Harris’s answers and counterclaims and entering default judgments in favor of the Bank.

For the above reasons this case is reversed and remanded for a decision on the merits.

GARRARD, J., concurs. STATON, J., dissents with opinion.

1 . The sections of TR. 6 relevant to this case provide:

“(B) Enlargement. When an act is required or allowed to be done at or within a specified time by these rules, the court may at any time for cause shown

(1) order the period enlarged, with or without motion or notice, if request therefor is made before the expiration of the period originally prescribed or extended by a previous order; or

(2) upon motion made after the expiration of the specified period, permit the act to be done where the failure to act was the result of excusable neglect; but, the court may not extend the time for taking any action for judgment on the evidence under Rule 50(A), amendment of findings and judgment under Rule 52(B), to correct errors under Rule 59(C), or to obtain relief from final judgment under Rule 60(B), except to the extent and under the provisions stated in those rules.

“(C) Service of pleadings and Rule 12 motions. A responsive pleading required under these rules, shall be served within twenty [20] days after service of the prior pleading. Unless the court specifies otherwise, a reply shall be served within twenty [20] days after entry of an order requiring it. The service of a motion permitted under Rule 12(B) alters the time for service of responsive pleadings as follows, unless a different time is fixed by the court:

(1) if the court does not grant the motion, the responsive pleading shall be served in ten [10] days after notice of the court’s action; (2) if the court grants the motion and the corrective action is allowed to be taken, it shall be taken within ten [10] days, and the responsive pleading shall be served within ten [10] days thereafter.”