Associates Financial Services Co. of Kentucky, Inc. v. Knapp, 1-880A293

Citation422 N.E.2d 1261
Decision Date07 July 1981
Docket NumberNo. 1-880A293,1-880A293
PartiesASSOCIATES FINANCIAL SERVICES COMPANY OF KENTUCKY, INC., Plaintiff-Appellant and Cross-Appellee, v. Jerome A. (Jerry) KNAPP, Defendant-Appellee and Cross-Appellant, Shirley Jean Cox, as Clerk of the Vanderburgh Circuit Court; Board of Commissioners of the County of Vanderburgh, Indiana; United States Internal Revenue District of Indiana; C. Curtis Young III and Peggy Lee Young; Steichen Vending Machines, Inc., Defendants-Appellees.
CourtCourt of Appeals of Indiana

Ronald Warrum, Evansville, for plaintiff-appellant and cross-appellee.

John D. Clouse, Michael C. Keating, Laurie A. Baiden, Evansville, for defendant-appellee and cross-appellant.



Associates Financial Services Company of Kentucky, Inc. (Associates of Kentucky), plaintiffs below, appeal from an order reinstating the counterclaim of defendant below, Jerry Knapp. Knapp cross-appeals the trial court's favorable response to Associates of Kentucky's motion for summary judgment in the amount of $12,455.39 in an action upon foreclosure of a mortgage. We affirm.


On December 1, 1976, Associates of Kentucky brought an action to foreclose a mortgage upon Knapp's property in payment of a $14,760 promissory note assigned to Associates of Kentucky by Associates Financial Services Company of Indiana, Inc. (Associates of Indiana). Union Federal Savings and Loan Association of Evansville, the clerk of the Vanderburgh Circuit Court, Clifford Skomp, the United States Internal Revenue District of Indiana, and the Board of Commissioners of Vanderburgh County were joined as party defendants. On December 16, 1976, Knapp answered admitting the mortgage and note in favor of Associates of Indiana, but counterclaimed against Associates of Kentucky alleging negligence and fraud by Associates of Kentucky in discounting several student tuition contracts of a Kentucky corporation of which Knapp was the former president. Knapp claimed that because of Associates of Kentucky's fraud and negligence he suffered great financial loss and was required to enter into security agreements with them which agreements he alleged were void for lack of consideration. Knapp also stated that Associates of Indiana had conspired together with Associates of Kentucky to assign the note and mortgage with the intent to defraud him. In addition to his demands for $183,890 actual and $500,000 punitive damages, Knapp demanded trial by jury. Associates of Kentucky filed an answer in general denial and noticed Knapp for deposition in March of 1977 and twice between January and May 1979, but Knapp failed to appear. On May 10, 1979, the court granted Associates of Kentucky's Motion to Strike Knapp's Answer and Counterclaim and entered an order of dismissal with prejudice pursuant to Ind. Rules of Procedure, Trial Rule 37. Meanwhile parties were dismissed from and added to the original action, and a pretrial conference was set for November 16, 1979. On that date Knapp moved the court to reinstate his answer and counterclaim which motion the court took under advisement. The court then ordered Knapp to appear for a deposition on December 10, 1979. Knapp complied with the order of discovery, and the

court ordered reinstatement of Knapp's answer and counterclaim. The court severed trial of issues in the counterclaim from the issues in the original complaint, however, and entered partial judgment on January 21, 1980. Again a party defendant, Steichen Vending Machines, Inc., was added, and both Steichen and Associates of Kentucky moved for summary judgment. The court granted summary judgment in favor of Associates of Kentucky for the amount requested in its motion and supporting affidavits, $12,445.39, and in favor of Steichen for $8,753.77 to be satisfied out of the proceeds which had been paid into court by defendants and cross-claimants Youngs. Both Associates of Kentucky and Knapp appeal.


I. Associates of Kentucky question whether the trial court erred in reinstating Knapp's counterclaim.

II. Knapp asks us to determine if the trial court erred in granting Associates of Kentucky's motion for summary judgment.

Issue One

Associates of Kentucky contend that the trial court erred in granting Knapp's Ind. Rules of Procedure, Trial Rule 60 motion for relief from the dismissal with prejudice of his counterclaim in the absence of a showing of exceptional circumstances which would justify such extraordinary relief. They cite extensively, and almost exclusively, as authority supporting their position this court's opinion in Snider v. Gaddis, (1980) Ind.App., 413 N.E.2d 322, trans. den. The basis of their argument is that the trial court could have granted Knapp relief from dismissal with prejudice only pursuant to the provisions of Ind. Rules of Procedure, Trial Rule 60(B)(8), and then only upon the showing of extraordinary circumstances, none of which were alleged in his petition for relief. Because no extraordinary circumstances were alleged, Associates of Kentucky reason that the trial judge here as in Gaddis abused his discretion by simply reconsidering, changing his mind, and correcting his judgment.

Indiana Rules of Procedure, Trial Rule 41(F) provides that "(a) dismissal with prejudice may be set aside by the court for the grounds and in accordance with the provisions of Rule 60(B)." We agree with Associates of Kentucky that the court granted relief to Knapp pursuant to T.R. 60(B)(8): "On motion and upon such terms as are just the court may relieve a party ... from an entry of ... (a) final order ... for ... any reason justifying relief from the operation of the judgment, other than those reasons set forth in sub-paragraphs (1), (2), (3), and (4)." Motions under T.R. 60(B) are addressed to the equitable discretion of the trial court, First National Bank and Trust Company of Crawfordsville v. Coling, (1981) Ind.App., 419 N.E.2d 1326, and the language of sub-section 8 of T.R. 60(B) is extremely broad. Our scope of review of the granting or denial of such motion, therefore, is limited to the question of whether the trial court's action in the matter constituted an abuse of discretion. Id. Abuse of such discretion will be found only where the court's action is clearly erroneous, i. e., " 'against the logic and effect of the facts and circumstances before the court, or the reasonable, probable, and actual deductions to be drawn therefrom.' " Summerlot v. Summerlot, (1980) Ind.App., 408 N.E.2d 820, 828.

We disagree with Associates of Kentucky that the trial judge here necessarily concluded that he had erroneously entered his order of dismissal. See, e. g., Justak v. Bochnowski, (1979) Ind.App., 391 N.E.2d 872, where this court held that it was not error for the court to dismiss a cause with prejudice when a party repeatedly failed to show up for her deposition. We echo the note of caution sounded by Judge Shields who recently wrote that, although it would generally constitute an abuse of discretion for a court to apply the sanction of dismissal without first attempting a lesser sanction, there are rare circumstances in which the imposition of a lesser initial sanction would not be appropriate. Breedlove v. Breedlove, (1981) Ind.App., 421 N.E.2d 739. From the meager set of facts available in the record here it is impossible to state with certainty whether the trial judge reinstated Knapp's counterclaim because he determined that the sanction had been imposed erroneously or because he determined that removal of the sanction was appropriate when it had attained the desired result. Although the facts and case are distinguishable from those in the case at bar, in J.Y. v. D.A., (1978) Ind.App., 381 N.E.2d 1270, 1271, Judge Lybrook wrote:

"Apparently there are no Indiana cases dealing with the propriety of removing discovery sanctions once they are imposed. Our rules clearly provide that the imposition of sanctions is within the discretion of the trial court. T.R. 37(B). Thus, in the absence of a dispositive rule to the contrary, we believe that the removal of sanctions is also a matter within the trial court's discretion."

Because the action of the trial court must be affirmed if it is sustainable on any theory, Indiana & Michigan Electric Co. v. Schnuck, (1973) 260 Ind. 632, 298 N.E.2d 436, and because Associates of Kentucky have failed to convince us that the court abused its discretion in removing the sanction of...

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