Huntington Nat'l Bank v. Car-X Assocs. Corp.

• Citation: 22 N.E.3d 687
• Decision Date: 02 December 2014
• Docket Number: No. 64A04–1405–MF–227.,64A04–1405–MF–227.
• Parties: The HUNTINGTON NATIONAL BANK, Appellant, v. CAR–X ASSOCIATES CORP., Appellee.
• Court: Court of Appeals of Indiana

22 N.E.3d 687

The HUNTINGTON NATIONAL BANK, Appellant

v.CAR–X ASSOCIATES CORP., Appellee.

No. 64A04–1405–MF–227.

Court of Appeals of Indiana.

Dec. 2, 2014.

John David Cross, Mercer Belanger, P.C., Indianapolis, IN, Attorney for Appellant.

Christopher M. Keefer, Sopko, Nussbaum, Inabnit & Kaczmarek, South Bend, IN, Attorney for Appellee.

OPINION

BROWN

, Judge.

The Huntington National Bank (“Huntington”) appeals the trial court's denial of its motion to set aside default judgment in favor of Car–X Associates Corp. (“Car–X”). Huntington raises one issue, which we restate as whether the court erred or abused its discretion in denying its motion to set aside default judgment. We reverse and remand.

FACTS AND PROCEDURAL HISTORY

On January 8, 2014, Car–X filed a complaint to foreclose a judgment lien it had obtained in 2013 against real property owned by Susanne and Terry Wood in the amount of $200,359.90 plus fees, costs, and post-judgment interest. The complaint named Huntington as a defendant because Huntington held a mortgage on the property which secured a loan to the Woods made in 2005 in the original principal amount of $310,500. The complaint and summons were served upon Huntington's registered agent for service of process by certified mail on January 27, 2014.

Paul Burnside was the Foreclosure Supervisor for Huntington. In his affidavit, Burnside stated he received service of Car–X's complaint on or about January 28, 2014, and referred the matter to counsel on February 25, 2014. Burnside further stated that the individual in his department who typically received service of process for Huntington was on a medical leave of absence when Huntington received service; that in addition to his regular duties he was assisting the individual who typically received service of process for Huntington during her leave of absence; that his regular duties included supervision of Huntington's pre-sale foreclosure staff, review of daily reports and updates, oversight of the foreclosure attorney network, and daily review of compliance with investor and governmental guidelines; and that he received the summons in the case but due to the volume of his regular duties was unable to timely refer the matter to counsel.

On February 25, 2014, Car–X moved for default judgment against Huntington. On February 27, 2014, the trial court granted Car–X's motion and specifically found that “Car–X's interest in and to the real estate ... is prior and superior to any and all interests, estates, rights, titles, claims, liens, and/or encumbrances of Huntington.” Appellee's Appendix at 50. The practical result of the default judgment was to make Huntington's mortgage subordinate to the judgment lien of Car–X. On March 14, 2014, counsel for Huntington filed an appearance, an answer, and a motion to set aside the default judgment. After conducting a hearing, the trial court denied Huntington's motion on April 24, 2014. Huntington now appeals.

DISCUSSION

The issue is whether the trial court erred or abused its discretion in denying Huntington's motion to set aside default judgment under Ind. Trial Rule 60(B)

. Upon appellate review of a refusal to set aside a default judgment, the trial court's ruling is entitled to deference and will be reviewed for an abuse of discretion. Allstate Ins. Co. v. Watson, 747 N.E.2d 545, 547 (Ind.2001). The trial court's discretion should be exercised in light of the disfavor in which default judgments are generally held. Id.; see also

Coslett v. Weddle Bros. Constr. Co., 798 N.E.2d 859, 861 (Ind.2003) ( “Indiana law strongly prefers disposition of cases on their merits.”), reh'g denied.

Huntington contends in part that the trial court erred in finding that its delay was not the result of excusable neglect.

Huntington specifically argues that the employee who typically received service of process was away on maternity leave, that Burnside covered for the woman, that Burnside does not typically receive service of process and added this job to his regular duties, and that, due to the volume of his regular duties, Burnside did not refer the matter to counsel until February 25, 2014, just six days after its deadline to respond to the complaint.

Car–X responds that the trial court did not abuse its discretion in entering default judgment and that the record demonstrates the court weighed the facts of the case. Car–X argues that Huntington is a large bank which had staffed at a minimum an employee and supervisor charged with, among other things, receiving service of process and overseeing the foreclosure attorney network. Car–X notes that the court found Huntington's neglect was not excusable under the circumstances and that there is nothing in the record demonstrating that it abused its discretion in doing so. Car–X also states that Huntington asserts for the first time in its appellant's brief that the employee was out on maternity leave¹ and that it would seem this employee would have had ample time to make all arrangements relative to her workload including receiving and handling of service of process.

Default judgments are not favored in Indiana. Shane v. Home Depot USA, Inc., 869 N.E.2d 1232, 1234 (Ind.Ct.App.2007)

. Any doubt as to the propriety of a default judgment must be resolved in favor of the defaulted party. Watson, 747 N.E.2d at 547. “Moreover, no fixed rules or standards have been established because the circumstances of no two cases are alike.” Kmart v. Englebright 719 N.E.2d 1249, 1253 (Ind.Ct.App.1999) (citing Siebert Oxidermo, Inc. v. Shields, 446 N.E.2d 332, 340 (Ind.1983) ), trans. denied. “A cautious approach to the grant of motions for default judgment is warranted in ‘cases involving material issues of fact, substantial amounts of money, or weighty policy determinations.’ ” Id. (citing Green v. Karol, 168 Ind.App. 467, 473–474, 344 N.E.2d 106, 110–111 (1976) ). In addition, the trial court must balance the need for an efficient judicial system with the judicial preference for deciding disputes on the merits. Id.

The entry of a default judgment is authorized by Ind. Trial Rule 55(A)

, and pursuant to Trial Rule 55(C) a judgment by default which has been entered may be set aside by the court for the grounds and in accordance with the provisions of Trial Rule 60(B). Huntington cited to Ind. Trial Rule 60(B)(1) in its motion to set aside default judgment. Ind. Trial Rule 60(B) provides in part that “[o]n 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: (1) mistake, surprise, or excusable neglect; ....” Ind. Trial Rule 60(B)(1). A motion shall be filed not more than one year after the judgment was entered for purposes of Trial Rule 60(B)(1), and a movant filing a motion under Trial Rule 60(B)(1) must allege a meritorious claim or defense. “A Trial Rule 60(B)(1) motion does not attack the substantive, legal merits of a judgment, but rather addresses the procedural, equitable grounds justifying the relief from the finality of a judgment.” Kmart, 719 N.E.2d at 1254 (citing Blichert v. Brososky, 436 N.E.2d 1165, 1167 (Ind.Ct.App.1982) ). We have held that “relief from judgment is essentially equitable in nature and, thus, a trial court must balance the alleged injustice suffered by the party moving for relief against the interests of the winning party and society in general in finality of litigation.” Id. at 1257

(citing King v. King, 610 N.E.2d 259, 262 (Ind.Ct.App.1993), reh'g denied, trans. denied ).

There is no general rule as to what constitutes excusable neglect under Trial Rule 60(B)(1)

. Id. at 1254 (citing In re Marriage of Ransom, 531 N.E.2d 1171, 1172 (Ind.1988) ). Each case must be determined on its particular facts. Id. (citing Boles v. Weidner, 449 N.E.2d 288, 290 (Ind.1983) ). The following facts have been held to constitute excusable neglect, mistake, or surprise:

(a) absence of a party's attorney through no fault of party; (b) an agreement made with opposite party, or his attorney; (c) conduct of other persons causing party to be misled or deceived; (d) unavoidable delay in traveling; (e) faulty process, whereby party fails to receive actual notice; (f) fraud, whereby party is prevented from appearing and making a defense; (g) ignorance of the defendant; (h) insanity or infancy; (i) married women deceived or misled by conduct of husbands; (j) sickness of a party, or illness of member of a family.

Id. (citing Cont'l Assurance Co. v. Sickels, 145 Ind.App. 671, 675, 252 N.E.2d 439, 441 (1969)

). “Although a default judgment plays an important role in the maintenance of an orderly, efficient 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.” Charnas v. Estate of Loizos, 822 N.E.2d 181, 184–185 (Ind.Ct.App.2005).

Even though there is a technical default, the non-defaulting party is not entitled to a judgment by default as a matter of right. Green, 168 Ind.App. at 473, 344 N.E.2d at 110

. This court has considered the amount of money involved, the material issues of fact accompanying the allegations, the short length of the delay, and lack of prejudice to the non-movant by the delay in concluding that a trial court did not abuse its discretion in allowing a case to be heard on the merits. See

id. at 475, 344 N.E.2d at 111.

Here, Huntington's deadline to file a responsive pleading to Car–X's complaint to foreclose a judgment lien was February 19, 2014, twenty-three days after service of the complaint on January 27, 2014. See Trial Rule 6(C)

(providing a responsive pleading shall be served within twenty days after service of the prior pleading); Trial Rule...