Kmart Corp. v. Englebright

• Decision Date: 19 November 1999
• Docket Number: No. 65A04-9812-CV-593.,65A04-9812-CV-593.
• Citation: 719 N.E.2d 1249
• Parties: KMART CORPORATION, Appellant-Defendant, v. Donna Fay ENGLEBRIGHT, Appellee-Plaintiff.
• Court: Indiana Appellate Court

719 N.E.2d 1249

KMART CORPORATION, Appellant-Defendant, v. Donna Fay ENGLEBRIGHT, Appellee-Plaintiff.

No. 65A04-9812-CV-593.

Court of Appeals of Indiana.

November 19, 1999.

Patrick L. Miller, Patrick F. Mastrian, III, Goodin & Kraege, Indianapolis, Indiana, Attorneys for Appellant.

Michael C. Keating, Keating, Bumb, Vowels, LaPlante & Kent, P.C., Evansville, Indiana; Thomas L. Montgomery, Montgomery & Montgomery, Evansville, Indiana, Attorneys for Appellee.

OPINION

ROBB, Judge.

Kmart Corporation ("Kmart") appeals the trial court's order denying its Trial Rule 60(B) motion to set aside the default judgment entered in favor of Donna Englebright. We reverse and remand.

Issue

Kmart raises one issue for our review which we restate as whether the trial court erred in denying Kmart's motion to set aside the default judgment previously entered in favor of Englebright when Kmart alleged that it had reasonably relied on the representations of Englebright's counsel granting Kmart an indefinite extension of time in which to file responsive pleadings and also that it had a meritorious defense to Englebright's claim.

Facts and Procedural History

On July 22, 1993, Englebright slipped and fell at a Kmart retail store located in Mount Vernon, Indiana. Consequently, on February 2, 1995, Englebright filed a lawsuit against Kmart in the Posey County Circuit Court seeking to recover damages for the personal injuries she incurred as a result of the fall.

On February 7, 1995, William P. Woods filed with the trial court an appearance as counsel for Englebright. Woods served a copy of his appearance on Kmart. Kmart forwarded Woods' appearance to IHDS of Michigan, Ltd. ("IHDS"), the entity that administers liability claims brought against Kmart. Subsequently, an IHDS adjuster contacted Woods and requested certain documentation from him. Thereafter, on February 10, 1995, Woods sent the IHDS adjuster a letter informing him that Englebright desired to pursue settlement negotiations with Kmart, and that unless otherwise notified by Woods, it was unnecessary for Kmart to respond to Englebright's complaint or enter its attorney's appearance with the trial court. Woods' attempts to settle Englebright's claim were ultimately unsuccessful, and on February 23, 1996, Woods filed a motion for leave to withdraw as Englebright's counsel, which was later granted by the trial court.

On May 30, 1997, David D. Kiely entered his appearance on behalf of Englebright and filed a motion for a default judgment against Kmart. Consequently, the trial court entered a default judgment in favor of Englebright and against Kmart in the amount of $732,265.72 plus interest and costs. Thereafter, counsel for Kmart entered an appearance with the trial court and filed a Trial Rule 60(B) motion based upon excusable neglect seeking to set aside the default judgment entered in favor of Englebright. On January 30, 1998, the trial court denied Kmart's Trial Rule 60(B) motion. This appeal ensued.

Discussion and Decision

Kmart contends that the trial court erred in denying its Trial Rule 60(B)(1) motion to set aside the default judgment entered in favor of Englebright. Specifically, Kmart alleges that it has shown excusable neglect in its failure to respond to Englebright's complaint. Moreover, Kmart alleges that it has shown a meritorious defense to Englebright's cause of action.

A. Standard of Review

The decision whether to set aside a default judgment is given substantial deference on appeal. Bonaventura v. Leach, 670 N.E.2d 123, 125 (Ind.Ct.App. 1996), trans. denied. Our standard of review is limited to determining whether the trial court abused its discretion. Bennett v. Andry, 647 N.E.2d 28, 31 (Ind.Ct.App. 1995). An abuse of discretion may occur if the trial court's decision is clearly against the logic and effect of the facts and circumstances before the court, or if the court has misinterpreted the law. McCullough v. Archbold Ladder Co., 605 N.E.2d 175, 180 (Ind.1993). We may affirm a general default judgment on any theory supported by the evidence adduced at trial. Breeden v. Breeden, 678 N.E.2d 423, 425 (Ind.Ct.App.1997). The trial court's discretion is necessarily broad in this area because any determination of excusable neglect, surprise, or mistake must turn upon the unique factual background of each case. Siebert Oxidermo, Inc. v. Shields, 446 N.E.2d 332, 340 (Ind.1983). Moreover, no fixed rules or standards have been established because the circumstances of no two cases are alike. Id. 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." Green v. Karol, 168 Ind.App. 467, 473-74, 344 N.E.2d 106, 110-11 (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. Teegardin v. Maver's, Inc., 622 N.E.2d 530, 533 (Ind.Ct.App.1993). Furthermore, reviewing the decision of the trial court, we will not reweigh the evidence or substitute our judgment for that of the trial court. Professional Laminate & Millwork, Inc. v. B & R Enterprises, 651 N.E.2d 1153, 1157 (Ind.Ct.App.1995). Upon a motion for relief from a default judgment, the burden is on the movant to show sufficient grounds for relief under Indiana Trial Rule 60(B). Jostens Learning Corp. v. Education Sys. Corp. of Indiana, 651 N.E.2d 1186, 1188 (Ind.Ct.App.1995), trans. denied.

B. Trial Rule 60(B)(1) Motion

The entry of a default judgment for failure to file a responsive pleading is authorized by Indiana Trial Rule 55(A). After a default judgment is entered, the defaulting party may seek to have it set aside through the procedures of Trial Rule 60(B). Ind. Trial Rule 55(C). Trial Rule 60(B) provides in pertinent part, that "[o]n motion and upon such terms as are just the court may relieve a party or his legal representative from an entry of default, final order, or final judgment, including a judgment by default, for the following reasons: (1) mistake, surprise, or excusable neglect...." T.R. 60(B)(1). 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. Blichert v. Brososky, 436 N.E.2d 1165, 1167 (Ind.Ct.App.1982). Moreover, a Trial Rule 60(B)(1) motion is addressed to the trial court's equitable discretion, with the burden on the movant to affirmatively demonstrate that relief is necessary and just. Cazarus v. Blevins, 159 Ind.App. 512, 514, 308 N.E.2d 412, 414 (1974).

1. Excusable Neglect

There is no general rule as to what constitutes excusable neglect under Trial Rule 60(B)(1). In re Marriage of Ransom, 531 N.E.2d 1171, 1172 (Ind.1988). Each case must be determined on its particular facts. 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.

Continental Assurance Co. v. Sickels, 145 Ind.App. 671, 675, 252 N.E.2d 439, 441 (1969).

Kmart contends that it has shown excusable neglect in failing to file responsive pleadings or even an appearance because it reasonably relied on Englebright's original counsel's representation that he was extending Kmart an indefinite extension of time in which to respond to the complaint and file counsel's appearance. We note initially that this court has repeatedly emphasized the importance of reliable and truthful communication between attorneys. See Carvey v. Indiana Nat'l Bank, 176 Ind.App. 152, 160, 374 N.E.2d 1173, 1179 (1978); see also Condon v. Patel, 459 N.E.2d 1205, 1207 (Ind.Ct.App.1984). The Indiana Supreme Court has held that "[t]he reliability of lawyers' representations is an important component of the fair and efficient administration of justice ... [a] lawyer's representations have long been accorded a particular expectation of honesty and trustworthiness." Fire Ins. Exch. v. Bell, 643 N.E.2d 310, 312 (Ind. 1994). Commitment to these values begins with the oath taken by every Indiana lawyer, which includes a promise that a lawyer will employ "such means only as are consistent with the truth." Ind. Admission and Discipline Rule 22. Moreover, Indiana Professional Responsibility Rule 8.4(c) declares that it is professional misconduct for a lawyer to "engage in conduct involving dishonesty, fraud, deceit, or misrepresentation." We wholeheartedly believe that an attorney's "word is his bond," as both an officer of the court and a member of the Indiana bar, and thus, his representations may be reasonably relied upon by both his client and the general public.

In the present case, Woods sent a letter to Kmart stating in part that:

... after speaking with my client, she has indicated that she would like to arrive at a settlement in this case. It is not necessary for you to enter an appearance or file an answer in this cause until we have notified you to do so.

R. 205. Upon receipt of this letter, counsel for Kmart had not yet entered an appearance with the trial court or filed an answer to Englebright's complaint. In fact, at this stage of Englebright's claim, IHDS was acting on behalf of Kmart.¹ R. 75. However, the IHDS adjuster who was investigating Englebright's claim did contact counsel for Kmart, who advised him that Kmart could rely on Woods'...