Logansport/Cass Cnty. Airport Auth. v. Kochenower

Citation169 N.E.3d 1143
Decision Date03 May 2021
Docket NumberCourt of Appeals Case No. 20A-PL-2143
Parties LOGANSPORT/CASS COUNTY AIRPORT AUTHORITY, Appellant-Plaintiff, v. Jerra KOCHENOWER, Barry Heinley, James Brown, Joseph Robert Morsman, Robert Allen James, James C. Mizell, BNY Mellon, Unknown Members, Shareholders, Officers, Partners, Sole Proprietors, or Other Affiliates of Any Other Defendant, Appellees-Defendants.
CourtCourt of Appeals of Indiana

Attorney for Appellant: Donald J. Tribbett, Tribbett Law Office, Logansport, Indiana

Attorney for AppelleeJerra Kochenower: Andrew A. Achey, The Law Office of Andrew Achey, Logansport, Indiana

Najam, Judge.

Statement of the Case

[1] Logansport/Cass County Airport Authority (the "Airport Authority") appeals the trial court's grant of Jerra Kochenower's Trial Rule 60(B) motion to set aside default judgment. The Airport Authority raises the following two issues for our review:

1. Whether the trial court erred as a matter of law when it relied on unverified and otherwise not-authenticated documents in setting aside the default judgment.
2. Whether the trial court abused its discretion when it set aside the default judgment.

[2] We affirm.

Facts and Procedural History

[3] On December 27, 2018, the Airport Authority issued bonds in the principal amount of $950,000 with Bank of New York Mellon ("BNY Mellon") as the paying agent. On July 5, 2019, ten days before the first installment payment of $64,811.50 was due, BNY Mellon emailed the Airport Authority an invoice for that amount. However, an unknown third party intercepted that invoice and altered its contents, which resulted in the Airport Authority's first payment being sent not to BNY Mellon but to a Chase Bank account. The Airport Authority later determined that that Chase Bank account had been opened in Kochenower's name. On July 10, the holder of the Chase Bank account issued wire transfer instructions for the stolen funds to several other third parties. The holder of the account then closed the account.

[4] On July 15, the Airport Authority discovered the theft. Chase Bank informed the Airport Authority's bank that the stolen funds could not be returned because the account had been closed. However, on August 19, Chase Bank was able to return $9,994 to the Airport Authority. The remaining stolen funds thus totaled $54,817.50.

[5] On September 12, the Airport Authority filed its complaint alleging unknown defendants had knowingly or intentionally exerted unauthorized control over the Airport Authority's property with the intent to deprive the Airport Authority of the value or use of that property, which constituted theft pursuant to Indiana Code Section 35-43-4-2. The Airport Authority sought "three times the amount of its actual damages, costs of this action, reasonable attorney's fees," and other related expenses. Appellant's App. Vol. 2 at 19.

[6] After discovery with Chase Bank, the Airport Authority filed its amended complaint in which it specifically named the alleged perpetrators, including Kochenower. On February 21, the Airport Authority served process on Kochenower at his home address in Colorado Springs, Colorado. Kochenower's appearance and answer were due by March 16. Kochenower did not file an appearance or answer during that time.

[7] Thereafter, the Airport Authority filed its Motion for Default Judgment, which the court granted.1 The court's default judgment awarded the Airport Authority $164,452.50 in damages, $12,900 in attorney's fees, and $296.36 in court costs.

[8] On June 2, the trial court received a letter from Kochenower. In that letter, Kochenower stated that he had been the victim of identity theft and that he had never opened the suspect Chase Bank account. Included with his letter were an incident report apparently from the Colorado Springs Police Department for the alleged identity theft and a letter apparently from Chase Bank that stated Kochenower did not open the account used to defraud the Airport Authority. Additionally, Kochenower stated in his letter to the court that he did not follow up on the Airport Authority's complaint because he had presented the complaint to Chase Bank in support of his claim of identity fraud and "Chase Bank said they were going to take care of it." Appellant's App. Vol. 2 at 35. The letter ended with "Your Honor, clear me of this." Id.

[9] The trial court concluded that Kochenower's letter was a motion to set aside the default judgment under Indiana Trial Rule 60(B), and the court set the matter for a hearing. Following argument at that hearing, the court granted Kochenower's motion and set aside the default judgment pursuant to Trial Rule 60(B)(1). This appeal ensued.

Discussion and Decision
Overview

[10] The Airport Authority alleges the trial court erred when it granted Kochenower's Trial Rule 60(B) motion to set aside the default judgment. Indiana Trial Rule 60(B)(1) states that "a judgment by default" may be set aside based on a party's "mistake, surprise, or excusable neglect" if the motion is filed within one year of the judgment2 and the moving party "allege[s] a meritorious claim or defense." "A motion under Rule 60(B)(1) 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." KWD Industrias SA DE CV v. IPM LLC , 129 N.E.3d 276, 281 (Ind. Ct. App. 2019) (citing Kmart v. Englebright , 719 N.E.2d 1249, 1254 (Ind. Ct. App. 1999), trans. denied ).

[11] Our Supreme Court has stated that a default judgment

is not generally favored, and any doubt of its propriety must be resolved in favor of the defaulted party. It is an extreme remedy and is available only where that party fails to defend or prosecute a suit. It is not a trap to be set by counsel to catch unsuspecting litigants.

Allstate Ins. Co. v. Watson , 747 N.E.2d 545, 547 (Ind. 2001) (emphasis added; internal quotation marks and citations omitted).

[12] On appeal, the Airport Authority contends that the trial court erred when it set aside the default judgment for two reasons. First, the Airport Authority asserts that the trial court erroneously interpreted Trial Rule 60(B) to allow the submission of inadmissible evidence in support of a motion to set aside a default judgment. Second, the Airport Authority argues that, even if the court properly considered Kochenower's submissions, those submissions were insufficient to satisfy the requirements of Trial Rule 60(B)(1). We address each argument in turn.

Issue One: Whether the Moving Party under Trial Rule 60(B) Must Submit Admissible Evidence

[13] The Airport Authority first alleges the trial erred when it granted Kochenower's Rule 60(B) motion because Kochenower failed to submit admissible evidence in support of his asserted meritorious defense. The Airport Authority's argument on this issue is that the trial court misapplied or misinterpreted Trial Rule 60(B). We review such questions de novo. Morrison v. Vasquez , 124 N.E.3d 1217, 1219 (Ind. 2019).

[14] Again, Indiana Trial Rule 60(B) provides that a party moving for relief for "mistake, surprise, or excusable neglect" must "allege a meritorious claim or defense." Concerning the meritorious defense requirement, the Indiana Supreme Court has said that

Rule 60(B) ’s requirement of a meritorious defense ... merely requires a prima facie showing of a meritorious defense, that is, a showing that "will prevail until contradicted and overcome by other evidence." The movant need only "present evidence that, if credited, demonstrates that a different result would be reached if the case were retried on the merits and that it is unjust to allow the judgment to stand."

Outback Steakhouse of Fla., Inc. v. Markley , 856 N.E.2d 65, 73-74 (Ind. 2006) (emphasis omitted) (quoting Smith v. Johnston , 711 N.E.2d 1259, 1265 (Ind. 1999) ).

[15] Our Supreme Court has not held that the meritorious claim or defense requirement means that the moving party's submission must be in an admissible form at the time of the Rule 60(B) motion. Indeed, in Outback Steakhouse , the Court relied on a treatise for the proposition that Federal Rule of Civil Procedure 60(b) requires the moving party to simply show that "vacating the judgment will not be an empty exercise." Id. at 73 (citing 12 Moore's Federal Practice , § 60.24[1] (3d ed. 1997) (hereinafter "Moore's Federal Practice ")). That same treatise goes on to say:

The ... moving party must make allegations that, if established at trial, would constitute a valid claim or defense.... [A]llegations attempting to state a claim or defense in this context are "meritorious if they contain ‘even a hint of a suggestion’ which, if proven at trial, would constitute a [valid claim or a] complete defense." On the other hand, mere conclusory statements that a claim or a defense is meritorious will not suffice. The moving party must state enough facts to give a court an opportunity to measure whether the claim or defense has any potential , whether the claim or defense is one that is recognized by law.

Moore's Federal Practice , supra , at § 60.24[2] (emphases added; footnotes omitted). That language is clear. The moving party need only state the factual basis for his alleged meritorious claim or defense. That statement need not rise to the level of admissible or persuasive evidence.

[16] We acknowledge that the Airport Authority's position appears to be supported by precedent. Most notably, in Bross v. Mobile Home Estates, Inc. , 466 N.E.2d 467, 469 (Ind. Ct. App. 1984), this Court held that the moving party under Trial Rule 60(B) must present "some admissible evidence" of a meritorious claim or defense to obtain relief from a default judgment. That rule has since been repeated. See Denny v. Vanoy , 148 N.E.3d 1144, 1146 (Ind. Ct. App. 2020) ; Southside Auto. of Anderson, Inc. v. Smith , 114 N.E.3d 551, 554-55 (Ind. Ct. App. 2018) ; Butler v. State , 933 N.E.2d 33, 36 (Ind. Ct. App. 2010) ; Bunch v. Himm , 879 N.E.2d 632, 637 (...

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