Oliver v. FLH Mill, LLC
| Decision Date | 30 March 2021 |
| Docket Number | Court of Appeals Case No. 20A-CT-1798 |
| Citation | 167 N.E.3d 749 (Table) |
| Parties | Paul OLIVER, Appellant-Plaintiff, v. FLH MILL, LLC; Jeremy Ferree; and Crystal Ferree, Appellee-Defendant. |
| Court | Indiana Appellate Court |
Attorneys for Appellant: Jeffrey D. Stemerick, Vivek R. Hadley, Taft Stettinius & Hollister LLP, Indianapolis, Indiana, Lucas Rowe, The Rowe Law Firm, LLC, Sullivan, Indiana
[1] Paul Oliver cut a deal with Jeremy Ferree (Jeremy) and FLH Mill, LLC (FLH) to build a log home for Oliver. That deal rotted when Jeremy and FLH failed to complete the home. After filing a complaint for breach of contract and conversion against FLH, Jeremy, and Jeremy's wife, Crystal Ferree (Crystal), Oliver obtained default judgments against all three, but those judgments were subsequently set aside. In this appeal, Oliver asks us to reinstate all three of his default judgments. We find the trial court properly overturned the default judgment against Crystal but abused its discretion in doing the same for Jeremy and FLH.
[2] Oliver entered into a contract with Jeremy to build a log home in Linton for $323,900. The contract lists the "Builder" as "Jeremy Ferree (FLH Mill LLC)." Oliver and Jeremy signed the contract, which reflects the word "Builder" next to Jeremy's signature but contains no explicit reference to FLH in the signature section. Crystal's name does not appear on the contract and the record contains no indication that she was involved in FLH's operations.
[3] Oliver eventually filed suit against Jeremy, FLH, and Crystal, alleging breach of contract and home improvement fraud. The complaint asserted Oliver had paid $313,681 of the $323,000 contract price to the defendants, who allegedly used the funds for other purposes and did not complete his log home. Oliver served the company and summons on Jeremy as agent for FLH by leaving the documents with another person at the business's address. Oliver served Crystal and Jeremy individually by leaving copies of the complaint and summons for each with the owner of a campground in Linton at which the Ferrees purportedly were staying.
[4] Jeremy, pro se on his own behalf and also on behalf of FLH, timely answered the complaint and denied Oliver's claims.1 Crystal failed to answer the complaint, prompting Oliver to move for default judgment against her. The trial court granted Oliver's motion and entered default judgment against Crystal on the day the motion was filed. Id. at 46-48.
[5] Two months later, Oliver moved to set aside the default judgment against Crystal only as to the count of home improvement fraud. Id. at 51-52. In the same motion, Oliver sought permission to amend the complaint to allege conversion, instead of home improvement fraud, as to Jeremy and FLH. Id. at 51-52. The trial court granted that motion, dismissing the default judgment against Chrystal only as to the home improvement count and otherwise reaffirming that default judgment. The trial court also authorized Oliver's proposed amendment of the complaint as to Jeremy and FLH. Oliver filed his amended complaint November 14, 2019. Id. at 56, 58. Jeremy and FLH failed to answer the amended complaint, prompting Oliver to seek default judgment against them. Jeremy and FLH failed to appear at the hearing on that motion. The trial court entered default judgment against Jeremy and FLH for $414,120.80.
[6] Two months later Jeremy, FLH, and Crystal filed a combined motion to set aside all of the default judgments under Ind. Trial Rule 60(B) based on excusable neglect. Id. at 82. At the hearing on their motion, the three defendants alleged Crystal had not been served with the complaint and that Jeremy and FLH did not understand they needed to file an answer to the amended complaint. The trial court granted the Trial Rule 60(B) motion as to all three defendants without specifying its reasons. Id. at 16.
[7] Oliver contends the trial court abused its discretion in granting the motion to set aside the default judgments. We determine he is correct as to the judgments against Jeremy and FLH but wrong as to the judgment against Crystal.
[8] Decisions to set aside default judgments are entitled to deference because Indiana law strongly favors disposition on the merits. Fields v. Safway Grp. Holdings, LLC , 118 N.E.3d 804, 809 (Ind. Ct. App. 2019). We review the trial court's judgment only for an abuse of discretion, resolving in favor of the defaulted party any doubt about the propriety of the default judgment. Id. An abuse of discretion occurs when the trial court's judgment is clearly against the logic and effect of the facts and circumstances before the trial court. Id.
[9] None of the defendants filed an appellee's brief. Under such circumstances, we apply a less stringent standard of review and do not assume their burden of presenting arguments against reversal. Rickman v. Rickman , 993 N.E.2d 1166, 1167 (Ind. Ct. App. 2013). Oliver need only establish prima facie error to obtain reversal. Jacob v. Vigh , 147 N.E.3d 358, 360 (Ind. Ct. App. 2020). Yet even under this prima facie standard, we remain obligated to apply the law correctly to the facts in the record to determine whether reversal is warranted. Tisdale v. Bolick , 978 N.E.2d 30, 34 (Ind. Ct. App. 2012).
[10] Oliver contends the trial court misapplied Indiana Trial Rule 60(B) when it set aside the three default judgments. That rule provides in relevant part:
The three defendants sought to set aside the judgments under subsections (1) (excusable neglect) and (8) (the catchall provision). App. Vol. II, p. 83.
[11] Oliver contends the defendants failed to meet their burden under Trial Rule 60(B) relief because they did not offer any evidence to support their claims of excusable neglect. He asserts they also failed to establish a meritorious defense, as required by Trial Rule 60(B). The Trial Rule 60(B) motion is unverified and without accompanying affidavits. At the hearing on the motion, the defendants offered only arguments by counsel and submitted no evidence.
[12] As the issues differ, we split Oliver's claims into two parts: 1) the default judgment against Crystal; and 2) the default judgments against Jeremy and FLH.
[13] Crystal alleged in the Trial Rule 60(B) motion that she had never been served with either the complaint or the amended complaint. App. Vol. II, pp. 82-83. The return of service filed with the trial court shows service was accomplished by certified or registered mail. Exhibits, p. 9. However, contrary to Indiana Trial Rule 4.11, Oliver did not provide a return receipt showing Crystal received that mailing. Instead, the sheriff's return indicates only that the sheriff left a copy of the summons and complaint at 10923 W. 185 N. in Linton—a location that the sheriff described as Crystal's "home or abode." Exhibits, p. 9. The return has a handwritten note indicating that Crystal "live[s] at the Eagles Nest Campground and has no address." Exhibits, p. 8. The sheriff left the summons and complaint with the campground owner. Tr. Vol. II, pp. 13, 28.
[14] Crystal conceded the Ferrees temporarily lived at the campground after suffering a fire at their Linton home. App. Vol. II, p. 82. However, Crystal asserted they never changed their mailing address to that location and, instead, maintained a mailing address at a different location in Linton. App. Vol. II, p. 82. As a result, Crystal did not receive notice and failed to appear to defend herself until after default judgment was entered against her.2
[15] "If service of process is inadequate, the trial court does not acquire personal jurisdiction over a party, and any default judgment rendered without personal jurisdiction is void." King v. United Leasing, Inc. , 765 N.E.2d 1287, 1290 (Ind. Ct. App. 2002). A judgment that is void for lack of personal jurisdiction may be collaterally attacked at any time, without the need to establish a meritorious defense under Trial Rule 60(B). Stidham v. Whelchel , 698 N.E.2d 1152, 1156 (Ind. Ct. App. 1998) ; Moore v. Terre Haute First Nat. Bank , 582 N.E.2d 474, 476-477 (Ind. Ct. App. 1991), reh. denied. A party's failure to appear due to faulty process and lack of notice is "excusable neglect" within the meaning of Trial Rule 60(B)(1). Moore , 582 N.E.2d at 479.
[16] The question, then, is whether Oliver's service of the summons and complaint on Crystal was defective and excused Crystal's failure to appear prior to the default judgment. Service upon an individual is governed by Indiana Trial Rule 4.1, which provides in relevant part:
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