Shane v. Home Depot Usa, Inc.

• Decision Date: 17 July 2007
• Docket Number: No. 82A01-0610-CV-465.,82A01-0610-CV-465.
• Citation: 869 N.E.2d 1232
• Parties: William F. SHANE and Martha J. Shane, Appellants-Plaintiffs, v. HOME DEPOT USA, INC., Gershman-Brown & Associates, Inc., and G.B. Evansville Developer, LLC, Appellees-Defendants.
• Court: Indiana Appellate Court

869 N.E.2d 1232

William F. SHANE and Martha J. Shane, Appellants-Plaintiffs, v. HOME DEPOT USA, INC., Gershman-Brown & Associates, Inc., and G.B. Evansville Developer, LLC, Appellees-Defendants.

No. 82A01-0610-CV-465.

Court of Appeals of Indiana.

July 17, 2007.

Robin R. Craig, Evansville, IN, Attorney for Appellants.

Jeri D. Barclay, Louisville, KY, Attorney for Appellee.

OPINION

CRONE, Judge.

Case Summary

William F. Shane and Martha J. Shane ("the Shanes") appeal the trial court's granting of the motion to set aside default judgment filed by Gershman-Brown & Associates, Inc. ("Gershman-Brown"). We affirm.

Issue

The Shanes present two issues, which we consolidate and restate as whether the trial court abused its discretion by granting Gershman-Brown's motion to set aside default judgment.

Facts and Procedural History

On May 4, 2004, the Shanes were shopping at a Home Depot store in Evansville. Gershman-Brown owned and operated the premises upon which the store was located. The Shanes had parked their car in a handicapped parking space in the Home Depot parking lot. When the couple decided to purchase something, ninety-four-year-old William walked outside with the intention of pulling the car up to the store's front doors, so that he could assist his wife in loading their purchase. On his way to the car, William tripped over a "concrete electrical service panel, installed in the asphalt pavement of the parking lot, and located in the center of the handicapped parking spaces." Appellants' App. at 2. William fell to the ground and allegedly suffered physical injuries as a result.

On May 4, 2006, the Shanes filed their complaint for personal injury and loss of consortium against Home Depot USA, Inc., Gershman-Brown, and G.B. Evansville Developer, LLC.¹ The Shanes sent the complaint to Gershman-Brown via certified mail on May 9, 2006. Gershman-Brown accepted service on May 15, 2006, and therefore, pursuant to Indiana Trial Rule 6, its answer was due on June 5, 2006.² On July 6, 2006, Gershman-Brown had yet to file a responsive pleading, and the Shanes filed a motion for default judgment, a supporting affidavit, and a request for hearing on damages. The trial court granted the Shanes' motion and scheduled a damages hearing for August 16, 2006.³

On August 11, 2006, attorney Jeri Barclay entered her appearance on behalf of Gersham-Brown and filed a motion to set aside the default judgment, a supporting memorandum, and a motion to continue hearing. The trial court denied Gershman-Brown's motion to continue and scheduled the motion to set aside default judgment for August 16, 2006.

At the hearing, Gershman-Brown offered the affidavit of Dennis Mason, a claims director at Firemen's Fund, Gershman-Brown's insurer. In his affidavit, Mason alleged that after Gershman-Brown had notified Fireman's Fund of the Shanes' complaint, Fireman's Fund mistakenly assigned the claim to an adjuster who had recently resigned from the company. He represented that the complaint was "inadvertently misplaced in the claims transfer process." Id. at 23. Gershman-Brown also offered an affidavit from Barclay, which stated that Gershman-Brown had identified several possible defenses based on photographs and medical records, which were attached as supporting exhibits. The Shanes objected to the admission of the exhibits and moved to strike them from the record. The trial court granted their motion to strike. At the conclusion of the hearing, the trial court granted Gershman-Brown's motion to set aside default judgment, vacated the Shanes' hearing on damages, and ordered Gershman-Brown to file its answer within twenty days.

On September 15, 2006, the Shanes filed a motion to correct error, which the trial court denied on September 19, 2006. The Shanes now appeal.

Discussion and Decision

The Shanes contend that the trial court erred in denying their motion to correct error. We review a trial court's denial of a motion to correct error for an abuse of discretion. Principal Life Ins. Co. v. Needler, 816 N.E.2d 499, 502 (Ind. Ct.App.2004). An abuse of discretion occurs if the trial court's decision is against the logic and effect of the facts and circumstances before the court, or reasonable inferences therefrom. Id. We also consider the standard of review for the underlying ruling, which in this case was the trial court's granting of Gershman-Brown's motion to set aside default judgment. Id. The decision whether to set aside a default judgment is given substantial deference on appeal. Anderson v. State Auto Ins. Co., 851 N.E.2d 368, 370 (Ind.Ct.App.2006). The trial court's discretion is broad in these cases because each case has a unique factual background. Id. This Court will not reweigh the evidence or substitute our judgment for the judgment of the trial court. Id. Generally, default judgments are not favored in Indiana, for it has long been the preferred policy of this state that courts decide a controversy on its merits. Walker v. Kelley, 819 N.E.2d 832, 837 (Ind.Ct.App.2004). Any doubt of the propriety of a default judgment should be resolved in favor of the defaulted party. Coslett v. Weddle Bros. Const. Co., Inc., 798 N.E.2d 859, 861 (Ind.2003).

Indiana Trial Rule 55(A) authorizes the entry of default judgment for failure to file a pleading. Flying J, Inc. v. Jeter, 720 N.E.2d 1247, 1249 (Ind.Ct.App.1999). Pursuant to Indiana Trial Rule 55(C), however, a default judgment may be set aside if grounds set forth in Indiana Trial Rule 60(B) exist. Id. In this case, Gershman-Brown alleges that one of those grounds— excusable neglect—did exist. There are no clear standards to determine what is and is not excusable neglect. Id. In making such a determination, "[c]ourts must balance the need for efficient administration of justice with the preference for deciding cases on their merits and giving a party its day in court." Id. Pursuant to Indiana Trial Rule 60(B)(2), a party seeking to set aside a judgment on the grounds of excusable neglect must also "allege" a meritorious defense. Here, the Shanes allege that Gershman-Brown failed to satisfy both of these requirements.

A. Excusable Neglect

Gershman-Brown claims that because it did not act with "willful disregard for the rules and orders of the court[,]" its "unintentional oversight" in failing to promptly file an answer to the Shanes' complaint is an example of excusable neglect. Appellee's Br. at 4. We are unaware of any legal authority supporting Gershman-Brown's suggestion that if an act is not purposeful, then it is per se excusable in this context.

Indiana appellate courts have decided several cases on the issue that arises in the instant case, which is whether a breakdown in communication is excusable neglect. In Whittaker v. Dail, 584 N.E.2d 1084, 1087 (Ind.1992), our supreme court affirmed the trial court's decision to set aside a default judgment where there was a breakdown in communication between an insurance company and its client. In that case, Whittaker failed to appear at trial, and upon Dail's motion, the trial court entered default judgment against Whittaker. Several days later, two attorneys entered their appearance on behalf of Whittaker and moved to set aside the default judgment. At the hearing on this motion, Whittaker testified that he had informed his insurer, Allstate Insurance Company, of the upcoming trial date and that it was his understanding that Allstate would hire an attorney to represent him. An Allstate adjuster testified that she had agreed to hire an attorney for Whittaker, and after discussing the case with attorneys from a law firm, she believed that she had hired the firm to represent Whittaker. An attorney from the firm testified, however, that he misunderstood the adjuster's request and believed that he was being employed for the purpose of filing a declaratory judgment action against Whittaker and not to defend him. Our supreme court found that the trial court had abused its discretion in denying Whittaker's motion to set aside default judgment:

[W]e hold that where the unchallenged credible testimony establishes a breakdown in communication which results in a party's failure to appear for trial, the grounds for setting aside a default judgment, as specified in Indiana Trial Rule 60, have been satisfied and the trial court should set aside such default judgment. The record here unequivocally reveals that, while this case had been pending for approximately three years, there was no evidence of any "foot dragging" on the part of Whittaker, other than his inability to continue to pay his attorneys to defend him.[⁴] In view of the record, we hold that the trial court's denial of Whittaker's request to set aside the default judgment and to have a jury determine the facts of this case was an abuse of discretion.

Id.

Similarly, in Flying J., Inc. v. Jeter, this Court held that Flying J's failure to file an answer to Jeter's complaint was excusable neglect where it was not the result of "foot dragging" on the part of Flying J. 720 N.E.2d at 1250. In that case, Flying J's insurance adjuster received a courtesy copy of the complaint, forwarded it to Flying J, and informed Jeter that he would have to perfect service through Flying J's agent. A Flying J employee contacted the adjuster and requested that he employ a specific law firm to defend Flying J. The employee believed that the adjuster would hire the firm immediately; the adjuster, however, thought that he was to hire the firm after receiving notice from Flying J that it had received proper service. This misunderstanding led to Flying J's failure to file a timely answer. Guided by the Whittaker decision, this Court found that Flying J's failure to answer the complaint was not because it failed to take action. Rather, Flying J timely requested its adjuster to hire a law firm for its defense, and it was the misunderstanding between them that resulted in a failure to respond. Finding an abuse...