State, Dept. of Natural Resources v. Van Keppel

• Decision Date: 18 December 1991
• Docket Number: No. 06A01-9106-CV-180,06A01-9106-CV-180
• Parties: STATE of Indiana, DEPARTMENT OF NATURAL RESOURCES, Appellant-Defendant, and Lake County Drainage Board, Non-Appealing Defendant, v. Gerrit VAN KEPPEL d/b/a Van Keppel Supply Company, Appellee-Plaintiff.
• Court: Indiana Appellate Court

Page 161

583 N.E.2d 161

STATE of Indiana, DEPARTMENT OF NATURAL RESOURCES, Appellant-Defendant, and Lake County Drainage Board, Non-Appealing Defendant, v. Gerrit VAN KEPPEL d/b/a Van Keppel Supply Company, Appellee-Plaintiff.

No. 06A01-9106-CV-180.

Court of Appeals of Indiana,

First District.

Dec. 18, 1991.

Linley E. Pearson, Atty. Gen., Harry John Watson, III, Deputy Atty. Gen., Indianapolis, for appellant-defendant.

Kent Frandsen, Parr, Richey, Obremskey & Morton, Lebanon, Michael L. Einterz, Lowe, Gray, Steele & Hoffman, Indianapolis, for appellee-plaintiff.

BAKER, Judge.

The State of Indiana, through its Department of Natural Resources (the DNR), appeals the trial court's denial of its motion to set aside a default judgment entered in favor of Gerritt Van Keppel in Van Keppel's breach of contract action against the DNR and the Lake County Drainage Board (Lake County).

The DNR challenges both the denial of the motion to set aside and the $1,212,996.28 in damages awarded to Van Keppel in a post-default damages hearing. Because we reverse on the first question, however, we need not address the second.

FACTS

Van Keppel is a contractor specializing in excavation. Lake County entered into a series of written contracts with him for the reconstruction of the Williams Ditch Levee in Lake County. The DNR, pursuant to its authority under the Soil and Water Conservation Districts Act, ¹ provided guidance and cooperation in the performance of the reconstruction. As is to be expected with large construction projects, unforeseen additional work, owner-contractor disputes, and cost over-runs came into play, causing the parties to renegotiate the terms of their agreement. When the fee Van Keppel expected was not forthcoming, he initiated this action.

Van Keppel initially brought suit in Marion Superior Court on February 16, 1990, properly effecting service on Lake County, the DNR, and the Office of Attorney General as the DNR's representative. ² Lake County filed its answer in a timely fashion, but the DNR did not. Van Keppel moved for change of venue from the county, and the action was docketed in Boone Circuit Court on April 30, 1990. On May 1, Van Keppel moved for and received default judgment against the DNR. On June 12, the Attorney General's office entered an appearance and moved to set aside the default judgment. After a hearing on the motion on September 10, the trial court denied the motion. After a subsequent damages hearing, the trial court entered final judgment against the DNR on February 19, 1991. Additional facts will be supplied as necessary.

DISCUSSION AND DECISION

The entry of default judgments for failure to file responsive pleadings is authorized by Ind.Trial Rule 55(A). A default judgment may be entered against a governmental organization. T.R. 55(E). After a default judgment has been entered, the defaulting party may seek to have it set aside through the procedures of Ind.Trial Rule 60(B). T.R. 55(C). T.R. 60(B)(1) provides that a default judgment may be set aside for "[m]istake, surprise, or excusable neglect."

No fixed standards exist to determine the bounds of "mistake, surprise or excusable neglect." Siebert Oxidermo, Inc. v. Shields (1983), Ind., 446 N.E.2d 332, 340. Accordingly, the trial court must balance the need for the orderly and efficient administration of justice with the judicial preference for deciding cases on their merits and giving parties their day in court based on the circumstances of each case. Green v. Karol (1976), 168 Ind.App. 467, 473-74, 344 N.E.2d 106, 110-11. Moreover, a cautious approach to the grant of motions for default judgment is warranted in "cases involving material issues of fact In addition to showing mistake, surprise, or excusable neglect, "[o]ur case law makes clear the movant [for relief from judgment] must also show a meritorious defense to the judgment." Cornelius v. State (1991), Ind.App., 575 N.E.2d 20, 21, trans. denied (citing Chelovich v. Ruff & Silvian Agency (1990), Ind.App., 551 N.E.2d 890, 892). A meritorious defense is one that would lead to a different result if the case were tried on the merits. Vanjani v. Federal Land Bank of Louisville (1983), Ind.App., 451 N.E.2d 667, 672. The movant need not prove absolutely the existence of a meritorious defense. Bross v. Mobile Home Estates, Inc. (1984), Ind.App., 466 N.E.2d 467, 469. The movant must show, however, enough admissible evidence to make a prima facie showing of a meritorious defense indicating to the trial court the judgment would change and that the defaulted party would suffer an injustice if the judgment were allowed to stand. Id.; Vanjani, supra, at 671.

                substantial amounts of money, or weighty policy determinations."  Id.  The trial court's resolution of these questions, on both entering and setting aside a default judgment, is a matter of discretion, and we will reverse a ruling on these questions only for an abuse of discretion.  Taco Bell Corp. v. United Farm Bureau Mut. Ins. Co.  (1991), Ind.App., 567 N.E.2d 163, 165, trans. denied; Green, supra, at 473, 344 N.E.2d at 110.   That is, we will reverse only "if the trial court's decision is clearly against the logic and effect of the facts and circumstances before the court, of the reasonable, probable, and actual deductions to be drawn therefrom."  Myers v. Myers (1990), Ind., 560 N.E.2d 39, 42
                

The present case involves both the balancing concerns and the factors warranting caution discussed by the court in Green, supra. In balancing efficiency with Indiana's strong preference for resolution of cases on the merits, ³ the trial court opted for efficiency and entered default judgment against the DNR even though Van Keppel's claims against Lake County were still pending trial on the merits. Moreover, the factors warranting caution concern us greatly. The prospect of awarding a $1,000,000 default judgment when the defendant's liability is still very much at issue should give all trial and appellate judges pause....