Perfect North Slopes, Inc. v. Nicholas A. Searcy ( 2013 )

Pursuant to Ind.Appellate Rule 65(D), this
Memorandum Decision shall not be
regarded as precedent or cited before any
Oct 15 2013, 9:15 am
court except for the purpose of
establishing the defense of res judicata,
collateral estoppel, or the law of the case.
ATTORNEY FOR APPELLANT: ATTORNEYS FOR APPELLEE:
MICHAEL C. PEEK LARRY J. WAGNER
Christopher & Taylor NOAH L. GAMBILL
Indianapolis, Indiana Wagner Crawford & Gambill
Terre Haute, Indiana
IN THE
COURT OF APPEALS OF INDIANA
PERFECT NORTH SLOPES, INC., )
)
Appellant-Defendant, )
)
vs. ) No. 15A05-1305-CT-204
)
NICHOLAS A. SEARCY, )
)
Appellee-Plaintiff. )
APPEAL FROM THE DEARBORN SUPERIOR COURT
The Honorable Jonathan N. Cleary, Judge
Cause No. 15D01-1211-CT-58
October 15, 2013
MEMORANDUM DECISION – NOT FOR PUBLICATION
RILEY, Judge
STATEMENT OF THE CASE
Appellant-Defendant, Perfect North Slopes, Inc. (North Slopes), appeals the trial
court’s denial of its motion to set aside default judgment entered at the request of
Appellee-Plaintiff, Nicholas A. Searcy (Searcy).
We affirm.
ISSUE
North Slopes raises two issues, one of which we find dispositive and which we
restate as: Whether the trial court abused its discretion by refusing to set aside the default
judgment.
FACTS AND PROCEDURAL HISTORY
On the evening of January 20, 2012, North Slopes, a snow sports recreation
facility located in Dearborn County, Indiana, remained open for night skiing. Searcy, a
customer at the facility, slipped and fell from the ski lift chairs, sustaining serious injuries
which required surgery. On February 29, 2012, Searcy’s counsel sent a letter to North
Slopes, advising it of his client’s fall and injuries and requesting North Slopes to inform
its insurance carrier of the incident. Searcy received no response. On March 15, 2012,
Searcy sent a second letter to North Slopes indicating that “[i]f we have not heard from
you or your insurance carrier within the next fourteen (14) days, we will file suit without
further notice.” (Appellant’s App. p. 61).
On March 19, 2012, Searcy received a letter from Dylan West (West), Senior
Claims Specialist with Willis of New Hampshire, Inc., notifying him that West
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represented North Slopes’ general liability carrier. In his letter, West requested
additional information to evaluate Searcy’s claim on its merits. On March 21, 2012,
Searcy responded with some of the requested additional information.
On June 4, 2012, Searcy sent copies of incurred medical expenses to West and
also asked him to confirm North Slopes’ general liability policy limits. On June 12,
2012, West replied to Searcy, advising him of the policy limits. However, Searcy never
received this letter. On August 27, 2012, Searcy sent another letter to West indicating
that he had yet to be advised of North Slopes’ policy limits. No response was received.
Thereafter, on October 27, 2012, Searcy sent a third request to West to confirm North
Slopes’ liability policy limits. Again, West did not reply.
On November 30, 2012, Searcy filed a Complaint against North Slopes alleging
negligence for failing to maintain the premises in a reasonably safe condition for its
invitees. North Slopes’ registered agent was served with the Complaint by summons,
sent by certified mail. North Slopes failed to answer Searcy’s Complaint. On January 7,
2013, Searcy filed a motion for default judgment, which the trial court granted on
February 7, 2013. The trial court’s Order also scheduled a separate hearing on the issue
of damages.
On March 1, 2013, North Slopes, by counsel, filed an appearance as well as a
motion to set aside the default judgment based on Indiana Trial Rule 60(B)(1). On April
9, 2013, the trial court summarily denied North Slopes’ motion without a hearing.
North Slopes now appeals. Additional facts will be provided as necessary.
DISCUSSION AND DECISION
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North Slopes contends that the trial court abused its discretion when it denied the
motion to set aside the default judgment pursuant to Indiana Trial Rule 60(B)(1) for
excusable neglect based on a breakdown in communication.
Pursuant to Indiana’s trial rules, once entered, a default judgment may be set aside
because of mistake, surprise, or excusable neglect so long as the motion to set aside the
default judgment is entered not more than one year after the judgment and the moving
party also alleges a meritorious claim or defense. Ind. Trial Rule 55(C); 60(B)(1).
Instances of excusable neglect include a breakdown in communication that results in a
party’s failure to appear. Smith v. Johnson, 711 N.E.2d 1259, 1262 (Ind. 1999). When
deciding whether or not a default judgment may be set aside because of excusable
neglect, the trial court must consider the unique factual background of each case because
“no fixed rules or standards have been established as the circumstances of no two cases
are alike.” Siebert v. Oxidermo, Inc., v. Shields, 446 N.E.2d 332, 340 (Ind. 1983)
(quoting Grecco v. Campbell, 386 N.E.2d 960, 961 (Ind. Ct. App. 1979)). Though the
trial court should do what is “just” in light of the facts of the individual case, that
discretion should be exercised in light of the disfavor in which default judgments are
held. Sears Roebuck and Co. v. Soja, 932 N.E.2d 245, 249 (Ind. Ct. App. 2010), trans.
denied.
On appeal, a trial court’s decision to set aside a default judgment is entitled to
deference and is reviewed for an abuse of discretion. Id. Any doubt of the propriety of a
default judgment should be resolved in favor of the defaulted party. Id. Although a
default judgment plays an important role in the maintenance of an orderly, efficient
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judicial system as a weapon for enforcing compliance with the rules of procedure and for
facilitating the speedy determination of litigation, in Indiana there is a marked judicial
deference for deciding disputes on their merits and for giving parties their day in court,
especially in cases involving material issues of fact, substantial amounts of money, or
weighty policy determinations. Id. at 185.
In several cases we have confronted the propriety of setting aside default
judgments when a defendant’s insurer or insurance agent is notified but counsel fails to
timely appear and answer. In Boles v. Weidner, 449 N.E.2d 288 (Ind. 1983), our supreme
court affirmed a trial court’s judgment to set aside a default judgment, finding excusable
neglect where the defendant passed the summons and complaint on to his independent
insurance agent, to be forwarded on to the insurer. Id. at 290. The court held that “since
[the defendant] did not hear from anyone, and had taken the steps expected of him, it
certainly is reasonable for the trial court to find there was excusable neglect justifying
setting aside the default judgment.” Id. at 291.
In Siebert Oxidermo, Inc. v. Shields, 446 N.E.2d 332 (Ind. 1983), the trial court
refused to set aside a default judgment where the defendant had forwarded the “suit
papers” to its insurance agent, who failed to get them to the proper insurance carrier on
time. Id. at 334. The court affirmed, observing that the trial court could have based a
finding of excusable neglect or mistake upon the apparent misunderstanding between the
defendant and its insurance agent but chose not to do so, and noting, “[m]ore
significantly, under the evidence it was not compelled to do so.” Id. at 340.
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More recently, in Sears Roebuck and Co. v. Soja, 932 N.E.2d 245 (Ind. Ct. App.
2010), trans. denied, we affirmed the trial court’s refusal to set aside a default judgment
entered against Sears. After Sears forwarded Soja’s complaint to its claims adjuster, the
claims adjuster contacted the general counsel of Razor, who was required to defend and
indemnify Sears in the lawsuit. Id. at 247. General counsel, after waiting to get a written
tender from the claims adjuster officially informing him of the duty to defend, never
directed an attorney to enter an appearance for Sears as no written tender was ever
received. Id. Even though we noted that a miscommunication occurred between the
claims adjuster and legal counsel early on in the proceedings, we concluded that the
claims adjuster’s subsequent conduct “amounted to inattention” as she waited more than
seven months to do any follow-up on the suite or even confirm that counsel had indeed
appeared for Sears Id. at 250.
Accordingly, in two of these three cases, Boles and Siebert Oxidermo, the courts
deferred to the decision of the trial court in ruling upon a motion to set aside a default
judgment. And in Sears, we found that the facts compelled a finding of inattentiveness,
not excusable neglect. Thus, to resolve this appeal, the overriding issue is whether the
circumstances of this case require us to conclude that the trial court abused its discretion
by refusing to set aside its prior default judgment. In accord with our disfavor of default
judgments, our preference for disposition of cases on their merits, and our deference to
the trial court’s decision in ruling upon motions to set aside default judgments, the
controlling question is not whether there has been a “breakdown in communication” but
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whether there is “even slight evidence of excusable neglect.” Coslett v. Weddle Bros.
Const. Co, Inc., 798 N.E.2d 859, 862 (Ind. 2003).
Here, North Slopes argues that it handled the suit in accordance with its internal
office procedure. Bev Weaver (Weaver), North Slopes’ office manager, affirmed that
any mail directed to North Slopes’ registered agent would be placed in the agent’s mail
basket, who after checking his mail would, in turn, give the documents to the Director of
Snow Sports and Safety. The Director would then hand the documents to Weaver to
notify West, who would retain counsel to defend North Slopes. Weaver represented that
Searcy’s file, an expandable folder on Weaver’s desk, was opened in March 2012, upon
receipt of Searcy’s counsel’s letter. Pursuant to the customary proceedings, Weaver
stated that she faxed this letter to West.
Weaver noted in her affidavit that an employee, Stephanie Nutley (Nutley), signed
for a “certified mail document” and placed it in the registered agent’s mail basket.
(Appellant’s App. p. 45). The registered agent attested that he “never saw the lawsuit,
Summons or Complaint.” (Appellant’s App. p. 43). Weaver also stated that she never
saw the Complaint until she received the default judgment on February 13, 2013. After
faxing the Order to West, she “looked into the Searcy folder on [her] desk” where she
found a copy of the Complaint. (Appellant’s App. p. 45). She then surmised that “Rather
than go through normal procedure someone put the Summons and Complaint in the
folder on my desk.” (Appellant’s App. p. 45).
Meanwhile, the communication between West and Searcy had stalled. On June 4,
2012, Searcy requested West to confirm North Slopes’ general liability policy limits.
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Even though West alleges that he responded to Searcy with the information, Searcy never
received a reply.
Although West’s nonresponsiveness to Searcy’s counsel is a contributing factor in
the filing of the Complaint, we find that North Slopes’ handling of the Complaint is the
immediate cause of the “breakdown of communication” as it triggered North Slopes’
non-appearance in the cause. See Smith, 711 N.E.2d at 1262. The affidavits submitted
by North Slopes in support of its motion to set aside raise more questions than answers.
Nutley never submitted an affidavit. While Weaver’s affidavit states that Nutley
remembered placing the letter in the registered agent’s mail basket, the registered agent
denied ever having seen it. Weaver’s statement of finding the Complaint in the folder on
her desk gives rise to the inference that the certified mail had been opened, but there is no
indication as to who opened it. It is North Slopes’ burden to establish excusable neglect.
Based on the facts before us, we conclude that North Slopes failed this burden.1
CONCLUSION
Based on the foregoing, we conclude that the trial court properly denied North
Slopes’ motion to set aside default judgment pursuant to T.R. 60(B)(1).
Affirmed.
ROBB, C. J. and KIRSCH, J. concur
1
Because we do not find excusable neglect, we do not need to analyze whether North Slopes presented a
meritorious defense.
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