Kathy Phariss, Clara Phariss by Next Friend of, Kathy Phariss v. Sara Haynes, Rick Doepping Personally and d/b/a Shangri-La Farms (mem. dec.)

MEMORANDUM DECISION
FILED
Pursuant to Ind. Appellate Rule 65(D),
Sep 16 2016, 10:00 am
this Memorandum Decision shall not be
regarded as precedent or cited before any CLERK
Indiana Supreme Court
court except for the purpose of establishing Court of Appeals
and Tax Court
the defense of res judicata, collateral
estoppel, or the law of the case.
ATTORNEY FOR APPELLANT ATTORNEY FOR APPELLEE,
Robert A. Plantz RICK DOEPPING
Robert A. Plantz & Associates, LLC Robert Stoner
Merrillville, Indiana Stoner Law Office
Valparaiso, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Kathy Phariss, Clara Phariss by September 16, 2016
Next Friend of, Kathy Phariss, Court of Appeals Cause No.
Appellants, 64A03-1603-CT-572
Appeal from the Porter Superior
v. Court
The Honorable Roger V. Bradford,
Sara Haynes, Rick Doepping Judge
Personally and d/b/a Shangri-La Trial Court Cause No.
Farms, 64D01-1506-CT-5549
Appellees.
Barnes, Judge.
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Case Summary
[1] Clara Phariss and her mother and next friend Kathy Phariss appeal the trial
court’s order setting aside a default judgment against Sara Haynes. We reverse
and remand.
Issue
[2] The sole issue is whether there was a sufficient evidentiary basis for the trial
court to set aside the default judgment.
Facts
[3] On June 29, 2015, the Pharisses filed a complaint against Haynes and Rick
Doepping. Doepping was named as a defendant both individually and d/b/a
Shangri-La Farms. The facts as alleged in the complaint are that Haynes was
either self-employed or worked for Doepping/Shangri-La Farms as a horse
trainer. Kathy bought a thoroughbred horse for eight-year-old Clara, and they
hired Haynes to train the horse. The complaint asserts that Haynes abused the
horse while training it and caused it severe injuries. The Pharisses sought
$50,000 in damages for Haynes’s maltreatment of the horse.
[4] Doepping/Shangri-La Farms timely answered the complaint, but Haynes did
not. On August 25, 2015, the Pharisses filed a motion for default judgment
against Haynes. The trial court granted the motion on August 28, 2015,
entering judgment against Haynes for $50,000.
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[5] On October 6, 2015, Haynes filed a motion to set aside the default judgment
under Indiana Trial Rule 60(B). In the unverified motion, Haynes’s attorney
stated that Haynes was in the process of moving to North Carolina when the
complaint was filed and that her husband, a licensed attorney, had received a
copy of the complaint but neglected to respond to it, contrary to Haynes’s
expectation. The motion also asserted that Haynes had taken no malicious
action nor had any intent to harm the horse, but rather had acted properly at all
times, and that the horse was still being ridden regularly. The motion also
stated that Haynes could provide evidence to refute the Pharisses’ allegations if
given the chance and that a damages award of $50,000 was unconscionable.
No affidavits were attached to the motion to set aside.
[6] The trial court held a hearing on the motion to set aside on January 21, 2016.
Haynes did not personally appear at the hearing. Her attorney presented
argument regarding setting aside the default judgment, which essentially
consisted of re-reading the statements in the motion to set aside. The Pharisses
objected to the trial court’s consideration of such statements, asserting that they
did not constitute evidence. Counsel for Doepping/Shangri-La Farms also
argued in favor of setting aside the default judgment, contending it would be
more difficult to obtain discovery from Haynes if she was no longer a party in
the case. The trial court ultimately concluded that it was “in the best interest of
everyone concerned to have this default judgment set aside.” Tr. p. 11. The
Pharisses now appeal.
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Analysis
[7] Before turning to the merits of this case, we note that Haynes has not filed an
appellee’s brief. Doepping/Shangri-La Farms have done so, essentially arguing
on behalf of Haynes. Doepping/Shangri-La Farms assert at the outset that we
should dismiss this appeal for lack of jurisdiction because the trial court’s ruling
setting aside default judgment was not a final appealable judgment and was not
interlocutory as of right. See Bacon v. Bacon, 877 N.E.2d 801, 804-05 (Ind. Ct.
App. 2007) (dismissing appeal where there was neither final judgment nor
interlocutory order that was appealable as of right), trans. denied. However,
Indiana Appellate Rule 2(H)(3) includes within its definition of “final
judgment” an order that is “deemed final under Trial Rule 60(C).” Trial Rule
60(C) expressly provides, “A ruling or order of the court denying or granting
relief, in whole or in part, by motion under subdivision (B) of this rule shall be
deemed a final judgment, and an appeal may be taken therefrom as in the case
of a judgment.” Thus, we have jurisdiction to entertain this appeal.
[8] We give deference to a trial court’s ruling on a motion to set aside default
judgment, and we will review such a ruling for an abuse of discretion. Front
Row Motors, LLC v. Jones, 5 N.E.3d 753, 758 (Ind. 2014). Such discretion on the
trial court’s behalf generally should be exercised in disfavor of default
judgments. Id. Any doubts about the propriety of default judgment “‘should be
resolved in favor of the defaulted party.’” Id. (quoting Allstate Ins. Co. v. Watson,
747 N.E.2d 545, 547 (Ind. 2001)).
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[9] Haynes moved to set aside the default judgment under Trial Rule 60(B)(1) for
“mistake, surprise, or excusable neglect.” A motion to set aside under this
provision must allege a meritorious claim or defense to the judgment. Ind.
Trial Rule 60(B). A party moving to set aside a default judgment pursuant to
Trial Rule 60(B) bears the burden of showing sufficient grounds for relief. Id.
“‘The catalyst needed to obtain the proper relief is some admissible evidence
which may be in the form of an affidavit, testimony of witnesses, or other
evidence obtained through discovery[.]’” State Farm Fire & Cas. Co. v. Radcliff,
18 N.E.3d 1006, 1016-17 (Ind. Ct. App. 2014) (quoting Natare Corp. v. Cardinal
Accounts, Inc., 874 N.E.2d 1055, 1059 (Ind. Ct. App. 2007) (in turn citing Bross v.
Mobile Home Estates, Inc., 466 N.E.2d 467, 469 (Ind. Ct. App. 1984))), trans.
denied. When relief from default judgment is sought, the movant must
ordinarily by affidavit or by introducing evidence at a hearing conducted on the
motion establish a factual basis for the claimed ground for relief and establish
that he or she has a meritorious defense. Sears v. Blubaugh, 613 N.E.2d 468,
469-70 (Ind. Ct. App. 1993), trans. denied.1
[10] As noted by the Pharisses, Haynes presented no admissible evidence in support
of her motion to set aside default judgment. The only grounds for the motion
1
There is an exception to this rule in small claims cases. See Sears, 613 N.E.2d at 470. Under Indiana Small
Claims Rule 10(C), a trial court may only enter default judgment after first being assured that the plaintiff has
presented a prima facie case; if a defendant moving to set aside a default judgment in a small claims case can
show that the plaintiff failed to meet this prima facie burden, a default judgment must be set aside, even
without meeting the ordinary requirements of Trial Rule 60(B). See id. This case was not a small claims case,
and so this exception does not apply.
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were stated in her attorney’s unverified pleading, which were again related by
the attorney at the hearing while not under oath.2 Haynes did not personally
appear and testify at the hearing on the motion to set aside, nor did she execute
an affidavit in support of the motion. Unsworn statements and unverified
pleadings “‘constitute no proof of the facts they allege.’” Hardiman v. Hardiman,
152 Ind. App. 675, 680, 284 N.E.2d 820, 823 (1972) (quoting Wabash Smelting,
Inc. v. Murphy, 134 Ind. App. 198, 206, 186 N.E.2d 586, 590 (1962) (overruled on
other grounds by McKinley v. Rev. Bd., 152 Ind. App. 269, 283 N.E.2d 395 (1972)).
“‘Self-serving statements or declarations by the party or his attorney not under
oath cannot constitute any evidence of the facts they allege.’” Id.
[11] Doepping/Shangri-La Farms contend that the unverified statements contained
within the motion to set aside should have been sufficient to have the default
judgment vacated. They argue that requiring a movant to present some
admissible evidence to support a motion to set aside default judgment
constitutes a re-writing of Trial Rule 60(B) and that the rule does not expressly
contain any such requirement. Regardless, the rule has been consistently
interpreted for decades by the courts of this state to have such a requirement.
See, e.g., Bross, 466 N.E.2d at 469. The Indiana Supreme Court has never
questioned that interpretation or the requirement that a motion to set aside
2
Under Indiana Trial Rule 11(A), an unverified pleading means only that the attorney has read the pleading
and that, to his or her knowledge, there is good ground to support the pleading and that it is not interposed
for delay. By contrast, the facts or matters stated or alleged in a verified pleading may be admitted as
evidence “when it is so provided in these rules, by statute or other law, or to the extent the writing or
signature expressly purports to be made upon the signer’s personal knowledge.” T.R. 11(C).
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default judgment must be supported by some quantum of admissible evidence.
We continue to adhere to that requirement today. Because Haynes did not
support her motion to set aside with any admissible evidence, the trial court
abused its discretion in setting aside the default judgment.
Conclusion
[12] The trial court abused its discretion in setting aside the default judgment in
favor of the Pharisses and against Haynes. We reverse the granting of that
motion and remand for further proceedings.
[13] Reversed and remanded.
Riley, J., concurs.
Bailey, J., concurs and dissents with separate opinion.
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IN THE
COURT OF APPEALS OF INDIANA
Kathy Phariss, Clara Phariss by
Next Friend of, Kathy Phariss,
Appellants,
Court of Appeals Cause No.
v.
64A03-1603-CT-572
Sara Haynes, Rick Doepping
Personally and d/b/a Shangri-La
Farms,
Appellees.
Bailey, Judge, concurring in part and dissenting in part with separate
opinion.
[14] I concur with the majority’s conclusion that because Haynes failed to support
her motion with admissible evidence of excusable neglect, the trial court abused
its discretion in setting aside the default. However, because the measure of
damages in this case was not certain and liquidated, the trial court should have
held a damages hearing before entering judgment in the sum of $50,000.
Accordingly, I would reinstate the entry of default, but would set aside the
damages portion of the judgment and on remand instruct the court to hold a
damages hearing at which Haynes may appear and defend.
[15] Default judgments consist of two stages: (1) the entry of default, and (2) the
entry of appropriate relief including damages. Stewart v. Hicks, 182 Ind. App.
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308, 395 N.E.2d 308, 312 (Ind. Ct. App. 1979). “It is well established that
where there is a default judgment, the plaintiff must provide proof as to the
amount of the judgment.” Prime Mortg. USA, Inc. v. Nichols, 885 N.E.2d 628,
656 (Ind. Ct. App. 2008). Where the action is for a sum certain and liquidated,
the final judgment can be entered and no hearing on damages is necessary.
Stewart, 395 N.E.2d at 312. However, if judgment is that one party is defaulted
and the amount of damages is unliquidated or not otherwise determined, the
defaulted party may still appear and be heard as to the amount of damages. Id.
[16] In their complaint, the Pharisses alleged that Haynes abused their horse and
caused it physical injuries. The complaint sought judgment “in an amount to
be determined by the trier of fact, together with punitive and exemplary
damages, a reasonable attorney’s fee, the costs of this action, and all other just
and proper relief[.]” (App. 8.) When the Pharisses moved for default
judgment, they requested $50,000 in damages. As evidence of damages, they
attached three photos of the horse’s injuries and Kathy Phariss’s sworn
affidavit, which stated:
Inclusive of (a) the fair market value of the horse, (b) the costs
incurred for medical attention, (c) lost work, (e) [sic] retraining,
and other miscellaneous consequential damages associated with
this matter, my damages exceed $50,000. However, for the
purpose of concluding this matter at the stage of these default
judgment proceedings, I waive any claims above $50,000 and
state my claim at this stage to be $50,000.
(App. 14.) The trial court entered judgment for $50,000, plus interest and costs.
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[17] This Court has previously held that a trial court was not required to hold a
damages hearing where the damages – fifty percent of attorney fees recovered
from two lawsuit settlements – were contractual and readily identifiable
through simple mathematical calculation. Fitzpatrick v. Kenneth J. Allen &
Assocs., P.C., 913 N.E.2d 255, 269 (Ind. Ct. App. 2009). On the other hand, in a
contract case where the trial court entered, then set aside, a default judgment for
$50,000, this Court reinstated the default, but remanded for a damages hearing
because $50,000 was more than four times the contract price and there was no
further evidence in the record to support the $50,000 award. Stewart, 395
N.E.2d at 313-14.3
[18] Here, the trial court, without first holding a hearing, entered default judgment
for the Pharisses in the sum of $50,000 based on three photos of a horse’s
injuries and Kathy Phariss’s self-serving affidavit that she suffered more than
$50,000 in damages, but would waive any claims above that amount. Unlike in
a contract action for a specific sum, damages allegedly flowing from the abuse
of a horse are not certain or liquidated. Further, I believe three photos and a
conclusory affidavit proposing a $50,000 settlement are insufficient proof to
either support the trial court’s default judgment award or dispense with the
necessary damages hearing. Accordingly, while I would reinstate the entry of
3
In Stewart, the Court held that Indiana Trial Rule 60(B)(8) (permitting relief for “any other reason justifying
relief from the operation of the judgment”) provided the trial court authority to set aside only the damages
portion of the judgment. Stewart, 395 N.E.2d at 313. Although in this case Haynes’s motion primarily
focused on Trial Rule 60(B)(1), she also invoked Trial Rule 60(B)(8) in both her motion and at the hearing.
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default, I would set aside the damages portion of the judgment and on remand
instruct the court to hold a damages hearing at which Haynes may appear and
defend.
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