Arthur David Siegle and Karen Lynn Siegle v. NextGear Capital, Inc. (mem. dec.)

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be
FILED
regarded as precedent or cited before any Dec 06 2019, 8:40 am
court except for the purpose of establishing CLERK
Indiana Supreme Court
the defense of res judicata, collateral Court of Appeals
and Tax Court
estoppel, or the law of the case.
ATTORNEY FOR APPELLANTS ATTORNEYS FOR APPELLEE
Jonathan D. Harwell David J. Jurkiewicz
Indianapolis, Indiana Nathan T. Danielson
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Arthur David Siegle and Karen December 6, 2019
Lynn Siegle, Court of Appeals Case No.
Appellants-Defendants, 19A-CC-1467
Appeal from the Hamilton Circuit
v. Court
The Honorable Paul A. Felix,
NextGear Capital, Inc., Judge
Appellee-Plaintiff Trial Court Cause No.
29C01-1810-CC-9687
Altice, Judge.
Case Summary
[1] Arthur David Siegle and his wife Karen Lynne Siegle appeal the trial court’s
entry of default judgment against them and in favor of NextGear Capital, Inc.
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(Nextgear). The Siegles contend that they had appeared in the action and were
thus, pursuant to Ind. Trial Rule 55(B), entitled to be served with written notice
of NextGear’s application for default judgment at least three days prior to a
hearing on the application. The Siegles contend that the trial court improperly
entered the default judgment without holding a hearing and without proper
notice. This might be true, but because they did not follow the proper
procedure for perfecting their appeal of this issue, we must dismiss the appeal.
[2] We dismiss.
Facts & Procedural History
[3] On October 11, 2018, NextGear initiated this lawsuit by filing a complaint
against International Auto Group of South Florida, Inc. d/b/a International
Auto Group (Auto Group) and the Siegles. Pursuant to an amended contract,
Auto Group had borrowed money on a credit line from NextGear, and the
Siegles were personal guarantors. The first three counts of the complaint
alleged breach of contract against each defendant and the fourth alleged a
conversion claim against Auto Group and Arthur. Arthur and Karen were
individually served with the complaint and a summons at their residence in
Florida in November.
[4] Thereafter, on March 29, 2019, Arthur, pro se, filed a motion for extension of
time to retain local counsel. In the motion Arthur indicated that he was acting
on behalf of himself, Karen, and Auto Group. NextGear objected to the
motion as to Karen and Auto Group, arguing that Arthur could not file a
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responsive pleading for those parties because he was not licensed to practice law
in Indiana. On April 15, 2019, the trial court sustained NextGear’s objection
and granted the motion for extension of time with respect to Arthur only, giving
him until May 1, 2019, to answer the complaint.
[5] On May 23, 2019, NextGear filed a notice of dismissal without prejudice as to
defendant Auto Group. This was because NextGear had been unable to locate
or obtain service on this defendant. The trial court dismissed Auto Group that
same day.
[6] The next day, May 24, NextGear filed a motion for entry of default judgment
as to Arthur and Karen for their failure to answer or otherwise respond to the
complaint. NextGear filed supporting affidavits and sought judgment against
Arthur and Karen, jointly and severally, for actual damages for breach of
guaranty in the amount of more than $8.5 million. Additionally, NextGear
sought damages for civil conversion against Arthur in the amount of more than
$1.2 million. NextGear served a copy of the motion for default judgment on
Arthur and Karen by first class mail.
[7] On May 28, 2019, without holding a hearing, the trial court granted the motion
for default judgment as to the Siegles. The court awarded actual damages from
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Arthur and Karen, jointly and severally, in the amount of $8,523,571.52. 1 The
Siegles now appeal directly from the entry of the default judgment.
Discussion & Decision
[8] The Siegles argue on appeal that the default judgment was invalid because no
hearing was held and they did not receive the three-day notice required by T.R.
55(B), which provides in relevant part: “If the party against whom judgment by
default is sought has appeared in the action, he (or, if appearing by a
representative, his representative) shall be served with written notice of the
application for judgment at least three [3] days prior to the hearing on such
application.” Further, relying on Nehring v. Raikos, 413 N.E.2d 328 (Ind. Ct.
App. 1980), the Siegles contend that they had appeared in the action by
Arthur’s filing the motion for extension of time before NextGear’s application
for default judgment. Id. at 330 (reversing the denial of defendant’s Ind. Trial
Rule 60(B) motion and holding that defendant had “appeared in the action” by
filing an untimely pro-se motion for enlargement of time and, therefore, was
“entitled to be served with written notice of the application for judgment at least
three days prior to the hearing on the application”).
[9] We are not unsympathetic to the Siegles’ argument. T.R. 55(B) requires a
hearing before a default judgment may be issued. See Snyder v. Tell City Clinic,
391 N.E.2d 623, 627 (1979); see also Standard Lumber Co. of St. John v. Josevski,
1
$1,225,507.98 of this amount also represented damages against Arthur on the civil conversion claim.
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706 N.E.2d 1092, 1096 (Ind. Ct. App. 1999) (“[T]he default judgment was
invalid because a hearing was never held.”). And the Siegles – or, at a
minimum, Arthur – appeared in the action before the application for default by
filing the motion for extension of time.
[10] “The language of T.R. 55(B) is not superfluous and strict adherence to the
notice provision is required.” Evansville Garage Builders v. Shrode, 720 N.E.2d
1273, 1277 (Ind. Ct. App. 1999), trans. denied. It is well established, however,
that the proper procedure for setting aside a default judgment is to first file a
T.R. 60(B) motion seeking to have the judgment set aside. 2 See T.R. 55(C); see
also Siebert Oxidermo, Inc. v. Shields, 446 N.E.2d 332, 337 (Ind. 1983); Greer v.
Discover Bank, 49 N.E.3d 1110, 1111 (Ind. Ct. App. 2016), trans. denied.
“Thereafter, an appeal may be taken for the trial court’s ruling on the Rule
60(B) motion.” Greer, 49 N.E.3d at 1111.
[11] Because the Siegles did not file a T.R. 60(B) motion for relief from the trial
court’s entry of default judgment against them, their appeal is not properly
before us and must be dismissed. See Greer, 49 N.E.3d at 1111 (citing to several
cases holding that a direct appeal from the entry of a default judgment is
improper). Of course, our holding does not preclude the Siegles from seeking
relief by filing a proper T.R. 60(B) motion with the trial court.
2
Default judgments entered without following the requirements of T.R. 55(B) are voidable and generally
qualify for relief under T.R. 60(B)(8) (the “catch-all provision”). See Evansville Garage Builders, 720 N.E.2d at
1277-78; Standard Lumber, 706 N.E.2d at 1096.
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[12] Dismissed.
Brown, J. and Tavitas, J., concur.
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