The Kroger Company d/b/a Jay C. Food Store v. Deborah and David Tincher

Pursuant to Ind.Appellate Rule 65(D), this
Memorandum Decision shall not be
regarded as precedent or cited before any FILED
court except for the purpose of establishing Sep 21 2012, 9:18 am
the defense of res judicata, collateral
estoppel, or the law of the case. CLERK
of the supreme court,
court of appeals and
tax court
ATTORNEYS FOR APPELLANT: ATTORNEYS FOR APPELLEES:
JEFFREY S. ZIPES DAVID W. STONE, IV
BLAKE N. SHELBY Stone Law Office & Legal Research
Coots, Henke & Wheeler, P.C. Anderson, Indiana
Carmel, Indiana
TROY K. RIVERA
Nunn Law Office
Bloomington, Indiana
IN THE
COURT OF APPEALS OF INDIANA
THE KROGER COMPANY, d/b/a, )
JAY C FOOD STORE, )
)
Appellant-Defendant, )
)
vs. ) No. 47A04-1204-CT-194
)
DEBORAH and DAVID TINCHER, )
)
Appellee-Plaintiffs. )
APPEAL FROM THE LAWRENCE SUPERIOR COURT
The Honorable Michael A. Robbins, Judge
Cause No. 47D01-1104-CT-397
September 21, 2012
MEMORANDUM DECISION - NOT FOR PUBLICATION
FRIEDLANDER, Judge
The Kroger Company, d/b/a Jay C. Food Store (Kroger) appeals the denial of its Trial
Rule 60(B) motion to set aside a default judgment in favor of Deborah and David Tincher in
their personal injury action against Kroger. Kroger presents the following restated issues for
review:
1. Was the service of process sufficient to confer personal jurisdiction
over Kroger?
2. Did the trial court abuse its discretion in denying Kroger’s motion for
relief from judgment?
We affirm.
For purposes of this appeal, the relevant facts are essentially undisputed. On
September 30, 2010, Deborah was a customer inside the Jay C. Store in Mitchell when she
slipped and fell to the floor. The Tinchers contacted Kroger’s third-party administrator,
Sedgwick Claims Management Services, and attempted to resolve their claim for damages
without resort to litigation. They worked directly with Sedgwick claims examiner David
James. Negotiations ultimately failed, however, and James denied the Tinchers’ claim on
December 7, 2010. James closed the file the next day.
On December 10, 2010, James received a letter from Attorney Troy Rivera, who
represented the Tinchers in this matter, asking him to reconsider the denial of their claim.
James indicated that the decision would not be revisited. James was next contacted by the
Tinchers when, on April 6, 2011, Rivera called and advised him that if Kroger did not
reconsider the denial of the claim, the Tinchers would file a lawsuit. James indicated that the
decision would not change. On April 8, 2011, James received a courtesy copy of a complaint
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for damages reflecting a lawsuit filed by the Tinchers against Kroger concerning Deborah’s
fall. The courtesy copy did not bear a file stamp or a cause number. On April 12, 2011, the
Jay C. Food Store where Deborah fell was served with a file-marked copy of the complaint.
At approximately the same time, a file-stamped copy of the same complaint was faxed to
James. Erroneously believing it to be another courtesy copy, James failed to do what he
customarily did when he received a complaint, which was “to send it to the ‘next level’ team
at Sedgwick such that the file could be re-opened and outside counsel could be retained to
defend Kroger’s interests.” Appellant’s Appendix at 19. Instead, James did nothing and the
file remained closed.
On September 27, 2011, the Tinchers filed a motion for default judgment. That
motion was granted on December 5. Sedgwick received notice of the default judgment on
January 27, 2012. On February 21, on Kroger’s behalf, Sedgwick filed a motion to set aside
the default judgment pursuant to T.R. 60(B)(1), which provides as follows: “On motion and
upon such terms as are just the court may relieve a party or his legal representative from a
judgment, including a judgment by default, for the following reasons: (1) mistake, surprise,
or excusable neglect[.]” Kroger appeals the denial of this motion.
1.
Citing T.R. 60(B)(6), Kroger contends the service of process was insufficient to
confer personal jurisdiction over Kroger and therefore the judgment is void. “Personal
jurisdiction” refers to a court’s power to bring a person into its adjudicative process and
render a valid judgment over that person. Laflamme v. Goodwin, 911 N.E.2d 660 (Ind. Ct.
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Ohio App. 2009). Where service of process on a defendant is inadequate, the trial court does not
acquire personal jurisdiction over that party, and a default judgment thereafter rendered in the
absence of personal jurisdiction is void. Yoder v. Colonial Nat’l Mortg., 920 N.E.2d 798
(Ind. Ct. App. 2010). After the party contesting jurisdiction challenges the lack thereof, the
plaintiff must present evidence to show there is personal jurisdiction over the defendant. Id.
“The defendant, however, bears the burden of proving the lack of personal jurisdiction by a
preponderance of the evidence, unless the lack of jurisdiction is apparent on the face of the
complaint.” Laflamme v. Goodwin, 911 N.E.2d at 664. “Personal jurisdiction either exists or
it does not, and its existence is a question of law that we review de novo.” Id. Accordingly,
we owe no deference to the trial court’s determination on that question.
Kroger contends that service was ineffective because the summons was not addressed
to a particular person. According to Kroger, “to properly effectuate service, the Indiana Trial
Rules require that a summons be addressed to an agent of the corporation being served, and
service of process is inadequate when the summons is not addressed to a specific person.”
Appellant’s Brief at 6 (emphasis in original).
The appropriate method for serving process on an organization is set out in Indiana
Trial Rule 4.6, which provides, in pertinent part:
(A) Service upon an organization may be made as follows:
(1) In the case of a domestic or foreign organization upon an executive
officer thereof, or if there is an agent appointed or deemed by law to
have been appointed to receive service, then upon such agent.
*****
(B) Service under subdivision (A) of this rule shall be made on the proper
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person in the manner provided by these rules, for service upon
individuals ....
Trial Rule 83(1) provides the following definition of “executive officer”:
‘Executive officer’ of an organization includes the president, vice president,
secretary, treasurer, cashier, director, chairman of the board of directors or
trustees, office manager, plant manager, or subdivision manager, partner, or
majority shareholder. For purposes of service of process, notice and other
papers, the term includes the personal secretary of any of the foregoing persons
or any person employed under or with any of the foregoing persons and who is
entrusted with responsible handling of legal papers, and any person employed
in the organization if such person promptly delivers the papers served to one of
the foregoing.
Kroger contends that the Tinchers’ method of service did not comply with the foregoing rules
and therefore that the trial court did not obtain personal jurisdiction over Kroger. Kroger
directs our attention to Volunteers of Am. v. Premier Auto Acceptance Corp., 755 N.E.2d 656
(Ind. Ct. App. 2001), in support of this claim.
In Volunteers of Am., an employer, Volunteers of American (VOA) brought a motion
for relief from default judgment granted to Premier Auto Acceptance Corporation (Premier),
a creditor in a garnishment action. In a small claims action, Premier had obtained a money
judgment against VOA employee Ron Parmerlee. To satisfy the judgment, Premier filed a
motion for proceedings supplemental naming VOA as a garnishee defendant. The trial court
granted Premier’s motion, and a summons was sent to “Volunteers of America” at its Fort
Wayne address. Parmerlee signed the return receipt for the summons but did not forward the
summons to anyone else in the VOA organization. Other items were sent to the Fort Wayne
VOA office over the next several months, but no executive officer or registered agent of
VOA ever received the items. Another time, Parmerlee signed for the garnishment order that
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was addressed to “Volunteers of America” at its Fort Wayne address, but Parmerlee again
failed to forward the order to anyone else in the VOA organization. The trial court
eventually entered a default judgment against VOA. More than one month after the trial
court had entered a default judgment, VOA received a “Verified Motion for Proceedings
Supplemental and Order thereon” that was addressed to the “Highest Ranking Officer” at
VOA’s Fort Wayne address. Id. at 658. VOA responded with a T.R. 60(B)(6) motion asking
the trial court to set aside the default judgment because it had never been properly served
with process. The trial court denied that motion, as well as VOA’s subsequent motion to
correct errors.
Upon appeal, we first rejected VOA’s claim that service was ineffective because it
was sent to a local office rather than the main office. We next addressed the claim that
service was inadequate because the summons was addressed simply to “Volunteers of
America” and was not addressed to the resident agent, “executive officer”, “highest available
officer”, “Highest Executive Officer”, or the “chief executive officer.” Id. at 660. This court
held that “Volunteers of America” was not enough to satisfy the requirements of T.R. 4.6. In
so holding, the court rejected Premier’s contentions that service was proper under both T.R.
4.15(F) (“[n]o summons or the service thereof shall be set aside or be adjudged insufficient
when either is reasonably calculated to inform the person to be served that an action has been
instituted against him, the name of the court, and the time within which he is required to
respond”) or T.R. 4.16(B) (providing “that anyone who accepts service for another person
has a duty to deliver that mail to the appropriate person, to notify the appropriate person that
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he has the mail, or to notify the court that he was unable to deliver the mail”). Volunteers of
Am. v. Premier Auto Acceptance Corp., 755 N.E.2d at 660.
Kroger contends that service was improper here because, as was the case in
Volunteers of Am., the Tinchers did not send the summons to any particular person, but
instead merely to Kroger. The Tinchers respond with a “no harm[-]no foul” defense, arguing
essentially that any defect in service was merely technical in nature, and that the summons
was, in fact, brought to the attention of the appropriate parties with respect to the handling of
this lawsuit. Appellant’s Brief at 8. In support of this contention, they cite Munster v. Groce,
829 N.E.2d 52 (Ind. Ct. App. 2005).
In Munster, the summons in question was sent only to BWI, the corporate defendant,
and not to an individual associated with BWI. The court noted, however, that the summons
had been delivered by an investigator to the residence of George Mikesell who was listed as a
director of BWI in its articles of incorporation. The summons and complaint were personally
received by Mikesell’s wife. The investigator telephoned Mikesell the next day to confirm
that he had received the summons. The trial court later dismissed the complaint filed against
BWI in part on grounds that Mikesell’s wife did not have actual or apparent authority to
accept service on BWI’s behalf.
Among the contentions addressed by this court was the argument that service upon
Mikesell was ineffective “because the summons was directed only to BWI, not to Mikesell or
any other person, such as a ‘director’ or ‘officer’ of BWI.” Id. at 63. The court rejected
Volunteers of Am. as precedent, distinguishing that case on the following bases:
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This case, however, clearly differs from VOA because that case concerned
mailings to VOA’s office that subsequently were never brought to the attention
of a high-ranking corporate officer. Here, by contrast, the summons and
complaint were delivered directly to Mikesell’s residence and he
acknowledged receipt of them; there was no chance that the summons and
complaint would fail to follow the proper internal corporate channels to a high-
ranking officer or director because they were delivered directly to a director.
As such, even if there was a technical defect in the summons to BWI, the
method of service by delivery at Mikesell’s residence still was reasonably
calculated to inform BWI of the pending lawsuit and, in fact, did provide such
notice. Trial Rule 4.15(F) excuses minor, technical defects in the method of
service where actual service has been accomplished. See Reed Sign Service,
Inc. v. Reid, 755 N.E.2d 690, 696 (Ind.Ct.App.2001), trans. denied. In sum,
Munster sufficiently complied with the Indiana Trial Rules so as to effect
service upon BWI and give the trial court personal jurisdiction over it.
Likewise, as we have indicated the method of service on BWI was reasonably
calculated so as to provide it with notice of the lawsuit and, therefore,
comports with the Due Process Clause. See Mullane, 339 U.S. at 314, 70 S.Ct.
at 657. We reverse the trial court’s grant of the motion to dismiss with respect
to BWI.
Id. at 64.
In the present case, as in Munster, the summons did not designate service upon any
individual, either by name or title. It is undisputed, however, that Sedgwick, the entity
selected by Kroger to handle claims such as the Tinchers’, received the complaint and
summons within three days of the service at the local store. Indeed, like Mikesell in Groce,
James acknowledged receiving a copy of the complaint, notwithstanding that he
misunderstood the nature of what he had received, believing it to be merely another courtesy
copy of a proposed complaint. Under these circumstances, we conclude that the technical
defect in the Tinchers’ complaint of failing to designate a person to receive service on behalf
of Kroger is excused under T.R. 4.15(F), because it was reasonably calculated to inform
Sedgwick, and thus Kroger, that an action has been instituted against it. Service of process
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was therefore sufficient to confer personal jurisdiction over Kroger.
2.
Kroger contends the trial court abused its discretion in denying its motion for relief
from judgment. The standard for reviewing the denial of a T.R. 60(B) motion to set aside a
default judgment is well settled - we apply an abuse-of-discretion standard. Clements v. Hall,
966 N.E.2d 757 (Ind. Ct. App. 2012). An abuse of discretion occurs when the trial court’s
judgment is clearly against the logic and effects of the facts and circumstances supporting the
motion for relief. Id. We have observed that a trial court’s discretion in this context is
“necessarily broad” and that the decision “must turn upon the unique factual background of
each case.” Mallard’s Pointe Condo. Ass’n, Inc. v. L & L Investors Grp., LLC, 859 N.E.2d
360, 365–66 (Ind. Ct. App. 2006), trans. denied (citations omitted). Moreover, we are aware
that the trial court “must balance the need for an efficient judicial system with the judicial
preference for deciding disputes on the merits.” Id. In reviewing a ruling on a T.R. 60(B)
motion to set aside, we do not reweigh evidence. Clements v. Hall, 966 N.E.2d 757.
Kroger filed its motion under T.R. 60(B)(1). A default judgment may be set aside
under this rule for mistake, surprise, or excusable neglect – the latter being the contention
upon which Kroger’s motion is based. In order to prevail on this issue, a party “must
establish (1) excusable neglect and (2) a meritorious basis to set aside the judgment—also
referred to as prejudice.” Thompson v. Thompson, 811 N.E.2d 888, 903 (Ind. Ct. App. 2004),
trans. denied. Included in instances of excusable neglect are breakdowns in communication
that result in a party’s failure to appear. See Smith v. Johnston, 711 N.E.2d 1259 (Ind. 1999).
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Kroger contends that is what occurred in the present case. Where a breakdown of this nature
is established, the criteria of T.R. 60(B)(1) are met and a default judgment must be set aside.
Id. Any doubt as to the sufficiency of the showing of excusable neglect or inadvertence
should be resolved in favor of the request to set aside the judgment. United Taxi Co. v.
Dilworth, 20 N.E.2d 699 (Ind. Ct. App. 1939). A trial court’s discretion in this area is
necessarily broad because any determination of excusable neglect, surprise, or mistake must
turn upon the unique factual background of each case. Kmart Corp. v. Englebright, 719
N.E.2d 1249 (Ind. Ct. App. 1999), trans. denied. Our courts have not fixed rules or standards
by which to measure requests to set aside on these bases because the circumstances vary from
case to case. Id. The trial court must balance the need for an efficient judicial system with
the judicial preference for deciding disputes on the merits. Id.
Three days after the Jay C. Food Store was served with the summons and complaint
on April 12, 2011, the Tinchers’ counsel faxed a copy of the file-marked complaint to James
at Sedgwick. Sedgwick was Kroger’s third-party administrator and was responsible for
handling lawsuits of this nature. It is undisputed that Kroger’s failure to respond to the
Tinchers’ summons and complaint was due entirely to James’s failure to notice that the faxed
copy of the complaint was file-marked, and not merely a second courtesy copy of an unfiled
complaint, which James apparently expected it to be. Kroger acknowledges that James’s
failure to send the complaint to the “next level team” at Sedgwick – which in turn would
have reopened the file and obtained outside counsel to defend Kroger’s interests – was a
neglectful act. Of course, that is true. Kroger further contends that this neglect was
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excusable. We disagree.
James worked for the company that handled lawsuits against The Kroger Company.
He had been personally responsible for negotiating with the Tinchers and had denied their
claim. He had been advised that the Tinchers would file a lawsuit and the implication was
that such was imminent. Two days later he received a courtesy copy of an unfiled complaint
from the Tinchers and one week after that he received a faxed copy of a the same complaint –
this one file-stamped. He did nothing because he neglected to notice the file-stamp. This is
distinguishable from decisions finding excusable neglect. “In those cases the defendants did
all that they were required to do but subsequent misunderstandings as to the assignments
given to agents of the defendants resulted in the failure to appear.” Smith v. Johnston, 711
N.E.2d at 1262. In Smith, entry of default judgment was a result of the appellant’s failure to
read his mail. James’s failure to scrutinize the fax closely enough to notice the file-stamp
strikes us as similar in tenor with respect to its negligent character. “The judicial system
simply cannot allow its processes to be stymied by simple inattention.” Id. Having failed to
establish excusable neglect, Kroger’s challenge to the denial of its motion to set aside also
fails.
Judgment affirmed.
BROWN, J., and PYLE, J., concur.
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