John M. Hauber, not Individually but as Chapter 13 Trustee for the Bankrupt Estate of Abreena Townsend v. Michael Muncy and Lutherstock Properties, LLC (mem. dec.) ( 2020 )

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be FILED
regarded as precedent or cited before any
Aug 18 2020, 8:36 am
court except for the purpose of establishing
the defense of res judicata, collateral CLERK
Indiana Supreme Court
estoppel, or the law of the case. Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEY FOR APPELLEE
Robert D. King, Jr. Jeremy M. Noel
David R. Thompson Indianapolis, Indiana
The Law Office of Robert D. King, Jr.,
P.C.
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
John M. Hauber, not August 18, 2020
Individually but as Chapter 13 Court of Appeals Case No.
Trustee for the Bankrupt Estate 19A-CT-2890
of Abreena Townsend, Appeal from the Marion Superior
Appellant-Plaintiff, Court
The Honorable Timothy W.
v. Oakes, Judge
Michael Muncy and Lutherstock The Honorable Caryl F. Dill,
Magistrate
Properties, LLC,
Trial Court Cause No.
Appellees-Defendants
49D02-1704-CT-14744
Crone, Judge.
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Case Summary
[1] Postal carrier Abreena Townsend was bitten by a dog while delivering mail to
an Indianapolis residence. John M. Hauber, acting as the Chapter 13 trustee
for Townsend’s bankruptcy estate, filed a negligence action against Michael
Muncy, whom Townsend believed to be the dog’s owner, and Lutherstock
Properties, LLC (Lutherstock), as owner and landlord of the residence. 1
Townsend sought and was granted a default judgment against both defendants.
Lutherstock filed a motion to set aside default judgment, which the trial court
granted. Townsend now appeals the trial court’s ruling. Finding that the trial
court acted within its discretion in setting aside default judgment against
Lutherstock, we affirm.
Facts and Procedural History
[2] In January 2017, Townsend was delivering mail to an Indianapolis residence
when she was bitten by a dog that was running loose on the property. She filed
a negligence action against Muncy, as the alleged owner of the dog. She filed
an amended complaint against Muncy, as the dog’s alleged owner, and
Lutherstock, as owner of the property, claiming that each knew or should have
known that the dog had dangerous propensities and that each failed to secure or
1
Townsend filed her first complaint individually against only Muncy. She filed an amended complaint
under the name of Hauber, as trustee for her pending bankruptcy proceedings, naming both Muncy and
Lutherstock as defendants. On May 21, 2019, the United States Bankruptcy Court, Southern District of
Indiana, dismissed Townsend’s bankruptcy case. Appellant’s App. Vol. 2 at 50. She appears individually in
this appeal.
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supervise the dog and failed to warn her concerning the dog. She also alleged
negligence per se, based on the defendants’ alleged violations of a local
ordinance prohibiting domesticated animals from roaming at large.
[3] On April 12, 2017, service of process was attempted by certified mail on
Lutherstock at the address listed in its corporate documents and on Muncy at
his last known address. Both were returned as undeliverable. On September
11, 2018, Townsend filed a praecipe for summons service by publication on
both defendants. On October 18, 2018, Townsend filed a proof of notice by
publication, pursuant to which each defendant was given thirty days to respond.
Neither of the defendants appeared or filed a responsive pleading. On January
17, 2019, Townsend filed a motion for default judgment against both
defendants pursuant to Indiana Trial Rule 55. On February 6, 2019, the trial
court granted her motion for default judgment and scheduled a hearing on the
issue of damages.
[4] On October 7, 2019, Lutherstock filed a motion to set aside default judgment
pursuant to Indiana Trial Rule 60(B)(4), claiming a meritorious defense. The
motion was accompanied by an affidavit from Lutherstock’s owner and sole
member, Alfred Warren, averring that he had no actual knowledge of
Townsend’s action until after default judgment was entered, that the address to
which the summons and complaint were sent was not current for Lutherstock
or for himself individually, that Lutherstock owned the property and had leased
it to three tenants on the date of the dog bite, that Muncy was not one of those
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tenants and had never been a tenant of Lutherstock, and that Warren had never
heard of Muncy and had never given consent for a pet on the leased premises.
[5] Following a hearing, the trial court issued an order granting Lutherstock’s
motion to set aside default judgment. Townsend now appeals. Additional facts
will be provided as necessary.
Discussion and Decision
[6] Townsend asserts that the trial court erred in granting Lutherstock’s Trial Rule
60(B) motion to set aside default judgment. “Default judgment is an extreme
remedy and …. whenever possible, courts should decide cases on their merits.”
Citimortgage, Inc. v. Barabas, 975 N.E.2d 805, 812 (Ind. 2012) (citations omitted).
Any doubt concerning the propriety of the default judgment must be resolved in
favor of the defaulted party. Kretschmer v. Bank of America, N.A., 15 N.E.3d 595,
601 (Ind. Ct. App. 2014), trans. denied (2015). When reviewing a trial court’s
ruling on a motion to set aside default judgment, we apply an abuse of
discretion standard. Speedway SuperAmerica, LLC v. Holmes, 885 N.E.2d 1265,
1270 (Ind. 2008). An abuse of discretion occurs where the trial court’s decision
is clearly against the logic and effect of the facts and circumstances before it or if
the trial court has misinterpreted the law. Fields v. Safway Grp. Holdings, LLC,
118 N.E.3d 804, 809 (Ind. Ct. App. 2019), trans. denied. When a Trial Rule
60(B) motion involves a request to set aside a default judgment, the trial court’s
discretion should be exercised in light of the disfavor in which default
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judgments are generally held. Seleme v. JP Morgan Chase Bank, 982 N.E.2d 299,
303 (Ind. Ct. App. 2012), trans. denied (2013).
[7] Trial Rule 60(B) provides a mechanism for obtaining relief from default
judgment under certain limited circumstances, and the burden is on the movant
to establish grounds for such relief. Seleme, 982 N.E.2d at 303. Trial Rule 60(B)
states in pertinent part,
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:
….
(4) entry of default judgment or judgment by default was entered
against such party who was served only by publication and who
was without actual knowledge of the action and judgment, order
or proceedings;
…. or
(8) any reason justifying relief from the operation of the
judgment, other than those reasons set forth in sub-paragraphs
(1), (2), (3), and (4).
The motion shall be filed within a reasonable time for reasons
(5), (6), (7), and (8), and not more than one year after the
judgment, order or proceeding was entered or taken for reasons
(1), (2), (3), and (4). A movant filing a motion for reasons (1),
(2), (3), (4), and (8) must allege a meritorious claim or defense.
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Lutherstock based its motion on sub-paragraph (4) and therefore was required
to file the motion within the required time limit, to make a prima facie showing
of a meritorious defense, and to demonstrate a lack of actual knowledge of the
action until after default judgment was entered. First Chicago Ins. Co. v. Collins,
141 N.E.3d 54, 62 (Ind. Ct. App. 2020).
[8] At the hearing on Lutherstock’s motion to set aside default judgment,
Townsend focused her argument on the timing of Lutherstock’s motion,
claiming that it was untimely filed because it was filed more than a year after
she served notice by publication. Her argument is misplaced. Trial Rule 60(B)
specifies that the party seeking relief from judgment under sub-paragraph (4)
shall file its motion “not more than one year after the judgment, order or
proceeding was entered.” (Emphases added.) The trial court entered default
judgment on February 6, 2019, and Lutherstock timely filed its Trial Rule
60(B) motion on October 7, 2019.
[9] Lutherstock also was required to make a prima facie showing of a meritorious
defense to the underlying action. A meritorious defense refers to “evidence
that, if credited, demonstrates that a different result would be reached if the case
were retried on the merits and that it is unjust to allow the default to stand.”
Smith v. Johnston, 711 N.E.2d 1259, 1265 (Ind. 1999). The underlying action
against Lutherstock is a negligence claim based on the acts of a presumed
tenant’s dog. To prevail against a landowner/landlord for the acts of a tenant’s
dog, the plaintiff must prove that the landowner retained control over the leased
property and that the landowner had actual knowledge of the tenant’s dog’s
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dangerous propensities. Morehead v. Deitrich, 932 N.E.2d 1272, 1276 (Ind. Ct. App.
2010), trans. denied (2011).
[10] In analyzing whether Lutherstock articulated a meritorious defense and
whether it had actual knowledge of the action, we refer to the attached affidavit
of Warren, Lutherstock’s sole member and registered agent. In his affidavit,
Warren averred as follows: that he had no actual knowledge of the pending
action until after the court issued the default judgment; that the address to
which the summons and complaint were sent was neither the current business
address of Lutherstock nor his personal address; that Lutherstock owned the
property where the dog bite allegedly occurred but did not retain any possession
or control over the property; that Warren never entered the leased property
without notice; that the property had no common areas; that Muncy was never
Lutherstock’s tenant; that Warren had never heard of Muncy; that the tenants
on the date of the incident were John Edwards, Sean Miller, and Hubert Cox II;
that Warren had never given consent for a pet on the premises; and that he was
never put on notice of any pet there. Appellant’s App. Vol. 2 at 36-38. As
reflected in Warren’s affidavit, Lutherstock neither retained control over the
leased property nor had actual knowledge of the presence of any dog there, let
alone one with dangerous propensities. Moreover, Warren expressly averred
that as Lutherstock’s sole member and registered agent, he did not have actual
knowledge of the underlying action until after default judgment was entered.
Thus, Lutherstock made a prima facie showing of a meritorious defense and
established a lack of actual knowledge of the action.
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[11] Townsend claims that Lutherstock is not entitled to relief from judgment
because it failed to update its registered agent’s address with the secretary of
state’s office as required by statute. See Ind. Code § 23-0.5-4-7(a) (if registered
agent changes name, address, or email, agent shall deliver to secretary of state a
statement of such change, specifying name of entity and both old information
and changes to that information). Lutherstock acknowledges that it did not
update its registered agent’s address but maintains that relief from default
judgment nevertheless was appropriate because it was without actual
knowledge of the action, articulated a meritorious defense, and was actually
“served only by publication” under Trial Rule 60(B)(4), the last of which
Townsend does not dispute.
[12] With the foregoing in mind, we address Townsend’s claim that granting
Lutherstock relief from her default judgment will result in an injustice because
she now knows the true identity of the tenants (as listed in Warren’s affidavit)
and is time-barred from pursuing them. However, Townsend is the one who
named Muncy as a defendant based on her assumptions that he was the dog’s
owner and that he was a tenant of Lutherstock. These mistaken assumptions
were not attributable to Lutherstock. Unfortunately for Townsend, she now
owns a default judgment against a defendant whose whereabouts are unknown.
But she is not without a remedy against Lutherstock, should she be able to
prove her case against it on the merits.
[13] In short, Lutherstock lacked actual knowledge of the action at the time default
judgment was entered, timely filed its motion to set aside default judgment, and
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made a prima facie showing of a meritorious defense to the underlying
negligence action. We therefore conclude that the trial court acted within its
discretion in setting aside default judgment against Lutherstock. In affirming
the trial court, we by no means condone an entity’s failure to update its contact
information with the secretary of state’s office. However, we are mindful of the
strong disfavor in which default judgments are held and the trial court’s ensuing
duty to exercise its discretion in accordance with Indiana’s well-settled
preference for hearing cases on the merits. Seleme, 982 N.E.2d at 303.
Consequently, we affirm.
[14] Affirmed.
Bailey, J., and Altice, J., concur.
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