LLC v. LLC CFR LLC CRF LLC CRF LLC (2025)

MEMORANDUM DECISION

Case Summary

[1] The Office of the Indiana Attorney General (“the State”) filed suit against Hickory Ridge Property Owner, LLC (“Hickory Ridge”) and Roco Chetrit Entities, LLC, CFR Mezz 1, LLC, CFR Mezz 2 LLC, and CFR Mezz 3, LLC (“the Chetrit Defendants”) on June 27, 2024, alleging various failures to satisfy statutory duties as landlords and engaging in unlicensed real estate transactions. After Hickory Ridge failed to timely respond to the lawsuit, the State sought, and was granted, a default judgment. Hickory Ridge moved to set aside the default judgment pursuant to Indiana Trial Rule 60(B). Following a hearing, the trial court denied Hickory Ridge's motion, with the trial court's order exclusively focusing on Trial Rule 60(B)(1) considerations. On appeal, Hickory Ridge contends that the trial court abused its discretion in denying it relief pursuant to Trial Rule 60(B)(1) and (B)(8). We affirm the trial court with respect to its determination that Hickory Ridge had failed to prove that it was entitled to Trial Rule 60(B)(1) relief. However, we remand the case to the trial court with instructions for the trial court to evaluate whether Hickory Ridge should be granted relief pursuant to Trial Rule 60(B)(8).

Facts and Procedural History

[2] On June 27, 2024, the State filed a complaint against Hickory Ridge and the Chetrit Defendants, alleging: Count 1 – Systematic Failure to Satisfy Statutory Landlord Responsibilities, Count 2 – Engaging in Real Estate Transactions without a License as Required by Law, Count 3 – Deceptive Representations of Habitability and Habitation, Count 4 – Incurable Deceptive Acts, and Count 5 – Knowing Violations of the Deceptive Consumer Sales Act. Service of the lawsuit was effectuated on Hickory Ridge on July 3, 2024. Service was effectuated on the Chetrit Defendants on July 26, 2024.²

[3] The State filed a motion for default judgment against Hickory Ridge on July 29, 2024, claiming that Hickory Ridge had failed to timely respond to the lawsuit. Default judgment was entered against Hickory Ridge the next day. Counsel appeared for Hickory Ridge on September 6, 2024, and filed a motion to set aside the default judgment. In its motion, Hickory Ridge argued that the default judgment should be set aside pursuant to Trial Rule 60(B)(1), (B)(2), and (B)(8).³

[4] The trial court held a hearing on Hickory Ridge's motion to set aside the default judgment on February 3, 2025. On February 4, 2025, the trial court issued an order denying Hickory Ridge's motion to set aside the default judgment, finding that Hickory Ridge was not entitled to relief as it failed to prove excusable neglect.

Discussion and Decision

[5] At the outset, we note that the State did not submit an appellee's brief.

In such a situation, we do not undertake the burden of developing arguments for the appellee. Applying a less stringent standard of review with respect to showings of reversible error, we may reverse the lower court if the appellant can establish prima facie error. Prima facie is defined in this context as at first sight, on first appearance, or on the face of it. The purpose of this rule is not to benefit the appellant. Rather, it is intended to relieve this court of the burden of controverting the arguments advanced for reversal where that burden rests with the appellee. Where an appellant is unable to meet that burden, we will affirm.

State Farm Ins. v. Freeman, 847 N.E.2d 1047, 1048 (Ind. Ct. App. 2006) (internal citations and quotations omitted, emphases in original).

[6] Hickory Ridge contends that the trial court abused its discretion in denying its motion to set aside the default judgment, citing both Trial Rule 60(B)(1) and 60(B)(8). In relevant part, Trial Rule 60(B) 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;

(2) any ground for a motion to correct error, including without limitation newly discovered evidence, which by due diligence could not have been discovered in time to move for a motion to correct errors under Rule 59;

(3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party;

(4) entry of default 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).

“A movant filing a motion for reasons (1), (2), (3), (4), and (8) must allege a meritorious claim or defense.” T.R. 60(B).

[7] The decision whether to set aside a default judgment is given substantial deference on appeal. Our standard of review is limited to determining whether the trial court abused its discretion. An abuse of discretion may occur if the trial court's decision is clearly against the logic and effect of the facts and circumstances before the court, or if the court has misinterpreted the law. We may affirm a general default judgment on any theory supported by the evidence adduced at trial. The trial court's discretion is necessarily broad in this area because any determination of excusable neglect, surprise, or mistake must turn upon the unique factual background of each case. Moreover, no fixed rules or standards have been established because the circumstances of no two cases are alike. A cautious approach to the grant of motions for default judgment is warranted in cases involving material issues of fact, substantial amounts of money, or weighty policy determinations. In addition, the trial court must balance the need for an efficient judicial system with the judicial preference for deciding disputes on the merits. Furthermore, reviewing the decision of the trial court, we will not reweigh the evidence or substitute our judgment for that of the trial court. Upon a motion for relief from a default judgment, the burden is on the movant to show sufficient grounds for relief under Indiana Trial Rule 60(B).

Kmart Corp. v. Englebright, 719 N.E.2d 1249, 1253 (Ind. Ct. App. 1999) (internal citations and quotations omitted), trans. denied.

I. Trial Rule 60(B)(1)

[8] A trial court may relieve a party from a default judgment pursuant to Trial Rule 60(B)(1) for “mistake, surprise, or excusable neglect” if the party files a motion within one year of the judgment and alleges a meritorious claim or defense. T.R. 60(B)(1).

Addressed to the trial court's equitable discretion, a Trial Rule 60(B)(1) motion does not attack the substantive, legal merits of a judgment, but rather addresses the procedural, equitable grounds justifying the relief from the finality of a judgment. Because there is no general rule as to what constitutes excusable neglect under Trial Rule 60(B)(1), each case must be determined on its particular facts.

Huntington Nat. Bank v. Car-X Assoc. Corp., 39 N.E.3d 652, 655 (Ind. 2015) (brackets and internal quotations omitted).

[9] In On the Level Fence & Deck, Inc. v. Indiana Bell Telephone Company, 217 N.E.3d 599, 601 (Ind. Ct. App. 2023), trans. denied, the facts established that AT&T had been communicating directly with On the Level's insurer before filing suit. On the Level, 217 N.E.3d at 601. Default judgment was entered against On the Level after it failed to respond to AT&T's lawsuit. Id. In appealing the denial of a motion to set aside the default judgment, On the Level argued

that because AT&T was communicating directly with [its] insurer before filing suit, On the Level [had] reasonably believed that its insurer would (1) know about the lawsuit and (2) continue handling matters as it had been up to that point.․ Under the circumstances, we agree[d] with On the Level that its failure to contact its insurer after being served with the complaint [had] amount[ed] to excusable neglect.

Id. at 602. We noted that “[t]o be sure, On the Level should have contacted its insurer out of an abundance of caution[,]” but, given the facts of the case, “it was reasonable for On the Level to believe that AT&T would continue communicating directly with On the Level's insurer after filing suit and that the insurer had things under control.” Id. Claiming that our opinion in On the Level supported its argument that the facts and circumstances of this case established excusable neglect, Hickory Ridge cites to a number of cases suggesting that, in order to successfully have default judgment overturned, it needed only to have shown slight evidence of excusable neglect. See Wamsley v. Tree City Village, 108 N.E.3d 334, 336 (Ind. 2018) (noting that our deferential standard of review compels us to affirm the trial court's order setting aside a default judgment where the trial court determined that exceedingly slight evidence was sufficient to show excusable neglect); Coslett v. Weddle Bros. Const. Co., 798 N.E.2d 859, 862 (Ind. 2003) (affirming the trial court's order setting aside a default judgment, noting our deferential standard of review on the question of whether slight evidence of excusable neglect existed).

[10] We do not find the facts and circumstances in On the Level to be similar to the facts and circumstances of this case. In denying Hickory Ridge's motion to set aside the default judgment, the trial court noted that “Hickory Ridge argues that a failure of an administrative assistant who actually received service and failed to pass on that information in a timely fashion constituted excusable neglect sufficient to set aside the default judgment entered.” Appellant's App. Vol. II p. 12. The trial court noted that “no argument [had been] made that Hickory Ridge was not properly served nor had any notice” and that the evidence demonstrated that Hickory Ridge had received service but that an administrative assistant had failed to act after receiving service. Appellant's App. Vol. II p. 12. The trial court found that “the administrative assistant's failure to act may [have been] neglect but not excusable neglect.” Appellant's App. Vol. II p. 13.

[11] Hickory Ridge argues that Sanchez's failure to act should have been found to be excusable neglect given the property's complicated factual history, claiming that “[t]he misunderstanding about whether the property was in the hands of a receiver resulted in the failure to communicate the summons and Complaint to Hickory Ridge management.” Appellant's Br. p. 25. Hickory Ridge asserts that Sanchez “incorrectly believed that the Complaint was associated with a sold property with the receiver having control of the remaining properties.” Appellant's Br. p. 27 (italics omitted). Hickory Ridge further asserts that Sanchez's confusion and misunderstanding created a breakdown in communications that led to Hickory Ridge's failure to timely respond.

[12] Again, questions regarding excusable neglect are fact specific and “each case must be determined on its particular facts.” Huntington, 39 N.E.3d at 655 (brackets, citations, and quotation omitted). We disagree with Hickory Ridge's assertion that the alleged facts establish that there had been a breakdown in communications or any other excusable failure to act. The alleged facts here demonstrate that after having received notice of the summons and complaint, Sanchez had filed the documents away rather than forwarding them on to a supervisor or legal counsel. Even if Sanchez had been confused about what to do with the legal documents, it seems obvious the appropriate action would have been to turn them over to a supervisor or attorney, not to simply file them away without telling anyone. We agree with the trial court that while Sanchez's failure to act may have constituted negligence, Hickory Ridge has failed to convince us that such negligence was excusable. As such, we cannot say that the trial court abused its discretion in denying Hickory Ridge's motion to set aside the default judgment for excusable neglect pursuant to Trial Rule 60(B)(1).

II. Trial Rule 60(B)(8)

[13] Under Trial Rule 60(B)(8), a trial court has the discretion to set aside a default judgment for any reason justifying relief from the operation of the judgment other than those set forth in other subsections of Trial Rule 60 if the party's motion is filed within a reasonable time and the party alleges a meritorious claim or defense. When a Trial Rule 60(B)(8) motion is filed, the burden is on the movant to demonstrate that relief is both necessary and just. As with subsection (B)(1), the decision whether to grant or deny a party's motion is left to the trial court's equitable discretion and highly fact specific.

Huntington, 39 N.E.3d at 658 (internal citation, quotations, and footnote omitted).

[14] “[A] trial court may grant relief from the judgment under [Trial Rule] 60(B)(8) upon an additional showing of ‘exceptional circumstances’ justifying such relief.” Innovative Therapy Sols. Inc. v. Greenhill Manor Mgmt., LLC, 135 N.E.3d 662, 668–69 (Ind. Ct. App. 2019).

Exceptional circumstances include “equitable considerations” such as (1) whether the movant has a substantial interest in the matter at issue; (2) whether the movant had an “excusable reason” for its untimely response; (3) whether the movant took “quick action to set aside the default judgment” once the complaint was discovered; (4) whether the movant will suffer significant loss if the default judgment is not set aside; and (5) whether the non-movant will suffer only minimal prejudice if the case is reinstated.

Id. at 669. Hickory Ridge argues that the trial court erred in failing to consider whether exceptional circumstances exist that justify its requested relief.

[15] In Huntington, Huntington had filed a motion to set aside a default judgment, citing both Trial Rule 60(B)(1) and 60(B)(8). 39 N.E.3d at 654. The trial court had rejected Huntington's Trial Rule 60(B)(1) argument but had not directly addressed the question of whether the default judgment should have been set aside pursuant to Trial Rule 60(B)(8). Id. at 654–55. Upon review, the Indiana Supreme Court affirmed the trial court's denial of Huntington's motion to set aside default judgment pursuant to Trial Rule 60(B)(1), but found “it best to remand to the trial court to reevaluate Huntington's motion upon consideration of these and all relevant circumstances[.]” Id. at 658–59. The Indiana Supreme Court further found that “[s]hould the trial court find that Huntington demonstrated sufficient grounds for relief from default judgment under Trial Rule 60(B)(8), then the case shall proceed to a resolution on its merits.” Id. at 659.

[16] Similarly, Hickory Ridge sought to set aside the default judgment by citing both Trial Rule 60(B)(1) and 60(B)(8). The trial court's order focuses exclusively on Trial Rule 60(B)(1) and does not mention the criteria for relief under Trial Rule 60(B)(8). Like the Indiana Supreme Court in Huntington, we conclude that it is best to remand the case to the trial court with instructions for the trial court to evaluate whether Hickory Ridge should be granted relief pursuant to Trial Rule 60(B)(8).⁴ Should the trial court find that Hickory Ridge demonstrated sufficient grounds for relief from default judgment under Trial Rule 60(B)(8), then the case should proceed to a resolution on the merits. See id.

[17] The judgment of the trial court is affirmed in part and the matter is remanded to the trial court with instructions for further proceedings.

FOOTNOTES

2.   Default judgment was only entered against Hickory Ridge. The Chetrit Defendants therefore do not participate in the instant appeal.

3.   Although Hickory Ridge cited Trial Rule 60(B)(2) in its motion to set aside the default judgment, its arguments on appeal focus on its Trial Rule 60(B)(1) and (B)(8) claims. We will likewise focus our attention on Hickory Ridge's contention that it was entitled to relief pursuant to Trial Rule 60(B)(1) and (B)(8).

4.   Hickory Ridge has raised numerous allegedly meritorious defenses. In denying Hickory Ridge's motion to set aside the default judgment, the trial court noted that it “need[ed] not address Hickory Ridge's claim of a meritorious defense” given that it had “already found the absence of excusable neglect.” Appellant's App. Vol. II p. 12. On remand, the trial court should determine the sufficiency of Hickory Ridge's alleged meritorious defenses if it finds that Hickory Ridge is entitled to relief pursuant to Trial Rule 60(B)(8).

Bradford, Judge.

Judges May and Mathias concur. May, J., and Mathias, J., concur.