Tony Thompson, Appellant-Defendant v. CL LLC (2025)

MEMORANDUM DECISION

Case Summary

[1] After a trial court entered default judgment against Tony Thompson, he moved to set it aside under Indiana Trial Rule 60(B)(1), arguing he should be relieved of the judgment due to excusable neglect. The trial court denied the motion, and on appeal, Thompson contends the court's decision to let the default judgment stand was an abuse of discretion. We affirm.

Facts and Procedural History

[2] On May 31, 2024, Cedar Lake ULock LLC (“Cedar Lake”) filed a complaint alleging Thompson and a limited liability company in which he held a membership interest, CL Self-Storage LLC (“CL”), (1) defaulted on a promissory note under which Cedar Lake loaned CL, Thompson, and a third party $450,000, and (2) destroyed the collateral securing the loan. Cedar Lake sought judgment of over $500,000, plus attorney fees, costs, and expenses. Contemporaneously with the filing of the complaint, Cedar Lake requested service of the complaint and summons by sheriff on both CL and Thompson.

[3] On June 4, the summons and complaint were served on Gerald Fankhauser, III, CL's registered agent and attorney.

[4] Service on Thompson, however, took a bit longer. Service of the original summons and complaint was addressed to Thompson at 13701 Lauerman Road and returned on June 4 due to an incomplete address. On June 6, Cedar Lake caused an alias summons to be issued for Thompson at 13701 Lauerman Road Lot 87. The sheriff served the summons on June 12 by leaving a copy at that address, which apparently belonged to Thompson's neighbor, and by mailing a copy. On June 13, Cedar Lake caused a second alias summons to be issued for Thompson at 13701 Lauerman Road Unit 78B. On June 17, the sheriff served the second alias summons by leaving a copy at that address and mailing a copy. The entry in the chronological case summary (“CCS”) states: “Alias Summons (Tony Thompson) left at door and copy mailed.” Appellant's App. Vol. 2 at 3.

[5] On June 24, Fankhauser timely filed an appearance on CL's behalf—but not Thompson's—and was granted an automatic thirty-day extension of time (until July 24) to file an answer for CL.

[6] Thompson did not appear or file a responsive pleading within twenty days of being served, and so on July 17, Cedar Lake moved for default judgment against Thompson only. The next day, the trial court granted the motion and entered judgment against Thompson.

[7] On July 24, Fankhauser appeared for Thompson and filed both CL's and Thompson's answers. Thompson also moved to set aside the judgment against him under Trial Rule 60(B)(1), arguing the default was due to excusable neglect, specifically, his attorney's “calendaring error” which was “compounded by a breakdown in communication” related to service on Thompson. Id. at 39–40. In an affidavit submitted with Thompson's motion and brief, Thompson averred the “service of process documents were ultimately delivered to a nearby townhome address and not at my place of abode” and “were subsequently given to me by the resident of said other townhome.” Id. at 46. He did not mention the second alias summons or his communications with his attorney.

[8] After holding a hearing on Thompson's motion to set aside the default judgment, the trial court entered a written order finding: (1) Thompson was properly served with an alias summons, (2) Fankhauser was Thompson's attorney, (3) Fankhauser did not argue he had no notice, and (4) Fankhauser failed to timely file an appearance or request an automatic extension of time to answer for Thompson as he did for CL. The trial court also determined Fankhauser's failure to appear or answer was due to “a calendaring error.” Id. at 64–65. The trial court acknowledged Indiana's preference for deciding cases on the merits. But after reviewing the facts and case law, the trial court concluded Fankhauser's failure “to keep his calendar in order” was “neglect but not excusable neglect.” Id. at 65. Accordingly, the trial court denied the motion to set aside.

The trial court did not abuse its discretion in refusing to set aside the default judgment.

[9] Trial Rule 55(A) authorizes a trial court to enter a default judgment if a defendant fails to respond to the plaintiff's complaint. Expert Pool Builders, LLC v. Vangundy, 224 N.E.3d 309, 314 (Ind. 2024). A default judgment is an extreme remedy reserved for parties who fail to defend or prosecute a suit. Id. at 314–15.

[10] A trial court may set aside a default judgment because of mistake, surprise, or excusable neglect, if the moving party files the motion not more than one year after the judgment is entered and alleges a meritorious claim or defense. Ind. Trial Rule 60(B)(1); Coslett v. Weddle Brothers Constr. Co., 798 N.E.2d 859, 860 (Ind. 2003). When determining whether to set aside a judgment because of excusable neglect, a trial court considers the “unique factual background of each case because ‘no fixed rules or standards have been established as the circumstances of no two cases are alike.’ ” Coslett, 798 N.E.2d at 860–61 (quoting Siebert Oxidermo, Inc. v. Shields, 446 N.E.2d 332, 340 (Ind. 1983)). And because the determination of excusable neglect, surprise, or mistake turns on the unique facts of each case, the trial court's discretion is “necessarily broad” in this area. Kmart Corp. v. Englebright, 719 N.E.2d 1249, 1253 (Ind. Ct. App. 1999), trans. denied.

[11] At the same time, Indiana law strongly prefers disposition of cases on their merits, so a trial court must exercise its discretion considering the disfavor in which default judgments are held. Coslett, 798 N.E.2d at 861. In other words, a “trial court must balance the need for an efficient judicial system with the judicial preference for deciding disputes on the merits.” Kmart, 719 N.E.2d at 1253. “Any doubt of the propriety of a default judgment should be resolved in favor of the defaulted party.” Coslett, 798 N.E.2d at 861.

[12] On appeal, we review a trial court's decision to enter a default judgment for abuse of discretion. Expert Pool Builders, 224 N.E.3d at 312. “That is because the trial court evaluates firsthand the relevant facts of each case and is in the best position to manage its docket, to balance the equities, and to determine the appropriate use of this extreme remedy.” Id. A trial court abuses its discretion when its decision is “unlawful, illogical, or otherwise unreasonable.” Id. And on review, we will not reweigh the evidence or substitute our judgment for that of the trial court. Kmart, 719 N.E.2d at 1253.

[13] On Cedar Lake's motion, the trial court entered default judgment against Thompson after he failed to timely respond to the complaint. After Thompson moved to set aside the default judgment, the trial court held a hearing and found Thompson was properly served, his attorney had notice, and his attorney failed to respond timely due to a calendaring error. The trial court weighed Indiana's preference for deciding cases on the merits against the need for efficiency in the judicial system. See Appellant's App. Vol. 2 at 63–64 (trial court's order acknowledging both “that, whenever possible, cases should be decided on their merits” and the “judicial system cannot allow its processes to be stymied by simple inattention”). And the trial court concluded Fankhauser's calendaring error did not constitute “excusable neglect” under Trial Rule 60(B)(1). The order shows the trial court evaluated the relevant facts and balanced the equities, as required under our Trial Rule 60(B)(1) jurisprudence. We cannot say the trial court's decision was unlawful, illogical, or unreasonable, and so we discern no abuse of the court's broad discretion.

[14] Even so, Thompson argues the trial court “improperly relied on inapposite case law involving personal distractions unrelated to litigation, rather than the well-established precedent recognizing attorney calendaring errors as excusable neglect.” Appellant's Br. at 8. The trial court principally relied on Smith v. Johnston, 711 N.E.2d 1259 (Ind. 1999), and Baker v. G.H. Paschen, S.N. Nielsen & Assocs., LLC, 188 N.E.3d 486 (Ind. Ct. App. 2022), trans. denied. In Smith, a doctor did not read his mail while his office manager was unavailable and therefore failed to timely respond to a summons and complaint, resulting in a default judgment against him. Our Supreme Court held these facts were “insufficient to require the trial court to set aside the judgment” under Trial Rule 60(B)(1) for excusable neglect. Smith, 711 N.E.2d at 1262. In Baker, a litigant was served with a complaint but chose not to answer or appear at a hearing on a subsequent motion for default judgment because he was a busy CPA during tax season and concerned about COVID-19. This Court affirmed the trial court's refusal to set aside the default judgment under Trial Rule 60(B)(1) because the litigant “has not shown evidence of excusable neglect.” Baker, 188 N.E.3d at 492. Both cases generally support the trial court's determination that absent other circumstances, the mere failure to respond to a complaint despite notice constitutes neglect, but not excusable neglect under Trial Rule 60(B)(1).

[15] In response to this authority, Thompson directs our attention to Li v. NextGear Capital, Inc., 136 N.E.3d 313 (Ind. Ct. App. 2019), which he contends presents a “nearly identical factual scenario” to this case that “was found to constitute excusable neglect.” Appellant's Br. at 11. In Li, a lender filed a complaint against Li, Li's former business partner, and their business, alleging the business defaulted on a promissory note for a loan that Li and the partner personally guaranteed. Li received the summons and complaint but failed to respond, and the trial court entered default judgment against him. At a hearing on Li's motion to set aside the judgment, Li and the partner testified that (1) Li immediately contacted the business’ attorney after Li received the summons and complaint, (2) the attorney told Li he was “on top of it” and negotiating a settlement, (3) Li agreed to contribute to the settlement, (4) the attorney told Li his representation “should” include Li (as well as the business and the partner), and (5) Li accordingly believed his interests were sufficiently represented and he need not hire his own attorney to respond to the complaint. Id. at 321. Although the trial court declined to set aside the default judgment, this Court reversed, holding there was a “clear breakdown in communication” between Li and the business’ attorney and “no evidence of foot dragging by Li” such that “the neglect by Li in failing to file an answer ․ was excusable.” Id.

[16] As in Li, Indiana courts have at times found excusable neglect when there is a “breakdown in communication” between a defendant and his or her agents resulting in a default judgment. See Smith, 711 N.E.2d at 1262 (discussing and distinguishing two prior Indiana Supreme Court cases finding a breakdown in communication). 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.” Id.

[17] Thompson similarly characterizes his attorney's failure to respond as due to a “breakdown in communication” and urges us to reach the same resolution as the Li Court. See Appellant's Br. at 11–12. But we find the facts of Li distinguishable because here Thompson presented no evidence establishing a clear breakdown in communication with his attorney. When a party moves for relief from a default judgment under Trial Rule 60(B), the moving party bears the burden to show sufficient grounds for relief. Kmart, 719 N.E.2d at 1253. In his affidavit supporting the motion to set aside, Thompson made several verified statements about the loan from Cedar Lake, the promissory note, and a separate real estate purchase agreement—all facts related to Thompson's alleged meritorious defense. As to service of process, he explained the summons and complaint were delivered to his neighbor, who then delivered them to him. But the affidavit is silent as to Thompson's receipt of the second alias summons—which was served on June 17—and as to his communications with his attorney. And, unlike the defendant in Li, Thompson did not testify at the hearing on the motion to set aside and provide evidence about receiving service, his attorney communications, and whether he believed his interests were being represented.

[18] To be sure, Thompson's attorney argued in the motion to set aside that in addition to his calendaring error, “actual service of Thompson was not clearly communicated [to the attorney] or discussed separately from [CL] due to the overlapping defenses of [CL] and Thompson.” Appellant's App. Vol. 2 at 40. But the trial court was not required to accept Fankhauser's arguments as fact, and in any case, we do not reweigh evidence when reviewing a trial court's decision on a motion to set aside a default judgment. Kmart, 719 N.E.2d at 1253. The trial court found Fankhauser “acknowledges the failure to timely enter an appearance and gain additional time to plead as a calendaring error” and “[n]o argument is made that [Thompson's] attorney had no notice.” Appellant's App. Vol. 2 at 64–65. On these facts, we are unpersuaded Thompson has established a breakdown in communication that would demand a different result. Instead, Thompson has shown only a “preventable oversight” that does not compel us to reverse the trial court's judgment. See Huntington Nat'l Bank v. Car-X Assoc. Corp., 39 N.E.3d 652, 656 (Ind. 2015) (describing the defendant's failure to respond in Smith despite notice as a “preventable oversight”).¹

Conclusion

[19] The trial court did not abuse its discretion in declining to set aside the default judgment entered against Thompson.

[20] Affirmed.

FOOTNOTES

1.   Because we hold the trial court did not abuse its discretion in finding an absence of excusable neglect under the meaning of Trial Rule 60(B)(1), we need not address Thompson's arguments about meritorious defense. See, e.g., Huntington, 39 N.E.3d at 658 (not addressing whether the defaulted party had a meritorious defense after holding the trial court did not abuse its discretion in declining to set aside a Trial Rule 60(B)(1) motion for default judgment); Smith, 711 N.E.2d at 1262 (same).

Kenworthy, Judge.

Foley, J., and Scheele, J., concur.