Image Motors, Ltd, Appellant-Defendant v. Theresa Valente and Angelina Valente, Appellees-Plaintiffs (2026)

MEMORANDUM DECISION

Statement of the Case

[1] Image Motors, Ltd. (“IM”), appeals the trial court's denial of its motion to set aside a default judgment issued in favor of Theresa Valente (“Theresa”) and Angelina Valente (collectively “the Valentes”). IM argues that the trial court abused its discretion when it denied IM's motion to set aside the default judgment. Concluding that the trial court did not abuse its discretion, we affirm the trial court's judgment.

[2] We affirm.

Issue

Whether the trial court abused its discretion when it denied IM's motion to set aside the default judgment.

Facts

[3] In September 2024, the Valentes purchased a 2016 Lincoln MKC from IM at its dealership in Elkhart. At some point, the Valentes contacted an attorney (“the Valentes’ attorney”) to discuss their concerns about their sales transaction with IM. The Valentes’ attorney subsequently drafted a multi-count complaint against IM. Specifically, the complaint alleged that IM had committed: (1) conversion because the sales documents only credited the Valentes with a $2,600 down payment when the Valentes had made a $4,500 down payment; (2) fraud because, among other things, IM had misreported the details of the transaction on the certificate of title application; (3) forgery because the Valentes had not authorized IM to use their electronic signatures on the retail sales contract and the vehicle service contract; (4) a violation of the deceptive consumer sales act (I.C. § 24-5-0.5 et seq.) because IM had failed to cure or offer to cure their deceptive sales practices after having received notice of these practices; and (5) a violation of the senior consumer protection act (I.C. § 24-4.6-6 et seq.) by committing financial exploitation of Theresa, who was a senior consumer. In their complaint, the Valentes further sought to recover statutory treble damages, the costs of the action, and reasonable attorney fees.

[4] Before filing the complaint, the Valentes’ attorney sent a courtesy copy of it to IM's dealership in Elkhart and to IM's corporate headquarters in Bristol. The Valentes filed their complaint at the end of May 2025.

[5] On June 9, 2025, Pamela Harris (“Harris”), IM's corporate compliance director whose office was located at IM's corporate headquarters, telephoned the Valentes’ attorney and left her a voicemail (“Harris’ voicemail”). Specifically, Harris told the Valentes’ attorney that she had received the copy of the unfiled complaint and that she was looking into the matter. Harris further told the Valentes’ attorney that the salesperson who had sold the vehicle to the Valentes was no longer employed by IM. In addition, Harris requested that the Valentes’ attorney return her call. The Valentes’ attorney returned Harris’ call but never heard back from Harris.

[6] The Valentes served IM's Elkhart dealership with a complaint on June 10, 2025. Further, the Valentes served IM's registered agent at IM's headquarters in Bristol on June 13, 2025.

[7] On July 17, 2025, after IM had failed to respond to the Valentes’ complaint, the Valentes filed a motion for default judgment. The trial court granted the Valentes’ motion, entered a default judgment, and awarded the Valentes damages on all claims. Specifically, the trial court awarded the Valentes $72,560, which included statutory treble damages. The trial court further awarded the Valentes attorney fees and post-judgment interest.

[8] At the end of July 2025, IM filed a motion for relief from the default judgment, wherein it asked the trial court to grant its motion pursuant to Indiana Trial Rule 60(B)(1), which “permits a court to relieve a party from a final judgment for ‘mistake, surprise, or excusable neglect.’ ” (App. Vol. 2 at 31). In its motion, IM alleged that “its failure to respond was the result of excusable neglect stemming from a clerical and administrative oversight, not from any willful disregard of the judicial process. This contention is more fully set forth in the sworn Affidavit of Brian Anderson, attached hereto and incorporated herein as Exhibit A.” (App. Vol. 2 at 30). In this affidavit, Anderson, who was the general manager of IM's Elkhart dealership, averred that he had been unfamiliar with IM's legal department's process of investigation and had been under the impression that the legal department would contact him if they needed any information. Anderson further averred that “[u]nbeknownst to [him], there had been a breakdown in communication between the legal department and the staff at headquarters and that the legal department had not, in fact, received a copy of the Summons and Complaint.” (App. Vol. 2 at 26). IM did not allege that it had not received the copy of the complaint that the Valentes had served on IM's registered agent at IM's headquarters in Bristol, and it did not further explain the breakdown in communication that had occurred between the staff at IM's headquarters and IM's legal department.

[9] In addition, in its motion, IM alleged that it had a meritorious defense to the Valentes’ claims. Specifically, IM argued that many of the Valentes’ allegations in their complaint were “factually inaccurate and materially disputed.” (App. Vol. 2 at 35).

[10] In August 2025, the Valentes filed a response in opposition to IM's motion for relief from the default judgment. Specifically, the Valentes argued that “Indiana reserves Rule 60(B)(1) relief for ‘rare and unusual cases,’ not for routine internal mishaps or inattentiveness.” (App. Vol. 2 at 41). According to the Valentes, IM's “own conduct defeat[ed] a claim of excusable neglect[.]” (App. Vol. 2 at 41).

[11] One month later, in September 2025, the trial court held a hearing on IM's motion to set aside the default judgment. During the hearing, IM told the trial court that the “lateness [in answering the complaint] [had been] caused by errors or miscommunication within the company.” (Tr. Vol. 2 at 5). The Valentes responded that they had given IM “repeated notice of this lawsuit.” (Tr. Vol. 2 at 6). Specifically, the Valentes first pointed out that they had sent a courtesy copy of the complaint to both the Elkhart dealer and the corporate headquarters in Bristol. The Valentes further told the trial court that Harris, IM's compliance director, had left a voicemail acknowledging receipt of the courtesy copy of the complaint and stating that she would look into the matter. Also, the trial court admitted Harris’ voicemail into evidence and listened to it. In addition, the Valentes pointed out that they had served copies of the complaint on both the Elkhart dealership and the corporate headquarters in Bristol. The Valentes argued that “internal mishandling of lawsuits [was] not excusable neglect.” (Tr. Vol. 2 at 6).

[12] After reviewing IM's motion and hearing the parties’ arguments, the trial court stated that there was “definitely neglect.” (Tr. Vol. 2 at 20). According to the trial court, it needed to do research and think about whether that neglect was excusable. The trial court further noted that although IM had submitted an affidavit from Anderson, who was the general manager at the dealership in Elkhart, IM had not submitted an affidavit from anyone at IM's corporate headquarters.

[13] In October 2025, the trial court issued a detailed six-page order denying IM's motion to set aside the default judgment. In its order, the trial court specifically found that, in this case, “․ [t]here ha[d] been a showing of neglect, but not a showing of excusable neglect. [IM]’s inattentiveness [did] not rise to the level of excusable neglect.” (App. Vol. 2 at 47).

[14] IM now appeals.

Decision

[15] IM argues that the trial court abused its discretion when it denied its motion to set aside the default judgment. We disagree.

[16] The decision whether to set aside a default judgment is given substantial deference on appeal. Huntington National Bank v. Car-X Associates Corporation, 39 N.E.3d 652, 655 (Ind. 2015). Our standard of review is limited to determining whether the trial court abused its discretion. Id. An abuse of discretion may occur if the trial court's decision is against the logic and effect of the facts and circumstances before the court or if the court has misinterpreted the law. Id. When reviewing the trial court's decision, we will not reweigh the evidence or substitute our judgment for that of the trial court. Id. Further, 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). Id.

[17] Here, IM specifically contends that it was entitled to relief from the default judgment under Indiana Trial Rule 60(B)(1) for excusable neglect. According to IM, it “experienced a breakdown in internal communications, which caused it to fail to respond promptly to the initial complaint. Although properly served, communications to the legal department were not initiated correctly or in a timely manner.” (IM's Br. 8).

[18] “Under subsection (B)(1), a trial court may relieve a party from a default judgment 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.” Huntington, 39 N.E.3d at 655. “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.” Id. (cleaned up). “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 own particular facts.” Id. (cleaned up).

[19] For example, in Huntington, Car-X properly served Huntington. However, the Huntington employee who typically received service of process for the bank was on maternity leave, and another employee received the complaint and summons. Because of the latter employee's other duties, he did not refer the complaint to Huntington's attorney until Huntington's deadline to reply had passed. Car-X filed a motion for default judgment, which the trial court granted. Thereafter, the trial court denied Huntington's motion to set aside the default judgment. On appeal, our Indiana Supreme Court concluded that no excusable neglect had occurred because Huntington's late response to the service was “wholly attributable to [its] inattentiveness.” Id. at 657. Specifically, the supreme court explained that Huntington's failure to respond to Car-X's complaint for “no reason other than an employee's disregard of the mail” did not constitute a successful allegation of a breakdown in communication sufficient to establish excusable neglect. Id. at 658. The supreme court further explained that “[t]he judicial system simply cannot allow its processes to be stymied by simple inattention[,]” and affirmed the trial court's denial of Huntington's motion to set aside the default judgment for excusable neglect under Trial Rule 60(B)(1). Id. at 658. (cleaned up). See also Smith v. Johnston, 711 N.E.2d 1259, 1262 (Ind. 1999) (explaining that physician's failure to open his mail when he knew that the person who regularly received the mail and handled all legal matters was not in the office was neglect but not excusable neglect).

[20] On the other hand, based on the facts in Boles v. Weidner, 449 N.E.2d 288, 291 (Ind. 1983), the supreme court found excusable neglect for a breakdown in communication and affirmed the trial court's grant of Weidner's motion to set aside a default judgment that had been entered against him. Specifically, in the Boles case, following an automobile accident, Boles filed a complaint against Weidner. Weidner delivered the complaint and summons to his insurance agent, who was supposed to notify the insurance carrier of the lawsuit. However, the insurance carrier did not receive the notice and did not respond to Boles’ complaint. Boles filed a motion for a default judgment, which the trial court granted. Thereafter, Weidner filed a motion to set aside the default judgment, which the trial court granted. On appeal, the supreme court found that “Weidner had done everything that apparently needed to be done.” Id. The supreme court further explained that it was the “breakdown in communications between the agent and the carrier, neither of [whom] was aware that the lawsuit was pending without the proper response of hiring an attorney and entering an appearance[,]” that had resulted in the entry of default judgment against Weidner. Id. See also Li v. NextGear Capital, Inc., 136 N.E.3d 313. 319 (Ind. Ct. App. 2019) (finding a breakdown in communication resulting in excusable neglect where the facts of the case revealed that Li “understandably believed, albeit mistakenly,” that an attorney was taking care of his case and that nothing further was required of him).

[21] As seen in these cases, “[a] characterizing constant in Indiana's [default judgment] precedents is the explanation provided for the breakdown in communication – an explanation which guides the result in whether courts find excusable neglect and overturn a default judgment.” Biodynamic Extraction, LLC v. Kickapoo Creek Botanicals, LLC, 187 N.E.3d 295, 300 (Ind. Ct. App. 2022). Here, although IM argues that there was an internal breakdown in communication between corporate staff and the legal department, IM fails to provide an explanation for that breakdown. We note, as did the trial court, that although IM tendered an affidavit from the general manager of IM's Elkhart dealership, IM did not tender an affidavit from anyone at the corporate headquarters explaining the breakdown in communication between the staff at headquarters and the legal department. Further, although Harris, the corporate compliance director at IM's corporate headquarters acknowledged receipt of the courtesy copy of the complaint and explained to the Valentes’ counsel in a voicemail that she was looking into the matter, IM has not explained the reason that the complaint did not reach the legal department.

[22] Any doubts about who is at fault are construed against IM, as it bore the risk of the communication breakdown between IM's corporate staff and IM's legal department. See Biodynamic, 187 N.E.3d at 301. Because IM has failed to give an explanation for the breakdown in communication between its corporate staff and its legal department, we are simply unable to determine whether IM did everything that needed to be done to prevent that breakdown. Accordingly, we find no excusable neglect and affirm the trial court's order denying IM's motion to set aside the default judgment. See id. (affirming the trial court's denial of Biodynamic's motion to set aside a default judgment where Biodynamic's evidentiary designations, which had simply averred that Biodynamics had not received the complaint without any explanation as to the nature of the breakdown in communication between the registered agents and Biodynamic, were insufficient for this Court to conclude that Biodynamic had done everything that apparently needed to be done to prevent that breakdown in communication).¹

[23] Affirmed.

FOOTNOTES

1.   Because we have found that the trial court did not abuse its discretion when it found no excusable neglect, we need not address whether IM had a meritorious defense.

Pyle, Judge.

Bradford, J., and Kenworthy, J., concur.