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Majority affirms default judgment against Sears

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The Indiana Court of Appeals split today as to whether a department store was entitled to have a default judgment set aside.

Judge James Kirsch believed Sears Roebuck and Co. did all it was required to do with Razor, the maker of an electric scooter, under the Universal Terms and Conditions contract the two companies had when it learned it was being sued. But the majority believed Sears’ third-party administrator was inattentive in monitoring the claim, which led to the default judgment being entered against Sears.

Vicky James sued Sears and Razor after her son fell and injured himself on a scooter she bought at Sears, alleging Razor defectively manufactured and designed the scooter and that Sears negligently sold and distributed it.

Sears forwarded the complaint to its third-party administrator and Nancy Hall was assigned to the case. She contacted James’ counsel, Richard Morgan, and general counsel for Razor, John Cochrane. Cochrane acknowledged Razor’s obligation under the UTC contract to defend Sears and that he had appointed John Obenchain as attorney.

The contract didn’t require Sears to send Cochrane written notice, but Cochrane waited to receive written notice from Hall confirming Razor’s duty to defend. She never sent it and Obenchain never appeared for Sears.

Seven months later, Hall tried following up, but sent e-mails to the wrong address. After reaching Obenchain, she learned of the default judgment entered against Sears and the $107,000 in damages award, and that he never appeared on the company’s behalf.

In Sears Roebuck and Co. v. Vicky James, et al., No. 71A03-1002-CT-104, Sears argued that the trial court erred in not setting aside the default judgment based on excusable neglect. The majority didn’t find any evidence of excusable neglect, but that Hall’s conduct in handling the litigation was “simple inattention.” She waited seven months to try to follow up with Cochrane; she could have contacted Obenchain directly. She also should have brought the case to the attention of her supervisor, which she did not.

The majority also concluded that James’ counsel’s conduct didn’t amount to misconduct that justified setting aside the judgment. They rejected Sears’ argument that James’ attorney should have contacted Hall prior to seeking default judgment. Hall is a claims adjuster, not an attorney, and under the Rules of Professional Conduct, James’ attorney wasn’t required to notify Hall of his intent to pursue default judgment, wrote Judge Patricia Riley.

But Judge Kirsch believed Sears acted with due diligence and did everything it was supposed to do when it learned it was being sued. Hall contacted James’ attorney and the general counsel for Razor. Cochrane told Hall that Razor was contractually obligated to defend Sears and that an attorney had been appointed.

“The subsequent default was the result of a breakdown of communications which we have held to constitute excusable neglect,” he wrote.

He also noted that setting aside default regarding Sears wouldn’t prejudice Razor in any way, and the only harm to the plaintiffs would be they couldn’t collect a judgment to which they may not be entitled on the merits of their claim. Judge Kirsch would vacate the default judgment and allow the case to go forward for a determination on its merits.
 

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  1. YES I WENT THROUGH THIS BEFORE IN A DIFFERENT SITUATION WITH MY YOUNGEST SON PEOPLE NEED TO LEAVE US ALONE WITH DCS IF WE ARE NOT HURTING OR NEGLECT OUR CHILDREN WHY ARE THEY EVEN CALLED OUT AND THE PEOPLE MAKING FALSE REPORTS NEED TO GO TO JAIL AND HAVE A CLASS D FELONY ON THERE RECORD TO SEE HOW IT FEELS. I WENT THREW ALOT WHEN HE WAS TAKEN WHAT ELSE DOES THESE SCHOOL WANT ME TO SERVE 25 YEARS TO LIFE ON LIES THERE TELLING OR EVEN LE SAME THING LIED TO THE COUNTY PROSECUTOR JUST SO I WOULD GET ARRESTED AND GET TIME HE THOUGHT AND IT TURNED OUT I DID WHAT I HAD TO DO NOT PROUD OF WHAT HAPPEN AND SHOULD KNOW ABOUT SEEKING MEDICAL ATTENTION FOR MY CHILD I AM DISABLED AND SICK OF GETTING TREATED BADLY HOW WOULD THEY LIKE IT IF I CALLED APS ON THEM FOR A CHANGE THEN THEY CAN COME AND ARREST THEM RIGHT OUT OF THE SCHOOL. NOW WE ARE HOMELESS AND THE CHILDREN ARE STAYING WITH A RELATIVE AND GUARDIAN AND THE SCHOOL WON'T LET THEM GO TO SCHOOL THERE BUT WANT THEM TO GO TO SCHOOL WHERE BULLYING IS ALLOWED REAL SMART THINKING ON A SCHOOL STAFF.

  2. Family court judges never fail to surprise me with their irrational thinking. First of all any man who abuses his wife is not fit to be a parent. A man who can't control his anger should not be allowed around his child unsupervised period. Just because he's never been convicted of abusing his child doesn't mean he won't and maybe he hasn't but a man that has such poor judgement and control is not fit to parent without oversight - only a moron would think otherwise. Secondly, why should the mother have to pay? He's the one who made the poor decisions to abuse and he should be the one to pay the price - monetarily and otherwise. Yes it's sad that the little girl may be deprived of her father, but really what kind of father is he - the one that abuses her mother the one that can't even step up and do what's necessary on his own instead the abused mother is to pay for him???? What is this Judge thinking? Another example of how this world rewards bad behavior and punishes those who do right. Way to go Judge - NOT.

  3. Right on. Legalize it. We can take billions away from the drug cartels and help reduce violence in central America and more unwanted illegal immigration all in one fell swoop. cut taxes on the savings from needless incarcerations. On and stop eroding our fourth amendment freedom or whatever's left of it.

  4. "...a switch from crop production to hog production "does not constitute a significant change."??? REALLY?!?! Any judge that cannot see a significant difference between a plant and an animal needs to find another line of work.

  5. Why do so many lawyers get away with lying in court, Jamie Yoak?

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