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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. Poor Judge Brown probably thought that by slavishly serving the godz of the age her violations of 18th century concepts like due process and the rule of law would be overlooked. Mayhaps she was merely a Judge ahead of her time?

  2. in a lawyer discipline case Judge Brown, now removed, was presiding over a hearing about a lawyer accused of the supposedly heinous ethical violation of saying the words "Illegal immigrant." (IN re Barker) http://www.in.gov/judiciary/files/order-discipline-2013-55S00-1008-DI-429.pdf .... I wonder if when we compare the egregious violations of due process by Judge Brown, to her chiding of another lawyer for politically incorrectness, if there are any conclusions to be drawn about what kind of person, what kind of judge, what kind of apparatchik, is busy implementing the agenda of political correctness and making off-limits legit advocacy about an adverse party in a suit whose illegal alien status is relevant? I am just asking the question, the reader can make own conclsuion. Oh wait-- did I use the wrong adjective-- let me rephrase that, um undocumented alien?

  3. of course the bigger questions of whether or not the people want to pay for ANY bussing is off limits, due to the Supreme Court protecting the people from DEMOCRACY. Several decades hence from desegregation and bussing plans and we STILL need to be taking all this taxpayer money to combat mostly-imagined "discrimination" in the most obviously failed social program of the postwar period.

  4. You can put your photos anywhere you like... When someone steals it they know it doesn't belong to them. And, a man getting a divorce is automatically not a nice guy...? That's ridiculous. Since when is need of money a conflict of interest? That would mean that no one should have a job unless they are already financially solvent without a job... A photographer is also under no obligation to use a watermark (again, people know when a photo doesn't belong to them) or provide contact information. Hey, he didn't make it easy for me to pay him so I'll just take it! Well heck, might as well walk out of the grocery store with a cart full of food because the lines are too long and you don't find that convenient. "Only in Indiana." Oh, now you're passing judgement on an entire state... What state do you live in? I need to characterize everyone in your state as ignorant and opinionated. And the final bit of ignorance; assuming a photo anyone would want is lucky and then how much does your camera have to cost to make it a good photo, in your obviously relevant opinion?

  5. Seventh Circuit Court Judge Diane Wood has stated in “The Rule of Law in Times of Stress” (2003), “that neither laws nor the procedures used to create or implement them should be secret; and . . . the laws must not be arbitrary.” According to the American Bar Association, Wood’s quote drives home this point: The rule of law also requires that people can expect predictable results from the legal system; this is what Judge Wood implies when she says that “the laws must not be arbitrary.” Predictable results mean that people who act in the same way can expect the law to treat them in the same way. If similar actions do not produce similar legal outcomes, people cannot use the law to guide their actions, and a “rule of law” does not exist.

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