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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. Unfortunately, the court doesn't understand the difference between ebidta and adjusted ebidta as they clearly got the ruling wrong based on their misunderstanding

  2. A common refrain in the comments on this website comes from people who cannot locate attorneys willing put justice over retainers. At the same time the judiciary threatens to make pro bono work mandatory, seemingly noting the same concern. But what happens to attorneys who have the chumptzah to threatened the legal status quo in Indiana? Ask Gary Welch, ask Paul Ogden, ask me. Speak truth to power, suffer horrendously accordingly. No wonder Hoosier attorneys who want to keep in good graces merely chase the dollars ... the powers that be have no concerns as to those who are ever for sale to the highest bidder ... for those even willing to compromise for $$$ never allow either justice or constitutionality to cause them to stand up to injustice or unconstitutionality. And the bad apples in the Hoosier barrel, like this one, just keep rotting.

  3. I am one of Steele's victims and was taken for $6,000. I want my money back due to him doing nothing for me. I filed for divorce after a 16 year marriage and lost everything. My kids, my home, cars, money, pension. Every attorney I have talked to is not willing to help me. What can I do? I was told i can file a civil suit but you have to have all of Steelers info that I don't have. Of someone can please help me or tell me what info I need would be great.

  4. It would appear that news breaking on Drudge from the Hoosier state (link below) ties back to this Hoosier story from the beginning of the recent police disrespect period .... MCBA president Cassandra Bentley McNair issued the statement on behalf of the association Dec. 1. The association said it was “saddened and disappointed” by the decision not to indict Ferguson police officer Darren Wilson for shooting Michael Brown. “The MCBA does not believe this was a just outcome to this process, and is disheartened that the system we as lawyers are intended to uphold failed the African-American community in such a way,” the association stated. “This situation is not just about the death of Michael Brown, but the thousands of other African-Americans who are disproportionately targeted and killed by police officers.” http://www.thestarpress.com/story/news/local/2016/07/18/hate-cops-sign-prompts-controversy/87242664/

  5. What form or who do I talk to about a d felony which I hear is classified as a 6 now? Who do I talk to. About to get my degree and I need this to go away it's been over 7 years if that helps.

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