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Maternity leave not excusable neglect for bank, but remand ordered

August 24, 2015

Huntington Bank failed to convince the Indiana Supreme Court that an overlooked notice in a mortgage foreclosure case was excusable neglect because the person who normally handled such notices was on maternity leave. But the Indiana Supreme Court did send the matter back to the trial court for a determination of whether relief could be granted on any other basis.

The bank held a first mortgage on property in Porter County owned by Susanne and Terry Wood. That loan was made in 2005 in an original principal amount of $310,500. Car-X Associates Corp. also had an interest in the property and in 2014 sued to foreclose a judgment lien in the amount of $200,359.90 plus fees and costs.

A Porter County trial court granted default judgment against Huntington in favor of Car-X after Huntington didn’t file a responsive pleading within the required timeframe, and the court denied Huntington’s motion to set aside the default judgment. A divided Court of Appeals panel reversed. The bank’s reply was more than 20 days late.

The Indiana Supreme Court on Friday ruled that Huntington’s delay in responding to a pleading wasn’t execusable neglect under Trial Rule 60(B)(1), affirming the trial court on that ground, but remanded the matter for further proceedings.

"(T)here is still the question of whether the denial of Huntington’s motion was just and equitable under the circumstances. To best answer this question, we remand this case to the trial court to reevaluate the motion under Trial Rule 60(B)(8), especially in light of Huntington’s meritorious defense to the underlying foreclosure suit (as Car-X concedes), the substantial amount of money involved, and Car-X’s lack of prejudice from the delay, among other considerations,” Justice Steven David wrote in an opinion joined by all justices except Robert Rucker, who concurred in result without a separate opinion.

David also used the opinion to encourage civility and remind litigants that a telephone call between opposing counsel could have resolved the issue and better served the profession. David wrote, “attorneys would be well advised to remember that the procedural rules are not intended to be used as swords to obtain judgments. Our profession deserves better.

“Though trial courts may continue to grant default judgments where a party undoubtedly fails to defend or prosecute a lawsuit, we strongly urge attorneys not to resort to seeking such a measure unless and until no other method would move the case forward.”

 

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