Default judgment upheld in Steuben Co. property dispute

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A group of Steuben County residents seeking to overturn default judgment in a lakefront property dispute failed in their bid to convince the Court of Appeals to allow them to intervene or to order the trial court to set aside the default judgment.

In 1922, Bert Sprague and Frank Gilbert purchased land on Lake George Beach in Fremont. The land was subdivided and sold over the years, with appellee-plaintiff Eileen V. Koltz purchasing a section of the land in 1999.

Koltz’s property included an easement to the west, in which she acquired partial ownership in 2004. Prior to April 2014, other portions of the easement were owned by appellants-intervenors Phillip S. Sprague, Jane Marie Meives and Ruth Anne Gregory.

In April 2014, Koltz filed a complaint to quiet title to real estate, claiming ownership of land commonly identified as “Survey Legal Tract A.” The sections comprising that tract were encumbered either entirely or in part by the easement.

An affidavit filed with the complaint noted all the defendants were deceased but that Koltz had “made a diligent search to locate the children and grandchildren … but [was] unsuccessful … .” Service by publication was made in a local newspaper, including a deadline to respond to the complaint.

No response was filed within 30 days of the third newspaper publication, so the Steuben Circuit Court entered a default judgment in February 2015. Koltz recorded the judgment with the Steuben County recorder the next month.

More than three years later in December 2018, appellant-intervenor Kay E. Morken purchased the real estate. Numerous parties including Gregory, Meives and Sprague conveyed their interest in the property to Morken.

Then in November 2021, the appellants moved to intervene and to set aside and vacate the default judgment, arguing in part that Koltz had not made reasonable efforts to identify and name the proper defendants.

The trial court denied both motions on Feb. 28, 2022, finding the notice by publication was sufficient. Koltz’s counsel was served with the judgment on March 1, 2022, but the appellants’ counsel was not served until April 14.

The appellants filed a motion to appeal on May 13, and Koltz filed a motion to dismiss the appeal as untimely. A motions panel of the Court of Appeals denied the motion to dismiss under Appellate Rule 1 and granted the appellants an extension to initiate the appeal.

“Here, in light of the Clerk’s belated service of the trial court’s Order on Appellants — but not on Koltz — and our court’s preference for deciding cases on their merits by giving a party its day in court rather than dismissing them on procedural grounds, we cannot say that our motions panel erred by reinstating Appellants’ otherwise forfeited appeal based on Appellate Rule 1,” Judge Patricia Riley wrote in a Tuesday opinion.

However, on the merits, the COA affirmed the denial of the appellants’ motions to intervene and to set aside the default judgment.

Looking first at the motion to intervene, the appellate court noted Sprague, Gregory and Meivis conveyed their interest in the property to Morken after the default judgment was recorded but before the motion to intervene was filed.

“As such,” Riley wrote, “at the moment they sought intervention in these proceedings, Sprague, Gregory, and Meivis no longer possessed an interest in the Property that was legally protectable.”

Although Morken did have an interest in the property when the motion to intervene was filed, the COA agreed with the trial court that the November 2021 motion was untimely.

“Even if Appellants’ motion to intervene was granted or if they, together or individually, could proceed directly with the motion to set aside default judgment without having to intervene first, we would still affirm the trial court’s denial of the motion to set aside the default judgment,” Riley continued, rejecting the appellants’ reliance on Indiana Trial Rules 60(B)(6) and (8).

The case is Ruth Anne Gregory, Jane Marie Meives, Kay E. Morken and Phillip S. Sprague v. Eileen V. Kotz, 22A-MI-1106.

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