Default judgments and the crucial role of proper notice in legal proceedings were recently examined in the case of Milestone Contractors North, Inc. v. ReEnergize USA, LLC, No. 23A-CT-1607 (Ind. App. 2023), where the Indiana appellate court considered the obligation to communicate with the opposing party’s counsel before pursuing default judgement and the criteria for granting relief under Indiana Trial Rule 60(B)(3).
In December 2021, Milestone Contractors North, Inc. (Milestone) filed a complaint against ReEnergize USA, LLC (ReEnergize), asserting a written agreement for re-grading work and alleging non-payment by ReEnergize after completing the first phase of work. Milestone properly served ReEnergize and obtained a default judgment in December 2022, after ReEnergize failed to respond. On April 10, 2023, ReEnergize filed a motion for relief from judgment under various sections of Ind. T.R. 60(B).
Under T.R. 60(B)(3), the court may grant relief from a judgment, including a default judgment, for reasons such as “fraud, misrepresentation, or misconduct of an adverse party.” ReEnergize contended that Milestone had engaged in “gamesmanship” prohibited by the rule and relied on the Indiana Supreme Court’s decision in Smith v. Johnson, 711 N.E.2d 1259 (Ind. 1999). Smith involved a medical malpractice claim where a default judgment was obtained without notifying the opposing attorney after the parties had communications relating to a settlement. Smith established that “[a] default judgment is appropriate only where a party has not appeared in person or by counsel and, if there is a lawyer known to represent the opposing party in the matter, counsel had made reasonable effort to contact that lawyer.”
Milestone argued that ReEnergize failed to sufficiently establish misconduct justifying relief under T.R. 60(B)(3), emphasizing distinctions from Smith. Milestone asserted that there were no pre-suit dealings indicative of ReEnergize’s representation, no prior contact with any attorney claiming to represent ReEnergize before the lawsuit, and highlighted that ReEnergize’s representative, Mr. Ding, held an executive role rather than being an attorney.
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The appellate court reversed the trial court’s order granting ReEnergize’s motion for relief from judgment, finding Milestone had shown a prima facie error, and ReEnergize failed to prove misconduct by Milestone’s counsel justifying relief under T.R. 60(B)(3). The court drew on various legal precedents where it was established that in cases where the plaintiff’s attorney lacks clear knowledge of the defendant’s legal representation, there is no duty to provide notice before seeking default judgment. The court highlighted that the requirement is negated, emphasizing that relief under T.R. 60(B)(3) is typically warranted only when there is clear knowledge on part of the plaintiff’s counsel that the opposing party is already represented by an attorney. The court emphasized that ReEnergize did not assert prior representation or false representation by Milestone, and the duty to contact Mr. Ding applied only with clear knowledge of representation.
This case clarifies the duty established in Smith, highlighting that relief is not warranted solely based on a lack of notice before seeking default judgment; it requires a demonstration of clear misconduct or misrepresentation by the party obtaining judgment.