Divided panel reverses default judgment against bank

Dave Stafford for www.theindianalawyer.com

The bank that promises customers 24-hour grace overdraft protection received more than 20 days grace in an Indiana Court of Appeals ruling Tuesday.

A divided appeals panel reversed default judgment a trial court entered against Huntington National Bank in a mortgage foreclosure case. The majority held the bank’s failure to timely respond to a lawsuit from another creditor was excusable neglect because the person who normally handled court notices was on maternity leave.

Huntington 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 earlier this year sued to foreclose a judgment lien in the amount of $200,359.90 plus fees and costs.

The trial court granted default judgment against Huntington in favor of Car-X after Huntington didn’t file a responsive pleading within the timeframe established under Trial Rule 6(E). The court later denied Huntington’s motion to set aside the default judgment.

“Finding that Huntington has established that it was entitled to relief from the default judgment by demonstrating excusable neglect and a meritorious defense, we conclude the trial court abused its discretion in denying Huntington’s Trial Rule 60(B)(1) motion to set aside the default judgment,” Judge Elaine Brown wrote for the majority joined by Judge Cale Bradford.

Dissenting Judge Michael Barnes wrote that he understood the majority’s reasoning but disagreed with it.

“One employee’s maternity leave is not such a circumstance and should not be used as an excuse for delaying judicial proceedings beyond the clear deadlines set by our Trial Rules, especially where a large and sophisticated party such as Huntington is concerned,” Barnes wrote. “I would defer to the trial court’s exercise of its discretion in this matter, and I vote to affirm its denial of Huntington’s motion for relief from judgment.”

The case is The Huntington National Bank v. Car-X Associates Corp., 64A04-1405-MF-227.