ATTORNEY FOR APPELLANT:
MICHAEL H. MICHMERHUIZEN
Barrett & McNagny
Fort Wayne, Indiana
IN THE COURT OF APPEALS OF INDIANA
PROGRESSIVE INSURANCE CO., ) ) Appellant-Plaintiff, ) ) vs. ) No. 35A05-0204-CV-185 ) NORMAN HARGER, ) ) Appellee-Defendant. )The Honorable Jeffrey R. Heffelfinger, Judge Cause No. 35D01-9911-CP-220
APPEAL FROM THE HUNTINGTON SUPERIOR COURT
October 25, 2002
OPINION - FOR PUBLICATION
Whether the trial court erred when it found that Harger was entitled to
coverage under the terms of the Progressive insurance policy.
The facts most favorable to the trial courts decision follow. Progressive issued a policy of automobile insurance to Harger. Harger was an assistant manager with Papa Johns restaurant and was paid a salary for his work. Employees are paid sixty cents per run when delivering pizzas. However, sometimes the managers do not take the per run fee for delivering pizzas. On September 21, 1995, Harger was driving his insured vehicle to deliver pizzas. While delivering pizzas, Harger was involved in an accident with a vehicle driven by Sabrina Kruse. Progressive paid $49,000.00 to settle claims arising from the accident.
On November 29, 1999, Progressive filed a complaint against Harger. The complaint alleged, in part, that:
On or about September 21, 1995, [Harger] used the insured vehicle to carry property, namely pizza, for a fee.
[Hargers] behavior and usage of the insured vehicle excluded him from liability coverage
pursuant to the terms of the policy.
On or about September 21, 1995, [Harger] was involved in an automobile accident
in Ft. Wayne, Huntington County [sic], Indiana.
Pursuant to the insurance policy, [Progressive] was forced to pay $49,000.00 for damages
incurred as a result of the automobile accident.
Pursuant to the insurance policy issued in favor of [Harger], [Harger] agreed to
reimburse [Progressive] for any payments made as a result of the issuance and
certification of the policy.
Demand has been made upon [Harger] to reimburse [Progressive] for the amounts paid,
but [Harger] has failed and refused to do so.
As a result of the payments made on behalf of [Harger], [Progressive] has
suffered unconscionable loss.
[Harger] has been unjustly enriched.
Appellants Appendix at 30-31.
Harger failed to respond to Progressives complaint, and Progressive filed a motion for default judgment under Ind. Trial Rule 55. The trial court set the matter for hearing and required Progressive to present a factual basis to establish liability and evidence pertaining to damages. Appellants Appendix at 2. After a hearing, the trial court issued the following order:
The Court having taken [Progressives] Motion for Default Judgment under advisement, the Court now finds that although [Harger] has failed to appear or otherwise defend this law suit and has hereby defaulted, nevertheless [Harger] was covered under the terms of the insurance contract between [Progressive] and [Harger].
The Court notes that there are conflicting provisions contained in the insurance contract
between [Progressive] and [Harger].
Paragraph 6 set forth on page 6 states that;
Bodily injury or property damage arising out of the ownership, maintenance or use of any vehicle, except a private passenger car, by you while employed or otherwise engaged in a business.
Paragraph 1 on page 11 sets forth the following exclusion:
To your insured car while used to carry persons or property for a
fee. This exclusion does not [apply] to shared expense carpools whose members
are on the way to or from the same place of employment.
The Court finds that [Harger] was delivering a pizza for his place of
employment. The Court further finds that [Harger] was using his private passenger
car when he was involved in the accident for which [Progressive] seeks to
recover expenses from. Although [Progressive] established that [Harger] was delivering a pizza
for his place of employment, [Progressive] did not establish that he was paid
a separate fee or anything other than his normal wages for such delivery.
Standard rules of construction require that conflicting provisions of the contract be construed
against the party preparing the contract. The Court therefore finds [Harger] was
covered by the contract between [Progressive] and [Harger] pursuant to the terms contained
in paragraph 6.
The Court finds that although [Harger] is defaulted, [Progressive] takes nothing by way
of [its] complaint.
Appellants Appendix at 4-5.
Our standard of review in the area of default judgments is limited. Siebert Oxidermo, Inc. v. Shields, 446 N.E.2d 332, 340 (Ind. 1983). The decision to grant or deny a motion for default judgment is within the trial courts discretion. R.R. Donnelley & Sons Co. v. N. Tex. Steel Co., Inc., 752 N.E.2d 112, 126 (Ind. Ct. App. 2001), rehg denied, trans. denied. We reverse only if the trial courts decision is clearly against the logic and effect of the facts and circumstances. Id. The trial courts discretion in granting or denying a motion for default judgment is considerable. Green v. Karol, 168 Ind. App. 467, 473, 344 N.E.2d 106, 110 (Ind. Ct. App. 1976). The trial court should use its discretion to do what is just in light of the unique facts of each case. Allstate Ins. Co. v. Watson, 747 N.E.2d 545, 547 (Ind. 2001) (quoting In re Ransom, 531 N.E.2d 1171, 1172 (Ind. 1988)).
The trial courts discretion should be exercised in light of the disfavor in which default judgments are held. Watson, 747 N.E.2d at 547. [A] default judgment is not generally favored, and any doubt of its propriety must be resolved in favor of the defaulted party. Id. (quoting Green, 168 Ind. App. at 474, 344 N.E.2d at 111). It is an extreme remedy and is available only where that party fails to defend or prosecute a suit. It is not a trap to be set by counsel to catch unsuspecting litigants. Watson, 747 N.E.2d at 547.
On the one hand, a default judgment plays an important role in the maintenance of an orderly, efficient judicial system as a weapon for enforcing compliance with the rules of procedure and for facilitating the speedy determination of litigation. On the other hand, there is a marked judicial preference for deciding disputes on their merits and for giving parties their day in court, especially in cases involving material issues of fact, substantial amounts of money, or weighty policy determinations. The trial court, in its discretion, must balance these factors in light of the circumstances of each case.
Green, 168 Ind. App. at 473, 344 N.E.2d at 110 (footnotes omitted)
(B) Default judgment. In all cases the party entitled to a judgment
by default shall apply to the court therefor; but no judgment by default
shall be entered against a person known to be an infant or incompetent
unless represented in the action by a general guardian, committee, conservator, or other
such representative who has appeared therein. If the party against whom judgment
by default is sought has appeared in the action, he (or, if appearing
by a representative, his representative) shall be served with written notice of the
application for judgment at least three  days prior to the hearing on
such application. If, in order to enable the court to enter judgment
or to carry it into effect, it is necessary to take an account
or to determine the amount of damages or to establish the truth of
any averment by evidence or to make an investigation of any other matter,
the court may conduct such hearing or order such references as it deems
necessary and proper and shall accord a right of trial by jury to
the parties when and as required.
Where a defendant fails to answer a complaint, even though there is a technical default, the nondefaulting party is not entitled to a judgment by default as a matter of right. Green, 168 Ind. App. at 473, 344 N.E.2d at 110; see also Teegardin v. Mavers, Inc., 622 N.E.2d 530, 532 (Ind. Ct. App. 1993).
Our supreme court addressed a similar default judgment issue in Shoulders v. State, 462 N.E.2d 1034 (Ind. 1984). In Shoulders, the defendant was convicted of murder and sought post-conviction relief, arguing that that he was not notified of his arrest, that newly discovered evidence existed, and that he was denied adequate assistance of counsel. Id. at 1035. He alleged he was detained from November 3, 1968, through December 9, 1968, without an arrest warrant or any court appearance. Id. He also alleged his trial attorney never presented evidence in his defense, but instead sat and watched the jury find petitioner guilty. Id. at 1035-1036. The post-conviction court defaulted the State for failure to file a timely answer to the defendants petition for post-conviction relief. Id. at 1035. However, the post-conviction court held a hearing on the merits of the petition and denied the defendants petition for post-conviction relief. Id.
Our supreme court noted that [t]he effect of the default judgment is that the facts as alleged in the petition are deemed admitted. However, the court must determine whether as a matter of law the facts as alleged in the petition entitle the petitioner to relief. Id. Relying upon Ind. Trial Rule 55(B), the supreme court noted that even though a default had been granted, the post-conviction court could conduct a hearing to enable it to enter a judgment. Id.
Our supreme court affirmed the denial of the defendants petition for post-conviction relief and held as follows:
The facts as alleged clearly raise issues of material fact, and are conclusory as to questions of law. We find no abuse of the post-conviction courts discretion in conducting an evidentiary hearing when confronted with the facts alleged by appellant. We further find that the court did not err in finding that appellant did not sustain his burden of proof. As discussed infra, entering of the default did not summarily dispose of the petition in appellants favor. Appellants argument that he had met his burden of proof, because the facts as alleged were deemed admitted, is without merit.
Id. at 1036. Thus, even though the State defaulted, the defendant was
not entitled to a default judgment.
Similarly, here, Harger failed to appear and file an answer to Progressives complaint and, thus, defaulted. However, Progressive was not automatically entitled to default judgment. Rather, Ind. Trial Rule 55(B) specifically permitted the trial court to conduct a hearing to establish the truth of any averment by evidence or to make an investigation of any other matter. Thus, the trial court was within its discretion to order Progressive to present a factual basis to establish liability. Appellants Appendix at 2. Furthermore, the trial court was within its discretion to make findings contrary to the allegations of Progressives complaint.See footnote See, e.g., Shoulders, 462 N.E.2d at 1036. While default may allow for expedited entry of judgment, it is not its purpose to facilitate a judgment that would be based upon untrue allegations of fact or contrary to law. It is not an abuse of discretion to put a party to its proof, default notwithstanding, as the trial court did here with notice to Progressive that it would be required to present a factual basis to establish liability.
Appellants Appendix at 36 (emphasis in original). However, the policy excludes liability
Bodily injury or property damage arising out of the ownership, maintenance or use of a vehicle when used to carry person(s) or property for a fee. This exclusion does not apply to shared-expense car pools whose members are on the way to or from the same place of employment.
Appellants Appendix at 36-37 (emphasis in original). The policy defines private passenger
car as a four-wheeled car of the private passenger type. Id. at
Here, Progressive presented evidence that Harger was an assistant manager with Papa Johns restaurant and was paid a salary for his work. While employees are generally paid sixty cents per run when delivering pizzas, managers do not always take the per run fee for delivering pizzas. See footnote
Under these circumstances, the policy is not susceptible to more than one interpretation and reasonably intelligent persons would not differ as to its meaning. While exclusion number six excludes coverage for the use of a vehicle by the insured while employed or otherwise engaged in a business, the exclusion expressly does not apply to a private passenger car. There is no dispute that Harger was driving his personal vehicle at the time of the accident. Similarly, there is no dispute that Hargers personal vehicle was a four-wheeled car of the private passenger type. Appellants Appendix at 34. Thus, Harger was driving a private passenger car and exclusion number six is inapplicable. See footnote
Exclusion number one applies to certain damages arising out of the ownership, maintenance or use of a vehicle when used to carry person(s) or property for a fee. Appellants Appendix at 36. Progressive argues that, given Hargers failure to respond, it did not have the burden of establishing the existence of a separate fee. However, as discussed supra, Ind. Trial Rule 55(B) specifically permits a trial court to conduct a hearing to establish the truth of any averment by evidence or to make an investigation of any other matter. Thus, the trial court was permitted to conduct a hearing on Progressives claims and Progressive had the burden of establishing the truth of its averments by presenting evidence.
The trial court held that although Progressive established that Harger was delivering a pizza for his place of employment, Progressive did not establish that Harger was paid a separate fee or anything other than his normal wages for such delivery. Id. at 4-5. We agree. The evidence presented by Progressive did not demonstrate that Harger was paid a separate fee for the pizza delivery at issue. Thus, exclusion number one is also inapplicable.
Both of the exclusions that Progressive claimed prevented coverage under the policy issued to Harger are inapplicable. Thus, Harger was entitled to coverage under the policy. Associated Aviation Underwriters v. George Koch Sons, Inc., 712 N.E.2d 1071, 1076 (Ind. Ct. App. 1999) (holding that an exclusion was inapplicable and the trial courts judgment that the insured was entitled to insurance coverage was not clearly erroneous), trans. denied.
For the foregoing reasons, we affirm the judgment of the trial court.
FRIEDLANDER, J., and NAJAM, J. concur
OK . . . they pay you 60 cents per run to deliver
It depends on if we take it or not. Sometimes, being a manager, we dont take it. All we do is, like on a free pizza, we just go and drop off the pizza. That way theres no money taken and that helps run our cost better also.
OK. But youre on salary in addition to that?
Appellants Appendix at 28. Thus, the evidence demonstrated that while employees were
generally paid sixty cents per run to deliver pizzas, sometimes the managers did
not take the per run fee. No evidence was presented that Harger
took the per run fee for the pizza delivery in question.