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The Indiana Supreme Court reversed an order from the Benton Circuit Court dismissing a plaintiff’s case regarding a settlement dispute because the party failed to move the case along, Chief Justice Loretta Rush wrote in a June 27 opinion.
The case dates back to 2011 when a court granted judgment in favor of First Merchants Bank, which sold a dairy company’s property after the company defaulted on its note with the bank. A few years prior, the dairy company granted the bank security interest in the property, which included farm products, haylage and corn silage.
Around the time the bank was granted interest, another party, Jeffrey and Kathie Foster (referred to as “Farmers”), were granted security interest in the property’s corn silage, which they had grown and sold to the dairy company.
When the bank sold the haylage and corn silage in 2010, the Farmers received no proceeds. They sued the bank in 2011 for money damages.
For the next three years, the Farmers made little progress in prosecuting their claim until 2014, when they served written discovery requests to the bank. After the bank responded, the case was dormant until 2018, when an attorney for the bank moved to withdraw from the case.
New attorneys entered appearance for the Farmers in 2022, and 10 days before a case-management conference, the bank moved to dismiss the Fosters’ complaint with prejudice for alternative reasons: under Indiana Trial Rule 41(E), which allows a litigant to seek dismissal of a case if a party fails to move the case along, or under “the equitable doctrine of laches,” Justice Rush wrote.
The trial court granted the bank’s motion and dismissed the case with prejudice under Rule 41(E). In doing so, the court found it didn’t need to address the issue of laches.
The Farmers appealed, and the Court of Appeals reversed the trial court’s decision as to Rule 41(E) but affirmed based on laches.
The Farmers then petitioned for transfer, the supreme court granted it, and the Court of Appeals opinion was vacated.
A Rule 41(E) motion can be used only if it’s filed at least 60 days after no action has been taken and before the other party resumes prosecution.
In this case, Rule 41(E) cannot be applied because the Farmers moved for a case management conference before the bank sought dismissal of the case.
“Though it’s true that the Farmers did not prosecute their claim for several years before that request, their inaction does not excuse the Bank from its burden to satisfy Rule 41(E)’s timeliness requirement,” Rush wrote.
The supreme court wrote that the bank’s alternative argument, applying the doctrine of laches because the Farmers “abandoned” their claim, does not work in this case because abandonment is not an explicit element of laches.
In the supreme court, laches has consistently not been used to bar legal relief, which is what the Farmers are seeking in this case, Rush explained. Because the bank did not provide reasoning as to why the supreme court should make an exception, the court will not stray from the precedent laid out in State v. McClaine, 300 N.E.2d 342 (Ind. 1973).
Justices Mark Massa, Christopher Goff and Derek Molter concurred.
Justice Geoffrey Slaughter dissented with a separate opinion, writing that State v. McClaine was wrongly decided and that the court should look at Rule 41(E) as it’s written, not as it’s interpreted in McClaine.
Slaughter said it should be up to the trial court to decide whether to grant a Rule 41(E) motion based on whether a plaintiff is actually pursuing a case diligently.
“Thus, I would overrule McClaine and treat the bank’s motion as timely. Then I would review for an abuse of discretion the trial court’s finding that the plaintiffs failed to show sufficient cause for their failure to prosecute,” Slaughter wrote.
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