Default judgment for buyers reversed in suit against car dealer

The Indiana Court of Appeals reversed a trial court’s denial of a car dealership’s motion to set aside a default judgment for two customers when it found a dealership employee was given incorrect information about his need for representation during a hearing.

In May 2017, Celeste Smith and Byron Swain purchased a BMW from David Amadio of Southside Automotive of Anderson. After three months of repairs at the dealership after Swain and Smith experienced intial troubles with the car, they said the car nearly caught on fire.

Smith and Swain filed a small claims suit against Southside and Amadio in September 2017, arguing that they sold a car they falsely claimed to be in “mint condition,”; that it took Southside and Amadio almost three months to make repairs; that Smith and Swain were without a vehicle for that entire time; and that even after making repairs, the car continued to malfunction.

Smith and Swain sought $6,700 in damages and $107 in court costs. Southside and Amadio filed a counterclaim denying the allegations and argued that Swain and Smith had failed to pay the remaining purchase price of the vehicle.  During a hearing, Southside failed to appear, and Amadio, pro se, attempted to speak on behalf of Southside.

The trial court admonished Amadio and ultimately entered a default judgment against both Southside and Amadio in favor of Smith and Swain, awarding them $6,000, the maximum amount permissible under small claims jurisdiction.

Southside and Amadio filed a motion to correct errors and set aside the entry of default judgment, but the trial court denied their motion.

On appeal, the defendants argue that the trial court erred and that default judgment should have been set aside because it was based on Amadio’s mistake. Before the hearing, Amadio was informed by the court reporter that he would not need to worry about obtaining legal counsel for the hearing and that he would be informed if needed representation.

“In our view, Amadio reasonably relied on the information provided by the court reporter and appeared at the hearing, with a mistaken but understandable belief that he could speak on behalf of himself and the company he heads,” Judge John Baker wrote for the court.

“When the trial court realized what had happened, it should have continued the hearing so that Southside could retain counsel,” Baker continued.  “Instead, it refused to do so and dramatically restricted what Amadio could and could not say during the hearing, thereby affecting the rights of both Southside and Amadio. Under these circumstances, the trial court erred by denying Southside’s motion to set aside the default judgment based on mistake.”

The case of Southside Automotive of Anderson, Inc., and David Amadio v. Celeste Smith and Byron Swain,18A-SC-471 was thus reversed and remanded for further proceedings.