Appellate court reverses order vacating default judgment nearly 10 years later

The Indiana Court of Appeals has reversed a trial court’s order vacating a nearly decade-old default judgment in a debt collection dispute, finding the debtor’s delay in bringing his fraud allegation was not reasonable.

In 2010, Fred Knight began a decade-long back and forth with a debt collection agency over tens of thousands of dollars he allegedly failed to pay.

Specifically, RAB Performance Recoveries LLC filed a complaint against Knight for the principal sum of $49,482.58 on an unpaid Chase Bank balance. Although Knight was served with a summons and complaint, he failed to answer, prompting an entry of default judgment to RAB in 2012.

Proceedings supplemental were started to collect on the outstanding judgment and a garnishment order was entered, which in turn withheld funds from Knight’s wages and was distributed to RAB. Funds continued to be withheld until January 2013, when Knight’s employer responded that Knight was no longer its employee. RAB commenced garnishment proceedings at Knight’s new employer in 2019, which he objected to.

Knight then filed a motion to vacate the 2012 default judgment, which the Vigo Superior Court granted after Knight’s counsel, without submitting any supporting evidence, asserted the debt was not Knight’s but rather was the result of “fraud perpetrated by an ex-wife.”

The Indiana Court of Appeals shook its head at that decision in a Friday reversal, finding that Knight failed to carry his burden of proving fraud as an independent action.

“Despite Knight’s premise of fraud committed by an ex-wife, he failed to submit any evidence to support this allegation made by his counsel during the hearing. He did not bring forward evidence, whether in the form of perjured testimony under oath in open court or in a pleading or affidavit, necessary to support a claim for extrinsic fraud, and neither did he allude to an unconscionable plan or scheme to influence the court’s decision in entering a default judgment necessary to proceed for fraud on the court,” Judge Patricia Riley wrote for the appellate panel.

Even if it analyzed Knight’s allegation pursuant to the catchall provision of Trial Rule 60(B), the panel said his cause would still fail.

“Even though he now claims that he was a road truck driver whose paycheck was ‘all over the board,’ and thus he was unaware of the garnishment, he does not dispute that the Complaint was properly filed and served,” Riley wrote. “We cannot say that Knight’s delay in bringing this fraud allegation before the court more than eight years later and after a second garnishment proceeding was commenced is reasonable or falls within exceptional circumstances.”

Thus, the panel concluded the trial court abused its discretion in vacating the default judgment and reversed that order in RAB Performance Recoveries, LLC v. Fred E. Knight a/k/a Fred E. Knight, Sr., 21A-CC-342.