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An Elkhart-based company failed to act within the time permitted under Indiana Trial Rule 60(B) and was not entitled to a trial court’s reinstatement of a declaratory judgement action, the Court of Appeals of Indiana ruled Monday in a reversal.
According to court records, NIBCO filed an action in 2017 against 22 of its commercial insurers seeking a declaration regarding coverage issued in connection with two underlying class actions against NIBCO for product liability related to NIBCO’s PEX 1006 plumbing components.
Following mediation, the majority of the insurance company defendants reached agreements with NIBCO and were dismissed from this action in June 2019 and April 2020.
The six defendants that remained in the action are Starr Indemnity & Liability Company, Starr Surplus Lines Insurance Company, Liberty Mutual Fire Insurance Company, The Ohio Casualty Insurance Company, Mt. Hawley Insurance Company, and National Fire & Marine Insurance Company.
On Feb. 8, 2021, Judge Christopher Spataro, sua sponte, issued an order for hearing for the purpose of dismissing the case pursuant to Indiana Trial Rule 41(E).
In that order, the Elkhart Superior Court scheduled the T.R. 41(E) hearing for March 19. and directed that an order of dismissal would be entered if “the plaintiff shall not show sufficient cause why this case should not be dismissed at or before such hearing.”
NIBCO did not attempt to show cause why the case should not be dismissed and did not appear on the date of the hearing or seek to have the hearing rescheduled.
The trial court dismissed the case with prejudice under T.R. 41(E).
On Dec. 7, 2022, more than 20 months after the dismissal, NIBCO filed a motion for relief from judgment seeking reinstatement of its action against insurers under Indiana Trial Rule 60(B)(8).
NIBCO argued that “equitable considerations” weighed in favor of granting relief, including that the hearing and dismissal orders had been sent only to one attorney of record, there was no evidence that a T.R. 41(E) hearing had been held, NIBCO had a good-faith belief that the case was still active, insurers would not be prejudiced by reinstatement of the action and that Indiana had a strong preference for deciding cases on the merits.
NIBCO claimed that it did not become “actually aware” of the dismissal until Nov. 21, 2022, when counsel for Starr Indemnity & Liability Company and Starr Surplus Lines Insurance Company referenced the dismissal during an update call.
In a reservation of rights letter to coverage counsel dated June 6, 2022, however, Starr’s counsel had already expressly noted the dismissal. And a reservation of rights letter from another insurer, sent on July 12, 2022, similarly referenced the dismissal order.
The insurers opposed NIBCO’s request for relief from judgment and argued that NIBCO had not satisfied the requirements of T.R. 60(B)(8).
The insurers claimed, among other things, that NIBCO failed to show circumstances beyond simple neglect/mistake by attorney John Conway, who was served with the hearing order and the dismissal order on behalf of NIBCO, that NIBCO failed to establish exceptional circumstances warranting relief and that NIBCO failed to seek relief from judgment within a reasonable time.
Despite expressly concluding that NIBCO was not entitled to relief under T.R. 60(B)(8), the trial court determined that it was required to reinstate the case because the scheduled T.R. 41(E) hearing had not actually been held.
The insurers filed a motion to correct error in which they argued that T.R. 41(E)’s hearing requirement was satisfied because “[a] hearing was set, scheduled, notice was provided, and NIBCO did not attend or respond in any way, despite having a full and fair opportunity to do so.”
In denying the insurers’ motion to correct error, the trial court clarified that it did not reinstate the case because NIBCO failed to respond or appear at a duly noticed hearing but because of the court’s own failure to conduct a hearing.
The Court of Appeals of Indiana reversed, finding relief from the judgment of dismissal was available to NIBCO only under T.R. 60(B) and because it failed to act within the time permitted by the rule, NIBCO was not entitled to reinstatement.
Chief Judge Robert Altice wrote the opinion for the appellate court.
According to Altice, NIBCO missed the opportunity to file an appeal from the judgment of dismissal.
“Thus, pursuant to T.R. 41(F), its only recourse was to seek reinstatement of the declaratory judgment action via T.R. 60(B),” Altice wrote.
Altice further wrote that, due to the belated filing of its T.R. 60(B) motion twenty months after the dismissal, NIBCO’s options were even more limited, which was reflected by the fact that NIBCO sought reinstatement only pursuant to T.R. 60(B)(8).
The chief judge noted that the trial court expressly determined that NIBCO was not entitled to relief under T.R. 60(B)(8) because NIBCO did not seek relief within a reasonable time and NIBCO had not shown exceptional circumstances justifying relief.
“Despite clearly and definitively rejecting reinstatement on T.R. 60(B) grounds, the trial court reinstated the action only because it had not held a T.R. 41(E) hearing,” Altice wrote. “In essence, the trial court applied a per se rule of reinstatement making dismissals subject to reinstatement indefinitely – that is, beyond a reasonable time – in any case where the trial court failed to hold a T.R. 41(E) hearing. This was clearly erroneous.”
Judges Leanna Weissmann and Dana Kenworthy concurred in Starr Indemnity & Liability Co., et. al. v. NIBCO Inc., 23A-PL-1343.
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