August 17, 2019

You Need to Give A Good Reason to Avoid a 41(E) Dismissal; Bank of America, N.A. v. Congress-Jones

Category: Indianapolis Law Club | Author: | Share:

Courts like to clear their dockets, and some can be aggressive in using Trial Rule 41(E) to dismiss cases for failure to prosecute. You can challenge this, but you will be in a much better position if you can give some reason for the delay.

In April 2017, the Bank filed a complaint against Jones for unpaid credit card debt. Jones hired an attorney, who filed an appearance and an answer. The Bank then did nothing to move the case forward for the rest of 2017.

In September 2017, Jones served discovery requests, including requests for admission, on the Bank. The Bank (through an attorney who had not appeared in the case) sent a letter acknowledging receipt, but asserting the Bank was “not obligated to respond due to improper service.” Jones disputed this and asked the Bank for timely responses, but those never came.

The Bank apparently hired a new law firm to take over its collections, but that firm did not appear in the case. Rather, the new firm sent Jones’s counsel an unsigned form letter in December 2017 noting that the Bank may seek a judgment if Jones did not pay the debt.

Jones moved for a Rule 41(E) dismissal, which was served on the lawyer who filed the complaint (who was the only attorney who had entered an appearance of the Bank). Jones did not serve the motion on the firm who sent the unsigned letter. The Bank did not appear at the 41(E) hearing, and case was dismissed with prejudice.

A few days later, a lawyer from the new firm entered an appearance and moved to set aside the dismissal. The trial court denied the motion, and the Bank appealed.

Jones did not file an appellee’s brief, so the Court could have reversed if it found prima facie error. But it did not see any error in this case.

In this case, the Bank filed suit on April 17, 2017, and filed nothing else on the docket until after the trial court issued its dismissal order on February 16, 2018, a lengthy delay of ten months. Further, there is no evidence the Bank took any informal steps to move the case forward. … [I]t is unclear why attorney Gerald Bowman of the law firm Blatt Hasenmiller, located in Merrillville, Lake County, Indiana, took no action on the case for ten months. … At some point, the Bank hired Lloyd & McDaniel to represent it in some capacity, but there is insufficient evidence in the record to demonstrate: (1) when, if ever, Blatt Hasenmiller dissolved and/or withdrew representation of the Bank in this case; (2) when and how Blatt Hasenmiller informed the Bank and Jones of its nonrepresentation in the case; and (3) when the Bank hired Lloyd & McDaniel to represent it in the instant pending lawsuit; and (4) why an attorney from Lloyd & McDaniel delayed entering an appearance in this pending lawsuit until February of 2018. None of the delay can be attributed to Jones or reflected on her.

The Bank’s letter from its new counsel did not change this.

The December 21, 2017 unsigned form letter did not reference the pending lawsuit at all, much less express a willingness to move forward with it. Instead, the letter merely discussed Jones’ debt in general terms and indicated the Bank might seek a judgment against her if payment was not forthcoming. … In addition, the Bank did not follow up the form letter with any other action, such as making personal contact with Jones’ counsel or having one of its attorneys file an appearance in this matter with the trial court. It is inconceivable that another law firm assuming representation for the Bank would wait several months before entering an appearance in this pending lawsuit.

These facts showed that “the Bank was simply not diligent in this action beforehand and was stirred into action only after the case was dismissed with prejudice.” The trial court did not abuse its discretion when dismissing the action.

And it appears that the Bank made a fatal litigation error when moving to set aside the judgment. It argued that the admissions were an unfair “gotcha” device, but did not put any facts on this issue in the record.

We do not know if Jones objected to the Bank’s demands for payment prior to filing suit. Further, because the Bank has not included Jones’ answer in the record, we do not know whether Jones denied or disputed the account balance after the suit was filed. Based on this incomplete record, it cannot be determined whether Jones’ discovery requests were improper.

Moreover, the Bank’s failure to respond to the requests for admission “was merely one factor in the Bank’s inactivity in this case.” The Court was not inclined to give the Bank a second bite at the apple.

Lessons:

  1. A plaintiff who fails to give a good reason for a delay in moving a case forward will likely have their case dismissed.
  2. Such a reason must be based on evidence in the record, rather than merely on argument.