Indiana Court of Appeals Reverses Rule 41(E) Dismissal for Suspended Lawyer’s Failure to Timely Serve Defendant

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by: Colin E. Flora

     Despite the often-stated line that pro se litigants are held to the same standard as practicing lawyers, the simple fact is that in many instances, they are not. As the Indiana Supreme Court recognized in Zavodnik v. Harper: “[T]he system actually imposes more restrictions on represented parties, at least indirectly through regulation of their attorneys.” Numerous other instances can be found in Indiana caselaw of courts signaling that more leeway is afforded to unrepresented parties than those with lawyers. Today, we discuss an extremely rare instance of the pendulum swinging the other way.

     While there are obvious advantages to having a competent advocate arguing on your behalf, there is always a danger of an incompetent advocate. Even aside from the potential to lose an otherwise winnable case or to obtain a less favorable result, there is a rather harsh rule on the books that imputes a lawyer’s negligence to his or her client. The exceptions to imputation are few and far between. In Rose v. Rose, the Court of Appeals set aside a default judgment, finding: “In a case such as this, where the uncontradicated evidence discloses that the client exercised diligence but whose rights were forfeited by attorney misconduct, the latter’s negligence should not be imputed to the client.”

     Today, we look to a new case from the Court of Appeals that chose to do substantial justice for the client despite the mistake of his attorney. The issue in Petrovski v. Neiswinger was that Mr. Petrvoski was in a car accident and hired a lawyer to seek compensation for his injuries. Despite apparently hiring the lawyer within two weeks of the accident, the case was not filed until the day before the two-year anniversary of the accident, which is the deadline for the applicable statute of limitations. The case was timely filed and service was attempted on the defendant by certified mail several days later. Two and a half weeks later, the mailing was returned as undeliverable. No further attempts at service were tried by the attorney.

     Sixteen months after the case was filed, but still not served, the lawyer was suspended from the practice of law by the Indiana Supreme Court. After finding out about the suspension–four months later–the client hired a new lawyer, who filed an appearance. Presumably, the new lawyer contacted the defendant’s insurance company, because a lawyer appeared for the defendant a few days after Mr. Petrovski’s new lawyer filed his appearance and then moved for dismissal of the case pursuant to Trial Rule 41(E) for failure to prosecute. Three weeks later, service was final completed on the defendant. In light of the fact that it had taken twenty-two months, the trial court granted the dismissal. Although the dismissal was without prejudice, the fact that the statute of limitations had already expired meant that he could not refile his case. So Mr. Petrovski appealed.

     Fortunately for Mr. Petrovski, the Court of Appeals agreed that his case should not have been dismissed.

     The first step of the analysis was to look to Rule 41(E) and its purpose. The Court wrote:

Trial Rule 41(E) provides in pertinent part:

[W]hen no action has been taken in a civil case for a period of sixty [60] days, the court, on motion of a party or on its own motion shall order a hearing for the purpose of dismissing such case. The court shall enter an order of dismissal at plaintiff's costs if the plaintiff shall not show sufficient cause at or before such hearing.

“The purpose of this rule is to ensure that plaintiffs will diligently pursue their claims. The rule provides an enforcement mechanism whereby a defendant, or the court, can force a recalcitrant plaintiff to push his case to resolution.”

     In assessing a Rule 41(E) motion, Indiana courts apply a nine-factor test: “(1) the length of the delay; (2) the reason for the delay; (3) the degree of personal responsibility on the part of the plaintiff; (4) the degree to which the plaintiff will be charged for the acts of his attorney; (5) the amount of prejudice to the defendant caused by the delay; (6) the presence or absence of a lengthy history of having deliberately proceeded in a dilatory fashion; (7) the existence and effectiveness of sanctions less drastic than dismissal which fulfill the purposes of the rules and the desire to avoid court congestion; (8) the desirability of deciding the case on the merits; and (9) the extent to which the plaintiff has been stirred into action by a threat of dismissal as opposed to diligence on the plaintiff’s part.”

     Applying the factors, the Court of Appeals found that the first four factors favored dismissal. There had been a twenty-two-month delay and, as we discussed, the general rule is that the actions of the lawyer are to be imputed to client. But the court found that the other five factors favored reversing the dismissal. Although the defendant argued that it had suffered inherent prejudice due to the delay, it could not point to any actual prejudice, such as loss of evidence or access to witnesses. Also of importance is that the defendant knew that Mr. Petrovski had retained a lawyer within weeks of the accident, who had engaged in pre-litigation settlement discussions.

     The result is refreshing, albeit a bit surprising. Back in May, a different panel of the Court of Appeals held that another client of the same lawyer was unable to obtain relief from judgment due to the lawyer’s failure to respond to requests for admission and to a motion for summary judgment. Similarly, in an unpublished decision from 2014, the Court of Appeals ruled against setting aside a Rule 41(E) ruling where the source of the delay was primarily the suspension of a client’s attorney. Granted, the standard differed dramatically in the decision from May, applying the Trial Rule 60(B) standard. And the 2014 decision had substantially different facts–chiefly that the client had hired a new lawyer while her previous lawyer was suspended.

     It is important to keep the Petrovski v. Neiswinger decision in perspective. It was an important result for Mr. Petrovski, but the court was clear to confine it to the facts of the case before it: “Under the unique facts of this case, in particular Attorney Vazanellis’s complete abdication of his duties as an Indiana attorney and Petrovski’s inability to refile, we conclude that the trial court erred in dismissing Petrovski’s complaint.” The case may be informative to future litigants found in similarly unfortunate circumstances, but there is no guarantee that another panel would find similarly. Indeed, I think the outcome of this case may well have gone differently were it before three different judges. That said, I think the Court of Appeals reached the proper result.

     Join us again next time for further discussion of developments in the law.

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*Disclaimer: The author is licensed to practice in the state of Indiana. The information contained above is provided for informational purposes only and should not be construed as legal advice on any subject matter. Laws vary by state and region. Furthermore, the law is constantly changing. Thus, the information above may no longer be accurate at this time. No reader of this content, clients or otherwise, should act or refrain from acting on the basis of any content included herein without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue.