A divided Indiana Court of Appeals recently revived a defendant’s counterclaim for personal injuries sustained in an Indiana car accident case despite the defendant’s failure to assert his counterclaim in his answer. In Pumphrey v. Jones, Melody Jones (Jones) and William Pumphrey III (Pumphrey) were involved in a car accident while Pumphrey was delivering pizzas for RPM Pizza Midwest, LLC d/b/a Domino’s Pizza (Domino’s). Within months of the collision, Jones sued Pumphrey and Domino’s. A third-party administrator for Domino’s hired defense counsel to defend Pumphrey and Domino’s. Defense counsel entered an appearance for Pumphrey and Domino’s, informed Pumphrey of the representation, and scheduled a meeting with Pumphrey. However, for an unknown reason, Pumphrey did not attend the meeting. After several failed attempts to contact Pumphrey, defense counsel went ahead and filed an answer on behalf of Pumphrey and Domino’s. No counterclaims were raised in the answer; however, the answer did raise affirmative defenses as to Plaintiff’s own fault in causing the collision.
The parties thereafter engaged in some discovery, including defense counsel taking Jones’ deposition. However, discovery responses on behalf of Pumphrey were delayed because defense counsel was unable to locate Pumphrey. Almost two years after the collision, an associate with defense counsel’s firm discovered that Pumphrey was employed at a different Domino’s store. The associate spoke with Pumphrey and obtained his new contact information, which was different than what defense counsel had been using. Other than defense counsel’s initial contact with Pumphrey, Pumphrey had not received any of defense counsel’s other communications. When the associate spoke and subsequently met with Pumphrey, Pumphrey disputed the police report, supplied the contact information of a potential witness, assisted the associate in providing discovery responses, and indicated he was still treating as a result of injuries he sustained in the collision and wanted to assert a claim for his own personal injuries from the accident.
After providing discovery responses on behalf of Pumphrey, defense counsel obtained authority from Domino’s to represent Pumphrey in his individual counterclaim. One year and nine months after Jones filed her complaint, and right before the statute of limitations, defense counsel filed a motion to amend Pumphrey’s answer to assert the counterclaim. Prior to the trial court ruling on Pumphrey’s motion to amend and with the statute of limitations looming, defense counsel went ahead and filed the counterclaim, to which Jones objected. After the trial court denied the motion to amend but before Pumphrey received notice of the denial, Pumphrey filed a reply to Jones’ objection. Pumphrey then requested the trial court reconsider its order, but the trial court again denied the motion to amend. Pumphrey thereafter appealed to the Indiana Court of Appeals.
Indiana Trial Rule 13(A) governs compulsory counterclaims and requires a defendant having a counterclaim arising out of the transaction or occurrence that is the subject matter of the plaintiff’s claim to assert the counterclaim in the defendant’s answer. Indiana Trial Rule 13(F) provides that when a defendant fails to properly assert a counterclaim through oversight, inadvertence, or excusable neglect, or when justice requires, the defendant may seek permission from the court to assert the counterclaim by amendment. Under Indiana Trial Rule 15(A) dealing with amendments to pleadings, belated amendments to pleadings such as an answer are allowed with permission of the trial court, and permission is to be given when justice so requires. In determining whether justice requires a court to allow an amendment, trial courts should consider factors such as undue delay, bad faith, dilatory motive on part of the movant, and prejudice to the non-movant. A trial court’s decision to allow or disallow belated counterclaims is reviewed for an abuse of discretion.
On appeal, the Indiana Court of Appeals recognized that denying Pumphrey the ability to file his compulsory counterclaim would in effect bar his claim from ever being heard. The Court further noted that discovery was still ongoing in the case, Pumphrey had not been personally involved in the litigation, Pumphrey was not involved in the retention of defense counsel or in responding to Jones’ complaint, Pumphrey had been dealing with his injuries from the accident, a domestic breakup, and a bankruptcy, Pumphrey had not provided his side of the story, once located Pumphrey immediately and fully complied with defense counsel, and defense counsel promptly filed the motion to amend and counterclaim upon locating Pumphrey and hearing his story.
Based upon these facts, the Court of Appeals found Pumphrey had not acted with bad faith or dilatory motive, and furthermore, found that despite any delay caused by allowing Pumphrey’s counterclaim, Jones would not suffer undue prejudice, with the Court noting, in particular, Jones was going to have to litigate her comparative fault for the collision in any case. The Court, therefore, concluded that the trial court abused its discretion in denying Pumphrey’s motion to amend to assert his counterclaim because “justice require[d]” the granting of the motion. The Court directed the trial court to permit the amendment on remand. Judge Kirsch of the Indiana Court of Appeals dissented from the majority because he believed the majority was reweighing the evidence and substituting its judgment for the trial court, which he believed did not abuse its discretion.
You can read the full opinion here.