Bys Inc. v. Smoudi
269 P.3d 1197
Ariz. Ct. App.2012Background
- BYS, Inc. sued the Smoudis for breach of a November 2006 lease; damages included unpaid rent and common area charges, with mitigation duties.
- Service of process was made on the Smoudis’ teenage son on May 29, 2009.
- Default was sought by BYS via an August 27, 2009 Application for Default; Smoudis filed a September 21, 2009 filing claiming extension and potential settlement.
- BYS responded October 2, 2009, asserting proper service but noting only a five‑day extension to answer; default judgment was entered October 8, 2009 for $182,340 plus fees.
- Smoudis moved December 2, 2009 to set aside the judgment on multiple grounds, including that they appeared in the action and were entitled to Rule 55(b)(2) notice/hearing on damages.
- Garnishment proceedings against the Smoudis’ assets occurred in July–August 2010, with a hearing held August 23, 2010; the trial court denied extension and set‑aside relief; this appeal followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether entry of default was proper despite Smoudis’ September 21 filing | BYS asserts default became effective on September 11, 2009; Smoudis filed Sept. 21, 2009, after default, so default valid. | Smoudis argue September 21 filing was an appearance and precluded default | Default entered validly, as extension occurred after default; no preclusion of default. |
| Whether Smoudis’ September 21 appearance entitled three‑days’ notice and a hearing under Rule 55(b)2 | Damages were fixed or could be determined; no notice required if liquidated amount. | Appearance triggered right to notice and a hearing on entry of judgment. | Judgment void for lack of notice/hearing; Smoudis entitled to Rule 55(b)2 process; vacate default judgment. |
| Whether trial court should have vacated the default judgment under Rule 60/c or 55/c on remand | Default judgment should stand if proper; no grounds shown to vacate. | There were grounds to vacate due to appearance and lack of notice; relief under Rule 60(c) or 55(c) possible. | Remand allowed to consider set‑aside under Rule 55(c) and, if not, conduct damages hearing consistent with Rule 55(b)2. |
Key Cases Cited
- Tarr v. Superior Court, 142 Ariz. 349 (1984) (appearance after default permits damages hearing; 3‑day notice requirement applies)
- Rogers v. Tapo, 72 Ariz. 53 (1951) (notice required before judgment on appearance)
- Gustafson v. McDade, 26 Ariz. App. 322 (App. 1976) (absence of notice voids judgment when appearance is present)
- McClintock v. Serv-Us Bakers, 103 Ariz. 72 (1968) (cited for notice and appearance principles)
- City of Phoenix v. Collar, Williams & White Eng'g, Inc., 12 Ariz.App. 510 (1970) (notice requirements in default judgments)
- Austin v. State ex rel. Herman, 10 Ariz.App. 474 (1969) (appearance and jurisdiction considerations)
- Neis v. Heinsohn/Phoenix, Inc., 129 Ariz. 96 (App. 1981) (liability vs. damages distinction in default context)