Discover Bank v. Morgan
363 S.W.3d 479
| Tenn. | 2012Background
- Discover filed suit against Morgan for credit card debt and breach of contract; Morgan answered and counter-claimed alleging misrepresentation and damages to credit under TCPA, FDCPA, FCRA, and TCPA.
- Morgan alleged Discover misled her about liability after death certificate; sought damages for lowered credit, closed accounts, higher interest, and inability to obtain future credit.
- Morgan's counter-claim proceeded while Discover's claim remained unresolved; Morgan moved for default judgment on the counter-claim in May 2007 and default judgment was entered May 22, 2007.
- Discover moved to set aside the default judgment, arguing excusable neglect under Rule 60.02; later amended motion asserted Rule 60.02 and argued liability defenses and damages issues.
- Trial court ultimately awarded damages on the counter-claim, trebled under TCPA, plus attorney’s fees; Discover appealed asserting improper rule for relief and improper damages calculations.
- Court of Appeals vacated damages award and remanded for a new damages hearing; Tennessee Supreme Court granted discretionary review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which rule governs relief from the non-final default judgment? | Discover: Rule 60.02 applies to relief from default. | Morgan: Rule 54.02 governs because not all claims were resolved. | Rule 54.02 applied; same test used as Rule 60.02 for excusable neglect. |
| What test governs relief from a partial default judgment? | Discover: strict Rule 60.02 standards should apply. | Morgan: apply Barbee/Campbell framework (willfulness, meritorious defense, prejudice). | Three-factor test (willfulness, meritorious defense, prejudice) applied; relief denied due to willful conduct. |
| Are damages for loss of available credit recoverable under TCPA, and what must the plaintiff prove? | Morgan: loss of credit damages should be recoverable under TCPA with proof of actual harm. | Discover: damages should be limited or not recoverable due to insufficient proof. | Yes, recoverable where there is demonstrable loss of credit proximately caused by defendant and resulting in actual harm; remanded for proper damages proof. |
Key Cases Cited
- Patterson v. Rockwell Int'l, 665 S.W.2d 96, 665 S.W.2d 96 (Tenn. 1984) (default admission of asserted facts; damages proof standards)
- Barbee v. Dept. of Human Servs., 689 S.W.2d 863, 689 S.W.2d 863 (Tenn. 1985) (excusable neglect standard for default relief; willfulness considered)
- Campbell v. Archer, 555 S.W.2d 110, 555 S.W.2d 110 (Tenn. 1977) (excusable neglect standard applied to default judgments)
- Munday v. Brown, 617 S.W.2d 897, 617 S.W.2d 897 (Tenn.Ct.App. 1981) (willfulness and notice considerations in default context)
- Harris v. Chern, 33 S.W.3d 741, 33 S.W.3d 741 (Tenn. 2000) (test for relief from judgments; Rule 59 vs Rule 60 framework)
- Hatchel v. BancorpSouth Bank, 223 S.W.3d 223, 223 S.W.3d 223 (Tenn.Ct.App. 2006) (damages proofs; causation and measurable loss standard)
- Hannan v. Alltel Publ'g Co., 270 S.W.3d 1, 270 S.W.3d 1 (Tenn. 2008) (actual damages proof cannot be speculative; prove with reasonable certainty)