Franklin Collection Service, Inc. v. BancorpSouth Bank
275 So. 3d 1048
Miss.2019Background
- Franklin Collection Service alleged BancorpSouth charged excessive overdraft fees (2006–2008) and amended its complaint to add a fiduciary-duty claim; BancorpSouth timely answered the first amended complaint but did not timely answer the second amended complaint filed June 6, 2013.
- Parties continued active litigation for years; BancorpSouth filed a motion for summary judgment in Sept. 2016. On Oct. 14, 2016 Franklin obtained a clerk’s entry of default and moved to deem the second amended complaint’s allegations admitted and for default judgment.
- BancorpSouth moved to set aside the clerk’s entry of default (Rule 55(c)) and later moved for leave to file a late answer to the second amended complaint, attaching proposed defenses.
- The trial court denied Franklin’s motion to deem admissions and denied default judgment, granted BancorpSouth leave to file a responsive pleading, but denied BancorpSouth’s motion to set aside the clerk’s entry of default.
- Mississippi Supreme Court consolidated interlocutory appeals: Franklin appealed denial of deeming admissions and the grant of leave to answer; BancorpSouth cross-appealed denial of motion to set aside the clerk’s default. Court affirmed Franklin’s appeals, reversed BancorpSouth’s interlocutory order, and remanded.
Issues
| Issue | Plaintiff's Argument (Franklin) | Defendant's Argument (BancorpSouth) | Held |
|---|---|---|---|
| Whether clerk’s entry of default should be set aside (Rule 55(c)) | Default established; Franklin entitled to relief and to have allegations deemed admitted | Counsel inadvertence explains default; BancorpSouth has colorable defenses and little prejudice would result from setting aside default | Reversed trial court: entry of default should be set aside — the balance (legitimacy of excuse, colorable defenses, prejudice) favors setting aside |
| Whether the court erred in denying Franklin’s motion to deem admitted all allegations under M.R.C.P. 8(d) | Failure to answer the second amended complaint automatically admits all averments (except damages) under Rule 8(d) | Rule 55 governs failures to answer; relief is via default procedure; courts favor merits | Affirmed trial court: Rule 8(d) cannot be used to effect a default judgment; Rule 55 procedures control |
| Whether the court erred in allowing BancorpSouth to file a late answer and assert defenses | Granting leave to answer undermines clerk’s entry of default and precludes deeming admissions | BancorpSouth had appeared, litigated the case, and has colorable defenses; no prejudice to Franklin | Affirmed trial court: trial court did not abuse discretion in allowing late answer; waiver of affirmative defenses reserved for later ruling |
| Whether Franklin suffered prejudice sufficient to deny relief from default | Expert unavailability and passage of time make setting aside default prejudicial | Franklin failed to depose its expert and caused much delay; prejudice is limited | Held: prejudice claim fails — delay mostly attributable to Franklin; prejudice factor favors setting aside default |
Key Cases Cited
- Tucker v. Williams, 198 So. 3d 299 (Miss. 2016) (standards and three-factor balancing for setting aside clerk’s default)
- Perez v. Wells Fargo Bank, N.A., 774 F.3d 1329 (11th Cir. 2014) (failure-to-answer remedies governed by default rules, not Rule 8)
- Universal Computer Servs., Inc. v. Lyall, 464 So. 2d 69 (Miss. 1985) (Rule 8(d) admissions where specific allegation not denied)
- Allstate Ins. Co. v. Green, 794 So. 2d 170 (Miss. 2001) (entry of default may be vacated where colorable defense exists)
- Woodruff v. Thames, 143 So. 3d 546 (Miss. 2014) (definition and scope of a colorable defense)
- Pate v. Conseco Life Ins. Co., 971 So. 2d 593 (Miss. 2008) (accrual rules informing statute-of-limitations analysis)
- Chassaniol v. Bank of Kilmichael, 626 So. 2d 127 (Miss. 1993) (preference against default when defendant shows intent to defend)
- Presley v. City of Jackson, 942 So. 2d 777 (Miss. 2006) (trial courts have discretion but defaults are disfavored; intent to defend is relevant)
- Wheat v. Eakin, 491 So. 2d 523 (Miss. 1986) (policy favoring disposition of cases on the merits)