150 So. 3d 7
La. Ct. App.2014Background
- The Hydes sued Cash Control Systems, LLC (CCS) for breach of contract over a defective restaurant computer system; suit filed March 15, 2012.
- CCS was personally served; CCS retained counsel (Favret) who spoke with Hydes' counsel (Edmond) and obtained an informal extension and an agreement Edmond would notify before taking adverse action.
- Communications thereafter were largely one-sided: Edmond sent multiple follow-ups; Favret did not file an appearance or answer.
- On September 19, 2012 Edmond revoked the informal extension by letter (which did not explicitly withdraw the agreement to give notice of adverse action).
- Twenty-seven days later Edmond obtained a default judgment against CCS; the clerk mailed notice of judgment to CCS’s owner at the original service address.
- CCS filed a petition to annul the judgment one year later; the trial court denied relief and this appeal followed.
Issues
| Issue | Plaintiff's Argument (Hydes) | Defendant's Argument (CCS) | Held |
|---|---|---|---|
| Whether failure to give opposing counsel notice before confirming a default constitutes an "ill practice" under La. C.C.P. art. 2004 | The Hydes: obtaining judgment after extension withdrawal was proper; CCS failed to protect its rights by not appearing or answering | CCS: Edmond breached the June 5 agreement to notify before adverse action and confirming default without notice was an ill practice that deprived CCS of defense rights | Court: Affirmed — no ill practice; CCS was not actively defending and took no steps to protect rights after extension withdrawal |
| Whether enforcement of the judgment would be unconscionable or inequitable under article 2004 | Hydes: enforcement is equitable because CCS had opportunity to appear and failed to act | CCS: enforcement would be inequitable because counsel relied on the agreement and was not given notice of confirmation | Court: Enforcement would not be unconscionable; CCS had time and means to appear but did not |
| Procedural adequacy of CCS’s petition to annul (summary proceeding vs. direct action) | Hydes: did not object below; court proceeded on merits | CCS: sought nullity relief via a hearing (but used motion practice) | Court: Noted nullity actions must be direct actions, but Hydes waived procedural objection by not raising it; court considered merits anyway |
| Applicability of precedents (Kem Search / Russell) | Hydes: precedents distinguishable because opposing counsel there actively participated in litigation | CCS: those cases support annulment when counsel confirms default without notice | Court: Distinguished Kem Search and Russell — those involved active participation by defendant's counsel; here CCS was passive |
Key Cases Cited
- Power Marketing Direct, Inc. v. Foster, 938 So.2d 662 (La. 2006) (appellate review defers to trial court discretion on annulment for fraud or ill practices)
- Duckworth Properties, L.L.C. v. Williams, 52 So.3d 287 (La. Ct. App.) (courts examine whether allowing judgment to stand would be inequitable)
- Kem Search, Inc. v. Sheffield, 434 So.2d 1067 (La. 1983) (confirming a default without notice can be an ill practice where defendant was actively protecting rights)
- Russell v. Illinois Cent. Gulf R.R., 686 So.2d 817 (La. 1997) (ill practice where opposing counsel participated in litigation and plaintiff confirmed default without attempting notice)
- Johnson v. Jones-Joumet, 320 So.2d 533 (La. 1975) (annulment requires showing deprivation of legal rights and that enforcement would be unconscionable)