716 S.E.2d 887
S.C.2011Background
- McClurg sued Deaton and New Prime for injuries from a 2002 truck accident; Zurich insured the defendants with a $2 million policy deductible.
- Insurer and defense counsel engaged in settlement negotiations from 2004–2005, with a 2004 settlement demand of $170,000.
- In June 2005, Deaton was served; he did not answer; a default was entered August 1, 2005, totaling $800,000 ($750,000 to McClurg, $50,000 to Stephen McClurg).
- Insurer discovered the default judgment only October 2005 and then sought relief under Rule 60(b); New Prime sought intervention and relief as an intervening party.
- Circuit court denied Rule 60(b) motions; Court of Appeals affirmed on issue-preservation grounds, not addressing merits of a damages-based defense.
- This Court granted certiorari to determine whether a meritorious defense may relate to damages and whether the default could be set aside for New Prime under Rule 60(b).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a meritorious defense to damages can support Rule 60(b) relief | McClurgs argued no meritorious defense to damages raised. | Petitioners contended damages discrepancy constitutes meritorious defense. | Damages-based meritorious defense may support relief. |
| Whether New Prime, as intervenor, may obtain relief under Rule 60(b) as to a default | New Prime was not properly served; relief should be unavailable. | Intervenor may stand in Deaton's shoes and seek relief for surprise/misconduct. | New Prime can seek relief under Rule 60(b) based on surprise and misconduct. |
| Whether the issue was properly preserved for appellate review | Meritorious-defense issue was not raised to the circuit court as such. | Petitioners raised sufficient arguments within pleadings/motions to show a meritorious defense. | Issue-preservation did not bar consideration; meritorious-defense contention is reviewable. |
| Whether the circuit court erred in denying Rule 60(b) relief under the standards of misrepresentation/surprise | Court properly found no meritorious defense and no basis for relief. | Surprise and misconduct were demonstrated; relief should be granted as to the judgment. | Relief granted on the basis of surprise and misconduct; meritorious-damages defense supported. |
Key Cases Cited
- Mitchell Supply Co., Inc. v. Gaffney, 297 S.C. 160 (Ct.App. 1988) (meritorious defense required for Rule 60(b) relief)
- Thompson v. Hammond, 299 S.C. 116 (1989) (meritorious defense defined as a real controversy warranting investigation)
- Em-Co Metal Prods., Inc. v. Great Atlantic & Pacific Tea Co., 280 S.C. 107 (Ct.App. 1984) (evidence can reflect meritorious defense in Rule 60(b) context)
- Williams v. Watkins, Jr., 384 S.C. 319 (Ct.App. 2009) (meritorious defense found within record)
- Edwards v. Ferguson, 254 S.C. 278 (1970) (standing in insured's shoes for liability; relief considerations)