Swan Beach Corolla, L. L.C. v. Cnty. of Currituck
255 N.C. App. 837
| N.C. Ct. App. | 2017Background
- Plaintiffs (property owners) sued Currituck County and its commissioners after the county prevented them from developing land, asserting vested rights, federal equal protection and a state uniform-tax claim.
- Defendants moved to dismiss under Rules 12(b)(1) and (6); the trial court granted dismissal in July 2013; Plaintiffs appealed.
- The Court of Appeals (Swan Beach I) reversed dismissal of the vested-rights and equal-protection claims and remanded; the appellate mandate issued 21 July 2014.
- Plaintiffs moved for entry of default on 21 August 2014 for Defendants’ alleged failure to answer; the clerk entered default and Plaintiffs mailed notice; Defendants moved six days later to set aside the entry and tendered a proposed answer.
- Defendants argued their obligation to answer never began because N.C. Gen. Stat. § 1-298 required the trial court to enter an order effectuating the appellate modification; the trial court denied the motion to set aside, later entered default judgment for Plaintiffs, and Defendants appealed.
- The Court of Appeals reversed the trial court’s denial of Defendants’ motion to set aside the entry of default, holding the trial court failed to apply the Rule 55(d) “good cause” standard and that, under that standard, denial would still have been an abuse of discretion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the time to file an answer began after the appellate mandate or only after a trial-court order under § 1-298 | Plaintiffs treated the mandate as reviving the claims and triggering normal deadlines | Defendants argued § 1-298 required the trial court to enter an order directing modification/performance before deadlines ran | Court did not decide the § 1-298 question here; focused on procedural error below and reversed default entry |
| Whether the trial court abused its discretion by denying motion to set aside clerk’s entry of default | Plaintiffs contended trial court properly denied relief | Defendants argued the court failed to apply Rule 55(d) “good cause” test and, applying it, relief was warranted (diligence, no harm, grave injustice) | Court held the trial court abused its discretion for failing to apply the proper standard and that denial would have also been an abuse under the correct standard |
| Whether plaintiffs were harmed by the short delay (relevant to good-cause analysis) | Plaintiffs asserted no specific harm from the brief delay but argued prejudice generally from prolonged litigation | Defendants argued Plaintiffs suffered no harm from the 16-day delay and were actively litigating | Court found no record showing Plaintiffs suffered harm from the short delay and accepted defendants’ diligence |
| Whether default judgment should stand if entry of default is set aside | Plaintiffs sought enforcement of default judgment and damages awarded | Defendants sought relief from default and default judgment | Court reversed denial of motion to set aside entry of default, rendering default judgment void and remanding for further proceedings |
Key Cases Cited
- Auto. Equip. Distribs., Inc. v. Petroleum Equip. & Serv., Inc., 87 N.C. App. 606 (principle that setting aside entry of default is discretionary and doubts favor vacatur)
- Peebles v. Moore, 302 N.C. 351 (principle that defaults should be avoided if justice allows; setting aside entry of default requires only good cause)
- Beard v. Pembaur, 68 N.C. App. 52 (default is drastic; facts showing active litigation can support vacatur)
- Luke v. Omega Consulting Grp., LC, 194 N.C. App. 745 (good-cause factors: diligence, harm, grave injustice)
- Brown v. Lifford, 136 N.C. App. 379 (distinguishing entry-of-default standard from Rule 60(b) relief)
- Decker v. Homes, Inc., 187 N.C. App. 658 (failure to apply good-cause standard is abuse requiring remand)
- Granville Med. Ctr. v. Tipton, 160 N.C. App. 484 (failure to respond due to neglect does not constitute good cause)
- Howell v. Haliburton, 22 N.C. App. 40 (rules requiring timely responses serve important goals)
- D & W, Inc. v. City of Charlotte, 268 N.C. 720 (mandate efficacy does not depend on a lower-court order)