Cales v. WillsCales v. Wills
- Reporters:
- ,
- Before:
- Davis
Lead Opinion
I.
FACTUAL AND PROCEDURAL HISTORY
On October 18, 1997, Mr. Cales sustained serious injuries, including a fractured left leg, when he was assaulted while performing his duties as a police
Subsequently, Mr. Wills’ insurance carrier, Dairyland Insurance Company (hereinafter referred to as “Dairyland”), filed a separate declaratory judgment action seeking a ruling as to whether the injuries sustained by Mr. Cales involved Mr. Wills’ vehicle such that they would fall within the liability coverage provided under Mr. Wills’ automobile insurance policy. The circuit court concluded that Mr. Cales’ injuries did in fact arise from the operation of Mr. Wills’ vehicle. As a result of this ruling, Dairyland offered to pay Mr. Cales the full policy limit of Mr. Wills’ liability coverage, which equaled $20,000.00. Additionally, Dairyland sought a
Although Dairyland paid to Mr. Cales the limits of Mr. Wills’ policy, the case against Mr. Wills nevertheless proceeded to trial for a determination of both liability and damages. A bench trial was held on March 24, 2000,1 but National was not represented. On September 14, 1999, a summons and a copy of the complaint filed against Mr. Wills had been served on the Secretary of State on behalf of National. National was served with process through the Secretary of State’s office on September 23, 1999. However, National failed to answer the complaint. Also on September 14, 1999, Mr. Cales notified National’s representative, AIG Claims, Inc., of the lawsuit against Mr. Wills and requested a waiver of subrogation against Mr. Wills’ insurer. In a letter dated September 15, 1999, AIG responded to the waiver request by indicating that Mr. Cales could proceed to
Prior to the calling of any witnesses at the trial, Mr. Cales specifically advised the court that National was in default as it had failed to file an answer to the complaint. Accordingly, the circuit court ruled that National was in default. Mr. Cales then called several witnesses to testify on the issues of liability and damages. After the evidence was presented, the circuit court returned a verdict in favor of Mr. Cales and assessed damages in the amount of $133,734.19. The circuit court then ruled that, because Mr. Wills’ insurance carrier had tendered its policy limits of $20,000.00, National, as the underinsured motorist insurance provider, was liable to Mr. Cales for the balance of the damages. In accordance with this ruling, the circuit court imposed a default judgment against National in the amount of $113,734.19, plus post-judgment interest.
On September 13, 2000, National moved to set aside both the default and the default judgment. By order entered May 3, 2001, the circuit court denied National’s motion. It is from this ruling that National now appeals.-
II.
STANDARD OF REVIEW
In this case, we are asked to review the circuit court’s ruling on National’s motion, which was filed in accordance with Rule 60(b) of the West Virginia Rules of Civil Procedure,2 to set aside the default and default judgment. It is well-settled that “[a] motion to vacate a judgment made pursuant to Rule 60(b), W. Va. R.C. P., is addressed to the sound discretion of the court and the court’s ruling on such motion will not be disturbed on appeal unless there is a showing of an abuse of such discretion.” Syl. pt. 5, Toler v. Shelton, 157 W.Va. 778, 204 S.E.2d 85 (1974). See also Syl. pt. 1, Jackson Gen. Hosp. v. Davis, 195 W.Va. 74, 464 S.E.2d 593 (1995) (same). Similarly, “[ajppellate review of the propriety of a default judgment focuses on the issue of whether the trial court abused its.discretion in entering the default judgment.” Syl. pt. 3, Hinerman v. Levin, 172 W.Va. 777, 310 S.E.2d 843 (1983). See also Syl. pt. 3, Intercity Realty Co. v. Gibson, 154 W.Va. 369, 175 S.E.2d 452 (1970) (“A motion to vacate a default judgment is addressed to the sound discretion of the court and the court’s ruling on such motion will not be disturbed on appeal unless there is a showing of an abuse of such discretion.”). We have also held that “[o]n an appeal to this Court the appellant bears the burden of showing that there was error in the proceedings below resulting in the judgment of which he complains, all presumptions being in favor of the correctness of the proceedings and judgment in and of the trial court.” Syl. pt. 2, Perdue v. Coiner, 156 W.Va. 467, 194 S.E.2d 657 (1973). With these considerations
III.
DISCUSSION
This appeal involves a default as to liability and a default judgment as to the issue of damages. In Coury v. Tsapis, 172 W.Va. 103, 304 S.E.2d 7 (1983), we recognized the distinction between a default and a default judgment. In Coury we observed, and we now hold, that “a default relates to the issue of liability and a default judgment occurs after damages have been ascertained.” 172 W.Va. at 106, 304 S.E.2d at 10. Therefore, we will discuss the default judgment entered in this case separately from the default as to liability.
A. Default Judgment Awarding Damages
With respect to the default judgment awarding damages against National, we are asked to determine whether the circuit court erred in entering the judgment when National had not received notice of any proceedings related to the award of damages against it. National argues that the default judgment should be set aside due to the lack of notice. Mr. Cales, on the other hand, contends that (1) National was not entitled to notice as it failed to make an appearance in the civil action; and (2) due to the nature of the damages awarded, there was no requirement of notice to National.
The issues described above directly involve Rule 55(b) of the West Virginia Rules of Civil Procedure,3 which expressly addresses default judgments. Rule 55(b) contains different procedural requirements for default judgments awarding sum certain damages, see W. Va. R. Civ. P. Rule 55(b)(1), and those awarding other types of damages, see W. Va. R. Civ. P. Rule 55(b)(2). For the purposes of the instant proceeding, we are concerned with the differences in these two provisions as they relate to notice to a defaulting party. Consequently, we pause to briefly identify the different notice requirements of these two rulés.
Rule 55(b)(1) addresses actions involving damages that are a “sum certain or . . . a sum which can by computation be made certain,” and instructs the court to “direct the entry of judgment by the clerk” in such circumstances.4 We have previously held, in syllabus point 1 of Coury v. Tsapis, 172 W.Va. 103, 304 S.E.2d 7 (1983), that
Rule 55(b)(1) of the West Virginia Rules of Civil Procedure relates to eases where the amount sued for is a sum certain or which can be rendered certain by computation. Upon a default in this category of cases, the court can enter a judgment not only as to liability but also to the amount due.
Because Rule 55(b)(1) applies only when the damages are a sum certain, or an amount which can be made certain by calculation, there clearly is no need for an evidentiary
if the damages sought by the party moving for a default judgment are for a sum certain, or an amount which can be rendered certain by calculation, no evidentiary hearing on damages is necessary and the circuit court may proceed to enter a “default judgment” on all issues in the case.
(Emphasis added). See also Franklin D. Cleckley, Robin J. Davis & Louis J. Palmer, Litigation Handbook on West Virginia Rules of Civil Procedure 914 (2002) (discussing Rule 55(b)(1) and stating “[i]f the damages sought by the party moving for a default judgment are for a sum certain, or an amount which can be rendered certain by calculation, no evidentiary hearing on damages is necessary and the trial court may proceed to enter a default judgment on all issues in the case.” (footnote omitted)). It follows, therefore, that because there is no need for a hearing to determine the amount of damages, there likewise is no requirement for notice to the defaulting party.
As presently stated, our rule 55(b) is nearly identical to its federal counterpart. There is similarly no requirement of notice to a defaulting party prior to the entry of a judgment pursuant to
Rule, 55(b)(2), on the other hand, addresses the entry of a default judgment where the amount of damages is not a sum certain. Under these circumstances, “[a] trial court is required to hold a hearing in order to ascertain the amount of damages.” Cleckley, supra, at 917. More importantly,
Having reviewed the notice requirements of
1.
This Court has recognized that “[t]he term ‘appeared in the action,’ for purposes of a default judgment under
Where a party defendant files a written stipulation extending the time for filing an answer, or indicates interest in pending litigation against him by any other written matter of record in the court file signed by the party, his counsel, or his representative, the party “has appeared” within the contemplation ofRule 55(b)(2) , R.C.P. and is entitled to notice of an application for default judgment.
Although Daniels focused on communications found in the record, it is generally acknowledged that “[a]n appearance [of a party in a litigation] for purposes of
National bases its appearance on the letter sent by its representative, AIG, to Mr.’ Cales on September 15, 1999. Mr. Cales contends that AIG was not a representative of National; therefore, National made no communication to him prior to the entry of default judgment. This contention is without merit. The letter forwarded by AIG specifically stated: “AIG Claim Services, Inc. is the authorized representative of National Union Fire Insurance Company of Pittsburgh, PA[.]” Consequently, we must conclude that, for
Because we have found that National made an appearance as contemplated under
2.
The term “sum certain” under West Virginia Rules of Civil ProcedureRule 55(b)(1) contemplates a situation where the amount due cannot be reasonably disputed, is settled with respect to amount, ascertained and agreed upon by the parties, or fixed by operation of law. A claim is not for a “sum certain” merely because the claim is stated as a specific dollar amount in a complaint, verified complaint, or affidavit.
The parties do not dispute that the damages sought in Mr. Cales’ complaint were unliquidated damages and not a sum certain. However, Mr. Cales contends that the verdict returned by the court against Mr. Wills converted the damages to a sum certain that could be imposed upon National without notice under
On the date set for the bench trial against Mr. Wills, Mr. Cales made an oral motion for a default as to liability against National. The trial court granted the motion. Mr. Cales then proceeded to present evidence at the bench trial to determine liability and damages against Mr. Wills. The trial court rendered a verdict assessing liability against Mr. Wills as well as making a determination as to damages.9 Subsequently, the trial court issued written findings of fact and conclusions of law in which default judgment damages were awarded against National. Mr. Cales argues to this Court that this procedure resulted in a sum certain damage amount. Consequently, the entry of a default judgment against National without prior notice was proper.
In contrast, National argues that fundamental principles of due process requires this Court to reject the procedure used in
A controlling principle of
Moreover,
In accordance with the foregoing holding, Mr. Cales could not use the damage award obtained against Mr. Wills as the basis for imposing default damages against National under
B. Default Determination of Liability
National next contends that the entry of default as to liability should be set aside in view of the factors established in Parsons v. Consolidated Gas Supply Corp., 163 W.Va. 464, 256 S.E.2d 758 (1979). In Parsows, we explained that the factors to be considered in determining whether a judgment by default should be vacated are: “(1) The degree of prejudice suffered by the plaintiff from the delay in answering; (2) the presence of material issues of fact and meritorious defenses; (3) the significance of the interests at stake; and (4) the degree of intransigence on the part of the defaulting party.” Syl. pt. 3, in part. Additionally,
1. The degree of prejudice. The initial inquiry under Parsons is a determination of the degree of prejudice to Mr. Cales if the default as to liability is vacated. National contends that Mr. Cales has failed to show that he would suffer any prejudice from a setting aside of the judgment of default as to liability. We agree.
All that Mr. Cales has shown is that setting aside the judgment of default as to liability would mean further delay in obtaining full compensation for his injuries. There has been no suggestion by Mr. Cales that evidence or witness testimony would be lost. See, e.g., Cook v. Channel One, Inc., 209 W.Va. 432, 549 S.E.2d 306 (2001) (per curiam) (finding no prejudice).
2. The presence of material issues of fact and meritorious defenses. The second factor to be considered under Parsons is whether National has shown that material issues of fact and meritorious defenses exist. This Court has previously explained that this factor seeks to determine whether “there is . . . reason to believe that a result different from the one obtained would have followed from a full trial.” Hinerman v. Levin, 172 W.Va. 777, 783-84, 310 S.E.2d 843, 850 (1983).
National has presented two defenses that it insists would result in a different outcome. First, National contends that Mr. Cales is not entitled to underinsurance coverage from the policy issued to the City of Hinton because he received workers’ compensation benefits as a result of the injuries he sustained. Second, National argues that Mr. Cales is not entitled to underinsured motorist coverage because he was not injured as a result of his ownership, maintenance, or use of a motor vehicle, since the injuries were received after Mr. Cales and Mr. Wills existed them respective vehicles.
Although we make no comment on whether National could prevail on its two primary defenses, the defenses do satisfy Parsons’ second requirement. See, e.g., State ex rel. United Mine Workers of Am., Local Union 1938 v. Waters, 200 W.Va. 289, 299, 489 S.E.2d 266, 276 (1997) (“There is no reason to conclude at this juncture that the petitioners’ defenses are not meritorious.”).
3. The significance of the interests at stake. Under the third factor of Parsons, we must examine the interests at stake in the litigation. The default damages entered against National, which we have set aside, were in the amount of $113,734.19, plus post-judgment interest. Obviously, the potential damages at stake in this case are significant and therefore the third factor is also satisfied. See, e.g., Parsons, 163 W.Va. at 473, 256 S.E.2d at 763 (noting that “monetary damages in the amount of $35,000.00, . . . [are] not . . . insignificant”).
4. The degree of intransigence by the defaulting party. Under Parsons’s fourth factor, we are obligated to examine the degree of intransigence by National in responding to the complaint. This court has observed “that any evidence of intransigence on the part of a defaulting party should be weighed heavily against him in determining the propriety of a default judgment.” Hinerman, 172 W.Va. at 782, 310 S.E.2d at 849. The record in this case shows that National was actually served with process by the Secretary of State’s office on September 23, 1999. During the six month period between the date of service on National and the trial on Mai’ch 24, 2000, National failed to either file an answer to the complaint, or file a separate declaratory judgment action contesting liability. We find this intransigence to be significant. See, e.g., Lee v. Gentlemen’s Club, Inc., 208 W.Va. 564, 542 S.E.2d 78 (2000) (per curiam) (affirming default judgment obtained by plaintiff seven months after complaint filed).
5. The existence of excusable or unavoidable cause. Under the final consideration required by Parsons, a defaulting party must show some excusable or unavoidable cause to explain the delay in answering the complaint. Mr. Cales contends that National has offered no excusable or unavoidable cause. We agree. National contends that it
Under
6. Weighing the Parsons factors. We have determined that no undue prejudice would result against Mr. Cales by stetting aside default as to liability. We have also determined that National has two defenses that have merit, and that the potential damages against National are significant. However, these findings must be weighed against National’s intransigence, which we have determined was significant, and National’s utter failure to present any excusable or unavoidable cause for not filing a timely answer. We believe that the proper balance in this case requires us to affirm the trial court’s denial of National’s motion to set aside judgment of default as to liability. See Hinerman v. Levin, 172 W.Va. 777, 782, 310 S.E.2d 843, 848 (1983) (“[Although this court is quite willing to review default judgments and to overturn them in eases where good cause is shown, a demonstration of such good cause is a necessary predicate to our overruling a lower court’s exercise of discretion.”). Thus, we find the circuit court did not abuse its discretion in denying National’s Rule 60(b) motion as it pertained to the determination that National defaulted in this action.
IV.
CONCLUSION
We affirm the circuit court’s entry of default as to liability against National. We reverse the entry of default as to damages, and remand this case for a hearing, pursuant to
Affirmed in part; Reversed in part; and Remanded.
Notes
. Mr. Wills did not personally attend the trial nor was he represented by counsel.
. Rule 60(b) of the West Virginia Rules of Civil Procedure states:
Mistakes; inadvertence; excusable neglect; unavoidable cause; newly discovered evidence; fraud, etc. — On motion and upon such terms as are just, the court may relieve a party or a party’s legal representative from a final judgment, order, or proceeding for the following reasons: (1) Mistake, inadvertence, surprise, excusable neglect, or unavoidable cause; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse parly; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment. The motion shall be made within a reasonable time, and for reasons (1), (2), and (3) not more than one year after the judgment, order, or proceeding was entered or taken. A motion under this subdivision (b) does not affect the finality of a judgment or suspend its operation. This rule does not limit the power of a court to entertain an independent action to relieve a party from a judgment, order or proceeding, or to grant statutory relief in the same action to a defendant not served with a summons in that action, or to set aside a judgment for fraud upon the court. Writs of coram nobis, coram vobis, petitions for rehearing, bills of review and bills in the nature of a bill of review, are abolished, and the procedure for obtaining any relief from a judgment shall be by motion as prescribed in these rules or by an independent action.
.
(b) Judgment. — Judgment by default may be entered as follows:
(1) By the clerk. — When the plaintiff’s claim against a defendant is for a sum certain or for a sum which can by computation be made certain, the court upon request of the plaintiff and upon affidavit of the amount due shall direct the entry of judgment by the clerk for that amount and costs against the defendant, if the defendant has been defaulted for failure to appear and is not an infant, incompetent person, or convict.
(2) By the court. — In all other cases the party entitled to a judgment by default shall apply to the court therefor; but no judgment by default shall be entered against an infant, incompetent person, or convict unless represented in the action by a guardian, guardian ad litem, committee, conservator, curator, or other representative who has appeared therein. If the parly against whom judgment by default is sought has appeared in the action, the party (or, if appearing by representative, the party‘s representative) shall be served with written notice of the application for judgment at least 3 days prior to the hearing on such application. If, in order to enable the court to enter judgment or to carry it into effect, it is necessary to take an account or to determine the amount of damages or to establish the truth of any averment by evidence or to make an investigation of any other matter, the court may conduct such hearings or order such references as it deems necessary.
. It should be noted, however, that the entry of such a judgment by the clerk may be made only if the defaulting party is not “an infant, incompetent person, or convict.”
. For full text of
. We have cautioned litigants that a
. The authors of this handbook point out that in Intercity Realty Co. v. Gibson, 154 W.Va. 369, 175 S.E.2d 452 (1970), this Court disapproved of oral communication as satisfying the appearance requirement of
. For text of
. As we previously noted, neither Mr. Wills nor his counsel were present at the bench trial.
. The decision reached in this opinion is consistent with our decision in State ex rel. Motorists Mutual Insurance Co. v. Broadwater, 192 W.Va. 608, 453 S.E.2d 591 (1994). Although the procedure used in Broadwater to obtain a judgment against a defendant underinsured motorist insurance carrier was similar to that of the instant case, Broadwater did not involve the entry of default judgment. The primary issue presented in Broadwater was whether or not judgment could be rendered directly against the insurance carrier rather than the tortfeasor. We so held in Broadwater.
While we agree with Mr. Cales that he could have obtained a judgment directly against National under Broadwater, he chose not to do so. Instead, Mr. Cales proceeded under our default judgment rule. Consequently, he is bound to comply with the requirements of that rule. We are not prepared to extend Broadwater beyond its limited context in order to spare Mr. Cales the burden of fulfilling the procedural obligations associated with obtaining a default judgment.
Concurrence Opinion
concurring.
(Filed July 3, 2002)
I write separately to express certain concerns that the majority’s opinion either fails to address or that are in need of further clarification. When possible, this Court clearly prefers that legal matters be determined on their merits. See McDaniel v. Romano, 155 W.Va. 875, 879, 190 S.E.2d 8, 11 (1972). At the same time, however, this Court fully recognizes the validity of and supports the enforceability of a default judgment that is properly obtained. In light of the finality of such judgments, barring successful Rule 60(b) motions, this Court has a duty to ensure that the requirements necessary for the issuance of default judgments are properly applied.
Lack of Defendant’s “Appearance”
In discussing the distinction between default judgments that are obtained under the provisions of
Thus, in establishing as a new point of law that “[generally, under
In attempting to distinguish those instances that properly fall under
Oral Communication Constituting an “Appearance”
In establishing what constitutes an “appearance” for purposes of the notice requirement that attaches under the provisions of
Other courts that have considered this issue have made clear that not just any oral communication will suffice to constitute an appearance for purposes of invoking the notice requirement of
While the issue of whether an “appearance” results from an oral communication will necessarily be a factual determination based on the nature of the conversation, as a general rule an “appearance” will result from a communication that conveys a clear intent to defend against the lawsuit at issue and may also be implied by language that indicates the defendant has taken or intends to take some steps related to the pending action that are either beneficial to the defendant or detrimental to the plaintiffs interests. See Heleasco Seventeen, Inc. v. Drake, 102 F.R.D. 909, 912 (D.Del.1984). Missing from the majority’s adoption of this new point of law permitting an oral communication to constitute an “appearance” is the clarification that the communication must involve an indication on the defendant’s part to take some action relative to the lawsuit. Absent such an affirmative indication, an oral communication is unlikely to rise to the level of the “appearance” necessary to trigger the notice requirements of
Practitioner Pointers
Despite the fact that
Based on the foregoing, I respectfully concur with the majority’s decision.
. While perhaps the majority intended to implicitly refer to the lack of an appearance in referencing the entry of a default as to liability, this is not accurate because the default as to liability may have been entered on a basis other than the lack of an appearance.
. This position had previously only been recognized by this Court in notes accompanying two of our decisions. See Farm Family Mut. Ins. Co. v. Thorn Lumber Co., 202 W.Va. 69, 75, n. 9, 501 S.E.2d 786, 792 n. 9 (1998); accord Colonial Ins. Co. v. Barrett, 208 W.Va. 706, 709, n. 2, 542 S.E.2d 869, 872 n. 2 (2000).
. See Miamisburg, 623 N.E.2d at 170. By applying
Concurrence Opinion
concurring in part, and dissenting in part.
(Filed July 11, 2002)
While I agree that National’s intransigence in this ease justifies a finding of default as to liability, I take issue with the majority’s action in reversing the resulting award of damages. Specifically, I disagree with the majority’s assertion in syllabus point five of the Court’s opinion that for purposes of West Virginia Rule of Civil Procedure 55(b)(2), an “appearance” by a party to a litigation may consist of nothing more than an oral or written communication to the opposing party demonstrating an interest in the pending litigation.
As the majority opinion readily admits, our past cases dealing with this issue are in conflict. In Intercity Realty Co. v. Gibson, 154 W.Va. 369, 374-76, 175 S.E.2d 452, 455 (1970), this Court expressly rejected the notion that mere oral communication between counsel constitutes an appearance under
Even the federal courts, from where we derive
[A] party “has appeared in the action” underRule 55(b)(2) only where that party has actually made some presentation or submission to the district court in the pending action. Such an interpretation is consistent with traditional and accepted legal parlance in which “appearance” is defined as “a coming into court as a party to a suit, either in person or by an attorney, whether as plaintiff or defendant.”
Id. at 230 (quoting Black’s Law Dictionary 89 (5th Ed.1979)) (emphasis in original).
In Town and Country Kids, Inc. v. Protected Venture Inv. Trust # 1, Inc., 178 F.R.D. 453 (E.D.Va.1998), the district court found that a notarized deposition sent from defendant’s to plaintiffs counsel, suggesting the possibility of settlement, was not enough to constitute an appearance under
These authorities emphasize the importance of keeping a trial court informed of the status of pending litigation. “Efficient court management and reliability of judicial process is enhanced by court records which disclose the critical procedural actions of the parties — such as the entry of an appearance.” Zuelzke, 925 F.2d at 230. Interpreting
Although I recognize the importance of giving a defendant an opportunity to defend against an application for default judgment, the Court should not go out of its way to find an appearance based upon communications that may indicate nothing more than de min-imis attention to the litigation. As the Seventh Circuit emphasized in Zuelzke, “it is a disservice to the legal system to distort the meaning of a concrete term such as ‘appearance’ in order to provide a mechanism to save a party from a default judgment.” 925 F.2d at 230. With this admonition in mind, I
Therefore, I respectfully concur with Part III.B of the majority opinion respecting National’s default as to liability, but dissent from Part III.A of the opinion, which reverses the circuit court’s award of damages. National was not entitled to notice under