About-Face in a Default Judgment Case

February 5, 2019 § Leave a comment

In July, 2018, we posted here about the case of Emery v. Greater Greenville Housing, decided by the COA on June 12, 2018. In that decision the COA affirmed a chancellor’s denial of Emery’s motion to set aside a default judgment. Emery filed a motion for rehearing.

On January 8, 2019, the COA denied the motion for rehearing, but went on to withdraw its prior opinion, substituting a new opinion that reversed the chancellor for the reason that Emery had shown a colorable defense to the action, which is the second element of the three-prong balancing test of R60(b).

In its January, 2019, opinion in Emery v. Greater Greenville Housing, by Judge Carlton, the COA reversed and remanded. On the matter of R60(b)’s balancing test, the court said this:

¶24. As the Mississippi Supreme Court has explained, “[a]ccording to Rule 55(c), a default judgment may be set aside ‘[f]or good cause shown’ and in accordance with Rule 60(b).” BB Buggies Inc. [v. Leon], 150 So. 3d [90] at 101 (¶23) (quoting M.R.C.P. 55(c)). The Court has articulated a three-pronged balancing test the trial court must apply in determining whether to set aside a judgment pursuant to Rule 60(b):

(1) the nature and legitimacy of the defendant’s reasons for his default, i.e. whether the defendant has good cause for default, (2) whether the defendant in fact has a colorable defense to the merits of the claim, and (3) the nature and extent of prejudice which may be suffered by the plaintiff if the default judgment is set aside.

Id. As noted above, we apply an abuse of discretion standard in reviewing the chancery court’s denial of Emery’s motion to set aside the default judgment. If the chancery court’s decision is based upon an error of law, however, we will reverse. Tucker [v. Williams], 198 So. 3d 299, 309 (¶24).

As for the factor of “good cause,” the COA agreed with the chancellor that Emery had failed to establish that he had good cause. He had failed to file any answer whatsoever, and did not demonstrate good cause for his failure. The court pointed out at ¶32, ” ‘However, lack of good cause alone will not prevent the Court from setting aside a default judgment if the other two factors weigh in favor of setting it aside.’ B.B. Buggies Inc., 150 So.3d at 102 (¶24) … ‘ ”

The court explained the element of colorable defense this way:

¶33. The Mississippi Supreme Court has “held unequivocally that the second factor [in the Rule 60(b) balancing test], the presence of a colorable defense, outweighs the other two, and [the Supreme Court has] encouraged trial courts to vacate a default judgment where the defendant has shown that he has a meritorious defense.” BB Buggies Inc., 150 So. 3d at 102 (¶25) (internal quotation marks omitted). In addressing the definition of a “colorable defense,” the Court has explicitly stated that “[a] colorable defense is one that reasonably may be asserted, given the facts of the case and the current law.” Tucker, 198 So. 3d at 312 (¶35). Further, “[a] defense need not be compelling, be proven to trial standards, or be supported by sworn evidence in order to qualify as a ‘colorable defense.’. . . Rather, the defense must be a reasonable one.” Id. (citation omitted). “Indeed, [the Mississippi Supreme] Court has held that even a defense of ‘questionable’ strength may be colorable.” Id. (quoting Woodruff, 143 So. 3d at 553 (¶18)).

The court went on to conclude that Emery had proven a colorable claim that necessitated setting aside of the default judgment.

On the final prong, prejudice to the plaintiff if the default is set aside, the court at its ¶45 cited B.B. Buggies yet again for the proposition that “prejudice does not result from the loss of rights that were obtainable only by default. B.B. Buggies, Inc., 150 So. 3d at 104 (¶31) …  ,” and found no prejudice to the plaintiff.

If you handle matters that involve default judgments the COA’s decision in this case bears closer reading. This was a deed reformation case, but the rule’s application can arise in many different types of chancery cases.

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