To Set Aside a Default Judgment
August 6, 2019 § Leave a comment
American Pride LLC filed suit to quiet and confirm title to property it acquired at a tax sale. It obtained a default judgment against John Vanaman, who owned the property.
Vanaman filed a motion in the trial court to set aside the default judgment, which the chancellor denied. Vandaman appealed, arguing that he was not properly served with process and that the chancellor’s decision did not properly follow the law.
In Vanaman v. American Pride Properties, LLC, decided December 18, 2018, the COA reversed and remanded, finding that the chancellor’s decision not to set aside the default judgment was in error, but finding that Vanaman was properly served with process. On the setting aside of the default judgment, the court pointed out that the trial court is required to apply a three-prong balancing test:
(1) the nature and legitimacy of the defendant’s reason for default (i.e., whether the defendant has good cause for default); (2) whether the defendant has a colorable defense to the merits of the claim; and (3) the nature and extent of the prejudice which may be suffered by the plaintiff if the default judgment is set aside. American States Insurance Co. v. Rogillio, 10 So. 3d 463, 468 (Miss. 2009).
Rogillio adds that the second factor is the most important. In Vanaman, the court upheld the chancellor on the first factor and reversed on the second. Judge Irving wrote the court’s opinion:
¶17. With respect to the second prong, Vanaman argues that he has a colorable defense because the chancery clerk did not follow the requirements of Mississippi Code Annotated section 27-43-3 (Rev. 2017) in issuing the notice of forfeiture stemming from the tax sale of the Wortham Road property. Vanaman maintains that he was not properly served with the notice of forfeiture either personally or by certified mail to his usual place of abode, and that publication was not proper. In response, American Pride asserts that Vanaman did not contest the validity of the notice of forfeiture provided by certified mail or by publication. Rather, he only took issue with the personal service provided by the sheriff. With respect to personal service, American Pride maintains that the 20440 Armes Road address was the proper location to serve Vanaman given that it was the address listed on the 2001 quitclaim deed, and that the chancery clerk had no reason to believe that Vanaman’s address was anything other than that.
¶18. Of the three prongs of the Rogillio balancing test, this one is the most important. Rogillio, 10 So. 3d at 470 (¶16). Our supreme court explained the meaning of a “colorable defense” in Tucker v. Williams, 198 So. 3d 299, 312 (¶35) (Miss. 2016):
“Colorable” is defined as appearing to be true, valid, or right. A colorable defense is one that reasonably may be asserted, given the facts of the case and the current law. 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. Indeed, this Court has held that even a defense of questionable strength may be colorable.
(Citations and internal quotation marks omitted).
¶19. Mississippi Code Annotated section 27-43-1 (Rev. 2017) requires that a chancery court clerk, “within one hundred eighty (180) days and not less than sixty (60) days prior to the expiration of the time of redemption with respect to land sold, either to individuals or to the state . . . issue notice to the record owner of the land sold as of 180 days prior to the expiration of the time of redemption.” Section 27-43-3 requires that redemption notice be given by personal service, mail, and publication in an appropriate newspaper:
The clerk shall issue the notice to the sheriff of the county of the reputed owner’s residence, if he is a resident of the State of Mississippi, and the sheriff shall be required to serve notice as follows:
(a) Upon the reputed owner personally, if he can be found in the county after diligent search and inquiry, by handing him a true copy of the notice;
(b) If the reputed owner cannot be found in the county after diligent search and inquiry, then by leaving a true copy of the notice at his usual place of abode with the spouse of the reputed owner or some other person who lives at his usual place of abode above the age of sixteen (16) years, and willing to receive the copy of the notice; or
(c) If the reputed owner cannot be found after diligent search and inquiry, and if no person above the age of sixteen (16) years who lives at his usual place of abode can be found at his usual place of abode who is willing to receive the copy of the notice, then by posting a true copy of the notice on a door of the reputed owner’s usual place of abode.
The sheriff shall make his return to the chancery clerk issuing the notice. The clerk shall also mail a copy of the notice to the reputed owner at his usual street address, if it can be ascertained after diligent search and inquiry, or to his post-office address if only that can be ascertained, and he shall note such action on the tax sales record. The clerk shall also be required to publish the name and address of the reputed owner of the property and the legal description of the property in a public newspaper of the county in which the land is located, or if no newspaper is published as such, then in a newspaper having a general circulation in the county. The publication shall be made at
least forty-five (45) days prior to the expiration of the redemption period.
. . . .
Notice by mail shall be by registered or certified mail. In the event the notice by mail is returned undelivered and the notice as required in this section to be served by the sheriff is returned not found, then the clerk shall make further search and inquiry to ascertain the reputed owner’s street and post-office address. If the reputed owner’s street or post-office address is ascertained after the additional search and inquiry, the clerk shall again issue notice as set out in this section. If notice is again issued and it is again returned not found and
if notice by mail is again returned undelivered, then the clerk shall file an affidavit to that effect and shall specify in the affidavit the acts of search and inquiry made by him in an effort to ascertain the reputed owner’s street and post-office address and the affidavit shall be retained as a permanent record in the office of the clerk and that action shall be noted on the tax sales record. If the clerk is still unable to ascertain the reputed owner’s street or post-office address after making search and inquiry for the second time, then it shall not be necessary to issue any additional notice but the clerk shall file an affidavit specifying the acts of search and inquiry made by him in an effort to ascertain the reputed owner’s street and post-office address and the affidavit shall be retained as a permanent record in the office of the clerk and that action shall be noted on the tax sale record.
. . . .
Should the clerk inadvertently fail to send notice as prescribed in this section, then the sale shall be void and the clerk shall not be liable to the purchaser or owner upon refund of all purchase money paid.
“All three requirements must be met for the redemption notice to be complete and in accordance with the statute.” Cleveland v. Deutche Bank Nat. Tr. Co., 207 So. 3d 710, 715 (¶20) (Miss. Ct. App. 2016). Statutes governing notice of a tax sale are “to be strictly construed in favor of the landowners, and any deviation from the statutorily mandated procedure renders the sale void.” Id.
¶20. We disagree with American Pride that Vanaman failed to raise the issue of notice via certified mail or publication. Vanaman argues that his motion to set aside the court’s default judgment was erroneously denied; inherent in the analysis of whether a court should have set aside a default judgment is the question of whether the landowner has a colorable defense. As such, this issue is properly before us on appeal.
¶21. As Vanaman points out, several documents were filed with the chancery clerk’s office listing his address as 22311 L. Lizana Road following the execution of the quitclaim deed in 2001, including a certificate of redemption in 2010 and a release from delinquent tax sale in 2012. Despite the filing of these documents with the chancery clerk, the notice of forfeiture executed on April 1, 2015, still listed Vanaman’s address as 20440 Armes Road. We further take note of the fact that whoever signed the return receipt on April 8, 2015, after delivery of the notice of forfeiture, actually wrote out a different address—22311 L. Lizana Road—from the address the notice was actually delivered to—20440 Armes Road. It is clear from the record that Vanaman had a colorable defense with respect to whether service was properly effectuated regarding the notice of forfeiture. As stated, this factor is the most significant of the Rogillio balancing test; we find that it weighs in favor of Vanaman, and that it merits the default judgment being set aside.
The court, brushing aside American Pride’s argument that it would be prejudiced if the default judgment were set aside because it had invested two years of litigation expenses in the case, held that prejudice “must be something more than the routine cost of litigation” (¶23).
The two obvious takeaways here are: (1) that if you expect to set aside a default judgment, you had better have a colorable claim; and (2) any failure of the clerk or sheriff to comply with every detail of the statute can get your tax sale set aside.
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  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.
Setting Aside a Default Judgment
July 23, 2018 § 1 Comment
MRCP 55 governs defaults.
R55(a) states that “When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend as provided by these rules and that fact is made to appear by affidavit or otherwise, the clerk shall enter his default.
R55(b) provides: “In all cases the party entitled to a judgment by default shall apply to the court therefor. …”
R55(c) says that: “For good cause shown, the court may set aside a default and, if a judgment by default has been entered, may likewise set it aside in accordance with Rule 60(b).”
This is R60(b):
(b) Mistakes; Inadvertence; Newly Discovered Evidence; Fraud, etc. On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons:
(1) fraud, misrepresentation, or other misconduct of an adverse party;
(2) accident or mistake;
(3) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b);
(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;
(6) any other reason justifying relief from the judgment.
The motion shall be made within a reasonable time, and for reasons (1), (2) and (3) not more than six months after the judgment, order, or proceeding was entered or taken. A motion under this subdivision does not affect the finality of a judgment or suspend its operation. Leave to make the motion need not be obtained from the appellate court unless the record has been transmitted to the appellate court and the action remains pending therein. 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 set aside a judgment for fraud upon the court. Writs of coram nobis, coram vobis, audita querela, and bills of review and bills in the nature of a bill of review, are abolished. The procedure for obtaining any relief from a judgment shall be by motion as prescribed in these rules or by an independent action and not otherwise.
Aside from the plain language of the rules, how have the courts addressed the setting aside default judgments?
The COA’s decision in Emery v. Greater Greenville Housing and Revitalization Association, handed down June 12, 2018, took on the appellant’s claim that the chancellor erred in refusing to set aside a default judgment entered against him. Judge Carlton wrote the opinion:
¶23. 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  at 101 (¶23) [(Miss. 2014)] (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) [(Miss. 2016)].
The decision goes on to analyze the facts of this particular case over the next dozen pages, reaching the conclusion that Emery failed to prove the necessary elements, and that the chancellor was not in error by refusing to set aside the default. You can read the opinion for yourself. It’s too lengthy and case-specific to be reproduced here.
Usually the lawyer is called upon to rescue the client from the client’s own failure and neglect to tend to his or her business that resulted in the default. That puts the lawyer in the unenviable digging-out-of-the-hole mode.
Sometimes it’s the lawyer’s oversight that put the client in the default hole. Don’t expect the chancellor to cut you any more slack than she would a lay person in the same situation. You still have to prove good cause, colorable defense, and nature of any resulting prejudice.
Divorce Defendant in Default
December 4, 2014 § Leave a comment
Larry Bolivar filed for divorce from his wife, Teresa, on February 19, 2013. She was served with process on March 21, 2013. The R4 process was in the usual form that included the admonishment to file an answer within 30 days, or the relief requested could be granted.
On May 8, 2013, Teresa had filed no response to the divorce complaint, and Larry appeared in court and presented his case. The chancellor granted him a divorce from her.
In June, 2013, Teresa filed a motion to set aside the divorce, an answer denying the allegations of the complaint, and a counterclaim for divorce. In her motion to set aside the divorce, she complained that she had not been properly served with a summons or notice of hearing for the May 8, 2013, proceeding.
At the hearing on her motion to set aside the divorce judgment, Teresa acknowledged that she had been served with process on the complaint, and the judge found on that point that she had been served with process. As to her argument that she should have been given notice of the May hearing, the chancellor denied the motion on the basis that her failure to file an answer precluded her from asserting that claim. Teresa appealed.
On appeal, Teresa raised for the first time the issue whether Larry should have had her declared to be in default per MRCP 55 before proceeding against her.
In the case of Bolivar v. Bolivar, decided November 25, 2014, the COA affirmed the chancellor’s rulings. Judge Ishee wrote the opinion for the court.
On the issue of whether Teresa was entitled to notice, pursuant to MRCP 5, of the May hearing, the court said this:
¶11. Rule 5(a), in pertinent part, provides that “every written notice . . . shall be served upon each of the parties.” Nonetheless, Rule 5(a) also states that “[n]o service need be made on parties in default for failure to appear[.]” At the hearing regarding Teresa’s motion to set aside the divorce judgment, Teresa testified that she was served properly with process. Although she contends that she had obtained an attorney whom she believed was handling her case, the record does not reflect that any action was taken on her behalf in the thirty days following her receipt of the summons. As such, she was in default for failing to answer or appear. Nonetheless, Teresa argues that she was not properly declared in default pursuant to Rule 55.
As to whether she was properly declared in default per MRCP 55:
¶12. Rule 55 governs default judgments, and provides that when a party “has failed to plead or otherwise defend as provided by these rules and that fact is made to appear by affidavit or otherwise, the clerk shall enter his default.” M.R.C.P. 55(a). However, “[i]f the party against whom judgment by default is sought has appeared in the action, he [or his representative] shall be served with written notice of the application for judgment at least three days prior to the hearing of such application[.]” M.R.C.P. 55(b). Teresa contends that Larry should have applied for an entry of default with the chancery clerk or applied for a default judgment in the chancery court. She maintains that his failure to declare her in default meant that she was not in default and his duty to serve her notice remained intact. As such, she argues that the judgment in his favor is void. We disagree.
¶13. This rule is “not directly applicable” to divorce proceedings. Stinson v. Stinson, 738 So. 2d 1259, 1262 (¶12) (Miss. 1999). Specifically, the Mississippi Supreme Court has held that a judgment entered in an action for divorce following a defendant’s failure to answer is “a special kind of default judgment.” Id. at 1263 (¶13) (quoting Mayoza v. Mayoza, 526 So. 2d 547, 548 (Miss. 1988)). A defendant’s failure to answer does not drag a divorce case to a halt. Instead, the plaintiff must, at a hearing, prove the allegations that support the receipt of a divorce. If that is done, then the chancellor has authority to grant the divorce despite the absence of the defendant. Id. at (¶15). This reasoning is supported by Rule 55(e), which provides that “unless the claimant establishes his claim or rights to relief by evidence,” a default judgment will not be entered in a suit for divorce. “Furthermore, a divorce will not be granted on the uncorroborated testimony of the claimant.” Lindsey v. Lindsey, 818 So. 2d 1191, 1194 (¶13) (Miss. 2002).
¶14. Since Teresa failed to answer or appear, we find that she was in default and not owed notice of the divorce hearing. Further, after a review of the record, we find that Larry established his claim to a judgment of divorce despite Teresa’s absence. Larry’s testimony, in addition to the corroborating testimony of Parker, clearly established a divorce on the grounds of desertion. As such, we find this issue is without merit.
Note that if the defendant does enter a timely appearance, and then stops participating, you must give the defendant notice of further proceedings per R5.
ANOTHER WAY TO FLOP ON APPEAL
February 28, 2013 § 4 Comments
Vinh Nguyen entered into a contract with Dustin and Roslyn Gifford to purchase real estate. When Vinh refused to purchase the property, the Giffords sued for breach of contract.
Vinh filed no responsive pleading to the suit and made no appearance, and the Giffords applied for entry of default. They obtained a default judgment in which the court ruled that the parties had entered into a valid contract, but that Vinh had failed to perform, so that the Giffords were entitled to specific performance, or $375,000, plus $2,000 earnest money, if Vinh failed to perform within thirty days, plus nearly $17,000 in attorney’s fees. The judgment was to be reduced if the Giffords sold the property.
Four months later Vinh filed a motion to set aside the judgment, which the court denied. The court did, however, reduce the judgment by $275,000, because the Giffords had sold the property.
Vinh appealed, raising four issues that certainly appear to have some meat on them:
- Whether Vinh’s contact with the Giffords’ lawyer to tell him that the claim was contested triggered the 3-day notice requirement of MRCP 55(b);
- Whether there was valid service of process on him;
- Whether a lawsuit was proper due to an arbitration agreement; and
- Whether Roslyn Gifford was entitled to a judgment since she never signed the contract.
Some quite pithy points, to be sure. Any of the first three could undoubtedly lead to a reversal and remand if upheld. So how did the appellate court resolve them?
Well, we’ll never know for sure, because Vinh’s brief on appeal cited no authorities at all. Not a single one. The COA, in a 9-1 decision, pointed out that “Failure to cite authority in support of claims of error precludes this Court from considering the specific claim on appeal.” The court found that it was procedurally barred from considering the unsupported issues on appeal, and affirmed the chancellor’s ruling.
It should go without saying that the purpose of an appeal is to persuade the learned appellate judges that the trial judge has made some error of law. To do that, one must cite some supportive case law, statute, regulation, court rule, learned treatise, or other recognized legal authority that bears up one’s position.
Without that authority, your client will go the way of Mr. Vinh, to that dark place where one goes to ponder the burden of a $117,000 judgment, with interest, and without further recourse, except against his own lawyer.
SETTING ASIDE A DEFAULT JUDGMENT
August 2, 2012 § Leave a comment
MRCP 55(c) allows the trial judge to set aside a default judgment “for good cause shown.” MRCP 60(b) authorizes the judge to set aside a default for “mistake, newly discovered evidence, fraud, void judgment, satisfaction, or other reasons the court finds to justify setting it aside.”
In the case of American States Insurance Co. v. Rogilio, 10 So.3d 463, 467 (Miss. 2009), the court established a three-prong test for trial courts to apply in determining whether to set aside a judgment:
(1) the nature and legitimacy of a defendant’s reasons for default (i.e., whether a defendant has good cause for default), (2) whether the defendant has a colorable defense to the merits of the claim, and (3) the nature and extent of prejudice that a plaintiff would suffer if default is set aside.
In the COA case of Olive v. Malouf, decided July 24, 2012, the trial judge had denied Olive’s motion to set aside the default judgment entered against him. Judge Roberts, writing for the COA, addressed each of the American Standard elements:
- The nature and legitimacy of a defendant’s reasons for default. In support of his motion, Olive argued only that he did not know where to file or send a copy of a responsive pleading, despite the fact that the name and address of opposing counsel was clearly stated on the complaint. Olive offered nothing else to explain his failure to file an answer. “¶11. The Mississippi Supreme Court has declined to set aside a default judgment where ‘[n]othing in the record suggests that [a defendant] was confused about the meaning and effect of the papers served upon him,’ and there was no indication that the defendant was ‘confused about the fact that he had been sued and should respond.’ Guar. Nat’l Ins. Co. v. Pittman, 501 So. 2d 377, 388 (Miss. 1987).”
- Whether the defendant has a colorable defense to the merits of the claim. Olive presented nothing by way of affidavit or other sworn form of evidence that he had any meritorious defense. A party does not meet the burden of MRCP 60(b) by relying on unsubstantiated allegations that a meritorious defense exists. American Cable Corp. v. Trilogy Communications, Inc., 754 So.2d 545, 554 (Miss.App. 2000). “Despite the general preference that litigants have a trial on the merits, a defendant must still ‘set forth[,] in affidavit form[,] the nature and substance of [his] defense.” Olive at ¶14, citing H & W Transfer & Cartage Service v. Griffin, 511 So.2d 895, 899 (Miss. 1987). This is the prong that the appellate courts have held to carry the most weight.
- The nature and extent of prejudice that a plaintiff would suffer if default is set aside. Olive presented nothing in support of this element, and the court found that Malouf would suffer prejuddice, especially considering that he had prevailed on the other two prongs.
To prevail on a Rule 55(c) or 60(b) argument, then, you will have to do some groundwork to support your claim. Mere allegations will not carry the day. You will have to file affidavits and address each prong of the American Standard test. If you fail to do so, you won’t prevail on appeal.