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.

Economics of the Do-It-Yourself Lawsuit

April 9, 2015 § 1 Comment

Nellie Pruitt died intestate in 1974. Her 24.12 acres of land was surveyed by Lambert, divided into five equal tracts, and deeded to Nellie’s five daughters, each of whom executed deeds that were recorded in the land records of Tishomingo County. In 2007, one of the daughters had the property surveyed by Guice, who discovered several errors in the deed descriptions. Freddie Dobbs, the heir of one of the original sisters, disagreed that there was any error in the descriptions, and obtained his own survey from Ledgewood that he claimed to support his position. Acting on his belief that the original description was correct, Dobbs bulldozed some trees, cleared land, and tore down a fence.

The other landowners (Crawford, et al.) filed suit against Dobbs in chancery court to reform the deeds, remove clouds, and quiet and confirm title. The complaint also sought damages, injunctive relief, expert witness fees, and attorney’s fees.

Dobbs represented himself.

Crawford filed a motion for partial summary judgment, and a hearing was held in which the judge apparently permitted testimony. Crawford put into evidence Guice’s survey with his affidavit, a deraignment of title, and the affidavit of the sole surviving Pruitt sister that the intent of the original partition was that each sister would receive an equal plot.

In response, Dobbs testified (apparently without objection) that Ledgewood had told him that the property lines were correct. He also testified (apparently without objection) that his mother had told him that she believed she owned more of her mother’s property, but did not want a family feud. He did not offer Ledgewood’s survey into evidence, and he offered no counteraffidavits, as required in R56(e).

The chancellor granted partial summary judgment reforming the deeds and quieting and confirming title according to the Guice survey.

A hearing was then held on the issues of injunctive relief, damages, court costs, expert witness fees, and attorney fees. Crawford et al. were represented by counsel. Dobbs, again, appeared pro se.

The Crawford plaintiffs put on detailed testimony and introduced documentary evidence to support their claims. In his defense, Dobbs again asserted that he had relied on Ledgewood. In ruling (predictably) for the plaintiffs, the chancellor observed that:

“Mr. Ledgewood did not testify and his survey was not offered nor admitted into evidence. There is no evidence whatsoever to support the explanation of the Defendant, Freddie Dobbs.”

The chancellor entered a judgment against Dobbs for nominal and actual damages totaling $17,746.20, for attorney’s fees in the sum of $13,000, and for expert witness fees in the amount of $3,250, for a grand total of $33,996.20. Each judgment was to bear interest at the rate of 8%.

Dobbs appealed, yet again representing himself.

On March 31, 2015, the COA handed down its decision in Dobbs v. Crawford, et al., in which Judge Irving observed for the unanimous court (Judge James not participating) that Dobbs ” … lists various grievances, but offers little argument and law.” Dobbs’ cornerstone contention was that, at the summary judgment hearing, he was “waiting for his chance to tell his side,” and that he did not know he was required to provide counteraffidavits with expert testimony. In other words, his lawyer (himself) was ignorant of the law. As you can guess, the COA did not buy that or any of his other contentions, and affirmed the trial court.

In case you’re not keeping count of Dobbs’ success as his own lawyer: Strike One, partial summary judgment hearing; Strike Two, damages hearing; and Strike Three, appeal. He’s Out.

So, let’s assess the wreckage:

  • I am going to assume that a moderately experienced attorney would have settled this case in its earliest stages (some other defendants did exactly that) for far less than was ultimately assessed against Dobbs.
  • No doubt an early settlement would have drastically reduced attorney’s fees. I note that there were two attorneys in the case, one of whom had fees of $10,000, and the other $3,000. My guess is that the former was the trial attorney, and the latter was the lawyer who did the title work and perhaps filed the initial pleadings in the unsuccessful hope that Dobbs would come to terms. If that’s so, then Dobbs cost himself $10,000 at least right there.
  • Had he retained counsel early enough, that attorney might have been able to dissuade Dobbs from doing the bulldozer work on the plaintiffs’ property that ultimately cost him $17,746.20.
  • If he had an attorney at the summary judgment proceeding, the Ledgewood survey (if it really existed) and some other supportive evidence would have been introduced that could have averted summary judgment and may have propelled the parties into settlement negotiations that would have saved Dobbs some serious money.
  • I am willing to bet that Dobbs’ attorney’s fees would have been in the neighborhood of a few hundred dollars had he hired a lawyer when he got the Ledgewood survey, and a few thousand afterward. At any event, his total fees and judgment with assistance of a lawyer would not have approached $33,000, in my opinion.

“Penny wise and pound foolish” is one way to put it.

Where Am I?

You are currently browsing entries tagged with quiet and confirm title at The Better Chancery Practice Blog.