Capital One Services, Inc. v. Rawls
| Docket Number: | 2003-CA-01050-SCT | |
| Supreme Court: | Opinion Link Opinion Date: 12-02-2004 Opinion Author: Carlson, J. Holding: Affirmed in Part; Vacated and Remanded in Part |
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| Additional Case Information: |
Topic: Contract - Default judgment - M.R.C.P. 60(b) - Evidentiary hearing - M.R.C.P. 55(b) - Jurisdiction - M.R.C.P. 59(e) Judge(s) Concurring: Smith, C.J., Waller and Cobb, P.JJ., Easley, Graves, Dickinson and Randolph, JJ. Non Participating Judge(s): Diaz , J. Procedural History: Default Judgment Nature of the Case: CIVIL - CONTRACT |
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| Trial Court: |
Date of Trial Judgment: 04-29-2003 Appealed from: Lamar County Circuit Court Judge: R. I. Prichard, III Disposition: Refused to set aside a default judgment. Case Number: 2002-344 |
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| Party Name: | Attorney Name: | |||
| Appellant: | CAPITAL ONE SERVICES, INC.,
A DELAWARE CORPORATION |
BILLY BERRYHILL
W. WAYNE DRINKWATER, JR.
LAWRENCE ELDER HAHN |
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| Appellee: | C. J. RAWLS AND LULA RAWLS | THOMAS M. MATTHEWS, III WILLIAM L. DUCKER |
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| Topic: | Contract - Default judgment - M.R.C.P. 60(b) - Evidentiary hearing - M.R.C.P. 55(b) - Jurisdiction - M.R.C.P. 59(e) |
| Summary of the Facts: | Capital One Services, Inc. received a signed acceptance certificate for a pre-approved MasterCard purportedly from C.J. Rawls. C.J. and his wife, Lula, never called to activate the card but an annual fee was charged to the account. When the Rawlses learned of the charges, they requested that COS cancel the account and charge off the balance. COS sent them a letter confirming that the balance had been cancelled, that the account had been closed, and that the credit reporting agencies had been directed to remove any derogatory information regarding the account. After the Rawlses had built a house and their mortgage application had been denied, they filed a complaint because COS did not comply with their demand letter that all derogatory information be removed from their credit report. The circuit clerk entered default pursuant to M.R.C.P. 55(a). The circuit court entered a final judgment in the amount of $63,071 in actual damages and $630,000 in punitive damages. The plaintiffs filed a Suggestion of Writ of Garnishment, and a writ of garnishment was issued for service shortly thereafter. In the writ, COS was listed as the defendant and Capital One Bank was listed as the garnishee defendant. COS filed a Motion to Set Aside Default Judgment. The court denied the motion. New counsel for COS filed an entry of appearance in the circuit court and also filed a Motion to Alter and Amend the Judgment, or, in the Alternative, to Reconsider the Motion to Set Aside the Default Judgment. The trial court set aside the award of punitive damages but left undisturbed the judgment for actual damages. COS appeals, and the Rawlses cross-appeal. |
| Summary of Opinion Analysis: | Issue 1: Default judgment In its motion to set aside the default judgment, COS asserted that it had a colorable defense; that the complaint misidentified the cardholder; and that it was not a proper party. In determining whether to set aside a default judgment pursuant to M.R.C.P. 60(b), the court must consider the nature and legitimacy of the defendant's reasons for default; whether the defendant has a colorable defense to the merits of the claim; and the nature and extent of prejudice which may be suffered by the plaintiff if the judgment is set aside. The circuit court focused on the fact that COS waited thirteen days after the court entered the default judgment before making an appearance and did not attack the default judgment at that time. The court noted that COS never responded to the proceedings until the plaintiffs sought to have the judgment enforced via the writ of garnishment. This delay is indicative of the lack of diligence by COS. The only support for the motion to set aside the default judgment is contained in an affidavit by the specialist and documents attached thereto. COS alleged as a defense that it was not a proper party. However, the affidavit did not address this defense and all that supports this allegation is the lone, conclusory statement contained in the motion itself. While the affidavit confirms that COS committed to contacting the credit reporting agencies to remove any derogatory information regarding the account, it fails to declare or provide proof that this was ever done. The trial court found that the plaintiffs would be prejudiced if the judgment were set aside. COS argues that affidavits alone are sufficient to support a motion to set aside a judgment. An affidavit is not a mere formality that guarantees a motion to set aside a judgment will be granted. Still necessary is that the affidavit addresses the substantive legal requirements for having a default judgment set aside. Therefore, the court was correct in refusing to set aside the default judgment entered as to liability. Issue 2: Evidentiary hearing COS argues that a trial court must conduct an on-the-record hearing regarding damages before entering a default judgment. Pursuant to M.R.C.P. 55(b), an on-the-record hearing must be held prior to the entry of default judgment under which unliquidated damages are requested. Liquidated damages are set or determined by contract, while unliquidated damages are established by a verdict or award and cannot be determined by a fixed formula. Because the damages awarded were not predetermined or contractually established in this case, the plaintiffs sought and received an award for unliquidated damages. Therefore, the court was required to conduct an evidentiary hearing on the record, and the case is remanded for an evidentiary hearing to assess damages. Issue 3: Jurisdiction The plaintiffs argue that the court did not have jurisdiction to consider COS’s Motion to Alter or Reconsider, because COS’s only option was to file a notice of appeal after the court denied the motion to set aside the default judgment. M.R.C.P. 59(e) allows a party to file a motion to alter or amend a judgment no later than ten days after entry of judgment. Here, judgment was entered on March 11, 2001, and the motion was filed on March 20, 2001. Because the deadline was met, the plaintiffs’ argument is without merit. |
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