Woodkrest Custom Homes, Inc. v. Cooper


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Docket Number: 2008-CA-00846-COA
Court of Appeals: Opinion Link
Opinion Date: 12-01-2009
Opinion Author: GRIFFIS, J.
Holding: AFFIRMED IN PART; VACATED AND REMANDED IN PART; The award of damages is vacated, and this case is remanded for further proceedings consistent with this opinion.
Additional Case Information: Topic: Contract - Improper service - Waiver - M.R.C.P. 12 - Setting aside default judgment - M.R.C.P. 55(c) - M.R.C.P. 60(b)(6) - Hearing on damages
Judge(s) Concurring: KING, C.J., LEE AND MYERS, P.JJ., IRVING, BARNES, ISHEE, ROBERTS, CARLTON AND MAXWELL, JJ.
Procedural History: Default Judgment
Nature of the Case: CIVIL - CONTRACT
Trial Court: Date of Trial Judgment: 04-03-2008
Appealed from: Itawamba County Circuit Court
Judge: Paul S. Funderburk
Disposition: MOTION TO SET ASIDE DEFAULT JUDGMENT DENIED
Case Number: 06-026
  Party Name: Attorney Name:   Brief(s) Available:
Appellant: WOODKREST CUSTOM HOMES INC., NATIONWIDE CUSTOM CONSTRUCTION, LLC AND ROBERT KRESS, SR.




 JOE MORGAN WILSON



  
  • Appellant #1 Brief
  • Appellant #1 Reply Brief
    		•
    Appellee: JAMES COOPER AND SANDRA COOPER THOMAS A. WICKER, JOSHUA S. WISE  
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    Topic: Contract - Improper service - Waiver - M.R.C.P. 12 - Setting aside default judgment - M.R.C.P. 55(c) - M.R.C.P. 60(b)(6) - Hearing on damages
    Summary of the Facts: James and Sandra Cooper filed a complaint against Woodkrest Custom Homes, Inc.; Nationwide Custom Construction, LLC; and Robert Kress, Sr., Individually. The Coopers asserted claims for breach of contract, negligent and fraudulent misrepresentation, misappropriation, and conversion of money. The defendants failed to respond, and the Coopers moved for a default judgment. The circuit court granted the default judgment and awarded the Coopers $119,387.14 in compensatory damages, $268,161.42 in punitive damages, and $5,000 in attorney’s fees. The defendants sought to set aside the default judgment, but the court denied the motion. The defendants appeal.
    Summary of Opinion Analysis: The defendants argue that service was improper because the proof of service for Woodkrest and Nationwide was not dated by Kress at signing and the proof of service for Kress was dated February 10, 2006, before the suit was filed on March 6, 2006. A court can consider the affirmative defenses of insufficiency of process and insufficiency of service of process only if they are properly raised and have not been waived. In the motion to set aside the default judgment, the defendants did not claim that service was improper. Again in the motion for rehearing, the defendants did not mention insufficiency in the service of process. Thus, the circuit judge correctly stated that the defendants had not contested the sufficiency of service of process as required by M.R.C.P. 12. The defendants also argue that the entry of default should be set aside under M.R.C.P. 55(c) for good cause and under M.R.C.P. 60(b)(6) because they did not know about the suit. Factors to consider in determining whether to set aside the default judgment include the nature and legitimacy of defendant's reasons for his default, i.e., whether the defendant has good cause for default; whether defendant in fact 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 default judgment is set aside. The defendants’ only argument is that they were unaware of the suit. However, the facts do not support their argument. Kress signed for the summonses for Woodkrest and Nationwide, and his wife signed for Kress’s summons. The only defense the defendants asserted is that the Coopers had failed to pay an additional $22,195.15 for the doors and windows so they did not order them. This alleged defense goes to only one of the Coopers’ claims – that materials were not produced. The defendants admit that, although doors and windows were paid for, they were not ordered. Because the defendants failed to present good cause for their default or a colorable defense, the court correctly denied their motion.The defendants also argue that the circuit court erred when it awarded the Coopers unliquidated damages without a hearing on the record. An on-the-record hearing must be held prior to the entry of default judgment under which unliquidated damages are requested. Liquidated damages are those that are set or determined by a contract when a breach occurs. Unliquidated damages are damages that have been established by a verdict or award but cannot be determined by a fixed formula, so they are left to the discretion of the judge or jury. The circuit court awarded the Coopers $30,000 in unliquidated damages and $268,161.42 in punitive damages. The punitive damages awarded were unliquidated damages because they were not set or determined by a contract when the breach occurred. Further, there is no finding by the circuit court that the defendants acted with malice or gross negligence or reckless disregard for the rights of others. Thus, the case is remanded based on the circuit court's failure to conduct an on-the-record hearing regarding damages.


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