Kumar, et al. v. Loper
| Docket Number: | 2009-CT-02037-SCT Linked Case(s): 2009-CA-02037-COA2009-CA-02037-COA2009-CT-02037-SCT |
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| Oral Argument: | 01-11-2012 | |
* This video is best viewed in the most current version of Google Chrome, Internet Explorer with Windows Media Player plug-in, or Safari (Mac Users). |
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| Supreme Court: | Opinion Link Opinion Date: 02-23-2012 Opinion Author: Carlson, P.J. Holding: Court of Appeals vacated; Circuit court reversed and remanded. |
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| Additional Case Information: |
Topic: Sexual harassment - Default judgment - Appearance - M.R.C.P. 55(b) & (c) - M.R.C.P. 3(a) - Setting aside default - M.R.C.P. 60(b) Judge(s) Concurring: Waller, C.J., Dickinson, P.J., Randolph, Lamar, Kitchens, Chandler, Pierce and King, JJ. Procedural History: Default Judgment Nature of the Case: CIVIL - TORTS-OTHER THAN PERSONAL INJURY & PROPERTY DAMAGE Writ of Certiorari: Granted Appealed from Court of Appeals |
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| Trial Court: |
Date of Trial Judgment: 10-29-2009 Appealed from: Lowndes County Circuit Court Judge: Lee J. Howard Disposition: MOTION TO SET ASIDE DEFAULT JUDGMENT DENIED Case Number: 2008-0156-CV1 |
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| Note: | Holding that a letter sent before an action was filed did not constitute an appearance for purposes of a default judgment, the Supreme Court vacated the Court of Appeals' holding and remanded the case to the Circuit Court to assess the motion to set aside the default judgment in accordance with this opinion. | |
| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | Arvind Kumar, Individually and d/b/a Holiday Inn of Columbus, Tony Savage and Tracey Savage |
JOHN W. CROWELL |
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| Appellee: | Shanna Loper | DEWITT T. HICKS, JR. |
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Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
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| Topic: | Sexual harassment - Default judgment - Appearance - M.R.C.P. 55(b) & (c) - M.R.C.P. 3(a) - Setting aside default - M.R.C.P. 60(b) |
| Summary of the Facts: | Arvind Kumar operated the Holiday Inn in Columbus. Tracey Savage managed the bar and lounge at the Holiday Inn. Two of the employees Tracey supervised were her son, Tony Savage, who cleaned and stocked the bar, and her cousin, the plaintiff, Shanna Loper, who worked as a cocktail waitress. Loper held the job for four months. The circumstances surrounding Loper’s leaving her employment on July 25, 2008, are disputed. The defendants allege that Loper was fired. Loper claims that she was not fired, but rather quit the position because she was sexually harassed by Tony. On August 6, 2008, counsel for Loper sent a demand letter to Kumar asserting claims of sexual harassment and intentional infliction of emotional distress. On August 18, 2008, Kumar’s attorney, Pleasants, responded to Loper’s demand letter. He stated that his letter served as notice that he was representing the defendants in this matter, and that the defendants denied Loper’s claims. The attorneys also exchanged several e-mails about certain evidence related to Loper's claims, and Pleasants consistently maintained that the defendants denied all claims. On December 9, 2008, Loper filed her complaint alleging that Tony had sexually harassed her at work, and that Tracey and Kumar were responsible for Tony’s actions, in their capacities as Tony’s supervisor and employer. However, the defendants alleged that Loper’s actual employer was Mit-Sar, LLC, a limited-liability company controlled by Kumar and his wife. Mit-Sar is not a party in this case. Tony was served with process on December 9, 2008. Kumar and Tracey were served on December 12, 2008. After the complaint had been filed, Loper's attorney spoke with Pleasants, who stated that he no longer represented the defendants and that he thought another local attorney might be handling the case. However, neither attorney, nor any other attorney, ever made an appearance on behalf of the defendants, and no answer was ever filed. Sometime thereafter, the defendants became unable to locate Pleasants. The circuit court entered a default judgment as to liability on February 24, 2009, and a hearing was held later to determine damages. Again, the defendants were not provided notice of the hearing. On June 11, 2009, the circuit court entered an order awarding Loper $100,000 in damages, for which Kumar, Tracey, and Tony were jointly and severally liable. Thereafter, Kumar's attorney discovered the existence of the default judgment while representing Kumar in an unrelated matter. On June 17, 2009, the defendants filed a motion to set aside both the judgment as to liability and the award of damages. On August 11, 2009, the defendants filed an answer denying liability and setting out several affirmative defenses. The circuit court found that no one had made an appearance on behalf of the defendants, and that, therefore, they were not entitled to notice of the hearing on the default judgment. Thus, the defendants’ motion to vacate the default judgment was denied. The defendants appealed, and the Court of Appeals reversed and remanded, finding that the letter from the defendants’ original attorney to Loper’s counsel, although sent prior to the filing of the complaint, sufficiently expressed the defendants’ intent to defend against Loper’s claims. Loper filed a petition for writ of certiorari, which the Supreme Court granted. |
| Summary of Opinion Analysis: | Loper argues that the Court of Appeals erred by holding that the circuit court committed error when the circuit court found that the letter from the defendants’ attorney to Loper’s counsel, sent prior to the filing of the complaint, did not constitute an appearance under M.R.C.P. 55(b). The appearance commanded by Rule 55(b) has been defined broadly and interpreted liberally and is not limited to formal court appearances. Once a party has made an indicia of defense or denial of the allegations of the complaint such party is entitled to at least three days’ written notice of the application for default judgment. Informal contacts between parties, including the exchange of letters, might constitute an appearance under Rule 55(b). An appearance for the purposes of notice under Rule 55(b) need not be so formal as a motion in court, and an exchange of letters may suffice. However, in the cases cited by the parties and by the Court of Appeals, such communication always took place after a case had been commenced by filing a complaint in court. The Supreme Court has never gone so far as to hold that an appearance may occur before an action has been filed; that is, legally commenced. Thus, the appearance requirement under Rule 55(b) cannot be satisfied until after an action has been commenced in court as provided under M.R.C.P. 3(a). Where there is a reasonable doubt as to whether or not a default judgment should be vacated, the doubt should be resolved in favor of opening the judgment and hearing the case on its merits. A consideration of the provisions of M.R.C.P. 55(c) and 60(b)(5) and (6) boils down to a balancing of the equities. Three factors which must be considered include the nature and legitimacy of the defendant’s reasons for his default, i.e., whether the defendant has good cause for the default; whether the 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 first prong of this test favors the defendants. The defendants claim that they maintained regular contact with their attorney, Pleasants. The defendants state that their attorney informed them that he had filed an appearance, and even showed them an undated copy of the answer he claimed to have filed. Under these facts, the defendants were not aware of, and ought not reasonably to have been aware of, this failure, or of their attorney’s purported withdrawal from the case. Tracey testified that, since she was told by Pleasants that the answer had been filed, she had no reason to believe that further action was required on her part at that time. While it is the responsibility of the parties to ensure that their attorneys diligently represent them, this sort of egregious misconduct on the part of the attorney (taking Tracey’s testimony to be true for the purposes of discussing the issue) was not common or predictable. This misconduct went beyond negligence, ignorance, or carelessness and constituted exceptional circumstances. The second prong strongly favors the defendants. The defendants deny Loper’s allegation of sexual harassment. They allege that Loper was fired. Thus, the defendants unquestionably have a colorable defense to the merits of the claims asserted by Loper. The third prong weighs in Loper’s favor. The fact that the injured plaintiff is without a resolution to her claim for that period of time i.e., the period of delay caused by the defendant’s default, constitutes prejudice. However, the defendants would also suffer prejudice caused by the default judgment, which was entered through no lack of diligence on their part. If the circuit court’s judgment were allowed to stand, the defendants would be compelled to surrender $100,000 to Loper, without an appropriate opportunity to defend themselves. The circuit court denied the defendants their day in court due to a technical deficiency that was outside the scope of their knowledge, and the court’s denial of the defendants’ motion to set aside the default judgment was an abuse of discretion. |
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