Title: Polselli v. Aulgur

State: arkansas

Issuer: Arkansas Supreme Court

Document:

Remo POLSELLI, et al. v. John AULGUR

96-426                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
                Opinion delivered April 14, 1997


1.   Judgment -- default judgment establishes liability but not damages. -- A
     default may establish liability but not necessarily the extent
     of damages.

2.   Damages -- hearing required when extent of damages remains in question. --
     When the extent of damages remains in question, a hearing is
     required to determine the amount of damages, and the plaintiff
     is required to introduce evidence of the damages.

3.   Damages -- evidence sufficient to support damages awarded. -- Where
     appellee's testimony was quite specific and supported by his
     closing statement and appellant's returned checks, the
     evidence was sufficient to support the damages awarded.

4.   Civil procedure -- defaulting defendant -- right to cross-examination. --
     When disputing the amount of damages, the defendant has the
     right to cross-examine the plaintiff's witnesses, to introduce
     evidence in mitigation of damages, and to question on appeal
     the sufficiency of the evidence to support the amount of
     damages awarded; the defaulting defendant may not, however,
     introduce evidence to defeat the plaintiff's cause of action.
5.   Damages -- trial court did not err in sustaining objection to question
     that went to issue of liability rather than damages. -- The supreme
     court, concluding that in view of the trial court's
     determination that appellant was liable under a contract for
     the sale of stock, the question asked by appellant's counsel
     of appellee at the damages hearing regarding the meaning of
     the term "buyer" in the contract was irrelevant to any issue
     remaining in the case, held that it was not error to sustain
     appellee's objection that the question went to the matter of
     appellant's liability rather than damages.

6.   Civil procedure -- default -- trial court's discretion to conduct hearing
     on damages or truth of averment. -- Under Ark. R. Civ. P. 55(b), the
     trial court is vested with discretion to conduct a hearing if,
     to enable the court to enter judgment or to carry it into
     effect, it is necessary to take an account or to determine the
     amount of damages or to establish the truth of any averment by
     evidence or to make an investigation of any other matter; no
     authority requires a trial court to hold such a hearing on
     issues of liability when it has already been established by
     the entry of a default.


     Appeal from Pulaski Circuit Court; John Ward, Judge; affirmed.
     Richard C. Downing, P.A., by: Richard C. Downing, for
appellant.
     Trammell Law Firm, by: Thomas F. Meeks, for appellee.

     David Newbern, Justice.
     As the result of failure to comply with a discovery order, a
judgment was entered in favor of appellee John Aulgur against
Little Rock Hotel Associates, Inc. (LRHA), and Remo Polselli.  Mr.
Aulgur's claim was for breach of a contract for the sale of his
stock in TCB Lodging Corporation.  The judgment was a default
judgment which resulted from the answer and counterclaim of LRHA
and Mr. Polselli being struck as a sanction permitted by Ark. R.
Civ. P. 37 for failure to answer interrogatories.  A hearing was
held to determine Mr. Aulgur's damages.  The issue in this appeal
is whether the Trial Court erred by refusing to allow Mr.
Polselli's counsel to ask a question on cross-examination of Mr.
Aulgur on the ground that the question went to the issue of
liability rather than damages.  We hold there was no error.
     There is no doubt that Mr. Polselli was made a defendant in
the complaint filed by Mr. Aulgur or that he was a party to the
contract at issue.  He was named as a party in the opening
paragraph of the contract, and he signed it once as President of
LRHA and then again on his own behalf.  Nor does counsel for Mr.
Polselli contend that there was any excuse for his client's failure
to respond to interrogatories after notices and inquiries from
opposing counsel and, ultimately, after an order from the Trial
Court to show cause why he should not be held in contempt for
failure to respond.  
     At a hearing to determine damages, Mr. Aulgur testified.  He
presented a closing statement which demonstrated that he,
personally, was to receive $78,627.00 from the $90,000 purchase
price recited in the contract.  He testified that he received three
checks from Mr. Polselli and his agent at the closing.  The checks,
from which Mr. Aulgur's $78,627.00 was to be taken, were returned
for "insufficient funds."  He attempted a second time to negotiate
the checks, and they were again returned for the same reason.
     Upon cross-examination of Mr. Aulgur, counsel for Mr. Polselli
asked Mr. Aulgur to read from the contract the portions stating
that LRHA was the "buyer" of the stock.  He then asked, "Now, would
you agree with me that per the contract that you just read, the
buyer refers to Little Rock Hotel Associates, Inc.?"  Counsel for
Mr. Aulgur objected on the ground that the question went to the
matter of liability of Mr. Polselli which was no longer at issue. 
The Trial Court pointed out that Mr. Polselli had been named by the
complaint as a party to the contract who was liable for the
payment.  Counsel for Mr. Polselli responded that the answer had
denied that claim, but he acknowledged that the answer had been
stricken as a discovery-failure sanction.  The Trial Court
sustained the objection on the ground that the question Mr.
Polselli's counsel sought to ask went to the issue of liability
rather than damages.
     Judgment was entered against LHRA and Mr. Polselli jointly and
severally and in favor of Mr. Aulgur in the amount of $78,627.  Mr.
Polselli moved for a new trial, citing Ark. R. Civ. P. 55(b),
claiming a meritorious defense and arguing that the rule required
a hearing regarding the "truthfulness" of Mr. Aulgur's claim.  The
motion was denied.

                     1.  Evidence of damages
     Mr. Polselli contends that the Trial Court abused his
discretion by awarding damages in the amount prayed for in the
complaint.  He argues, in essence, that the evidence did not
support the amount of the damages awarded.  He submits that his
cross-examination would have shown that Mr. Polselli was not
liable.  Nothing is presented to contest the testimony of Mr.
Aulgur concerning the amount he would have received had the
contract been performed.
     A default may establish liability but not necessarily the
extent of damages.  Byrd v. Dark, 322 Ark. 640,