Title: Tharp v. Smith

State: arkansas

Issuer: Arkansas Supreme Court

Document:

Freddy THARP v. Velma SMITH

96-451                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
               Opinion delivered October 14, 1996


1.   Motions -- decision on motion to set aside default judgment --
     standard on review. -- The standard under which the appellate
     court reviews the granting or denial of a motion to set aside
     a default judgment is whether the trial court abused its
     discretion.   

2.   Judgment -- default judgment -- judgment establishes liability
     but not damages. -- A default judgment establishes liability
     but not the extent of damages; thus, proof must be presented
     regarding the amount of damages; the only exception to the
     proof requirement is in a suit on an account where a verified
     statement of the account is filed with the complaint. 

3.   Damages -- plaintiff must produce evidence of damages --
     defendant may produce evidence to mitigate. -- A hearing is
     required to determine the amount of damages, and the plaintiff
     is required to introduce evidence of the damages; ARCP Rule
     55(b) does not require that notice of the hearing be given to
     a defaulting defendant who has not appeared; a defendant has
     the right to cross-examine the plaintiff's witnesses, to
     introduce evidence in mitigation of damages, and to challenge
     the sufficiency of the evidence on appeal; however, after
     having received evidence, the trial court may not transform
     the judgment from one of default to one based on the merits
     such that ARCP Rule 55 no longer applies.  

4.   Judgment -- judgment of liability upheld -- no abuse of
     discretion found. -- Despite appellant's argument that he was
     justified in not answering the complaint, at the hearing on
     the motion to set aside, the trial court did not find any
     reason for setting aside the default judgment; the record was
     clear that appellant was served with summons by the sheriff
     and that he chose to deal with the dispute between himself and
     appellee by pursuing the eviction proceeding in municipal
     court; the trial court did not abuse its discretion in finding
     that there was no excuse for appellant's default. 

5.   Judgment -- default judgment proper -- appellant's argument
     without merit. -- Appellant's argument that the "reason" to
     set aside the judgment was because he had a meritorious
     defense and that a miscarriage of justice would result if he
     was not allowed to present it clearly circumvented the dual
     requirements of Rule 55(c); moreover, it ignored the cogent
     fact that the reason appellant was not allowed to present a
     defense in the first place was because of his own unexcusable
     default.

6.   Damages -- no evidence given concerning damages -- judgment
     for damages should not have been entered without hearing. --
     Where there was no verified statement of account in this case,
     appellee's complaint was not verified, there was nothing in
     the record to indicate that the trial court heard evidence
     concerning the amount of the damages, and the default judgment
     itself did not recite that it was based on any evidence being
     presented, the trial court should not have entered judgment as
     to damages without conducting a hearing where appellee should
     have been required to prove the amount of her damages and
     where appellant should have been allowed the opportunity to
     cross-examine her witnesses and to offer his own evidence of
     mitigation; a plaintiff must prove his damages against a
     defaulting defendant.   


     Appeal from Ashley Circuit Court, Second Division; Sam Pope,
Judge; affirmed in part; reversed and remanded in part.
     Johnson & Keith, by:  Paul W. Keith, for appellant.
     No response.

     Donald L. Corbin, Justice. 
     Appellant, Freddy Tharp, appeals the order of the Ashley
County Circuit Court refusing to set aside a default judgment that
awarded damages of $4,723.00 plus costs and interest to Appellee,
Velma Smith, on her complaint for damages for repairs she made to
Appellant's real property in contemplation of purchasing the
property pursuant to an oral contract.  Appellant presents two
arguments for reversal.  First, he contends the trial court should
have set aside the default judgment to prevent a miscarriage of
justice.  Second, he contends there was no evidence to support the
award of damages.  Appellant's first argument requires our
interpretation of ARCP Rule 55, specifically Rule 55(c)(4).  Thus,
our jurisdiction of this appeal is pursuant to Ark. Sup. Ct. R. 1-
2(a)(3).  We find no merit to Appellant's first argument, but do
find merit to his second argument and therefore affirm the default
judgment as to liability but reverse and remand for a hearing to
determine the amount of damages.  
     Appellee filed a complaint on June 9, 1995, alleging that
Appellant orally agreed to sell her a house he owned at 500
North Carolina Street in Crossett, Arkansas, for $4,723.00,
provided that she would repair the house, which was not in
habitable condition.  According to the complaint, Appellee
completed the repairs in good faith and tendered a check for
$4,723.00 to Appellant, who then refused the check, refused to
reimburse her for the repairs, and instead initiated eviction
proceedings against her.  The complaint listed itemized repairs in
the total amount of $2,438.00 and prayed for damages for that sum
"AND LABOR AND PUNITIVE DAMAGES IN THE SUM OF $2,562.00, PLUS ALL
COSTS AND REPRESENTATIVE OF $300. WITH 8% INTEREST PER ANNUM FROM
THE DATE OF JUDGMENT AND ALL OTHER PROPER RELIEF."  The Ashley
County sheriff served Appellant with a summons on June 20, 1995. 
Appellant did not answer the complaint or make an appearance in
this case until he filed a motion to set aside the default
judgment.  
     The record does not indicate that Appellee ever moved for a
default judgment or that a hearing was ever held.  However, the
trial court entered a default judgment for Appellee on September 5,
1995, finding that Appellant was served with a copy of the
complaint and summons but had failed to appear.  
     Appellee's counsel then filed a writ of execution and a writ
of garnishment naming First State Bank of Crossett as garnishee. 
Garnishee answered and admitted being indebted to Appellant in
excess of $5,301.13.  The trial court entered an order on
October 4, 1995, ordering the release of funds from Garnishee in
the amount of $5,301.13. 
     On October 13, 1995, Appellant filed a single motion captioned
"MOTION TO SET ASIDE JUDGMENT AND MOTION TO QUASH WRIT OF
GARNISHMENT."  The trial court set a hearing on this motion and
temporarily restrained Appellee and her counsel from disbursing the
funds released by Garnishee until the hearing could be held.  The
trial court allowed Garnishee to intervene in the case.  At the
hearing on the motion to set aside judgment, the trial court
received evidence from both Appellant and Appellee.  The trial
court entered an order denying Appellant's motion.  This appeal
followed.  Appellee did not file a brief in this appeal.
     Appellant's first point on appeal is that the trial court
erred in refusing to set aside the default judgment in toto.  He
contends that he was justified in failing to answer the complaint,
that the trial court did not consider the proper factors in making
its decision, and that a miscarriage of justice will result if he
is not allowed to present a defense.  Appellant's second point for
reversal is that the trial court erred in failing to set aside the
default judgment as to damages because there is no evidence of the
amount of the damages.  The standard by which we review the
granting or denial of a motion to set aside a default judgment is
whether the trial court abused its discretion.  B & F Eng'g, Inc.
v. Cotroneo, 309 Ark. 175,