Title: Southern Transit Company, Inc. v. Eugene Collums

State: arkansas

Issuer: Arkansas Supreme Court

Document:

SOUTHERN TRANSIT COMPANY v. Eugene COLLUMS

97-967                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
                  Opinion delivered May 7, 1998


1.   Civil procedure -- default judgment -- revision of Ark. R. Civ. P. 55 made grant
     discretionary. -- In 1990, the supreme court substantially revised
     Ark. R. Civ. P. 55 so that more cases would be decided on the
     merits instead of upon the technicalities that often lead to
     default judgment; one of the changes was to make the grant of
     default judgment under Rule 55(a) discretionary rather than
     mandatory.

2.   Civil procedure -- default judgment -- factors to be considered in deciding whether
     to enter. -- In deciding whether to enter a default judgment, the
     court should take into account the following factors: whether
     the default is largely technical and the defendant is now
     ready to defend; whether the plaintiff has been prejudiced by
     the defendant's delay in responding; and whether the court
     would later set aside the default judgment under Ark. R. Civ.
     P. 55(c).

3.   Civil procedure -- default judgment -- setting aside -- requirements. -- Under Ark.
     R. Civ. P. 55(c), a default judgment may be set aside for the
     following reasons: mistake, inadvertence, surprise, or
     excusable neglect; the judgment is void; fraud,
     misrepresentation, or other misconduct of an adverse party; or
     any other reason justifying relief from the operation of the
     judgment. 

4.   Civil procedure -- default judgment -- setting aside -- meritorious defense must be
     shown. -- In addition to establishing one of the grounds for
     setting aside a default judgment, the defendant must also
     demonstrate a meritorious defense to the action, unless the
     ground asserted is that the judgment is void.

5.   Civil procedure -- default judgment -- void if defendant improperly served. -- A
     default judgment is void under Ark. R. Civ. P. 55(c)(2) if the
     defendant was improperly served under Ark. R. Civ. P. 4. 

6.   Process -- summons -- compliance with technical requirements must be exact. -- The
     technical requirements of a summons, and compliance with those
     requirements, must be exact.

7.   Statutes -- statutory requirements -- compliance must be exact. -- Statutory
     requirements, being in derogation of common-law rights, must
     be strictly construed; compliance with them must be exact.

8.   Civil procedure -- default judgment -- trial court could have rendered void on basis
     of defective summons. -- Where the summons correctly listed the names
     of both defendants but incorrectly directed the summons to
     employee defendant instead of appellant corporate defendant
     and thus did not strictly comply with the technical
     requirements of Ark. R. Civ. P. 4, the trial court could have
     ruled that the default judgment was void ab initio regardless
     of the fact that appellant corporate defendant had actual
     knowledge of the complaint against it.       

9.   Process -- insufficiency of -- when defense is waived. -- Pursuant to Ark. R.
     Civ. P. 12(h)(1), a party waives the defense of insufficiency
     of process under Ark. R. Civ. P. 12(b)(4) if he or she fails
     to raise the argument in either the answer or a motion filed
     simultaneously with or before the answer.

10.  Process -- insufficiency of -- appellant's defense waived. -- Where appellant
     did not raise its valid defense of insufficiency of process in
     its answer or by motion filed prior to or simultaneously with
     its answer, the supreme court held that the defense was
     waived.  

11.  Pleading -- denial of allegation not equivalent to stating facts sufficient to support
     defense. -- The mere denial of a factual allegation is not
     equivalent to stating facts sufficient to support a legal
     defense.  

12.  Civil procedure -- lack of personal jurisdiction separate defense from insufficiency
     of process. -- Lack of jurisdiction over the person under Ark. R.
     Civ. P. 12(b)(2) is a separate and distinct defense from
     insufficiency of process under Ark. R. Civ. P. 12(b)(4).

13.  Process -- insufficiency of -- appellant's denial that court had personal jurisdiction
     did not sufficiently raise defense. -- Appellant's mere denial of the
     factual allegation that the court had jurisdiction over the
     parties did not sufficiently raise the legal defense of
     insufficiency of process.

14.  Civil procedure -- default judgment -- trial court did not abuse discretion in granting
     as to appellant's liability. -- Where appellant waived its valid
     defense of insufficiency of process by failing to raise that
     defense in its first responsive pleading, the supreme court
     held that the trial court did not abuse its discretion when it
     granted default judgment with respect to appellant's
     liability.  


     Appeal from Hempstead Circuit Court; Jim Gunter, Judge;
affirmed.
     McKenzie, McRae, Vasser & Barber, by: James H. McKenzie, for
appellant.
     Gary Eubanks & Associates, by: Robert S. Tschiemer and William
Gary Holt, for appellee.

     Annabelle Clinton Imber, Justice.
     The appellant, Southern Transit Co. Inc., challenges a default
judgment that was entered in favor of the appellee, Eugene Collums,
on the issue of liability.  We affirm. 
     The appellant, Eugene Collums, collided with a truck owned by
the appellee, Southern Transit Company, and operated by its
employee, Bruce Peek.  On February 26, 1997, Collums filed a
negligence action against Southern Transit and Bruce Peek for the
injuries he sustained during the accident.  Collums then sent by
certified mail a copy of the complaint, the summons, and several
discovery requests to Southern Transit's agent for service.  The
summons correctly listed Southern Transit and Bruce Peek as the
defendants, but it was improperly directed to Defendant Bruce Peek
instead of Southern Transit.  On March 7, 1997, Southern Transit's
agent for service received the certified mail and signed the return
receipt.
     On April 2, 1997, Collums gave Southern Transit a thirty-day
extension to file an answer to the complaint.  When Southern
Transit failed to file its answer within the extended time period,
Collums filed a motion for default judgment on May 21, 1997.  On
June 19, 1997, which was 104 days after the date of service and 43
days after the expiration of the thirty-day extension, Southern
Transit filed its answer to Collums's complaint.  On June 23, 1997,
Southern Transit also filed a response to Collums's request for
default judgment.  In its response, Southern Transit argued for the
first time that default judgment should not be granted to Collums
because the summons was improperly directed to Bruce Peek, instead
of Southern Transit. 
     On July 8, 1997, the trial court struck Southern Transit's
answer as untimely, ordered a default judgment against Southern
Transit as to liability, and granted a jury trial on the issue of
damages.  The default judgment was entered as to Southern Transit
only and did not apply to Defendant Bruce Peek.  Southern Transit
subsequently filed a motion to set aside the default judgment,
which was denied by the trial court on July 30, 1997.  Southern
Transit appeals.  Although the issue of damages remains to be
resolved by a jury and the default judgment was entered only as to
Southern Transit, we have jurisdiction over this case because it is
an interlocutory appeal of the trial court's order striking
Southern Transit's answer.  See Ark. Sup. Ct. R. 1-2(a)(11); Ark.
R. App. P. 2(a)(4) -- Civ; Arnold Fireworks Display, Inc. v.
Schmidt, 307 Ark. 316, 820 S.W.2d 44 (1991).  
                        I.  Void Judgment
     On appeal, Southern Transit contends that the trial court
erred when it granted Collums's motion for default judgment under
Ark. R. Civ. P. 55(a).  In 1990, we substantially revised Rule 55
so that more cases would be decided on the merits instead of upon
the technicalities that often lead to default judgment.  B & F
Engineering, Inc. v. Cotroneo, 309 Ark. 175,