Title: Ryland v. Manor Care Inc.
Citation: N/A
Docket Number: 020306
State: Virginia
Issuer: Virginia Supreme Court
Date: October 31, 2003

Present:  All the Justices 
ELIZABETH ANN LONG RYLAND, 
EXECUTRIX OF THE ESTATE 
OF POLLY E. LONG 
 
v.  Record No. 020306  OPINION BY JUSTICE CYNTHIA D. KINSER 
 
 
 
 
 
 
 
    October 31, 2003 
MANOR CARE, INC., ET AL. 
 
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY 
Jonathan C. Thacher, Judge 
 
 
 
This appeal involves a chancery suit brought under the 
provisions of Code § 8.01-248(D) and challenges the circuit 
court’s judgment setting aside a default judgment.  Because 
we cannot say that the court’s judgment was plainly wrong 
or without evidence to support it, we will affirm that 
judgment. 
MATERIAL FACTS AND PROCEEDINGS 
 
Manor Care, Inc. and Manor Care of America, Inc. 
(collectively “Manor Care”), filed a bill of complaint, 
seeking to set aside a default judgment that previously had 
been entered against it in favor of Elizabeth Ann Long 
Ryland, executrix for the estate of Polly E. Long 
(“Ryland”).  The Circuit Court of Fairfax County had 
entered that default judgment in a medical malpractice 
action styled Ryland v. Tyroler, et al, No. 196801 (Va. 
Cir. Ct. Aug. 31, 2001) (order granting default judgment).1  
Manor Care unsuccessfully moved to have the default 
judgment in the medical malpractice action reconsidered or 
set aside.  While that motion was pending, Manor Care filed 
this separate chancery suit under the provisions of Code 
§ 8.01-428(D).  The circuit court heard the following 
evidence ore tenus. 
 
On July 18, 2001, Manor Care received from its 
registered agent the notice of motion for judgment and 
other papers concerning the medical malpractice action that 
Ryland had re-filed against it.  Manor Care faxed those 
documents to its insurance company, PHICO Insurance Company 
(“PHICO”), on July 19, 2001, and requested PHICO to assign 
defense counsel to represent Manor Care as soon as 
possible.  That same day, Manor Care sent the documents 
concerning the re-filed medical malpractice action to PHICO 
via a commercial overnight delivery service.  The 
litigation coordinator for Manor Care acknowledged that 
Manor Care relied on PHICO to retain defense counsel and to 
assure that responsive pleadings were timely filed. 
 
On July 25, 2001, after receiving the documents from 
Manor Care, PHICO assigned Vicki L. Layman (“Layman”) to 
                     
1 Ryland had re-filed the medical malpractice action 
after taking a nonsuit in a prior action. 
 
2
defend the action.2  The written assignment, which PHICO 
faxed to Layman on that date, requested Layman to enter an 
appearance and answer the action on behalf of its insured, 
Manor Care.  PHICO advised Layman that an action had been 
filed in 1998 involving the same plaintiff and defendant, 
and that it was reopening its file.  PHICO sent a copy of 
the assignment to Manor Care. 
 
After receiving the assignment from PHICO, Layman 
contacted the attorney representing Ryland and obtained an 
extension of time to August 24, 2001, for Manor Care to 
file responsive pleadings.3  Then, in a letter dated August 
1, 2001, Layman advised PHICO that she was requesting an 
increase in her hourly compensation for representing 
PHICO’s insureds.  Layman asked PHICO to advise her by 
August 6, 2001, as to whether it agreed not only to her 
increased fee but also to monthly billing.  If PHICO 
approved the rate increase, Layman asked PHICO to forward 
the necessary documents to confirm their agreement.  
Finally, Layman advised PHICO that, in the event it did not 
approve her fee increase, PHICO should immediately reassign 
                     
2 Layman had represented Manor Care in the non-suited 
medical malpractice action filed by Ryland. 
 
3 According to Layman, responsive pleadings were 
originally due on August 7, 2001. 
 
 
3
the defense of Ryland’s medical malpractice case against 
Manor Care to another attorney since responsive pleadings 
were due on August 7, 2001.4
 
PHICO received Layman’s August 1 letter on August 6, 
2001.  PHICO’s senior claims representative telephoned 
Layman that same day and left a detailed voice message 
authorizing the requested rate increase for Layman’s 
defending Manor Care in the Ryland medical malpractice 
action.  However, PHICO never sent Layman a written 
agreement reflecting the rate increase. 
 
On August 16, 2001, a Pennsylvania court, acting on a 
petition by the Insurance Commissioner of the Commonwealth 
of Pennsylvania, placed PHICO into “Rehabilitation.”  
According to PHICO’s senior claims representative, that 
action caused many defense attorneys to become reluctant 
about working for PHICO because all bills not paid as of 
that date were placed in the Rehabilitation estate.  Due to 
PHICO’s financial circumstances, Layman notified PHICO, in 
a letter faxed to PHICO on August 21, 2001, that she was 
unable to represent Manor Care in the Ryland medical 
malpractice action and that PHICO, therefore, should 
immediately reassign the matter to another attorney.  
                     
4 Apparently, Layman did not advise PHICO at that time 
about the extended deadline for filing responsive 
 
4
Layman also informed PHICO that Ryland’s attorney had 
agreed to extend the deadline for filing responsive 
pleadings to August 24, 2001. 
 
That same day, PHICO contacted another attorney, Gary 
Godard, about representing Manor Care and faxed “the new 
assignment” to him.  Godard agreed to represent Manor Care, 
and in a letter received by PHICO on August 22, 2001, 
Godard’s office confirmed that Godard would file 
appropriate responsive pleadings on behalf of Manor Care.  
On August 21, PHICO also advised Manor Care that a new 
attorney had been assigned to the case and that the 
attorney would file responsive pleadings.  Manor Care’s 
litigation coordinator did not contact PHICO again until 
August 30, 2001. 
 
Layman received a voice message from Godard on August 
23, 2001, and she then called Ryland’s attorney to advise 
that Godard had been assigned to the case.  In a prior 
telephone conversation with Ryland’s attorney, Layman had 
requested a 30-day extension for filing responsive 
pleadings, but the attorney did not agree to her request.  
However, at trial, Manor Care attempted to show that Layman 
had “asked the judge” for and had received a verbal 
agreement that a 30-day extension would be granted to the 
                                                             
pleadings.  
 
5
new defense counsel.  The circuit court made a factual 
finding that there was no evidence to support any claim 
that such an extension had been agreed to or granted by the 
court.  Nevertheless, the circuit court accepted that Manor 
Care had that understanding, whether it was right or wrong. 
 
On August 27, 2001, PHICO learned that Godard had a 
conflict of interest and could not represent Manor Care.  
Consequently, PHICO contacted yet another attorney about 
representing Manor Care, but that attorney declined to do 
so on August 28, 2001.  Two days later, PHICO obtained 
counsel to represent Manor Care and advised Manor Care of 
that fact.  However, unbeknownst to PHICO or Manor Care, 
Ryland had moved for default judgment against Manor Care on 
August 24, 2001.  The court entered the judgment of default 
on August 31, 2001. 
 
After hearing this evidence, the circuit court 
observed that Ryland’s attorney knew on August 23 that 
Godard “allegedly, had been brought into this case, and it 
was very shortly after that that this default judgment was 
obtained.”  The court queried whether it was “equitable 
that this case [did not] get tried on its merits because 
Mr. Godard had a conflict, and the law precludes him from 
doing what he said he would do, and he [had] to get out of 
the case[.]”  In conclusion, the circuit court stated, “I 
 
6
hang my hat on number one . . . in that the default 
judgment should not, in equity, in good conscience, be 
enforced.  I’m not sure it rises to the level of 
negligence.”  For the reasons stated from the bench, the 
court subsequently entered an order granting the relief 
sought in the bill of complaint and vacating the default 
judgment entered against Manor Care.  Ryland appeals from 
that judgment. 
ANALYSIS 
 
In Charles v. Precision Tune, Inc., 243 Va. 313, 317, 
414 S.E.2d 831, 833 (1992), we stated that the provision 
now numbered subsection (D) of Code § 8.01-428 “does not 
create any new rights or remedies, but merely preserves a 
court’s inherent equity power to entertain an independent 
action” by a party seeking relief from any judgment.  We 
then enumerated the elements of this independent action in 
equity: 
(1) a judgment which ought not, in equity and good 
conscience, to be enforced; (2) a good defense to the 
alleged cause of action on which the judgment is 
founded; (3) fraud, accident, or mistake which 
prevented the defendant in the judgment from obtaining 
the benefit of his defense; (4) the absence of fault 
or negligence on the part of the defendant; and (5) 
the absence of any adequate remedy at law. 
 
Id. at 317-18, 414 S.E.2d at 833 (citing National Surety 
Co. of New York v. State Bank of Humboldt, 120 F. 593, 599 
 
7
(8th Cir. 1903)); accord Media General, Inc. v. Smith, 260 
Va. 287, 290, 534 S.E.2d 733, 735 (2000).  The party 
seeking relief under Code § 8.01-428(D) has the burden to 
prove each of these elements.  Media General, id.
 
On appeal, Ryland acknowledges that only three of 
these elements are in dispute: whether in equity and good 
conscience the default judgment should be enforced; whether 
an accident or mistake prevented Manor Care from having the 
benefit of its defense; and whether there was an absence of 
fault or negligence on the part of Manor Care.  However, 
Ryland asserts that the circuit court erred in setting 
aside the default judgment because Manor Care failed to 
prove these elements.  Manor Care disagrees and argues that 
the court’s judgment is supported by sufficient evidence. 
 
The parties do not dispute our standard of review in 
this appeal.  Since the circuit court heard evidence ore 
tenus, its judgment cannot be disturbed on appeal unless 
the court’s findings are plainly wrong or without evidence 
to support them.  Code § 8.01-680; Pizzarelle v. Dempsey, 
259 Va. 521, 527, 526 S.E.2d 260, 263 (2000); Blue Cross & 
Blue Shield of Virginia v. St. Mary’s Hosp. of Richmond, 
Inc., 245 Va. 24, 34, 426 S.E.2d 117, 123 (1993).  We 
review the evidence and all reasonable inferences in the 
light most favorable to the prevailing party at trial.  
 
8
Ravenwood Towers, Inc. v. Woodyard, 244 Va. 51, 57, 419 
S.E.2d 627, 630 (1992). 
 
Before addressing the merits of Ryland’s challenge to 
the circuit court’s judgment, we point out that the court 
did not articulate specific findings with regard to the 
five elements that must be proven in order to obtain relief 
under Code § 8.01-428(D).5  Instead, the court stated only 
that the default judgment should not, in equity and good 
conscience, be enforced and that it was not sure whether 
Manor Care’s conduct rose “to the level of negligence.”6  We 
presume that the court nonetheless made the necessary 
findings since it set aside the default judgment. 
 
Even so, we take this opportunity to stress that a 
trial court must articulate its findings with particularity 
regarding each of the five elements set forth in Precision 
Tune.  Because of the need to have finality and certainty 
with regard to judgments, see Byrum v. Lowe & Gordon, Ltd., 
225 Va. 362, 365, 302 S.E.2d 46, 48 (1983), a trial court’s 
decision to set aside a default judgment is a significant 
action and must, therefore, include its consideration of 
                     
5 The parties stipulated that Manor Care had a good 
defense to the cause of action upon which the default 
judgment was granted. 
 
 
9
and findings with regard to all the necessary elements.  In 
a somewhat analogous situation, i.e., setting aside a jury 
verdict and ordering remittitur, we require that the record 
include “both the trial court’s conclusion that the verdict 
was excessive and a demonstration that, in reaching that 
conclusion, the trial court considered ‘factors in evidence 
relevant to a reasoned evaluation of the damages.’ ”  
Poulston v. Rock, 251 Va. 254, 259, 467 S.E.2d 479, 482 
(1996) (quoting Bassett Furniture Indus. v. McReynolds, 216 
Va. 897, 911-12, 224 S.E.2d 323, 332 (1976)); accord 
Shepard v. Capitol Foundry of Virginia, Inc., 262 Va. 715, 
721, 554 S.E.2d 72, 75 (2001).  No less detailed analysis 
is permissible when setting aside a default judgment. 
 
Turning now to the merits of the issue on appeal, we 
conclude that, despite the sequence of events starting with 
PHICO’s requesting Layman to file an answer to the re-filed 
medical malpractice action on behalf of Manor Care and 
ending with her ultimate decision not to represent Manor 
Care, the critical events that led to the entry of default 
judgment commenced when PHICO assigned the case to Godard.  
At that point, sufficient time remained before the August 
24 deadline expired during which responsive pleadings could 
                                                             
6 Ryland’s assignments of error address only the 
sufficiency of evidence and do not challenge the court’s 
 
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have been filed.  Godard’s office confirmed in writing on 
August 21 that he would file appropriate responsive 
pleadings on behalf of Manor Care.  But, Godard later 
learned, at a time not shown in the record, that he had a 
conflict of interest and could not represent Manor Care.  
Unfortunately, he did not advise PHICO or Manor Care of 
that fact until August 27, three days after responsive 
pleadings were due. 
 
We hold that the record is sufficient to support a 
finding that Godard’s actions constituted a mistake that 
prevented Manor Care from having the benefit of its 
defense.  See Director, State Employees Workers’ Comp. Div. 
v. Evans, 889 S.W.2d 266, 269 (Tex. 1994) (attorney’s 
failure to appear was due to accident or mistake when 
predecessor attorney misdated the trial date on a calendar 
and conveyed the wrong information to the new attorney).  
Because this mistake impacted Godard’s ethical 
responsibilities, it is not akin to an attorney’s error 
about a filing deadline or the negligent failure to file a 
pleading by a certain date.  Godard had no choice but to 
decline the representation of Manor Care.  As the circuit 
court correctly commented during closing arguments, the law 
precluded Godard from doing what he indicated to PHICO in 
                                                             
failure to enunciate these findings. 
 
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good faith that he would do.  His conflict of interest and 
failure to inform either PHICO or Manor Care about that 
conflict until after the deadline for filing responsive 
pleadings had passed caused Manor Care to lose the benefit 
of its defense. 
 
Next, we also hold that the record is sufficient to 
support the circuit court’s implied finding that both PHICO 
and Manor Care were free from fault or negligence during 
this critical period.7  However, Ryland argues that PHICO 
and Manor Care were, in fact, negligent because neither of 
them contacted Godard before August 24 to confirm that he 
had filed an answer on behalf of Manor Care, or called the 
circuit court clerk’s office either to verify that Godard 
had filed responsive pleadings or to determine whether 
information Manor Care allegedly received concerning a 30-
day extension of time was accurate.  We are not persuaded 
                     
7 Citing Ayres v. Morehead’s Adm’r, 77 Va. 586 (1883), 
Ryland argues that the actions of PHICO must be attributed 
to Manor Care.  In that case, this Court stated that “[t]he 
rule that a party who has, through the negligence of 
himself or his agents or attorneys, failed to avail himself 
of a defence which he might have made at law, will not be 
relieved in equity is too well settled to require any 
extended reference to the adjudged cases.”  Id. at 588.  It 
is not necessary to decide that issue in the present case 
because we conclude that neither PHICO nor Manor Care were 
negligent during the period of time immediately preceding 
the default.  We note, however, that Ryland has not argued 
that Godard’s actions should be attributed to Manor Care. 
 
 
12
by this argument.  Given the written communication from 
Godard’s office advising that he would file responsive 
pleadings, we cannot say that either PHICO or Manor Care 
was negligent by failing to make further inquiries at that 
time. 
 
The present situation is distinguishable from the 
circumstances in Media General that led us to hold that the 
defendant there was not free of fault or negligence.  In 
that case, the evidence showed only that a system put in 
place by the defendant to receive and respond to service of 
process had failed, but there was no evidence explaining 
how or why the system had failed.  260 Va. at 291, 534 
S.E.2d at 735.  Thus, there was no evidence that the 
defendant was free of fault or negligence when it did not 
respond to the motion for judgment.  Id.  In contrast, we 
have evidence in the present case explaining why responsive 
pleadings were not timely filed after Godard agreed to 
represent Manor Care, and that evidence does not impute any 
fault or negligence to PHICO or Manor Care. 
 
Finally, we hold that the record is sufficient to 
support the circuit court’s finding that, in equity and 
good conscience, the default judgment should not be 
enforced.  As Ryland argued, this element does not carry 
more weight than the other four elements, all of which must 
 
13
be proven in order to obtain relief under Code § 8.01-
428(D).  The five elements set forth in Precision Tune, 
taken together, reflect the balance that must be struck 
between the need to uphold the rules of court by 
sanctioning the late appearance of a party and the 
injustice that results from denying that party the 
opportunity to litigate a claim on its merits.  See 
Restatement (Second) of Judgments § 67 cmt. a (1982). 
CONCLUSION 
 
In summary, we cannot say that the circuit court’s  
judgment was plainly wrong or without evidence to support 
it.  See Code § 8.01-680.  The question here is not whether 
the evidence would have supported a judgment in favor of 
Ryland.  Instead, the relevant inquiry is whether, upon 
applying correct principles of law, the record contained 
sufficient evidence to support the judgment of the circuit 
court in favor of Manor Care.  Barnes v. Craig, 202 Va. 
229, 235, 117 S.E.2d 63, 67 (1960) (citing Barnes v. Moore, 
199 Va. 227, 228, 98 S.E.2d 683, 684 (1957)).  And, we 
conclude that it did.  As with a jury verdict, if there is 
evidence to support a trial court’s judgment rendered after 
receiving evidence ore tenus, this Court cannot simply 
overturn that judgment and substitute its own judgment, 
even if its opinion might differ from that of the trial 
 
14
court.  See Cable v. Commonwealth, 243 Va. 236, 239, 415 
S.E.2d 218, 220 (1992). 
 
For these reasons, we will affirm the judgment of the 
circuit court.8
Affirmed. 
                     
8 In light of our decision, it is not necessary to 
address Ryland’s remaining assignment of error. 
 
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