Opinion ID: 1792065
Heading Depth: 2
Heading Rank: 2

Heading: Failure to Hold an Evidentiary Hearing on the Issue of Damages.

Text: ¶ 25. COS argues that this Court has held that a trial court must conduct an on-the-record hearing regarding damages before entering a default judgment. Because no hearing regarding damages was conducted, COS contends that the default judgment must be vacated. The plaintiffs make several arguments, none of which are compelling. Primarily, they contend that the damages awarded were in the nature of liquidated damages and that COS waived its right to a hearing. ¶ 26. An on-the-record hearing must be held prior to the entry of default judgment under which unliquidated damages are requested. See Miss. R. Civ. P. 55(b). Journey v. Long, 585 So.2d 1268, 1272 (Miss.1991) (default judgment reversed based on the fact that no record was made of hearing); Am. 3-CI v. Farrow, 749 So.2d 298 (Miss.Ct.App.1999). That said, the plaintiffs argue that they sought and received liquidated damages. However, in their request for assessment of damages, the plaintiffs specifically stated that they were seeking unliquidated damages. ¶ 27. Recently this Court discussed the general distinction between liquidated and unliquidated damages. Moeller v. Am. Guar. & Liab. Ins. Co., 812 So.2d 953 (Miss.2002). The Court noted that liquidated damages are set or determined by contract, [8] while unliquidated damages are established by a verdict or award and cannot be determined by a fixed formula. Id. at 959-60. In the instant case, the damages awarded were not predetermined or contractually established. Thus, we can quickly conclude that the plaintiffs sought and received an award for unliquidated damages. Save the $71.00 balance, the plaintiffs submitted no proof regarding how they determined that they had suffered $63,071 in damages. The plaintiffs argue that the matter is a simple mathematical calculation; however, they fail to illustrate such. In any event, because the plaintiffs sought unliquidated damages, the trial court was required to conduct an evidentiary hearing on the record. ¶ 28. As for waiver, this Court disagrees with the plaintiffs. Under this Court's precedent addressing Miss. R. Civ. P. 55(b), a judgment for unliquidated damages cannot be entered until an on-the-record hearing of such has occurred. In the instant case, the only hearing that occurred was the hearing conducted after the entry of the judgment and that hearing did not address the issue of damages. Instead, this hearing addressed COS's motion to set aside the default judgment. The plaintiffs argue that because COS declined to present any witnesses or evidence, it waived any error. Many of the orders from the trial court and motions by the plaintiffs indicate that a hearing was held in January 2003 regarding damages. But it is not until the trial court's April 30, 2003 order that it is clear that no such hearing actually occurred. Thus, COS cannot be faulted for assuming that a hearing had already occurred. ¶ 29. As for the March 10, 2003 hearing, the notice filed in the record indicated that the hearing was to address the motion to set aside the default judgment and does not mention damages. Assuming, arguendo, that COS's decision not to present proof at this hearing is relevant, it does not obviate the requirement to hold a hearing. The hearing requirement obligates the plaintiff to present proof and for the trial court to establish damages. It is an opportunity for plaintiffs to substantiate their damage request and for the courts to ensure that the awards are not unreasonable or without merit. Accordingly, the trial court was still required to consider any evidence which the plaintiffs submitted regarding damages. ¶ 30. Ultimately, this Court finds that it was an error not to conduct a hearing on damages. If the court determines that defendant is in default, the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true. Journey, 585 So.2d at 1272. Because a default judgment is not an admission as to damages, trial courts are obligated to hold a hearing on damages. Allstate Ins. Co. v. Green, 794 So.2d at 176 (citing Journey, 585 So.2d at 1272). ¶ 31. In the end, for the foregoing reasons, we affirm the trial court's denial of the motion to set aside the judgment as to liability, but vacate the judgment and remand the case for an evidentiary hearing to assess damages.