Opinion ID: 865843
Heading Depth: 3
Heading Rank: 2

Heading: Colorable Defense

Text: ¶32. A trial court confronted with a motion to set aside a default judgment likewise must consider whether the defaulting defendant has a colorable defense to the merits of the plaintiff’s claim. Rogillio, 10 So. 3d at 469. Admittedly, this Court has held that the “colorable-defense” prong is the most important factor. With regard to that prong, we have held that “[i]f any one of the three factors in the balancing test outweighs the other in importance, this is the one.” Rogillio, 10 So. 3d at 469-70 (citing Bailey v. Ga. Cotton Goods, 543 So. 2d 180, 182 (Miss. 1989)); see also Stanford v. Parker, 822 So. 2d 886, 888 (Miss. 2002) (quoting Allstate Ins. Co. v. Green, 794 So. 2d 170, 174 (Miss. 2001) (stating that this Court has “encouraged trial courts to vacate a default judgment where ‘the defendant has shown that he has a meritorious defense’”)). ¶33. Flagstar made several principal arguments regarding “colorable defenses” in its motion to set aside the default judgment. First, Flagstar argued that service of process was deficient. The trial court’s order denying the motion states that “the defendant raises 17 numerous other issues relating to service . . . [but] this Court deems them to be without merit.” (Emphasis added). Thus, it could be said that the trial court considered the “colorable-defense” prong, insofar as defective service of process is a “colorable defense,” but found Flagstar’s arguments thereunder to be lacking. ¶34. However, Flagstar also argued as a “colorable defense” that it could not be held liable, as a matter of law, for the injuries complained of by the Danoses. A short explanation of the background facts is required to understand this contention. The Danoses’ complaint asserted liability based on the fact that several agents of the defendant mortgage holders had “submitted false and erroneous information to their principles [sic]” and thus to the Danoses, the consumers. The complaint alleged, inter alia, that Chris Shirley and Amerigo Mortgage were agents of Flagstar. To be liable for the acts of a disclosed principal, the agent must have acted outside the scope of his agency and would incur no individual liability absent fraud or other equivalent conduct. Rosson v. McFarland, 962 So. 2d 1279, 1288 (Miss. 2007); see also Harrison v. Chandler-Sampson, Co., Inc., 891 So. 2d 224, 227-31 (Miss. 2005). However, the trial court granted summary judgment to Shirley, finding that no genuine issues of material fact existed as to his liability.9 Thus, Flagstar’s agent, who provided the sole basis for its alleged vicarious liability, was dismissed from the case. Since there is a valid argument that no agency relationship existed between Flagstar and the other defendants in the case that would have served as the basis for vicarious liability otherwise, 9 The order granting summary judgment to Shirley was included as an exhibit in Flagstar’s motion to set aside the default judgment. 18 this certainly could be deemed to be a “colorable defense” to the Danoses’ claims against Flagstar.10 Thus, this prong would appear to weigh in favor of Flagstar. ¶35. However, notwithstanding our finding on this factor, we note that this Court addressed the availability of a colorable defense in Pointer v. Huffman, 509 So. 2d 870, 874 (Miss. 1987), and stated: Pointer also testified concerning his defense to Huffman’s claim. The existence of a colorable defense on the merits “is a factor which should often be sufficient to justify vacation of a judgment entered by default.” Guaranty National Ins. Co. v. Pittman, 501 So. 2d at 388 . . . . ... The gist of Huffman’s claim is the failure of Pointer to include worker’s compensation coverage in an insurance package. However, the testimony of Pointer indicates there is an important factual issue which goes to the very heart of Huffman’s claim. Mr. Pointer’s testimony indicates a colorable defense in that Huffman voluntarily chose not to include worker’s compensation insurance within his insurance package. The resolution of that factual issue in favor of Pointer would negate the presence of any basis of liability. To be sure, [Pointer] could have been more diligent in his actions to defend this suit. The trial court, in the exercise of his discretion, so held, and this Court finds no abuse of this discretion. Pointer, 509 So. 2d at 876.