Opinion ID: 1802819
Heading Depth: 2
Heading Rank: 1

Heading: whether the default judgment should be set aside.

Text: ¶ 12. When this Court reviews a denial of a motion to set aside a default judgment, it applies an abuse-of-discretion standard. McCain v. Dauzat, 791 So.2d 839, 842 (Miss.2001). Under the abuse-of-discretion standard, this Court first determines whether the trial court applied the correct legal standard. Burkett v. Burkett, 537 So.2d 443, 446 (Miss.1989). The Court then consider[s] whether the decision was one of those several reasonable ones which could have been made. Id. Accordingly, the trial court's exercise of its discretion may be disturbed only where it has been abused. Guar. Nat'l Ins. Co. v. Pittman, 501 So.2d 377, 388 (Miss.1987). ¶ 13. Pursuant to Rule 55(b) of the Mississippi Rules of Civil Procedure, a litigant may pursue a default judgment for a party's failure to timely answer a complaint. Miss. R. Civ. P. 55(b). Once a default judgment has been entered, the defaulting party may move the court to set aside the default judgment pursuant to Rule 60(b) of the Mississippi Rules of Civil Procedure. Miss.R. Civ. P. 55(c) (directing the non-defaulting party to proceed under Rule 55(c) to set aside entry of default and under Rule 60(b) to set aside a default judgment). Rule 60(b) contains the following language: On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons: (1) fraud, misrepresentation, or other misconduct of an adverse party; (2) accident or mistake; (3) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; (6) any other reason justifying relief from the judgment. The motion shall be made within a reasonable time, and for reasons (1), (2) and (3) not more than six months after the judgment, order, or proceeding was entered or taken. Miss. R. Civ. P. 60(b). If the basis of a motion to set aside default judgment is Rule 60(b)(1)-(3), the trial court has no discretion to grant the motion if it is made more than six months after the final judgment. Burkett, 537 So.2d at 445. Relief from a default judgment may be granted pursuant to Rule 60(b)(6) in `exceptional and compelling circumstances ... when relief is not warranted by the preceding clauses, or when it is uncertain that one or more of the preceding clauses afford relief.' Bryant, Inc. v. Walters, 493 So.2d 933, 939 (Miss.1986) (quoting Moore's Federal Practice, Vol. 1, § 60-295). ¶ 14. The Mississippi Supreme Court has held that the trial court must consider the following three-pronged balancing test when considering a Rule 60(b) motion: (1) [t]he nature and legitimacy of the defendant's reasons for his default, i.e., whether the defendant has good cause for default; (2) whether the defendant in fact has a colorable defense to the merits of the claim, and (3) the nature and extent of prejudice which may be suffered by the plaintiff if the default is set aside. Chassaniol v. Bank of Kilmichael, 626 So.2d 127, 134 (Miss.1993) (citations omitted). ¶ 15. Greater Canton's Motion to Set Aside Default Judgment failed to recite which clause of Rule 60(b) it proceeded under, and the default judgment does not indicate the clause under which the court denied relief. Likewise, no record exists of the hearing on the Motion to Set Aside Default Judgment. When the record is devoid of what ground the decision of the lower court was made, the duty of [this Court] is to sustain the judgment or decree if there was any ground disclosed by the record upon which the decision could properly have been reached. Winfield v. Winfield, 203 Miss. 391, 395, 35 So.2d 443, 443 (1948). ¶ 16. Greater Canton argues that its Motion to Set Aside Default Judgment was made pursuant to Rule 60(b)(6). ¶ 17. In its Motion to Set Aside Default Judgment, Greater Canton asserted that it had a good and valid defense and listed several defenses. Greater Canton's assertion of a defense could fall within the language any other reason justifying relief of Rule 60(b)(6) of the Mississippi Rules of Civil Procedure. Because the trial court may have denied the Motion to Set Aside Default Judgment pursuant to Rule 60(b)(6), this Court proceeds to evaluate the evidence or lack of evidence under the three-pronged balancing test. This Court is mindful of the fact that there are no specific findings of fact, so this Court must look to the evidence and see what state of facts will justify the decree. Century 21 Deep S. Props., Ltd. v. Corson, 612 So.2d 359, 367 (Miss.1992) (citations omitted). ¶ 18. Under the first prong, Greater Canton must show it had good cause for the default. Greater Canton admits that it was properly served and the delay was lengthy. Greater Canton argues that its failure to answer the complaint should be excused since it was no longer an active business when it was served with process. Greater Canton also argues that the record does not support the amount of damages awarded, but this contention has nothing do with whether or not it had good cause in failing to answer the complaint. ¶ 19. Conversely, Lane argues that Greater Canton cannot rely upon its confusion as good cause for failure to timely respond to the complaint. Greater Canton does not rely upon its confusion but the confusion of othersC.T. Corporation, Alegnani, and Universalin trying to establish good cause. Lane also argues that she properly served Greater Canton's authorized agent, C.T. Corporation. Lane asserts that C.T. Corporation, Alegnani, and Universal were entities with such close ties to Greater Canton that they should have answered on behalf of Greater Canton. Additionally, Lane argues that Greater Canton had ample time in which to learn of the summons and complaint and to file an answer. ¶ 20. The trial court had before it undisputed evidence that Greater Canton's registered agent accepted service of process. While the registered agent failed to give the summons and complaint to an officer or director, it did forward it to Alegnani, an accounting firm designated to handle Greater Canton's business affairs. Alegnani then forwarded the complaint to Greater Canton's insurer. Furthermore, all parties who saw the summons and complaint could clearly read that an answer was due within thirty days from the date of acceptance of service of process. After reviewing the evidence, we find that Greater Canton failed to put forth evidence of good cause; therefore, the trial court did not abuse its discretion as to prong one. ¶ 21. Under the second prong, this Court considers whether Greater Canton demonstrated a colorable defense. This Court has stated that the second prong generally outweighs the other two prongs in importance. Allstate Ins. Co. v. Green, 794 So.2d 170, 174 (Miss.2001) (citing Bailey v. Georgia Cotton Goods, Co., 543 So.2d 180, 182 (Miss.1989)). In order to show a colorable defense, a party must show facts, not conclusions, and must do so by affidavit or other sworn form of evidence. Rush v. N. Am. Van Lines, Inc., 608 So.2d 1205, 1210 (Miss. 1992). In order to show that it has a colorable defense, Greater Canton must show that it has a defense on the merits. See Bailey, 543 So.2d at 182. ¶ 22. Greater Canton argues that it submitted an affidavit by Wanda Patrick, a former business manager, and a supporting document that established Lane had cancelled the warranty before any repairs were made. [2] Alternatively, Lane claims that Greater Canton put forth unsubstantiated allegations and a general denial. ¶ 23. Greater Canton failed to attach an affidavit to its Motion to Set Aside Default Judgment. Greater Canton finally submitted an affidavit on March 26, 2007, almost one year after it filed its Motion to Set Aside Default Judgment. [3] Assuming arguendo the trial court even considered the untimely affidavit, the affidavit still fails to support a colorable defense. ¶ 24. Wanda Patrick's affidavit completely relied upon and incorporated an attached cancellation worksheet for the defense that Lane had cancelled the warranty prior to any repairs. The affidavit does not present a meritorious defense since the cancellation worksheet is inadmissible hearsay pursuant to Mississippi Rule of Evidence 802. Patrick failed to qualify the cancellation worksheet as an exception to the hearsay rule pursuant to Mississippi Rule of Evidence 803(6), Records of Regularly Conducted Activity, or authenticate the worksheet pursuant to Mississippi Rule of Evidence 902. Patrick stated only that she was familiar with the business records kept and maintained by Greater Canton. She never qualified the cancellation worksheet as made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of [Greater Canton] to make the... record. See Miss. R. Evid. 803(6). ¶ 25. In viewing the evidence before the trial court, we find the trial court did not abuse its discretion under prong two. The only sworn testimony offered by Greater Canton relied completely upon inadmissable hearsay. Because Greater Canton failed to assert a meritorious defense, we find the trial court did not abuse its discretion as to prong three. ¶ 26. Under the third prong, this Court considers whether Lane would be prejudiced if the default judgment was set aside. Before the trial court, Greater Canton failed to present any evidence or argument that Lane would not suffer prejudice if the default judgment was set aside. Because this Court reviews the evidence before the trial court to determine an abuse of discretion, Greater Canton's arguments on appeal will not be considered on this point. Cf. Miss. Mun. Liab. Plan v. Jordan, 863 So.2d 934, 940 (Miss. 2003) ([W]here a party fails to raise an issue before the trial court, [this Court is] procedurally barred from considering that issue.). ¶ 27. While Greater Canton failed to address prong three before the trial court, Lane argued that prejudice would result if the Motion to Set Aside Default Judgment was granted. Lane argued three points relating to prejudice: (1) diminished memories, (2) unavailable witnesses, and (3) unavailability of evidence. ¶ 28. After evaluating the evidence of prong three, we find that Lane put forth sufficient evidence of prejudice. Notably, the record is devoid of any argument by Greater Canton that Lane would not be prejudiced if the default judgment was set aside. On the other hand, Lane offered specific names of witnesses who could not be located, who had died, and who had moved out of the state. In viewing all the evidence, this Court finds the trial court did not abuse its discretion as to prong three. ¶ 29. After reviewing the evidence before the trial court, all three prongs of the balancing test favor Lane. This Court finds the trial court properly balanced the equities and did not abuse its discretion in denying the Motion to Set Aside Default Judgment.