Court Opinion

ID: 2785460
Source: CourtListenerOpinion
Date Created: 2015-03-11 19:09:42.238254+00
Date Added: 2024-06-11T11:03:27.428223
License: Public Domain

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA

                                   January 2015 Term
                                                                  FILED
                                      No. 14-0215             March 11, 2015
                                                                released at 3:00 p.m.
                                                                RORY L. PERRY II, CLERK
                                                              SUPREME COURT OF APPEALS
                                                                  OF WEST VIRGINIA

                               LEXON INSURANCE CO.,
                               Defendant Below, Petitioner

                                           V.

       COUNTY COUNCIL OF BERKELEY COUNTY, WEST VIRGINIA,

          AND BERKELEY COUNTY PLANNING COMMISSION,

                    Plaintiffs Below, Respondents

                Appeal from the Circuit Court of Berkeley County

                        Honorable Gray Silver, III, Judge

                           Civil Action No. 11-C-973

                        REVERSED AND REMANDED

                           Submitted: February 11, 2015

                              Filed: March 11, 2015

Ancil G. Ramey                              William J. Powell
Steptoe & Johnson PLLC                      Jackson Kelly PLLC
Huntington, West Virginia                   Martinsburg, West Virginia
Eric J. Hulett                              Albert F. Sebok
Steptoe & Johnson PLLC                      Ellen S. Cappellanti
Martinsburg, West Virginia                  Jackson Kelly PLLC
Attorneys for the Petitioner                Charleston, West Virginia
                                            Attorneys for the Respondents

JUSTICE DAVIS delivered the Opinion of the Court.
                             SYLLABUS BY THE COURT

              1.     “Generally, under Rule 55(b)(1) of the West Virginia Rules of Civil

Procedure, when the damages sought by a plaintiff involve a sum certain or a sum which can

by computation be made certain, a judgment by default may be entered against a party who

has defaulted as to liability without prior notice to that party.” Syllabus point 3, Cales v.

Wills, 212 W. Va. 232, 569 S.E.2d 479 (2002).

              2.     “The term ‘sum certain’ under West Virginia Rules of Civil Procedure

Rule 55(b)(1) . . . contemplates a situation where the amount due cannot be reasonably

disputed, is settled with respect to amount, ascertained and agreed upon by the parties, or

fixed by operation of law. A claim is not for a ‘sum certain’ merely because the claim is

stated as a specific dollar amount in a complaint, verified complaint, or affidavit.” Syllabus

point 3, Farm Family Mutual Insurance Co. v. Thorn Lumber Co., 202 W. Va. 69, 501
S.E.2d 786 (1998).

              3.     The sum stated on the face of a performance bond is not equal to a “sum

certain” for purposes of obtaining default judgment without a hearing under Rule 55(b)(1)

of the West Virginia Rules of Civil Procedure.

                                              i
               4.      “When unliquidated damages are involved, a plaintiff must utilize the

procedure under Rule 55(b)(2) of the West Virginia Rules of Civil Procedure for obtaining default

damages against a defaulting party. . . .” Syllabus point 6, in part, Cales v. Wills, 212 W. Va. 232,

569 S.E.2d 479 (2002).

               5.      “Pursuant to Rule 55(b)(2) of the West Virginia Rules of Civil

Procedure, when the damages sought by a plaintiff involve damages other than a sum certain

or a sum which can by computation be made certain, a defaulting party who has appeared in

the action must be provided notice of the hearing to determine the amount of unliquidated

damages to be assessed.” Syllabus point 4, Cales v. Wills, 212 W. Va. 232, 569 S.E.2d 479

(2002).

               6. “‘Although courts should not set aside default judgments or dismissals

without good cause, it is the policy of the law to favor the trial of all cases on their merits.’

Syl. Pt. 2, McDaniel v. Romano, 155 W. Va. 875, 190 S.E.2d 8 (1972).” Syllabus point 6,

Gray v. Mena, 218 W. Va. 564, 625 S.E.2d 326 (2005).

                                                 ii
Davis, Justice:

              In this appeal, Petitioner Lexon Insurance Co. (“Lexon”),1 defendant below,

challenges the entry of default judgment against it in an action filed by Respondents County

Council of Berkeley County, West Virginia, and Berkeley County Planning Commission

(collectively “Berkeley County”). Because we find that the damages sought in this case are

not a “sum certain” as required by West Virginia Rule of Civil Procedure 55(b)(1), default

judgment was improperly granted under that rule. In addition, we find that default was

improperly entered under the unique circumstances presented herein where the parties failed

to follow the Rules of Civil Procedure pertaining to the extension of the time for filing an

answer. Accordingly, we reverse the Circuit Court of Berkeley County’s order denying

Lexon’s motion to set aside default judgment and remand this case for further proceedings.

                                               I.

                        FACTUAL AND PROCEDURAL HISTORY

              This case arises from two performance bonds issued by Lexon to DLM, LLC

(“DLM”).2 DLM sought to develop a 255-unit subdivision known as Chandler’s Glen in

Berkeley County, West Virginia. As part of the approval process for the Chandler’s Glen

              1
                  Lexon is a Texas corporation authorized to do business in the State of West
Virginia.
              2
                  DLM was named as a defendant in the action below, but is not a party to this
appeal.

                                                1

subdivision final plat, Berkeley County’s subdivision ordinance required DLM to either

complete all of the required site improvements and infrastructure for the project or post

bonds guaranteeing future completion. On November 8, 2005, Lexon issued a performance

bond in the amount of $1,050,000.       This bond guaranteed completion of the site

improvements for the Chandler’s Glen subdivision. A second performance bond in the

amount of $2,388,565.20, which guaranteed completion of the infrastructure for the

Chandler’s Glen subdivision, was issued by Lexon on February 10, 2006. Both of the bonds

issued by Lexon named Berkeley County as the obligee. Upon obtaining the first bond in

2005, DLM began grading the Chandler’s Glen subdivision site and installing site

improvements. Thereafter, on November 17, 2010, Berkeley County learned that DLM had

filed for bankruptcy. DLM had not completed the site improvements and infrastructure for

the Chandler’s Glen subdivision site. Accordingly, DLM had defaulted under both bonds.

             On December 9, 2010, Berkeley County made a demand on Lexon under the

$1,050,000 site improvement performance bond. Subsequently, on January 25, 2011,

Berkeley County made a demand on Lexon under the $2,388,565.20 infrastructure

performance bond. Lexon responded by letter dated February 24, 2011, acknowledging

receipt of Berkeley County’s demands. Over the following months, Berkeley County and

Lexon met on at least two occasions and also exchanged communications in an attempt to

resolve the matter. Berkeley County rejected offers made by Lexon to either complete only

                                           2

those portions of the Chandler’s Glen subdivision that contained purchased lots, or to settle

the matter for an amount that was less than the face value of the two performance bonds. By

letter dated October 6, 2011, Berkeley County reiterated its demand for the full proceeds of

the two performance bonds.

              Having received no response to its letter of October 6, 2011, Berkeley County

filed the instant lawsuit, naming Lexon and DLM as defendants, on November 17, 2011. In

its complaint, Berkeley County sought “specific performance of the Surety’s obligations

according to the terms of the subject bonds,” in addition to its “costs and expenses in

prosecution of this matter; and, for such other relief as the Court deems appropriate and

proper.”

              Thereafter, Lexon and Berkeley County entered an informal agreement to

extend the time for Lexon to file a response to Berkeley County’s complaint. This agreement

is reflected in an email from Bruce Maas, counsel for Lexon, to Norwood Bentley, Legal

Director for Berkeley County Council. The email, dated December 15, 2011, stated, in

relevant part, that “this will confirm that Lexon has an indefinite extension of time to respond

to the complaint and that you will give me 15 days notice if this consent is withdrawn.” By

subsequent email, dated April 20, 2012, Norwood Bentley advised Bruce Maas that Berkeley

County had “decided to go forward and press the litigation which was earlier filed against

                                               3

your client, Lexon. . . . Will appreciate your answer at your earliest convenience.” This

email was followed, on May 9, 2012, by another email that included a copy of the April 20

email and sought to confirm receipt of that email:

              I assume you received the notice below on April 20, as it did not
              come back to me as undeliverable. As you will recall, we had
              agreed that after notice, you would have 15 days in which to
              respond with an answer. I will appreciate your indicating to me
              that you have received this communication.

Also on May 9, 2012, Berkeley County sent a letter to Bruce Maas via the United States

Postal Service, which letter informed Mr. Maas that,

                      [h]aving sent two electronic mail notices to you
              concerning Berkeley County’s decision to move forward and
              prosecute the civil action against your client, above referenced,
              which civil action was earlier served, and about which you and
              I have had discussion, and having received no response from
              you, I thought it wise to give you notice via snail mail. Thus,
              this notice.

                     As you will recall, we had agreed that you would have
              fifteen days from the date of notice in which to answer the
              complaint. My first notice was dated April 20, 2012. Please let
              me know that you have received this communication and when
              I might expect your answer.

              Having received no response to its communications of April 20 and May 9,

Berkeley County, on June 14, 2012, filed a motion for default judgment, pursuant to Rule

                                             4

55(b)(1) of the West Virginia Rules of Civil Procedure, against Lexon.3 Service of the

motion upon Lexon was had by mailing the same to its counsel, Mr. Maas. Thereafter,

intermittent settlement negotiations continued between Berkeley County and Lexon. During

this time, Berkeley County indicated that it would not encourage the circuit court to rule on

its motion for default. Nevertheless, on July 5, 2012, the Circuit Court entered default

judgment against Lexon for the sum of $3,438,565.20 (the total face value of the two bonds

at issue), plus post judgment interest. Lexon continued to pursue a settlement and failed to

immediately appear in the action and move to set aside the default judgment. Instead, Lexon

sought Berkeley County’s agreement to vacate the default judgment. Berkeley County

refused. Lexon obtained local counsel and continued, unsuccessfully, its attempts to get

Berkeley County to agree to vacate the default judgment. Finally, on February 22, 2013,

Lexon made its first appearance in this action by filing its Motion to Set Aside Default

Judgment pursuant to Rule 55(c) of the West Virginia Rules of Civil Procedure. By order

entered February 6, 2014, the circuit court denied Lexon’s motion. This appeal followed.

              3
                 Meanwhile, on May 30, 2012, NLP Finance, LLP (“NLP”), filed a motion to
intervene as a plaintiff. NLP is the current holder of a construction loan executed by DLM
and is the first lienholder on the remaining, unsold, platted lots, roads, streets, and common
areas of the Chandler’s Glen subdivision area. The circuit court granted NLP’s motion to
intervene by order entered August 1, 2012, having received no pleadings in opposition to the
motion from either Berkeley County or Lexon. NLP is not a party to this appeal.

                                              5

                                             II.

                               STANDARD OF REVIEW

              In this appeal, Lexon seeks reversal of the circuit court’s order denying its

motion to set aside default judgment. It is well settled that

                     “[a] motion to vacate a default judgment is addressed to
              the sound discretion of the court and the court’s ruling on such
              motion will not be disturbed on appeal unless there is a showing
              of an abuse of discretion.” Syl. Pt. 3, Intercity Realty Co. v.
              Gibson, 154 W. Va. 369, 175 S.E.2d 452 (1970)[, overruled on
              other grounds by Cales v. Wills, 212 W. Va. 232, 569 S.E.2d
479 (2002)].

Syl. pt. 1, Drumheller v. Fillinger, 230 W. Va. 26, 736 S.E.2d 26, 27 (2012). In other words,

“‘“[a]ppellate review of the propriety of a default judgment focuses on the issue of whether

the trial court abused its discretion in entering the default judgment.” Syllabus point 3,

Hinerman v. Levin, 172 W. Va. 777, 310 S.E.2d 843 (1983).’ Syl. pt. 1, Cales v. Wills, 212
W. Va. 232, 569 S.E.2d 479 (2002).” Syl. pt. 2, Hardwood Grp. v. Larocco, 219 W. Va. 56,

631 S.E.2d 614 (2006). With this standard as our guide, we proceed to evaluate the

arguments herein raised.

                                             III.

                                       DISCUSSION

              In this appeal, Lexon raises several grounds for reversing the circuit court’s

denial of its motion to set aside the judgment of default entered against it. However, we need

                                              6

address only two issues, the propriety of the default judgment under West Virginia Rule of

Civil Procedure 55(b)(1), and the propriety of default in light of the parties’ agreement to

informally extend the time for Lexon to answer the complaint.4 We address these issues in

turn.

                  A. Propriety of Default Judgment Under Rule 55(b)(1)

              Lexon first argues that the circuit court erred by failing to set aside the default

judgment where it received no notice of hearing, and no hearing was conducted on damages

despite the fact that Lexon had a right to elect a method of curing the default of its principal

as opposed to paying monetary damages. In essence, Lexon contends that requirements for

default judgment under Rule 55(b)(1) were not met. Berkeley County responds that it

              4
                Lexon also has complained of insufficient service of process based upon
Berkeley County’s failure to serve Lexon, a foreign corporation authorized to do business
in the State of West Virginia, through the West Virginia Secretary of State. We find, based
upon the particular facts herein presented, this issue was waived below. See Franklin D.
Cleckley, Robin J. Davis, & Louis J. Palmer, Jr., Litigation Handbook on West Virginia
Rules of Civil Procedure, § 12(h)(1), at 417 (4th ed. 2012) (“An objection to sufficiency of
service of process must be raised timely in a pre-answer motion, or where no pre-answer
motion is made, then by answer. Failure to properly use either method to object constitutes
a waiver. . . . A defendant may waive the defense of insufficiency of service of process
through . . . conduct inconsistent with the defense.”). In this case, Lexon received actual
notice of the action in November 2011, when it received a copy of the summons and
complaint via the United States Postal Service. However, rather than raising an objection to
the sufficiency of service, Lexon instead engaged in negotiations with Berkeley County for
more than a year, and did not make an appearance in the circuit court until February 2013,
which was more than seven months after the circuit court had entered default judgment
against it.

                                               7

properly moved for default judgment under Rule 55(b)(1); therefore, no notice to Lexon or

hearing on damages was required. This is so, argues Berkeley County, because Lexon had

refused Berkeley County’s demand for performance, which refusal obligated Lexon to pay

the full penal sum of its bonds as liquidated damages. We disagree.

             Rule 55(b) provides two methods for entering default judgment:

                   (b) Judgment. – Judgment by default may be entered as
             follows:

                     (1) By the clerk. – When the plaintiff’s claim against a
             defendant is for a sum certain or for a sum which can by
             computation be made certain, the court upon request of the
             plaintiff and upon affidavit of the amount due shall direct the
             entry of judgment by the clerk for that amount and costs against
             the defendant, if the defendant has been defaulted for failure to
             appear and is not an infant, incompetent person, or convict.

                    (2) By the court. – In all other cases the party entitled to
             a judgment by default shall apply to the court therefor; but no
             judgment by default shall be entered against an infant,
             incompetent person, or convict unless represented in the action
             by a guardian, guardian ad litem, committee, conservator,
             curator, or other representative who has appeared therein. If the
             party against whom judgment by default is sought has appeared
             in the action, the party (or, if appearing by representative, the
             party’s representative) shall be served with written notice of the
             application for judgment at least 3 days prior to the hearing on
             such application. If, in order to enable the court to enter
             judgment or to carry it into effect, it is necessary to take an
             account or to determine the amount of damages or to establish
             the truth of any averment by evidence or to make an

                                             8

              investigation of any other matter, the court may conduct such
              hearings or order such references as it deems necessary.

(Emphasis added).

              As noted above, Berkeley County sought default judgment under Rule 55(b)(1).

Critically, there are certain prerequisites to seeking default judgment pursuant to Rule

55(b)(1). In this regard, it has been observed that

                     [t]he prerequisites for entry of default judgment under
              Rule 55(b)(1) are that: (1) damages are for a sum certain, (2)
              the defendant has been defaulted for failure to appear, (3) the
              defendant is not an infant, incompetent person, or convict, (4) a
              motion by the plaintiff to the trial court, and (5) an affidavit of
              the amount due. When these factors are in place the rule states
              that the court must direct the entry of judgment by the court
              clerk for that amount and costs against the defendant.

Franklin D. Cleckley, Robin J. Davis, & Louis J. Palmer, Jr., Litigation Handbook on West

Virginia Rules of Civil Procedure § 55(b)(1)[2], at 1193 (4th ed. 2012) (footnote omitted)

(emphasis added). Relevant to the instant appeal is the “sum certain” prerequisite:

                      Generally, under Rule 55(b)(1) of the West Virginia
              Rules of Civil Procedure, when the damages sought by a
              plaintiff involve a sum certain or a sum which can by
              computation be made certain, a judgment by default may be
              entered against a party who has defaulted as to liability without
              prior notice to that party.

Syl. pt. 3, Cales v. Wills, 212 W. Va. 232, 569 S.E.2d 479 (2002) (emphasis added).

              This Court addressed the definition of the term “sum certain” in Farm Family

                                              9

Mutual Insurance Co. v. Thorn Lumber Co., 202 W. Va. 69, 501 S.E.2d 786 (1998). Farm

Family involved a subrogation action in which an insurer, Farm Family Mutual, sought to

recover the full amount it had paid to its insured to cover a loss resulting from the alleged

negligence of the defendant, which was $135,416.37. When the defendant failed to appear

in the action, Farm Family Mutual sought default judgment under Rule 55(b)(1). In support

of its motion for default judgment, Farm Family Mutual presented an affidavit stating that

it was owed $135,416.37 by the defendant. The circuit court accepted the amount as a “sum

certain” and granted default judgment to Farm Family Mutual without first conducting an

evidentiary hearing on the issue of damages. On appeal, this Court was asked to decide

whether the damages in the case were, in fact, a sum certain or an amount that could be

rendered certain by calculation. Observing that “[t]ypical ‘sum certain’ situations covered

by Rule 55(b)(1) [1959] include actions on money judgments, negotiable instruments, or

similar actions where the damages can be determined without resort to extrinsic proof,” this

Court held that

                     [t]he term “sum certain” under West Virginia Rules of
              Civil Procedure Rule 55(b)(1) . . . contemplates a situation
              where the amount due cannot be reasonably disputed, is settled
              with respect to amount, ascertained and agreed upon by the
              parties, or fixed by operation of law. A claim is not for a “sum
              certain” merely because the claim is stated as a specific dollar
              amount in a complaint, verified complaint, or affidavit.

                                             10

Farm Family Mut. Ins. Co., 202 W. Va. at 74, 501 S.E.2d at 791, & Syl. pt. 3.5 Farm Family

Mutual’s argument that it sought the sum certain amount equal to the amount it had paid to

its insured pursuant to the relevant insurance contract was rejected. In rejecting the

argument, this Court explained that

                    [t]he amount sought by Farm Family Mutual was not
             predicated upon a precise dollar figure, i.e., a dishonored
             negotiable instrument or a contract prescribing liquidated
             damages, where recovery is upon a sum certain. Instead, the
             action was based upon the allegation that appellant Farmer Boy
             was negligent, and that Farmer Boy was liable for any damages
             proximately caused by that negligence.

Farm Family Mut. Ins. Co., 202 W. Va. at 74, 501 S.E.2d at 791.

             It similarly has been recognized that the penal sum of a bond is not recognized

to be a settled amount of liquidated damages payable upon breach of the bond. For example,

one commentator has observed that,

                    [a]s a fundamental principle, the amount of the bond, its
             “penal sum,” is not treated as an amount of “liquidated
             damages” to be awarded for any breach by the principal; rather,
             the penal sum states the maximum amount for which the surety
             agrees to be held responsible . . . .

                    Accordingly, when the principal’s breach of duty causes
             less damage than the penal sum, the aggrieved bond claimant is

             5
               The 1959 version of Rule 55(b)(1) was being addressed in Farm Family
Mutual Insurance Co. v. Thorn Lumber Co., 202 W. Va. 69, 501 S.E.2d 786 (1998). The rule
was amended in 1989. Nevertheless, because the revised rule also refers to a “sum certain,”
Syllabus point 3 of Farm Family remains applicable.

                                            11

              entitled only to the amount of actual damage.

11 Lee R. Russ & Thomas F. Segalla, Couch on Insurance 3D § 163:9, at 163-19 (2005)

(emphasis added) (footnotes omitted). See also 4A Philip L. Bruner & Patrick J. O’Connor,

Jr., Bruner & O’Connor on Construction Law § 12:22, at 94 (2009) (“The limit of the

surety’s financial exposure under a performance bond is the sum stated on the face of the

performance bond as the surety’s maximum liability to the obligee for completion of the

contract or payment of the oblige’s actual costs of completion. This sum historically has

been referred to as the ‘penal sum’ or ‘bond penalty’ – terms which originated in earlier times

when the penal sum was forfeited entirely upon the principal’s default as a ‘penalty,’ rather

than serving as a mere source for payment of the obligee’s actual damages up to the penal

sum limit. Outright forfeiture provisions in modern surety bonds are rare.” (emphasis

added) (footnotes omitted)).

              Courts addressing this issue have reached the same conclusion as the

commentators. In St. Paul Mercury Insurance Co. v. Department of State, Division of

Corrections, 581 So. 2d 976, 977 (Fla. Dist. Ct. App. 1991) (per curiam), a trial court had

awarded damages equal to the full amount of a bond. In reducing the award to the amount

of damages the state actually suffered, the Florida District Court of Appeal commented that

              [a] bond conditioned to be void on the fulfillment by the
              principal of all of his duties is operative as a promise that either
              all those duties will be performed, or that the obligee will be
              indemnified within the limit of the penalty in the case of

                                              12

              non-performance. Only in cases where the harm inflicted by the
              breach of a bonded obligation is not capable of being measured
              and liquidated in money will the penalty of the bond be
              enforced. In all other cases, the plaintiff’s recovery will not
              exceed the amount of the injury that he proves. Corbin on
              Contracts, §§ 258, 800.

                      Here, St. Paul argues, and the state concedes, that
              although the bond was issued in the amount of $697,045, the
              state actually paid only $674,045 under the bonded contract. . . .

St. Paul Mercury Ins. Co., 581 So. 2d at 977. See also Westchester Fire Ins. Co. v. City of

Brooksville, 731 F. Supp. 2d 1298, 1308 (M.D. Fla. 2010) (“The measure of recovery under

a performance bond is the amount actually and reasonably expended in completing the duties

under the bonded contract.” (quotations and citation omitted)), aff’d, 465 F. App’x 851 (11th

Cir. 2012); Turner Constr. Co. v. First Indem. of Am. Ins. Co., 829 F. Supp. 752, 759 (E.D.

Pa. 1993) (“[W]hen a performance bond surety fails to complete its principal’s work, the

surety is ‘liable for the loss plaintiff sustained, not exceeding the amount of the bond’

because of the surety’s breach of its ‘absolute undertaking to erect and complete the

building’. Purdy v. Massey, 306 Pa. 288, [293,] 159 A. 545, 547 (1932).”), aff’d sub nom.

Turner Constr. Co. v. Space U.S.A., Inc., 22 F.3d 303 (3d Cir. 1994). But see Synovus Bank

v. County of Henderson, 222 N.C. App. 319, 729 S.E.2d 731 (2012) (unpublished opinion)

(treating performance bond as penal bond and awarding full amount).

              The indefinite nature of amount of the damages forfeited under a performance

bond is further demonstrated by this very case. Indeed, the circuit court’s default judgment

                                             13

order, as well as Berkeley County’s representations to this Court, establish that the damages

sought in this action are not a sum certain. In this respect, the circuit court expressly

concluded in its default judgment order that Berkeley County “represented that it is only

seeking to retain proceeds from Lexon under the bonds in the amount that the county actually

expends installing the site improvements and infrastructure for Chandler’s Glen, and that any

amount of the default judgment not so expended will be returned to Lexon.” (Emphasis

added). Furthermore, according to Berkeley County’s brief, relevant regulations provide that

“‘[t]he bond shall be subject to forfeiture to the County Commission for the sole purpose of

installation or completion of required improvements.’” (citing Subdivision Regulation,

Berkeley County, West Virginia, § 702.1 (2004) (emphasis added)). Thus, the bond is

subject to forfeiture only insofar as necessary for installation or completion of required

improvements. See also W. Va. Code § 8A-6-1(b) (2004) (Repl. Vol. 2012) (requiring that

the “money from the bond shall only be used by the governing body to which the bond is

payable, for the completion of the infrastructure construction, when the infrastructure

construction is not completed as approved at the issuance of the bond”). Finally, we note that

Berkeley County conceded during oral argument before this Court that some improvements

to Chandlers Glen were made by developer DLM, and Berkeley County did not know the

cost to complete the site improvements and infrastructure for the Chandler’s Glen

subdivision.

                                             14

              Based upon our above analysis, we now hold that the sum stated on the face

of a performance bond is not equal to a “sum certain” for purposes of obtaining default

judgment without a hearing under Rule 55(b)(1) of the West Virginia Rules of Civil

Procedure.

              Because Berkeley County’s claim against Lexon was not for a “sum certain”

as required by Rule 55(b)(1), the damages were unliquidated. “When unliquidated damages

are involved, a plaintiff must utilize the procedure under Rule 55(b)(2) of the West Virginia

Rules of Civil Procedure for obtaining default damages against a defaulting party. . . .” Syl.

pt. 6, in part, Cales v. Wills, 212 W. Va. 232, 569 S.E.2d 479. Thus, Lexon was entitled to

three days notice and a hearing pursuant to Rule 55(b)(2):

                     Pursuant to Rule 55(b)(2) of the West Virginia Rules of
              Civil Procedure, when the damages sought by a plaintiff involve
              damages other than a sum certain or a sum which can by
              computation be made certain, a defaulting party who has
              appeared in the action must be provided notice of the hearing to
              determine the amount of unliquidated damages to be assessed.

Syl. pt. 4, Cales v. Wills, 212 W. Va. 232, 569 S.E.2d 479. Accordingly, we find that the

circuit court erred in granting default judgment in favor of Berkeley County pursuant to Rule

55(b)(1), and without affording Lexon notice and a hearing on damages pursuant to Rule

55(b)(2). This conclusion, however, does not end our analysis. We must additionally

                                             15

examine the propriety of the circuit court’s entry of default against Lexon.6

                                  B. Propriety of Default

              The summons served on Lexon with Berkeley County’s complaint expressly

stated that “[y]ou are required to serve your answer within 30 days after service of this

summons upon you, exclusive of the day of service. If you fail to do so, judgment by default

will be taken against you for the relief demanded in the complaint . . . .” Thus, this summons

complied with the requirement of Rule 4(a) of the West Virginia Rules of Civil Procedure

that the summons “shall also state the time within which the defendant must appear and

defend, and notify the defendant that failure to do so will result in a judgment by default

against the defendant for the relief demanded in the complaint.”

              The record reflects, however, that prior to the expiration of the thirty-day

period, Berkeley County waived its right to pursue a default pursuant to the West Virginia

Rules of Civil Procedure by entering an informal agreement with Lexon allowing Lexon an

indefinite time within which to respond to Berkeley County’s complaint. This informal

agreement is reflected in an email dated December 15, 2011, in which counsel for Lexon

sought to confirm that Lexon was being given “an indefinite extension of time to respond to

              6
              This Court has recognized that “[a] default relates to the issue of liability and
a default judgment occurs after damages have been ascertained.” Syl. pt. 2, Cales v. Wills,
212 W. Va. 232, 569 S.E.2d 479 (2002).

                                              16

the complaint and that you [Berkeley County] will give me 15 days notice if this consent is

withdrawn.” Lexon, in apparent reliance on this agreement, did not file its answer within the

thirty-day period mandated by the summons. Likewise, Berkeley County, apparently also

relying on the agreement, failed to move for default at the expiration of thirty days following

service of the summons and complaint.

              Lexon now argues that Berkeley County failed to provide it with the agreed

upon fifteen-day notice that Berkeley County was withdrawing its consent to the indefinite

extension for filing an answer.7 Berkeley County, on the other hand, contends that it gave

such notice by virtue of three communications. First, by email dated April 20, 2012,

Berkeley County advised counsel for Lexon that it had “decided to go forward and press the

litigation which was earlier filed against your client, Lexon. . . . Will appreciate your answer

at your earliest convenience.” (Emphasis added). This email was followed, on May 9, 2012,

by another email seeking to confirm receipt of the April 20 email. Also on May 9, 2012,

Berkeley County sent a letter to counsel for Lexon, via the United States Postal Service,

which letter informed Mr. Maas that,

                    [h]aving sent two electronic mail notices to you
              concerning Berkeley County’s decision to move forward and

              7
               The issue of setting aside the default was briefed in the context of the factors
cited in Syllabus point 3 of Parsons v. Consolidated Gas Supply Corp., 163 W. Va. 464, 256
S.E.2d 758 (1979). However, because of the unique procedural posture of this case, we need
not address the Parsons factors.

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              prosecute the civil action against your client, above referenced,
              which civil action was earlier served, and about which you and
              I have had discussion, and having received no response from
              you, I thought it wise to give you notice via snail mail. Thus,
              this notice.

                     As you will recall, we had agreed that you would have
              fifteen days from the date of notice in which to answer the
              complaint. My first notice was dated April 20, 2012. Please let
              me know that you have received this communication and when
              I might expect your answer.

(Emphasis added).

              Lexon asserts that these communications were equivocal and failed to amount

to proper notice that Berkeley County was providing the agreed upon fifteen-day notice that

it was withdrawing its consent to Lexon having an indefinite time within which to answer

the complaint. Berkeley County contends that its three communications demonstrated that

Berkeley County “intended to move forward with this lawsuit and expected Lexon to file its

answer.”

              The primary difficulty demonstrated by the foregoing events in this case is the

parties’ combined failure to comply with the West Virginia Rules of Civil Procedure. Rule

6(b) provides the proper method of extending the time for the filing of a defendant’s answer:

                     Enlargement. When by these rules or by a notice given
              thereunder or by order of court an act is required or allowed to
              be done at or within a specified time, all the parties to the action,
              by written stipulation filed with the court, may agree at any time

                                               18

               to a different period, or the court for cause shown may at any
               time in its discretion (1) with or without motion or notice order
               the period enlarged if request therefor is made before the
               expiration of the period originally prescribed or as extended by
               a previous order, or (2) upon motion made after the expiration
               of the specified period permit the act to be done where the
               failure to act was the result of excusable neglect; but it may not
               extend the time for taking any action under Rules 50(b), 52(b),
               59(b), (d) and (e), and 60(b), except to the extent and under the
               conditions stated in them.

W. Va. R. Civ. P. 6(b). Instead of complying with the procedure set out in Rule 6(b), the

parties instead engaged in an unclear and poorly executed agreement to indefinitely extend

the time afforded to Lexon for answering the complaint. Although we find that the parties

improperly sought to extend the time frame for filing an answer to the complaint, the parties

will be bound by their agreement for the purposes of this appeal.

               In ruling on the propriety of the default under the unique circumstances herein

presented, we are mindful that, “‘[a]lthough courts should not set aside default judgments or

dismissals without good cause, it is the policy of the law to favor the trial of all cases on their

merits.’ Syl. Pt. 2, McDaniel v. Romano, 155 W. Va. 875, 190 S.E.2d 8 (1972).” Syl. pt. 6,

Gray v. Mena, 218 W. Va. 564, 625 S.E.2d 326 (2005) (emphasis added). Based upon the

language in Berkeley County’s communications quoted above, and the policy favoring trial

of all cases on their merits, we agree with Lexon that Berkeley County failed to provide clear

notice that it was withdrawing its consent to give Lexon an indefinite time within which to

answer Berkeley County’s complaint.           Berkeley County merely stated that it would

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“appreciate [Lexon’s] answer at your earliest convenience,” and asked to be informed of

when it “might expect [Lexon’s] answer.” These ambiguous communications fail to clearly

articulate an intent on the part of Berkeley County to seek default in the event that Lexon’s

answer was not forthcoming. Accordingly, Berkeley County’s motion was improperly filed

and should not have been granted.

                                            IV.

                                     CONCLUSION

              Because we find that the damages sought in this case are not a “sum certain”

as required by West Virginia Rule of Civil Procedure 55(b)(1), default judgment was

improperly granted under that rule. In addition, we find that default was improperly entered

under the unique circumstances of this case where the parties failed to follow the Rules of

Civil Procedure pertaining to the extension of the time for filing an answer. Accordingly,

we reverse the Circuit Court of Berkeley County’s order of February 6, 2014, denying

Lexon’s motion to set aside default judgment, and remand this case for further proceedings.

                                                                  Reversed and Remanded.

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