Court Opinion

ID: 9540046
Source: CourtListenerOpinion
Date Created: 2023-08-07 16:12:26.834486+00
Date Added: 2024-06-11T14:59:33.718200
License: Public Domain

HEARN, C.J.
(concurring in part and dissenting in part):
I respectfully concur in part, and dissent in part. I would reverse the circuit court’s denial of Deaton and New Prime’s Rule 60(b), SCRCP motion, and remand for a full trial on the merits.
I agree with the majority that the circuit court erred in denying New Prime relief on the basis that it was not a party, after previously granting its motion to intervene. However, I part company with the majority in holding that neither party satisfied the requirement of a meritorious defense under Rule 60(b).
“In determining whether to grant a motion under Rule 60(b), the trial judge should consider: (1) the promptness with which relief is sought, (2) the reasons for the failure to act promptly, (3) the existence of a meritorious defense, and (4) the prejudice to the other party.” Mictronics, Inc. v. S.C. Dep’t of Revenue, 345 S.C. 506, 510-11, 548 S.E.2d 223, 226 (Ct.App.2001). Here, there is no question that New Prime acted promptly in seeking relief under Rule 60(b) as soon as it learned that default judgment had been taken against Deaton. The MeClurgs made no showing of how they would be prejudiced if the default judgment were to be set aside, and the law favors the resolution of disputes based upon all parties having their day in court. Thus, the trial court hinged its denial of *581relief upon the Appellants’ failure to establish a meritorious defense. I would hold this was error.
Under the majority’s view, Appellants had to establish a meritorious defense as to liability in order to prevail on their Rule 60(b) motion. I agree there was no showing by Appellants concerning Deaton’s lack of responsibility for causing the accident, but I would hold there was evidence of a meritorious defense, provided by the McClurgs’ own attorney, which related to the amount of damages. In negotiations with New Prime’s carrier, Zurich, which were ongoing prior to and beyond the filing of suit, McClurgs’ counsel made a settlement demand of $170,000. I would hold this course of conduct by McClurgs’ attorney is sufficient to satisfy Rule 60(b)’s meritorious defense requirement. Although not previously recognized in South Carolina, courts in other jurisdictions have held that in the context of a Rule 60(b) motion, an allegation that the amount of damages could be different from what was awarded under the default judgment, is sufficient to satisfy the meritorious defense requirement. See e.g. Augusta Fiberglass Coatings, Inc. v. Fodor Contracting Corp., 843 F.2d 808 (4th Cir.1988); Wainright’s Vacations, LLC v. Pan American Airways Corp., 130 F.Supp.2d 712 (D.Md.2001) (applying Augusta Fiberglass); Esteppe v. Patapsco & Back Rivers Railroad, 2001 WL 604186 (D.Md.2001); Miller v. Susa Partnership, L.P., 2008 WL 660563 (Ohio App. 10th 2008); Oberkonz v. Gosha, 2002 WL 31320242 (Ohio App. 10th 2002); Cook v. Rowland, 49 P.3d 262 (Alaska 2002); Syphard v. Vrable, 141 Ohio App.3d 460, 751 N.E.2d 564 (2001); Ferguson & Co. v. Roll, 776 S.W.2d 692 (Tex.App.Dallas 1989, no writ); The Moving Co. v. Whitten, 717 S.W.2d 117 (TexApp.-Houston 1986, writ ref'd n.r.e.) (overruled on other grounds); Beal v. State Farm Mut. Auto. Ins. Co., 151 Ariz. 514, 729 P.2d 318 (Ct.App.1986); Hertz v. Berzanske, 704 P.2d 767 (Alaska 1985).
I also disagree with the majority’s holding that Appellants did not preserve this issue for appellate review. Our preservation rules exist to ensure that issues argued on appeal were fairly presented and ruled upon at the trial level. McClurgs’ counsel’s settlement demand was clearly argued to the circuit court and referenced in memoranda and affidavits submitted at the motion hearing. The circuit court held that New Prime *582and Deaton failed to make any showing of a meritorious defense. Therefore, I would find this argument was raised and ruled upon, and is thus properly before this court.
I join the majority’s serious concern with the conduct of the McClurgs’ counsel in the manner in which he pursued this case. While no duty technically existed to notify New Prime or Zurich of the filing of suit against Deaton, the failure to do so under the circumstances of this case compromises the high ethical standards attaching to the practice of law. As the majority points out, the McClurgs indicated in correspondence to Zurich that New Prime would be served as a defendant in the event a settlement could not be reached, stating emphatically: “If I haven’t heard from [Zurich] by that time, I will file suit and serve the Defendant and send you a courtesy copy of the pleadings.” The maxim that a lawyer’s word is his bond is not only a time-honored tradition; it is included as a guiding principle in the South Carolina Bar’s Standards of Professionalism.
Moreover, during negotiations, the McClurgs’ counsel sent a copy of his proposed complaint to New Prime which showed both New Prime and Deaton as defendants. However, the complaint ultimately served on Deaton made no mention of New Prime as a defendant. Inexplicably, less than a month after filing the complaint against Deaton, McClurgs’ counsel appeared to be continuing settlement negotiations with New Prime by sending it an additional medical report.
While the facts presented here — the failure to serve an insurance company where there is a clear and established prior course of dealings between the carrier and the plaintiff— appear to present a novel situation in South Carolina,2 the Indiana Court of Appeals addressed a similar situation in McGee v. Reynolds, 618 N.E.2d 40 (Ind.Ct.App.1998). There, two parties were involved in an automobile accident and *583negotiations ensued between the injured party and the at-fault driver’s insurance company. When those negotiations reached an impasse, the injured party filed suit against the at-fault party without notifying the insurance company. Similar problems of service arose, and in the meantime, the insurance company made an inquiry as to the claim’s status, only to receive no response. Finally, a default judgment was obtained, and after notice of the judgment, the at-fault driver and insurer moved to set aside the according to Rule 60(B)(3).
The McGee court affirmed the trial court’s decision to grant the at-fault driver’s motion to set aside the default judgment where the plaintiffs attorney failed to give notice of the lawsuit to defendant’s insurer. Id. at 41. The court described the plaintiff attorney’s behavior as bad faith and “smack[ing] of chicanery and unfair advantage” which could not be tolerated. Id. Further, in reaching its decision, the McGee court referenced Boles v. Weidner, 449 N.E.2d 288, 290 (Ind.1983) and stated:
While there is no general duty to inform the defendant’s insurer of a lawsuit, in Boles, the supreme court concluded the plaintiffs failure to notify the defendant’s insurer of the existence of the lawsuit after negotiations had occurred was a valid consideration in determining whether to set aside a default judgment.
Id. The Boles court had determined that failure to notify the insurer, standing alone, was not enough to justify setting aside the default judgment. However, in McGee, the court held that the failure to serve the insurer after negotiations were undertaken, when combined with the attorney’s refusal to answer the direct inquiry by the insurance company as to the status of the claim, constituted grounds for relief. Id.
The case before us is factually very similar to McGee. Here, McClurgs’ counsel continued to negotiate with Zurich while filing a complaint against the at-fault driver without notice to New Prime or its carrier, despite his prior written assurance that he would send Zurich a courtesy copy. Additionally, the actual complaint served on Deaton was markedly different from the copy counsel had sent to Zurich, in that New Prime was no longer named as a defendant.
*584I fully recognize that this court has not been asked to adopt a bright-line rule with respect to service of complaints on carriers where settlement negotiations have been ongoing; nevertheless, counsel’s actions in continuing to uphold the appearance of settlement negotiations while simultaneously pursuing a default judgment without notice to Zurich, when coupled with the evidence of a meritorious defense as to damages, certainly warrants the grant of New Prime and Deaton’s Rule 60(b) motion.
Accordingly, I concur in part and dissent in part.

. Neither New Prime nor Deaton has requested this court adopt a rule requiring service on an insurance company under these circumstances; therefore, it is not within our province as an appellate court to do so. See Langley v. Boyter, 284 S.C. 162, 181, 325 S.E.2d 550, 561 (Ct.App.1984) rev’d on other grounds, 286 S.C. 85, 332 S.E.2d 100 (1985) ("[Ajppellate courts in this state, like well-behaved children, do not speak unless spoken to and do not answer questions they are not asked.”).