Court Opinion

ID: 9640623
Source: CourtListenerOpinion
Date Created: 2023-08-22 17:10:03.98094+00
Date Added: 2024-06-11T18:10:31.052454
License: Public Domain

Steele Hays, Justice, dissenting. Today’s decision narrowly interprets the rules of civil procedure and completely ignores the 1990 Amendment to ARCP Rule 55 which adopted a more liberal standard regarding default judgments to reflect a preference for deciding cases on the merits rather than on technicalities. Because I believe the trial court erred in striking the answers in both cases and in granting a default judgment in Case No. E-90-156,1 dissent to the Court’s holding. The Williamses argue the trial court erred in striking their answer in Case No. E-90-127. Although Arnold & Arnold originally filed its complaint on August 29, 1990, the chancellor granted the Williamses’ motion for an extension to file their response until October 13, 1990. October 13 fell on Saturday and the Williamses filed the response on Monday, October 15. However, the trial court concluded the answer was untimely since it was filed two days beyond the allowed extension. The Williamses contend that since the 13th of October was a Saturday, when the clerk’s office was closed, the filing of their response on the following Monday was timely, citing ARCP Rule 6(a). ARCP Rule 6 provides in relevant part: In computing any period of time prescribed or allowed by these rules, by order of the Court or by any applicable statute, the day of the act, event or default from which the designated period of time begins shall not be included. The last day of the period so computed shall be included, unless it is a Saturday, Sunday, or legal holiday, in which event the period runs until the end of the next day which is not a Saturday, Sunday, or legal holiday. Although this rule may have been drafted for situations in which a party is given a certain number of days (30, 60, 90, etc.), I believe the principles outlined in the rule also apply where the order specifies a particular date, and certainly that rationale should apply where default is the issue. Consequently, I would hold that the trial court abused its discretion in striking the answer as untimely given the particular circumstances. In addition, the Williamses allege the trial court erred in granting a default judgment in Case No. E-90-156 due to their failure to timely answer the counterclaim. ARCP Rule 55(a) states: “[w]hen a party against whom a judgment for affirmative relief is sought has failed to appear or otherwise defend as provided by these rules, judgment by default may be entered by the court.” (Emphasis supplied.) In determining whether the trial court abused its discretion, the appellate court must consider the nature of the mistake causing a failure to respond on a case by case basis. Divelbliss v. Suchor, 311 Ark. 8, 841 S.W.2d 600 (1992). (Emphasis supplied.) In the instant cáse, Arnold & Arnold filed its answer and counterclaim in Case No. E-90-156 on November 9, 1990, and filed a motion for default judgment on February 21, 1991. Although the Williamses had not answered the counterclaim, they had previously filed an answer to the complaint in Case No. E-90-127 which involved the same causes of action. Further, they had filed a motion for continuance in the original action (E-90-127) only nine days after Arnold & Arnold filed its answer and counterclaim in E-90-156. The Williamses also maintain they were not required to respond to the counterclaim since the trial court stayed all matters relating to the proceedings. The record does not contain an order granting the motion for continuance, but it does reflect that the trial, which was originally scheduled for December 12, 1990, was postponed. In addition, the Williamses alleged that Larry Williams was incarcerated in a federal penitentiary from October 15, 1990, until February 15, 1991. The Williamses, in fact, filed their answer in E-90-156 only ten days after Larry Williams was allegedly released from incarceration and only four days after the motion for default judgment had been filed. It is significant that Case No. E-90-127 and Case No. E-90-156 are essentially a single action. This action consists of the original action by Arnold & Arnold (E-90-127), an answer by the Williamses (Oct. 15, 1990), a “counterclaim” by the Williamses (filed as E-90-156), and an answer to the Williamses’ action (November 9, 1990). Had the Williamses simply filed a counterclaim in E-90-127 rather than filing the separate action in E-90-156, Arnold & Arnold would not have filed the counterclaim which resulted in the default judgment. Further, the Williamses’ answer in the original action (E-90-127) is essentially an answer to the counterclaim by Arnold & Arnold in E-90-156. Consequently, this case is comparable to Cammack v. Chalmers, 284 Ark. 164, 680 S.W.2d 689 (1984), where we sustained the trial court’s denial of appellants’ (plaintiffs below) motion for a default judgment. The appellees (defendants below) fiied a timely special appearance and moved for dismissal. The trial court requested the opposing litigants to submit a proposed order. After some two and one-half months (on November 17, 1980) the trial court denied the motion and gave appellees twenty-five days to answer. That order was not received by appellees but on February 4, 1981, counsel for appellants notified counsel for appellees the order had been entered. On April 10 appellees filed a responsive pleading and appellants maintained they were entitled to a default judgment. In affirming the trial court’s refusal to grant a default judgment, we cited language of Ark. R. Civ. P. 55 that a judgment by default may be granted when a party “fails to appear or otherwise defend,” pointing out that these appellees defended when they filed their motion to dismiss. Further, this case has notable similarities to Sparks v. Shepherd, 255 Ark. 969, 504 S.W.2d 716 (1974), where we affirmed a trial court’s denial of appellants’ motion for default judgment where appellees had failed to answer a counterclaim. In a land title dispute, the appellees originally filed an action which sought to enjoin the appellants from trespassing. The appellants filed an answer and a counterclaim which challenged the appellees’ chain of title. After filing an answer to the counterclaim, the appellees requested and were granted a nonsuit. However, the issue of the counterclaim remained before the trial court. Shortly after the dismissal without prejudice, the appellees filed a new cause of action against the appellants. Once again, the appellants filed an answer which contained a counterclaim. This time, the appellees failed to answer the counterclaim within the statutory period for filing a reply. The chancellor denied the appellants’ motion for default judgment and held that the pleading filed by the appellants was more in the nature of an answer than of a counterclaim and did not require a response by the appellees. In sustaining the action of the trial court, we found justification for a finding of excusable neglect or “other just cause” in the circumstances prevailing because the very issues raised by the appellants were already an issue in the first case by virtue of the pleadings then extant, i.e., the counterclaim and reply thereto. Also, in Easley v. Inglis, 233 Ark. 589, 346 S.W.2d 206 (1961), we said that if an answer to a “counterclaim” had been stricken as untimely, the refusal to grant a default judgment would not have been error, because testimony of the same issues would necessarily be heard on the issues made by the pleadings that were timely filed. See Also Jetton v. Fawcett, 264 Ark. 69, 568 S.W.2d 42 (1978). We have often said that default judgments are not favored in the law and a default judgment may be a harsh and drastic result affecting the substantial rights of the parties. Maple Leaf Canvas, Inc. v. Rogers, 311 Ark. 171, 842 S.W.2d 22 (1992). We have said repeatedly that default judgments should be avoided when possible. Tapp v. Fowler, 291 Ark. 309, 724 S.W.2d 176 (1987). In furtherance of that view, the 1990 Amendment to ARCP Rule 55 adopted a more liberal standard regarding default judgments and represents a preference for deciding cases on the merits rather than on technicalities. Divelbliss, supra; See also Reporter’s Note to the 1990 Amendment. Under the current rule, a default judgment may be set aside on the basis of mistake, inadvertence, surprise, excusable neglect, or any other reason justifying relief from the operation of the judgment. ARCP Rule 55(c). Under the prior rule, a default judgment could be set aside only upon a showing of “excusable neglect, unavoidable casualty, or other just cause.” Id. The 1990 Amendment adopts the language found in the Federal Rules of Civil Procedure regarding mistake, inadvertence, and surprise. In fact, the Reporter’s Note to the 1990 Amendment states: The standard in amended Rule 55(c) for setting aside a default is taken from Federal Rule Civil Procedure 60(b), which is made applicable in the default judgment context by Federal Rule 55(c), and should be interpreted in accordance with federal case law. Consequently, we should examine federal case law in order to interpret the mistake, surprise, and inadvertence language found in the amended rule. The United States Court of Appeals for the Sixth Circuit has stated: Where default results from an honest mistake “rather than willful misconduct, carelessness or negligence” there is especial need to apply [Fed. R. Civ. R] Rule 60(b) liberally. . United Coin Meter v. Seaboard Coastline R.R., 705 F.2d 839 (6th Cir. 1983). In addition, the Fifth Circuit has reversed a district court’s dismissal with prejudice due to the failure of counsel to appear at a scheduled trial. N.L.R.B. v. B.D. Holt Company, 516 F.2d 505 (5th Cir. 1975). In reversing, the circuit court concluded that the counsel failed to appear because a “too busy” lawyer and a “too busy” Judge had a series of misunderstandings. Id. The court noted the misunderstandings lacked any suggestion of “contumacious indifference to the Court of the kind we generally regard as requisite to the use of this severe action.” Id. Finally, “[t]he party seeking to have the judgment set aside must demonstrate a meritorious defense to the action.” ARCP Rule 55(c); See also. Hubbard v. The Shores Group, Inc., 313 Ark. 498, 855 S.W.2d 924 (1993). The court has defined meritorious defense as: [E]vidence (not allegations) sufficient to justify the refusal to grant a directed verdict against the party required to show the meritorious defense. In other words, it is not necessary to prove a defense, but merely present sufficient defense evidence to justify a determination of the issue by a trier of fact. RLI Ins. Co. v. Coe, 306 Ark. 337, 813 S.W.2d 783 (1991). The Williamses presented sufficient evidence to establish that Arnold & Arnold agreed to represent Larry Williams in four cases until the appeals were completed and that Arnold & Arnold withdrew from the representation prior to completion. Proof of a breach of contract is a valid defense to the counterclaim for quiet title; therefore, the evidence is sufficient to justify a determination of the issue by a trier of fact. Although the Williamses had not responded to the counterclaim in E-90-156, they continued to respond in E-90-127 which involved the same issues. Further, the Williamses acted with promptness in responding to the motion for default judgment and have demonstrated a meritorious defense to the action. See Morrissee v. Defensive Instruments, Inc., 16 Fed. R. Serv. 2d 358 (1972). Based upon these factors and those mentioned above, I am persuaded their failure to file a timely answer is attributable to mistake or inadvertence. Accordingly, I would find the granting of the default judgment and striking of the Williamses’ answer in Case No. E-90-156 to be an abuse of discretion. Brown, J., joins in this dissent.