Court Opinion

ID: 6329286
Source: CourtListenerOpinion
Date Created: 2022-04-01 20:12:54.640641+00
Date Added: 2024-06-11T09:22:49.629724
License: Public Domain

04/01/2022
               IN THE COURT OF APPEALS OF TENNESSEE
                           AT NASHVILLE
                        Assigned on Briefs December 1, 2021

        TRACEE ANNETTE HIGGINS v. LAURA SMITH MCCORD

                  Appeal from the Circuit Court for Marion County
                   No. 18673          Thomas W. Graham, Judge
                     ___________________________________

                           No. M2021-00789-COA-R3-CV
                       ___________________________________

This personal injury action arose following a motor vehicle accident. The plaintiff timely
commenced an action in which she sought $1 million in compensatory damages and
$1 million in punitive damages. After the defendant was served but failed to file an answer
to the complaint, the plaintiff filed a motion for default judgment, which the trial court
granted as to liability only, leaving open the amount of damages to be awarded. The case
remained dormant for seven years until the plaintiff was granted leave to file an amended
complaint that increased the request for compensatory damages from $1 million to
$2 million. The amended complaint, however, was never served on the defendant.
Thereafter, a final judgment was entered in which the plaintiff was awarded the monetary
damages she sought in the amended complaint, that being $2 million for compensatory
damages and $1 million for punitive damages. Seventeen months later, and after paying
$30,000 toward the $3 million judgment, the defendant filed a Tennessee Rule of Civil
Procedure 60.02(3) motion to set aside the default judgment on the ground the judgment
was void ab initio for lack of personal jurisdiction. The plaintiff opposed the motion
arguing, inter alia, that the Rule 60.02(3) motion was untimely and that it should be denied
based on exceptional circumstances as recognized in Turner v. Turner, 473 S.W.3d 257
(Tenn. 2015). Following a hearing and finding the motion timely, the trial court determined
(1) that the defendant had not been served with the amended complaint, (2) that the
judgment was void, and (3) that the plaintiff had not proven the requisite exceptional
circumstances to deprive the defendant of Rule 60 relief due to the plaintiff’s failure to
establish another person’s detrimental reliance on the void judgment. We affirm.

  Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed

FRANK G. CLEMENT, JR., P.J., M.S., delivered the opinion of the court, in which JOHN W.
MCCLARTY and ARNOLD B. GOLDIN, JJ., joined.

John H. Cameron, Sr., Jasper, Tennessee, for the appellant, Tracee A. Higgins.
Paul D. Cross, Monteagle, Tennessee, for the appellee, Laura S. McCord.

                                              OPINION

       Tracee A. Higgins (“Plaintiff”) and Laura S. McCord (“Defendant”) were in a car
accident on May 27, 2009. Plaintiff complained that she sustained injuries from the
accident and subsequently filed suit against Defendant, asserting claims for common law
negligence, negligence per se, and gross negligence.

       The initial Complaint, which was filed on October 30, 2009, sought $1 million in
compensatory damages and $1 million in punitive damages. Defendant was properly
served on November 2, 2009; however, Defendant never filed a responsive pleading or an
Answer. Resultantly, Plaintiff filed a Motion for Default Judgment. The trial court granted
the motion and entered an order of default judgment against Defendant on December 18,
2009, which permitted Plaintiff to proceed ex parte. The default judgment did not award
monetary damages; thus, the issue of Plaintiff’s damages remained to be determined.

       The case lay dormant until Plaintiff filed an Amended Complaint on October 20,
      1
2016. Notably, the Amended Complaint incorporated the allegations from the initial
Complaint and increased the request for compensatory damages from $1 million to
$2 million. Defendant was never served with the Amended Complaint.

        Following an evidentiary hearing, the trial court entered a Final Judgment on
August 18, 2017, awarding Plaintiff $2 million in compensatory damages and $1 million
in punitive damages. Shortly after the Final Judgment was entered, the Judgment and a
Notice of Lien Lis Pendens were filed in the Register’s Office of Marion County.

       In November of 2017, Defendant entered into a contract to sell a parcel of real
property she owned; however, she was unable to close on the contract due to the recorded
lien. After negotiations, Plaintiff executed a partial lien release in exchange for a $30,000
payment toward the judgment from Defendant.

       On May 22, 2020, Defendant filed a Rule 60.02(3) Motion seeking relief from a
void judgment.2 Defendant argued that the August 18, 2017 Judgment was void because
the Amended Complaint increased the damages requested but was never served on
Defendant. She specifically relied on Holder v. Drake, 908 S.W.2d 393 (Tenn. 1995),

          1
        Shortly prior to the filing of the Amended Complaint, Plaintiff filed a Request for Admissions on
September 6, 2016, followed by a Supplemental Request for Admissions on September 9, 2016. Similar to
the Amended Complaint, the Requests for Admissions were never served on Defendant.
          2
         At the same time Defendant also filed an independent action to set aside the judgment as void;
however, that action is not at issue in this appeal.

                                                  -2-
which explained that when a plaintiff takes a default judgment and then increases the
damages sought in a subsequent amended complaint, the defendant must be served with
process in accordance with Tennessee Rule of Civil Procedure 5.01. Defendant later
amended her Rule 60.02(3) motion to allege that the Default Judgment rendered on
December 18, 2009, was no longer enforceable pursuant to Tennessee Code Annotated §
28-3-110(a)(2).

       In Plaintiff’s response to Defendant’s Rule 60.02(3) Motion,3 Plaintiff conceded
that the August 18, 2017 Judgment was void for the reasons asserted by Defendant.
However, Plaintiff argued that relief pursuant to Rule 60.02(3) “from a void judgment may
be denied if certain exceptional circumstances exist.” Turner, 473 S.W.3d at 279. Plaintiff
argued that such exceptional circumstances were present because Defendant treated the
judgment as valid by making a $30,000 payment toward the judgment, causing Plaintiff to
rely on the validity of the Judgment. Alternatively, Plaintiff asked the court to set aside the
August 18, 2017 Judgment and render judgment on the initial Complaint.

      In its order granting Defendant’s Amended Rule 60.02(3) Motion, the trial court
made the following findings:

       1. It is uncontested that the judgment of August 18, 2017 which was based
          on (1) an Amended Complaint that lacked service upon the Defendant
          and (2) was further based on a Request to Admit that likewise was not
          served on the Defendant is void and of no legal effect.

       2. The only way the Court could deny the Defendant’s Motion would be if
          two (2) exceptional circumstances are established. Specifically: (1) the
          Defendant must have accepted the validity of the judgment and
          (2) another person is shown to have relied on the void judgment to their
          detriment. The requirement of detrimental reliance by another person
          has simply not been established.

       3. This case cannot now be reheard because the ten (10) year statute of
          limitation on actions on judgments expired on December 18, 2019.

(Emphasis added).

       3
           Plaintiff opposed Defendant’s Rule 60.02(3) Motion by filing a response, which included
Plaintiff’s own Rule 60.02(5) Motion. While Plaintiff’s motion practice was unorthodox, it did serve the
purpose of opposing Defendant’s Rule 60.02(3) Motion.

                                                 -3-
       The court explained that the August 18, 2017 Judgment was void ab initio for lack
of personal jurisdiction over Defendant and that further action on the December 18, 2009
Default Judgment was barred by Tennessee Code Annotated § 28-3-110(a)(2).

       Following this order, Plaintiff filed a Rule 59.04 Motion to Alter or Amend, asking
the court to enter a judgment against Defendant for the damages requested in the initial
Complaint. Plaintiff also insisted that Defendant’s Rule 60 Motion had not been timely
filed.

       The trial court denied Plaintiff’s Rule 59.04 Motion, explaining that Plaintiff’s
motion was futile because the August 18, 2017 Judgment was void and because further
action on the December 18, 2009 Default Judgment was barred by Tennessee Code
Annotated § 28-3-110(a)(2). The court further noted that void judgments may be attacked
at any time.

      This appeal followed.

                                                 ISSUES

        Each party identified three issues for our consideration,4 which we restate as
follows: (1) whether Defendant’s Rule 60.02(3) Motion was timely filed; (2) whether the
trial court abused its discretion in granting Defendant relief from a void judgment; and

      4
          Appellant’s issues were stated as follows:

      1. The trial court erred in granting the Defendant’s Rule 60 Motion in that the Defendant
         accepted the validity of the judgment and the Plaintiff relied on the void judgment to
         her detriment.

      2. The Court erred in not granting the Plaintiff’s Rule 60 Motion to reinstate the one-
         million-dollar ($1,000,000) verdict.

      3. The trial court erred in granting the Defendant’s Rule 60 Motion even though the
         Motion was filed thirteen (13) months after the entry of the original judgment.

      Appellee’s issues were stated as follows:

      1. The trial court ruled correctly in granting Defendant’s Rule 60 Motion in that first, the
         judgment attacked by the Rule 60 Motion was indisputably void, and the facts of this
         case do not satisfy the criteria set forth by the case of Turner v. Turner, which provides
         a very limited, exceptional circumstances escape valve from the operation of Rule 60
         to a void judgment.

      2. The trial court ruled correctly in denying Plaintiff’s Rule 60 Motion.

      3. The trial court ruled correctly that Defendant’s Rule 60 Motion was not untimely.

                                                   -4-
(3) whether the trial court erred in denying Plaintiff’s motion to reinstate the 2009 Default
Judgment.

                                         STANDARD OF REVIEW

         In general, we review a trial court’s ruling on a request for relief from a final
judgment under Rule 60.02 of the Tennessee Rules of Civil Procedure pursuant to the abuse
of discretion standard. Discover Bank v. Morgan, 363 S.W.3d 479, 487 (Tenn. 2012)
(citing Henry v. Goins, 104 S.W.3d 475, 479 (Tenn. 2003)). Likewise, this court has
previously explained that “[w]e review a trial court’s denial of a Tenn. R. Civ. P. 59.04
motion to alter or amend a judgment for abuse of discretion.” Robinson v. Currey,
153 S.W.3d 32, 38 (Tenn. Ct. App. 2004) (quoting Chambliss v. Stohler, 124 S.W.3d 116,
120 (Tenn. Ct. App. 2003)). “An abuse of discretion occurs when a court strays beyond the
applicable legal standards or when it fails to properly consider the factors customarily used
to guide the particular discretionary decision.” Lee Medical Inc. v. Beecher, 312 S.W.3d
515, 524 (Tenn. 2010). Thus, a court abuses its discretion “when it ‘applie[s] an incorrect
legal standard, or reache[s] a decision which is against logic or reasoning that cause[s] an
injustice to the party complaining.’” Eldridge v. Eldridge, 42 S.W.3d 82, 85 (Tenn. 2001)
(alterations in original) (quoting State v. Shirley, 6 S.W.3d 243, 247 (Tenn. 1999)). “The
abuse of discretion standard does not permit the appellate court to substitute its judgment
for that of the trial court.” Id.

                                                 ANALYSIS

      Defendant argues, and Plaintiff concedes, that the August 17, 2018 Judgment was
void ab initio because Plaintiff failed to serve Defendant with the Amended Complaint,
which increased her claim for compensatory damages as requested in the initial
Complaint.5 Yet, Plaintiff contends that the trial court erred by granting Defendant’s Rule
60.02(3) Motion because Defendant’s Rule 60.02(3) Motion was not timely filed.

        5
            Tennessee Rule of Civil Procedure 5.01 explains when service of process is required and specifies:

        [N]o service need be made on parties adjudged in default for failure to appear, except that
        pleadings asserting new or additional claims for relief against them shall be served upon
        them in the manner provided for service of summons, or for constructive service, in Rules
        4, 4A, or 4B.

(Emphasis added).

        In Holder v. Drake, 908 S.W.2d 393 (Tenn. 1995), the Tennessee Supreme Court reasoned that an
amendment which increased an ad damnum is a “new or additional claim” within the meaning of Rule 5.01
and “that a Plaintiff who takes a default judgment and who thereafter amends the complaint to increase the
damages sought must serve the defendant with the motion to amend in accordance with Tenn. R. Civ. P.
4.” Id. at 394–96. Thus, Plaintiff was required to serve Defendant with the Amended Complaint, and
because she did not, the August 18, 2017 Judgment is void for lack of personal jurisdiction.

                                                     -5-
Alternatively, Plaintiff contends that even if the motion was timely filed, the trial court
abused its discretion in granting Rule 60 relief because exceptional circumstances exist.

                     I. TIMELINESS OF THE RULE 60.02(3) MOTION

      Tennessee Rule of Civil Procedure 60.02 provides that after an order is final, a court
may relieve a party from a final judgment “[o]n motion and upon such terms as are just,”
based on the following grounds:

       (1) mistake, inadvertence, surprise or excusable neglect; (2) fraud . . . ,
       misrepresentation, or other misconduct of an adverse party; (3) the judgment
       is void; (4) the judgment has been satisfied, released or discharged . . . ; or
       (5) any other reason justifying relief from the operation of the judgment.

     Notably, Rule 60.02(3) specifically provides relief from a final judgment when “the
judgment is void.”

        Plaintiff insists that because Defendant’s Rule 60.02(3) Motion was filed nearly
three years after the August 18, 2017 Judgment became a final judgment, the motion was
time-barred. Conversely, Defendant argues that her Rule 60.02(3) Motion was not subject
to the reasonable time filing requirement of Rule 60.02; therefore, it was appropriate for
the trial court to grant her relief.

       Motions made under Rule 60.02 must be made within a “reasonable time,” and
motions brought under subsections (1) and (2) must be filed within one year after entry of
the judgment. Id. However, “the reasonable time filing requirement of Rule 60.02 does not
apply to petitions seeking relief from void judgments under Rule 60.02(3).” Turner,
473 S.W.3d at 260. Rather, void judgments may be attacked at any time. Id. at 279.

       Because Defendant was seeking relief from a void judgment pursuant to Rule
60.02(3), the motion was timely filed. Accordingly, the trial court applied the correct legal
standard in determining that Defendant’s motion was timely.

   II. DENIAL OF RULE 60.02(3) RELIEF BASED ON EXCEPTIONAL CIRCUMSTANCES

       While Rule 60.02(3) motions are not subject to the reasonable time filing
requirement, relief from a void judgment “may be denied if certain exceptional
circumstances exist.” Turner, 473 S.W.3d at 279.

        The Supreme Court held in Turner that relief from a void judgment should
nevertheless be denied “if the following exceptional circumstances exist: ‘(1) [t]he party
seeking relief, after having had actual notice of the judgment, manifested an intention to
treat the judgment as valid; and (2) [g]ranting the relief would impair another person’s

                                            -6-
substantial interest of reliance on the judgment.’” Id. at 260 (quoting Restatement (Second)
of Judgments § 66 (Am. Law Inst. 1982)). Consequently, these two requirements must be
established for a court to deny Rule 60.02(3) relief from a void judgment.

        As for the first requirement, the Restatement (Second) of Judgments clarifies that in
some instances, manifestation of intent arises when the party against whom the judgment
was rendered is later “in a position where he would be expected to deny the effect of the
judgment but does not do so.” § 66 cmt. b. “[F]ailure to protest the judgment in such a
situation can be taken as an affirmation of the judgment because the circumstances invited
an expression of a contrary position.” Id. Defendant manifested an intent to treat the
judgment as valid by paying $30,000 toward the judgment. Thus, the first requirement has
been established.

       A thorough review of the record has not revealed any assertion by Plaintiff that
granting relief from the judgment “would impair another person’s substantial interest of
reliance of the judgment.” Id. § 66.

        Regarding the second requirement, the Restatement (Second) of Judgments explains
that the interests protected by denying relief include interests of persons in status, property,
or in repose from legal controversy. Id. § 66 cmt. c. Thus, Plaintiff bears the burden of
establishing that granting Defendant relief from the final judgment would impair “another
person’s substantial interest of reliance on the judgment” as is required to establish
exceptional circumstances. Id. § 66.

       In its order granting Defendant relief from the void judgment, the trial court held:

       The only way the Court could deny the Defendant’s Motion would be if two
       (2) exceptional circumstances are established. Specifically: (1) the Defendant
       must have accepted the validity of the judgment and (2) another person is
       shown to have relied on the void judgment to their detriment. The
       requirement of detrimental reliance by another person has simply not been
       established.

(Emphasis added).

       Plaintiff argues the trial court erred in concluding that detrimental reliance of
another person had not been established. Meanwhile, Defendant agrees with the trial
court’s conclusion and argues that even if Defendant manifested an intent to treat the
judgment as valid, the reliance element was not met.

       A thorough review of the record reveals no assertion by Plaintiff that granting relief
from the judgment “would impair another person’s substantial interest of reliance on the
judgment.” Restatement (Second) of Judgments § 66 (Am. Law Inst. 1982). The record

                                             -7-
supports the trial court’s conclusion that the requirement of detrimental reliance by another
person has not been established.

       Accordingly, we affirm the trial court’s decision to grant Defendant relief from the
void judgment.

               III. REINSTATEMENT OF THE 2009 DEFAULT JUDGMENT

       For completeness, we acknowledge Plaintiff’s contention that the trial court erred
in denying her motion to reinstate the 2009 Default Judgment. More specifically, Plaintiff
contends “that the trial court erred in stating that the Order of Default Judgment is barred
by the ten (10) year statute of limitations on judgments more than ten (10) years old.” See
Tenn. Code Ann. § 28-3-110(a)(2). While we agree that Tennessee Code Annotated § 28-
3-110(a)(2) is inapplicable to the facts of this case, our determination provides no relief to
Plaintiff. This is because the 2009 Default Judgment was not a final judgment; it was
merely an interlocutory order. See In re Est. of Ridley, 270 S.W.3d 37, 40 (Tenn. 2008)
(holding that “[b]y definition, an ‘interlocutory order’ cannot be a ‘final judgment.’”).

       Significantly, the Default Judgment Plaintiff relies upon did not dispose of all claims
asserted by Plaintiff in the initial Complaint. In the initial Complaint, Plaintiff sought to
recover substantial monetary damages, but the Default Judgment did not award any
monetary damages. It merely granted a default as to Defendant’s liability. In fact, Plaintiff
was not awarded any damages until the entry of the final judgment in 2017.

       As Rule 3(a) of the Tennessee Rules of Appellate Procedure states:

       In civil actions every final judgment entered by a trial court from which an
       appeal lies to the Supreme Court or Court of Appeals is appealable as of right.
       Except as otherwise permitted . . . , any order that adjudicates fewer than all
       the claims or the rights and liabilities of fewer than all the parties is not
       enforceable or appealable and is subject to revision at any time before entry
       of a final judgment adjudicating all the claims, rights, and liabilities of all
       parties.

        Because the Default Judgment did not include an award for monetary damages, the
Default Judgment was an interlocutory order that was “subject to revision at any time
before the entry of the judgment adjudicating all the claims and the rights and liabilities of
all the parties.” See Tenn. R. Civ. P. 54.02. “A final judgment is one that resolves all the
issues in the case, ‘leaving nothing else for the trial court to do,’” and “[b]y definition, an
‘interlocutory order’ cannot be a ‘final judgment.’” In re Est. of Ridley, 270 S.W.3d at 40
(citation omitted).

       Plaintiff’s filing of a motion to amend the Complaint fully supports our conclusion
that the Default Judgment was merely an interlocutory order. This is evident because

                                             -8-
Plaintiff would not have been able to amend the Complaint in 2016 if the 2009 Default
Judgment constituted a final judgment. If it had been final, the trial court would have lacked
jurisdiction to grant Plaintiff leave to amend her Complaint.

      As a consequence, and contrary to Plaintiff’s contentions, the 2009 Default
Judgment, which was subject to revision at any time by the trial court before the entry of
the now-voided 2017 final judgment, cannot serve as a substitute final judgment for the
August 18, 2017 Judgment.

                                      IN CONCLUSION

       Based on the foregoing, we affirm the trial court’s determination that the August 17,
2017 Judgment is void ab initio for lack of personal jurisdiction over Defendant. Costs of
appeal are assessed to Tracee A. Higgins.

                                                    ________________________________
                                                    FRANK G. CLEMENT JR., P.J., M.S.

                                            -9-