Wise v. Harper , 2015 Ark. App. LEXIS 792 ( 2015 )

Cite as 2015 Ark. App. 702
ARKANSAS COURT OF APPEALS
DIVISION III
No. CV-15-632
Opinion Delivered December 9, 2015
HERBERT WISE, INDIVIDUALLY, APPEAL FROM THE MISSISSIPPI
HERBERT WISE, JR., D/B/A COUNTY CIRCUIT COURT,
WISE CUSTOM BUILT HOMES AND CHICKASAWBA DISTRICT
WISE CUSTOM BUILT HOMES, LLC [NO. CV-2014-10]
APPELLANTS
HONORABLE CHARLES BRENT DAVIS,
V. JUDGE
JENNIFER M. HARPER AFFIRMED IN PART; REVERSED AND
APPELLEE REMANDED IN PART
LARRY D. VAUGHT, Judge
Appellant Herbert Wise appeals the Mississippi County Circuit Court’s September 19,
2014 default judgment against him, awarding appellee Jennifer Harper $6,000 in damages
and $2,000 in attorney’s fees. Wise contends that the default judgment should be set aside
due to misrepresentation and that the damages award should be reversed because the
complaint did not specify an amount of damages sought, and the circuit court had no record
of any testimony or other evidence establishing damages. We affirm the entry of default
judgment against Wise, but we agree that evidence is necessary to determine the amount of
damages. Therefore, we reverse and remand as to the damages award.
Wise and Harper entered into a contract for the construction and purchase of a home
that Wise was to build on land he owned. The home was built and title was transferred to
Harper by warranty deed dated January 23, 2012. On January 21, 2014, Harper filed a
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complaint against Wise alleging negligence in failing to properly install electrical and
plumbing components, which included some dirt work. The complaint did not specify the
amount of damages sought but stated that it was an amount less than that required for
diversity jurisdiction in federal court. The record reflects service of the summons and
complaint on Wise on January 22, 2014, but proof of service was never introduced. It is
undisputed that Wise did not file an answer. On September 19, 2014, the circuit court
entered an order granting Harper a default judgment against Wise and awarding Harper
$6,000 in damages and $2,000 in attorney’s fees. No motion for default judgment had been
filed prior to the default-judgment order. The order stated that the damages award was based
on “statements regarding the repair of the septic system and other things necessary” from
Jennifer Harper’s husband, Brandon Harper.
Upon becoming aware of the default judgment, Wise filed a motion to set it aside on
numerous grounds. He contacted the circuit court’s court reporter to get a copy of the
transcript of a damages hearing at which Brandon Harper testified but learned that, while
court was in session that day, there had been no hearing in this case. There was no record of
any testimony by Brandon Harper.
On May 8, 2015, the circuit court held a hearing on Wise’s motion to set aside. Wise’s
attorney presented no evidence but argued that the complaint requested no specified amount
of damages; therefore, proof of damages was required. He also argued that the complaint
contained misrepresentations sufficient to set aside the default judgment and that Harper’s
husband had told him that no answer was necessary because they had worked out the
dispute. The court denied the motion to set aside, and this timely appeal followed.
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In Lone v. Koch we stated,
An order denying a motion to set aside a default judgment is an appealable
order, see Marcinkowski v. Affirmative Risk Mgmt. Corp., 322 Ark. 580, 910 S.W.2d 679
(1995), which this court reviews for an abuse of discretion. Nationwide Ins. Enter. v.
Ibanez, 368 Ark. 432, 246 S.W.3d 883 (2007). The abuse-of-discretion standard is “a
high threshold that does not simply require error in the circuit court’s decision, but
requires that the circuit court act improvidently, thoughtlessly, or without due
consideration.” Gulley v. State, 2012 Ark. 368, at 10, 423 S.W.3d 569, 576.
Lone, 2015 Ark. App. 373, at 4, 467 S.W.3d 152, 155.
Wise makes several arguments on appeal as to why the default judgment should have
been set aside. However, the only two issues that he raised below are that (1) there was
misrepresentation in obtaining the judgment, and (2) there was insufficient proof of
damages. Appellate courts will not address arguments raised for the first time on appeal.
Scroggins v. State, 2012 Ark. App. 87, at 7, 389 S.W.3d 40, 45 (citing Roston v. State, 362 Ark.
408, 208 S.W.3d 759 (2005)).
Wise argues that, pursuant to Rule 55(c) of the Arkansas Rules of Civil Procedure, the
default judgment should have been set aside due to misrepresentation. He alleges two types
of misrepresentation: (1) the substantive allegations in the complaint, which he disputes; and
(2) statements allegedly made by Harper’s husband leading him to believe that the issue was
resolved and that no answer was necessary. As to his claim that the substantive allegations
contained in the complaint (the date of the deed, the extent of the warranty, the facts
surrounding the alleged negligence) constituted misrepresentation sufficient to require the
circuit court to set aside the default judgment, we disagree. Rule 55 allows the circuit court to
set aside a default judgment for several reasons, including “fraud (whether heretofore
denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse
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party.” Ark. R. Civ. P. 55(c) (2015). The fact that Wise disputes the factual allegations found
in the complaint simply does not fall within this category. There is no basis for setting aside
a default judgment simply because Wise wishes to dispute the substantive allegations
underlying the claim.
Finally, we note that the only other fraud or misconduct alleged by Wise as a basis for
setting aside the default judgment is the allegation that Harper’s husband told Wise that
filing an answer to the complaint was unnecessary because they had worked everything out.
However, Wise never testified or offered any evidence of such a conversation to the circuit
court. His attorney briefly mentioned it during argument below, and he fleetingly mentions it
in his appellant’s brief, but neither of those arguments are evidence. The circuit court had no
evidence of fraud or misrepresentation before it. As a result, we see no error in the circuit
court’s finding that Harper did not engage in misrepresentation in obtaining the default
judgment.
Wise next argues that, because there was not a specified amount of damages sought
in the complaint and because this was not an action based on a verified statement of an
account, proof of damages was required. We agree. When a default judgment is appropriate,
all that is admitted is liability, not the amount of damages. Gardner v. Robinson, 42 Ark. App.
90, 854 S.W.2d 356 (1993). All of the plaintiff’s material allegations are taken as true, but
proof as to damages beyond nominal damages is necessary in order to determine the amount
of the default judgment. Id.; Kohlenberger, Inc. v. Tyson’s Foods, Inc., 256 Ark. 584, 510 S.W.2d
555 (1974).
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Harper does not dispute Wise’s contention that proof of damages was required; she
simply claims that the language of the order is sufficient to establish that such proof existed.
However, the court reporter has verified that, despite the language contained in the order to
the contrary, no hearing was held or other on-the-record statement given in this case. No
affidavit, declaration, deposition, or other proof of damages is contained in the record.
Although the order states that it is based on the statements of Brandon Harper, we have no
such statements to review. Therefore, either the default judgment was erroneously entered
without proof of damages or the court relied on ex parte, off-the-record statements in
violation of Arkansas Supreme Court Administrative Order No. 4(a). In the absence of a
proper waiver, Administrative Order No. 4(a) imposes a duty on the circuit court to require
that a verbatim record be made of all proceedings pertaining to any contested matter before
the court or the jury. Ark. Sup. Ct. Admin. Order No. 4(a); Holley v. State, 2013 Ark. App.
668, at 2. In either case, we must reverse and remand to allow the circuit court to conduct an
on-the-record hearing as to damages. However, we note that there is no dispute that Wise
failed to answer, we have rejected his misrepresentation arguments, and he has not preserved
any other argument attacking the default judgment. Therefore, the underlying default
judgment was proper, and the only remaining issue to be settled on remand is the amount of
damages. Where, as here, liability due to default has been established, a damages hearing is
limited in scope, and Wise may not introduce evidence to defeat Harper’s cause of action.
B&F Eng’g Inc. v. Controneo, 309 Ark. 175, 830 S.W.2d 835 (1992).
Affirmed in part; reversed and remanded in part.
GRUBER and BROWN, JJ., agree.
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Jason W. Harris, for appellant.
Reid, Burge, Prevallet & Coleman, by: Richard A. Reid, for appellee.
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