Armor v. Michelin Tire Corp ( 1997 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
CAROLYN ARMOR; RICHARD T.
ARMOR, JR.,
Plaintiffs-Appellants,
v.
MICHELIN TIRE CORPORATION, No. 96-1724
Defendant-Appellee,
and
JOHN DOE MANUFACTURER,
Defendant.
Appeal from the United States District Court
for the Southern District of West Virginia, at Parkersburg.
Charles H. Haden II, Chief District Judge.
(CA-95-779-6)
Argued: January 29, 1997
Decided: May 13, 1997
Before WILKINSON, Chief Judge, ERVIN, Circuit Judge, and
HILTON, United States District Judge for the Eastern District of
Virginia, sitting by designation.
_________________________________________________________________
Affirmed by unpublished opinion. Judge Hilton wrote the opinion, in
which Chief Judge Wilkinson and Judge Ervin joined.
_________________________________________________________________
COUNSEL
ARGUED: Dennis Lyle Sipe, BUELL & SIPE COMPANY, L.P.A.,
Marietta, Ohio, for Appellants. John Jerome Polak, KING, ALLEN &
GUTHRIE, Charleston, West Virginia, for Appellee. ON BRIEF:
Michelle M.M. Price, KING, ALLEN, & GUTHRIE, Charleston,
West Virginia; James L. McCrystal, Jr., WESTON, HURD, FAL-
LON, PAISLEY & HOWLEY, Cleveland, Ohio, for Appellee.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
HILTON, District Judge:
Appellants Carolyn and Richard Armor appeal from the judgment
of the district court denying their motion for default judgment and
subsequently granting appellee Michelin Tire Corporation's motion
for summary judgment.
I.
On June 3, 1991, plaintiff Carolyn Armor was involved in a motor
vehicle accident in Wood County, West Virginia. The apparent cause
of the accident was the failure of the right rear tire on plaintiffs' vehi-
cle and its subsequent wrapping around the rear axle. Carolyn Armor
suffered serious injuries as a result of the accident. On June 3, 1993,
the Armors filed suit against Michelin in Wood County, West Vir-
ginia and on June 2, 1993, in Washington County, Ohio. On June 24,
1994 the West Virginia lawsuit was dismissed due to failure to prose-
cute. In September 1994, it became apparent to counsel for the
Armors that the Armors would not be prepared for trial which was
scheduled for September 24, 1994. Plaintiffs had retained an expert
who needed additional time and information to complete his investi-
gation concerning the allegedly defective tire. In addition, the injuries
that Carolyn Armor sustained as a result of the automobile accident
began to increase in severity. The Ohio court was unwilling to grant
the Armors a continuance of the trial date. On September 19, 1994,
the Ohio court, pursuant to the Armors' motion, dismissed without
2
prejudice the Armors' lawsuit with the proviso that plaintiffs main-
tained the right to refile the action within one year of the filing of the
entry.
On September 15, 1995, the Armors reinstituted litigation in the
court below, the United States District Court for the Southern District
of West Virginia. In order to give Michelin time to ascertain whether
the complaint had been served the parties entered into a stipulation,
on October 18, 1995, that Michelin would file an answer by Novem-
ber 5, 1995. Michelin contends that it failed to file an answer by
November 5, 1995, because it was never served with the complaint
and because counsel for the Armors did not request a waiver of ser-
vice under Fed. R. Civ. P. 4(d). Following Michelin's failure to
answer, the district court clerk's notice to counsel was filed on
November 21, 1995. On December 1, 1995, Michelin moved for leave
to untimely answer the complaint, and on the same day the Armors'
motion for default judgment was filed. Michelin filed its response to
the Armors' motion for default judgment on December 14, 1995. The
district court denied plaintiffs' motion for default judgment and
granted Michelin's motion for leave to file its answer and affirmative
defenses to the complaint. The case went forward until April 23,
1996, when the district court granted Michelin's motion for summary
judgment. The Armors appeal the district court's orders denying their
motion for default judgment and granting Michelin's motion for sum-
mary judgment.
II.
We review the district court's order denying plaintiffs motion for
default judgment under an abuse of discretion standard. Augusta
Fiberglass Coatings, Inc. v. Fodor Contracting Corp. , 843 F.2d 808(4th Cir. 1988); Consolidated Masonry & Fireproof, Inc. v. Wagman
Constr. Co., 383 F.2d 249 (4th Cir. 1967).
Michelin's opposition to plaintiffs' motion for default judgment
can be properly viewed as a motion to set aside an entry of default.
Meehan v. Snow, 652 F.2d 274, 276 (2d Cir. 1981), 10 Wright, Miller
& Kane, Federal Practice and Procedure,§ 2692, pp. 466-67 (2d ed.
1983). Rule 55(c) of the Federal Rules of Civil Procedure provides
that "[f]or good cause shown the court may set aside an entry of
3
default and, if a judgment by default has been entered, may likewise
set it aside in accordance with Rule 60(b)." Since the present case is
one in which a default judgment had not yet been entered, the district
court was required to decide plaintiffs' motion for default judgment
under the "good cause" standard of Fed. R. Civ. P.55(c) as opposed
to the more rigorous standard of Rule 60(b).* The disposition of
motions to set aside an entry of default under Rule 55(c) lies largely
within the discretion of the district judge and is not lightly to be dis-
turbed by an appellate court. Consolidated Masonry & Fireproof, Inc.
v. Wagman Constr. Co., 383 F.2d 249, 251 (4th Cir. 1967). The clear
policy of the federal rules is to encourage disposition of claims on
their merits. Reizakis v. Loy, 490 F.2d 1132, 1135 (4th Cir. 1974);
Tolson v. Hodge, 411 F.2d 123, 130 (4th Cir. 1969).
Under Rule 55(c), the principal factors bearing on the appropriate-
ness of relieving a party of a default are whether setting it aside would
prejudice the adversary and whether a meritorious defense is pres-
ented. Central Operating Co. v. Utility Workers of America, AFL-
CIO, 491 F.2d 245, 252 (4th Cir. 1974). In addition, the district court
can consider whether or not the moving party acts with reasonable
promptness, see Consolidated Masonry at 251, and whether or not the
party has been disadvantaged by the errors or neglect of his attorney,
see United States v. Moradi, 673 F.2d 725, 728 (4th Cir. 1982).
In the present case, it is clear that the district court did not abuse
its discretion in denying plaintiffs' motion for default judgment. All
that is necessary to establish the existence of a meritorious defense is
a presentation or proffer of evidence, which, if believed, would permit
the court to find for the defaulting party. Moradi at 727 (citing
Central Operating Co. v. Utility Workers of America , 491 F.2d 245,
252 n.8 (4th Cir. 1974)). "The underlying concern is . . . whether there
is some possibility that the outcome . . . after a full trial will be con-
trary to the result achieved by the default." Augusta Fiberglass Coat-
ings v. Fodor Contracting, 843 F.2d 808, 812 (4th Cir. 1988) (quoting
10 Wright, Miller & Kane, Federal Practice and Procedure, § 2697,
p. 531 (2d ed. 1983)).
_________________________________________________________________
*Rule 60(b) requires a showing of mistake, inadvertence, surprise, or
excusable neglect to set aside a default judgment.
4
Plaintiffs contend that Michelin failed to proffer evidence of its
meritorious defenses. Michelin, however, submitted two separate affi-
davits of its litigation counsel explaining the reasons for default and
noting the existence of Michelin's legal and factual defenses to the
complaint. Any doubt as to the sufficiency of these affidavits is
resolved in Michelin's favor since we cannot say that ultimately
Michelin's defenses proved to be without merit. The record is clear
that Michelin was only in default due to the misunderstanding of its
Ohio counsel, who believed that the Armors still had to serve the
complaint before Michelin was required to answer. Michelin acted
promptly when it was apprised of the default, filing its motion for
leave to file an answer and affirmative defenses eleven days after it
received notice from the clerk's office. Furthermore, the Armors
admit that they were not prejudiced, by Michelin's delay in answering
the complaint.
III.
We review grants of motions for summary judgment de novo on
appeal. Jackson v. Kimel, 992 F.2d 1318, 1322 (4th Cir. 1993); Roe
v. Doe, 28 F.3d 404 (4th Cir. 1994). Summary judgment is appropri-
ate when there is no genuine issue as to any material fact. Fed. R. Civ.
P. 56(c).
In granting Michelin's motion for summary judgment, the district
court found that the Armors' claim is barred by the West Virginia
statute of limitations and is not saved by the West Virginia savings
statute. The Armors' complaint in this case was filed more than four
years after the June 3, 1991 accident, forcing the Armors to rely upon
West Virginia's savings statute to toll West Virginia's two-year stat-
ute of limitations for personal injury actions.
West Virginia recognizes a two-year statute of limitations for dam-
ages for personal injuries relating to products liability. W. Va. Code
§ 55-2-12(b) (1994); see also Barney v. Auvil, 195 W. Va. 733, 738,
466 S.E.2d 801, 806 (1995). Under the West Virginia's savings stat-
ute, a timely filed action which is involuntarily dismissed for reasons
other than on the merits, may be refiled within one year of the dis-
missal, even if such refiling is beyond the two-year limitation period.
W. Va. Code § 55-2-18 (1994). West Virginia authority is clear, how-
5
ever, that when an action is voluntarily dismissed, even though origi-
nally brought within the two-year time frame, it is not saved by the
West Virginia savings statute. Lawrence v. Winifrede Coal Company,
48 W. Va. 139, 35 S.E. 925 (1900); Allen v. Burdette, 89 W. Va. 615,
109 S.E. 739 (1921); McClung v. Tieche, 126 W. Va. 575, 29 S.E.2d
250 (1944); Keener v. Reynolds Transportation Co., 134 W. Va. 712,
61 S.E.2d 629 (1950); Henthorn v. Collins, 146 W. Va. 108, 111, 118
S.E.2d 358 (1961).
The Armors filed two lawsuits against Michelin prior to this action,
both of which were dismissed because the Armors elected not to pro-
ceed. The first case dismissed was the lawsuit filed by the Armors in
the Circuit Court of Wood County, West Virginia. That proceeding
was dismissed on June 24, 1994 because the Armors failed to serve
the complaint on Michelin. The Armors chose to proceed in Ohio
rather than West Virginia.
The second dismissal was by the Ohio state court. Because the
Armors were not prepared for trial and the Ohio court would not grant
a continuance, the Armors voluntarily dismissed their lawsuit. In
accordance with Ohio procedural law, the Ohio court's dismissal
order permitted the Armors' action to be refiled within one year. The
Ohio savings statute, unlike West Virginia's, would have permitted
the Armors to refile their action in an Ohio court within one year even
though the first action was voluntarily dismissed. The Ohio proce-
dural law in question, however, can only be applied in Ohio courts.
West Virginia law controls the procedural aspects of this case. Saena
v. Zenith Optical Co., 135 W. Va. 795, 65 S.E.2d 205 (1951). Statutes
of limitation are considered procedural because they are considered
as going to the remedy and not the fundamental right itself. Goad v.
Celotex Corp., 831 F.2d 508, 511 (4th Cir. 1987), cert. denied, 487
U.S. 1218 (1988) (citing Chase Securities Corp. v. Donaldson, 358
U.S. 304, 314 (1945)); and First United Methodist Church of Hyatts-
ville v. United States Gypsum Co., 882 F.2d 862, 865 (4th Cir. 1989).
The Armors contend that the West Virginia savings statute, West
Virginia Code § 55-2-18, should be liberally interpreted. McClung, 29
S.E.2d at 252. A liberal interpretation of the statute advances the pur-
pose and remedial character of the statute. See Henthorn, 118 S.E.2d
at 360. However, the broad construction of the savings statute is
6
appropriate only where "the dismissal was one included within the
terms of the statute." Keener, 61 S.E.2d at 632. The statute requires
that a dismissal of an action which will save a second action from the
effects of a statute of limitations must not be the result of voluntary
action on the part of plaintiff. Id. The court in Crawford v. Hatcher,
814 F. Supp. 834, 837 (S.D. W. Va. 1992), noted that in some cases
the voluntary nature of the dismissal is difficult to determine. A long
line of West Virginia Supreme Court cases require that "voluntary
dismissals should be confined to those cases in which the plaintiff has
specifically or by implication abandoned his original action."
Crawford, 814 F. Supp. at 837. It is clear that the Armors voluntarily
moved the Ohio court to dismiss their action pursuant to Ohio R. Civ.
P. 41(A). A voluntary dismissal is not within the terms of the statute
and, therefore, is not subject to the statute's remedial purpose.
Keener, 61 S.E.2d at 631; McClung, 29 S.E.2d at 252.
The Armors cite Ketterman v. Dry Fork Railroad Co., 37 S.E. 683,
684 (W. Va. 1900), for the proposition that the dismissal of their prior
lawsuit must have been purely voluntary and attributable solely to
their negligence for the savings statute not to be applicable. However,
in Ketterman the case was commenced with a defective summons,
and subsequently dismissed for that reason. The Ketterman court
found that dismissal due to negligence on the part of the clerk, not the
plaintiffs, was involuntary. Plaintiffs also cite Litten v. Peer, 197
S.E.2d 322, 323 (W. Va. 1973), in support of their position. In Litten,
plaintiff did not appear in court on the day trial was scheduled, and
his case was dismissed with prejudice for want of prosecution. The
Litten court held that, absent any consideration of the doctrine of res
judicata, the failure of plaintiff to appear on the day of trial did not
constitute a voluntary dismissal or abandonment of the lawsuit and
plaintiff's subsequent action would not be barred. The Armors argue
that the only difference between Litten and the present case is that in
the present case the Armors moved for dismissal prior to the day of
trial. However unlike in Litten, there is no doubt that the Armors'
action in Ohio state court was dismissed pursuant to their request. The
district court properly found that the Armors willfully abandoned
their suit, and as a result the suit is not saved by the West Virginia
savings statute.
We note that the Armors were not without a forum to litigate their
claims following the dismissal of their Ohio state court action. If the
7
Armors had filed this action in either a state or federal court in West
Virginia by June 23, 1995, the cause of action would have been saved
by West Virginia Code § 55-2-18 because the Wood County, West
Virginia action was involuntarily dismissed on June 24, 1994. The
West Virginia action was dismissed because of a failure to prosecute,
and the Ohio action was abandoned voluntarily because of plaintiffs'
need for further expert witness testimony and the need to determine
the extent of the continuing deterioration of plaintiff Carolyn Armor's
physical condition. Still, at that point, plaintiffs' cause of action could
have been resuscitated in one of two ways: 1) as noted above, by fil-
ing in a West Virginia Court by June 24, 1995; and 2) by filing in an
Ohio Court by September 19, 1995. Because plaintiffs followed nei-
ther of these courses of action, their action is barred.
IV.
Five days prior to trial, on September 19, 1994, the Ohio court dis-
missed the litigation because the Armors were not prepared to pro-
ceed at trial. The trial court dismissed the case without prejudice
pursuant to Ohio R. Civ. P. 41(A). The Armors contend that the order
issued by the Ohio court barred the district court from considering
whether their claims were barred by West Virginia's statute of limita-
tions. The Armors cite Stoner v. New York Life Insurance Co., 311
U.S. 464, 468 (1940), for the proposition that state court determina-
tions are not amenable to being relitigated in the federal courts, where
the issues had already been litigated in state court. Plaintiffs have
cited decisions from the Third, Seventh and Tenth Circuits for the
proposition that a federal court is bound by the prior determination of
a state court. Plaintiffs rely once again on Litten v. Peer, where the
state court applied the doctrine of res judicata to a federal district
court decision dismissing a case with prejudice. In Litten, the state
court would not allow refiling of the suit since it was dismissed with
prejudice by the federal district court. The Litten court merely applied
res judicata to a case that had been dismissed with prejudice and
decided on its merits. We find that the cases proffered by the Armors
are inapposite to the present case, as the issue of whether the West
Virginia's statute of limitations and its savings statute should bar the
present claim has never been decided on its merits.
"Dismissal without prejudice is a dismissal that does not operate as
an adjudication upon the merits, Rule 41 (a) (1), and thus does not
8
have a res judicata effect." Cooter & Gell v. Hartmarx Corp., 496
U.S. 384, 396 (1990) (quotations omitted). Res judicata only applies
to claims and issues actually litigated between the parties and operates
to preclude parties from contesting matters that they have had a full
and fair opportunity to litigate. Conley v. Spillers, 171 W. Va. 584(1983). The decision of the Ohio Court allowed the Armors to refile
in Ohio until September 19, 1995, but did not apply to any actions
filed in West Virginia. The district court properly found that it was
not bound by the dismissal order issued by the Ohio trial court.
V.
For the reasons stated above, the district court's orders denying the
Armors' motion for default judgment and granting Michelin's motion
for summary judgment are affirmed.
AFFIRMED
9