Chancellor's Learning Sys., Inc. v. Arlington , 2013 Ohio 582 ( 2013 )

[Cite as Chancellor's Learning Sys., Inc. v. Arlington, 2013-Ohio-582.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 98541
CHANCELLOR’S LEARNING SYSTEMS, INC.
PLAINTIFF-APPELLANT
vs.
SHIRLEY ARRINGTON
DEFENDANT-APPELLEE
JUDGMENT:
AFFIRMED
Civil Appeal from the
Garfield Heights Municipal Court
Case No. CVF 1200120
BEFORE: McCormack, J., S. Gallagher, P.J., and Blackmon, J.
RELEASED AND JOURNALIZED: February 21, 2013
ATTORNEYS FOR APPELLANT
Rosemary Taft Milby
Daniel A. Friedlander
Weltman Weinberg & Reis
323 W. Lakeside Avenue
Suite 200
Cleveland, Ohio 44113
ATTORNEYS FOR APPELLEE
Ronald I. Frederick
Michael L. Berler
Ronald Frederick & Associates
1370 Ontario Street
Suite 1240
Cleveland, Ohio 44113
TIM McCORMACK, J.:
{¶1} Plaintiff-appellant, Chancellor’s Learning Systems, Inc. (“Chancellor”),
appeals the trial court’s decision granting defendant-appellee, Shirley Arrington’s
(“Arrington”), motion for relief from judgment. In its order, the trial court vacated the
default judgment previously entered against Arrington.
Substantive Facts and Procedural History
{¶2} On January 17, 2012, Chancellor filed a complaint against Arrington for
breach of contract. The record reflects that Arrington was served with the complaint.
Chancellor then filed a motion for default judgment on March 6, 2012, due to Arrington’s
failure to timely file an answer or otherwise respond to Chancellor’s complaint. The
trial court granted Chancellor’s motion. Thereafter, on March 13, 2012, Arrington filed
a motion to vacate the default judgment, pursuant to Civ.R. 60(B)(1), stating that her
failure to respond to Chancellor’s complaint was due to inadvertence or excusable
neglect. The court conducted a hearing on the motion to vacate on April 9, 2012.
{¶3} During the hearing, in response to the court’s inquiry about possible
resolution of the matter, Arrington’s counsel informed the court that the parties had not
discussed settlement but he would be willing to do so, because he did not “desire to
proceed with another class action against [Chancellor],” as he had already resolved one
prior class action lawsuit against Chancellor. He further stated that Chancellor is “suing
for a bunch of product that [Arrington] never received and it’s their pattern and practice
to do that.” Counsel for Arrington advised the court that Chancellor provides study
guides to nursing students, charging them $345 for books the students could, essentially,
borrow from the library. According to counsel, these books are delivered to the students
after they have completed two books. He further noted that Chancellor charges the
students $1,195 for a lab that they “sell more of than they have capacity to perform by
almost a factor of three.”
{¶4} The court, in noting that Arrington was served of the complaint in January,
asked counsel why “it [took] Mrs. Arrington so long to see [counsel].” Arrington’s
attorney, in response, informed the court that Arrington called Chancellor on her own,
apparently at some point upon receiving the complaint, to “see what she could do.”
Arrington was told that she could pay $3,000, and Chancellor would send her “the rest of
the books.” Chancellor’s counsel provides, however, that Arrington should have
responded to its complaint, stating that she has been sued before and, therefore, she
should have known that a response was required.
{¶5} At the close of the hearing, the court granted Arrington’s motion and
vacated the default judgment previously entered. Chancellor now appeals the decision
of the trial court.
Assignments of Error
I. It is reversible error to vacate a default judgment under Civ.R. 60(B)
when the movant fails to show excusable neglect.
II. It is reversible error to vacate a default judgment under Civ.R. 60(B)
when the movant’s sole basis for a meritorious defense was based
upon argument without operative facts.
Standard of Review
{¶6} This court reviews Civ.R. 60(B) motions under an abuse of discretion
standard. Render v. Belle, 8th Dist. No. 93181, 2010-Ohio-2344, ¶ 8, citing Associated
Estates Corp. v. Fellows, 11 Ohio App.3d 112, 463 N.E.2d 417 (8th Dist.1983). An
abuse of discretion “implies that the court’s attitude is unreasonable, arbitrary or
unconscionable.” Blakemore v. Blakemore, 5 Ohio St.3d 217, 219, 450 N.E.2d 1140(1983). In reviewing for an abuse of discretion, this court does not substitute its
judgment for that of the trial court. In re Jane Doe I, 57 Ohio St.3d 135,138, 566
N.E.2d 1181 (1990), citing Berk v. Matthews, 53 Ohio St.3d 161, 169, 559 N.E.2d 1301(1990). The test is not whether this court would have granted or denied the motion;
rather, it is “whether the trial court, being in the best position to judge the cases on its
docket, abused its broad discretion * * *.” Collins Fin. Serv. v. Murray, 11th Dist. No.
2008-P-0095, 2009-Ohio-4619, ¶ 18.
Law and Analysis
{¶7} In its first assignment of error, Chancellor argues that Arrington should not
prevail on her motion for relief filed pursuant to Civ.R. 60(B) because she has not
demonstrated “excusable neglect.” It maintains that Arrington’s misunderstanding of
the consequences of failing to timely answer a complaint is an insufficient basis for
establishing excusable neglect. Chancellor also argues, in its second assignment of
error, that Arrington failed to allege sufficient operative facts that would demonstrate a
potentially meritorious defense.
{¶8} In order to prevail on a motion for relief from judgment under Civ.R. 60(B),
the moving party must establish that: (1) the party has a meritorious defense or claim to
present if relief is granted; (2) the party is entitled to relief under one of the grounds
stated in Civ.R. 60(B)(1) through (5); and (3) the motion is made within a reasonable
time. GTE Automatic Elec., Inc. v. ARC Industries, Inc., 47 Ohio St.2d 146, 351 N.E.2d
113 (1976), paragraph two of the syllabus. Failure to prove any of the three elements is
fatal to the motion, as the elements are “independent and in the conjunctive, not the
disjunctive.” Id. at 151.
{¶9} Civ.R. 60(B) delineates various means by which a party can obtain relief
from a final judgment:
On motion and upon such terms as are just, the court may relieve a party or
his legal representative from a final judgment, order or proceeding for the
following reasons: (1) mistake, inadvertence, surprise or excusable neglect;
(2) newly discovered evidence which by due diligence could not have been
discovered in time to move for a new trial under Rule 59(B); (3) fraud
(whether heretofore denominated intrinsic or extrinsic), misrepresentation
or other misconduct of an adverse party; (4) the judgment has been
satisfied, released or discharged, or a prior judgment upon which it is based
has been reversed or otherwise vacated, or it is no longer equitable that the
judgment should have prospective application; or (5) any other reason
justifying relief from the judgment.
Civ.R. 60(B). The rule further provides that the motion “shall be made within a
reasonable time, and for reasons (1), (2) and (3) not more than one year after the
judgment, order or proceeding was entered or taken.” Id.
I. Meritorious Defense
{¶10} Chancellor argues that Arrington fails to provide sufficient evidence or
operative facts in support of a meritorious defense, as required by the first element
outlined in the GTE test.1 In establishing this element, the moving party is not required
to attach evidentiary material to his or her motion for relief from judgment. ABL
Wholesale Distribs., Inc. v. Quick Shop, 8th Dist. No. 97897, 2012-Ohio-3576, ¶ 11. If
the movant files a motion for relief under Civ.R. 60(B) and it contains allegations of
operative facts that would warrant relief, the trial court should grant a hearing on such
motion. Adomeit v. Baltimore, 39 Ohio App.2d 97, 105, 316 N.E.2d 469 (8th
Dist.1974).
{¶11} In this case, Arrington argued to the trial court that she had a meritorious
defense. At the hearing on Arrington’s motion to vacate the default judgment,
Arrington’s attorney asserted that Arrington was not liable for her debt because she never
For ease of discussion, the court has re-arranged the order of Chancellor’s assignments of
1
error in its analysis.
received the goods for which she contracted, stating that Chancellor is “suing for a bunch
of product that [Arrington] never received.” He further provided that Chancellor
charges the students $1,195 for a lab that they “sell more of than they have capacity to
perform by almost a factor of three.” If these statements are true, Arrington has
demonstrated that she has a meritorious defense to Chancellor’s claim. We find,
therefore, that the trial court did not abuse its discretion by concluding that the first
element of the GTE test was satisfied. Accordingly, Chancellor’s second assignment of
error is without merit.
II. Excusable Neglect
{¶12} Arrington moved to vacate the default judgment entered against her
pursuant to Civ.R. 60(B)(1), claiming inadvertence or excusable neglect. Chancellor
argues that Arrington should not prevail on her motion for relief because she has not
demonstrated “excusable neglect” sufficient to satisfy the second element of the GTE test.
It asserts that Arrington’s misunderstanding of the consequences of failing to timely
answer a complaint is an insufficient basis for establishing excusable neglect under
Civ.R. 60(B)(1).
{¶13} Arrington maintains that she did not understand the effect of not answering
the complaint in a timely manner. In support of this argument, Arrington states that she
phoned Chancellor at some point upon receiving its complaint “to see what she could do”
and she was told that she should pay $3,000 and the remaining books would be delivered
to her. Upon receiving Chancellor’s motion for default judgment, Arrington claims that
she immediately contacted counsel. Within one week, with the assistance of counsel,
Arrington filed her motion to vacate the default judgment.
{¶14} The term “excusable neglect” is “an elusive concept which has been
difficult to define and to apply.” Kay v. Marc Glassman, Inc., 76 Ohio St.3d 18, 20, 665
N.E.2d 1102 (1996). The moving party’s actions, however, cannot be viewed as “a
complete disregard for the judicial system.” Kay at 20, citing GTE at 153. Courts
must take into consideration all of the facts and circumstances of the case in order to
make such a determination. Colley v. Bazell, 64 Ohio St.2d 243, 248, 416 N.E.2d 605(1980). This court, in following the standard of review for excusable neglect established
by the United States Supreme Court, has noted that such circumstances necessarily
include “the danger of prejudice to the [movant], the length of delay and its potential
impact on judicial proceedings, the reasons for the delay, including whether it was within
the reasonable control of the movant, and whether the movant acted in good faith.”
Russo v. Fonseca, 8th Dist. No. 98527, 2012-Ohio-5714, ¶ 22, citing Cleveland Mun.
School Dist. v. Farson, 8th Dist. No. 89525, 2008-Ohio-912, ¶ 12, quoting Pioneer
Invest. Servs. Co. v. Brunswick Assoc. Ltd. Partnership, 507 U.S. 380, 395, 113 S.Ct.
1489, 123 L.Ed.2d 74 (1993).
{¶15} Moreover, courts must be mindful of the fact that Civ.R. 60(B) is a remedial
rule that must be liberally construed “with a view toward effecting a just result.” Colley
at 248. Where timely relief is sought from a default judgment and the moving party has
a meritorious defense, “‘doubt, if any, should be resolved in favor of the motion to set
aside the judgment so that cases may be decided on their merits.’” Collins Fin. Serv.,
11th Dist. No. 2008-P-0095, 2009-Ohio-4619, ¶ 26, quoting GTE at paragraph three of
the syllabus.
{¶16} In this case, the trial court conducted a hearing on Arrington’s motion to
vacate the default judgment. The record indicates that Arrington stated that she phoned
Chancellor at some point upon receiving its complaint “to see what she could do” to
resolve the matter. Arrington was told that she should pay $3,000 and Chancellor would
send her additional books. These statements are offered in support of Arrington’s
“excusable neglect.” Chancellor provides that Arrington’s neglect is not excusable
because she has been sued before and, therefore, she should have known that an answer
was required. Under these facts, however, and in the interests of deciding cases on their
merits, we cannot conclude that the trial court abused its broad discretion in determining
that Arrington had established excusable neglect sufficient to satisfy the second element
of the GTE test. Accordingly, Chancellor’s first assignment of error is without merit.2
{¶17} Judgment affirmed.
It is ordered that appellee recover of said appellant costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the municipal
court to carry this judgment into execution.
This court does not address the third element of the GTE test (“the motion is made within
2
a reasonable time”), because it is undisputed by the parties that Arrington’s motion was timely filed,
and Chancellor did not address this element in its assignments of error.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure.
______________________________________________
TIM McCORMACK, JUDGE
SEAN C. GALLAGHER, P.J., and
PATRICIA ANN BLACKMON, J., CONCUR