Amy Smith v. Madeleine Fowler ( 2003 )

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
May 8, 2003 Session
AMY B. SMITH v. MADELEINE FOWLER
Appeal from the Circuit Court for Williamson County
No. I-01355 R.E. Lee Davies, Judge
No. M2002-01575-COA-R3-CV - Filed July 14, 2003
Appellant, the defendant in fault, challenges the lower court’s refusal to set aside default judgment.
Appellant failed to file her answer timely in the trial court. Neither in the original Motion for
Default nor in the response to the Motion to Set Aside did Plaintiff aver any prejudice to her other
than delay. We reverse the default judgment and remand the case to the trial court.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court
Reversed and Remanded
WILLIAM B. CAIN , J., delivered the opinion of the court, in which WILLIAM C. KOCH , JR., J., and
PATRICIA J. COTTRELL, J., joined.
J. Ross Pepper, Nashville, Tennessee, for the appellant, Madeleine Fowler.
Stephen K. Heard and Mary B. Langford, Nashville, Tennessee, for the appellee, Amy B. Smith.
OPINION
Amy B. Smith, Plaintiff and Appellee, is a Tennessee resident who contracted with the
Defendant/Appellant, Madeleine Fowler in a lease-purchase agreement for a thoroughbred show
jumper, O’Conner, whose barn name is Zeke. Under the terms of the contract, the Defendant/Lessee
was to carry certain insurance and, in the event that the option to purchase was not exercised, return
the horse unharmed and in good health on or before the lease termination date, August 31, 2000.
Fowler never exercised the option and returned Zeke to the Plaintiff in September of 2000. Upon
examination of the horse after receipt, Smith discovered that the horse appeared malnourished. In
addition, Zeke had a two-centimeter long laceration on his right hock, which eventually became
infected. After several attempts at negotiation and settlement, Smith filed her complaint for breach
of the lease agreement on May 23, 2001. That complaint was accompanied with a summons which
was returned unclaimed on June 27, 2001. Service was attempted again, and the process server
noted on the return that service had been refused July 25, 2001. On November 29, 2001, an associate
in plaintiff counsel’s law firm finally effected personal service of the summons on Fowler in a
courthouse in Alabama where she was also embroiled in a bitter divorce.
On January 4, 2002, having received no Answer from the Defendant, Smith filed and served
a Motion for Default Judgment in Williamson County Circuit Court, alleging “that in violation of
the language of the Alias Summons served upon the Defendant setting forth the time required for
filing a responsive pleading and Rule 12.01 of the Tennessee Rules of Civil Procedure, the
Defendant is in default and a judgment should be entered against her on all issues except damages.”
Prior to filing the Motion for Default, plaintiff counsel had been negotiating with the law firm of
Phelps, Jenkins, Gibson and Fowler in Tuscaloosa, Alabama, in the belief that this law firm was
representing Fowler’s interest under the contract claim. Though the assumption was reasonable
judging from the correspondence exchanged between that law firm and Plaintiff’s counsel, that
assumption eventually proved false. On February 8, 2002, Linda Hill with the law firm of Miller &
Martin, LLP, filed an appearance and answer three days before the hearing on the Motion for
Default. That answer alleged lack of subject matter jurisdiction, lack of personal jurisdiction and
several other defenses to wit:
4. With respect to the allegations of Paragraph 4 of the Complaint,
Defendant denies that she entered into a lease agreement with the Plaintiff, in her
individual capacity. Defendant avers that Sugar Hill, LLC entered into a lease
agreement (“Agreement”) with the Plaintiff, said lease being executed by Defendant
on behalf of the entity. Defendant avers that the Agreement speaks for itself. To the
extent the remaining allegations constitute Plaintiff’s understanding or interpretation
of the Agreement Defendant denies the same.
5. With respect to the allegations of Paragraph 5 of the Complaint, it is
denied that Defendant executed the Agreement in Williamson County, Tennessee.
Defendant avers that she executed the Agreement on behalf of Sugar Hill, LLC in
Tuscaloosa, Alabama. Further, it is denied that performance of the Agreement was
made in Williamson County, Tennessee. Defendant avers that performance of the
Agreement was made in Alabama. Defendant avers that the Agreement speaks for
itself. To the extent the remaining allegations constitute Plaintiff’s understanding or
interpretation of the Agreement Defendant denies the same. Defendant denies that
venue is appropriate in this court.
6. With respect to the allegations of Paragraph 6 of the Complaint, it is
denied that the Defendant agreed to pay for use of the horse. Defendant avers that
Sugar Hill, LLC agreed to pay, and did pay, a fee of Twenty Thousand Dollars
($20,000.00) to the Plaintiff for the use of the horse. Defendant avers that the
Agreement speaks for itself. To the extent the remaining allegations constitute
Plaintiff’s understanding or interpretation of the Agreement Defendant denies the
same.
....
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8. With respect to the allegations of Paragraph 8 of the Complaint, it is
admitted that the horse, O’Conner a/k/a Zeke, received an injury to his rear leg after
execution of the Agreement. The remaining allegations of Paragraph 8 of the
Complaint are denied.
....
11. With respect to the allegations of Paragraph 11, the Defendant admits
that O’Conner suffered from minor hair loss, a condition for which the horse was
being treated and a condition that existed prior to execution of the Agreement. All
other allegations of Paragraph 11 of the Complaint are denied and Defendant
demands strict proof thereof.
On February 11, 2002, the first of two hearings on the Motion for Default was held. On
February 26, 2002, Attorney Hill filed her Motion to Withdraw as counsel in the cause and requested
a continuance until such time as Ms. Fowler could obtain other counsel. On March 11, 2002, J. Ross
Pepper entered an appearance as counsel for defendant. On that same day the Motion for Default
Judgment was heard again. On April 4, 2002, the trial court granted judgment by default, finding
“that the Court has subject matter jurisdiction, personal jurisdiction over the Defendant, that venue
is proper, that service of process was sufficient and that a Default Judgment should be granted in this
cause for Defendant’s failure to file a timely Answer pursuant to 12.01 T.R.C.P.” (footnote omitted).
On June 3, 2002, Ms. Fowler filed her Motion to Set Aside the Default Judgment. This
Motion was accompanied by several affidavits. One of these affidavits was from the Plaintiff
averring that she had not realized before January 9, 2002 that an Answer to the Complaint was to be
filed within thirty days of November 29, 2001. She was under the impression that Tuscaloosa
counsel was handling the breach of contract claim. The current counsel supplied an affidavit from
himself and from Barbara Johnson, Ph.D., alleging certain emotional difficulties which may or may
not have interfered with the Plaintiff’s ability to make decisions regarding the defense of this claim.
In her response to the Defendant’s Motion and in support of the default judgment Plaintiff averred
the following:
14. The Defendant’s conduct leading to the entry of the Default Judgment
was willful.
15. The Defendant’s statements regarding grounds to set aside the Default
Judgment are false.
16. The Default Judgment awarded to the Plaintiff was proper, and should
not be set aside.
Tennessee Rules of Civil Procedure 55.02 provides that a default judgment may be set aside
for good cause shown in accordance with the provisions of Rule 60.02. The latter rule provides,
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On motion and upon such terms as are just, the court may relieve a party or
the party’s legal representative from a final judgment, order or proceeding for the
following reasons: (1) mistake, inadvertence, surprise or excusable neglect; (2)
fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or
other misconduct of an adverse party; (3) the judgment is void; (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 a judgment should
have prospective application; or (5) any other reason justifying relief from the
operation of the judgment. . . .
Tenn. R. Civ. P. 60.02.
It is well settled that a motion under Tennessee Rules of Civil Procedure 60.02 is properly
addressed to the trial court’s discretion. See, e.g., Gamble v. Waters, 197 Tenn. 470, 274 S.W.2d
3 (1954); Nelson v. Simpson, 826 S.W.2d 483, 485 (Tenn.Ct.App. 1991); State ex rel. Jones v.
Looper, 86 S.W.3d 189, 193 (Tenn.Ct.App. 2000). See also Tennessee Department of Human
Services v. Barbee, 689 S.W.2d 863, 866 (Tenn. 1985). Nonetheless, courts faced with a rule 60.02
motion to set aside a default judgment should construe the rule’s requirements liberally. See Nelson,
826 S.W.2d at 485. “They should also examine the moving party’s proof to determine whether the
default was willful and to assess the extent to which the defaulting party’s conduct has prejudiced
the non-defaulting party.” Id. (citing Barbee, 689 S.W.2d at 866).
In reviewing the record under these standards this Court finds no showing of prejudice to the
plaintiff. Although the delay evidenced from the unsuccessful attempts at service of process and
during negotiation toward settlement might suggest evasive conduct on the part of the defendant, the
record does not satisfactorily establish such conduct. The Answer was filed prior to the first hearing
on the Motion for Default. Although in its Order overruling the defendant’s motion to set aside the
default judgment the trial court stated it found defendant’s excuses to be “without merit,” the Order
contains no finding of willful conduct on the part of the defendant. While a motion to set aside a
default judgment is addressed to the sound discretion of the trial court, such a motion prompts a
consideration of the equities between the parties. Patterson v. Rockwell International, 665 S.W.2d
96, 100 (Tenn. 1984). Trial courts should grant relief whenever any reasonable doubt exists
concerning whether the default judgment should be set aside. Keck v. Nationwide Systems, Inc., 499
S.W.2d 266 (Tenn.Ct.App. 1973); Tennessee State Bank v. Lay, 609 S.W.2d 525 (Tenn.Ct.App.
1980); Nelson v. Simpson, 826 S.W.2d 483 (Tenn.Ct.App. 1991).
The problems that prompted the trial court to grant the default judgment were brought on
primarily by the neglect of the defendant and, as a condition to setting aside the default judgment,
we determine that defendant should pay the costs in the trial court that have accrued prior to the
appeal. Upon such payment of costs the default judgment is set aside and the case remanded for trial
on the merits.
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Costs on appeal are assessed to the appellee.
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WILLIAM B. CAIN, JUDGE
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