Resources Limited, LLC v. New Trinity Coal, Inc ( 2022 )

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
FILED
January 2022 Term April 26, 2022
_____________ released at 3:00 p.m.
EDYTHE NASH GAISER, CLERK
SUPREME COURT OF APPEALS
No. 21-0332 OF WEST VIRGINIA
_____________
RESOURCES LIMITED, LLC,
Defendant Below, Petitioner,
V.
NEW TRINITY COAL, INC.,
Plaintiff Below, Respondent.
________________________________________________
Appeal from the Circuit Court of Fayette County
The Honorable Paul M. Blake, Jr., Judge
Civil Action No. 21-C-12
REVERSED AND REMANDED
________________________________________________
Submitted: March 15, 2022
Filed: April 26, 2022
Jace H. Goins Kirk Lightner
Christopher S. Etheredge Lightner Law Offices PLCC
Steptoe & Johnson PLLC Scott Depot, West Virginia
Charleston, West Virginia Attorney for the Respondent
Attorneys for the Petitioner
JUSTICE MOATS delivered the Opinion of the Court.
JUSTICE ALAN D. MOATS, sitting by temporary assignment.
SYLLABUS BY THE COURT
1. “‘“A motion to vacate a default judgment is addressed to the sound
discretion of the court and the court’s ruling on such motion will not be disturbed on appeal
unless there is a showing of an abuse of discretion.” Syl. Pt. 3, Intercity Realty Co. v.
Gibson, 154 W. Va. 369, 175 S.E.2d 452 (1970)[, overruled on other grounds by Cales v.
Wills, 212 W. Va. 232, 569 S.E.2d 479 (2002)].’ Syllabus point 6, Games-Neely ex rel.
West Virginia State Police v. Real Property, 211 W. Va. 236, 565 S.E.2d 358 (2002).”
Syllabus point 1, Hardwood Group v. LaRocco, 219 W. Va. 56, 631 S.E.2d 614 (2006).
2. “‘“Appellate review of the propriety of a default judgment focuses on
the issue of whether the trial court abused its discretion in entering the default judgment.”
Syllabus point 3, Hinerman v. Levin, 172 W. Va. 777, 310 S.E.2d 843 (1983).’ Syllabus
point 1, Cales v. Wills, 212 W. Va. 232, 569 S.E.2d 479 (2002).” Syllabus point 2,
Hardwood Group v. LaRocco, 219 W. Va. 56, 631 S.E.2d 614 (2006).
3. “In determining whether a default judgment should be . . . vacated
upon a Rule 60(b) motion, the trial court should consider: (1) The degree of prejudice
suffered by the plaintiff from the delay in answering; (2) the presence of material issues of
fact and meritorious defenses; (3) the significance of the interests at stake; and (4) the
i
degree of intransigence on the part of the defaulting party.” Syllabus point 3, in part,
Parsons v. Consolidated Gas Supply Corp., 163 W. Va. 464, 256 S.E.2d 758 (1979).
4. “In addressing a motion to set aside a default judgment, ‘good cause’
requires not only considering the factors set out in Syllabus point 3 of Parsons v.
Consolidated Gas Supply Corp., 163 W. Va. 464, 256 S.E.2d 758 (1979), but also requires
a showing that a ground set out under Rule 60(b) of the West Virginia Rules of Civil
Procedure has been satisfied.” Syllabus point 5, Hardwood Group v. LaRocco, 219 W. Va.
56, 631 S.E.2d 614 (2006).
ii
Moats, Justice:
Petitioner Resources Limited, LLC (“Resources Limited”) appeals from an
order entered March 31, 2021, by the Circuit Court of Fayette County. The circuit court
previously had entered a default judgment order against Resources Limited in favor of
Respondent New Trinity Coal, Inc. (“New Trinity”). Immediately following the entry of
the default judgment order, Resources Limited filed its answer and affirmative defenses
and a motion pursuant to Rule 60(b) of the West Virginia Rules of Civil Procedure to set
aside the default judgment. By its March 31, 2021 order, the circuit court denied the motion
to set aside the default judgment. On appeal, Resources Limited asserts that the circuit
court incorrectly applied the factors set out in Parsons Consolidated Gas Supply Corp.,
163 W. Va. 464, 256 S.E.2d 758 (1979), which will be more fully discussed infra, and
failed to appropriately consider whether Resources Limited’s conduct in failing to timely
respond to the complaint was excusable.
Upon thorough review of the record, and upon careful consideration of the
parties’ briefs and oral arguments and the relevant law, we agree with Resources Limited
that the circuit court erred in denying its motion to set aside the default judgment.
Accordingly, we reverse the circuit court’s March 31, 2021 order denying Resources
Limited’s motion to set aside the default judgment and remand for further proceedings
consistent with this opinion.
1
I.
FACTUAL AND PROCEDURAL HISTORY
On February 12, 2021, New Trinity filed a complaint in the Circuit Court of
Fayette County asserting claims of breach of contract and unjust enrichment against
Resources Limited arising from a contract agreement between the parties. According to
the complaint, Resources Limited and New Trinity entered a contract where Resources
Limited agreed to mine coal on property owned by New Trinity in Fayette County, West
Virginia. New Trinity asserted that at the time of filing the complaint, Resources Limited
owed it $1,271,216.29 which contention it supported with an affidavit signed by New
Trinity’s chief financial officer. Additionally, New Trinity contended that it had “perfected
a lien on [Resources Limited’s] equipment to protect the substantial sums of money
advanced to [Resources Limited] that had not been repaid in case the contract would
ultimately be terminated.”
Pursuant to the West Virginia Rules of Civil Procedure, New Trinity attached
a civil case information statement to the complaint. The civil case information statement
indicated that service was to be completed by the Secretary of State’s Office and that
Resources Limited would have thirty days from the date of such service to file its
responsive pleading. According to New Trinity, Resources Limited received a copy of the
complaint in three different ways: (1) by electronic mail on February 12, 2021; (2) by
certified mail on February 17, 2021; and (3) by service on the Secretary of State’s Office,
perfected on February 22, 2021.
2
On March 23, 2021 1, New Trinity filed a motion for default judgment
pursuant to Rule 55 2 of the West Virginia Rules of Civil Procedure maintaining that it had
1
March 23, 2021, was thirty-four days from February 17, 2021, the date
Resources Limited received service via certified mail, and twenty-nine days from February
22, 2021, the date Resources Limited received service through the Secretary of State’s
Office.
2
Rule 55(b) provides that
(b) Judgment. — Judgment by default may be entered as
follows:
(1) By the clerk. — When the plaintiff’s claim against a
defendant is for a sum certain or for a sum which can by
computation be made certain, the court upon request of the
plaintiff and upon affidavit of the amount due shall direct the
entry of judgment by the clerk for that amount and costs against
the defendant, if the defendant has been defaulted for failure to
appear and is not an infant, incompetent person, or convict.
(2) By the court. — In all other cases the party entitled to a
judgment by default shall apply to the court therefor; but no
judgment by default shall be entered against an infant,
incompetent person, or convict unless represented in the action
by a guardian, guardian ad litem, committee, conservator,
curator[,] or other representative who has appeared therein. If
the party against whom judgment by default is sought has
appeared in the action, the party (or, if appearing by
representative, the party’s representative) shall be served with
written notice of the application for judgment at least 3 days
prior to the hearing on such application. If, in order to enable
the court to enter judgment or to carry it into effect, it is
necessary to take an account or to determine the amount of
damages or to establish the truth of any averment by evidence
or to make an investigation of any other matter, the court may
conduct such hearings or order such references as it deems
necessary.
W. Va. R. Civ. P. 55.
3
served Resources Limited on February 17, 2021, via certified mail and again on February
22, 2021, via the Secretary of State’s Office. New Trinity further asserted that as of March
23, 2021, Resources Limited had filed no responsive pleading and made no appearance in
the matter. The very next day, on March 24, 2021, the circuit court granted the motion for
default judgment. In its order, the circuit court directed the circuit clerk to enter an order
awarding New Trinity “the sum certain set forth in [the c]omplaint” and directed the sheriff
to seize mining equipment referenced in the complaint in which New Trinity claimed to
have a secured financial interest. On the same day, the circuit court entered a separate
order directing that New Trinity “be given immediate possession of the secured collateral”
referenced in the complaint and, again, directing the sheriff to retrieve the collateral.
Shortly thereafter, on March 26, 2021, pursuant to Rule 60(b) of the West
Virginia Rules of Civil Procedure, Resources Limited filed a motion to set aside the default
judgment. Resources Limited argued that the civil case information statement filed by
New Trinity along with its complaint specifically stated that service would be perfected
through the Secretary of State’s Office, and Resources Limited, therefore, “believed that
[it] had been served on February 22, 2021.” Additionally, counsel for Resources Limited
stated that when it discussed this complaint with the president of Resources Limited, David
Huffman, he indicated that “he had not been served personally and was not aware of
receiving service of process through any other method.” Furthermore, Resources Limited
denied that its president had signed the return receipt for the certified mail containing a
copy of the complaint. Resources Limited maintained that it had served its answer and
4
affirmative defenses by certified mail on March 24, 2021. 3 Finally, Resources Limited
argued that it should be granted relief because (1) New Trinity would not be prejudiced by
the continuation of the action; (2) several of the material facts alleged by New Trinity were
disputed and meritorious defenses existed; (3) a judgment of $1.2 million is a significant
interest at stake; (4) there was no intransigence; and (5) excusable neglect existed. New
Trinity opposed the motion.
The circuit court conducted a hearing on the motion to set aside default
judgment on March 30, 2021. During the hearing, the circuit court stated that New Trinity
suffered “extreme” prejudice because Resources Limited had control and use of equipment
that was secured by New Trinity. It also found “based upon all pleadings in this matter - -
it appears that there are really no material issues of fact or meritorious defenses.” The
circuit court concluded that there was a significant interest in this matter. In addition, the
circuit court decided that the failure to answer the complaint in a timely fashion was a
stalling tactic and not for any valid reason. The circuit court then summarily found that
there was no evidence of excusable neglect.
Following the hearing, on March 31, 2021, the circuit court entered its order
denying Resources Limited’s motion to set aside the default judgment. In its order, the
3
This was thirty days from the date of service by the Secretary of State’s
Office. The answer and affirmative defenses were not received by the circuit clerk’s office
until March 26, 2021.
5
circuit court explained that there are five factors that the court can consider in setting aside
a default judgment and concluded that New Trinity
ha[d] suffered an extreme prejudice by [Resources Limited’s]
actions and/or inactions in this matter. In support of this
conclusion, the [c]ourt notes that [New Trinity] has a secured
interest in the equipment owned (and still operated) by
[Resources Limited]. Every day that [Resources Limited] is
permitted to continue operating this equipment, and profiting
from this work, [New Trinity] is prejudiced. Every day that
this equipment is used, the value of said equipment diminishes.
[New Trinity] has been owed substantial sums of money for
almost two years now, and [Resources Limited] continues to
operate its business to [New Trinity’s] detriment.
Moreover, the circuit court ordered the “previously entered default judgment remain in
place” and that Resources Limited “be forced to immediately idle its equipment, so [New
Trinity] is not additionally financially damaged.”
Subsequently, on April 14, 2021, New Trinity filed an emergency motion to
enforce compliance with the circuit court’s order denying the motion to set aside the default
judgment. Through its motion, New Trinity asserted that it had spoken with counsel for
Resources Limited several times “in an attempt to agree on a repayment plan whereby
[New Trinity] would agree to not seize the equipment it has a lawful right to seize.” New
Trinity further argued that Resources Limited had failed to confirm that the equipment was
idled and provide the physical location of each item of equipment. As a result, New Trinity
requested the circuit court to order (1) Resources Limited’s compliance with the default
judgment order; (2) that Resources Limited confirm the equipment is idled; (3) that
Resources Limited provide the specific location for all secured equipment; and (4) an
6
award of pre-judgment interest, post-judgment interest, and attorney’s fees. Two days later
the circuit court held a hearing and granted the motion, directed Resources Limited to
comply, and found that Resources Limited’s actions/inactions had been “contumacious”
throughout the proceeding.
Thereafter, on April 19, 2021, Resources Limited filed a Chapter 11
bankruptcy petition in the United States Bankruptcy Court for the Southern District of West
Virginia. The same day, Resources Limited filed with the circuit court a suggestion of
bankruptcy which notified the circuit court of the bankruptcy filing and suggested that the
circuit court action had been stayed by the operation of Title 11 U.S.C. §362. Resources
Limited then filed the instant appeal from the circuit court’s March 31, 2021 order denying
its motion to set aside the default judgment. During the pendency of this appeal, on
February 23, 2022, this Court received an order from the bankruptcy court indicating that
this current appeal is exempted from the automatic stay.
II.
STANDARD OF REVIEW
With respect to motions made pursuant to Rule 60(b) of the West Virginia
Rules of Civil Procedure to set aside a default judgment rendered pursuant to Rule 55 of
the West Virginia Rules of Civil Procedure, we have held that
“‘[a] motion to vacate a default judgment is addressed
to the sound discretion of the court and the court’s ruling on
such motion will not be disturbed on appeal unless there is a
7
showing of an abuse of discretion.’ Syl. Pt. 3, Intercity Realty
Co. v. Gibson, 154 W. Va. 369, 175 S.E.2d 452 (1970)[,
overruled on other grounds by Cales v. Wills, 212 W. Va. 232,
569 S.E.2d 479 (2002)].” Syllabus point 6, Games-Neely ex
rel. West Virginia State Police v. Real Property, 211 W. Va.
236, 565 S.E.2d 358 (2002).
Syl. pt. 1, Hardwood Grp. v. LaRocco, 219 W. Va. 56, 631 S.E.2d 614 (2006).
Furthermore,
“‘[a]ppellate review of the propriety of a default
judgment focuses on the issue of whether the trial court abused
its discretion in entering the default judgment.’ Syllabus point
3, Hinerman v. Levin, 172 W. Va. 777, 310 S.E.2d 843(1983).” Syllabus point 1, Cales v. Wills, 212 W. Va. 232, 569
S.E.2d 479 (2002).
Syl. pt. 2, Hardwood, 219 W. Va. 56, 631 S.E.2d 614. However, we are mindful that there
is also a presumption in favor of adjudication of cases upon their merits. See generally
Farm Family Mut. Ins. Co. v. Thorn Lumber Co., 202 W. Va. 69, 72, 501 S.E.2d 786, 790
(1998). With these considerations in mind, we examine the parties’ arguments.
III.
DISCUSSION
Resources Limited raises a single assignment of error on appeal: the circuit
court erred in denying Resources Limited’s motion to set aside the default judgment
because it incorrectly applied the Parsons factors and failed to appropriately consider
whether Resources Limited’s conduct was excusable. In general, Resources Limited
argues that the circuit court abused its discretion in denying Resources Limited’s motion
to set aside the default judgment because the circuit court “failed to consider all of the
8
factors which this Court has admonished trial courts to consider when ruling on a motion
filed under Rule 60(b) of the West Virginia Rules of Civil Procedure, inappropriately
weighed the factors it did consider, and considered improper factors when reaching its
conclusion.” We agree.
This Court’s law on whether to vacate a default judgment is well-established.
We previously have held that
[i]n determining whether a default judgment should be
. . . vacated upon a Rule 60(b) motion, the trial court should
consider: (1) The degree of prejudice suffered by the plaintiff
from the delay in answering; (2) the presence of material issues
of fact and meritorious defenses; (3) the significance of the
interests at stake; and (4) the degree of intransigence on the
part of the defaulting party.
Syl. pt. 3, in part, Parsons v. Consol. Gas Supply Corp., 163 W. Va. 464, 256 S.E.2d 758(1979). This Court further explained in Hardwood what a defendant is required to
demonstrate when moving a circuit court to set aside a default judgment:
In addressing a motion to set aside a default judgment,
“good cause” requires not only considering the factors set out
in Syllabus point 3 of Parsons v. Consolidated Gas Supply
Corp., 163 W. Va. 464, 256 S.E.2d 758 (1979), but also
requires a showing that a ground set out under Rule 60(b) of
the West Virginia Rules of Civil Procedure has been satisfied.
Syl. pt. 5, Hardwood, 219 W. Va. 56, 631 S.E.2d 614. Accordingly, we stated, “[i]n
summary, the Parsons factors and excusable neglect, or any other relevant factor under
9
Rule 60(b) 4, constitute ‘good cause’ for setting aside a default judgment.” Hardwood, 219
W. Va. at 63, 631 S.E.2d at 621 (footnote added). Additionally,
[i]n determining the discretion issue, we have
established as a basic policy that cases should be decided on
their merits, and consequently default judgments are not
favored and a liberal construction should be accorded a Rule
60(b) motion to vacate a default order. See Syllabus Point 2 of
Parsons v. McCoy, 157 W. Va.183, 202 S.E.2d 632 (1973),
and Hamilton Watch Co. v. Atlas Container, Inc., [156 W. Va.
52, 190 S.E.2d 779 (1972)].
Parsons, 163 W. Va. at 471, 256 S.E.2d at 762. See also Carpenter v. Walker, No. 18-
0683, 2020 WL 2735564, at *3 (W. Va. May 26, 2020)(memorandum decision) (“It is
settled law in West Virginia that a case should ordinarily be disposed of on its merits. As
we stated in State ex rel. Richmond American Homes of West Virginia, Inc. v. Sanders, 226
W. Va. 103, 113, 697 S.E.2d 139, 149 (2010), ‘the sanction of default judgment “should
be used sparingly and only in extreme situations [in order to effectuate] the policy of the
law favoring the disposition of cases on their merits.”’ (quoting Bell v. Inland Mut. Ins.
Co., 175 W. Va. 165, 172, 332 S.E.2d 127, 134 (1985)).”).
With these guiding principles in mind, we analyze the instant case with
respect to the Parsons and Hardwood factors.
4
Pursuant to Rule 60(b)(1), a defaulting party may show good cause on the
basis of “[m]istake, inadvertence, surprise, excusable neglect, or unavoidable cause[.]”
10
1. The degree of prejudice. We previously have explained that “[t]he
initial inquiry is the degree of prejudice to [the plaintiff] if the default judgment is vacated.”
Hardwood, 219 W. Va. at 64, 631 S.E.2d at 622. Specifically, in examining the prejudice
factor, this Court has stated that
[w]hen discussing the West Virginia Rules of Civil
Procedure this Court often refers to, but does not consider
binding, interpretations of the Federal Rules. . . . Federal
courts have ruled that prejudice occurs when circumstances
have changed since the entry of the default judgment which
impairs the plaintiff’s ability to prosecute its claim. On the
other hand, federal courts have said that
. . . the fact that the plaintiff would have to try
the case on the merits if relief is granted is not
the kind of prejudice that should preclude relief.
Similarly, the fact that reopening the judgment
would delay plaintiff’s possible recovery has not,
in itself, been deemed to bar relief.
10A Fed. Prac. & Proc. § 2699 (Civ. 3d. 1998). Also, the fact
that a party may be required to undergo the expense of
preparing and conducting a trial on the merits is an insufficient
basis for denying relief from default. Furthermore, we believe
the authority granted West Virginia trial courts under Rule
60(b) when granting relief from a default judgment to impose
“. . . such terms as are just . . .” provides courts with the power
to minimize the effect upon the non-defaulting party when
ordering relief from default judgments. We find these
principles consistent with our jurisprudence and applicable to
the instant case.
Groves v. Roy G. Hildreth & Son, Inc., 222 W. Va. 309, 315-16, 664 S.E.2d 531, 537-38
(2008) (per curiam) (citation omitted).
11
In the matter sub judice, Resources Limited asserts that the circuit court
abused its discretion regarding this factor because the circuit court misinterpreted it as
allowing prejudice to result from New Trinity being compelled to litigate its claims. In its
order, the circuit court found that New Trinity had suffered “extreme prejudice” because it
had a secured interest in equipment owned and operated by Resources Limited and that
every day the equipment is used, the value diminishes.
There is nothing in the circuit court’s analysis that identifies any prejudice
that New Trinity would experience as a result of the reinstatement of the case. In
particular, there is no suggestion that any evidence or witness testimony would be lost if
the default judgment is vacated. See, e.g., Cook v. Channel One, Inc., 209 W. Va. 432, 549
S.E.2d 306 (2001) (per curiam) (finding no prejudice). See also Cales v. Wills, 212 W. Va.
232, 242, 569 S.E.2d 479, 489 (2002) (“All that Mr. Cales has shown is that setting aside
the judgment of default as to liability would mean further delay in obtaining full
compensation for his injuries. There has been no suggestion by Mr. Cales that evidence or
witness testimony would be lost.”). In other words, the record is devoid of any indication
that circumstances have changed since the entry of the default judgment which would
impair New Trinity’s ability to prosecute its claims on the merits. 5 As such, this factor
favors Resources Limited’s request to set aside the default judgment.
5
The circuit court also relied on the potential equipment harm, which is
misplaced because Resources Limited denies that any such valid security interest exists,
and the only evidence New Trinity has produced is an unsigned UCC financing statement.
West Virginia Code § 46-9-203(a) (eff. 2006) provides that “[a] security interest attaches
12
2. The presence of material issues of fact and meritorious defenses.
This Court has said that
[w]e are guided by the explanation that this factor focuses on
whether “‘there is . . . reason to believe that a result different
from the one obtained would have followed from a full trial.’
Hinerman v. Levin, 172 W. Va. 777, 783-84, 310 S.E.2d 843,
850 (1983).” Cales, 212 W. Va. at 242, 569 S.E.2d at 489.
to collateral when it becomes enforceable against the debtor with respect to the collateral,
unless an agreement expressly postpones the time of attachment.” West Virginia Code §
46-9-203(b) (eff. 2006) explains when a security interest is enforceable:
(b) Enforceability. Except as otherwise provided in
subsections (c) through (i), inclusive, of this section, a security
interest is enforceable against the debtor and third parties with
respect to the collateral only if:
(1) Value has been given;
(2) The debtor has rights in the collateral or the power
to transfer rights in the collateral to a secured party; and
(3) One of the following conditions is met:
(A) The debtor has authenticated a security agreement
that provides a description of the collateral and, if the security
interest covers timber to be cut, a description of the land
concerned;
(B) The collateral is not a certificated security and is in
the possession of the secured party under section 9-313 [§ 46-
9-313] pursuant to the debtor’s security agreement;
(C) The collateral is a certificated security in registered
form and the security certificate has been delivered to the
secured party under section 8-301 [§46-8-301] pursuant to the
debtor’s security agreement; or
(D) The collateral is deposit accounts, electronic chattel
paper, investment property letter-of-credit rights, or electronic
documents, and the secured party has control under section 7-
106 [§ 46-7-106], 9-104 [§ 46-9-104], 9-105 [§ 46-9-105], 9-
106 [§ 46-9-106,] or 9-107 [§ 46-9-107] pursuant to the
debtor’s security agreement.
13
Hardwood, 219 W. Va. at 64, 631 S.E.2d at 622. We have had the opportunity to examine
this factor on multiple occasions. For example, in Cook, this Court found that
[i]n essence, CLC’s defense denies liability and therefore
disputes material allegations in Ms. Cook’s complaint. In
Parsons we determined that when a defendant “disputes the
material allegations of the plaintiff’s complaint, and its defense
is essentially that it is not liable[,] [t]he requirement of a
meritorious defense exists.” Parsons, 163 W. Va. at 474, 256
S.E.2d at 763. We therefore find that CLC has satisfied
Parsons’ second factor.
Id., 209 W. Va. at 436, 549 S.E.2d at 310 (footnote omitted). Similarly, in Cales, we
explained that
[a]lthough we make no comment on whether National
could prevail on its two primary defenses, the defenses do
satisfy Parsons’ second requirement. See, e.g., State ex rel.
United Mine Workers of Am., Local Union 1938 v. Waters, 200
W. Va. 289, 299, 489 S.E.2d 266, 276 (1997) (“There is no
reason to conclude at this juncture that the petitioners’ defenses
are not meritorious.”).
Id., 212 W. Va. at 242, 569 S.E.2d at 489.
Here, the circuit court did not specifically address this factor in its written
order; however, during the hearing, the court summarily disposed of the issue by finding
that “based upon all the pleadings in this matter - - it appears that there are really no material
issues of fact or meritorious defenses. This appears to be a stalling tactic on behalf of
[Resources Limited].” However, in its answer, Resources Limited explicitly denied
numerous factual assertions from New Trinity’s complaint and denied most of the
14
substantive claims as well. 6 Moreover, Resources Limited asserted ten affirmative
defenses. While we make no specific findings with respect to whether Resources Limited
will ultimately succeed with respect to any of its asserted defenses, Resources Limited has
satisfied this factor.
3. The significance of the interests at stake. The amount of the default
judgment in the underlying matter was approximately $1.2 million. “The award of such a
large amount of damages on a default judgment must be seriously and carefully
considered.” State ex rel. Monster Tree Serv., Inc. v. Cramer, 244 W. Va. 355, 368, 853
S.E.2d 595, 608 (2020). When previously examining this factor, we have found
substantially lesser amounts to be significant. See Groves, 222 W. Va. at 316, 664 S.E.2d
at 538 (“The default judgment was in the amount of $704,000.00. We consider a judgment
6
For instance, Resources Limited denies (1) that New Trinity agreed to
advance substantial sums of money to Resources Limited in order to capitalize the work to
be performed by Resources Limited; (2) that pursuant to the contract, $1.00 per ton would
be withheld for reclamation; however, New Trinity did not withhold this amount from the
Resources Limited’s payments, making the same due and owing to New Trinity upon
termination of the contract; (3) that Resources Limited continued to mine coal pursuant to
the contract terms until approximately June 1, 2019, at which time the parties agreed to
terminate the contract due to Resources Limited being unable to mine the tonnage specified
in the contract; (4) that from approximately February 1, 2018, to June 1, 2019, Resources
Limited invoiced New Trinity for work performed and New Trinity paid Resources
Limited (and advanced additional funds) for the work performed; (5) that prior to the
contact being terminated pursuant to the agreement of the parties, New Trinity, in early
February of 2019, perfected a lien on Resources Limited’s equipment to protect the
substantial sums of money advanced to Resources Limited that had not been repaid in case
the contract would be terminated; (6) that Resources Limited has refused to pay the monies
owed, and has ceased communications with New Trinity’s counsel; and (7) that the amount
of $1,271,216.29 remains due and owing.
15
in this amount to be significant[.]”). See also Arbuckle v. Smith, No. 17-0239, 2018 WL
1444288, at *4 (W. Va. Mar. 23, 2018)(memorandum decision) (finding a default judgment
in the amount of $51,423.95 “constitute[s] a significant amount”); Parsons, 163 W. Va. at
473, 256 S.E.2d at 763 (finding that “monetary damages in the amount of $35,000 . . . is
not an insignificant claim”).
While the circuit court did not specifically address this factor in its written
order, during the hearing the circuit court acknowledged that there was a significant interest
at stake in this matter. Despite this acknowledgment, the court weighed this factor in favor
of New Trinity because this “large amount of money [] is owed by [Resources Limited] for
this particular equipment that [New Trinity] has an interest in[.]” We agree with the circuit
court that the amount at issue is significant, but we find that the circuit court clearly mis-
weighed this factor in favor of New Trinity.
4. Degree of intransigence by the defaulting party. We have said that
“any evidence of intransigence on the part of a defaulting party should be weighed heavily
against him in determining the propriety of a default judgment.” Hinerman, 172 W. Va. at
782, 310 S.E.2d at 849. In State ex rel. United Mine Workers of America, Local Union
1938 v. Waters, 200 W. Va. 289, 299, 489 S.E.2d 266, 276 (1997), this Court reasoned that
the petitioners were not intransigent because
[t]hey advanced colorable good-faith reasons for not filing
their answer and counterclaim and defensive motions prior to
the default judgment’s entry. The petitioners acted in a timely
16
fashion (eleven days from the default judgment’s issuance) to
seek relief from the default judgment. In Evans v. Holt, 93
W. Va. at 587, 457 S.E.2d at 524, a period of one month to file
a motion to set aside a default judgment after learning of it was
held to be reasonable.
In the matter sub judice, again, the circuit court did not specifically address
this factor in its written order; however, during the hearing, the circuit court stated that
“there doesn’t appear to be any good reason why . . . [Resources Limited] did not attend to
this matter on an earlier basis.” We disagree. There appears to be very little, if any,
intransigence by Resources Limited in responding to the complaint. At the very most,
Resources Limited was fifteen days late in serving its answer to the complaint. 7 Moreover,
Resources Limited filed its motion to vacate within forty-eight hours of the entry of the
order awarding default judgment. Thus, the intransigence factor also weighs in favor of
Resources Limited.
5. Rule 60(b) ground. Lastly, “[t]he final consideration under Parsons
is whether [the defendant] satisfied a ground under Rule 60(b).” Hardwood, 219 W. Va.
at 65, 631 S.E.2d at 623. Rule 60(b) provides, in relevant part, as follows:
On motion and upon such terms as are just, the court may
relieve a party or a party’s legal representative from a final
judgment, order, or proceeding for the following reasons: (1)
7
As discussed herein, there is some discrepancy as to when Resources
Limited was served with the complaint. However, it does not matter whether Resources
Limited was fifteen days late or timely in serving its answer and affirmative defenses.
Either way, there was little to no delay in filing the responsive pleading.
17
Mistake, inadvertence, surprise, excusable neglect, or
unavoidable cause . . . . 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. A motion under this subdivision (b) does not affect
the finality of a judgment or suspend its operation. This rule
does not limit the power of a court to entertain an independent
action to relieve a party from a judgment, order or proceeding,
or to grant statutory relief in the same action to a defendant not
served with a summons in that action, or to set aside a judgment
for fraud upon the court.
W. Va. R. Civ. P. 60. Both in the underlying proceedings and on appeal, Resources
Limited asserts that it has demonstrated inadvertence, mistake, and excusable neglect
thereby satisfying a ground under Rule 60(b). During the hearing, the circuit court simply
stated that it “d[id] not find [the] existence of excusable neglect in this matter.”
The civil case information statement attached to the complaint indicated that
service would be accomplished through the Secretary of State and that Resources Limited
must respond within thirty days from the date service was perfected upon the Secretary of
State’s office. Counsel for Resources Limited averred that he continuously reviewed the
Secretary of State’s service of process status page until he found that service had occurred
on February 22, 2021. In accordance with that notice and subsequent website posting, that
service date is the one used by Resources Limited to calculate the time within which it was
required to file its answer and affirmative defenses. Under these circumstances, we find
that Resources Limited has demonstrated inadvertence, mistake, and excusable neglect
thereby satisfying a ground under Rule 60(b).
18
6. Weighing the Parsons and Hardwood factors. As discussed herein,
the record does not support a finding that undue prejudice would result against New Trinity
by setting aside the default judgment. Furthermore, Resources Limited has asserted
material issues of fact and defenses which may have merit, and that the interests at stake
are significant. Moreover, we find that there was little, if any, intransigence on the part of
Resources Limited and that under Rule 60(b), Resources Limited has provided sufficient
reasons to satisfy that ground. Thus, in weighing the Parsons and Hardwood factors,
Resources Limited’s motion to set aside the default judgment should have been granted,
and, therefore, reversal is justified.
IV.
CONCLUSION
For the foregoing reasons, we find that the circuit court abused its discretion
in denying Resources Limited’s motion to set aside the default judgment. Therefore, the
default judgment is reversed, and the case is remanded for further proceedings consistent
with this opinion. 8
Reversed and remanded.
8
On remand, we remind the circuit court to be cognizant of any automatic
stay that may still be in place pursuant to Title 11 U.S.C. §362.
19