Marcinkowski v. Affirmative Risk Management Corp.

David Newbern, Justice.

The issue before us is whether the Pulaski Circuit Court erred in dismissing as untimely an appeal from Little Rock Municipal Court of an order refusing to set aside a default judgment. We hold the appeal should not have been dismissed.

Affirmative Risk Management Corporation (ARM), the appellee, brought a claim against Chris Marcinkowski in Little Rock Municipal Court. Apparently ARM and Mr. Marcinkowski engage in the business of adjusting insurance claims. The action of ARM against Mr. Marcinkowski was for intentional interference with a business expectancy. The complaint alleged that Economy Insurance Company inadvertently notified Mr. Marcinkowski of a claim it intended to have adjusted by ARM and that Mr. Marcinkowski adjusted the claim knowing that it was not intended for him to do so.

The complaint, seeking damages of $3000, was filed August 6, 1993. A default judgment for the full amount sought was entered by the Municipal Court on October 12,1993, although no hearing was held on damages. On October 21, 1993, Mr. Marcinkowski filed an answer to the claim. On November 12, 1993, he moved to have the default judgment set aside and sought a hearing on the reasons for the late answer and the matter of damages awarded in the amount of “$3,000 when the contract was only a $90.00 job.” The motion to set the default judgment aside was denied by the Municipal Court by an order of February 22, 1994.

On March 4, 1994, Mr. Marcinkowski appealed to the Circuit Court the denial of the motion to set aside the default judgment and the refusal of the Municipal Court to hold a hearing on the issue of damages. ARM moved to dismiss the appeal because it was filed more than 30 days from the October 12, 1993 judgment of the Municipal Court. In his brief responding to the motion to dismiss, Mr. Marcinkowski stated:

A hearing was scheduled on February 17, 1994, on Appellant’s motion to set aside the default judgment and for the Appellee to prove his damages. At this hearing the Municipal Court denied Appellant’s motion to set aside the default judgment and refused to hear any evidence concerning Appellee’s alleged damages. It was from this Order that Appellant now appeals. . . . Appellant’s Notice of Appeal from this Order is clearly within the 30 day time limit.

It is clear that Mr. Marcinkowski argued to the Circuit Court that he was appealing from the Municipal Court’s refusal to set aside a default judgment rather than appealing from the judgment and that his appeal from the refusal to set aside was timely.

The Circuit Court held a hearing on ARM’s motion to dismiss the appeal. In the course of the hearing, the Court remarked that the judgment was “bad” because there had been no hearing on damages, and that such a hearing could have been sought in the Municipal Court. The Circuit Court entered an order dismissing the appeal because of failure to appeal the Municipal Court judgment within 30 days from the date of its entry.

In the final paragraph of his brief before this Court, Mr. Marcinkowski states the following:

Appellant’s motion to set aside the default judgment was pursuant to Rule 55(c)(2) of the Arkansas Rules of Civil Procedure which apply to the municipal Court under Rule 10 of the Inferior Court rules. The Circuit Court was in error when it dismissed Appellant’s appeal for being untimely because until February 17, 1994 there was not an appealable order and his Notice of Appeal filed after February was well within the 30 day requirement.

While a part of the argument, including a citation to Sevenprop Assocs. v. Harrison, 295 Ark. 35, 746 S.W.2d 51 (1988), is to the effect that the Circuit Court’s default judgment was not a final order, another part is obviously that the appeal from the refusal to set aside the judgment was timely. The Circuit Court’s sole stated basis for dismissing the appeal was its lack of timeliness. In these circumstances we need not be concerned with the argument that the judgment was not a final order because we know the reason for the Circuit Court’s action and we have before us Mr. Marcinkowski’s concurrent argument that the appeal to the Circuit Court was timely.

Rule 9(a) of the Arkansas Inferior Court Rules requires that a judgment of a municipal court be appealed within 30 days from the date of entry of the judgment. See Allred v. State, 310 Ark. 476, 837 S.W.2d 469 (1992); Bocksnick v. City of London, 308 Ark. 599, 825 S.W.2d 267 (1992). That rule would control this case if the appeal were from the judgment. It is, however, as noted above, an appeal from the order refusing to set aside the default judgment. None of the Inferior Court Rules applies directly to this situation. Rule 10 provides, “Where applicable and unless otherwise specifically modified herein, the Arkansas Rules of Civil Procedure . . . shall apply to and govern matters of procedure ... in the inferior courts of this State.”

Arkansas R. Civ. P. 55(c) states that, “The court may, upon motion, set aside a default judgment,” and it prescribes the bases for doing so, including, “(4) any other reason justifying relief from the operation of the judgment.” It requires that the party seeking to set such a judgment aside “demonstrate a meritorious defense to the action” unless the judgment is void, in which case no such defense need be stated. No time limit for moving to set aside a default judgment is prescribed in the rule.

Reviews of municipal court decisions in circuit courts are de novo. State v. Roberts, 321 Ark. 31, 900 S.W.2d 175 (1995); Casoli v. State, 297 Ark. 491, 763 S.W.2d 650 (1989). We are tempted to conclude that Mr. Marcinkowski is entitled to no relief because he could have had a complete de novo review of his case had he simply appealed from the Municipal Court judgment instead of filing the belated answer and then moving to set the judgment aside. That, however, would be tantamount to holding that a municipal court defendant who has suffered a default judgment may have no review whatever of a municipal court’s decision on refusal to set aside a default judgment in response to a Rule 55(c) request.

Denial of a motion to set aside a default judgment by a circuit or chancery court is an appealable order. We entertained such appeals, for example, in Divelbliss v. Suchor, 311 Ark. 8, 841 S.W.2d 600 (1992), and in May v. Bob Hankins Distrib. Co., 301 Ark. 494, 785 S.W.2d 23 (1990). We see no reason to deny such appeals from municipal to circuit courts. To do so would be inconsistent with our allowance of such appeals to the Court of Appeals and to this Court from our courts of general jurisdiction, and we can think of no good reason for such an inconsistency.

The Circuit Court must entertain a timely appeal from denial by the Municipal Court of a motion to set aside a default judgment. The Circuit Court is to conduct a de novo proceeding to determine, in accordance with Ark. R. Civ. P. 55(c) whether relief from the operation of the judgment is justified. If no such relief is justified, the matter is ended. If relief is granted, the case will then be treated as any other de novo review of a municipal court judgment.

Reversed and remanded.

Dudley, J., not participating. Jesson, C.J., dissents.