Wayne A. Howes v. Mark Swanner

05/17/2017
IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
Assigned on Briefs April 3, 2017
WAYNE A. HOWES, ET AL. V. MARK SWANNER, ET AL.
Appeal from the Circuit Court for Montgomery County
No. MC-CC-CV-DD-11-2599 Ross H. Hicks, Judge
No. M2016-01892-COA-R3-CV
Homeowners filed suit for breach of contract and fraud and/or negligent representation
against the owners of a restoration business who performed repairs on their house after a
fire. When the defendants failed to respond to or appear at the hearing on the plaintiffs’
motion for summary judgment, the trial court granted summary judgment for the
plaintiffs. The defendants then filed a Tenn. R. Civ. P. 60 motion and affidavits stating
that they did not receive notice of the hearing on the motion for summary judgment. The
trial court held a hearing on the Rule 60 motion and denied the motion. Because there is
no transcript or statement of the evidence regarding the hearing on the summary
judgment motion or on the Rule 60 motion, we must accept the trial court’s findings of
fact. We find no abuse of discretion in the trial court’s denial of the plaintiffs’ Rule 60
motion.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed
ANDY D. BENNETT, J., delivered the opinion of the Court, in which CHARLES D. SUSANO,
JR., and KENNY W. ARMSTRONG, JJ., joined.
Jacob P. Mathis, Clarksville, Tennessee, for the appellants, Mark Swanner and Robin
Swanner.
Gregory D. Smith, Clarksville, Tennessee, for the appellees, Wayne A. Howes and
Starlene K. Howes.
OPINION
FACTUAL AND PROCEDURAL BACKGROUND
Wayne and Starlene Howes (“Homeowners”) own a home located on Broadripple
Drive in Clarksville, Tennessee. In January 2011, Homeowners’ home sustained
substantial damage in a fire, and their insurer, State Farm Insurance Company (“State
Farm”), acknowledged that they had a valid claim under their fire insurance policy. Upon
the recommendation of their State Farm agent, Homeowners contracted with Mark and
Robin Swanner, owners and operators of Ultra Clean Restoration (also known as Ultra
Clean Carpet Cleaning) (“Ultra Clean”), to do clean-up, repairs, and restoration work on
their home.
On October 31, 2011, Homeowners filed this action against Ultra Clean, State
Farm, and their State Farm agent.1 The complaint alleges, in pertinent part, as follows:
On or about January 18, 2011, Defendant, Mark Swanner, came to 1765
Broadripple Drive, Clarksville, Tennessee and requested that Plaintiff . . .
personally obtain the building permit to begin work on 1765 Broadripple
Drive, Clarksville, Tennessee. . . .
Unusual business practices by Defendant Mark Swanner caused Plaintiffs
to have concern regarding Defendant, Mark Swanner and his company,
Ultra Clean Restoration . . . . Upon investigation, the quality of work being
done by the Defendants, Mark and Robin Swanner, also came into question.
Around May 11, 2011, these concerns were voiced to Defendant, Steve R.
Ray [the State Farm agent].
Investigation revealed that neither Defendant, Mark Swanner nor
Defendant, Robin Swanner had a contractor’s license as is required for jobs
of over $25,000.00 by Tenn. Code Ann. § 62-6-103. Defendant, Mark
Swanner, was paid approximately $87,500.00 regarding 1765 Broadripple
Drive, Clarksville, Tennessee and some of the checks paid were in excess
of $25,000.00 prior to this fact coming to light with Plaintiffs.
....
Due to concerns over poor workmanship, work ethic and the failure to
disclose the lack of contractor’s license, Plaintiffs sought to dismiss
Defendants Mark Swanner and Robin Swanner from further work on 1765
Broadripple Drive, Clarksville, Tennessee on the basis of both breach of
contract and fraud or misrepresentation. Defendant, Steve R. Ray . . .
insisted that the Defendants, the Swanners, should continue working on
1765 Broadripple Drive, Clarksville, Tennessee.
Defendant, State Farm, would not issue new checks to allow another
contractor, one who had a license, to finish repairs on 1765 Broadripple
Drive, Clarksville, Tennessee. As a result, Plaintiffs sought reimbursement
from both Defendants, the Swanners, and from Defendant, State Farm, to
1
State Farm and Homeowners’ State Farm agent, Steve R. Ray, are not involved in this appeal.
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either refund costs paid or to get an independent licensed home inspector to
examine and approve work already done by the Swanners. These options
were declined and therefore, Plaintiffs filed the pending suit.
The Homeowners alleged causes of action against the Swanners for breach of contract
and for fraud and/or negligent misrepresentation.
The Swanners filed a pro se response to the complaint detailing their own version
of the facts. The response states, in pertinent part, as follows:
After the Demo work had been done and prior to the rebuild, defendant
Mark Swanner told the Plaintiff, Wayne Howes that he was a certified
restoration contractor, not a General Contractor and could not exceed
$25,000 in rebuilding repairs without a license. The Defendant told the
Plaintiff that he could become his own contractor and pull the building
permits himself or he could get someone else to do the remaining rebuild.
The Plaintiff, Wayne Howes stated that he wanted the defendant Mark
Swanner to do the rebuild. At no time whatsoever, did the Defendant Mark
Swanner mislead the Plaintiff, Wayne Howes regarding the contractor’s
license. . . . The Plaintiff, Wayne Howes, was well aware of the fact that
the Defendant was not a General Contractor. The fact is that the Plaintiff,
Wayne Howes, became his own contractor when he pulled the permits
himself.
. . . On a daily basis, the Plaintiff, Wayne Howes came to the property and
requested changes and upgrades be made by the Defendants and changes
and upgrades were done on a daily basis. At no time whatsoever during
these daily visits did the Plaintiff, Wayne Howes make any complaints
about workmanship.
According to the Swanners, a dispute arose between the parties because
Homeowners wanted to see all of the Swanners’ invoices to State Farm and “wanted to
know how much profit was made on each invoice.” The Swanners refused to provide this
information “because they were using the insurance adjuster[’s] estimate to do the job, as
was normal, and the overhead and profit had been built into the estimate.” At a meeting
regarding the invoices, the parties also discussed upgrades and changes to the property.
The Swanners alleged that Homeowners refused “to pay anything out of pocket for those
significant changes and upgrades and stated they should be paid for by the Defendant[s’]
overhead and profit.” The Swanners allegedly informed Homeowners that Homeowners
were in breach of the contract and refused to continue work on the project until payment
for the upgrades and changes was resolved. In September 2011, the State Farm agent met
with Mr. Swanner and stated that Homeowners wanted to know if he would consider
finishing the work on their home. Because, according to their response, working with
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Homeowners “had been a nightmare and they had breached the contract,” Mr. Swanner
declined their request. The Swanners’ response further states: “At no time during this
whole ordeal was there ever any mention of poor workmanship.”
On March 9, 2015, Homeowners filed a motion for summary judgment and
statement of undisputed material facts supported by an affidavit from Russell Hamilton, a
general contractor.2 The motion included a notice of hearing for May 4, 2015. The
motion was heard on that day, but the Swanners did not appear at the hearing. In its
order, entered on May 6, 2015, the trial court made the following pertinent findings of
fact:
Defendants did not respond to the motion for summary judgment, did not
respond to the Tenn. R. Civ. P. 56.03 Statement of Undisputed Material
Facts, nor did Defendants present counter-affidavits to Plaintiffs’ expert
affidavit;
As noted on the front page of the Plaintiffs’ Motion for Summary Judgment
filed on March 9, 2015, this matter was set for hearing on May 4, 2015, (56
days between the motion being filed and the hearing on said motion);
. . . Defendants did not appear for the hearing on Plaintiffs’ motion for
summary judgment.
Plaintiffs’ expert found damages caused by Defendants and against
Plaintiffs in the amount of $53,296.00 in his expert opinion as set out by an
affidavit filed on March 9, 2015.
The court granted summary judgment in favor of Homeowners and ordered that a
judgment in the amount of $53,296.00 be entered in their favor against the Swanners.
The Swanners, through a newly retained attorney, filed a motion pursuant to Tenn.
R. Civ. P. 60 for relief from the judgment entered by the court on May 6, 2015. They
argued that they did not receive notice of the hearing held on May 4, 2015. Each of the
Swanners submitted an affidavit stating, in pertinent part, that they “did not receive
notice of the hearing in this matter, which was held on May 4, 2015.” The Swanners’
2
In his affidavit, Mr. Hamilton gave estimates regarding how much it would cost to complete the work on
Homeowners’ house. He further gave his professional opinion regarding applicable breaches of a
Tennessee contractor’s duty of care and/or loyalty to the client. Mr. Hamilton stated that he had
personally inspected Homeowners’ home and opined that “much of the work performed . . . would not
pass codes and was not adequately completed . . . .” Mr. Hamilton further discussed omissions and
deficiencies in the contract between the parties. In Mr. Hamilton’s opinion, the total amount of damages
was $53,296.
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Rule 60 motion was heard on June 15, 2015 and, on June 30, 2015, the court entered an
order denying the motion.
The Swanners filed a notice of appeal of the trial court’s June 30, 2015 order, and
this Court dismissed the appeal for lack of jurisdiction because the order appealed was
not a final judgment. Howes v. Swanner, No. M2015-01389-COA-R3-CV, 2016 WL
659199 (Tenn. Ct. App. Feb. 17, 2016). On September 1, 2016, the trial court entered a
final order incorporating its 2014 consent order dismissing with prejudice State Farm and
the State Farm agent, its May 21, 2015 order granting Homeowners’ motion for summary
judgment, and its June 30, 2015 order denying the Swanners’ Rule 60 motion. The
Swanners appeal from the September 1, 2016 final order denying their Rule 60 motion.
STANDARD OF REVIEW
We review a trial court’s decision on a Rule 60 motion under an abuse of
discretion standard. Discover Bank v. Morgan, 363 S.W.3d 479, 487 (Tenn. 2012). It is
well-established that, “‘A trial court abuses its discretion only when it applies an
incorrect legal standard, or reaches a decision which is against logic or reasoning that
causes an injustice to the party complaining.’” Caldwell v. Hill, 250 S.W.3d 865, 869
(Tenn. Ct. App. 2007) (quoting Eldridge v. Eldridge, 42 S.W.3d 82, 85 (Tenn. 2001)).
The abuse of discretion standard does not permit an appellate court to substitute its
judgment for that of the trial court. Id. Thus, under this standard, we give great deference
to the trial court’s decision. Henry v. Goins, 104 S.W.3d 475, 479 (Tenn. 2003).
The trial court’s findings of fact are presumed to be correct and will not be
overturned unless the evidence preponderates otherwise. TENN. R. APP. P. 13(d); Bogan
v. Bogan, 60 S.W.3d 721, 727 (Tenn. 2001). We review conclusions of law de novo with
no presumption of correctness. Broadbent v. Broadbent, 211 S.W.3d 216, 220 (Tenn.
2006); Union Carbide Corp. v. Huddleston, 854 S.W.2d 87, 91 (Tenn. 1993).
ANALYSIS
The Swanners assert that the trial court should have granted them relief from the
judgment pursuant to Tenn. R. Civ. P. 60.02(1), for “mistake, inadvertence, surprise or
excusable neglect.” They focus their arguments on the last ground, excusable neglect.
A party seeking relief from a final judgment bears the burden of proof to show
their entitlement to such relief. Henry, 104 S.W.3d at 482. In Fillers v. Collins, No.
E2013-01210-COA-R3-CV, 2014 WL 631239 (Tenn. Ct. App. Feb. 18, 2014), a case
similar to the present case, the trial court granted summary judgment in favor of the
plaintiffs because the defendants “failed to appear at the hearing date and still had yet to
respond to the motion for summary judgment and attached statement of material facts.”
Fillers, 2014 WL 631239, at *1. One of the defendants filed a motion to set aside the
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judgment asserting that her attorney “inadvertently failed” to respond to the motion and
attend the hearing due to personal circumstances constituting “mistake, inadvertence, or
excusable neglect” pursuant to Tenn. R. Civ. P. 60.02(1). Id. at *1, *3. The trial court
granted in part and denied in part the defendant’s motion to set aside the judgment. Id. at
*2. In affirming the decision of the trial court, the appellate court applied the following
reasoning:
“[W]e find instructive those factors that are used to determine if a default
judgment should be vacated under Rule 60.02(1)” because of the similarity
between default judgments and the grant of a motion for summary
judgment for failure to respond. Henry, 104 S.W.3d at 481. “When a
defendant fails to answer a complaint, the plaintiff may obtain a default
judgment without a hearing on the merits.” Id. (analogizing a default
judgment with a dismissal for failure to prosecute). Similarly, when an
adverse party fails to respond to a motion for summary judgment, the
motion may be granted without a hearing and without the benefit of
opposing affidavits. TENN. R. CIV. PRO. 56.06. The factors at issue
include: “(1) whether the default was willful; (2) whether the defendant has
a meritorious defense; and (3) whether the nondefaulting party would be
prejudiced if relief were granted.[”] Id. (citing Tennessee Dep’t of Human
Servs. v. Barbee, 689 S.W.2d 863, 866 (Tenn. 1985)).
Fillers, 2014 WL 631239, at *3.
Thus, based on Fillers, to determine whether a party who fails to respond to a
motion for summary judgment and appear at the hearing is entitled to Rule 60.02(1)
relief, we apply the same factors used with respect to setting aside default judgments
under Rule 60.02(1). Our Supreme Court has stated that “‘[t]here is much more reason
for liberality in reopening a judgment when the merits of the case never have been
considered than there is when the judgment comes after a full trial on the merits.’” Tenn.
Dep’t of Human Servs. v. Barbee, 689 S.W.2d 863, 866 (Tenn. 1985) (quoting 11 Charles
Alan Wright & Arthur R. Miller, FEDERAL PRACTICE AND PROCEDURE § 2857 (1973));
see also World Relief Corp. of Nat’l Ass’n of Evangelicals v. Messay, No. M2005-01533-
COA-R3-CV, 2007 WL 2198199, at *5 (Tenn. Ct. App. July 26, 2007). Thus, “a motion
to vacate a default judgment should be granted whenever ‘there is a reasonable doubt as
to the justness of dismissing the case before it can be heard on its merits.’” World Relief,
2007 WL 2198199, at *5 (quoting Henry, 104 S.W.3d at 481).
Before we begin examining the relevant factors, it is important to note that the
record on appeal does not contain a transcript or a statement of the evidence of any of the
hearings below, including the hearing at which summary judgment was granted and the
hearing denying Rule 60 relief. Under Tenn. R. App. P. 24, it is the duty of the appellant
“to prepare the record which conveys a fair, accurate, and complete account of what
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transpired in the trial court regarding the issues which form the basis of the appeal.” In re
M.L.D., 182 S.W.3d 890, 894 (Tenn. Ct. App. 2005); see also TENN. R. APP. P. 24(b), (c).
Thus, it is the appellant’s responsibility to provide the court with a transcript or a
statement of the evidence “from which we can determine whether the evidence
preponderates for or against the findings of the trial court.” Id. at 894-95. If there is no
transcript or statement of the evidence, “we conclusively presume that the findings of fact
made by the trial court are supported by the evidence and are correct.” Id. at 895.
Because the Swanners did not include a transcript or statement of the evidence in the
record, we must presume that the trial court’s findings of fact are correct.
Our Supreme Court has held that, in applying the three-factor Rule 60 analysis
regarding “excusable neglect” adopted by the court in Henry v. Goins (and quoted above
from Fillers), the threshold determination is whether the defaulting party acted willfully.
Discover Bank, 363 S.W.3d at 493-94. If the defaulting party’s actions were willful, the
judgment cannot be set aside on grounds of excusable neglect. Id. at 494. If the actions
were not willful, the court must consider the remaining two factors. Id. In the present
case, the Swanners argue that their actions in failing to respond to the motion and appear
at the hearing were not willful because they did not receive notice of the hearing.
In the context of Rule 60, willful conduct refers to “‘strategic decision[s] to
default,’” “‘conduct that is more than merely negligent or careless,’” and “conduct that is
“‘egregious and not satisfactorily explained.’” McBride v. Webb, No. M2006-01631-
COA-R3-CV, 2007 WL 2790681, at *3 (Tenn. Ct. App. Sept. 25, 2007) (quoting Am.
Alliance Ins. Co., Ltd. v. Eagle Ins. Co., 92 F.3d 57, 61 (2d Cir. 1996); SEC v. McNulty,
137 F.3d 732, 738 (2d Cir. 1998)). Since 2003, when the Supreme Court adopted the
three-factor test in Henry v. Goins, 104 S.W.3d at 481, “Tennessee courts have wrestled
with the apparent incompatibility of ‘excusable neglect’ and ‘willfulness.’” Pryor v.
Rivergate Meadows Apartment Assocs. Ltd. P’ship, 338 S.W.3d 882, 886 (Tenn. Ct. App.
2009). One decision offered the following explanation: “This approach [under the Henry
factors] has been to find that negligence, a form of neglect, may be excusable and to
employ willfulness as a critical factor in distinguishing neglect that is excusable from that
which is not.” World Relief, 2007 WL 2198199, at *7 n.9 (citing Am. Alliance Ins., 92
F.3d at 59-62).
Homeowners’ motion for summary judgment includes a notice of hearing at the
bottom of the one-page motion along with a certificate of service executed by their
counsel stating that the motion was mailed to the defendants at 575 Forest Retreat Road,
Hendersonville, Tennessee.3 Under Tennessee law, “[a] certificate of service is prima
facie evidence that a motion was served in the manner described in the certificate, and
raises a rebuttable presumption that it was received by the person to whom it was sent.”
McBride, 2007 WL 2790681, at *3. This presumption may, however, be rebutted by
3
In their affidavit in support of their Rule 60 motion, the Swanners state that this is their correct address.
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proof that the document was not, in fact, received. Estate of Vanleer v. Harakas, No.
M2001-00687-COA-R3-CV, 2002 WL 32332191, at *8 (Tenn. Ct. App. Dec. 5, 2002).
Each of the Swanners submitted an affidavit stating that he or she did not receive “notice
of the hearing.” The Swanners argue that these affidavits rebut the presumption that they
received notice. They further assert that their lack of notice of the hearing “and their
immediate actions taken to protect their rights subsequent to learning of the granting of
Summary Judgment for the first time demonstrate that their failure to appear was not
willful.”
While we acknowledge that the Swanners’ affidavits are evidence concerning
service of process, the Swanners ignore the findings of the trial court from the hearing on
their Rule 60 motion. In its order denying Rule 60 relief, the trial court made the
following pertinent findings:
Counsel for Plaintiff pointed out to newly hired counsel for Defendants that
the motion for summary judgment had the notice of hearing on the bottom
of the one (1) page motion in bold setting a hearing date for said motion on
May 4, 2015.
At the hearing on the Tenn. R. Civ. P. 60 [motion], counsel for Plaintiffs
pointed out the very carefully crafted wording of the Rule 60 motion and
affidavits which said Defendants did not receive a notice [of] hearing, but
did not state that Defendants failed to receive the motion for summary
judgment. Counsel for Plaintiffs asked that Defendants be placed under
oath to answer whether they received the motion for summary judgment.
Defendant, Mark Swanner, was present and testified. Defendant, Robin
Swanner was not in court on June 15, 2015. Mr. Swanner acknowledged
receiving the statement of undisputed facts which contains a certificate of
service for the same date as the motion for summary judgment, which was
filed on March 9, 2015.
The motion for summary judgment states that it was accompanied by the statement of
undisputed material facts and a memorandum of law. The motion, statement of
undisputed facts, and memorandum have the same certificate of service date. Based upon
the trial court’s findings of fact and its denial of the Swanners’ Rule 60 motion, it appears
that the trial court found the Swanners’ testimony (by affidavit and at the hearing) that
they failed to receive notice of the hearing not to be credible. A trial court’s assessment
of credibility is entitled to great weight on appeal because the trial court “observed the
manner and demeanor of the witnesses and was in the best position to evaluate their
credibility.” Union Planters Nat’l Bank v. Island Mgmt. Auth., Inc., 43 S.W.3d 498, 502
(Tenn. Ct. App. 2000).
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The trial court implicitly found that the Swanners received the notice of the
hearing. The burden of proof was on the Swanners to introduce evidence as to why their
actions were not willful. See H.G. Hill Realty Co., LLC v. Re/Max Carriage House, Inc.,
428 S.W.3d 23, 37-38 (Tenn. Ct. App. 2013) (holding that there was no basis for
concluding the appellant’s actions were not willful because he failed to show they were
not willful). In Brown v. Juarez, No. E2013-00979-COA-R3-CV, 2014 WL 1408147
(Tenn. Ct. App. Apr. 10, 2014), a case similar to the case at hand, plaintiffs filed a Rule
60.02 motion to set aside an order dismissing their case, and their attorney admitted that
he had received the motion to dismiss but “that he simply overlooked the notice of
hearing.” Brown, 2014 WL 1408147, at *1. The trial court denied the motion. Id. On
appeal, the court reasoned as follows:
While counsel was negligent in failing to appear or respond to the motion,
his behavior cannot be characterized as a willful decision to ignore the
motion and allow an order of dismissal to be entered against Plaintiffs.
McBride v. Webb, No. M2006-01631-COA-R3-CV, 2007 WL 2790681, at
*3 (Tenn. Ct. App. Sept. 25, 2007) (providing that willfulness includes a
strategic decision and conduct that is more than mere negligence or
carelessness but is egregious and not satisfactorily explained). However,
his neglect was not excusable because he would have noticed the hearing
date if he had simply read the motion in its entirety. Knowing that
Defendants sought an order of dismissal against Plaintiffs, he also failed to
even respond to the motion within a reasonable amount of time. With these
considerations in mind, we conclude that Plaintiffs failed to carry their
burden of proving entitlement to relief under Rule 60.02 of the Tennessee
Rules of Civil Procedure.
Id. at *4 (emphasis added). Applying this reasoning to the present case, we conclude that
the Swanners’ failure to respond to the motion for summary judgment and to appear at
the hearing was not willful but also was not excusable neglect in that, had they read the
motion for summary judgment, they would have been aware of the hearing. In light of
this conclusion, the trial court did not abuse its discretion in denying their motion for
Rule 60 relief.
Our analysis under factor one alone is sufficient to affirm the trial court’s decision.
See Brown, 2014 WL 1408147, at *4; H.G. Hill, 428 S.W.3d at 37-38 (holding that, when
a defaulting party did not dispute certificates of service and failed to meet his “burden to
show that his failure to answer was not willful,” the trial court did not err in denying Rule
60 relief). We further note, however, that the Swanners did not address the other two
factors, meritorious defense and prejudice, in their Rule 60 motion. When making a
motion under Rule 60.02, “[t]he burden is upon the movant to set forth in a motion or
petition and supporting affidavits facts explaining why the movant was justified in failing
to avoid the mistake, inadvertence, surprise or neglect.” Tenn. State Bank v. Lay, 609
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S.W.2d 525, 527 (Tenn. Ct. App. 1980) (citing Hopkins v. Hopkins, 572 S.W.2d 639, 640
(Tenn.1978)). In support of their motion for summary judgment, Homeowners submitted
the affidavit of an expert to establish liability and damages. The Swanners submitted no
evidence with their Rule 60.02 motion to show a meritorious defense to Homeowners’
claims or the absence of prejudice.
We have previously stated that “the trial court is in the best position to assess the
various factors that should be considered in determining whether a default judgment
should be vacated.” Barbee, 689 S.W.2d at 867. This same reasoning applies to a
motion for summary judgment where the defendants fail to respond or appear at the
hearing. See Fillers, 2014 WL 631239, at *3. We conclude that the trial court did not
abuse its discretion in denying the Swanners’ motion for Rule 60 relief.
CONCLUSION
The judgment of the trial court is affirmed, and this matter is remanded with costs
of appeal assessed against the appellants. Execution may issue if necessary
________________________________
ANDY D. BENNETT, JUDGE
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