Summary
reversing on direct appeal a grant of default judgment where the trial court failed to hold a hearing as required by Civ.R. 55
Summary of this case from 1031 Props., LLC v. BeardenOpinion
No. 83-766
Decided April 18, 1984.
Civil procedure — Default judgment — Party that has appeared entitled to notice of application for default judgment, when — Civ. R. 55(A) — Default judgment vacated, when.
APPEAL from the Court of Appeals for Stark County.
On April 2 and April 13, 1982, the Industrial Commission of Ohio issued its order and decision allowing additional compensation for an aggravation of a pre-existing condition suffered by Richard C. Carlton, appellee-claimant herein. AMCA International Corp., d.b.a. Morgan Engineering, appellant-employer herein, filed a notice of appeal of this decision in the Court of Common Pleas of Stark County pursuant to R.C. 4123.519 on June 3, 1982.
The Industrial Commission of Ohio, per Raymond A. Connor, Administrator, filed its answer on June 30, 1982.
Appellant-employer, learning that service had not been obtained on appellee-claimant, filed a request with the court to have the notice of appeal served on appellee-claimant by certified mail on July 15, 1982. Additionally, appellant-employer contacted attorney James S. Gwin, who had previously represented appellee-claimant with regard to this workers' compensation claim. In pertinent part, Gwin responded by letter of July 20, 1982, as follows: "* * * I have not been asked nor retained by * * * [Richard C. Carlton] to represent him in regard to this law suit. Therefore, I am not in a position to file a complaint to this Notice of Appeal. It has been sometime since I have been in communication with Mr. Carlton; I am not aware of his intentions, desires or even his address." A copy of this letter was filed with the court on July 22, 1982.
On August 13, 1982, a complaint was filed by Gwin on behalf of appellee-claimant as required by R.C. 4123.519 in the Court of Common Pleas of Stark County praying for judgment against appellant-employer which would allow appellee-claimant to participate in the benefits provided by workers' compensation for aggravation of a pre-existing condition and seeking costs. The certificate of service indicated that the complaint was sent to Squire, Sanders Dempsey, attorneys for appellant-employer.
Subsequently, appellee-claimant filed, on October 5, 1982, a motion for default judgment against appellant-employer on the grounds that it had failed to answer or otherwise defend as to the complaint filed. A copy of this motion was sent to Squire, Sanders Dempsey. In a judgment dated October 6, 1982, the trial court granted appellee-claimant's motion for a default judgment.
Appellant-employer filed its answer to the complaint on October 7, 1982.
On October 18, 1982, appellant-employer filed a brief in opposition to the motion for default judgment asserting that it should be denied because "* * * there has been absolutely no showing of an intentional * * * failure to plead * * * and instead the evidence demonstrates * * * the employer acted reasonably and diligently." An affidavit accompanied the brief, wherein a legal assistant for Squire, Sanders Dempsey averred as follows:
"1. On or about September 28, 1982 * * * he called the Clerk of Courts and ascertained that a Complaint had been filed and that the law firm had been marked for a copy of the Complaint although no such Complaint had been received in the file.
"2. That * * * on that same date [he] called the attorney * * * Mr. James Gwin, and that Attorney Gwin informed him that he would send a copy of the Complaint to the firm so that an Answer could be prepared and served.
"3. That it was his understanding from this telephone conversation with Attorney Gwin that the firm would be afforded with a reasonable opportunity and a reasonable amount of time to prepare and serve the Answer.
"4. That on or about September 29, 1982, he received the copy of the Complaint from Attorney Gwin's office, and thereafter, on October 6, 1982, only seven days later, the employer's Answer was served by ordinary U.S. Mail upon Attorney Gwin and mailed to the Court for filing."
After this motion in opposition was filed, counsel for appellant-employer received a letter from Gwin dated October 18, 1982, which was accompanied by an unsigned file copy of the default judgment entry. Counsel for appellant-employer assert that this was the first notification that they had that a default judgment entry had in fact been signed by the court and filed on October 6, 1982.
A motion to set aside the default judgment pursuant to Civ. R. 55(B) and 60(B) was filed by appellant-employer on October 25, 1982. Appellee-claimant responded with a memorandum in opposition filed October 29, 1982.
Appellant-employer, on November 5, 1982, filed a notice of appeal from the default judgment entered on October 6, 1982.
On December 29, 1982, the trial court made the following judgment entry with respect to the motion to vacate:
"This matter is now in the Court of Appeals and this Court is without jurisdiction. Therefore, Employer's motion to set aside the default judgment is hereby overruled."
The court of appeals, in addressing the procedural propriety of the default judgment entered against appellant-employer, stated as follows:
"While we perceive that the October 6, 1982, judgment entry followed by only one day the October 5th motion asking for the same so as to present an obvious noncompliance with the seven day notice rule embodied in Ohio Civil Rule 55(A) so as to constitute error, our affirmance turns upon the fact that no prejudice affirmatively appears on the face of the appellate record in this direct appeal from that judgment."
This cause is now before the court pursuant to an allowance of a motion to certify the record.
Messrs. Squire, Sanders Dempsey, Mr. Robert H. Gillespy, Mr. Frank J. Pokorny and Mr. Howard J. Nichols, for appellant.
Messrs. Gutierrez, Mackey Gwin and Mr. James S. Gwin, for appellee.
The basic issue presented is whether the trial court erred in entering a default judgment against appellant-employer under the circumstances of this case. This court holds that the trial court violated Civ. R. 55(A) in entering the default judgment and hence such judgment was improper.
The proper procedure for holding a party in default is set forth in Civ. R. 55(A) which provides in pertinent part as follows:
"Entry of judgment. When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend as provided by these rules, the party entitled to a judgment by default shall apply in writing or orally to the court therefor * * *. If the party against whom judgment by default is sought has appeared in the action, he (or, if appearing by representative, his representative) shall be served with written notice of the application for judgment at least seven days prior to the hearing on such application. * * *" (Emphasis added.)
This court must thus initially determine whether appellant "appeared in this action" so as to trigger the seven-day notice requirement set forth in Civ. R. 55(A). Under the facts of this case, there is little question but that appellant-employer's actions constituted an appearance. Indeed, it was the appellant-employer who initiated this cause by submitting itself to the jurisdiction of the Court of Common Pleas of Stark County by filing a notice of appeal from the order of the Industrial Commission as required by R.C. 4123.519. In addition, the record indicates that appellant-employer had also had a telephone conversation in which appellee-claimant's attorney was made sufficiently aware of appellant-employer's intention to defend the suit. (Cf. Hutton v. Fisher [C.A. 3, 1966], 359 F.2d 913.)
Before a default judgment could properly be entered, then, appellant-employer, by virtue of its appearance, was entitled to receive notice of the application for judgment at least seven days prior to the hearing on such application. The plain language of Civ. R. 55(A) so demands.
The record clearly indicates, however, that this time prescription was not observed — the motion for default judgment was filed on October 5, 1982, and the trial court entered the default judgment the next day, October 6, 1982. Inasmuch as the mandatory time prescription set forth in Civ. R. 55(A) was not observed by the trial court, the entry of the default judgment was improper.
Federal courts, in addressing similar facts under the corresponding federal rule, have resolved this issue in a like fashion. It has been consistently held that a defendant who has appeared in the action is entitled to service of an application for default judgment prior to its entry, and where service is required, a default judgment entered without service must be vacated or reversed on appeal. H.F. Livermore Corp. v. Aktiengesellschaft Gebruder Loepfe (C.A.D.C. 1970), 432 F.2d 689; Bass v. Hoagland (C.A. 5, 1949), 172 F.2d 205, certiorari denied (1949), 338 U.S. 816, holding that a default against a defendant is void and without due process where the appearing defendant is not afforded the benefit of service of the three-day notice and hence is susceptible to collateral attack; Commercial Cas. Ins. Co. v. White Line Transfer Storage Co., Inc. (C.A. 8, 1940), 114 F.2d 946; Hoffman v. New Jersey Federation etc. (C.A. 3, 1939), 106 F.2d 204; Press v. Forest Laboratories, Inc. (S.D.N.Y. 1968), 45 F.R.D. 354.
Fed.R.Civ.P. 55(b)(2) states in part:
"If the party against whom judgment by default is sought has appeared in the action, he (or, if appearing by representative, his representative) shall be served with written notice of the application for judgment at least 3 days prior to the hearing on such application."
Moreover, this court's holding today is in keeping with the spirit of Civ. R. 55(A) in particular and with the Civil Rules in general. A notice requirement similar to the one in Civ. R. 55 has been described as follows: It is "* * * a device intended to protect those parties who, although delaying in a formal sense by failing to file [timely] pleadings * * *, have otherwise indicated to the moving party a clear purpose to defend the suit." As discussed above, appellant-employer made clear its purpose to defend the suit. The purpose of the notice requirement will be emasculated if appellant-employer is not given sufficient time ( i.e., seven days) to show cause why it should be allowed to file a late answer and to show that it had a meritorious defense.
H.F. Livermore Corp. v. Aktiengesellschaft Gebruder Loepfe (C.A.D.C. 1970), 432 F.2d 689, 691, construing Fed.R.Civ.P. 55(b)(2) (see fn. 1).
More generally, the policy underlying the modernization of the Civil Rules — i.e., the abandonment or relaxation of restrictive rules which prevent hearing of cases on their merits — is central to this issue and this court has long been mindful of this policy in its construction of the rules. See, e.g., Perotti v. Ferguson (1983), 7 Ohio St.3d 1, Maritime Manufacturers, Inc. v. Hi-Skipper Marina (1982), 70 Ohio St.2d 257 [24 O.O.3d 344], DeHart v. Aetna Life Ins. Co. (1982), 69 Ohio St.2d 189, 192 [23 O.O.3d 210], Zuljevic v. Midland-Ross (1980), 62 Ohio St.2d 116, 119 [16 O.O.3d 140].
Since the entry of the default judgment was in violation of the provisions of Civ. R. 55(A), the judgment of the court of appeals is hereby reversed and the cause is remanded to the trial court for further proceedings.
This decision is specifically limited to the propriety of the default judgment entry with respect to the mandated seven-day notice requirement of Civ. R. 55(A). This court expresses no opinion as to the merits of the default judgment which may be raised upon remand.
Judgment reversed and cause remanded.
CELEBREZZE, C.J., W. BROWN, SWEENEY, LOCHER, HOLMES, C. BROWN and J.P. CELEBREZZE, JJ., concur.