“Meritorious Defense” Now Encompasses Damages and Proximate Cause: A Detailed Commentary on Green v. Johnson (Supreme Court of South Carolina, 2025)

1. Introduction

Green v. Johnson presented the Supreme Court of South Carolina with a deceptively routine post-default dispute that ultimately produced a notable procedural holding: a defendant in default may demonstrate a “meritorious defense” under Rules 55(c) and 60(b)(1), S.C.R.Civ.P., by showing a plausible defense solely to the amount of damages or to proximate cause, even if liability is conceded. Beyond that doctrinal breakthrough, the Court also scrutinised the trial court’s large default damage award and clarified the master-in-equity’s authority to revise its own damages findings on a timely Rule 52/59 motion.

The parties were:

• Respondents (Plaintiffs): Kacey and Charinrath (“Mrs.”) Green – occupants of a Tesla rear-ended three times by a tractor-trailer.
• Petitioner (Defendant): Mervin Lee Johnson – the tractor-trailer driver, in default.

After a default damages hearing, the master-in-equity awarded the Greens US $1.76 million (US $1 million actual, US $750k punitive, US $10k property). On post-trial motion the master reduced the total to US $250k and eliminated the property component. The Court of Appeals reinstated the original US $1.76 million. The Supreme Court:

1. Affirmed refusal to set aside the default.
2. Reinstated the reduced US $250,000 award (with a new direction to add back US $10,000 property damage and to apportion between the spouses).
3. Formally enlarged the concept of “meritorious defense.”

2. Summary of the Judgment

The Supreme Court delivered a split-result order: affirmed in part, reversed in part, and remanded. Key holdings were:

• No relief from default because Johnson failed to show “good cause” or excusable neglect for not answering the Complaint.
• New Procedural Rule: A meritorious defense under Rule 55(c)/60(b)(1) can relate exclusively to damages or to proximate cause; it need not contest fault.
• Damages: The original US $1.76 million award was grossly disproportionate to the evidence (US $12,826 medical bills + minor property damage). The master’s reduction to US $250k was within discretion and supported by evidence adduced at the default hearing; the Court of Appeals erred in reinstating the larger sum.
• Corrections on Remand: (1) apportion the US $190k actual / US $60k punitive awards between Mr. and Mrs. Green; (2) add US $10k property depreciation to Mr. Green’s share.

3. Detailed Analysis

3.1 Precedents Cited and Their Influence

3.2 Court’s Legal Reasoning

A. Default Relief Framework

The Court first reaffirmed the two-step analysis under Rule 55(c):

1. Show a satisfactory reason for failing to respond.
2. If satisfied, court weighs timing, prejudice, and meritorious defense.

Johnson failed step 1; his health issues were chronologically mismatched and uncorroborated, and there was no agreement from plaintiffs to notify him of suit (contrast McClurg). Therefore relief was properly denied.

B. Expansion of “Meritorious Defense”

“We agree … and hold a party in default can satisfy the meritorious defense requirement … by showing he has a meritorious defense as to the amount of damages or proximate cause.” – Green v. Johnson

This passage converts previously tentative dicta (Chief Judge Hearn and Chief Justice Toal) into binding precedent. It harmonises Rule 55(c) with Rule 8(c) affirmative defenses, many of which concern damages or causation rather than fault (e.g., mitigation, comparative negligence percentages, statutory caps).

C. Damage Reduction Authority

The master’s self-correction derived from Rule 52(b) (amend findings within 10 days). Because Johnson’s motion raised the excessiveness argument within that window, the master retained authority. The Supreme Court stressed that:

• Default does not transform a damages hearing into a “lottery.”
• Courts must anchor awards in record evidence, not speculation about what a local jury “might” award.

The Tesla dash-cam video and the $12,826 medical expenses exposed a gulf between evidence and the $1 million/$750k figures, justifying the revised $190k/$60k split. Any consideration of additional exhibits at the Rule 52/59 hearing was harmless because the primary “excessiveness” was already obvious.

D. Property Damage Restoration

Citing Howell and Nelson, the Court reminded that vehicle owners may testify to depreciation; therefore the master’s unexplained deletion of the $10,000 property figure had to be reinstated.

3.3 Anticipated Impact of the Decision

• Procedural Gatekeeping: Defaulting defendants now have an expressly recognised path to relief when the dispute is only about quantum of damages, encouraging more balanced outcomes and discouraging windfall judgments in low-value collisions, consumer credit cases, or construction disputes.
• Litigation Strategy: Plaintiffs can no longer rely on the “liability only” posture of default to secure inflated awards; they must prepare to substantiate damages even in uncontested liability settings.
• Judicial Economy: Trial courts are empowered—and obliged—to tether default awards to the record, lowering appellate reversals and preserving public confidence.
• Insurance & Claims Handling: Insurers may adjust reserving and defense decisions, knowing that damage-only defenses may suffice to reopen judgments when claims inflation is suspected.

4. Complex Concepts Simplified

• Default, Entry vs. Judgment: Entry of default (Rule 55(a)) establishes liability when a defendant fails to respond. Default judgment (Rule 55(b)) adds a money figure or specific relief after a hearing.
• Rule 55(c) vs. Rule 60(b)(1): 55(c) governs lifting the entry of default; 60(b)(1) governs setting aside the judgment. Both require a “meritorious defense”—now possibly to damages only.
• Meritorious Defense: A non-frivolous factual or legal contention that, if proven, would alter the outcome. Under Green, showing potential over-assessment of damages satisfies this requirement.
• Master-in-Equity: A specialised judge who hears non-jury matters (often foreclosures, equity cases) by referral. Here, the master conducted the damages hearing and subsequent motions.
• Punitive vs. Actual Damages: Actual (compensatory) damages redress loss; punitive damages punish and deter egregious conduct. South Carolina requires some ratio and proportionality to the harm.
• Rule 52(b) Motion: Allows the trial court, within 10 days, to amend or make additional findings—essentially a chance to fix or refine its own order before appeal.

5. Conclusion

Green v. Johnson accomplishes twin objectives. Substantively, it restrains outsized default judgments that bear little relationship to provable harm. Procedurally—and more importantly for future litigants—it broadens the “meritorious defense” gate so that defendants may seek relief even when liability is incontrovertible but damages are suspect. By adopting the view previously voiced only in concurring or dissenting opinions, the Supreme Court aligns South Carolina with a more pragmatic, fairness-oriented default-relief doctrine. Courts, litigants, and insurers will need to recalibrate strategies accordingly, but the overarching effect should be greater proportionality, transparency, and equity in default proceedings.