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Smart Summary

Factual and Procedural Background

This appeal arises from a default judgment entered against appellant Richard Scriver in the amount of $813,620. The case had previously been before the Court of Appeals after the trial court granted Scriver's motion for judgment notwithstanding the verdict and an alternative motion for a new trial following a jury verdict favoring the plaintiffs. The appellate court reversed the judgment notwithstanding the verdict but affirmed the new trial order.

The retrial was specially set for May 19, 1997. Prior to trial, Scriver's counsel moved to withdraw and notified him of the trial date and possible adverse consequences if he failed to prepare or obtain new counsel. The trial court granted this motion and also granted the plaintiffs' counsel leave to withdraw. Neither party requested a continuance, and no new counsel appeared for Scriver at trial.

On the trial date, only one plaintiff, 690019 Ontario, Ltd. ("Ontario"), appeared. Scriver and his counsel were absent. The trial court granted Ontario's motion to dismiss Scriver's answer and counterclaim and proceeded with a non-jury trial. Ontario's secretary-treasurer testified, and the court awarded Ontario actual damages, attorney's fees, and punitive damages. Scriver filed post-judgment motions which were denied, leading to this appeal.

Legal Issues Presented

  1. Whether the trial court erred in denying Scriver's motions for new trial or to set aside the judgment based on alleged intrinsic defects caused by non-appearance and alleged fraud, accident, mistake, or acts of the adverse party;
  2. Whether the evidence supported the trial court's award of actual damages;
  3. Whether the award of attorney's fees was justified under OCGA § 13-6-11;
  4. Whether the trial court erred in awarding $500,000 in punitive damages, considering the applicable statutory cap and the nature of Scriver's conduct.

Arguments of the Parties

Appellant's Arguments

  • Scriver argued that the trial court's proceeding without two of the three parties caused an intrinsic defect requiring a new trial under OCGA § 9-11-60(c) and (d)(3).
  • He contended that his non-appearance was due to fraud, accident, mistake, or the adverse party's acts under OCGA § 9-11-60(d)(2).
  • Scriver claimed he received "express information" prior to trial that plaintiffs would not proceed, which justified his delay in hiring new counsel.
  • He challenged the sufficiency of evidence supporting the damages awarded.
  • He contested the award of attorney's fees and punitive damages as unsupported or excessive.

Appellee's Arguments

  • Ontario argued that Scriver's negligence and lack of diligence in preparing for trial and following proceedings did not constitute an intrinsic defect.
  • They maintained that Scriver failed to show a legal excuse for non-appearance, thus the default judgment was properly entered.
  • Ontario presented evidence demonstrating actual damages totaling $278,620, supported by testimony regarding financial transactions and losses caused by Scriver's conduct.
  • They justified the attorney's fees award based on the protracted litigation and Scriver's fraudulent conduct.
  • Ontario supported the punitive damages award as proportional to actual damages and justified by Scriver's willful misconduct, fraud, and wantonness, noting the case was not subject to the statutory cap.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Lister v. Scriver, 216 Ga. App. 741, 746-747 (456 S.E.2d 83) (1995) Reversal of judgment n.o.v. and affirmation of new trial order. Referenced to establish procedural history and prior appellate rulings.
Brunswick Gas Fuel Co. v. Parrish, 179 Ga. App. 495, 496 (347 S.E.2d 240) (1986) A default judgment cannot be set aside unless the non-appearance is excused by legal cause and a meritorious defense is shown. Supported denial of Scriver's motion to set aside default judgment due to lack of legal excuse for non-appearance.
Lasonde v. A E Real Estate Sales c., 231 Ga. App. 754 (500 S.E.2d 636) (1998) Discretionary standard for setting aside default judgments. Used to affirm trial court's discretion in denying post-trial motions.
Aycock v. Hughes, 189 Ga. App. 838 (377 S.E.2d 689) (1989) Standards regarding setting aside judgments. Applied to support the trial court's ruling.
Archer v. Moore, 165 Ga. App. 724, 725 (302 S.E.2d 583) (1983) Requirements for setting aside default judgments. Referenced in affirming denial of Scriver's motions.
Kraft, Inc. v. Abad, 262 Ga. 336 (417 S.E.2d 317) (1992) Equitable relief standards for judgments. Distinguished but cited to emphasize negligence bars relief.
Holland v. Holland Heating c., 208 Ga. App. 794, 796 (432 S.E.2d 238) (1993) Requirement that damages must have a reasonable basis for calculation in fiduciary breach claims. Supported sufficiency of evidence for actual damages award.
CRS Sirrine, Inc. v. Dravo Corp., 219 Ga. App. 301, 303 (464 S.E.2d 897) (1995) Proof of damages with reasonable certainty and attribution to defendant. Applied to uphold actual damages award based on testimony.
Gaines v. Compton Knowles Corp., 190 Ga. App. 863, 864-865 (380 S.E.2d 498) (1989) Standards for damages evidence. Used to support damages award.
Floyd v. First Union Nat. Bank c., 203 Ga. App. 788, 792 (417 S.E.2d 725) (1992) Attorney's fees award under OCGA § 13-6-11 justified by fraud and bad faith. Supported award of attorney's fees to Ontario.
Shaw v. Lawrence P. Vickers Assoc., 162 Ga. App. 97, 98-99 (290 S.E.2d 186) (1982) Attorney's fees in cases involving bad faith. Applied to uphold attorney's fees award.
Hill v. Johnson, 210 Ga. App. 824, 825 (437 S.E.2d 801) (1993) Criteria for punitive damages including willful misconduct and fraud. Used to affirm punitive damages award.
Hulsey Pool Co. v. Troutman, 167 Ga. App. 192, 194 (306 S.E.2d 83) (1983) Standards for awarding punitive damages. Supported the court's punitive damages determination.

Court's Reasoning and Analysis

The court examined Scriver's contention that the trial court erred by proceeding without his presence or counsel and without two of the three parties, which he argued created an intrinsic defect under OCGA § 9-11-60. The court found that Scriver was duly warned by prior counsel about the trial date and consequences of non-preparation. Despite receiving unspecified "express information" that plaintiffs would not proceed, Scriver delayed hiring new counsel until shortly before trial and failed to prepare adequately or follow the proceedings. The court emphasized that negligence and lack of diligence do not constitute intrinsic defects warranting a new trial or setting aside a default judgment. The court cited precedent holding that relief from default judgment requires both a meritorious defense and a legal excuse for non-appearance, neither of which Scriver demonstrated.

Regarding damages, the court analyzed the testimony of Ontario's secretary-treasurer, who detailed the financial losses resulting from Scriver's failure to contribute capital, unauthorized share sales, misappropriation of funds, and related expenses. This testimony provided a reasonable basis to calculate actual damages, satisfying the applicable legal standard.

The court further found the attorney's fees award justified by evidence of Scriver's fraud and bad faith conduct over nearly a decade of litigation, consistent with OCGA § 13-6-11 and supporting case law.

Finally, the court upheld the punitive damages award, noting that the cause of action arose before the statutory cap on punitive damages was enacted. The court found that Scriver's willful misconduct, fraud, wantonness, and conscious indifference to consequences warranted punitive damages amounting to less than twice the actual damages, in line with legal standards.

Holding and Implications

Judgment affirmed.

The Court of Appeals affirmed the trial court's denial of Scriver's post-judgment motions and upheld the default judgment awarding actual damages, attorney's fees, and punitive damages. This decision directly affects the parties by enforcing the judgment against Scriver and does not establish new legal precedent beyond the application of existing standards for default judgments, damages, attorney's fees, and punitive damages.

SCRIVER v. LISTER.

POPE, Presiding Judge.

Appellant Richard Scriver appeals from a default judgment entered against him in the total amount of $813,620. This is the second appearance of this matter before this Court. The case was first appealed after the trial court granted Scriver's motion for judgment n.o.v. and his alternative motion for a new trial following a jury verdict in the plaintiffs' favor. In Lister v. Scriver, 216 Ga. App. 741, 746-747 ( 456 S.E.2d 83) (1995), we reversed the trial court's grant of the motion for judgment n.o.v., but affirmed the grant of the motion for new trial.

A full description of the underlying facts of this case appears in that decision.

The re-trial was specially set for May 19, 1997. On February 10, 1997, the counsel who had represented Scriver throughout the proceeding moved to withdraw. In connection with that motion, the counsel notified Scriver of the scheduled trial date and further that he could suffer adverse consequences if he did not hire other counsel and prepare for trial. The trial court granted the motion for leave to withdraw on February 11, 1997, and on February 20, 1997, counsel for Thomas J. Lister, one of the plaintiffs, was also granted leave to withdraw. None of the parties moved for a continuance following these withdrawals, and the special setting remained on the calendar. No other counsel entered an appearance for Scriver prior to the trial date.

On the scheduled day, only one of the parties, plaintiff 690019 Ontario, Ltd. ("Ontario"), appeared. Because Scriver was not present and no counsel appeared on his behalf, the trial court granted Ontario's motion to dismiss Scriver's Answer and Counterclaim. The matter proceeded to a non-jury trial after Ontario waived its jury demand and Norman Burkoski, Ontario's secretary-treasurer, was the only witness. At the conclusion of the evidence, the trial court awarded Ontario $278,620 in actual damages, $35,000 in attorney's fees and $500,000 in punitive damages.

Judgment was entered on June 9, 1997, and within three days Scriver filed a motion for new trial, or in the alternative, to set aside the judgment. The trial court denied Scriver's motions and he appeals.

1. Scriver contends that the trial court erred in denying his motions because the court's decision to proceed to trial without two of the three parties caused an intrinsic defect in the proceedings. See OCGA § 9-11-60(c) (d)(3). He further contends that this non-appearance was the result of fraud, accident, mistake or the acts of the adverse party. See OCGA § 9-11-60(d)(2).

In support of his post-trial motions, Scriver submitted his affidavit stating that prior to trial he had received "express information" that Ontario and the other plaintiff did not intend to go forward with the case. Based on this information, Scriver stated he did not hire counsel until April 1997 when he engaged attorney Scott Kaplan to appear at the scheduled trial date and move for a dismissal for want of prosecution. But Scriver's affidavit does not identify the source of this information or even assert that the information came from the plaintiffs themselves.

Attorney Kaplan also submitted an affidavit confirming that Scriver had retained him and explaining that he was unable to appear because his father had a medical emergency on the morning of the trial requiring him to make "serious and far-reaching medical decisions." Yet nothing in the record indicates that Kaplan or Scriver attempted to notify the trial court of Kaplan's situation either on the day of trial or in the intervening 20 days between the scheduled trial date and the entry of judgment. Therefore, despite his prior counsel's admonitions and in reliance on information from an unspecified source, Scriver waited until the month before trial to hire new counsel. And rather than instructing his new counsel to prepare for trial, Scriver simply directed him to appear and move for a dismissal or a continuance if the plaintiffs chose to appear. And apparently neither Scriver nor his counsel attempted to ascertain the outcome of the scheduled trial prior to the entry of the judgment 20 days later.

Scriver's negligence in failing to prepare for trial and his, and his counsel's, lack of diligence in following the progress of the proceedings do not equate with a intrinsic defect necessitating a new trial. Moreover, "[a] judgment cannot be set aside in equity unless its rendition is unmixed with the negligence or fault of the complainant as this judgment obviously was not. Consequently, with regard to default judgments, a motion to set aside cannot be granted when it fails to show not only a meritorious defense but a legal excuse for his non-appearance." (Punctuation and citations omitted. Brunswick Gas Fuel Co. v. Parrish, 179 Ga. App. 495, 496 (2) ( 347 S.E.2d 240)(1986). Scriver has shown no legal excuse for his non-appearance at trial. Under these circumstances, we find that trial court did not abuse its discretion in denying Scriver's motions. See Lasonde v. A E Real Estate Sales c., 231 Ga. App. 754, (1) ( 500 S.E.2d 636) (1998); Aycock v. Hughes, 189 Ga. App. 838 (1) ( 377 S.E.2d 689) (1989); Archer v. Moore, 165 Ga. App. 724, 725 (1) ( 302 S.E.2d 583) (1983); cf. Kraft, Inc. v. Abad, 262 Ga. 336 ( 417 S.E.2d 317)(1992).

2. Scriver also contends that the evidence failed to support the trial court's award of damages. "In a claim alleging that a business was damaged because the defendant breached his fiduciary duty to the business, the [trier of fact] must be given a reasonable basis upon which to calculate the amount damage due to the breach. [Cit.]" Holland v. Holland Heating c.,, 208 Ga. App. 794, 796 (2) ( 432 S.E.2d 238)(1993). "[I]f a plaintiff can show with reasonable certainty the total amount of damages and the degree to which those damages are attributable to defendant, that is sufficient to support an award." CRS Sirrine, Inc. v. Dravo Corp., 219 Ga. App. 301, 303 (1) ( 464 S.E.2d 897)(1995).

Burkoski, Ontario's secretary-treasurer, testified at bench trial that the corporation made an initial investment of $100,000 in the enterprise proposed by Scriver based upon his assurances that Scriver and Ontario would be 50-50 partners, with Scriver also investing $100,000, and that Scriver personally would operate the business. Scriver never put up his share of the capitalization, and, instead, hired someone else to run the business. Also, unbeknownst to Ontario, Scriver sold this individual 25,000 shares in the company. The company later paid Scriver an additional $15,000 to purchase a franchise, but Scriver used the proceeds to purchase the franchise for one of his own businesses. The evidence further showed that Scriver borrowed $80,000 on behalf of its enterprise with Ontario, but retained $67,000 of that money for his own personal use. Burkoski also testified that Scriver acquired $25,000 from the commercial complex in which the enterprise was located, which he converted to his own use. To finance its share of the capitalization Ontario took out loans on other property, as did Burkoski, upon which interest has been paid. Burkoski summarized that including the original investment, the monies paid for the franchise, travel expenses, Ontario's share of the corporate opportunities usurped by Scriver, and interest paid in the intervening years on loans, Ontario had suffered actual damages in the amount of $278,620. This evidence is sufficient to support the trial court's award of actual damages. See generally CRS Sirrine, Inc. v. Dravo Corp., 219 Ga. App. at 303; Gaines v. Compton Knowles Corp., 190 Ga. App. 863, 864-865 (1)( 380 S.E.2d 498)(1989).

3. Additionally, the trial court found that evidence of Scriver's fraud and bad faith warranted an award of attorney's fees under OCGA § 13-6-11. Burkoski testified and Ontario's counsel stated in his place that through almost ten years of protracted litigation and the earlier appeal process, Ontario had incurred $35,000 in attorney's fees. We find that the award of attorney's fees is supported by the evidence. See Floyd v. First Union Nat. Bank c., 203 Ga. App. 788, 792 (3) ( 417 S.E.2d 725)(1992); Shaw v. Lawrence P. Vickers Assoc., 162 Ga. App. 97, 98-99 ( 290 S.E.2d 186)(1982).

4. Scriver also contests the trial court award of $500,000 in punitive damages. The trial court found that the cause of action in this case arose from Scriver's actions in 1985 and 1986; therefore, this case is not subject to the current $250,000 cap on punitive damage awards. OCGA § 51-12-5.1 (g) (h). Based upon the evidence, the trial court concluded that Scriver's actions showed willful misconduct, fraud, wantonness and the entire want of care which would raise the presumption of conscious indifference to the consequences of his conduct, and awarded punitive damages in an amount less than twice the actual damages in the case. Accordingly, we find no error in the award of punitive damages. See generally Hill v. Johnson, 210 Ga. App. 824, 825 ( 437 S.E.2d 801)(1993); Hulsey Pool Co. v. Troutman, 167 Ga. App. 192, 194 (2) ( 306 S.E.2d 83) (1983).

Judgment affirmed. Beasley and Ruffin, JJ., concur.

POPE, Presiding Judge.

DECIDED NOVEMBER 30, 1998 — CERT. APPLIED FOR.
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SCRIVER v. LISTER
(Nov 30, 1998)