Calvin L. Scott
ORDER
AND NOW, TO WIT, this 17th day of July, 2012, IT IS HEREBY ORDERED as follows:
Introduction
Before the Court is Defendant's, American Car Wash, Inc. ("Defendant" or "ACW") motion to for relief from judgment entered after an inquisition hearing before a Commissioner on May 30, 2012. The Court finds that although the lack of diligence in handling this case is not condoned, Defendant has established excusable neglect, a meritorious defense, and a showing that substantial prejudice would not result to the Plaintiffs, James B. Johnson and Barbara Johnson ("Plaintiffs"). Therefore, given the facts and circumstances in this case, the Defendant's motion to vacate the default judgment pursuant to Superior Court Civil Rule 60(b) is GRANTED.
Facts
This case arises from an alleged altercation at American Car Wash that occurred on or about April 28, 2010. The Complaint alleges that on this date, Plaintiff was a business invitee at American Car Wash when he was assaulted without warning. According to the Plaintiffs, as a result of the Defendant's negligence, which was the proximate cause of Plaintiff's injuries, Plaintiff was entitled to damages for compensation.
On January 9, 2012, the Sheriff's office served ACW by leaving a copy of the Complaint with the Manager and owner of ACW, Dwayne Sailor ("Mr. Sailor"). Defendant's motion alleges that Mr. Sailor attempted to fax the complaint to the company's insurance agent at Pratt Insurance Company, but the paperwork did not go through because the machine was not working properly. After realizing the fax machine was sending "false positive" confirmations, the paperwork was sent again. Pratt insurance forwarded the information to Ohio Casualty Claims on March 20, 2012 and the paperwork was then forwarded to defense counsel on March 21, 2012.
In the meantime, after failing to answer, otherwise plead or filing an entry of appearance, on February 22, 2012, Plaintiffs filed a motion for default judgment pursuant to Super. Ct. Civ. R. 55(b)(2). On March 19, 2012, this Court granted Plaintiffs' motion for default judgment. Defense counsel alleges that upon receiving the paperwork and in preparation of filing an answer, she learned that a default judgment had been entered against the Defendant. Defendant's counsel claims that upon realization of the entry of default judgment, she immediately sent an e-mail to Plaintiffs' counsel. Plaintiffs' counsel has no recollection of this communication. Defense counsel also alleges that her office sent an e-mail to Plaintiff's counsel about the case assigned to her office. Plaintiff does not dispute that this e-mail was sent.
On March 22, 2012, defense counsel's e-mail informed Plaintiffs' counsel which law firm was assigned to the case along with the lawyer assigned to the case. In addition, the e-mail stated, "[i]t is unclear if service has been established, so I assume that, if necessary, you will extend us the courtesy of a brief extension of time to Answer, Move or otherwise Plead. If this is problematic, would you please let [counsel] know ASAP." Plaintiffs' counsel did not respond to the e-mail.
Def. Mot. for Relief from Judgment, Ex. B.
During the month of March, 2012, defense counsel attempted to contact Mr. Saylor for the purposes of filing a motion to vacate the default judgment. Counsel was unable to do so in March. During the same time, counsel's mother was diagnosed with an incurable illness and the motion was not subsequently filed.
An inquisition hearing was scheduled in this Court and was held on May 30, 2012. A notice of the inquisition was sent via regular mail to the Defendant, but Mr. Saylor does not recall receiving notice. After an inquisition hearing, the Commissioner recommended judgment for the Plaintiffs in the amount of $140,996.95, representing $30,996.95 for medical expenses, $100,000.00 for general damages for Plaintiff James Johnson and $10,000.00 for Plaintiff Barbara Johnson's loss of consortium claim.
Parties' Contentions
Defense counsel filed a motion to vacate the default judgment on June 6, 2012 alleging that: (1) counsel's actions amount to "excusable neglect"; (2) Defendant has a viable defense to this claim because Plaintiff may have been the initial aggressor to the altercation; and (3) given the promptness of Defendant's request in relation to the inquisition results, no prejudice results to Plaintiffs. An affidavit of Mr. Saylor was submitted to support Defendant's contentions.
Plaintiffs filed a response in opposition to Defendant's motion to vacate the default judgment. Specifically, it is Plaintiffs' position that a opposing counsel's e-mail did not require a response, and that neither Defendant nor its counsel satisfied the requirements necessary to vacate the default judgment.
Discussion
A motion to vacate a default judgment pursuant to Superior Court Civil Rule 60(b)(1) is addressed to the sound discretion of this Court. "The proceeding is essentially equitable in nature, ruled by equitable principles, and the appeal is to the conscience of the Court." For public policy reasons that favor a trial on the merits to resolving cases by default judgment, Super. Ct. Civ. R. 60(b) has been liberally applied. In furtherance of this policy, any doubts raised by the motion will be resolved in favor of the moving party.
Battaglia v. Wilm. Sav. Fund Soc., 379 A.2d 1132, 1135 (Del. 1977).
Kaiser-Frazer Corp. v. Eaton, et. al., 101 A.2d 345, 353 (Del. Super. Ct. Sept. 21, 1953).
Id.
Verizon Delaware, Inc. v. Baldwin Line Constr. Co., 2004 WL 838610, at *1 (Del. Super. Apr. 13, 2004).
A party moving to vacate a default judgment under the rule has the burden of showing the following before the motion will be granted: "(1) excusable neglect in the conduct that allowed a default judgment to be taken; (2) a meritorious defense to the action that would allow a different outcome to the litigation if the matter was heard on the merits; and (3) a showing that substantial prejudice would not be suffered by the plaintiff if the motion is granted." The Court will only consider the second and third prongs if a "satisfactory explanation has been established for failing to answer the complaint, e.g. excusable neglect or inadvertence." Excusable neglect is defined as "that neglect which might have been the act of a reasonably prudent person under the circumstances."
Verizon Delaware, Inc., 2004 WL 838610, at *1.
Apartment Cmtys. Corp. v. Martinelli, 859 A.2d 67, 72 (Del. 2004).
Battaglia, 379 A.2d at 1135 n. 4.
In Apartment Communities Corp. v. Martinelli, the Supreme Court of Delaware affirmed this Court's denial of defendant's motion to vacate a default judgment after the Commissioner awarded damages to the plaintiffs. In Martinelli, defendant's full-time employee of about five years was served with the Complaint but did not realize the legal significance of being served. There was nothing in the defendant's motion explaining what happened to the complaint once the employee accepted service of process. Additionally, the motion was not supported by affidavits or statements under oath. The Supreme Court of Delaware held that the defendant did not meet its burden of showing that the employee's inaction constituted excusable neglect, given defense counsel's speculation at the hearing and the lack of sworn affidavits to support defendant's motion. Accordingly, this Court did not abuse its discretion in denying the defendant's motion to vacate the default judgment.
Apartment Communities Corp. v. Martinelli, 859 A.2d 67, 74 (Del. 2004).
Id. at 71.
Id. at 69.
Id.
Id.
Id. at 72.
Id. at 74.
Similarly, in Perry v. Wilson, the defendant failed to answer the complaint and did not file anything until three months after the Court granted default judgment. The defendant's only allegation in its motion for failing to respond was that they either did not understand the Complaint, how to respond or recognize their right to free counsel. At oral argument, the defendant claimed that they did fax the complaint to their insurance company but were unable to provide any reasons for a lack of response to the complaint. This Court found nothing in the record that would justify vacating the default judgment and reopening the case.
2009 WL 1964787 (Del. Super. Ct. July 8, 2009).
Id. at *1.
Id.
Id. at *2.
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Unlike in Martinelli and Perry, here, there is evidence in the record that the action or inaction on behalf of the defendant and/or defendant's counsel amounted to excusable neglect. Defendant's motion contains an affidavit of Mr. Saylor submitted under oath. The affidavit states that: (1) upon receiving the complaint in later January, 2012, Mr. Saylor faxed it to his insurance company but the paperwork did not go through because of a defect in the fax machine; (2) upon receipt of the motion of default judgment, Mr. Saylor again forwarded the paperwork to his insurance company; and (3) had he received a copy of the inquisition hearing notice, he would have immediately contacted his insurance company. In addition, defense counsel submits that she was unable to file a motion to vacate the default judgment because of extenuating family circumstances.
This case is distinguishable from Martinelli and Perry. In both cases, the defendants simply ignored the process and failed to realize the severity of the lawsuit until it was too late. Additionally, there was nothing in the record, such as affidavits, that would suggest that the defendant's actions constituted excusable neglect. Here, however, the defendant's motion did contain affidavits submitted under oath which reveal that the owner of ACW promptly sent the complaint to his insurance company via fax. However, because of a defect in the fax machine, the information was not forwarded to defense counsel until March 21, 2012, two days after the entry of default judgment. The delay in sending the information to the insurance company and then to defense counsel constitutes neglect that may have been the act of a reasonably prudent person under the circumstances. Therefore, the Defendant has met its burden of showing excusable neglect.
In addition to proving excusable neglect, the Defendant has also met its burden of showing: (1) a meritorious defense to this claim that would suggest a different outcome at trial; and (2) that substantial prejudice would not be suffered by the Plaintiff. First, as to the meritorious defense claim, in Defendant's affidavit, Mr. Saylor states that ACW did not owe a duty to Plaintiff on the day of the incident and there are facts that would suggest that Plaintiff was the initial aggressor in the altercation. Both allegations would be a meritorious defense that would suggest a different outcome at trial. Additionally, the Defendant has also showed that substantial prejudice would not be suffered by the Plaintiff given the promptness in moving to vacate relative to the Commissioner's findings and recommendations.
Accordingly, under the facts and circumstances of this case, the interests of justice would best be served by granting the Defendant's motion.
Conclusion
Based on the foregoing, Defendant's Motion to Vacate the default judgment pursuant to Super. Ct. Civ. R. 60(b) is GRANTED.
IT IS SO ORDERED.
________________________
Judge Calvin L. Scott, Jr.
Original: Prothonotary's Office
cc: Gary S. Nitsche, Esq.
Nancy Chrissinger Cobb, Esq.