Colley v. Bazell

• Decision Date: 30 December 1980
• Docket Number: 80-427,Nos. 80-425,s. 80-425
• Citation: 64 Ohio St.2d 243,18 O.O. 3d 442,416 N.E.2d 605
• Parties: , 18 O.O.3d 442 COLLEY et al., Appellants and Appellees, v. BAZELL, Appellee and Appellant.
• Court: Ohio Supreme Court

Page 243

64 Ohio St.2d 243

416 N.E.2d 605, 18 O.O.3d 442

COLLEY et al., Appellants and Appellees, v. BAZELL, Appellee and Appellant.

Nos. 80-425, 80-427.

Supreme Court of Ohio.

Dec. 30, 1980.

Syllabus by the Court

1. A judgment overruling a Civ.R. 60(B) motion for relief from a default judgment is a final appealable order.

2. Where a defendant, upon being served with summons in a cause of action based on a claim for which he has liability insurance, relies upon his carrier to defend the lawsuit, his failure to file an answer or to determine independently that his carrier has failed to file timely an answer which leads to the taking of a default judgment, may constitute "excusable neglect," depending on the facts and circumstances of the case, so as to justify relief from the default judgment pursuant to Civ.R. 60(B).

On November 9, 1977, Claude L. Colley, joined by his wife, Rachel, and his son, James, filed a complaint alleging legal malpractice and seeking a judgment of $75,000 against Haskell Bazell, an attorney, in the Court of Common Pleas of Athens County. The Colleys alleged that they had employed Bazell to prosecute Claude Colley's claim for black lung benefits under Part B of the Federal Coal Mine Health and Safety Act, Sections 901 et seq., Title 30, U.S.Code, and that Bazell had failed to file an action in the appropriate United States District Court within the prescribed time, November 12, 1976. After attempts at service by personal service and certified mail failed, Bazell was eventually served by regular mail posted January 10, 1978. On February 10, 1978, the Colleys filed a motion for a default judgment as Bazell had failed to file an answer or otherwise make an appearance. On February 13, 1978, the court granted the Colleys a default judgment against Bazell in the sum of $75,000. On February 24, 1978, Bazell filed a motion for relief from the default judgment.

In support of the motion, Bazell demonstrated that on January 12, 1978, he sent by certified mail a letter to his insurance agent, Robert R. Rielage of Frederick Rauh & Company of Cincinnati. In the letter to Rielage, Bazell requested that the fact of the suit be referred to his professional liability carrier. Additionally, Bazell outlined his defense, and indicated that the envelope forwarding the complaint was dated January 10, 1978, and advised that "we should have approximately 28 days to file an Answer, or, in the alternative, a Motion requesting additional time to file an answer." By affidavits in support of the motion, Bazell demonstrated that Frederick Rauh & Company mailed the suit papers to Seibert-Keck Insurance Agency in Akron on January 16, 1978. Siebert-Keck Insurance Agency, the broker for Bazell's insurance carrier, then forwarded the papers on January 25, 1978, to the National Union Fire Insurance Company, Bazell's insurance carrier. For unexplained reasons, the papers did not arrive at the offices of the National Union Fire Insurance Company until February 13, 1978. Upon receipt of the papers in New York coverage was verified and counsel retained to defend the lawsuit.

On April 7, 1978, the trial court overruled the motion for relief from judgment for the reason "that the defendant, an attorney at law, failed to take those steps a reasonably prudent person would have been expected to take to see that a responsive pleading was filed by the answer date." The ensuing judgment entry was filed April 13, 1978.

On April 19, 1978, Bazell filed a motion styled a motion to reconsider. In that motion, Bazell claimed for the first time that the trial court had granted a default judgment without a hearing to determine the extent of the damages. The motion to reconsider was overruled on May 2, 1978, and journalized on May 8th. On May 9, 1978, Bazell filed a notice of appeal from the judgment of April 13 and May 8, 1978. The Court of Appeals by majority vote affirmed in part and reversed in part the April 13, 1978, judgment denying the defendant relief from the February 13, 1978, default judgment. The Court of Appeals ruled that the trial court correctly denied relief from the judgment of February 13, 1978, as to liability, but erred in failing to set aside the default judgment as to the award for damages and remanded the issue of damages only to the trial court for further proceedings.

The cause is now before this court pursuant to the allowance of motions to certify the record filed by both the Colleys and Bazell.

Lappen, Lilley, Kernen & Co., L.P.A., Will Kernen and Robert L. Lilley, Logan, for appellants and appellees.

Walker, Mollica & Gall Co., L.P.A., Steven T. Sloan, Athens, Gallagher, Sharp, Fulton, Norman & Mollison and George W. Stuhldreher, Cleveland, for appellee and appellant.

DOWD, Justice.

Initially, we consider and reject the claim advanced by the plaintiffs that the appeal of Bazell from the denial of his application for Civ.R. 60 relief should have been dismissed by the Court of Appeals because the notice of appeal was filed on May 9, 1978, more than 30 days following the granting of the default judgment on February 13, 1978. The plaintiffs correctly observe that the time for filing a notice of appeal from a judgment is not tolled by either the filing of a Civ.R. 60(B) motion for relief from judgment or a motion to reconsider. Kauder v. Kauder (1974), 38 Ohio St.2d 265, 213 N.E.2d 797; William W. Bond, Jr. & Assoc. v. Airway Development Corp. (1978), 54 Ohio St.2d 363, 377 N.E.2d 988. Moreover, a motion for relief from judgment is not a substitute for a direct appeal from the judgment challenged. Bosco v. Euclid (1974), 38 Ohio App.2d 40, 311 N.E.2d 870; Town & Country Drive-In Shopping Centers, Inc., v. Abraham (1975), 46 Ohio App.2d 262, 348 N.E.2d 741. However, it is well settled that a judgment denying a motion for relief from judgment filed pursuant to Civ.R. 60(B) is itself a final appealable order. Greenspahn v. Joseph E. Seagram & Sons, Inc., (C.A. 2, 1951), 186 F.2d 616; Russell v. Cunningham (C.A. 9, 1960), 279 F.2d 797; 7 Moore's Federal Practice (2d Ed.), 430, Section 60.30(3); McCormac, Ohio Civil Rules Practice, (1980 Supp.), 101, Section 13-27. Therefore, it follows that a judgment denying a motion for relief from judgment pursuant to Civ.R. 60(B) may be appealed, providing the notice of appeal is filed within 30 days as required by App.R. 4(A). On April 13, 1978, the motion for relief from the default judgment of February 13, 1978, was denied. The subsequent notice of appeal was filed on May 9, 1978. ¹ It challenges the judgment of April 13, 1978, not the default judgment of February 13, 1978. Hence, the Court of Appeals correctly denied the motion of the plaintiffs to dismiss the defendant's appeal.

We next consider whether defendant Bazell's motion for relief from judgment was properly overruled as to the issue of liability. We conclude that the trial court erred, upon the basis of the submission for relief, in failing to vacate the default judgment of February 13, 1978. Therefore, it is not necessary to address the plaintiffs' claim that the remand on the issue of damages was erroneous, for it follows that a judgment vacating a default judgment results in the entire case proceeding on its merits.

The requirements imposed upon the party who seeks to have a default judgment vacated include demonstration of a meritorious defense or claim to present if relief is granted, timely action, and a ground for relief under the provisions of Civ.R. 60(B). ² GTE Automatic Electric v. ARC Industries (1976), 47 Ohio St.2d 146, 351 N.E.2d 113, paragraph two of the syllabus.

It is readily apparent that the motion was timely filed, as only 11 days elapsed between the granting of the default judgment and the filing of the motion for relief from the judgment. Civ.R. 60(B) requires that a motion predicated on the ground of "excusable neglect," among others, must be filed within one year of the judgment.

We also find from an examination of the record that the defendant demonstrated a meritorious defense. ³

Hence, the critical inquiry focuses on whether the defendant Bazell demonstrated a valid ground for relief from judgment under the provisions of Civ.R. 60(B)(1). The defendant claims that his failure to file an answer or other responsive pleading prior to the granting of the default judgment, considering all the facts and circumstances, constituted "excusable neglect." Generally, a default judgment is vacated upon motion where a defaulting party has notified his insurer of the commencement of the suit and has relied, to his detriment, on its undertaking to defend. Ellington v. Milne (D.C.N.C.1953), 14 F.R.D. 241; Hobbs v. Martin Marietta Co. (1954), 257 Iowa 124, 131 N.W.2d 772; Petition of Wells (1964), 97 R.I. 178, 196 A.2d 721; Antonopoulos v. Eisner (1972), 30 Ohio App.2d 187, 284 N.E.2d 194; Dalton v. Alexander (1956), 10 Ill.App.2d 273, 135 N.E.2d 101; Hinz v. Northland Milk & Ice Cream Co. (1952), 237 Minn. 28, 53 N.W.2d 454; Scott v. McEwing (1940), 337 Pa. 273, 10 A.2d 436; Newton v. De Armond (1922), 60 Cal.App. 231, 212 P. 630.

The rationale for the development of such a rule was discussed in Hobbs v. Martin Marietta Co., supra, at page 132, 131 N.W.2d 772, where the court held:

"In the case at bar, it is clear defendants in good faith intended to defend. They sent the papers through the usual and regular channels and reasonably assumed, after they reached the Chicago office, that they were being promptly and properly processed. * * * "The contention that it would be an unjust burden to require these defendants to keep a constant check upon such papers until the appearance was entered in the case seems reasonable. In this large and general business operation such a burden might be most unjust and unfair * * *. We conclude the factual showing that the papers were promptly forwarded through the regular channels and were lost in transit was a showing of mistake, inadvertence or...