Coury v. Tsapis, 15773

• Decision Date: 25 March 1983
• Docket Number: No. 15773,15773
• Citation: 304 S.E.2d 7,172 W.Va. 103
• Court: West Virginia Supreme Court
• Parties: Charles J. COURY, et al. v. Callie TSAPIS, Judge, etc.

Page 7

304 S.E.2d 7

172 W.Va. 103

Charles J. COURY, et al. v. Callie TSAPIS, Judge, etc.

No. 15773.

Supreme Court of Appeals of West Virginia.

March 25, 1983.

Rehearing Denied July 5, 1983.

Syllabus by the Court

1. Rule 55(b)(1) of the West Virginia Rules of Civil Procedure relates to cases where the amount sued for is a sum certain or which can be rendered certain by computation. Upon a default in this category of cases, the court can enter a judgment not only as to liability but also as to the amount due.

2. "Where a default judgment has been obtained under Rule 55(b)(2) of the West Virginia Rules of Civil Procedure, a trial court is required to hold a hearing in order to ascertain the amount of damages if the plaintiff's claim involves unliquidated damages." Syllabus, Farley v. Economy Garage, 170 W.Va. 425, 294 S.E.2d 279 (1982).

3. A Rule 60(b) motion can be utilized to seek relief from a default order even where the amount of damages has not been ascertained.

4. Where a plaintiff obtains a default order on an unliquidated claim, the eight- month period set out in Rule 60(b) does not begin to run until there has been a judgment order rendering certain the amount of damages owed.

5. Before a defendant may invoke the rule that the failure of his insurance carrier to make a timely answer should relieve him of a default he must have a justifiable belief that his carrier will afford coverage under its insurance policy.

Jolyon W. McCamic, McCamic & McCamic, Wheeling, for petitioners.

Frederick P. Stamp, Jr., Schrader, Stamp, Byrd, Byrum, Johnson & Companion, Wheeling, for respondent Wheeling-Pittsburgh Steel Corp.

MILLER, Justice:

This proceeding was brought by Charles J. and Evelyn C. Coury as an original petition in prohibition upon the claim that the trial judge was without jurisdiction to set aside a default judgment in their favor in their suit against Wheeling-Pittsburgh Steel Corporation (hereinafter Wheeling-Pittsburgh). The parties subsequently filed the record from the Circuit Court of Brooke County and have agreed that we can consider the merits of the trial court's ruling under Rule 60(b) of the West Virginia Rules of Civil Procedure as well as the procedural issue. Thus, in effect, we treat this case as one on appeal.

The Courys assert that Wheeling-Pittsburgh made its motion to set aside the default judgment beyond the eight-month time limitation provided in Rule 60(b). They also claim that the corporation failed to show excusable neglect in not filing a timely answer. We disagree that the defendant was foreclosed from utilizing a Rule 60(b) motion, but on the merits conclude that the trial judge abused her discretion in setting aside the default.

I. THE PROCEDURAL ISSUE

The procedural history of this case reveals that on May 5, 1981, the Courys filed a complaint against Wheeling-Pittsburgh in the Circuit Court of Brooke County. The complaint alleged that the corporation had failed to provide Charles J. Coury with a safe place to work and that as a result he had sustained personal injuries. His wife claimed for loss of consortium. A summons and a copy of the complaint were served upon the West Virginia Secretary of State on May 7, 1981, and actual notice was received by Wheeling-Pittsburgh on May 12, 1981. The suit papers were then forwarded to Wheeling-Pittsburgh's insurance representative on May 14, 1981.

No answer or other responsive pleading was ever filed on behalf of Wheeling-Pittsburgh, and on June 22, 1981, the trial judge entered a "default judgment" on the corporation's liability. The order left open the question of the amount of damages sustained.

On April 29, 1982, more than eight months after entry of the "default judgment," Wheeling-Pittsburgh filed a motion to set aside the judgment. The Courys resisted the motion on the ground that there was no excusable neglect on the part of the corporation and on the further ground that more than eight months had elapsed since entry of the judgment. They asserted that the eight-month time limitation in Rule 60(b) of our Rules of Civil Procedure barred the court from setting the order aside. The court, on November 30, 1982, entered an order setting aside the "default judgment" and permitting the corporation to file an answer to the complaint.

We begin by noting that Rule 60(b) ¹ of our Rules of Civil Procedure is analogous to In order to resolve this question, it is necessary to examine the distinction between a default and a default judgment under Rule 55 of our Rules of Civil Procedure. Our Rule 55 makes a clear distinction between two types of cases. Rule 55(b)(1) ² relates to cases where the amount sued for is a sum certain or which can be rendered certain by computation. Upon a default in this category of cases, the court can enter a judgment not only as to liability but also as to the amount due. The second category, covered by our Rule 55(b)(2), ³ applies to cases where the amount sued for is not a sum certain. In this situation, after a default is entered, a further hearing is required in order to ascertain the damages. We spoke of these distinctions in Farley v. Economy Garage, 170 W.Va. 425, 294 S.E.2d 279 (1982), and stated in its single Syllabus:

Rule 60(b) of the Federal Rules of Civil Procedure. The main difference between our rule and its federal counterpart is that the time for bringing a 60(b) motion on grounds of excusable neglect is eight months under our rule and one year under the federal rule. Wheeling-Pittsburgh contends that we should not hold the eight-month time period under 60(b) as jurisdictional under the facts of this case.

"Where a default judgment has been obtained under Rule 55(b)(2) of the West Virginia Rules of Civil Procedure, a trial court is required to hold a hearing in order to ascertain the amount of damages if the plaintiff's claim involves unliquidated damages."

Our Rule 55 is somewhat analogous to Rule 55 of the Federal Rules of Civil Procedure except that under the federal rule the clerk is authorized to enter the default judgment on a sum certain. ⁴ Moreover "Rule 55(a) provides that the clerk is to enter the default of a party against whom a judgment for affirmative relief is sought, who has failed to plead or otherwise defend, and that fact is made to appear by affidavit or otherwise....

federal Rule 55(a), ⁵ permits the clerk to enter a default in any case, a provision [172 W.Va. 106] which is not present in our rule. The federal law explicitly recognizes both defaults and default judgments in that a default relates to the issue of liability and a default judgment occurs after damages have been ascertained. Under the federal rule, if damages are for a sum certain the clerk can enter both the default and the default judgment. Where damages are unliquidated, the clerk may enter the default for failure to answer but the court must hold a further hearing to ascertain the damages before rendering a default judgment. Federal Rule 55 is summarized in 6 J. Moore, W. Taggart & J. Wicker, Moore's Federal Practice § 55.02 (2d ed. 1982):

"Subsequent to the entry of default, Rule 55(b) provides that judgment by default is to be entered by the clerk in certain specified situations; and in all other cases by the court." (Footnotes omitted)

The federal rule's distinction between a default and a default judgment has resulted in a recognition that a default order is interlocutory. In reality, it represents a default on liability and, until the amount of damages is ascertained, there is no final judgment. Consequently, under Rule 55(c) of the Federal Rules of Civil Procedure ⁶ a default can be set aside by a good cause motion but a default judgment can only be set aside by a Rule 60(b) motion. Under the federal practice, Rule 60(b) operates only on final judgments and thus its attendant time limitation does not come into play until there has been a monetary judgment. ⁷ See Meehan v. Snow, 652 F.2d 274 (2nd Cir.1981).

We have previously noted that Rule 55 of the West Virginia Rules of Civil Procedure makes no distinction between a default and a default judgment and consequently, our Rule 55(c) addresses only the setting aside of a default judgment under Rule 60(b). ⁸ This difference between our Rule 55 and the federal rule is discussed on several occasions in Lugar & Silverstein, W.Va.Rules. In the Reporters' Original Note to Rule 55, this statement is made:

"This provision is based on present West Virginia practice rather than the federal rule. The federal rule permits entry of 'default' or 'default judgment' by the clerk, whereas the rule presented here has no such thing as 'default' and requires entry of judgment by the court himself." Lugar & Silverstein, W.Va.Rules p. 415 (1960 ed.).

In their general discussion of Rule 55(b), the following comments are made:

"The basic difference in Federal Rule 55 and this Rule appears in the combination of Federal Rule 55(a) and (b) into subdivision (b) of the West Virginia Rule. Federal Rule 55(a) provides for entry of default when a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend as provided by the Rules and that fact is made to appear by affidavit or otherwise. The clerk enters his default. There is no such procedure in the West Virginia Rule. However, under the same circumstances, except that proof must be by affidavit if the defendant has failed to appear or otherwise defend, West Virginia Rule 55(b) provides for the court's directing entry by the clerk of judgment by default. The West Virginia Rule provides only one step; the Federal Rule provides for the clerk's entering default and thereafter entry of judgment by default, in some instances by the clerk and in all others by the court." Lugar & Silverstein, W.Va.Rules pp. 416-17 (1960 ed.). (Emphasis in original).

Moreover, in their discussion of our Rule 55(c), this statement is made:

"This subdivision is different from the ...