Hardwood Group v. Larocco

• Decision Date: 17 February 2006
• Docket Number: No. 32781.,32781.
• Citation: 631 S.E.2d 614
• Court: West Virginia Supreme Court
• Parties: The HARDWOOD GROUP d/b/a Plywood and Plastics of Roanoke, Plaintiff Below, Appellee, v. Claire V. LaROCCO, Defendant Below, Appellant.

631 S.E.2d 614

The HARDWOOD GROUP d/b/a Plywood and Plastics of Roanoke, Plaintiff Below, Appellee, v. Claire V. LaROCCO, Defendant Below, Appellant.

No. 32781.

Supreme Court of Appeals of West Virginia.

Submitted January 10, 2006.

Decided February 17, 2006.

Concurring Opinion of Justice ALBRIGHT May 11, 2006.

COPYRIGHT MATERIAL OMITTED

Syllabus by the Court

1. "`A motion to vacate a default judgment is addressed to the sound discretion of the court and the court's ruling on such motion will not be disturbed on appeal unless there is a showing of an abuse of discretion.' Syl. Pt. 3, Intercity Realty Co. v. Gibson, 154 W.Va. 369, 175 S.E.2d 452 (1970) [overruled on other grounds by Cales v. Wills, 212 W.Va. 232, 569 S.E.2d 479 (2002)]." Syllabus point 6, Games-Neely ex rel. West Virginia State Police v. Real Property, 211 W.Va. 236, 565 S.E.2d 358 (2002).

2. "`Appellate review of the propriety of a default judgment focuses on the issue of whether the trial court abused its discretion in entering the default judgment.' Syllabus point 3, Hinerman v. Levin, 172 W.Va. 777, 310 S.E.2d 843 (1983)." Syllabus point 1, Cales v. Wills, 212 W.Va. 232, 569 S.E.2d 479 (2002).

3. "In determining whether a default judgment should be ... vacated upon a Rule 60(b) motion, the trial court should consider: (1) The degree of prejudice suffered by the plaintiff from the delay in answering; (2) the presence of material issues of fact and meritorious defenses; (3) the significance of the interests at stake; and (4) the degree of intransigence on the part of the defaulting party." Syllabus point 3, in part, Parsons v. Consolidated Gas Supply Corp., 163 W.Va. 464, 256 S.E.2d 758 (1979).

4. When addressing a motion to set aside an entry of default, a trial court must determine whether "good cause" under Rule 55(c) of the West Virginia Rules of Civil Procedure has been met. In analyzing "good cause" for purposes of motions to set aside a default, the trial court should consider: (1) the degree of prejudice suffered by the plaintiff from the delay in answering; (2) the presence of material issues of fact and meritorious defenses; (3) the significance of the interests at stake; (4) the degree of intransigence on the part of the defaulting party; and (5) the reason for the defaulting party's failure to timely file an answer.

5. In addressing a motion to set aside a default judgment, "good cause" requires not only considering the factors set out in Syllabus point 3 of Parsons v. Consolidated Gas Supply Corp., 163 W.Va. 464, 256 S.E.2d 758 (1979), but also requires a showing that a ground set out under Rule 60(b) of the West Virginia Rules of Civil Procedure has been satisfied.

James W. Lane, Jr., Charleston, for the Appellant, Claire V. LaRocco.

Josef A. Horter, Hendrickson & Long, P.L.L.C., Charleston, for the Appellee, The Hardwood Group.

DAVIS, Chief Justice:

The appellant herein and defendant below, Claire V. LaRocco (hereinafter referred to as "Ms. LaRocco"), appeals from an order entered December 9, 2004, by the Circuit Court of Greenbrier County. The circuit court had previously entered a judgment by default against Ms. LaRocco in favor of the appellee herein and plaintiff below, The Hardwood Group (hereinafter referred to as "Hardwood"). Ms. LaRocco then filed a Rule 60(b) motion to set aside the default judgment for excusable neglect. By the terms of the December 9, 2004, order, the circuit court found no good cause existed for Ms. LaRocco's failure to act in a timely manner, and denied the motion to set aside the default judgment. Based upon the parties' briefs,¹ the record designated for our consideration, and the pertinent authorities, we affirm the rulings of the circuit court.

I. FACTUAL AND PROCEDURAL HISTORY

The case before us follows the circuit court's denial of Ms. LaRocco's motion to set aside a default judgment. The record reveals that Ms. LaRocco was the president of a company, Greenbrier Architectural Woodworks, and signed a promissory note with Hardwood guaranteeing repayment of a specific sum of money. In exchange for the execution of the promissory note, Hardwood was able to extend credit to Ms. LaRocco so her company could continue running its business.

Hardwood filed a complaint against Ms. LaRocco on September 19, 2003, alleging that Ms. LaRocco had defaulted on her personal guarantee of a debt. Ms. LaRocco signed the restricted delivery notice on October 1, 2003, evidencing receipt of the summons and complaint.² On December 3, 2003, Hardwood moved for default judgment pursuant to Rule 55 of the West Virginia Rules of Civil Procedure based on Ms. LaRocco's failure to file an answer or other responsive pleading to the complaint. A copy of the letter requesting a ruling of default, the motion, and an accompanying affidavit were sent to Ms. LaRocco. The circuit court entered an order granting default judgment³ on December 9, 2003, with a copy of the order forwarded to Ms. LaRocco. Hardwood then sought execution of the judgment.

Thereafter, on February 3, 2004, Ms. LaRocco filed a motion to set aside the default judgment and to quash the suggestion of execution. Ms. LaRocco argued that her failure to respond was justified based on excusable neglect, and further, that meritorious defenses existed to the default action commenced by Hardwood. A hearing was held on May 17, 2004, wherein the trial court requested briefs regarding meritorious defenses. Subsequently, the trial court entered an order on December 9, 2004, and found that Ms. LaRocco had not shown good cause for her failure to respond to the complaint in a timely manner, and therefore, denied her motion to aside the default judgment. It is from this ruling that Ms. LaRocco now appeals.

II. STANDARD OF REVIEW

This case is before this Court on appeal from the circuit court's order denying Ms. LaRocco's motion to set aside a default judgment under Rule 60(b) of the West Virginia Rules of Civil Procedure. The standard of review is well-settled, and we have previously held that "`[a] motion to vacate a default judgment is addressed to the sound discretion of the court and the court's ruling on such motion will not be disturbed on appeal unless there is a showing of an abuse of discretion.' Syl. Pt. 3, Intercity Realty Co. v. Gibson, 154 W.Va. 369, 175 S.E.2d 452 (1970) [overruled on other grounds by Cales v. Wills, 212 W.Va. 232, 569 S.E.2d 479 (2002)]." Syl. pt. 6, Games-Neely ex rel. West Virginia State Police v. Real Prop., 211 W.Va. 236, 565 S.E.2d 358 (2002). We have further explained that "`[a]ppellate review of the propriety of a default judgment focuses on the issue of whether the trial court abused its discretion in entering the default judgment.' Syllabus point 3, Hinerman v. Levin, 172 W.Va. 777, 310 S.E.2d 843 (1983)." Syl. pt. 1, Cales v. Wills, 212 W.Va. 232, 569 S.E.2d 479 (2002). Further guidance is obtained from our previous holding that "[o]n an appeal to this Court the appellant bears the burden of showing that there was error in the proceedings below resulting in the judgment of which he complains, all presumptions being in favor of the correctness of the proceedings and judgment in and of the trial court." Syl. pt. 2, Perdue v. Coiner, 156 W.Va. 467, 194 S.E.2d 657 (1973). Mindful of these applicable standards, we now consider the substantive issues herein raised.

III. DISCUSSION

On appeal to this Court, Ms. LaRocco assigns error to the circuit court's failure to set aside the default judgment. In so doing, Ms. LaRocco challenges the circuit court's conclusion that no good cause was shown for her failure to timely respond to the summons and complaint. Before this Court, Ms. LaRocco avers that the circuit court used the incorrect standard in denying the Rule 60(b) motion to set aside the default judgment because she alleges that she is not required to meet a "good cause" standard. Further, Ms. LaRocco contends that under the factors set forth by this Court in Parsons v. Consolidated Gas Supply Corp., 163 W.Va. 464, 256 S.E.2d 758 (1979), the trial court abused its discretion in declining to set aside the default judgment. Hardwood argues that the trial court was proper in its granting of the default judgment, and was further correct in denying the motion to set aside the default judgment. We will first look to the language of the applicable rules to determine the correct standard to apply when considering a motion to set aside a default judgment.

Ms. LaRocco first argues that the default judgment entered against her should be set aside for "excusable neglect" pursuant to Rule 60(b), and that there is no requirement that she meet a separate threshold of "good cause" before she can prevail in her motion to set aside. While we previously have articulated a difference between the issuance of a default as opposed to a default judgment, we have yet to make a distinction between the standard for setting aside a default and that for setting aside a default judgment. See Syl. pt. 2, Cales, 212 W.Va. 232, 569 S.E.2d 479 ("A default relates to the issue of liability and a default judgment occurs after damages have been ascertained."). The present case deals with a default judgment⁴ and the appropriate standard to be applied in setting aside a default judgment; however, to properly understand the applicable standards, we are compelled to discuss and clarify the standard for setting aside both a default and a default judgment.

A. Standard for Setting Aside Defaults and Default Judgments

To determine the proper standard for setting aside defaults and default judgments, we turn first to the applicable rule. Rule 55(c) of the West Virginia Rules of Civil Procedure directs that "[f]or good cause shown the court may set aside an entry of default and, if a judgment by default has been entered, may likewise set it aside in accordance with Rule 60(b)."⁵ Thus, at first glance, it appears that two different standards have been created under ...