Hartwell v. Marquez

• Decision Date: 10 September 1997
• Docket Number: No. 24124.,24124.
• Citation: 498 S.E.2d 1,201 W.Va. 433
• Court: West Virginia Supreme Court
• Parties: Delbert J. HARTWELL, Plaintiff Below, Appellee, v. Diane C. MARQUEZ, Defendant Below, Appellee, Gallant Insurance Company, Appellant.

498 S.E.2d 1

201 W.Va. 433

Delbert J. HARTWELL, Plaintiff Below, Appellee, v. Diane C. MARQUEZ, Defendant Below, Appellee, Gallant Insurance Company, Appellant.

No. 24124.

Supreme Court of Appeals of West Virginia.

Submitted September 10, 1997.

Rehearing Denied November 21, 1997.

As Modified November 21, 1997.

Lane O. Austin, Sanders, Austin, Swope & Flanigan, Princeton, for Appellee, Delbert J. Hartwell.

Daniel R. Schuda, Ancil G. Ramey, Steptoe & Johnson, Charleston, for Appellant.

DAVIS, Justice:

Gallant Insurance Company appeals the denial of its Rule 60(b)¹ motion to set aside a default judgment and a resulting monetary judgment in the amount of $449,067.55 entered against defendant below Diane Marquez, and in favor of appellee Delbert J. Hartwell, plaintiff below, by the Circuit Court of Mercer County. The underlying personal injury action arose from an automobile accident wherein Hartwell was struck by a vehicle driven by Marquez. Gallant contends that the default judgment should be set aside on three grounds. First, Gallant argues that substituted service of process made pursuant to W. Va.Code § 56-3-31 (1990) (Repl.Vol.1997) was ineffective, because Gallant did not insure either the driver or the owner of the vehicle that struck Hartwell at the time it received substituted service of process. Gallant next declares that W. Va. Code § 56-3-31, which allows substituted service of process on an insurer as attorney-in-fact for a nonresident motorist insured, is unconstitutional insofar as it (1) permits the exercise of personal jurisdiction based upon service of process on an insurance company that has no contractual relationship with the nonresident motorist at the time of service, and (2) fails to require that the insurance company notify its insured that a suit has been filed against him/her. Finally, Gallant argues that the default judgment should be set aside because the plaintiff failed to serve Gallant with notice of the motion for default judgment and with notice of the inquiry regarding Hartwell's damages. We find no error. Therefore, we affirm the default judgment granted by the circuit court.

I. FACTUAL AND PROCEDURAL HISTORY

This case arose from an automobile accident that occurred on or about November 4, 1994, while Delbert Hartwell [hereinafter Hartwell], appellee and plaintiff below, was attempting to repair his truck. The truck had broken down. It was parked on the north-bound shoulder of U.S. Rt. 19 near Princeton, West Virginia. Hartwell apparently was standing by the left front fender of the truck engaged in his attempted repairs when Diane Marquez [hereinafter Marquez], who was traveling south on U.S. Rt. 19, lost control of the vehicle she was driving. Marquez crossed the median and struck Hartwell and the truck. As a result of the accident, Hartwell suffered substantial injuries to his left leg. The automobile driven by Marquez was owned by Dwight L. Cecil [hereinafter Cecil]. According to the record, Cecil had a contract of automobile or liability insurance with Gallant Insurance Company [hereinafter Gallant]² at the time of the accident. The policy listed "Diane Marquey" as an authorized driver of the vehicle. Both Marquez and Cecil are residents of Illinois. Their whereabouts are otherwise unknown.

By letters to Gallant dated December 1, 1994, December 27, 1994, and January 13, 1995, counsel for Hartwell disclosed his representation of Hartwell with regard to the accident of November 4, 1994. Hartwell's counsel also requested that Gallant provide the policy limits of any liability coverage available to Cecil and Marquez. Subsequently, on February 2, 1995, having received no response from Gallant, Hartwell filed his complaint against Marquez in the Circuit Court of Mercer County. Because Marquez was a nonresident motorist, the Secretary of State, on February 6, 1995, received service of process as her agent pursuant to W. Va. Code § 56-3-31(e) (1990) (Repl.Vol.1997). Notice of service and a copy of the summons and complaint were sent to Marquez by certified mail, return receipt requested, on February 7, 1995. However, on March 9, 1995, the Secretary of State notified the Clerk of the Circuit Court of Mercer County that the certified mail to Marquez had been unclaimed. On March 24, 1995, substituted service was accepted by the Secretary of State on behalf of Gallant. The Secretary then forwarded the notice of service, summons, complaint and plaintiff's interrogatories to Gallant by certified mail, return receipt requested, pursuant to W. Va.Code § 56-3-31(g). In due course, the return receipt was received by the Secretary of State. It was signed by Brian Hallberg on behalf of Gallant, and was dated March 28, 1995. Thereafter, on April 10, 1995, Gallant responded to the letters previously sent by counsel for Hartwell. Gallant disclosed that the bodily injury liability limits of Cecil's policy were $20,000 per person and $40,000 per accident. The property damage liability was limited to $15,000 per accident. Gallant also stated that it was attempting to verify whether Marquez was covered by any other liability insurance policies. The letter made no reference to the pending civil action. However, the bottom of the letter contained the following notation:

cc: James Henderson

Abrams, Byron, Henderson & Richmond

It is noteworthy that this letter was the only written communication Hartwell or his counsel received from Gallant prior to the time Gallant filed its motion to set aside the default judgment.³

Gallant subsequently failed to file an answer to Hartwell's complaint within thirty days of receiving service of process. Accordingly, on May 16, 1995, Hartwell's counsel tendered to the circuit court his "Affidavit of Failure to Plead or Otherwise Defend in Support of Plaintiff's Application for Entry of Default Judgment," pursuant to W. Va.Code § 56-3-31(g). Counsel also moved for default judgment against Marquez on the issue of liability and requested the court to schedule an inquiry as to Hartwell's damages. By order entered May 17, 1995, the circuit court, observing that "pursuant to West Virginia Code § 56-3-31(c), service upon defendant's automobile liability insurance company `shall be of the same legal force and validity as though said nonresident or his or her administrator, administratrix, executor or executrix were personally served with a Summons and Complaint within this state,'" granted Hartwell's motion for default judgment and scheduled an inquiry into Hartwell's damages. At that inquiry, the circuit court heard evidence regarding Hartwell's damages and, on July 18, 1995, entered its judgment in favor of Hartwell, and against Marquez, in the amount of $449,067.56, plus post-judgment interest.⁴

Gallant was not notified of any of the proceedings relating to the default judgment or the award of damages. After entry of the monetary judgment against Marquez, counsel for Hartwell delayed slightly more than eight months before notifying Gallant of the default and monetary judgments entered against Marquez.⁵

On May 22, 1996, Gallant filed a "MOTION TO SET ASIDE DEFAULT JUDGMENT," alleging that it did not have a contract of automobile or liability insurance with Marquez or Cecil⁶ at the time it received service of process. Gallant argued that, under W. Va.Code § 56-3-31(a), a contract of insurance between the nonresident defendant and the insurer receiving substituted service must be in effect at the time of service of process for such substituted service to be valid. In addition, Gallant contended in its motion that § 56-3-31(a) violates the due process provisions of the Fourteenth Amendment to the United States Constitution in that it asserts personal jurisdiction over a nonresident defendant based upon service of process to the defendant's automobile or liability insurer, but does not require that the insurance company notify the defendant of the pending action. By order entered October 7, 1997, the Circuit Court of Mercer County denied Gallant's motion to set aside the default judgment based upon its findings that "proper service of process was had upon the defendant and that West Virginia Code Chapter 56, Article 3, Section 31 [(§ 56-3-31)] is not unconstitutional." It is from this order that Gallant now appeals.

II. DISCUSSION

A. Standard of Review

In the case sub judice, we are asked to reverse a circuit court's decision on a motion to set aside a default judgment made pursuant to Rule 60(b) of the West Virginia Rules of Civil Procedure,⁷ and to permit the case to proceed on its merits. We apply an abuse of discretion standard when reviewing a trial court's ruling on a motion to vacate a judgment.

"`A motion to vacate a judgment made pursuant to Rule 60(b), W. Va. R.C.P., 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 such discretion.' Syl. pt. 5, Toler v. Shelton, 157 W.Va. 778, 204 S.E.2d 85 (1974)." Syl. pt. 1, Jackson General Hospital v. Davis, 195 W.Va. 74, 464 S.E.2d 593 (1995).

Syl. pt. 1, Nancy Darlene M. v. James Lee M., 195 W.Va. 153, 464 S.E.2d 795 (1995). However, we recognize that such discretion must be tempered by the general policy favoring the trial of all cases on their merits. We have stated, "`[a]lthough courts should not set aside default judgments or dismissals without good cause, it is the policy of the law to favor the trial of all cases on their merits.' Syl. Pt. 2, McDaniel v. Romano, 155 W.Va. 875, 190 S.E.2d 8 (1972)." Syl. pt. 7, Evans v. Holt, 193 W.Va. 578, 457 S.E.2d 515 (1995).

In resolving the issues raised by Gallant, we are also asked to interpret the language of W. Va.Code § 56-3-31 (1990) (Repl. Vol.1997) and to rule on the constitutionality of certain provisions contained in that code section. Our review of these issues is de novo. "Where the issue on an appeal from the circuit court is clearly a...