Jones v. Chrysler Corp.

• Decision Date: 30 April 1987
• Docket Number: No. 14597,14597
• Citation: 731 S.W.2d 422
• Parties: Irma JONES and Ray Jones, Plaintiffs-Respondents, v. CHRYSLER CORPORATION, a Delaware corporation, Defendant-Appellant.
• Court: Missouri Court of Appeals

Page 422

731 S.W.2d 422

Irma JONES and Ray Jones, Plaintiffs-Respondents, v. CHRYSLER CORPORATION, a Delaware corporation, Defendant-Appellant.

No. 14597.

Missouri Court of Appeals,

Southern District,

Division Two.

April 30, 1987.

Motion for Rehearing or to Transfer

Denied May 21, 1987.

Application to Transfer Denied July 14, 1987.

Donald R. Duncan, Turner, Reid, Duncan, Loomer & Patton, P.C., Springfield, for defendant-appellant.

Stephen R. Soutee, Soutee & Soutee, Marionville, Jerry L. Reynolds, Larry B. Moore, Jerry L. Reynolds and Associates, P.C., Springfield, for plaintiffs-respondents.

FLANIGAN, Judge.

Plaintiffs Irma Jones and Ray Jones brought this action against defendant Chrysler Corporation for losses allegedly sustained by reason of a fire which occurred on December 15, 1983, near Mt. Vernon. The fire caused extensive damage to a house owned by plaintiff Irma Jones and to the house's contents owned by the respective plaintiffs. The petition alleged that the fire was caused by a defect in a Dodge automobile manufactured by Chrysler.

The suit papers were served upon Chrysler on October 10, 1985. On November 13, 1985, the case was assigned by the presiding judge to Associate Circuit Judge Jack P. Steinle. On that date, Chrysler having failed to appear, an evidentiary hearing was held at which both plaintiffs testified with respect to the occurrence and their respective damages. Stephen R. Soutee, one of the two attorneys representing plaintiffs, was also present. On that date the court entered a judgment by default in favor of the plaintiffs and against defendant Chrysler and awarded $130,500 to plaintiff Irma Jones and $30,000 to plaintiff Ray Jones.

On December 10, 1985, Chrysler filed its "Motion to Vacate Judgment and for Leave to File Responsive Pleadings." Also on December 10 an evidentiary hearing was held on Chrysler's motion and both sides presented evidence. On December 12, 1985, the trial court denied Chrysler's motion. On December 20, 1985, Chrysler filed its notice of appeal from the default judgment and from the order denying Chrysler's motion to vacate that judgment.

Chrysler's first point is that the trial court erred in denying its motion to vacate the judgment because:

(a) Chrysler established that it had a good excuse for failure to file a timely answer, that it had a meritorious defense and that plaintiffs would not be unduly prejudiced if the judgment were set aside;

(b) Procedural errors appear on the face of the record in that the default hearing took place before Judge Steinle before the order assigning the case to Judge Steinle was filed and at a time when jurisdiction of the case was still vested in the circuit judge;

(c) The clerk failed to give notice to Chrysler, under Rule 74.78, that a judgment had been entered and Chrysler showed, within six months from the date of the judgment, good cause as to why it should be set aside.

The following are the significant events:

October 3, 1985--Petition filed.

October 10--Suit papers served on defendant Chrysler Corporation.

October 17--Supervision of suit assigned to Robert Maples, claims supervisor in Chrysler's claim department.

October 21--Maples has telephone conversation with Jerry Reynolds, one of the two attorneys representing plaintiffs. Maples dictates a letter to Turner, Reid & Duncan, Chrysler's defense attorneys in Springfield, assigning defense of suit.

November 13--Presiding Judge Pinnell signs order assigning case to Associate Circuit Judge Jack P. Steinle. Plaintiffs and their attorney Soutee appear, present evidence on damages, court enters default judgment awarding $130,500 to plaintiff Irma Jones and $30,000 to plaintiff Ray Jones.

November 14--Judge Pinnell's order of November 13 filed.

December 10--Chrysler files motion to vacate judgment. Evidentiary hearing held on motion; both sides offer evidence.

December 12--Judge Steinle enters order denying Chrysler's motion to vacate.

December 20--Chrysler files notice of appeal.

At the December 10 hearing, Chrysler presented the testimony of Robert Maples, claims supervisor in Chrysler's claim department, to whom the case had been assigned.

Maples testified, in substance: On October 21 I had a telephone conversation with Jerry Reynolds, one of the two attorneys representing plaintiffs. Reynolds told me that a portion of the damages had been paid by Farm Bureau Insurance Company but that the losses exceeded the insurance. Reynolds told me that the owner of the car had alternator problems and shortly before the fire a new alternator had been installed in Hayes, Kansas. With regard to whether I had an agreement with Reynolds to extend the time for pleading 30 days beyond the 30-day deadline, "I am not sure I asked him for it."

Maples further testified: Also on October 21 I wrote a memorandum to my secretary to set up a file on the lawsuit and to send a memorandum to Chrysler engineer Tracy requesting information concerning the specific automobile. I dictated a letter to the Springfield law firm of Turner, Reid & Duncan, assigning that firm the defense of the case. Although the secretary sent the memorandum to Tracy, the letter to defense firm was not typed or mailed until November 19, 1985. The file was apparently pushed aside because of the air bag litigation and the letter to the law firm just did not get typed. On November 11, November 13 and November 16 I received service information, warranty records, and a recall notice pertaining to the automobile. The service records on this vehicle showed that the alternator was repaired twice by a dealer in Lawrence County, Missouri.

Maples further testified: On November 26 attorney Kenneth Reid of the Springfield law firm telephoned me and informed me that my letter (dictated October 21) was received by Reid on November 26, and that Reid had checked with the circuit clerk that day and was informed that the default judgment had been entered.

Attorney Jerry Reynolds, testifying for the plaintiffs, stated: In the Maples-Reynolds conversation of October 21 Reynolds told Maples that he, Reynolds, represented the interest of Farm Bureau; that his co-counsel, Soutee, represented the individual interests of the plaintiffs, who were substantially underinsured; and that Farm Bureau had paid the plaintiffs $80,000.

Reynolds also testified: Maples was not sure "where Mt. Vernon was or where Springfield was," and I told Maples that Turner, Reid and Duncan did his defense work in this area. Maples looked at his defense counsel manual and said I was right and that he would send the file to that firm.

Reynolds also said: "Maples and I had no conversation about extending the deadline for Chrysler to file pleadings. There was no reason to discuss anything about an extension. We talked about my interest and Soutee's interest in the case. I did not attempt to make any agreement on Soutee's behalf, and there was no such agreement.

"Kenneth Reid told me in a telephone conversation on November 26 that he had received the file from Chrysler and that he had learned that a judgment had been taken. On the same day I received a call from Maples and Maples asked me whether or not we had an agreement for an extension of time and I told Maples we had no such agreement."

Chrysler does not claim that it did not have a full opportunity to present all available evidence concerning the circumstances underlying its failing to file a timely pleading and permitting the matter to be in default at the time of the entry of the default judgment on November 13. From the foregoing testimony the trial court could, and apparently did, reach the conclusion that there was no agreement between plaintiffs and Chrysler for Chrysler's pleading deadline to be extended beyond the standard "thirty days after the service of the summons and petition upon [Chrysler]," Rule 55.25(a); ¹ that Maples' letter, dictated October 21, was not typed and mailed until November 19 and was not received by the Turner firm until November 26; that the delay in the typing and mailing of the letter was due to mishandling on the part of the Chrysler claim department; that neither plaintiffs nor their attorneys played any role in the mishandling.

The action of a trial court in sustaining or overruling a motion to set aside a default judgment is generally within the trial court's sound judicial discretion. Whitledge v. Anderson Air Activities, Inc., 276 S.W.2d 114, 116 (Mo.1955); Lambert Brothers, Inc. v. Tri City Construction Co., 514 S.W.2d 838, 841 (Mo.App.1974); Ward v. Cook United, Inc., 521 S.W.2d 461, 470 (Mo.App.1975). The discretion to be exercised is not a capricious or arbitrary one, but is to be guided and controlled in its exercise by fixed legal principles. Whitledge v. Anderson Air Activities, Inc., supra.

Defendant Chrysler, as the party seeking to set aside the default judgment, had the burden of proving: (1) it had a good excuse for being in default, (2) it had a meritorious defense to the action, and (3) plaintiffs would not be substantially harmed by the delay resulting from the default being set aside. Sullenger v. Cooke Sales & Service Co., 646 S.W.2d 85, 89 (Mo. banc 1983).

Where the default is due to mishandling of the suit papers by defendant's legal department, Distefano v. Kansas City Southern Railway Co., 501 S.W.2d 551 (Mo.App.1973); Hughes v. Christian, 586 S.W.2d 788 (Mo.App.1979); Sullenger v. Cooke Sales & Service Co., supra, the individual defendant himself, Harriman v. Household Finance Corp., 608 S.W.2d 117 (Mo.App.1980), the defendant's insurer, Ward v. Cook United, Inc., supra; Luce v. Anglin, 535 S.W.2d 504 (Mo.App.1976), or defendant's branch office, Human Development Corp., Etc. v. Wefel, 527 S.W.2d 652 (Mo.App.1975); M.S. Conway Const. Co. v. Prudential Ins. Co., 682 S.W.2d 56 (Mo.App.1984), the appellate court has affirmed the order of the trial court which denied relief to the defaulting defendant.

In Luce v. Anglin, supra...