Manci v. Ball, Koons & Watson

• Decision Date: 23 May 2008
• Docket Number: 1061370.
• Citation: 995 So.2d 161
• Parties: William A. MANCI v. BALL, KOONS & WATSON, a partnership.
• Court: Alabama Supreme Court

995 So.2d 161

William A. MANCI v. BALL, KOONS & WATSON, a partnership.

1061370.

Supreme Court of Alabama.

May 23, 2008.

Joseph J. Boswell, Mobile, for appellant.

Stephen P. Johnson of Brackin, McGriff & Johnson, P.C., Foley, for appellee.

SEE, Justice.

William A. Manci appeals from the entry of a default judgment in favor of Ball Koons & Watson, a partnership formed for the practice of law ("BK & W"), on its claims against Manci and from the dismissal of Manci's counterclaims against BK & W. We affirm.

Facts and Procedural History

In 1998, Manci retained Ball & Koons, Attorneys at Law (now BK & W), to represent him in litigation regarding the estate of Arthur Manci ("the estate"). When BK & W's legal fees exhausted Manci's original retainer, Manci and BK & W entered into a contingent-fee agreement providing that Manci would pay BK & W a fee of 1/3 of the value of any assets or sums Manci recovered or was awarded as a result of the litigation. Following the litigation, Manci refused to make any payment under the contingent-fee agreement. In May 2004, BK & W sued Manci, the estate, and other persons and entities associated with the estate seeking the payment of fees for legal services BK & W had provided to Manci. Manci brought a counterclaim against BK & W and its individual attorneys, alleging legal malpractice and requesting a judgment declaring that BK & W was not entitled to the payment of any legal fees.

In February 2005, BK & W submitted its first discovery requests to Manci. Manci did not respond. In June 2005, BK & W moved the trial court to compel Manci to respond to the discovery requests. In March 2006, the trial court ordered that all pending discovery be completed within 30 days. In April 2006, BK & W noticed the deposition of Manci, but he failed to respond to the notice or to appear for the deposition. Manci then amended his answer and counterclaim and responded to BK & W's first set of interrogatories with a series of objections and vague responses.

In July 2006, BK & W filed a motion to show cause why Manci should not be held in contempt for his nonresponsive replies to BK & W's discovery requests. The trial court granted the show-cause motion in September 2006. Manci moved the trial court to vacate its order and to enter a protective order. On January 2, 2007, the trial court held a hearing on the outstanding motions of all the parties, subsequent to which it ordered Manci to complete his responses to discovery by January 19, 2007, and set February 2, 2007, as the date for Manci's deposition. Manci responded by petitioning this Court for the writ of mandamus declaring that the trial court had exceeded its discretion by ordering Manci to complete his responses to BK & W's discovery requests. We denied that petition without an opinion on February 27, 2007 (case no. 1060633).

On January 31, 2007, BK & W moved for sanctions against Manci for his failure to comply with the trial court's discovery orders. On February 2, 2007, the trial court entered an order finding that "[a]s of the date of this Court Order, [Manci] still refuses to provide any answers to discovery as ordered by this Court in it[]s order of January 8, 2007." Based on this finding, the trial court entered a default judgment against Manci on BK & W's claims, dismissed Manci's counterclaims with prejudice, and awarded BK & W damages in the amount of $1,212,045.78 based on the contingent-fee agreement. Manci moved to set aside the trial court's default judgment. The trial court denied that motion, and Manci now appeals.

Issues

Manci presents five issues on appeal. First, Manci argues that the trial court exceeded its discretion by entering a default judgment on BK & W's claims and by dismissing Manci's counterclaims as a sanction for Manci's failure to comply with the trial court's discovery orders. Second, Manci argues that his failure to submit discovery was harmless because, he says BK & W never properly replied to Manci's amended counterclaim and, thus, admitted the averments of the counterclaim. Third, Manci argues that the trial court erred in granting BK & W's motion to tax Manci with fees for an expert witness incurred during BK & W's representation of Manci. Fourth, Manci argues that BK & W presented no admissible evidence to support the award of damages against him. Fifth, Manci argues that the record does not support the trial court's finding that Manci's responses to discovery were not made in good faith.

Standard of Review

In reviewing a trial court's denial of a motion to set aside a default judgment, this Court has stated:

"A trial court has broad discretion in deciding whether to grant or deny a motion to set aside a default judgment. Kirtland v. Fort Morgan Auth. Sewer Serv., Inc., 524 So.2d 600 (Ala.1988). In reviewing an appeal from a trial court's order refusing to set aside a default judgment, this Court must determine whether in refusing to set aside the default judgment the trial court exceeded its discretion. 524 So.2d at 604. That discretion, although broad, requires the trial court to balance two competing policy interests associated with default judgments: the need to promote judicial economy and a litigant's right to defend an action on the merits. 524 So.2d at 604. These interests must be balanced under the two-step process established in Kirtland.

"We begin the balancing process with the presumption that cases should be decided on the merits whenever it is practicable to do so. 524 So.2d at 604. The trial court must then apply a three-factor analysis first established in Ex parte Illinois Central Gulf R.R., 514 So.2d 1283 (Ala.1987), in deciding whether to deny a motion to set aside a default judgment. Kirtland, 524 So.2d at 605. The broad discretionary authority given to the trial court in making that decision should not be exercised without considering the following factors: `1) whether the defendant has a meritorious defense; 2) whether the plaintiff will be unfairly prejudiced if the default judgment is set aside; and 3) whether the default judgment was a result of the defendant's own culpable conduct.' 524 So.2d at 605."

Zeller v. Bailey, 950 So.2d 1149, 1152-53 (Ala.2006).

Analysis

I.

First, we address Manci's argument that the trial court exceeded its discretion in entering a default judgment on BK & W's claims and in dismissing Manci's counterclaims as a sanction for Manci's failure to comply with the trial court's discovery orders.

A. Meritorious Defense

In clarifying the meritorious-defense requirement for reviewing a trial court's refusal to set aside a default judgment, this Court has stated:

"To be more precise, a defaulting party has satisfactorily made a showing of a meritorious defense when allegations in an answer or in a motion to set aside the default judgment and its supporting affidavits, if proven at trial, would constitute a complete defense to the action, or when sufficient evidence has been adduced either by way of affidavit or by some other means to warrant submission of the case to the jury.

"The allegations set forth in the answer and in the motion must be more than mere bare legal conclusions without factual support; they must counter the cause of action averred in the complaint with specificity—namely, by setting forth relevant legal grounds substantiated by a credible factual basis."

Kirtland, 524 So.2d at 606 (citations omitted). In the trial court's order denying Manci's motion to set aside the default judgment and the dismissal of Manci's counterclaims, the trial court found that Manci had "failed to set forth with sufficient particularity a plausible legal defense based upon (1) a viable legal theory, and (2) a strong factual basis to counter [BK & W]'s Cause of Action. [Manci]'s mere allegation that he has a meritorious defense is insufficient."

The record supports the trial court's order. Manci's motion to set aside the judgment makes only one allegation: "The contents of the combined motions creates a genuine issue as to whether Manci or his counsel has engaged in culpable conduct." Because Manci's motion presents "mere bare legal conclusions without factual support," Kirtland, 524 So.2d at 606, we turn to Manci's amended answer and counterclaim to determine whether they show a meritorious defense.

Manci's amended answer and counterclaim aver three affirmative defenses. First, Manci offers a bare allegation that BK & W fails to state a claim upon which relief can be granted. This allegation is insufficient as a basis on which to set aside the default judgment. Second, Manci asserts that BK & W's claims are barred because the complaint "fails to allege that BK & W performed all of BK & W's obligations and conditions precedent to BK & W's right to recover under the [contingent-fee agreement]." This second assertion, however, is factually incorrect. BK & W's complaint states that BK & W "substantially performed all of the terms required of it under the terms of said [contingent-fee agreement] and a dispute has arisen concerning the amount [Manci] owes [BK & W] for legal services rendered." Manci's third defense is that BK & W forfeited the right to compensation by engaging in abusive and overreaching misconduct in its attempt to collect the disputed legal fees. However, Manci offers no legal basis for this contention. Therefore, this claim too is insufficient to demonstrate that Manci has a meritorious defense.

Manci asserted two claims in his counterclaim. Manci alleges a legal-services-liability claim against BK & W, alleging numerous breaches of the standard of care applicable to BK & W. However, this Court has consistently held that "`"in a legal malpractice case, the plaintiff must show that but for the defendant's negligence he would have recovered on the underlying cause of action ...."'" Dennis v. Northcutt, 923 So.2d 275, 279 (Ala.2005) (quoting Independent Stave Co. v. Bell, Richardson & Sparkman, P.A. 678 So.2d 770, 772 (Ala.1996...