Nissan N. Am., Inc. v. Harlan

• Decision Date: 05 April 2017
• Docket Number: No. CV–16–590,CV–16–590
• Parties: NISSAN NORTH AMERICA, INC., Appellant v. Jeanne Lucille HARLAN, Appellee
• Court: Arkansas Court of Appeals

518 S.W.3d 89

NISSAN NORTH AMERICA, INC., Appellant

v.Jeanne Lucille HARLAN, Appellee

No. CV–16–590

Court of Appeals of Arkansas, DIVISION IV.

OPINION DELIVERED: APRIL 5, 2017

Hartline Dacus Barger Dreyer LLP, by: Jeffrey Patterson ; and Wright, Lindsey & Jennings, LLP, by: Michael A. Thompson and Baxter D. Drennon, for appellant.

Reid, Burge, Prevallet & Coleman, by: Robert L. Coleman, Blytheville, for appellee.

ROBERT J. GLADWIN, Judge

Nissan North America, Inc. ("Nissan"), appeals the Mississippi County Circuit Court's order denying Nissan's motion to set aside the default judgment filed against it on October 30, 2015. On appeal, Nissan argues that the circuit court erred in denying its motion for three reasons: (1) Nissan's failure to file a timely answer was inadvertent and the result of a mistake or excusable neglect; (2) Nissan has a meritorious defense; and (3) appellee Jeanne Harlan would suffer no prejudice if the default judgment were set aside. Nissan also contends that the circuit court erred in assigning damages for two reasons: (1) portions of the damages awarded are arbitrary and unsupported by evidence and (2) the award of attorney's fees is improper under Arkansas law. We affirm.

I. Facts

Harlan filed suit against Nissan alleging that, while she was driving, she was injured when her car, a 2000 Infiniti G20, violently and explosively deployed the front driver and passenger airbags without any collision or other apparent reason. No other vehicle was involved in the incident. Harlan notified Nissan and cooperated in its investigation. She took her car to the Nissan dealership in Blytheville, Arkansas, on July 20, 2012, for an inspection arranged by Nissan.

Harlan further alleged that on September 10, 2012, Nissan's representative, Joey Ruff, contacted Harlan's attorney by telephone and later confirmed by email that Nissan was responsible for the deployment of the airbag and that Nissan would pay for repairs. Ruff requested that Harlan make an appointment with the Nissan dealership at her convenience. However, on September 12, 2012, Ruff wrote Harlan's attorney that the dealership was not capable of performing the needed repairs, and Harlan's car "is being towed (at no cost to the customer) to Infiniti of Memphis. Once the repairs are completed, the vehicle will be towed back" to the dealership. Harlan alleged that she did not consent to her car being taken to Memphis. Nissan later notified Harlan that a replacement airbag was not available and the vehicle was not safe to drive without one.

Harlan claimed that Rob Bickens, another Nissan representative, offered to pay her $5950 for her car, along with attorney's fees in the amount of $1500. On December 14, 2012, Bickens increased his offer by $550 to resolve all claims for $8000. Instead of accepting the offer by Nissan, Harlan filed suit.

The complaint alleged as follows:

15. The Defendant, Nissan North America, Inc., was guilty of fault which was a proximate cause of the unexpected air bag deployment and Plaintiff's resulting damages, which acts of fault include, but are not limited to, the following:

a) Strict liability in tort based on supplying a product in a defective condition which rendered it unreasonably dangerous (see A.C.A. § 16–116–102 );

b) Breach of the implied warranty of merchantability;c) Breach of the implied warranty of fitness for a particular purpose; and,

d) Breach of express warranty.

16. Pleading further, Plaintiff states that the Defendant, Nissan North America, Inc., is also at fault and liable to Plaintiff under the theories of breach of contract, promissory estoppel, conversion, and bailment, inasmuch as it represented to the Plaintiff that it would repair the vehicle and return it to her in Blytheville, Arkansas. Instead, Nissan North America, Inc., failed to repair the vehicle; moved the vehicle to Memphis without Plaintiff's consent; and, has kept the vehicle and converted that vehicle to its own use without compensating Plaintiff for the vehicle or the loss of use of the vehicle for almost three (3) years.

She alleged that she was entitled to damages of $5950 for the value of her car; a reasonable amount for the loss of use of her vehicle; her time and expense incurred in traveling to Memphis—a 160–mile-round trip—to remove items from her car because she had not been told it would be taken there; registration fees, license-tag fees, and sales tax incurred by obtaining another car; and "such other damages as the jury may find to be fair and reasonable under the circumstances." Finally, she sought pre- and postjudgment interest, costs, and attorney's fees.

Harlan obtained service on Nissan through its registered agent for service of process in Arkansas on August 27, 2015. No answer was filed, and Nissan later alleged that its administrative specialist had inadvertently failed to route the summons to the appropriate individuals in the company. Accordingly, Nissan's legal staff did not receive a copy of the summons, and no answer was filed to Harlan's complaint.

At the hearing on Harlan's oral motion for default judgment, Harlan testified as to the facts set forth above regarding the airbag deployment and her dealings with Nissan. Photographs of Harlan's arms, depicting burn-like injuries, were introduced into evidence. She also testified that her daughter, a passenger in the car at the time of the airbag deployment, cried because, although she did not sustain any injuries, the deployment caused "such a loud bang."

She testified that she and Nissan had agreed that the value of the car, as set forth in the National Automobile Dealers Association Used Car Guide, was $5950, and the document depicting this information was admitted into evidence. She also said that Nissan was going to charge her for storing her car at the Infiniti dealership in Memphis, where Nissan had taken it. She said that she arranged to have it towed for $443.30, and the bill was admitted into evidence. She also said that the car was currently being stored, but she had not yet received a bill for its storage.

She asked the circuit court for compensatory damages and for an amount that would "fairly compensate [her] for the temporary visible results of the injury, the pain, and mental anguish." She testified, "As a result of this, I became fearful for a little bit about even riding in a vehicle or airbags [sic]. I got over it because I had to take my grandson to daycare."

Harlan's counsel, referring to Harlan's request for compensation for her injuries, pain, and suffering, told the circuit court that "we would just certainly leave that to the court's discretion." Harlan then specifically testified that she was seeking $5950 for the value of the vehicle; $900 per month from July 1 until December 14, 2015, representing $30 a day for the loss of use of the vehicle; one dollar per mile for the 160–mile round trip to Memphis; $512 for registration, title, and sales tax for acquiring an identical vehicle for $5950; $443 for the towing charge; and for reasonable attorney's fees. Counsel told the circuit court that, looking strictly at time, "I probably have twenty hours." The circuit court then awarded $5000 for attorney's fees in its judgment filed October 30, 2015, along with the other amounts sought for damages as set forth in Harlan's request.

When the circuit court asked counsel whether he had an amount in mind for compensatory damages for Harlan's pain, suffering, and mental anguish, counsel responded that "for the fright and the anguish, I think $5000 would be a reasonable amount for that." The circuit court complied, and the judgment also reflects this amount. Harlan's counsel notified Nissan by letter dated December 16, 2015, that a judgment had been obtained in the amount of $23,198.44.

On January 21, 2016, Nissan filed a motion to set aside the default judgment and alleged that it had been notified of the incident by Harlan and that Nissan had performed an investigation. Nissan alleged that "the vehicle also displayed some underbody impacts, suggesting the undercarriage came into contact with another object at some point." Nissan also claimed that, despite this, it had offered Harlan $8000 ($6000 for the vehicle and $2000 for additional expenses). This offer was declined, and Harlan filed her complaint on June 29, 2015. Although service was obtained on August 27, 2015, Nissan claimed that its administrative specialist "inadvertently failed to route the summons to the appropriate individuals in the company. As a result of this accident, Nissan's legal staff did not receive a copy of the summons and an assignment was never created in Nissan's system." Further, Nissan asserted that the matter had been submitted for a default judgment "without giving anyone at Nissan notice." Nissan admitted that its in-house counsel learned of the complaint and judgment when it received the letter from Harlan's counsel on December 17, 2015. Nissan urged the circuit court to set aside the default judgment under Arkansas Rule of Civil Procedure 55(c) (2015) on the grounds of inadvertence, mistake, excusable neglect, and other reasons justifying relief from the operation of judgment.

Harlan responded that Nissan had failed to attend to business, which is not the type of mistake, inadvertence, surprise, or excusable neglect contemplated under Rule 55(c) that would excuse the failure to answer or serve as grounds to set aside a default judgment. The circuit court denied Nissan's motion by order filed March 7, 2016. This appeal timely followed.

II. Applicable Law

The Arkansas Supreme Court has clearly established the applicable standard of review:

The standard by which we review the granting of a default judgment and the denial of a motion to set aside the default judgment is whether the trial court abused its discretion. NCS Healthcare, Ark., Inc. v. W.P. Malone, Inc. , 350 Ark. 520, 88 S.W.3d 852 (2002) ; Southeast Foods, Inc. v. Keener , 335 Ark. 209, 979 S.W.2d 885 (1998) ; Arnold &

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