Oliver v. Towns

• Decision Date: 15 January 1999
• Citation: 738 So.2d 798
• Parties: Beatrice E. OLIVER v. Patricia TOWNS.
• Court: Alabama Supreme Court

738 So.2d 798

Beatrice E. OLIVER v. Patricia TOWNS.

1970312.

Supreme Court of Alabama.

January 15, 1999.

Rehearing Denied June 11, 1999.

Beatrice E. Oliver, appellant, pro se.

James G. Bodin and Julian McPhillips of McPhillips, Shinbaum, Gill & Stoner, L.L.P., Montgomery, for appellee.

SEE, Justice.

In this legal-malpractice action concerning the misuse of a $12,000 settlement, the trial court entered a default judgment against attorney Beatrice E. Oliver and in favor of her former client Patricia Towns. The trial court awarded Towns $500,000 in compensatory damages and $1 million in punitive damages. The trial judge denied Oliver's subsequent motion that the judge recuse himself from the case and denied Oliver's motion for a thorough review of the damages award for excessiveness. We hold that the trial court correctly entered the default judgment and correctly denied Oliver's motion that the trial judge recuse himself; however, we hold that the trial court erred in refusing to review the question of excessiveness of the damages. Accordingly, we affirm in part, reverse in part, and remand.

I.

In March 1990, Towns was involved in an automobile accident in which she sustained personal injuries. Towns became acquainted with Oliver, an attorney practicing law in Montgomery, when Towns rented property from Oliver's mother and uncle. Towns retained Oliver to file a personal-injury action for her in Butler County. She signed a contingency-fee contract that provided for Oliver to receive 40% of any settlement, in return for Oliver's legal services. Oliver settled the case for $12,000 in September 1992.

On September 19, 1995, Towns filed this legal-malpractice action against Oliver, in the Montgomery Circuit Court, alleging, among other things, breach of contract, fraud, deceit, and misrepresentation. Oliver failed to make an appearance, and, on May 9, 1996, the trial court entered a default judgment in favor of Towns. A hearing to determine damages was set for May 20. Oliver failed to appear at the May 20 hearing, but, on that same day, acting pro se, she filed a motion to set aside the default judgment and filed an answer, counterclaims, and a motion for summary judgment.

During the course of the May 20, 1996, hearing, the trial judge had heard testimony indicating the following: that Oliver failed to inform Towns of the settlement; that Oliver forged or had someone forge Towns's endorsement on the settlement check; that Oliver cashed the settlement check without Towns's consent; that Oliver failed to transfer any of the settlement proceeds to Towns; that Towns did not learn of the settlement until May 1995, when she contacted directly the insurance carrier for the defendant in the automobile-accident case; that Oliver had dealt with a previous client in a similar manner; and that Oliver had deliberately avoided service of process.

Oliver's summary-judgment motion contained her affidavit, which claimed that Towns had been apprised of the settlement; that Towns had signed a "release and satisfaction" as to the personal-injury claim; that Towns had endorsed the check; that Towns had asked Oliver to deduct overdue rent from her settlement; and that Oliver had attempted to transfer to her the settlement, less fees and expenses, but that Towns had refused to accept the money. The motion also contained a copy of a notarized "release and satisfaction" bearing the signature of Towns and Oliver.¹ On November 27, 1996, the trial court set aside the default judgment and scheduled a trial for March 3, 1997.

On February 26, 1997, the day before a scheduled pretrial conference, Oliver sent a motion for continuance, by overnight carrier, to the office of the clerk of the Montgomery Circuit Court, asking for continuances of the pretrial conference and the trial, based on illness. Oliver failed to support her motion with any documentation evidencing that she had an illness. Although the trial court did not rule on the motion for a continuance, Oliver failed to appear for the pretrial conference on February 27. Again, even though the trial court did not grant the motion for continuance, Oliver failed to appear for trial on March 3. On March 3, the trial court again heard testimony about Oliver's conduct and about the harm suffered by Towns. The evidence indicated that, as a result of Oliver's actions, Towns had incurred, among other things, a loss of housing, a bad credit rating, and mental anguish.

On March 5, 1997, the trial court entered a second default judgment for Towns. In its order, the trial court stated that Towns was entitled to recover damages on her breach-of-contract, fraud, deceit, and misrepresentation counts. The default judgment awarded Towns $500,000 in compensatory damages² and $1 million in punitive damages.

Oliver filed a timely motion for a new trial, challenging the process by which the trial court had entered the default judgment; making a general challenge to the damages as excessive; and challenging specifically the excess of the punitive award over the $250,000 cap contained in Ala.Code 1975, § 6-11-21. She also filed a motion for recusal of the trial judge. After a hearing, the trial court denied the motion for a new trial, without examining the question of excessiveness of the damages, and denied the motion for recusal. Oliver appealed.³

II. Validity of the Default Judgment

Oliver argues that the trial court erred in refusing to set aside the second default judgment.⁴ Specifically, she argues that the trial court erred by not granting her motion to continue the trial because of her illness. Oliver claims that the motion should have been granted because, she says: she was a party representing herself; she was, as well, a material, competent witness; and she had a meritorious defense. Oliver also argues, among other things, that the default judgment was not based on the evidence, but instead was intended to send a message to other lawyers. Towns argues, in response, that the trial court did not abuse its discretion in refusing to set aside the second default judgment.

"The applicable standard of review in appeals arising from a trial court's order granting or denying a motion to set aside a default judgment is whether the trial court's decision constituted an abuse of discretion." Bailey Mortgage Co. v. Gobble-Fite Lumber Co., 565 So.2d 138, 139 (Ala.1990) (citing Kirtland v. Fort Morgan Auth. Sewer Serv., Inc., 524 So.2d 600 (Ala.1988)). In exercising its discretion, the trial court must consider "whether the defendant has a meritorious defense[,]... whether the plaintiff will be unfairly prejudiced if the default judgment is set aside and whether the default judgment was a result of the defendant's own culpable conduct." Id. at 140 (internal quotation marks omitted).

On the one hand, in Ex parte Robinson Roofing & Remodeling, Inc., 709 So.2d 444 (Ala.1997), this Court held that the trial court abused its discretion in entering a default judgment against a pro se defendant. The pro se defendant had acted in good faith by filing an answer with the plaintiff, but not with the trial court. Id. at 444. Because the pro se defendant had failed to comply with Rule 5(d), Ala. R. Civ. P. (by failing to file an answer with the clerk of the court), the trial court entered a default judgment against him. Id. at 445. It appeared that the defendant had a meritorious defense, that the plaintiff would not be unfairly prejudiced if the court set aside the default judgment, and that the defendant's conduct was not culpable. Id. at 445-46. See generally Kirtland, 524 So.2d 600. Thus, this Court held that the trial court abused its discretion in denying the defendant's motion to set aside the default judgment. Id. at 446.

On the other hand, in Jones v. Hydro-Wave of Alabama, Inc., 524 So.2d 610 (Ala.1988), this Court affirmed the trial court's refusal to set aside a default judgment based on the trial court's finding of culpability on the part of the defendant. This Court determined that the defendant had satisfied the meritorious-defense requirement, and that the plaintiff would not be prejudiced if the default judgment were set aside; however, this Court agreed that the defendant's conduct was culpable. Id. at 614-15. The defendant had failed to appear for trial because of a business engagement; that failure prompted the trial court to threaten to enter a default judgment. The trial court gave the defendant a second chance, but the defendant missed the second trial date because of an illness. Although the defendant provided evidence establishing that he was actually ill, "[t]here [was] no evidence suggesting that [the defendant's] illness was so debilitating as to prevent him from traveling to Alabama for the trial." Id. at 615. Thus, this Court held that the trial court did not abuse its discretion in denying the defendant's motion to set aside the default judgment. Id. at 616.

Oliver's conduct is similar to that of the defendant in Jones and, in some respects, it is worse. Oliver missed her first trial date, and a default judgment was entered. The trial court then gave Oliver a second chance when it set aside the first default judgment. Despite the fact that the trial court had not ruled on Oliver's motion for a continuance of the pretrial conference and the second trial, Oliver missed both the conference and the second trial date because of an alleged illness. Oliver, however, had absolutely no documentation— only her own assertion—to indicate that she was in fact sick. The trial judge also received evidence indicating that Oliver had deliberately avoided service of process before the first trial date. Because of the evidence in the record indicating culpable conduct and because the trial judge held a hearing at which he observed Oliver and could judge the credibility of her reasons for the default, we defer to the trial court's discretion in denying Oliver's motion to set aside the default...