Parsons v. Consolidated Gas Supply Corp., 14329

• Decision Date: 17 July 1979
• Docket Number: No. 14329,14329
• Citation: 163 W.Va. 464,256 S.E.2d 758
• Court: West Virginia Supreme Court
• Parties: Squire E. PARSONS v. CONSOLIDATED GAS SUPPLY CORPORATION.

Page 758

256 S.E.2d 758

163 W.Va. 464

Squire E. PARSONS v. CONSOLIDATED GAS SUPPLY CORPORATION.

No. 14329.

Supreme Court of Appeals of West Virginia.

July 17, 1979.

Syllabus by the Court

1. Where, under the West Virginia Rules of Civil Procedure, a defaulting party has litigated the issue of unavoidable cause or excusable neglect on a Rule 6(b) motion prior to the entry of a default judgment, he need not relitigate this issue by a Rule 60(b) motion upon the entry of the default judgment, but may directly appeal the default judgment.

2. "Inasmuch as courts favor the adjudication of cases on their merits, Rule 60(b) of the West Virginia Rules of Civil Procedure should be given a liberal construction." Syllabus Point 2, Hamilton Watch Co. v. Atlas Container, Inc., 156 W.Va. 52, 190 S.E.2d 779 (1972).

3. In determining whether a default judgment should be entered in the face of a Rule 6(b) motion or vacated upon a Rule 60(b) motion, the trial court should consider: (1) The degree of prejudice suffered by the plaintiff from the delay in answering; (2) the presence of material issues of fact and meritorious defenses; (3) the significance of the interests at stake; and (4) the degree of intransigence on the part of the defaulting party.

Charles E. Hurt, Charleston, for appellant.

Charles E. McCarty, Spencer, for appellee.

MILLER, Justice:

Consolidated Gas Supply Corporation (herein Consolidated) appeals a default judgment order of the Circuit Court of Roane County. The default order was based on the failure of Consolidated to file a timely answer and on the court's view that Consolidated's motion for leave to file a late answer under Rule 6(b) of the West Virginia Rules of Civil Procedure (herein RCP) was without merit.

Consolidated and its contractor, Carl E. Smith, Inc., were sued by Mr. Squire E. Parsons. The plaintiff Parsons claimed that his house and property had been damaged as a result of blasting, excavation and fill work performed by the contractor in the course of constructing a pipeline for Consolidated.

Suit was filed and served on both defendants on August 31, 1977. The contractor filed a timely answer, denying the allegations of negligence and damages contained in the complaint. Consolidated subsequently filed its late answer, also denying the allegations of the complaint. According to the certificate of service appended to the answer, it was mailed to plaintiff's counsel on November 10, 1977. The answer was not stamped as filed in the circuit clerk's office until November 18, 1977. On November 16, 1977, the plaintiff filed a motion for default judgment. The hearing on the default motion was continued to January 27, 1978, to permit Consolidated to file a motion for relief.

On December 27, 1977, Consolidated filed a motion under Rule 6(b), RCP, for leave to file a late answer. Attached to the motion was an affidavit of George E. Burke, an adjuster for the insurance carrier of the contractor. Mr. Burke stated that he had received the summons and complaint from the contractor and forwarded them to defense counsel. Subsequently, on September 18, 1977, he received a letter from Consolidated requesting that the contractor assume Consolidated's defense in accordance with the provisions of an indemnity clause in the construction contract between the two parties. The adjuster also stated the insurance carrier had to determine whether the indemnity clause required the contractor to assume Consolidated's defense and if the contractor's insurance policy covered the contractor's liability under the indemnity obligation.

The affidavit states that while these matters were being pursued, the adjuster called Frederick R. Brooking, the original attorney representing Consolidated, and received the impression that Mr. Brooking had an agreement with the plaintiff's attorney that the answer could be delayed pending a determination of the indemnity and insurance coverage questions.

The affidavit concludes that the legal questions were resolved on November 9, 1977, and that the contractor's defense attorney was advised to assume the defense for Consolidated, which he did by filing an answer. The adjuster admits that on further investigation, he discovered there was no agreement or understanding between Mr. Brooking and the plaintiff's attorney with regard to extending time for Consolidated to file its answer.

The attorney for Consolidated in these proceedings filed an affidavit in connection with the Rule 6(b) motion to the effect that Consolidated had a meritorious defense to the plaintiff's suit. This defense was predicated on the assertion that the blasting and excavation could not have damaged the plaintiff's property.

The trial court ruled that Consolidated's motion for leave to file a late answer was not based on any good cause and therefore rejected it, and entered a default judgment against Consolidated. The question of damages was reserved for a later hearing.

I APPEALABILITY

This appeal is from a default order against one of two defendants. The attempted answer was followed by a Rule 6(b) motion to file a late answer. No default order was entered until after the Rule 6(b) motion had been heard. There is a direct relationship between the Rule 6(b) requirement for showing "excusable neglect or unavoidable cause" in order to file late, and a Rule 60(b) motion to obtain relief against a default judgment based on "excusable neglect or unavoidable cause" in failing to file a timely answer. ¹ As a result, the federal courts have concluded that where the issue of unavoidable cause or excusable neglect is litigated prior to the entry of a default judgment, and a default judgment is then entered, it is not necessary for the party against whom the default order is entered to move under Rule 60(b) to have it set aside. See, e. g., SEC v. Research Automation Corp., 521 F.2d 585 (2d Cir.1975); Nishimatsu Construction Co. v. Houston National Bank, 515 F.2d 1200 (5th Cir.1975); Bonanza International, Inc. v. Corceller, 480 F.2d 613 (5th Cir.1973), Cert. denied, 414 U.S. 1073, 94 S.Ct. 587, 38 L.Ed.2d 479; McCloskey & Co. v. Eckart, 164 F.2d 257 (5th Cir.1947).

The reason is that the grounds of excusable neglect or unavoidable cause have already been asserted and heard by the court, and there is no need to relitigate them by means of a Rule 60(b) motion to vacate. We, therefore, conclude that where, under the West Virginia Rules of Civil Procedure, a defaulting party has litigated the issue of unavoidable cause or excusable neglect on a Rule 6(b) motion prior to the entry of a default judgment, he need not relitigate this issue by a Rule 60(b) motion upon the entry of the default judgment, but may directly appeal the default judgment. ²

Despite the similarities between our Rules 54 and 55, RCP, and Rules 54 and 55 of the Federal Rules of Civil Procedure, they differ in several aspects in regard to default judgments arising from a late answer. Our Rule 55 does not permit, as does Federal Rule 55, a default judgment to be entered by the clerk.

Furthermore, Federal Rule 54(b) has been generally interpreted by the federal courts as not to permit an appeal of a default judgment that does not include all of the defendants unless the order contains the Rule 54(b) language that the trial court has found "upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment." 6 J. Moore, Federal Practice § 54.28(2) (1978); 10 C. Wright & A. Miller Federal Practice and Procedure: Civil § 2660 (1973).

The federal practice under Rule 55, in relation to default judgments where there are multiple party defendants, is generally that the default judgment should not be entered where the liability between the defendants may be joint as to the plaintiff. 6 J. Moore, Federal Practice § 55.06 (1978); 10 C. Wright & A. Miller, Federal Practice and Procedure: Civil § 2690 (1973). This is on the theory that appeal is premature in that a defaulting defendant with joint liability may be absolved if the plaintiff loses his claim on the merits against the other co-defendants.

This Court has not followed the federal path in the area of the appealability of default judgments for failure to file a timely answer. Our divergence from the federal rule reflects not so much a difference in philosophy, but is based on the difference between our appellate system and the federal appellate system regarding the right to appeal.

The right of appeal to a federal circuit court is absolute; under our system, it is not. The consequence of this difference is that we can be less restrictive in interpreting the finality of an order, since upon preliminary review of the application for appeal we may reject it as being without merit. By stating this policy in the area of default judgments, we do not mean to imply that it applies to other areas. The articulation of this policy is merely a recognition of the practices established by our prior case law.

Parsons v. McCoy, W.Va., 202 S.E.2d 632 (1973), is a prime example of the liberality we have accorded appeals from default judgments. There, we reviewed an order setting aside a default judgment obtained by the plaintiff against one of several defendants. We noted the general, if not universal, rule that such orders are not appealable: "There is virtually no other authority in other jurisdictions holding that such an order is appealable . . . ." (W.Va., 202 S.E.2d at 635). Notwithstanding this overwhelming contrary authority, we permitted the appeal. Although the case involved multiple defendants with a default order only as to one defendant, no discussion was made of the limiting federal doctrine noted above.

In McDaniel v. Romano, 155 W.Va. 875, 190 S.E.2d 8 (1972), an appeal was permitted from an order setting aside the default judgment although the appealability of the order was not discussed. Parsons v. McCoy, supra, noted this fact, but...