Strader v. Palladian Enters., LLC

• Decision Date: 16 November 2011
• Docket Number: No. A11A1020.,A11A1020.
• Citation: 312 Ga.App. 646,719 S.E.2d 541,11 FCDR 3691
• Parties: STRADER v. PALLADIAN ENTERPRISES, LLC et al.
• Court: Georgia Court of Appeals

11 FCDR 3691

312 Ga.App. 646

719 S.E.2d 541

STRADER

v.PALLADIAN ENTERPRISES, LLC et al.

No. A11A1020.

Court of Appeals of Georgia.

Nov. 16, 2011.

Bell & Mulholland, Robert E. Mulholland, Atlanta, James D. Summerville, for appellant.

Goodman, McGuffey, Lindsey & Johnson, David M. Abercrombie, Atlanta, for appellees.

DILLARD, Judge.

Rodman Strader filed a personal-injury action, seeking damages related to a slip-and-fall accident outside of his workplace, naming Palladian Enterprises, LLC (“Palladian”) and three John Does as defendants. Palladian failed to file a timely answer to the complaint and thereafter filed a motion to open default, which the trial court granted. We granted Strader's application for interlocutory appeal, challenging the trial court's order granting Palladian's motion to open default. For the reasons noted infra, we affirm the trial court's decision.

Palladian was served with Strader's complaint on April 26, 2010, but failed to file a timely answer within 30 days or to open the default as a matter of right within 15 days as permitted by OCGA § 9–11–55(a). A non-jury trial was then set for August 30, 2010. On August 20, 2010, Palladian paid costs and filed a motion for continuance, in which it also gave notice of its intent to open the default. The trial court granted the continuance and, on August 30, 2010, Palladian filed a motion to open default. Along with its motion to open default, Palladian filed a verified answer setting forth meritorious defenses—namely that it did not own the subject building or property at issue and owed no duty to Strader—and announced that it was ready to proceed with trial. Palladian supplemented the motion to open default with the affidavit of its representative, Patricia Bittinger.¹

Bittinger's affidavit explained that she received Strader's complaint on April 26, 2010, and forwarded it to Palladian's insurance carrier and local insurance agent on May 11, 2010. Bittinger was informed by the insurer that because Palladian had no ownership rights in either the subject building or the property at issue, it was not a proper party to the lawsuit; ² she was also directed to place the proper entities on notice of the lawsuit.³ Bittinger forwarded related documents to Palladian's insurer and local agent on June 11, 2010, and requested further instruction and direction. On June 20, 2010, Bittinger received and forwarded to Palladian's insurer a notice placing the case on an August 30, 2010 non-jury trial calendar, and Bittinger again requested further instruction and/or direction at that time. The notice made no mention of Palladian's default status. Bittinger contends that she first became aware that Palladian was in default on August 18, 2010, when she was advised that her insurer had appointed counsel to represent Palladian and that counsel would attempt to open the default. Two days later, Palladian's counsel paid costs and filed a motion for continuance, which also contained a notice of intent to file a motion to open the default. The insurer then filed a verified answer and moved to open the default on August 30, 2010.⁴

Upon considering the averments set forth in Palladian's motion to open default, as well as the supporting affidavit, the trial court found that a “proper case” had been established to open the default and granted the motion. In doing so, the trial court expressly held that (1) Palladian acted diligently by promptly forwarding the complaint and all subsequently received documents to its insurer; (2) Palladian was entitled to infer that its insurer received the forwarded documents and was handling the case based upon its instruction to Bittinger to place the proper entities on notice of the suit; (3) the delay between Palladian first learning of the default and moving to open same was not unreasonable; and (4) Strader failed to show that he would be prejudiced by the opening of the default. Strader filed the instant appeal, challenging the trial court's order granting Palladian's motion to open default.

At the outset, we note that OCGA § 9–11–55(b) allows a default to be opened on one of three grounds: providential cause, excusable neglect, or a proper case.⁵ As a condition precedent to the trial court's consideration of whether any of the three grounds has been met, the defendant must show compliance with four statutory conditions by (1) making a showing under oath, (2) setting up a meritorious defense, (3) offering to plead instanter, and (4) announcing ready to proceed with trial.⁶ And here, it is undisputed that Palladian met these preconditions for opening default.

On appeal, Strader limits his challenge to the trial court's determination that Palladian's averments presented a “proper case” to allow the default to be opened, arguing that the court abused its discretion in opening the default because Palladian did not provide the court with a “reasonable explanation” for its failure to file a timely answer to his complaint. We disagree.

In considering Strader's argument, we begin by noting that the proper-case ground, under which the default was opened in this case, has been “construed to confer discretion on the trial court broader than that conferred on the other two grounds, as if reaching out to take in every conceivable case where injustice might result if the default were not opened.” ⁷ Indeed, the sole function we have as an appellate court reviewing a trial court's grant of a motion to open default is to ascertain whether all of the conditions delineated in OCGA § 9–11–55 have been satisfied and, if so, “whether the trial court abused its discretion based on the facts peculiar to each case.” ⁸ And because the public policy of this state strongly favors resolution of cases on their merits, the remedial provisions for opening a default are to be forgivingly applied.⁹ For this reason, a default should generally be set aside when the defendant “acts with reasonable promptness and alleges a meritorious defense,” ¹⁰ so as to avoid a “drastic sanction” that “should be invoked only in extreme situations.” ¹¹ In sum, once the four preconditions have been satisfied by a defendant, the trial court is vested with broad discretion in determining whether to open a default on the “proper case” ground, and we will not disturb a trial court's decision on this matter absent an abuse of its discretion. ¹²

In the case sub judice, Palladian received the complaint, forwarded same to its insurer, and confirmed that it was received.¹³ It also took the steps necessary to notify the proper parties in interest of the lawsuit. Additionally, Palladian forwarded the later-received documentation to its insurer and requested further instruction and/or direction. Moreover, within two days of learning of the default, Palladian paid costs, moved to continue the case, and filed notice of its intent to move to open the default, which it did twelve days later (along with filing a verified answer setting forth meritorious defenses and announcing that it was ready to proceed with trial).¹⁴ Finally, Strader presented no evidence of prejudice suffered by the opening of the default.¹⁵ Under the foregoing circumstances, particularly in light of the evidence that Palladian may not be a proper party in interest to the lawsuit, we conclude that the trial court did not abuse its broad discretion in accepting Palladian's explanation and opening the default.¹⁶

In reaching this conclusion, we once again emphasize that, contrary to plaintiff's assertion, “it is not for this Court to determine whether, in the first instance, the proffered justification given by [the defaulting defendant to the trial court] is reasonable,” because to do so would “undermine [ ], to the point of eviscerating, the abuse of discretion standard of review we are charged with adhering to in these cases....” ¹⁷ Thus, while it is certainly true that a “default [may be] opened under the ‘proper case’ analysis only where a reasonable explanation for the failure to timely answer exists,” ¹⁸ this Court's review of a trial court's determination as to the reasonableness of such an explanation is exceedingly deferential. As we have previously explained, “this Court can (and should) only evaluate the reasonableness of [Palladian's] proffered justification for opening a default on the ‘proper case’ ground in the context of considering whether the trial court's acceptance of this justification as a basis for opening default amounts to a manifest abuse of discretion.” ¹⁹ To do otherwise would amount to substituting our judgment for that of the trial court, which the applicable standard of review flatly prohibits. ²⁰

Judgment affirmed.

MIKELL, C.J., and SMITH, P.J., concur.

1. Bittinger is the vice president of Palladian, Inc., an affiliated corporation.

2. Strader objects to the affidavit on the ground that it contains communications between Bittinger and the insurer that amount to inadmissible hearsay. We disagree. Because the challenged statements are being used to explain Bittinger's conduct (as opposed to being admitted for the truth of the matter asserted), and are otherwise relevant to the reasonableness of Bittinger's actions, they do not constitute hearsay and were properly considered by the trial court. See generally Lumpkin v. Deventer N. Am., Inc., 295 Ga.App. 312, 316(2), 672 S.E.2d 405 (2008) (admitting out-of-court statements of a non-witness offered to explain conduct relevant to an issue presented); Unified Gov't of Athens–Clarke County v. Watson, 255 Ga.App. 1, 3(2), 564 S.E.2d 453 (2002) (“When the conduct and motives of the actor are matters concerning which the truth must be found (i.e., are relevant to the issues on trial), then information, conversations, letters and replies, and similar evidence known to the actor are admissible to explain the actor's conduct.” (punctuation omitted)). Cf. Teague v. State, 252 Ga. 534, 534(1), 314 S.E.2d 910 (1984) (“[W]here the question...