American States Insurance Company v. Ellis R. Rogillio ( 2008 )


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  •                    IN THE SUPREME COURT OF MISSISSIPPI
    NO. 2008-IA-01049-SCT
    AMERICAN STATES INSURANCE COMPANY
    v.
    ELLIS R. ROGILLIO
    DATE OF JUDGMENT:                        05/29/2008
    TRIAL JUDGE:                             HON. FORREST A. JOHNSON, JR.
    COURT FROM WHICH APPEALED:               AMITE COUNTY CIRCUIT COURT
    ATTORNEYS FOR APPELLANT:                 W. WRIGHT HILL, JR.
    JAN F. GADOW
    ATTORNEYS FOR APPELLEE:                  HOLLIS McGEHEE
    RONALD L. WHITTINGTON
    NATURE OF THE CASE:                      CIVIL - INSURANCE
    DISPOSITION:                             AFFIRMED AND REMANDED - 06/04/2009
    MOTION FOR REHEARING FILED:
    MANDATE ISSUED:
    BEFORE GRAVES, P.J., DICKINSON AND LAMAR, JJ.
    GRAVES, PRESIDING JUSTICE, FOR THE COURT:
    ¶1.   This interlocutory appeal concerns the denial of a motion to set aside a default
    judgment. Ellis Rogillio filed a complaint against American States Insurance Company
    (“American States”), Mississippi Farm Bureau Casualty Insurance Company (“Farm
    Bureau”), and Bi-County Insurance Agency (“Bi-County”). American States failed to file
    an answer or otherwise defend the action for more than four months after service of the
    complaint. As a result, Rogillio obtained a default judgment. Thereafter, American States
    filed an answer and a motion to set aside the default judgment, which the trial court denied.
    American States now appeals to this Court.
    FACTS
    ¶2.    On March 26, 2004, Rogillio was seriously injured while driving on Highway 10 in
    Tangipahoa Parish, Louisiana. Rogillio was traveling eastbound when a large, seventy-
    pound metal vise was separated from a vehicle traveling westbound. The vise flew into the
    eastbound lane of the highway and struck Rogillio, severing his right arm just below the
    shoulder socket. Rogillio underwent several surgical operations to reattach his arm and to
    allow him to regain some use of it. He also suffered spinal injuries from the accident. The
    driver of the vehicle carrying the vise was never identified.
    ¶3.    At the time of the accident, Rogillio was employed by J & N Timber, Inc. (“J & N
    Timber”), and was working within the scope of his employment. J & N Timber is a timber
    company owned by William B. Netterville. In addition to owning J & N Timber, Netterville
    had also cofounded a corporation called Clover Hill, LLC (“Clover Hill”), which owned a
    2002 Ford F-150 truck. When Rogillio was injured, he was driving this particular truck.
    Clover Hill had an insurance policy with American States, and this policy provided for a
    maximum of $25,000 in uninsured motorist coverage. Rogillio made a claim under the
    Clover Hill policy, and in 2005, American States approved the claim and paid Rogillio
    $25,000. J & N Timber also had an insurance policy with American States, which provided
    a maximum of $600,000 in uninsured motorist coverage – $100,000 for each of the six
    automobiles insured under the policy. This insurance policy is the subject of this case.
    2
    ¶4.    In April 2006, Rogillio made a claim under the J & N Timber policy. Keith Anderson,
    an American States claims specialist, corresponded with Rogillio’s counsel for several
    months regarding this claim. Ultimately, Anderson informed Rogillio that his claim would
    be denied. Subsequently, on March 9, 2007, Rogillio filed a complaint against Farm Bureau,
    American States, Bi-County, and John Does 1-5. Rogillio claimed that he was covered by
    the J & N Timber policy and that he was legally entitled to recover damages in the amount
    of the liability limits of the policy. On March 12, 2007, American States’ registered agent,
    C. T. Corporation, was served with Rogillio’s complaint. American States concedes that it
    was properly served. On March 15, 2007, Anderson and Rogillio’s counsel spoke via
    telephone regarding Rogillio’s lawsuit. The exact contents of this discussion are disputed.
    ¶5.    On July 17, 2007, Rogillio filed an application for an entry of default, submitting an
    affidavit citing the fact that American States had failed to answer or otherwise defend in the
    action. On the same day, the circuit clerk entered an entry of default. Rogillio filed a motion
    for default judgment. On July 18, 2007, the trial court entered a default judgment against
    American States without holding a hearing.
    ¶6.    On August 6, 2007, American States filed an answer and affirmative defenses. On
    August 23, 2007, American States filed a motion to set aside the default judgment. American
    States argued that it had defaulted because of a “simple clerical error.” American States
    claimed that, under the proper legal standard, the default judgment should be set aside
    because American States had a legitimate reason for defaulting, because it had a colorable
    defense to the merits of Rogillio’s claim, and because Rogillio would not suffer prejudice if
    the default judgment were set aside. In the alternative, American States asserted that the
    3
    default judgment was void because Rogillio did not provide American States with three days’
    notice of his motion for default judgment. On September 4, 2007, Rogillio filed a response
    to the motion to set aside, arguing that the default judgment should not be set aside because
    American States did not have a legitimate reason for defaulting, because it did not have a
    colorable defense, and because Rogillio would suffer substantial prejudice if the default
    judgment were set aside.
    ¶7.    Also on September 4, 2007, at a hearing before the trial court, both sides presented
    their arguments regarding the motion to set aside the default judgment. The trial court took
    the matter under advisement and issued an order on May 29, 2008 denying the motion to set
    aside the default judgment. In its order, the trial court found that the default judgment had
    been entered properly and that
    the failure of the defendant to respond to the complaint was not due to accident
    or mistake, nor any conduct of the plaintiff or plaintiff’s counsel, but to poor
    business practices of the defendant and complete inattention to the complaint.
    . . . [T]he court finds there is no showing of good cause.
    The trial court also stated that “the defendant is entitled to a full defense on the issue of
    damages, including a jury trial. It is therefore ordered that this cause shall proceed on the
    issue of damages only, in all respects.” Subsequently, American States timely filed a petition
    for interlocutory appeal, which this Court granted.
    ANALYSIS
    ¶8.    This Court reviews a trial court’s decision regarding a motion to set aside a default
    judgment for an abuse of discretion. See, e.g., Guar. Nat’l Ins. Co. v. Pittman, 
    501 So. 2d 377
    , 388 (Miss. 1987). Although “default judgments are not favored in the law, it does not
    4
    follow that a party seeking relief from a default judgment is entitled to that relief as a matter
    of right.” Pointer v. Huffman, 
    509 So. 2d 870
    , 875 (Miss. 1987); see also Pittman, 
    501 So. 2d
    at 387-88 (citations omitted). This Court has stated that “where there is a reasonable
    doubt as to whether or not a default judgment should be vacated, the doubt should be
    resolved in favor of opening the judgment and hearing the case on its merits.” McCain v.
    Dauzat, 
    791 So. 2d 839
    , 843 (Miss. 2001) (quoting Sw. Sur. Ins. Co. v. Treadway, 
    74 So. 143
    , 146 (Miss. 1916)). Nevertheless, this Court has also stated that “[w]e will not reverse
    unless convinced that the Circuit Court has abused its discretion.” H & W Transfer &
    Cartage Serv., Inc. v. Griffin, 
    511 So. 2d 895
    , 899 (Miss. 1987); see also Bailey v. Georgia
    Cotton Goods Co., 
    543 So. 2d 180
    , 182 (Miss. 1989) (citations omitted) (“The existence of
    trial court discretion, as a matter of law and logic, necessarily implies that there are at least
    two differing actions, neither of which if taken by the trial judge will result in reversal.”).
    I.     Whether the Trial Court Erred in Denying the Defendant’s Motion to Set Aside
    the Default Judgment.
    ¶9.    The trial court’s “discretion must be exercised in accordance with the provisions of
    Rules 55(c) and 60(b) as well as the supplementary criteria given validity in the decisions of
    this Court.” Pittman, 
    501 So. 2d
    at 388. Mississippi Rule of Civil Procedure 55(c) states:
    “For good cause shown, the court may set aside an entry of default and, if a judgment by
    default has been entered, may likewise set it aside in accordance with Rule 60(b).” Miss. R.
    Civ. P. 55(c). Mississippi Rule of Civil Procedure 60(b) states, in relevant part:
    (b) Mistakes; inadvertence; newly discovered evidence; fraud, etc. On motion
    and upon such terms as are just, the court may relieve a party or his legal
    representative from a final judgment, order, or proceeding for the following
    reasons:
    5
    (1) fraud, misrepresentation, or other misconduct of an adverse party;
    (2) accident or mistake;
    (3) newly discovered evidence which by due diligence could not have
    been discovered in time to move for a new trial under Rule 59(b);
    (4) the judgment is void;
    (5) the judgment has been satisfied, released, or discharged, or a prior
    judgment upon which it is based has been reversed or otherwise
    vacated, or it is no longer equitable that the judgment should have
    prospective application;
    (6) any other reason justifying relief from the judgment.
    Miss. R. Civ. P. 60(b).
    ¶10.   This Court has noted that
    [a]scertaining the meaning of the provisions of Rule 55(c) and Rule 60(b)(5)
    and (6) with any degree of precision simply may not be done for the language
    is hopelessly open textured. A consideration of the criteria of those rules
    together boils down almost to a balancing of the equities.
    Pittman, 
    501 So. 2d
    at 388. As a result, this Court applies a three-prong balancing test when
    determining whether a trial court properly decided a motion to set aside a default judgment.
    Id.; see also Stanford v. Parker, 
    822 So. 2d 886
    , 887-90 (Miss. 2002). In deciding whether
    to set aside a default judgment, the trial court must consider
    (1) the nature and legitimacy of the defendant’s reasons for his default, i.e.,
    whether the defendant has good cause for default, (2) whether [the] defendant
    in fact has a colorable defense to the merits of the claim, and (3) the nature and
    extent of prejudice which may be suffered by the plaintiff if the default
    judgment is set aside.
    H & W Transfer & Cartage Serv., 
    Inc., 511 So. 2d at 898
    ; see also Pittman, 
    501 So. 2d
    at
    388.
    A.     The Nature and Legitimacy of the Defendant’s Reasons for Default
    ¶11.   American States argues that all three prongs of the balancing test weigh in favor of
    setting aside the default judgment entered against it. The first prong concerns the defendant’s
    6
    reasons for defaulting. American States claims that it has a legitimate reason for its default.
    American States concedes that its registered agent was properly served by Rogillio. It claims
    that the support staff at its home office in Seattle, Washington committed an “inadvertent
    clerical error” by placing Rogillio’s summons and complaint in the claims file for the Clover
    Hill policy rather than the claims file for the J & N Timber policy. American States explains
    that it was first informed of Rogillio’s lawsuit by a representative of its codefendant Bi-
    County, and that this representative provided a courtesy copy of the complaint to American
    States on March 14, 2007. American States further contends that, although Anderson later
    saw Rogillio’s complaint in the Clover Hill claims file, he assumed it was the courtesy copy
    of the complaint provided by Bi-County and that American States had still not been officially
    served by Rogillio. American States asserts that it was only when counsel for Farm Bureau
    informed American States of the default judgment on August 2, 2007 that it realized that it
    had been served, had failed to answer, and was, therefore, in default.
    ¶12.   This Court has found that similar excuses do not constitute bona fide excuses. In
    Pointer v. Huffman, the defendant, after being served, mailed information regarding the
    lawsuit to “the proper company officers,” but took no further action until discovering that a
    default judgment had been entered. 
    Pointer, 509 So. 2d at 871
    , 876. The defendant argued
    that “default was unintentional and was the result of his complete reliance on his insurance
    carrier to take all necessary action.” 
    Id. at 876. The
    trial court noted that, despite being an
    “astute businessman with years of experience dealing with insurance claims and litigation,”
    the defendant never took any steps to determine whether the papers were received or whether
    an answer had been filed. 
    Id. The trial court
    denied the defendant’s motion to set aside the
    7
    default judgment. 
    Id. at 872. On
    appeal, this Court concluded that “[t]o be sure, [the
    defendant] could have been more diligent in his actions to defend this suit. The trial court,
    in the exercise of his discretion, so held, and this Court finds no abuse of this discretion.”
    
    Id. at 876. ¶13.
      In H & W Transfer & Cartage Service, Inc., the defendant, after being served with
    substituted service, delivered copies of the summons and complaint to its insurance agent,
    who delivered them to the defendant’s liability insurance carrier. H & W Transfer &
    Cartage Serv., 
    Inc., 511 So. 2d at 896
    . As in Pointer, the defendant then took no further
    action until it was informed that a default judgment had been entered. 
    Id. In commenting on
    the defendant’s lack of diligence, this Court stated that the defendant prudently forwarded
    the summons and complaint to its insurance agent upon receipt, but “[i]mprudently, [the
    defendant] thereafter did nothing, made no follow-up inquiry, and for all practical purposes
    let the matter drop until some five months later when it found out about the default
    judgment.” 
    Id. at 899. This
    Court concluded that the defendant’s “story” did not amount to
    good cause justifying a default under the first prong of the balancing test. 
    Id. ¶14. In this
    case, the trial court found American States’ excuse to be inadequate. At the
    hearing before the trial court, counsel for American States characterized the reason for
    default as
    a simple mistake by Mr. Anderson. It was a simple mistake by someone in the
    home office putting the actual served copy of the complaint in the 2004 Clover
    Hill file, as opposed to putting it in the active J & N file. But that was an
    honest mistake. . . . I think the reasons for the default are simple neglect –
    negligence, a clerical error in putting the claim – the summons and the
    complaint in the wrong file, but certainly not a bold face [sic] attempt just to
    8
    ignore the summons and complaint and ignore the plaintiff’s lawsuit on a claim
    that they had denied.
    After arguments from both sides, the following exchange occurred:
    THE COURT:            All right. Mr. Hill [counsel for American States] what
    about this? This does sound pretty bad now.
    MR. HILL:             Well, Your Honor –
    THE COURT:            Well, let me say this: I’ve set aside default judgments in
    the past and everything, but why should – this case – this
    sounds bad.
    MR. HILL:             Yeah. What happened, Your Honor, again, was: The
    first copy that Mr. Anderson got was the courtesy copy.
    He didn’t know at that time that they had been officially
    served with the complaint. When American States was
    served –
    THE COURT:            Isn’t that enough to check further, I mean to go a little bit
    further? Why aren’t you sitting right there with this date
    checking when the statute runs, checking to see if a
    lawsuit had been filed or something? I’m just saying that
    this looks bad. This looks bad. This is one of the worst
    ones that I’ve seen.
    Shortly thereafter, when discussing Anderson’s failure to monitor the status of Rogillio’s
    lawsuit, the trial court stated: “This just doesn’t add up. This doesn’t add up.”
    ¶15.   This Court agrees. American States’ excuse for defaulting defies logic. Misfiling the
    summons and complaint does not explain how American States failed to answer it. American
    States does not claim that it did not receive the complaint, or that it did not recognize or
    understand the import of a summons and complaint. Based on the evidence in the record and
    the relevant legal precedent, this Court finds that the first prong of the balancing test weighs
    in favor of Rogillio.
    B.     Whether the Defendant Has a Colorable Defense to the Merits of the
    Claim.
    9
    ¶16.   The second prong of the balancing test asks whether the defendant has a colorable
    defense to the merits of the plaintiff’s claim. See, e.g., Pittman, 
    501 So. 2d
    at 388. With
    regard to the second prong, this Court has held that “[i]f any one of the three factors in the
    balancing test outweighs the other in importance, this is the one.” 
    Bailey, 543 So. 2d at 182
    ;
    see also 
    Stanford, 822 So. 2d at 888
    (quoting Allstate Ins. Co. v. Green, 
    794 So. 2d 170
    , 174
    (Miss. 2001)) (stating that this Court has “encouraged trial courts to vacate a default
    judgment where ‘the defendant has shown that he has a meritorious defense’”).
    ¶17.   American States argues that Rogillio is not covered under the J & N Timber policy.
    The policy states that six vehicles – a 2004 Ford F-150, a 2001 Ford Expedition, a 1998 Ford
    Ranger, a 2000 Ford pickup, a 2003 Ford Crown Victoria sedan, and a 2003 Lincoln
    Towncar sedan – are covered under it. The policy also includes “Drive Other Car” coverage
    for certain individuals when they are driving cars other than the six cars specifically listed.
    The only individuals listed under “Drive Other Car” coverage are William B. Netterville and
    Vicki Netterville. Rogillio is not listed under the “Drive Other Car” coverage and was not
    driving any of the vehicles specified in the J & N Timber policy at the time of the accident.
    Thus, it is arguable that, based on the excerpts of the J & N Timber policy included in the
    record, American States has a colorable defense to the merits of Rogillio’s claim.
    ¶18.   However, we note that it is unclear whether American States would prevail on the
    merits by asserting this defense. The record includes a short and long version of the J & N
    Timber policy. The short version of the insurance policy, which is what American States
    provided to Rogillio when he requested a copy of the policy prior to filing his complaint,
    10
    includes a document with a Safeco Insurance 1 logo at the upper left corner of the page. This
    document states:
    Dear Valued Policyholder,
    We appreciate the opportunity to write your commercial auto coverage. Please
    take a minute to review your policy.
    Your policy has been issued based on the drivers listing below. In order to
    insure that your policy is issued with the most current information, please
    review this list and update as necessary. Include employees who drive their
    own vehicles on company business or anyone who will drive an insured
    vehicle. Contact your independent agent to advise of any changes.
    The document then includes a list of six drivers, including Ellis Rogillio. American States
    argues that the attachment of this document was accidental. American States asserted in its
    motion to set aside the default judgment that “[w]hen printing the policy to provide to
    Plaintiff and his counsel, in an effort to conserve paper, American States inadvertently
    attached [the] document.”     American States did not explain how attaching additional
    documents to an insurance policy conserves paper. American States contends on appeal that
    this document is clearly not part of a policy or policy application, but a
    separate and subsequent letter written to the named insured, J&N Timber, Inc.,
    simply to confirm those persons who would potentially be using a scheduled
    insured vehicle so that American States could evaluate and assess its risk and
    the premium to be charged for insuring that risk.
    1
    The relationship between American States and Safeco Insurance is not clear from
    the record. The first page of the J & N Timber policy has a Safeco Insurance logo at the
    upper left corner of the page and states “American States Insurance Company” at the top
    of the page. The “Drive Other Car” coverage documents also have Safeco Insurance
    logos at the upper left corners. American States cites an affidavit in the record from a
    Safeco Insurance Company underwriter in order to explain the J & N Timber policy
    papers. However, American States does not clarify its relationship to Safeco Insurance.
    Although the exact relationship between the two corporate entities is unclear, American
    States does not argue that the J & N Timber policy was issued by an insurance company
    other than itself.
    11
    American States provides an affidavit by a Safeco Insurance underwriter that states that the
    document listing Rogillio as a driver has nothing to do with the “Drive Other Car” coverage
    under the J & N Timber policy, and that Rogillio is not insured under the policy. American
    States claims on appeal that the underwriter’s “testimony is undisputed.” However, Rogillio
    certainly disputed this fact in the pleadings and at the hearing and continues to dispute it on
    appeal. Rogillio maintains that the attachment of the document listing him as a driver creates
    an ambiguity in the insurance policy, which should be interpreted against the insurer.
    ¶19.   The document in question clearly states that “[y]our policy has been issued based on
    the drivers listing below.” In addition, although American States argues that the document
    was mistakenly attached to the short version of the policy when Rogillio requested a copy
    of the policy prior to filing suit, Rogillio rightly points out on appeal that the document also
    appears in the middle of the long version of the insurance policy that is included in the
    record.
    ¶20.   It is well-established that any ambiguity in an insurance policy is interpreted in favor
    of the insured as the nondrafting party. See, e.g., Crum v. Johnson, 
    809 So. 2d 663
    , 666
    (Miss. 2002); J&W Foods Corp. v. State Farm Mut. Auto. Ins. Co., 
    723 So. 2d 550
    , 552
    (Miss. 1998). This Court is persuaded by Rogillio’s argument regarding the ambiguity in the
    insurance policy and finds that the strength of American States’ defense is questionable.
    Nevertheless, we are of the opinion that American States’ defense does present a colorable
    defense to the merits of the Rogillio’s claim for the purposes of the balancing test.
    Therefore, the second prong of the balancing test weighs in favor of American States.
    12
    C.     The Nature and Extent of Prejudice Which May Be Suffered by the
    Plaintiff if the Default Judgment is Set Aside
    ¶21.   The third prong of the balancing test concerns the prejudice, if any, suffered by the
    plaintiff if the default judgment is set aside. American States argues that Rogillio will suffer
    no prejudice if the default judgment is set aside because there are no witnesses whose
    memory will have suffered from the default and the resultant passage of time. American
    States further asserts that having to prove a claim against a defendant “is not what is meant
    by cognizable prejudice under this prong of the balancing test.” 
    Bailey, 543 So. 2d at 183
    .
    ¶22.   Rogillio argues that he will suffer prejudice if the default judgment is set aside
    because such a decision will trigger the continuation of his litigation against Bi-County,
    which ended as a result of the default judgment against American States. Although Rogillio
    initially sued Farm Bureau, American States, and Bi-County, Farm Bureau was removed
    from the lawsuit, and Rogillio’s claim against Bi-County was rendered moot after the default
    judgment was entered and upheld by the trial court. Therefore, Bi-County was released from
    the lawsuit. If the default judgment is set aside, Rogillio will have to continue its litigation
    against Bi-County in addition to proving its claims against American States. The fact that
    Rogillio will be forced to pursue litigation against Bi-County is a burden separate and distinct
    from the burden of proving the liability of American States, which this Court would not
    consider “cognizable prejudice” under the third prong. 
    Bailey, 543 So. 2d at 183
    . Therefore,
    this Court finds that Rogillio will suffer prejudice if the default judgment is set aside.
    ¶23.   Furthermore, as Rogillio argues, he will suffer prejudice because of the ongoing
    financial and emotional distress related to his severe injuries. This Court has found that the
    13
    fact that “the injured plaintiff is without a resolution to her claim for that period of time [i.e.,
    the period of delay caused by the defendant’s default]” constitutes prejudice. Pittman, 
    501 So. 2d
    at 388; see also 
    Stanford, 822 So. 2d at 890
    (finding that plaintiffs had suffered
    substantial prejudice in part from the financial and emotional distress they suffered).
    Rogillio filed his lawsuit against American States in March 2007. He perfected service upon
    American States’ designated agent and proceeded with the litigation as he should have.
    Because of American States’ carelessness and lack of diligence in defending the lawsuit,
    Rogillio properly obtained a default judgment more than four months after service of the
    complaint. American States filed a motion to set aside the default judgment more than one
    month after the default judgment had been entered – three weeks after it discovered that a
    default judgment had been entered against it and more than two weeks after it filed an answer
    and affirmative defenses. The trial court denied American States’ motion approximately nine
    months after that. As this Court held in H & W Transfer & Cartage Service, Inc., the
    plaintiff “may have been subject to prejudice from the granting of the motion in the sense
    that she would have been put to trial some months following the date when she would have
    originally been able to obtain a trial setting had [the defendant] responded promptly.” H &
    W Transfer & Cartage Serv., 
    Inc., 511 So. 2d at 899
    . This Court finds that setting aside the
    default judgment would certainly have caused prejudice to Rogillio.
    ¶24.   Thus, two of the three prongs weigh in favor of Rogillio and against setting aside the
    default judgment. We find, therefore, that the trial court did not abuse its discretion in
    denying the motion to set aside the default judgment. Although the second prong weighs in
    favor of American States, this Court has previously affirmed the trial court’s denial of a
    14
    motion to set aside default judgment where the second prong weighed in favor of the
    defaulting party. See, e.g., Pittman, 
    501 So. 2d
    at 388-89; 
    Stanford, 822 So. 2d at 889-91
    .
    Additionally, we note that, while American States is now foreclosed from presenting any
    defenses as to liability, it will nevertheless be given an opportunity to contest the amount of
    unliquidated damages and raise any and all defenses it may have as to the damages claimed
    by the plaintiff. The trial court entered a partial default judgment as to liability. See 
    Pointer, 509 So. 2d at 873-74
    ; Capital One Servs., Inc. v. Rawls, 
    904 So. 2d 1010
    , 1018 (Miss.
    2004). In entering the partial default judgment, the trial court expressly provided that “the
    defendant is entitled to a full defense on the issue of damages, including a jury trial. It is
    therefore ordered that this cause shall proceed on the issue of damages only, in all respects.”
    Furthermore, as this Court stated in Pittman,
    [i]t may be that people will miss fewer trains if they know the engineer will
    leave without them rather than delay even a few seconds. Although we are not
    about to inaugurate a policy of entering irrevocable defaults where no answer
    has been filed by the thirty-first day, we are equally resolved that people know
    that the duty to answer must be taken seriously. At some point the train must
    leave.
    Pittman, 
    501 So. 2d
    at 388-89.
    ¶25.   American States argues in its rebuttal brief that the trial court abused its discretion by
    failing to consider the three-prong test. American States cites State Highway Commission
    v. Hyman, 
    592 So. 2d 952
    , 956 (Miss. 1991), McCain v. Dauzat, 
    791 So. 2d 839
    , 843 (Miss.
    2001), Clark v. City of Pascagoula, 
    507 So. 2d 70
    , 77 (Miss. 1987), and Bryant, Inc. v.
    Walters, 
    493 So. 2d 933
    , 937 n.3 (Miss. 1986) in support of its argument. These cases are
    either distinguishable from the facts of this case or fail to support American States’ argument.
    15
    In citing Hyman, American States merely directs this Court to the application of the three-
    prong test in a case in which this Court ruled that the default judgment should have been set
    aside. 
    Hyman, 592 So. 2d at 956
    . American States does not explain how the facts in Hyman
    are at all analogous to the facts of this case. In Dauzat, this Court remanded the case so that
    the trial court could consider the three prongs of the balancing test. 
    Dauzat, 791 So. 2d at 843
    . However, in Dauzat, “the trial judge became perturbed with McCain and prematurely
    ended the hearing on the motion [to set aside the default judgment].” 
    Id. This Court found
    that there was “strong evidence” that the trial court did not weigh the three factors. 
    Id. In this case,
    it is clear that the trial court heard arguments from both sides regarding the
    application of the three-prong test during the hearing on September 4, 2007. The hearing was
    not prematurely ended, and the trial court took the matter under consideration for a
    significant period of time before entering an order denying the motion to set aside the default
    judgment. Although the trial court did not discuss the three-prong test in its order, there is
    no indication that the trial court failed to consider it in reaching its decision. In Clark, this
    Court affirmed the order of the trial court, which “made no specific findings . . . but merely
    set aside the default judgments.” 
    Clark, 507 So. 2d at 77
    . American States does not explain
    how Clark supports its argument that the trial court abused its discretion by failing to
    consider the three-prong test. Lastly, American States also does not explain how footnote
    three 2 from Bryant, Inc. supports its argument. Therefore, we find that American States’
    2
    Footnote three states:
    The circuit judge could also, under his discretionary power, have set the
    judgment aside on this particular ground under the facts of this case. Three
    16
    argument that the trial court abused its discretion and failed to consider the three-prong test
    is without merit.
    Mississippi Rule of Civil Procedure 60(b)
    ¶26.   We note that the result reached by applying the three-prong test in this case is
    consistent with Mississippi precedent regarding Mississippi Rule of Civil Procedure 60(b).
    Although the motion to set aside default judgment did not specify the subsection of Rule
    60(b) under which the motion was being made, on appeal, American States argues that the
    default judgment should have been set aside for either accident or mistake under Rule
    60(b)(2) or for any other reason justifying relief under Rule 60(b)(6).
    ¶27.   This Court has stated that
    As a general rule, the “extraordinary relief” provided for by Rule 60(b), will
    be granted “only upon an adequate showing of exceptional circumstances,”
    and gross negligence, ignorance of the rules, ignorance of the law, or
    carelessness on the part of the attorney will not provide sufficient grounds for
    relief.
    days after due date of the answer the plaintiff moved for and secured a default,
    and on the fourth day got a judgment. The case could not be tried until the
    August term of court. Motion to vacate the judgment was filed the first day
    of the term.
    Indeed, upon a showing by the defendant that he has a meritorious
    defense, we would encourage trial judges to set aside default judgments in a
    case where, as here, no prejudice would result to the plaintiff. The importance
    of litigants having a trial on the merits should always be a serious
    consideration by a trial judge in such matters. We are unable to say, however,
    that the circuit judge abused his discretion in refusing to set aside the
    judgment in this case on the particular ground of “accident or mistake.”
    Bryant, 
    Inc., 493 So. 2d at 937
    n.3 (emphasis added).
    17
    Accredited Sur. & Cas. Co. v. Bolles, 
    535 So. 2d 56
    , 58 (Miss. 1988) (quoting Stringfellow
    v. Stringfellow, 
    451 So. 2d 219
    , 221 (Miss. 1984)). This Court has also stated that “we are
    obliged to ask why the mistake or inadvertence was not avoided.” 
    Bolles, 535 So. 2d at 58
    .
    Furthermore, a party “must make some showing that he was justified in failing to avoid
    mistake or inadvertance [sic]; gross negligence, ignorance of the rules, or ignorance of the
    law is not enough.” 
    Stringfellow, 451 So. 2d at 221
    (citations omitted); see also 
    Bolles, 535 So. 2d at 59
    (citing 
    Stringfellow, 451 So. 2d at 221
    ) (“Ignorance, incompetence, or
    carelessness will not suffice.”). In H & W Transfer & Cartage Service, Inc., this Court
    stated that “[a]ssuming arguendo that the reason H & W did not answer timely was an
    accident or mistake within Rule 60(b)(2), we consider the first factor, the validity or cause
    for H & W’s failure to answer.” H & W Transfer & Cartage Serv., 
    Inc., 511 So. 2d at 899
    .
    The Court then applied the analysis under the first prong of the balancing test and concluded
    that H & W had not provided a valid reason for its failure to answer. 
    Id. ¶28. American States
    has not made a showing that it was justified in failing to avoid the
    mistake or inadvertence that led it to default. American States does not provide any
    explanation for its failure to make the simple determination of whether or not it had been
    served. American States repeatedly claims that its default resulted from a “simple mistake”
    or an “inadvertent clerical error.” This excuse is insufficient to explain the carelessness and
    lack of diligence that caused it to default. American States waited for four months to file an
    answer and more than four-and-a-half months to file a motion to set aside. It appears that
    American States may never have filed an answer or motion had it not been informed of the
    default judgment by counsel for Farm Bureau.
    18
    ¶29.   As for Rule 60(b)(6), this Court has held that relief under that subsection “is reserved
    for exceptional and compelling circumstances. It must be based on some other reason than
    the first five clauses, and it must be some ground which will justify relief from the final
    judgment.” Bryant, Inc. v. Walters, 
    493 So. 2d 933
    , 939 (Miss. 1986). “Rule 60(b)(6) in
    the Mississippi Rules of Civil Procedure calls for an exceptional or compelling reason to set
    aside a default judgment in the absence of the other enumerated reasons.” Stanford, 
    822 So. 2d
    at 891. As in Stanford, this Court finds that American States has not demonstrated an
    exceptional or compelling reason to set aside the default judgment entered against it.
    II.    Whether the Default Judgment is Void for Failure to Comply with Mississippi
    Rule of Civil Procedure 55(b).
    ¶30.   American States argues in the alternative that the default judgment is void because
    Rogillio did not provide three days’ notice to American States when it filed its motion for
    default judgment. Rogillio maintains that three days’ notice was not required because
    American States never made an appearance in the action.            Mississippi Rule of Civil
    Procedure 55(b) provides, in relevant part:
    In all cases the party entitled to a judgment by default shall apply to the court
    therefor. If the party against whom judgment by default is sought has
    appeared in the action, he (or if appearing by representative, his representative)
    shall be served with written notice of the application for judgment at least three
    days prior to the hearing of such application.
    Miss. R. Civ. P. 55(b). Based on the plain language of Rule 55(b), we must determine
    whether or not American States made an appearance in this action. This Court has held that
    “[t]raditionally, for an action to constitute an appearance, one had to file documents in or
    actually physically appear before a court.” Holmes v. Holmes, 
    628 So. 2d 1361
    , 1363 (Miss.
    19
    1993) (citations omitted). However, “those requirements have been relaxed considerably for
    Rule 55 purposes.” 
    Holmes, 628 So. 2d at 1363
    (citations omitted). “Once a party has made
    an indicia of defense or denial of the allegations of the complaint such party is entitled to at
    least three days[’] written notice of the application for default judgment.” Wheat v. Eakin,
    
    491 So. 2d 523
    , 525 (Miss. 1986). This Court has noted that “informal contacts between
    parties may constitute an appearance.” 
    Holmes, 628 So. 2d at 1364
    (citing various cases in
    which written documents that were exchanged between parties or filed with the court, or
    conversations initiated by defendants’ counsel, indicated an intent to defend the action and
    thus constituted an appearance).
    ¶31.   This Court has decided several cases that are helpful in determining what constitutes
    an appearance for purposes of Rule 55(b). In Wheat v. Eakin, this Court found that the pro
    se defendant’s answer entitled him to at least three days’ written notice of the plaintiff’s
    application for default judgment. 
    Wheat, 491 So. 2d at 526
    . This Court found that “[w]hile
    the form and language of the appellant’s response are less than desirable and more frank than
    customary, the appellant did state in short and plain terms his general denial of appellees’
    claims.” 
    Id. at 525. Therefore,
    this Court found that the defendant had appeared through his
    answer and that the plaintiff’s failure to provide notice pursuant to Rule 55(b) justified
    reversal of the default judgment. 
    Id. at 524-26. ¶32.
      In Chassaniol v. Bank of Kilmichael, the defendant filed an answer to the complaint,
    but failed to file a timely answer to the amended complaint. Chassaniol v. Bank of
    Kilmichael, 
    626 So. 2d 127
    , 129-30 (Miss. 1993). The plaintiff sought a default judgment
    without providing notice to the defendant. 
    Id. at 130. The
    trial court entered a default
    20
    judgment, and this Court found that the trial court erred by refusing to set aside the default
    judgment because the defendant had appeared and the plaintiff failed to provide notice
    pursuant to Rule 55(b). 
    Id. at 130, 132.
    This Court found that
    [b]oth the court and opposing counsel were on notice by virtue of the
    documents in the court file that Chassaniol was contesting every element of the
    Bank’s case . . . Chassaniol filed an answer to the original complaint, filed an
    objection to the amended complaint, filed a motion to set aside the entry of
    default, pursued the case in federal court, and filed an answer to the amended
    complaint while in federal court.
    
    Id. at 131-32. ¶33.
      In Holmes, this Court found that the defendant had made an appearance in the action
    because of the letters exchanged between counsel for the parties demonstrating that the
    defendant intended to defend the action. 
    Holmes, 628 So. 2d at 1364
    . Accordingly, this
    Court reversed the trial court’s order denying the defendant’s motion to set aside the
    judgment of divorce because the defendant had appeared through her lawyer’s
    correspondence with opposing counsel and the plaintiff failed to provide notice pursuant to
    Rule 55(b). 
    Holmes, 628 So. 2d at 1362
    , 1365.
    ¶34.   In King v. Sigrest, the defendant failed to file a timely answer and the plaintiff
    subsequently obtained an entry of default. King v. Sigrest, 
    641 So. 2d 1158
    , 1160 (Miss.
    1994). However, after the entry of default, the defendant served the plaintiff with a motion
    to set aside default, although the defendant failed to file this motion with the court. 
    Id. The plaintiff then
    obtained a default judgment without providing notice to the defendant. 
    Id. at 1160. This
    Court held that the trial court erred in denying the defendant’s motion to vacate
    the default judgment because the defendant had appeared in the action by serving the plaintiff
    21
    with her motion to set aside default and the plaintiff failed to provide notice pursuant to Rule
    55(b). 
    Id. at 1162. ¶35.
      Returning to the present case, American States claims that “[i]t is undisputed that
    during that conversation [between Anderson and Rogillio’s counsel on March 15, 2007],
    Anderson clearly advised Rogillio’s attorney that after Rogillio had served American States,
    American States would enter an appearance, defend this matter, and contest coverage.”
    However, the contents of the discussion between Anderson and Rogillio’s counsel on March
    15, 2007 are disputed. Rogillio concedes that his counsel spoke with Anderson on March
    15, 2007, but maintains that his counsel advised Anderson that the complaint had been filed
    and that Anderson “advised that he had received a filed copy of the Complaint and knew of
    the lawsuit.” Rogillio does not concede that Anderson “clearly advised Rogillio’s attorney
    that after Rogillio had served American States, American States would enter an appearance,
    defend this matter, and contest coverage.”
    ¶36.   Based on this Court’s prior caselaw, we find that American States did not enter an
    appearance in the action when its claims specialist spoke over the telephone with Rogillio’s
    attorney. Although an appearance need not be a formal entry of appearance or a physical
    presence in court, in the illustrative cases summarized above, the defendants either 1) served
    or sent a document to the plaintiff indicating in writing the defendant’s intent to defend, 2)
    filed a document with the court indicating in writing the defendant’s intent to defend, or 3)
    had counsel communicate to opposing counsel the defendant’s intent to defend. Here, there
    is no evidence of American States informing Rogillio or the court in writing or through
    counsel of its intent to defend the suit. Although it argues that its claims specialist,
    22
    Anderson, advised Rogillio of its intent to defend on March 15, 2007, there is no written or
    audio record of this phone conversation and there is no followup confirmation letter to
    indicate what transpired during that conversation. American States has not shown that it
    made an appearance in this action such that Rogillio was required to provide at least three
    days’ notice to American States of its application for default judgment. Accordingly, this
    Court concludes that the default judgment is not void for failure to comply with Rule 55(b).
    CONCLUSION
    ¶37.   This Court finds that the trial court properly denied the motion to set aside the default
    judgment. Therefore, the trial court’s order denying the motion to set aside default judgment
    is affirmed, and this case is remanded for further proceedings on the issue of damages.
    ¶38.   AFFIRMED AND REMANDED.
    WALLER, C.J., CARLSON, P.J., RANDOLPH, LAMAR, CHANDLER AND
    PIERCE, JJ., CONCUR. DICKINSON, J., CONCURS IN PART AND RESULT.
    KITCHENS, J., NOT PARTICIPATING.
    23