Mitchell P. Smith v. Christopher A. Ferrell , 195 So. 3d 790 ( 2015 )

IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI
NO. 2013-CA-00131-COA
MITCHELL P. SMITH AND HORACE HOYT APPELLANTS
SMITH
v.
FIRST BANK, CHRISTOPHER A. FERRELL, APPELLEES
CYNTHIA FERRELL, JAMES FERRELL AND
CHRISTOPHER B. FERRELL, A MINOR, AND
CHRISTINA FERRELL, A MINOR BY AND
THROUGH THEIR MOTHER AND NEXT
FRIEND, CYNTHIA FERRELL
DATE OF JUDGMENT: 11/04/2011
TRIAL JUDGE: HON. DAVID H. STRONG JR.
COURT FROM WHICH APPEALED: LINCOLN COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANTS: W. BRADY KELLEMS
JOSEPH PRESTON DURR
CHELI KELLEMS DURR
ATTORNEYS FOR APPELLEES: DENNIS L. HORN
JARROD WATKINS TAYLOR
SHIRLEY PAYNE
JOHN DENVER FIKE
NATURE OF THE CASE: CIVIL - PERSONAL INJURY
TRIAL COURT DISPOSITION: DENIED APPELLANT’S MOTIONS TO SET
ASIDE AND VACATE JUDGMENT AND
FOR REHEARING AND TO ALTER THE
JUDGMENT
DISPOSITION: AFFIRMED: 04/28/2015
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
BEFORE GRIFFIS, P.J., BARNES AND ISHEE, JJ.
GRIFFIS, P.J., FOR THE COURT:
¶1. This Court considers a challenge to the circuit court’s decision to uphold a default
judgment and related orders. We find no error and affirm.
FACTS
¶2. In 2004, Christopher and Cynthia Ferrell bought a home in Lincoln County. They
moved in the home with their children: James, Christina, Christopher B. (“Bubba”), and
Marna.
¶3. On April 29, 2006, several of the Ferrells were injured when a fight started on
neighboring property owned by Mitchell P. Smith.
¶4. On April 26, 2007, the Ferrells filed a complaint for damages against Mitchell,
Horace Hoyt Smith (Mitchell’s father), and several others. The Ferrells personally served
process on Horace on April 27, 2007. Mitchell could not be located, and he was dismissed
from this action. However, Horace did not respond, and a default was entered against him
on September 6, 2007.
¶5. On January 22, 2009, the Ferrells filed another complaint based on the same facts.
This time, the Ferrells served Mitchell with process through his nineteen-year-old son,
Brandon. Thereafter, the Ferrells filed a motion to consolidate the two actions. The circuit
court granted the motion on October 21, 2010.
¶6. On May 9, 2011, this case went to trial. Neither Mitchell nor Horace appeared to
defend himself. The circuit court entered a default judgment against Mitchell and Horace,
in the sum of $917,000.
¶7. On June 1, 2012, First Bank received a writ of garnishment on Mitchell’s account.
Thereafter, the bank mistakenly told Mitchell that he could withdraw all of his money from
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his account. Mitchell acted on this information and withdrew all of his money from First
Bank.
¶8. On August 23, 2012, Mitchell and Horace filed their motions to set aside the
judgment. The circuit court found “that both Mitchell and [Horace] have colorable defenses,
and that had they defended these claims at trial, as it was their right to do, the outcome might
have been substantially different.” However, after weighing the relevant factors, the circuit
court ruled that the default judgment against Mitchell and Horace should stand. Their motion
was denied. In addition, Mitchell was ordered to return the funds that he withdrew from First
Bank. It is from this judgment that Mitchell and Horace now appeal.
ANALYSIS
¶9. On de novo review, this Court must first determine whether the judgment is void
because of insufficient service of process. Fletcher v. Limeco Corp., 996 So. 2d 773, 776
(¶8) (Miss. 2008). “A court must have jurisdiction, proper service of process, in order to
enter a default judgment against a party. Otherwise, the default judgment is void. If a
default judgment is void, the trial court has no discretion and must set the judgment aside.”
McCain v. Dauzat, 791 So. 2d 839, 842 (¶7) (Miss. 2001) (internal citations omitted).
¶10. Once the procedural issues are satisfied, we apply an abuse-of-discretion standard of
review to the circuit court’s decision on a motion to set aside a default judgment. Am. States
Ins. Co. v. Rogillio, 10 So. 3d 463, 467 (¶8) (Miss. 2009). “[W]here there is a reasonable
doubt as to whether or not a default judgment should be vacated, the doubt should be
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resolved in favor of opening the judgment and hearing the case on its merits.” Id. (quoting
McCain, 791 So. 2d at 843 (¶10)).
I. Whether service of process was proper.
A. Horace – Service of Process
¶11. Horace argues that he never received service of process and points to a defect on the
face of the “Return.” The defect is the placing of his name, “Horace Smith,” where the
month, “April,” should be. According to Mississippi Rule of Civil Procedure 4(f), the
“[f]ailure to make proof of service does not affect the validity of service.” However, the
absence of some proof of the receipt of a summons makes the notice questionable. Mansour
v. Charmax Indus. Inc., 680 So. 2d 852, 854 (Miss. 1996).
¶12. Here, even though the return did not properly state the date of process, there was proof
of the service of process on Horace. Accordingly, we find that the record includes sufficient
evidence to indicate that Horace was properly served with process.
B. Mitchell – Service of Process
¶13. Mitchell asserts that the Ferrells failed to comply with the service requirements of
Mississippi Rule of Civil Procedure 4. He claims that they did not use reasonable diligence
in serving personal process before using secondary service. Also, Mitchell claims that the
process server did not leave the summons at his abode. And, even if it was his abode, the
relative located on the lawn outside of the house could not receive service under Rule 4
because that relative did not live there.
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¶14. According to Rule 4(d)(1)(B),
if service under subparagraph (1)(A) of this subdivision cannot be made with
reasonable diligence, by leaving a copy of the summons and complaint at the
defendant’s usual place of abode with the defendant’s spouse or some other
person of the defendant’s family above the age of sixteen years who is willing
to receive service . . . .
¶15. In 2007, the Ferrells attempted to serve Mitchell personally on a separate lawsuit
based on the same facts. At that time Mitchell was out of the country. The Ferrells could not
locate Mitchell, and the circuit court dismissed him from the lawsuit.
¶16. In 2009, the Ferrells tried to personally serve Mitchell in a second action based on the
same facts. The process server, Gary Windham, went to the address of Mitchell’s house and
found Mitchell’s nineteen-year-old son, Brandon, at that address. Mitchell was not
available. Windham then left service of process with Brandon.
¶17. According to McDaniel v. Burroughs, 739 So. 2d 461, 463 (¶6) (Miss. Ct. App. 1999),
after the process server is unable to locate the party, it is proper to leave summons with a
family member over the age of sixteen. In McDaniel, “service of process was attempted on
McDaniel[] at his usual place of abode. After the process server was unable to locate
McDaniel, he left a copy of the summons and complaint with McDaniel’s wife.” Id.Accordingly, we find the Ferrells used reasonable diligence before leaving process with
Mitchell’s son, Brandon.
¶18. However, Mitchell argues that the house located at the address was not his usual place
of abode. In Alpaugh v. Moore, 568 So. 2d 291, 293 (Miss. 1990), “a person’s ‘usual place
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of abode’ is the place the person is actually living at the time when the service of process is
made.” (Citing Hendricks v. Kellogg, 116 Miss. 22, 76 So. 746 (1917); 62B Am. Jur. 2d
Process § 208, at 911 (1990)).
¶19. At the time of process in January 2009, Mitchell claimed to be overseas. He testified
that when he returned from overseas, in February 2009, he stayed at his house. Specifically
he stated, “I come to town. I go back. I don’t ever leave the house again.”
¶20. Mitchell later testified that he did not live in the house from August 2008 to about
April or May of 2009. Instead, he testified that he lived in a trailer located along his
driveway to his house. He contends the trailer was his abode at the time of service.
¶21. To show he was not living in the house, Mitchell presented evidence that the house
was burglarized and vandalized in August 2008. He claimed to be living in the trailer until
the renovations on the house were completed. However, after reviewing the record, we find
that there was sufficient evidence to support the circuit court’s decision that the house was
Mitchell’s usual place of abode.
¶22. Finally, Mitchell argues that Brandon did not live at the house. He claimed that
Brandon lived in a trailer located at the same address as the house. Here, we find Brandon
was “some other person of the defendant's family above the age of sixteen years who [was]
willing to receive service . . . .” M.R.C.P. 4(d)(1)(B). Therefore, we find there was
sufficient evidence to support the circuit court’s finding that Mitchell was properly with
process.
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II. Whether the default judgment should be set aside.
¶23. The supreme court discussed the standard for reviewing default judgments:
This Court reviews the trial court’s decision on a motion to set aside a default
judgment under an abuse of discretion standard. Default judgments are not
favored in the law. If reasonable doubt exists as to whether a default judgment
should be vacated, “the doubt should be resolved in favor of opening the
judgment and hearing the case on its merits.” However, the party seeking
relief from the default judgment is not entitled to relief as a matter of right, and
this Court will only reverse the trial court where it has abused its discretion.
Woodruff v. Thomas, 143 So. 3d 546, 552 (¶11) (Miss. 2014) (internal citations omitted).
¶24. When a circuit court considers a Mississippi Rules of Civil Procedure 60(b) motion
to set aside a default judgment, it must weigh: “(1) the nature and legitimacy of the
defendant’s reasons for his 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 is set aside.” McCain, 791 So. 2d at 843 (¶10). Here,
the circuit court weighed each factor in making its ruling.
A. Nature and Legitimacy of the Reason for Default
¶25. The circuit court began with a review Mitchell’s and Horace’s reasons for default.
The circuit court found that the Ferrells properly served Horace and Mitchell with process.
In addition, both Horace and Mitchell provided no good cause for failing to answer the
complaint. However, “procedural mis-steps . . . , which are grounds for finding the first
factor in the default analysis against [a party], are not sufficient by themselves to permit the
upholding of the trial court’s denial of the motion to set aside the default.” Am. Cable Corp.
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v. Trilogy Commc'n Inc., 754 So. 2d 545, 556 (¶44) (Miss. Ct. App. 2000). We find this
prong weighs in favor of the Ferrells. Nevertheless, we must still consider the other two
prongs.
B. Colorable Defense
¶26. As to the colorable-defense prong, courts have determined that this factor “outweighs
the other two, and we have encouraged trial courts to vacate a default judgment where ‘the
defendant has shown that he has a meritorious defense.’” Allstate Ins. Co. v. Green, 794 So.
2d 170, 174 (¶9) (Miss. 2001) (citing Bailey v. Ga. Cotton Goods Co., 543 So. 2d 180, 182
(Miss. 1989)); see also Flagstar Bank FSB v. Danos, 46 So. 3d 298, 307 (¶32) (Miss. 2010)
(most important factor is the colorable-defense prong).
¶27. Here, the circuit court found:
[T]he defendants put on considerable testimony that neither Mitchell nor
[Horace] [was] involved in the party or the fight, that neither Mitchell nor
[Horace] provided alcohol to the minors at the party, and that neither Mitchell
nor [Horace] [was] involved in the fight in any way. In fact, the court is
convinced that both Mitchell and [Horace] have colorable defenses, and that
had they defended these claims at trial, as it was their right to do, the outcome
might have been substantially different.
We find the circuit court did not abuse its discretion in finding a strong colorable defense.
However, while a colorable defense is the strongest factor, prejudice to the plaintiff may
prevent a default judgment from being vacated. Guar. Nat’l Ins. Co. v. Pittman, 501 So. 2d
377, 388 (Miss. 1987). Therefore, we must still consider the prong of prejudice to the
plaintiffs.
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C. Nature and Extent of Prejudice to the Plaintiffs
¶28. The third prong of the balancing test is “the nature and extent of prejudice which may
be suffered by the plaintiff if the default is set aside.” McCain, 791 So. 2d at 843 (¶10).
¶29. Here, the circuit court found:
The third prong . . . weighs against the defendants. Here, the damage was
inflicted over five years ago, the lawsuit has been litigated for five years,
Brandon Smith, a key witness is now deceased, and unable to testify, and the
plaintiffs followed the rules of civil procedure in attempting to file and serve
the lawsuit. For these reasons, the court finds that setting aside the default
judgment would result in substantial prejudice to the plaintiffs.
As a result, the circuit court’s decision was based primarily on the finding that setting aside
default judgment would cause the Ferrells substantial prejudice. “The 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.” Rogillio, 10 So. 3d at 472 (¶23).
¶30. We agree with the circuit court. Mitchell and Horace had years to respond after
receiving service of process. Also, after Mitchell became aware of the final judgment against
him in November 2011, he still did not take any action until over nine months later.
¶31. Recovery under Rule 60(b)(6) “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). Mitchell and Horace present no exceptional or compelling
circumstances.
¶32. Therefore, after reviewing the record and relevant factors, we find the circuit court
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did not abuse its discretion when it denied the motion to set aside the default judgment.
III. Whether Mitchell should return mistakenly released funds to First
Bank.
¶33. After the court entered a default judgment against Mitchell, First Bank received a writ
of execution followed by a writ of garnishment. Once the bank received the writ of
garnishment, the circuit court dismissed the writ of execution. Upon the dismissal of the writ
of execution, the bank called Mitchell and told him that he could withdraw his money from
his account. After being instructed by the bank, Mitchell withdrew all of his money, totaling
$19,537.26.
¶34. At the hearing to set aside the default judgment, the bank asked the circuit court to
order Mitchell to return the money to avoid unjust enrichment. Unjust enrichment was
addressed in Dunn v. Dunn, 853 So. 2d 1150, 1153-54 (¶12) (Miss. 2003):
Money paid to another by mistake of fact, although such mistake may have
been caused by payor’s negligence, may be recovered from the person to
whom it was paid, in an action for money had and received. The ground on
which recovery is allowed is that one receiving money paid to him by mistake
should not be allowed to enrich himself at the expense of the party who paid
the money to him by retaining it, but in equity and good conscience should
refund it. In order that this rule may apply, the party to whom the payment
mistake was made must be left in the same situation after he refunds it as he
would have been left had the payment not been made.
¶35. Ultimately, the circuit court ruled that the default judgment against Mitchell and
Horace should stand. Upon this holding, the circuit court ordered Mitchell to return the
withdrawn funds to the bank and ordered the bank to release the funds to the Ferrells.
¶36. We find First Bank unjustly enriched Mitchell. Therefore, Mitchell must repay the
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bank the full amount pursuant to the circuit court order.
CONCLUSION
¶37. Upon reviewing the record, we find both Mitchell and Horace received service of
process. Further, the circuit court did not abuse its discretion when it refused to set aside the
default judgment. For these reasons, the circuit court’s decision to uphold the default
judgment and related orders is affirmed.
¶38. THE JUDGMENT OF THE LINCOLN COUNTY CIRCUIT COURT IS
AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE
APPELLANTS.
LEE, C.J., IRVING, P.J., BARNES, ISHEE, ROBERTS, CARLTON,
MAXWELL AND FAIR, JJ., CONCUR. JAMES, J., DISSENTS WITHOUT
SEPARATE WRITTEN OPINION.
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