Indymac Bank v. James C. Young
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IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI
NO. 2006-CA-01175-COA
INDYMAC BANK, F.S.B.
APPELLANT
v.
JAMES C. YOUNG
DATE OF JUDGMENT:
TRIAL JUDGE:
COURT FROM WHICH APPEALED:
ATTORNEYS FOR APPELLANT:
ATTORNEY FOR APPELLEE:
NATURE OF THE CASE:
TRIAL COURT DISPOSITION:
DISPOSITION:
APPELLEE
6/15/2006
HON. SHARION R. AYCOCK
TISHOMINGO COUNTY CIRCUIT COURT
CHARLES R. WILBANKS
JEFFREY P. HUBBARD
SUSAN LOUISE DURHAM
GREG E. BEARD
CIVIL - CONTRACT
DEFAULT JUDGMENT WAS ENTERED
AGAINST INDYMAC. THE MOTION TO SET
ASIDE THAT JUDGMENT WAS DENIED.
AFFIRMED IN PART; REMANDED IN PART:
10/23/2007
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
BEFORE KING, C.J., CHANDLER AND CARLTON, JJ.
KING, C.J., FOR THE COURT:
¶1. Indymac Bank appeals the Tishomingo County Circuit Court’s denial of its motion to set
aside a default judgment. On appeal, Indymac presents several issues that will be consolidated
into the following: (1) whether the circuit court erred in finding there was proper jurisdiction to
hear the case, (2) whether the circuit court erred in denying the motion to set aside the default
judgment, pursuant to Rule 60(b) of the Mississippi Rules of Civil Procedure, and (3) whether
the judgment is void because the court’s award of damages is not supported by the evidence.
FACTS
¶2.
On August 16, 2000, James C. Young borrowed $127,000 from Indymac Bank, F.S.B., and
executed a deed of trust in favor of Indymac as security. The deed contained an incorrect legal
description of property. The deed actually described another property that Young owned and
resulted in the bank placing a lien on the wrong property. On July 17, 2001, Young filed suit against
Indymac (Cause No. CV01-0116) and, once Indymac changed the legal description of the property,
Young dismissed the suit.
¶3.
On April 12, 2002, Young filed another suit against Indymac, alleging intentional breach of
contract based on Indymac’s failure to correct the deed description in a timely manner.1 Young
argued that this failure violated Mississippi Code Annotated Section 89-5-21 (Supp. 2006). He
requested $60,000, plus interests, and statutory and punitive damages.
¶4.
On April 23, 2002, service of process was issued to Kathy Hart, one of Indymac’s agents for
service of process. Indymac failed to answer the complaint and, on May 29, 2002, Young obtained
a final default judgment against Indymac in the amount of $60,000, plus $15,000 in attorney’s fees,
for a total of $75,000. On October 4, 2004, Indymac filed a motion to set aside the default judgment.
On June 15, 2006, the court held a hearing on the motion and denied Indymac’s request.
STANDARD OF REVIEW
¶5.
This Court reviews motions to set aside default judgments under an abuse of discretion
standard. Tatum v. Barrentine, 797 So. 2d 223, 227 (¶15) (Miss. 2001). The trial court applies a
three-prong balancing test in reviewing a motion to set aside a default judgment, pursuant to Rule
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The record does not actually indicate the duration of time between the time Young filed the
suit and when Indymac corrected the deed description.
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60(b) of the Mississippi Rules of Civil Procedure. Stanford v. Parker, 822 So. 2d 886, 888 (¶6)
(Miss. 2002). Where jurisdictional questions are raised, however, the standard of review is de novo.
Trustmark Nat’l Bank v. Johnson, 865 So. 2d 1148, 1150 (¶8) (Miss. 2004).
ANALYSIS
(1) Whether the circuit court erred in finding there was proper jurisdiction to hear the case.
¶6.
Young filed his complaint against Indymac in the Tishomingo County Circuit Court, as an
action for damages due to an intentional breach of contract. Indymac argues that the circuit court
lacked subject matter jurisdiction to hear the case because Young’s cause of action involved a cloud
of title upon real estate. Indymac asserts that Young should have properly filed an action for
reformation of the deed of trust in order to clear the cloud of title, an action limited to the jurisdiction
of the chancery court.
¶7.
Mississippi circuit courts are courts of general subject matter jurisdiction while chancery
courts maintain special or limited jurisdiction. Hall v. Corbin, 478 So. 2d 253, 255 (Miss. 1985).
According to Article 6, Section 156 of the Mississippi Constitution, circuit courts maintain original
jurisdiction for all civil and criminal matters in this state in which the Mississippi Constitution has
not already vested into some other court. Hogrobrooks v. Progressive Direct, 858 So. 2d 913, 91617 (¶10) (Miss. Ct. App. 2003).
¶8.
The Mississippi Constitution establishes the jurisdictional limitations of the chancery court
as a court of equity. Article 6, Section 159 of the Mississippi Constitution provides as follows:
The Chancery Court shall have full jurisdiction of the following matters and cases,
viz.:
(a)
(b)
All matters in equity;
Divorce and alimony;
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(c)
(d)
(e)
(f)
Matters testamentary and of administration;
Minor’s business;
Cases of idiocy, lunacy, and persons of unsound mind;
All cases of which the said court had jurisdiction under the laws in force
when this Constitution is put in operation.
Miss. Const., art. 6, § 159. The chancery court is given additional jurisdiction over the following
types of cases pertaining to real property:
And in addition to the jurisdiction heretofore exercised by the chancery court in suits
to try title and to cancel deeds and other clouds upon title to real estate, it shall have
jurisdiction in such cases to decree possession, and to displace possession; to decree
rents and compensation for improvements and taxes; and in all cases where said court
heretofore exercised jurisdiction, auxiliary to courts of common law, it may exercise
such jurisdiction to grant the relief sought, although the legal remedy may not have
been exhausted or the legal title established by a suit at law.
Miss. Const., art. 6, § 160. These two provisions define the parameters of the chancery court’s
jurisdiction.
¶9.
Young filed his suit as a intentional breach of contract claim. In ERA Franchise Sys. v.
Mathis, 931 So. 2d 1278, 1283 (¶14) (Miss. 2006), the supreme court held that the circuit court is
in a better position to retain jurisdiction over breach of contract issues than the chancery court. The
court acknowledged that recent case law favored allowing equitable claims to be heard before a
circuit court when the claims are connected to a contractual relationship or other claims tied to
questions of law. Id. The circuit court maintained the proper subject matter jurisdiction to hear
Young’s intentional breach of contract claims.
¶10.
Even if this Court held that Young’s claims did not correctly allege the elements of an
intentional breach of contract claim, the trial courts determine whether a claim is legal or equitable
by considering the substance, and not the form, of the claims. Copiah Medical Assocs. v. Mississippi
Baptist Health Sys, 898 So. 2d 656, 661 (¶16) (Miss. 2005). Trial courts resolve questions of
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whether a complaint is legal or equitable in nature by allowing the circuit courts to maintain
jurisdiction over these cases. Id.
(2) Whether the trial court erred in denying the motion to set aside final default judgment
under Rule 60(b) of the Mississippi Rules of Civil Procedure.
¶11.
Rule 60 provides limited grounds for relief from judgments or orders. Under Rule 60(b), a
trial court may grant relief based on a sufficient showing of fraud, mistake or other justifiable reason.
Williams v. Kelly, 872 So. 2d 783, 785 (¶8) (Miss. Ct. App. 2004). Rule 60(b) reads, in pertinent
part, as follows:
(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:
(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.
The motion shall be made within a reasonable time, and for reasons (1), (2) and (3) not more
than six months after the judgment, order, or proceeding was entered or taken.
¶12.
Indymac filed its motion to set aside judgment under Rule 60(b)(4), alleging the judgment
was void. Indymac filed the motion two years and four months after the entry of the default
judgment. The trial court denied Indymac’s request, finding Indymac’s motion was not filed within
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a reasonable time period. The court declined to set aside the judgment that, at the time of the hearing
on June 15, 2006, had been in place for four years and one month.
¶13.
What constitutes a reasonable time period is determined on a case-by-case basis. Jenkins v.
Jenkins, 757 So. 2d 339, 344 (¶11) (Miss. Ct. App. 2000) (citing Briney v. United States Fid. &
Guar. Co., 714 So. 2d 962, 966-67 (Miss. 1998). The court must take into account whether the
opposing party has been prejudiced by the delay in seeking relief and whether there is good reason
for the defaulting party’s failure to take appropriate actions sooner. Id.
¶14.
Federal practice guidelines provide guidance in defining the limitations of Rule 60(b).
Overbey v. Murray, 569 So. 2d 303, 305 (Miss. 1990). If the court finds that a judgment is void,
according to federal authority, there is no effective time limit because no amount of time or delay
may cure a void judgment. Id. at 306 (citing 11 C. Wright & Miller, Federal Practice and
Procedure § 2862 (1973); In re Whitney-Forbes, Inc., 770 F.2d 692 (7th Cir. 1985); Triad Energy
Corp. v. McNell, 110 F.R.D. 382 (S.D.N.Y. 1986). In Overbey, the court restated the federal rule
in saying that “ a judgement is void only if the court that rendered it lacked jurisdiction of the subject
matter, or of the parties, or if acted in a manner inconsistent with due process of law.” Overbey, 569
So. 2d at 306.
¶15.
This Court holds that the final default judgment against Indymac is not void. As previously
discussed, the Tishomingo County Circuit Court had jurisdiction over the subject matter and the
parties to this action, and was thus entitled to render a judgment in this case. This Court does not
find any evidence that the trial court acted in any manner inconsistent with due process.
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¶16.
The trial court did not abuse its discretion in finding Indymac failed to file its motion within
a reasonable time period, as required by Rule 60(b)(4). Finding no error in the trial court’s decision
to deny the motion to set aside judgment, we affirm as to that issue.
(3) Whether the judgment is void because the court’s award of damages is not supported by
the evidence.
¶17.
The trial court awarded Young a judgment in the sum of $60,000, plus reasonable attorney’s
fees in the amount of $15,000, for a total of $75,000, plus interest from May 29, 2002, the date of
the judgment, until the judgment was paid in full. The circuit court did not conduct an evidentiary
hearing to establish the amount of damages that should have been awarded to Young.
¶18.
Indymac argues that the court’s judgment is void because the court did not hold an
evidentiary hearing regarding the award of damages and the award is unsupported by any evidence
in the record. Indymac also argues that the court awarded an unreasonable and arbitrary amount of
attorney’s fees.
¶19.
The trial court found that Rule 60(b)(4) required it to first determine if the default judgment
was void before it could address the merits of Indymac’s claims regarding the award of damages.
The court reasoned that since the default judgment was valid, the issues regarding damages were
precluded from the court’s consideration. While the court acknowledged that the damages award
probably exceeded the amount of damages Young would be entitled to if an evidentiary hearing was
held, the court refused to disturb the finality of the four-year old default judgment.
¶20.
The trial court was incorrect in finding it was precluded from addressing Indymac’s
arguments regarding the award of damages. In Rich ex rel. Brown v. Nevels, 578 So. 2d 609, 617
(Miss. 1991), the court held that “damages awards must be supported by evidence, and such evidence
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must be reflected in the record if it is to be affirmed on appeal.” The record is completely void of
any evidence to support the damages awards or attorney’s fees. In the absence of supporting
evidence, the actual award of damages is void.
¶21.
This Court affirms the trial court’s denial of the motion to set aside the default judgment.
However, the trial court’s award of damages and attorney’s fees is vacated and remanded to the trial
court for an evidentiary hearing to determine the appropriate amount of damages and attorney’s fees,
if any, that should be awarded.
¶22. THE JUDGMENT OF THE TISHOMINGO COUNTY CIRCUIT COURT DENYING
THE MOTION TO SET ASIDE DEFAULT JUDGMENT IS AFFIRMED. THE DAMAGES
AWARD IS VACATED AND REMANDED FOR AN EVIDENTIARY HEARING. ALL
COSTS OF THIS APPEAL ARE ASSESSED TO THE APPELLANT.
LEE AND MYERS, P.JJ., IRVING, CHANDLER, GRIFFIS, BARNES, ISHEE,
ROBERTS AND CARLTON, JJ., CONCUR.
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