Byrd v. Mortenson

298 S.E.2d 170 (1982)

Earl H. BYRD, Jr. v. Rodney A. MORTENSON, M.D., P.A., and Rodney A. Mortenson, M.D.

No. 8110SC1263.

Court of Appeals of North Carolina.

December 21, 1982.

*172 Cheshire, Manning & Parker by Joseph B. Cheshire V, Thomas C. Manning and Barbara A. Smith, and Bode, Bode & Call by Robert V. Bode, Raleigh, for plaintiff-appellee.

Perry C. Henson and Perry C. Henson, Jr., Greensboro, for defendants-appellants.

ARNOLD, Judge.

Defendants' primary attack on appeal is on the trial judge's refusal to set aside the defaults against them.

For the entry of a default to be disturbed, as those entered by the Clerk of Superior Court on 3 and 6 April in this case, G.S. 1A-1, Rule 55(d) requires that "good cause" be shown. That determination is in the trial judge's discretion and will not be disturbed absent an abuse of discretion. Frye v. Wiles, 33 N.C.App. 581, 235 S.E.2d 889 (1977). Crotts v. Pawn Shop, 16 N.C. App. 392, 192 S.E.2d 55, cert. denied 282 N.C. 425, 192 S.E.2d 835 (1972).

This Court follows the principle that "[i]nasmuch as the law generally disfavors default judgments, any doubt should be resolved in favor of setting aside an entry of default so the case may be decided on its merits." Peebles v. Moore, 48 N.C. App. 497, 504-5, 269 S.E.2d 694, 698 (1980), modified, 302 N.C. 351, 275 S.E.2d 833 (1981). At the same time "the rules which require responsive pleadings within a limited time serve important social goals, and a party should not be permitted to flout them with impunity." Acceptance Corp. v. Samuels, 11 N.C.App. 504, 510, 181 S.E.2d 794, 798 (1971).

Two decisions strongly support defendants' position here. In Whaley v. Rhodes, 10 N.C.App. 109, 177 S.E.2d 735 (1970), the Court set aside entry of a default under Rule 55(d). The default had been entered after the defendant failed to answer plaintiff's complaint. Whaley found that the defendant showed "good cause" for failure to file an answer because he had turned the plaintiff's complaint over to his insurance agent "who assured him that ... the insurance company ... would take care of the matter ...." 10 N.C.App. at 109, 177 S.E.2d at 736.

In the recent case of Peebles, the Court set aside entry of default on facts analogous to this case. That decision was based on the insurer's misplacing of the insured's file, which resulted in an answer being filed seven days late. Peebles concluded "defendant's failure timely to file his answer was due to an inadvertence on the part of defendant's insurer ...." 48 N.C.App. at 507, 269 S.E.2d at 700.

Although defendant here did not turn over a copy of the complaint to his insurer, he took sufficient action to justify setting aside the defaults against him. First, he immediately contacted his insurer when he learned of the suit. Second, he forwarded all relevant medical and office records to the insurer in a timely manner. Third, he acted in conformity with his insurer's instructions, which was a reasonable response given the insurer's superior expertise in these matters. It should also be noted that his lawyer immediately contacted the Clerk of Superior Court's office to enter an appearance when he discovered that he was the defendant's counsel.

The cases cited by plaintiff do not appear to be dispositive on the default issue. For example, Howell v. Haliburton, 22 N.C.App. 40, 205 S.E.2d 617 (1974), is distinguishable on the facts. In that case, the insurer waited ten months after receiving notice of the suit before contacting local counsel to take care of the matter. The time lapse was much shorter here. Britt v. Georgia-Pacific Corp., 46 N.C.App. 107, 264 S.E.2d 395 (1980), is also not determinative since the delay there was caused by the defendant's in-house legal department misplacing the papers.

In Peebles, the court reversed the trial court's refusal to set aside an entry of default on facts similar to those in this case, where defendant's failure to file a timely *173 answer was due to the insurer's inadvertence.

Other similarities between Peebles and this case justify following its holding here. The court thought it important, for example, that an answer was filed promptly when the mistake was discovered. In the present case defendants sought "other and further relief as to the court may seem just and proper" in their 15 April motion and sought time to file an answer in a 13 July motion.

Peebles also pointed to a lack of prejudice to the plaintiff and injustice to the defendant as factors in the default decision. The only prejudice to plaintiff here is in the sense that he may have to try a case that he has won without a trial. That, however, is not the type of prejudice that Peebles seeks to avoid. Thus, the injustice to the defendant in not having a review of his defense on the merits with the resultant harm to his reputation and ability to make a living outweighs any possible prejudice to the plaintiff. "[W]e believe that justice will best be served by allowing this case to be tried on its merits." Peebles, 48 N.C.App. at 507, 269 S.E.2d at 700.

In Clark v. Clark, 301 N.C. 123, 129, 271 S.E.2d 58, 63 (1980), our Supreme Court said: "A judge is subject to reversal for abuse of discretion only upon a showing by a litigant that the challenged actions are manifestly unsupported by reason." Based on the record before us, and in our advantage of hindsight, we cannot say that the trial court's refusal to set aside the defaults against defendants was not "manifestly unsupported by reason." As a result, we reverse the trial court's refusal to set aside the defaults against the defendants.

The defendants' second assignment of error is that they should have been allowed an extension of time to file an answer. Where a party seeks an extension of time to answer after the expiration of the 30-day limit, the judge may permit the answer if he finds that "the failure to act was the result of excusable neglect." G.S. 1A-1, Rule 6(b).

In Norris v. West, 35 N.C.App. 21, 239 S.E.2d 715 (1978), the court upheld a finding of excusable neglect under Rule 6(b) on facts less compelling than these. Relying on a conversation with the deputy sheriff who served him with a copy of the summons and complaint, the defendant in Norris believed that he was only required to get the papers to his insurance agent within 30 days. As a result, the papers did not reach the insurer's attorney until after the expiration of the stated time to file an answer. If Norris found excusable neglect when the defendant waited 27 days to contact his insurance agent, the requisite excuse is certainly found here where defendant contacted his insurer as soon as he learned of the suit against him. Upon remand, defendant shall be allowed to file an answer in this case.

Reversed and remanded.

WHICHARD, J., concurs.

MARTIN, J., dissents.

ROBERT M. MARTIN, Judge, dissenting:

I am of the opinion that the record below does not disclose a manifest abuse of discretion entitling this Court to interfere with the trial judge's refusal to vacate the default entry.

The North Carolina Supreme Court, in Settee v. Electric Ry., 170 N.C. 365, 367, 86 S.E. 1050, 1050-51 (1915), attempted to shed some light on the meaning of "abuse of discretion" stating that

The discretion of the judge ... is not an arbitrary one to be exercised capriciously or according to his absolute will, but reasonably and with the object solely of presenting what may seem to him an inequitable result. The power is an inherent one, and is regarded as essential to the proper administration of the law.... While the necessity for exercising this discretion, in any given case, is not to be determined by the mere inclination of the judge, but by a sound and enlightened judgment in an effort to attain the end of all law, namely, the doing of even and *174 exact justice, we will yet not supervise it, except, perhaps, in extreme circumstances, not at all likely to arise; and it is therefore practically unlimited.

That Court has been reluctant to find an abuse of discretion and in most instances has carefully guarded the trial courts' discretionary powers.

While it has been recognized that it is "practically impossible to fashion a rule which could generally pinpoint where a trial judge's discretion in any matter ends and an abuse thereof begins," Worthington v. Bynum and Cogdell v. Bynum, 305 N.C. 478, 484, 290 S.E.2d 599, 604 (1982), I do not feel this case deserves different treatment than those cited in the majority opinion in which the trial judges' decisions to deny or grant defendants' motions to vacate entry of default were upheld on appeal. Although the majority may disagree with the able and conscientious trial judge, there is sufficient evidence to warrant his denial of defendant's motion to vacate entry of default. First, defendant failed to include a copy of the complaint and summons with the medical records which he mailed to his insurer, a fact which may account for the improper placement of the medical records in the insurer's "incidental" file. Second, defendant did not check back with his insurer or his assigned counsel, even though he was never contacted once he had mailed the records to his insurer.

In my opinion the majority has "substituted what it considered to be its own better judgment ... and did not strictly review the record for the singular cause of determining whether ... [the judge] had clearly abused his discretion...." Id. at 486, 290 S.E.2d at 604. Since I "believe that our appellate courts should place great faith and confidence in the ability of our trial judges to make the right decision, fairly and without partiality," Id. at 487, 290 S.E.2d at 605, I cannot participate in the majority's finding of an abuse of discretion on the part of the trial judge.