RICHARD BASHAM, d/b/a Basham's Wrecker Service v. WILLIAM RICH and PATRICIA RICH
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RENDERED: March 5, 1999; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1997-CA-003022-MR
RICHARD BASHAM, d/b/a
Basham’s Wrecker Service
APPELLANT
APPEAL FROM WARREN CIRCUIT COURT
HONORABLE THOMAS R. LEWIS, JUDGE
ACTION NO. 97-CI-000529
v.
WILLIAM RICH and
PATRICIA RICH
APPELLEES
OPINION
REVERSING AND REMANDING
* * * * * * * * *
BEFORE:
BUCKINGHAM, EMBERTON, AND HUDDLESTON, JUDGES.
BUCKINGHAM, JUDGE.
Richard Basham, d/b/a Basham’s Wrecker
Service, (Basham) appeals from an order of the Warren Circuit
Court denying his motion pursuant to Kentucky Rule of Civil
Procedure (CR) 55.02 to set aside a default judgment entered
against him and in favor of William and Patricia Rich (the
Riches) in the amount of $8,536.74 plus costs.
We conclude that
the default judgment was improperly entered and reverse and
remand.
The Riches were involved in a motor vehicle accident on
May 16, 1996.
Basham, who operates a wrecker service, came to
the accident scene and towed the Riches’ pickup truck,
trailer/camper, and other personal property to his storage lot in
Bowling Green.
While the Riches’ property was stored on Basham’s
premises, some of it was stolen.
As a result of the theft, the Riches filed a complaint
against Basham in the trial court on May 12, 1997, seeking to
recover damages for their loss.
the following day.
Summons was served on Basham on
On May 16, 1997, one of the Riches’
attorneys, Wesley G. Lile (Lile), sent a letter to the office of
Basham’s insurer, John Deere Insurance, in Jacksonville, Florida,
which reads in full as follows:
Dear Mr. Patrick:
This will confirm my agreement to extend the
time for you to answer the law suit filed
against your insured.
This is an indefinite extension of time, in
the hopes that we may resolve the claim
without further litigation.
I will be providing your company with an
itemization of the loss as well as any
investigative materials we have concerning
events after the loss was discovered. I will
be in touch with you soon.
Very truly yours,
WESLEY G. LILE
On May 23, 1997, the trial court entered an order setting the
case for a scheduling conference on July 7, 1997.
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The clerk’s
docket notation indicates that a copy of the order was sent to
all counsel of record and parties not represented by counsel.1
On July 7, 1997, the trial court held a scheduling
conference at which William Rudloff (Rudloff), the Riches’ other
attorney, was present.
From a review of the videotape of the
hearing, it appears that neither Basham nor anyone on his behalf
was present.
The trial court suggested that Rudloff move the
court to grant the Riches a default judgment, as no answer had
been filed by Basham.
Rudloff then indicated to the court that
his co-counsel, Lile, had granted an extension of time for an
answer to be filed, and, at the suggestion of the Riches’
counsel, a trial date of August 8, 1997, was set.
On July 25, 1997, counsel for the Riches heeded the
suggestion of the trial court and filed a motion for a default
judgment.
The motion was not served on either Basham or his
insurer, and a default judgment in the amount of $8,536.74 was
entered against Basham on July 29, 1997.
The trial date was
subsequently removed from the court’s docket.
Negotiations to settle the case continued between
Basham’s insurer and the Riches’ attorney after the entry of the
default judgment, although the insurer was apparently unaware of
the judgment.
In fact, a representative of the insurer faxed a
1
Although the clerk’s docket indicates that notice of entry
of the order was sent to all counsel and all parties not
represented by counsel, and the order itself directs that the
clerk send copies to those individuals, the name “William
Rudloff” and the date “5/27/97" and a checkmark were written at
the bottom of the order and apparently initialed by a deputy
clerk. Despite the clerk’s notation on the docket, we question
whether this order was ever mailed to anyone other than Mr.
Rudloff, the Riches’ other attorney.
-3-
letter to one of the Riches’ attorneys on August 3, 1997,
offering to settle the claim for $1,000 before assigning the case
to an attorney to defend the claim.
The letter acknowledged that
the case was set to be tried on August 8, 1997.2
On October 1, 1997, Basham, by counsel, filed a motion
to set aside the default judgment.
A hearing on the motion was
held on October 20, 1997, and the trial court ordered the motion
passed for hearing until November 3, 1997, so as to encourage the
parties to settle the claim out of court.
The trial court
indicated that it would likely set aside the default judgment at
that time if the case was not settled.
However, the trial court
also related to Basham’s counsel that the court did not approve
of indefinite extensions of time and that it had dismissed cases
in the past so as to discourage the granting of such extensions.
On November 3, 1997, the motion to set aside the
default judgment again came before the trial court, as the case
had not been settled in the interim.
The trial court
acknowledged that “I overruled his [Mr. Liles’] letter,” and the
motion was denied.
This appeal followed.
CR 55.02 provides that “[f]or good cause shown the
trial court may set aside a judgment by default in accordance
with Rule 60.02.”
The law does not favor default judgments.
Bargo v. Lewis, Ky., 305 S.W.2d 757, 758 (1957).
However,
“[w]hile the courts should adopt a liberal attitude on motions to
set aside default judgments, good cause must be shown.”
2
Jacobs
Basham’s insurer was apparently notified of the trial date
by letter from the Riches’ attorney dated July 7, 1997.
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v. Bell, Ky., 441 S.W.2d 448, 449 (1969).
Also, even though
default judgments are not favored, broad discretion rests in the
trial courts in considering motions to set them aside and
appellate courts will not interfere with that discretion absent
abuse.
Howard v. Fountain, Ky. App., 749 S.W.2d 690, 692 (1988).
We conclude that, since the judgment should never have
been entered in the first place, the trial court abused its
discretion in not setting it aside.
We understand the trial
court’s desire to control its docket and to move cases to a
timely disposition.
We also understand the trial court’s dislike
of indefinite extensions of time and the delay in the timely
dispositions of cases that such extensions may cause.
However,
such an extension was granted by the Riches’ counsel in this
case, and a default judgment was entered against Basham pursuant
to the trial court’s suggestion and without notice to Basham,
despite the written “indefinite extension” that had been granted
him by opposing counsel.
It was surely necessary that Basham be
given notice that the written extension upon which he relied was
revoked prior to a default judgment being entered against him.
We are concerned with the delay of approximately sixty
days from the entry of the default judgment until Basham’s motion
to set aside the judgment was filed.
Citing Terrafirma, Inc. v.
Krogdahl, Ky., 380 S.W.2d 87 (1964), and Zimmerman v. Segal, 288
Ky. 33, 155 S.W.2d 20 (1941), the Riches contend that Basham did
not timely file his motion to set aside the judgment.
However,
in Terrafirma, the “unreasonable delay” to which the court was
referring was the time between the serving of the summons on the
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defendant and the granting of the default judgment and not the
time between the granting of the judgment and the filing of the
motion to set it aside.
The defendant in Terrafirma did not wait
two months to set aside the default judgment, as the Riches state
in their brief, but filed the motion within fifteen days of the
judgment.
The court’s opinion in that case was not based on the
delay between the judgment and the defendant’s motion to set it
aside.
Likewise, in Zimmerman, the delay to which the court
referred included a period of time before the judgment was
entered.
Furthermore, it is not perfectly clear that the clerk
ever gave notice of entry of the default judgment to Basham.3
The clerk’s docket notation indicates that notice was sent to
“Dan Rudloff & Wes Lile,” but the docket also contains a notation
that notice of entry was sent to “all counsel of record and
parties not represented by counsel.”
In examining the judgment
itself, there is a clerk’s notation of the names of the Riches’
two attorneys and checkmarks by their names which were initialed
apparently by a deputy clerk.
While we cannot say that the clerk
did not send a copy of the default judgment to Basham, in light
of the notation on the judgment, it appears that such may have
been the case.
In short, it is unclear when Basham or his
insurer became aware of the default judgment.
3
While the clerk was not required to serve notice of entry
of the judgment on Basham since he was in default, see
CR 77.04(1), the date that Basham actually became aware of the
default judgment is relevant to this discussion.
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At any rate, we hold that the trial court erred by not
granting Basham’s motion to set aside the default judgment, as
the judgment was improperly entered in light of the written
“indefinite extension” which had been given to Basham and on
which he reasonably relied without being given notice to the
contrary.
The order of the Warren Circuit Court is reversed, and
the case is remanded for further proceedings.
ALL CONCUR.
BRIEFS FOR APPELLANT:
BRIEF FOR APPELLEE:
John David Cole, Jr.
Bowling Green, KY
Dan Rudloff
Bowling Green, KY
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