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Jones v. Jones

Court of Appeals of North Carolina

February 5, 2019

JOY MANN JONES, Plaintiff-Appellee,
v.
BRUCE RAY JONES, Defendant-Appellant.

          Heard in the Court of Appeals 29 November 2018.

          Appeal by defendant from entry of default entered 2 June 2015 by the Lee County Clerk of Court and orders entered 10 August 2016 and 12 October 2017 by Judge Mary H. Wells in Lee County, No. 13 CVD 817 District Court.

          Elizabeth Myrick Boone for plaintiff-appellee.

          Wilson, Reives and Silverman, PLLC, by Jonathan Silverman, for defendant-appellant.

          ARROWOOD, Judge.

         Bruce Ray Jones ("defendant") appeals from entry of default and orders denying his motion to set aside entry of default, denying his Rule 59 motion, and ordering specific performance. For the following reasons, we affirm.

         I. Background

         Plaintiff initiated this breach of contract action for damages and specific performance by filing a verified complaint on 5 September 2013 alleging defendant failed to comply with a separation agreement and property settlement entered into by the parties on 19 October 2011 as part of their separation and divorce. Defendant filed a motion for extension of time to file responsive pleadings on 13 September 2013 which was granted the same day by order of the clerk. The order allowed responsive pleadings through 8 November 2013. On 7 November 2013, defendant filed a motion to dismiss for lack of subject matter jurisdiction. In the motion, defendant asserted that he had previously filed an action against plaintiff in Lee County with case number 12 CVD 442 to rescind or vacate the 19 October 2011 separation agreement and property settlement at issue and that plaintiff's claims in the present action were compulsory counterclaims in his prior action. Plaintiff filed a response on 13 January 2014.

         Defendant's motion to dismiss came on for hearing in Lee County District Court on 12 February 2014. The trial court denied the motion by order filed 18 March 2014. Defendant filed notice of appeal to this Court from the 18 March 2014 order denying his motion to dismiss on 27 March 2014 alleging the trial court's decision affected a substantial right. The appeal was heard before this Court on 25 September 2014. This Court agreed the matter affected a substantial right and reviewed the appeal, ultimately affirming the trial court's denial of defendant's motion to dismiss in an unpublished opinion filed 17 March 2015. See Jones v. Jones, 240 N.C.App. 88, 772 S.E.2d 13 (2015) (unpub.) COA14-507 (available at 2015 WL 1201332).[1] This Court's opinion was certified to the district court on 6 April 2015 and filed in Lee County on 8 April 2015.

         Almost two months later, on 2 June 2015, plaintiff filed a motion for entry of default together with an attached affidavit of plaintiff's counsel. Plaintiff asserted entry of default was proper because defendant failed to file an answer or other pleading before the time for doing so expired. The Lee County Clerk of Court entered default against defendant on the same day plaintiff filed the motion, 2 June 2015. Plaintiff then filed an affidavit and a motion for summary judgment on 15 June 2015.

         Almost a month after entry of default, defendant filed a verified motion to dismiss and answer on 30 June 2015. Over a month after entry of default, defendant filed a motion to set aside entry of default on 9 July 2015. Defendant asserted that entry of default should be set aside because "[it] was obtained without notice to [him] and as required by Rule 5" and because "[he] has now filed an answer in this action and has meritorious defenses." Thus, defendant contended "[g]ood cause has been shown to set aside entry of default and it should be set aside pursuant to Rule 55(d) . . . ."

          The matter came on for a motions hearing on 6 April 2016. Defendant was represented by new counsel at the hearing because his original counsel was suspended from the practice of law around 5 February 2016. At the hearing, the court first considered defendant's motion to set aside entry of default. Defendant argued the entry of default was not proper because he did not have notice or receive service. Defendant further argued that even if entry of default was proper without notice or service, the court could set aside entry of default using its equitable powers. In opposition, plaintiff argued the entry of default was simply a ministerial task by the clerk when there is no responsive pleading. Plaintiff additionally argued that notice and service were not necessary for entry of default and, therefore, defendant has not established grounds for setting aside entry of default.

         After considering the arguments, the trial court indicated it was inclined to deny defendant's motion to set aside entry of default. At that point, defendant's counsel sought to postpone a decision until they could get an affidavit from defendant's original counsel. Defendant's counsel asserted that the affidavit would show whether or not good cause existed. The trial court agreed to allow defendant to file an affidavit of defendant's original counsel. The next day, 7 April 2016, defendant filed an amended motion to set aside entry of default, which sought to incorporate an affidavit of his original counsel with the original motion to set aside entry of default. The affidavit of defendant's original counsel asserted the following grounds to support his assertion that good cause does exist to set aside the entry of default: the passage of time between filing the motion to dismiss and this Court's decision in defendant's appeal; a State Bar grievance which defendant's original counsel was dealing with; other murder cases defendant's original counsel was involved with; defendant's defense through the litigation; alleged meritorious defenses; the failure of plaintiff's counsel to provide notice of the motion for entry of default; and the violation of local customs when plaintiff's counsel moved for entry of default without discussing the matter with defendant's counsel in advance.

         Plaintiff's counsel responded by filing an affidavit on 8 April 2016. Plaintiff's counsel averred that she spoke with defendant's original counsel after this Court's decision and "asked him if [defendant] was now going to pay [plaintiff]. His response to me was 'that it was the case with no options.'" Plaintiff's counsel further averred that they felt filing the motion for entry of default was the best option after defendant's original counsel's "comment . . . about this being 'the case with no options' along with his failure to file an answer or to respond with any information regarding [defendant's] willingness or unwillingness to comply with the [a]greement[.]"

         After plaintiff submitted a proposed order and defendant filed a request for additional findings of fact, the trial court filed an order denying defendant's motion to set aside entry of default on 10 August 2016. On the same day defendant filed a motion for a new hearing pursuant to Rule 59(a)(8) claiming the trial court erred by imputing his original counsel's neglect to him.

         The matter came back on for a hearing on 14 September 2016. At that time, the court considered and denied defendant's Rule 59 motion. The court then proceeded to consider plaintiff's motion for summary judgment and denied the motion. The matter was then scheduled for an evidentiary hearing, which took place on 29 September 2016 and 19 October 2016. After plaintiff submitted a proposed order, defendant filed a request for findings of fact on 9 August 2017.

         On 12 October 2017, the trial court filed orders denying defendant's Rule 59 motion, denying plaintiff's summary judgment motion, and ordering specific performance of the separation agreement and property settlement. On 9 November 2017, defendant filed notice of appeal from the trial court's entry of default on 2 June 2015, order denying his motion to set aside entry of default filed on 10 August 2016, and orders filed on 12 October 2017 denying his Rule 59 motion and ordering specific performance.

         II. Discussion

         On appeal, defendant challenges the trial court's denial of his motion to set aside entry of default and the trial court's order for specific performance.

         1. Entry of Default

          Defendant first argues the trial court erred in denying his motion to set aside entry of default. "A trial court's decision of whether to set aside an entry of default, will not be disturbed absent an abuse of discretion. A judge is subject to a reversal for abuse of discretion only upon a showing by a litigant that the challenged actions are manifestly unsupported by reason." Luke v. Omega Consulting Grp., LLC, 194 N.C.App. 745, 748, 670 S.E.2d 604, 607 (2009) (citation and quotation marks omitted). Upon review, we find no abuse of discretion and affirm the trial court.

         Rule 55(d) governs setting aside entry of default and provides that the trial court may set aside an entry of default "[f]or good cause shown[.]" N.C. Gen. Stat. § 1A-1, Rule 55(d) (2017). "What constitutes good cause depends on the circumstances in a particular case" and "defendant carries the burden of showing good cause to set aside entry of default." Luke, 194 N.C.App. at 748, 670 S.E.2d at 607 (quotation marks omitted). When determining if defendant has shown good cause to set aside entry of default, both the trial court and this Court consider the following factors: "(1) was defendant diligent in pursuit of this matter; (2) did plaintiff suffer any harm by virtue of the delay; and (3) would defendant suffer a grave injustice by being unable to defend the action." Id.

[I]t is entirely proper for the court to give consideration to the fact that default judgments are not favored in the law. At the same time, however, it is also true that 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.

Howell v. Haliburton, 22 N.C.App. 40, 42, 205 S.E.2d 617, 619 (1974).

         In this case, defendant emphasizes that the standard for setting aside entry of default is lower than that for setting aside a default judgment, see Swan Beach Corolla, L.L.C. v. Cnty. of Currituck, __ N.C.App. __, __, 805 S.E.2d 743, 747 (2017) (" 'This [good cause] standard is less stringent than the showing of 'mistake, inadvertence, or excusable neglect' necessary to set aside a default judgment pursuant to N.C. Gen. Stat. § 1A-1, Rule 60(b).' ") (quoting Brown v. Lifford, 136 N.C.App. 379, 382, 524 S.E.2d 587, 589 (2000)), and Coastal Federal Credit Union v. Falls, 217 N.C.App. 100, 108, 718 S.E.2d 192, 197 (2011) (comparing the standard for setting aside entry of default with the more stringent standard for setting aside a default judgment), and contends that he met the threshold of showing good cause to set aside entry of default in this case. Defendant compares his case to Swan Beach Corolla, L.L.C. v. Cnty. of Currituck, __ N.C.App. __, 805 S.E.2d 743 (2017), and Beard v. Pembaur, 68 N.C.App. 52, 313 S.E.2d 853, disc. review denied, 311 N.C. 750, 321 S.E.2d 126 (1984).

         In Swan Beach, this Court explained that "[a] trial court abuses its discretion when the party appealing the denial of its motion to set aside the entry of default demonstrates that the trial court did not apply the proper 'good cause' standard in its determination." N.C.App. at__, 805 S.E.2d at 747. This Court further explained that a trial court may also abuse its discretion in finding that a defendant had not established good cause to set aside entry of default. Id. at__, 805 S.E.2d at 747 (citing Peebles v. Moore, 48 N.C.App. 497, 504, 269 S.E.2d 694, 698 (1980), modified and aff'd by 302 N.C. 351, 275 S.E.2d 833 (1981)).

         In Swan Beach, this Court held "the trial court abused its discretion by failing to apply the good cause standard when it denied [the d]efendant's motion to set aside the entry of default." Id. at__, 805 S.E.2d at 749. This Court explained that its review of the record revealed "that the trial court identified no reason for its denial of [the d]efendants' motion other than uncertainty as to whether the time for which [the d]efendants had to file an answer had run." Id. at__, 805 S.E.2d at 748. This Court then went a step further in its analysis and held "that even if the trial court had applied the proper standard it would have abused its discretion in denying [the d]efendant's motion[.]" Id. at__, 805 S.E.2d at 749. In reaching its alternative holding, this Court analyzed the three factors set forth above and agreed with the defendants that they had been vigorously pursuing the litigation and that they would suffer a grave injustice given the size of the judgment and the nature of the claims. Id. at__, 805 S.E.2d at 748-49. In concluding the defendants were vigorously pursuing the litigation, this Court explained that within a week of this Court's decision overturning the trial court's grant of the defendant's prior motion to dismiss, "counsel for [the d]efendants promptly resumed discussions with [the p]laintiffs' counsel regarding discovery scheduling and other tasks related to continuing the litigation" and "[t]wo days before [the p]laintiffs' counsel sought entry of default, counsel had scheduled a meeting to discuss settlement." Id. at__, 805 S.E.2d at 749. This Court further noted that the entry of default was a surprise to the defendants, who submitted a proposed answer and filed a motion to set aside entry of default six days after entry of default. Id. at__, 805 S.E.2d at 749.

         In Beard, to which this Court referred in Swan Beach, see N.C. App. at__, 805 S.E.2d at 748, this Court reviewed the trial court's denial of the plaintiff's motion to set aside entry of default on the defendant's counterclaim and held the trial court abused its discretion. Beard, 68 N.C.App. at 55-56, 313 S.E.2d at 855-56. This Court explained in Beard that the plaintiff cited both Rule 55 and Rule 60 and specifically referred to "excusable neglect" and "meritorious defense" in the motion to set aside the entry of default and it was unclear from the trial court's order whether the trial court applied the proper "good cause" standard. Id. at 56, 313 S.E.2d at 855. This Court, however, held that "[e]ven if the trial court used as its standard, 'good cause,' as set forth in Rule 55(d), the trial court abused its discretion" because the record indicated that "discovery was being pursued vigorously by the parties; that [the] plaintiff's counsel thought, albeit erroneously, that service was not perfected on [the] defendant until . . . four days before the entry of default; and that all matters in [the] defendant's [c]ounterclaim related to the . . . subject of all material allegations in the plaintiff's [c]omplaint." Id. at 56, 313 S.E.2d at 855-56.

          First and foremost, unlike in Swan Beach and Beard, it is clear the trial court applied the "good cause" standard in this case. The trial court made a finding and issued a conclusion directly stating that "[d]efendant has failed to show good cause for his failure to file a responsive pleading in this matter."

         Furthermore, the trial court did not abuse its discretion in its good cause analysis. As this Court noted in both Swan Beach and Beard, the unique facts in each case must be considered. While we may have arrived at a result different from that of the trial court if we were to review the matter de novo, we simply cannot say that the trial court abused its discretion in this instance.

         This Court's analysis in both Swan Beach and Beard emphasized that the defaulting party was vigorously pursuing the litigation at the time of the entry of default. That does not appear to be the case following the appeal to this Court in the present action. Defendant attempts to broaden the scope of this Court's review on appeal by asserting that "[i]t cannot be said that [he] was anything other than diligent in pursuing issues relating to the subject agreement . . . ." In doing so, defendant conflates this action with the action he previously filed to rescind and vacate the separation agreement and property settlement and contends he vigorously litigated both actions all the way to this Court. Defendant contends his participation in the two actions has included taking part in depositions and court hearings, submitting affidavits, and conducting other discovery. Furthermore, despite defendant's acknowledgment that his answer was untimely by weeks, defendant emphasizes that he has submitted an answer raising defenses along with another motion to dismiss.

         Indeed, in the order denying defendant's motion to set aside entry of default, the trial court found that defendant had vigorously litigated this action and asserted meritorious defenses. Yet, contrary to defendant's assertion that he was actively pursuing his case through the time of the entry of default and unlike in Swan Beach, in which the parties immediately resumed discussions regarding discovery and litigation following this Court's decision on appeal, nothing in the record in this case indicates defendant took any action related to this particular case following the filing of this Court's decision on 17 March 2015 and the certification of that opinion to the district court on 6 April 2015. Based on the record in this case, the trial court found counsel for the parties continued to communicate between the time this Court's decision was filed on 17 March 2015 and entry of default on 2 June 2015. Those communications, however, were directed toward discovery, trial preparation, and continuances in a separate action by plaintiff against defendant's current wife for alienation of affection; they have nothing to do with the present case. The only evidence of communications between counsel concerning this particular case was the affidavit of plaintiff's counsel, in which counsel explains she communicated with defendant's counsel, who indicated there were no options after this Court's decision on appeal.

          Additionally, we note that after this Court upheld the validity of the separation agreement and property settlement in defendant's appeal in his separate action to rescind and vacate the agreement, see Jones v. Jones, 240 N.C.App. 88, 772 S.E.2d 13 (2015) (unpub.) COA14-236 (available at 2015 WL 1201320), the only issues for determination in this action were whether defendant breached the agreement and what plaintiff was entitled to recover as a result of any breach. Defendant has admitted to his unilateral reduction in payments toward obligations under the separation agreement and property settlement. Furthermore, the trial court denied plaintiff's motion for summary judgment and ultimately considered evidence related to the affirmative defenses asserted in the untimely answer submitted by defendant. Defendant had the opportunity at trial to contest plaintiff's evidence of his ability to comply and the amount of damages. Thus, it does not appear that defendant has suffered a grave injustice as a result of the entry of default.

         Given that defendant took no action regarding this case between the filing of this Court's decision on his appeal and the entry of default, and because defendant admits to not fully complying with the terms of the separation agreement and property settlement when coupled with the fact that defendant was able to contest plaintiff's evidence at trial, this case is distinguishable from Swan Beach and Beard. The trial court did not abuse its discretion in this case.

          Moreover, the trial court found that "[d]efendant failed to state a reason in his [m]otion for his inattention to the process." Defendant argues this finding is not supported by the evidence. However, the record shows that the only grounds asserted in the motion to set aside filed on 9 July 2015 were that defendant previously appeared in the action, the motion for entry of default and the entry of default do not bear a certificate of service, entry of default was obtained without notice, and defendant had filed an answer after entry of default. The motion did not explain why defendant did not timely answer the complaint.

         It was not until defendant's motion came on for hearing and the trial court indicated the motion would be denied that defendant requested, and the trial court allowed defendant's replacement counsel to file an affidavit of defendant's original counsel. The trial court, however, did not allow defendant to file an amended motion to change the basis asserted in the original motion. While the affidavit submitted shows that defendant's original counsel was dealing with several unrelated matters during the relevant time, the affidavit continues to maintain that it was defendant's original counsel's opinion that plaintiff's counsel should have provided notice of their motion for entry of default. Defendant's original counsel also candidly admits in the affidavit that it "slipped [his] mind that [he] needed to file additional responsive pleadings after th[is Court] entered its decision."

          Considering both the motion to set aside entry of default filed on 9 July 2015 and the affidavit, we hold the trial court's finding is supported by the record. The trial court did not abuse its discretion in denying defendant's motion to set aside entry of default in this case.

         2. Specific Performance

         Defendant also argues the trial court erred in various ways in its order for specific performance. We are not convinced.

         This Court has explained that, "the equitable remedy of specific performance may be ordered only if no adequate remedy exists at law, and the party who is ordered to specifically perform is capable of doing so." Lasecki v. Lasecki, __ N.C.App. __,, 809 S.E.2d 296, 302 (2017) (citations omitted).

The sole function of the equitable remedy of specific performance is to compel a party to do that which in good conscience he ought to do without court compulsion. The remedy rests in the sound discretion of the trial court, and is conclusive on ...

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