in the Court of Appeals 29 November 2018.
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,
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.
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.
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of defendant's motion to dismiss in an unpublished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). This Court's opinion was
certified to the district court on 6 April 2015 and filed in
Lee County on 8 April 2015.
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.
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) . . . ."
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.
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.
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
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.
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.
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.
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.
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
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
[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).
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).
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)).
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.
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.
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."
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.
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.
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
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.
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.
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.
also argues the trial court erred in various ways in its
order for specific performance. We are not convinced.
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 ...