Bhones v. Peete (Ex parte Bhones)

285 So.3d 740

EX PARTE Alvin BHONES and Diane Bhones

(In re: Alvin Bhones and Diane Bhones

v.Travis Shawn Peete and Beech Brook Companies, LLC)

1171171

Supreme Court of Alabama.

March 1, 2019

H. Arthur Edge III and Hunter C. Sartin of Arthur Edge, P.C., Birmingham, for petitioners.

Marcus M. Maples and Laura E. Collins of Baker Donelson Bearman Caldwell & Berkowitz, P.C., Birmingham, for petitioners.

WISE, Justice.

Alvin Bhones and Diane Bhones, the plaintiffs below, filed a petition for a writ of mandamus requesting that this Court order the Limestone Circuit Court to vacate its August 2, 2018, order setting aside the default judgment it had entered in their favor on March 21, 2018, against Travis Shawn Peete and Beech Brook Companies, LLC, the defendants below. We grant the petition and issue the writ.

Facts and Procedural History

On February 12, 2015, the Bhoneses sued Beech Brook and Peete, the sole member of Beech Brook, based on their allegedly defective construction of the Bhoneses' new home. The complaint stated claims of breach of contract, breach of warranty, fraud, fraudulent misrepresentation, and negligence. The complaint was served on the defendants on February 19, 2015, but they did not file an answer. On March 13, 2018, the Bhoneses moved for a default judgment. On March 21, 2018, the trial court entered a default judgment in favor of the Bhoneses.

On May 22, 2018, the defendants filed a motion to set aside the default judgment pursuant to Rule 60(b)(1) and (6), Ala. R. Civ. P. On July 31, 2018, the Bhoneses file a response in opposition to that motion. On August 1, 2018, the defendants filed an affidavit in support of the motion to set aside the default judgment.

On August 2, 2018, the trial court conducted a hearing on the motion and response and, afterward, entered an order setting aside the default judgment. This mandamus petition followed.

Standard of Review

" ‘Mandamus is a drastic and extraordinary writ, to be issued only where there is (1) a clear legal right in the petitioner to the order sought; (2) an imperative duty upon the respondent to perform, accompanied by a refusal to do so; (3) the lack of another adequate remedy; and (4) properly invoked jurisdiction of the court.’ " Ex parte Perfection Siding, Inc., 882 So.2d 307, 309–10 (Ala. 2003) (quoting Ex parte Integon Corp., 672 So.2d 497, 499 (Ala. 1995) ).

" ‘A petition for the writ of mandamus is a proper method for attacking the grant of a Rule 60(b) motion.’ Ex parte A & B Transp., Inc., 8 So.3d 924, 931 (Ala. 2007). ‘In general, the decision whether to grant or to deny a postjudgment motion filed pursuant to ... Rule 60 is within the sound discretion of the trial court, and the exercise of that discretion will not be disturbed ... unless the trial court [exceeded] its discretion.’ Comalander v. Spottswood, 846 So.2d 1086, 1090 (Ala. 2002). However, ‘[a] party seeking relief must both allege and prove one of the grounds set forth in Rule 60 in order to be granted relief under that rule.’ Ex parte American Res. Ins. Co., 663 So.2d 932, 936 (Ala. 1995). Thus, where a ‘ Rule 60(b) motion offer[s] no proper basis for granting relief from the judgment, ... the trial court's granting of that motion [exceeds its] discretion.’ Ex parte Alfa Mut. Gen. Ins. Co., 681 So.2d 1047, 1050 (Ala. 1996)."

Ex parte Wallace, Jordan, Ratliff & Brandt, L.L.C., 29 So.3d 175, 177–78 (Ala. 2009).

Discussion

The Bhoneses argue that the trial court exceeded its discretion in granting the defendants' motion to set aside the default judgment pursuant to Rule 60(b), which provides, in part:

"On motion and upon such terms as are just, the court may relieve a party or a party's legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; ... or (6) any other reason justifying relief from the operation of the judgment. The motion shall be made within a reasonable time, and for reason[ ] (1) ... not more than four (4) months after the judgment, order, or proceeding was entered or taken."

Also,

"[i]n considering whether to grant a Rule 60(b)(1) motion to set aside a default judgment, a trial court must not only consider whether the defendant has established excusable neglect, but it also must apply the factors outlined in Kirtland v. Fort Morgan Authority Sewer Service, Inc., 524 So.2d 600 (Ala. 1988).¹SeeRooney v. Southern Dependacare, Inc., 672 So.2d 1 (Ala. 1995) ; and DaLee v. Crosby Lumber Co., 561 So.2d 1086 (Ala. 1990).

" ‘Under Kirtland, the trial court must first presume that cases should be decided on the merits whenever it is practicable to do so.... Second, the trial court must apply a three-factor analysis in determining whether to set aside a default judgment: it must consider "1) whether the defendant has a meritorious defense; 2) whether the plaintiff will be unfairly prejudiced if the default judgment is set aside; and 3) whether the default judgment was a result of the defendant's own culpable conduct." Kirtland, 524 So.2d at 605.’

" Sampson v. Cansler, 726 So.2d 632, 633 (Ala. 1998) (emphasis added).

"__________________

"¹‘Although Kirtland involved a Rule 55(c)[, Ala. R. Civ. P.,] motion to set aside a default judgment, we also apply the Kirtland analysis to Rule 60(b) motions to set aside default judgments.’ Sampson v. Cansler, 726 So.2d 632, 633 (Ala. 1998)."

Campbell v. Campbell, 910 So.2d 1288, 1290-91 (Ala. Civ. App. 2005). Finally,

"[t]he law is well settled in Alabama that the defaulting party has the initial burden of demonstrating the existence of the three Kirtland factors. Ex parte Family Dollar Stores of Alabama, Inc., 906 So.2d 892, 899-900 (Ala. 2005) ; Phillips v. Randolph, 828 So.2d 269, 278 (Ala. 2002) ; and Kirtland, 524 So.2d at 605-08."

Carroll v. Williams, 6 So.3d 463, 467 (Ala. 2008).

In the motion to set aside the default judgment, the defendants first argued that they were entitled to relief based on Rule 60(b)(1) and (6). They asserted that Peete had sought the advice of counsel on three occasions: 1) after a July 26, 2013, demand letter had been served on them; 2) after they received service of the complaint on February 19, 2015; and 3) in March 2018, when the default judgment was entered against them. Citing Rule 60(b)(1), the defendants argued that Peete had been mistaken about whether the attorney he had met with would represent them and that he would have sought alternative representation if he had known that the attorney from whom he had sought advice would not take any action on their behalf. The defendants also asserted that the Bhoneses had actually breached the contract and that, therefore, pursuant to Rule 60(b)(6), the entry of the default judgment should be set aside to accomplish justice.

In their motion, the defendants also asserted that, considering the factors set forth in Kirtland v. Fort Morgan Authority Sewer Service, Inc., 524 So.2d 600 (Ala. 1988), the default judgment should be set aside. With regard to the meritorious-defense requirement, they argued that an attached, unverified and unfiled proposed answer and counterclaim established that they were not the bad actors in this case and that, in fact, the Bhoneses were the ones who actually had breached the contract.¹ With regard to the requirement that the Bhoneses would not suffer substantial prejudice if the judgment was set aside, the defendants argued that nothing had happened in the case between the time they were served with the complaint in February 2015 and the time the Bhoneses moved for a default judgment in March 2018, and they further argued that allowing the case to proceed on the merits would not cause the Bhoneses any prejudice, much less substantial prejudice. Finally, with regard to the requirement that the default not be the result of their culpable conduct, the defendants argued that the default was not the result of willful or bad-faith conduct but, instead, was the result of a legitimate mistake. Specifically, the defendants contended that they thought that the case had been handled and resolved by the attorney Peete had consulted after they were served with the complaint in 2015 and that they retained counsel and responded to the Bhoneses' allegations as soon as the trial court entered a default judgment in the case.

In their response in opposition to the motion to set aside the default judgment, the Bhoneses first argued that the defendants did not support the factual allegations in their motion with evidence, such as affidavits or deposition testimony. They acknowledged that the defendants had attached a proposed answer and counterclaim to the motion, but they pointed out that neither one was verified. The Bhoneses also argued that the defendants' alleged reliance on the unidentified previous attorney was not reasonable under the circumstances.

On August 1, 2018, Peete filed an affidavit in support of the defendants' motion to set aside the default judgment. In that affidavit, Peete stated that he "sought the advice of counsel" after he received the July 26, 2013, demand letter. He also stated that he "met with an attorney about the legal action" immediately after he was served with the complaint on February 19, 2015, and that he "left the meeting with the understanding that the attorney would handle [the] case." Peete further stated that he did not receive the motion for a default judgment and that he did not hear from the court or any party until March 2018, when the default judgment was entered. Finally, he stated that, if he "had known that the attorney [he] met with would not take any action on [the defendants'] behalf, [he] would have sought alternative legal representation."

The Bhoneses argue that the trial court should not have set aside the default judgment because, they assert, the defendants did not submit evidence to satisfy all three factors set forth in Kirtland. Specifically, they contend that the defendants did not submit any...