Sunday, June 2, 2013

Smith v. Flynn - Ky App. 2012

Smith v. Flynn

Kentucky Court of Appeals
Rendered: November 9, 2012

Full opinion here.

No. 2011–CA–002101–MR
Appeal from the Russell County Circuit Court: Cause No. 110-CI-00460

Denial of motion to vacate a default judgment affirmed.

This dispute arose between two adjoining land owners in Russell County, Kentucky, from the unauthorized timber removal by one from the land of the other. Both parties were aware of the situation and they had discussed reparations, but nothing came from these negotiations and a civil complaint for statutory damages was filed and served. The defendant did not offer any defense and judgment by default was entered. Some eight months after the action was commenced, after the plaintiff sought execution of a judgment lien, the defendant was inspired to take action.

Defendant’s excuse for not taking timely action to defend against the claim was that he had recently been diagnosed with Alzheimer's disease and dementia. His two motions to have the default judgment vacated pursuant to Kentucky Rules of Civil Procedure CR 60.02 were denied,

On appeal, defendant Smith argued he was incompetent for purposes of service of process, but he admitted that he has never been adjudicated incompetent by a court.

Claiming he was of “unsound mind,” defendant Smith proposed that CR 17.03 required the trial court to appoint a guardian ad litem on his behalf, which did not happen. The court relied upon the Kentucky Supreme Court case Goff v. Walker, 809 S.W.2d 698 (Ky.1991) which affirmed that the words “unsound mind” as used in CR 17.03 are technical words which mean a person who actually had been adjudicated incompetent pursuant to KRS 387.500.  The opinion in Goff states:
“It is the holding of this Court that the trial judge in a civil case, in the absence of a legal adjudication of incompetency, has no duty to take steps on his own to protect the interests of any defendant other than as provided in existing CR 17.03.”
This is not to suggest a trial court could not accept serious medical or mental problems as a valid excuse for default under CR 60.02, within the legitimate exercise of its sound discretion, but only that it is not required to do so as a matter of law.

The Court of Appeals relied upon Perry v. Central Bank & Trust Co., 812 S.W.2d 166, 170 (Ky.App.1991) for the relevant considerations in deciding whether to set aside a judgment for good cause, which are:

  1. A valid excuse for the default;
  2. some form of a meritorious defense against the claim, and;
  3. absence of prejudice to the other party.

Without specifically stating so, but by implication, the Court of Appeals presented the circumstances of this case as an indication there was no arbitrary abuse of the trial court’s discretion for rejecting the Alzheimer's diagnosis as a valid excuse:
“There is no dispute that he was actually served with notice of the lawsuit. His daughter submitted an affidavit in which she averred that she has designated people who live close to Smith to look after his affairs. As his power of attorney, his daughter could have initiated proceedings to have Smith declared incompetent.”
The court’s opinion also observed that defendant Smith offered no form of defense to the merits of Plaintiff’s claim for damages. Nothing.

I would argue that the Court of Appeals should have stopped here, but it proceeded to make two curious statements:
“The third of the Perry criteria entails the prejudicial impact on the other party. If the default judgment were reversed, Flynn would suffer the loss of his legal expenses in addition to the expense of replacing his fence and the destruction of his trees.”
Any time the court sets aside a default judgment, the opposing party will suffer the results of having to pursue a claim on the merits. Since the Civil Rules specifically authorize setting aside judgments by default under appropriate circumstances, the unavoidable consequences of occasionally setting a default judgment aside cannot by itself be a good reason not to do it.

Finally, the opinion states:
“All three factors for not setting aside the default judgment were satisfied. Therefore, we cannot conclude that the court erred.”
Rather than, “all three factors for not setting aside the default judgment were satisfied,” a better phrase might be, “all three factors for setting aside the default judgment were not satisfied.”

Cases cited:

  1. Straney v. Straney, 481 S.W.2d 292 (Ky.1972)
  2. Dressler v. Barlow, 729 S.W.2d 464 (Ky.App.1987)
  3. Perry v. Central Bank & Trust Co., 812 S.W.2d 166 (Ky.App.1991)
  4. Goff v. Walker, 809 S.W.2d 698 (Ky.1991)
  5. Age v. Age, 340 S.W.3d 88 (Ky.App.2011)