DEFAULT JUDGMENT; KIRTLAND FACTORS - HILYER V. FORTIER
Hilyer v. Fortier, [Ms. 1140991, Jan. 6, 2017] __ So. 3d __ (Ala. 2017). The Court reverses an order of the Elmore Circuit Court denying a defendant 18-wheel log truck driver's motion filed pursuant to Rule 55(c), Ala. R. Civ. P., to set aside a default judgment entered against him and in favor of a parent and minor child injured in a collision with the log truck. The court reviews the required elements for setting aside a default judgment first enunciated in Kirtland v. Fort Morgan Authority Sewer Service, Inc., 524 So. 2d 600 (Ala. 1988). The Court discusses Kirtland as follows:
In Kirtland, we held that a trial court's broad discretionary authority to set aside a default judgment under Rule 55(c) should not be exercised without considering the following three factors: 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. 524 So. 2d at 605. "'"However, in order to trigger the mandatory requirement that the trial court consider the Kirtland factors, the party filing a motion to set aside a default judgment must allege and provide arguments and evidence regarding all three of the Kirtland factors."'"
Ms. *13 n. 3. The standard of review of a trial court's denial of the motion to set aside a default judgment is as follows:
"'A trial court has broad discretion in deciding whether to grant or deny a motion to set aside a default judgment. Kirtland v. Fort Morgan Auth. Sewer Serv., Inc., 524 So. 2d 600 (Ala. 1988). In reviewing an appeal from a trial court's order refusing to set aside a default judgment, this Court must determine whether in refusing to set aside the default judgment the trial court exceeded its discretion. 524 So. 2d at 604. That discretion, although broad, requires the trial court to balance two competing policy interests associated with default judgments: the need to promote judicial economy and a litigant's right to defend an action on the merits. 524 So. 2d at 604. These interests must be balanced under the two-step process established in Kirtland.
"'We begin the balancing process with the presumption that cases should be decided on the merits whenever it is practicable to do so. 524 So. 2d at 604. The trial court must then apply a three-factor analysis first established in Ex parte Illinois Central Gulf R.R., 514 So. 2d 1283 (Ala. 1987), in deciding whether to deny a motion to set aside a default judgment. Kirtland, 524 So. 2d at 605. The broad discretionary authority given to the trial court in making that decision should not be exercised without considering the following factors: "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." 524 So. 2d at 605.'
"Zeller v. Bailey, 950 So. 2d 1149, 1152-53 (Ala. 2006)."
Manci v. Ball, Koons & Watson, 995 So. 2d 161, 165 (Ala. 2008).
Ms. *16-17. The Court then examined each of the three required Kirtland elements in detail.
Whether the Defendant Has a Meritorious Defense
Concerning whether the defendant has alleged a meritorious defense under Kirtland, this Court has stated:
"To present a meritorious defense, for Rule 55(c) purposes, does not require that the movant satisfy the trial court that the movant would necessarily prevail at a trial on the merits, only that the movant show the court that the movant is prepared to present a plausible defense. Kirtland, 524 So. 2d at 605.
"'The defense proffered by the defaulting party must be of such merit as to induce the trial court reasonably to infer that allowing the defense to be litigated could foreseeably alter the outcome of the case. To be more precise, a defaulting party has satisfactorily made a showing of a meritorious defense when allegations in an answer or in a motion to set aside the default judgment and its supporting affidavits, if proven at trial, would constitute a complete defense to the action, or when sufficient evidence has been adduced either by way of affidavit or by some other means to warrant submission of the case to the jury.
"'The allegations set forth in the answer and in the motion must be more than mere bare legal conclusions without factual support; they must counter the cause of action averred in the complaint with specificity -- namely, by setting forth relevant legal grounds substantiated by a credible factual basis. Such allegations would constitute a "plausible defense."'
"Kirtland, 524 So. 2d at 606."
Sampson v. Cansler, 726 So. 2d 632, 634 (Ala. 1998).
Whether the Plaintiff Will Suffer Substantial Prejudice
Concerning the second Kirtland factor, whether a plaintiff will suffer substantial prejudice, this Court has said:
"The second factor that a trial court must consider in ruling on a motion to set aside a default judgment is whether the plaintiff will be unfairly prejudiced if it grants the motion. Kirtland, 524 So. 2d at 606-07. This prejudice cannot take the form of mere delay or increased costs, because those can be remedied by imposing additional costs on the defendant if the plaintiff later prevails. 524 So. 2d at 607. Rather, the prejudice must be substantial, facilitating fraud or collusion, resulting in the loss of evidence, or hindering discovery. 524 So. 2d at 607.
"Although common sense dictates that a plaintiff is usually in a far better position to know what prejudice might befall him from the delay, and more importantly how substantial that prejudice would be, we have placed upon the defendant the initial burden of demonstrating that the plaintiff will not be substantially prejudiced. As we have stated:
"'We hold that when a party files a motion to set aside a default judgment, the movant has the initial burden of making a prima facie showing that the plaintiff will not be unfairly prejudiced if the default judgment is set aside. If the movant makes a prima facie showing that the plaintiff will not be unfairly prejudiced, the burden then shifts to the plaintiff to present facts showing that the plaintiff will be unfairly prejudiced if the default judgment is set aside.'
"Phillips v. Randolph, 828 So. 2d 269, 278 (Ala. 2002). Additionally, a defendant cannot simply state that the plaintiff will not be prejudiced if the motion to set aside the default judgment is granted. Phillips, 828 So. 2d at 275."
Royal Ins. Co. of America v. Crowne Invs., Inc., 903 So. 2d 802, 811 (Ala. 2004).
Lack of Culpable Conduct on the Part of the Defaulting Party
The third Kirtland factor requires a circuit court to examine the conduct of the defaulting party. Concerning the third Kirtland factor, this Court has stated:
"To warrant a refusal to set aside a default judgment, the defaulting party's actions that resulted in the entry of the default judgment must constitute willful conduct or conduct committed in bad faith. Negligence alone is not sufficient. Bad faith or willfulness is identified by 'incessant and flagrant disrespect for court rules, deliberate and knowing disregard for judicial authority, or intentional nonresponsiveness.' Kirtland, 524 So. 2d at 608 (citing Agio Indus., Inc. v. Delta Oil Co., 485 So. 2d 340, 342 (Ala. Civ. App. 1986)). A trial court's finding with respect to the culpability of the defaulting party is subject to great deference. Jones v. Hydro–Wave of Alabama, Inc., 524 So. 2d 610, 616 (Ala. 1988)."
Zeller v. Bailey, 950 So. 2d 1149, 1154 (Ala. 2006).
Finding that the defendant introduced evidence satisfying each of the three Kirtland factors, the Court holds the Elmore Circuit Court exceeded its discretion in refusing to set aside the default judgment such that reversal of that order was required.