THE STATE OF SOUTH CAROLINA
In The Court of Appeals
Alice Mae Pilgrim, Respondent,
Yvonne Wardlaw Miller, Appellant.
Appeal From Spartanburg County
Donald W. Beatty, Circuit Judge
REVERSED AND REMANDED
Robert E. Davis, of Spartanburg, for appellant.
Andrew N. Poliakoff, of Spartanburg, for respondent.
GOOLSBY, J.: This action concerns an automobile accident that occurred on April 11, 1997. Alice Mae Pilgrim served a summons and complaint on Yvonne Wardlaw Miller almost three years later on March 24, 2000. The next day, Miller took the suit papers to an attorney, who advised her to take them to her insurance company. She did so, delivering the suit papers promptly to an agent for Allstate Insurance Company.
For reasons yet to be explained, Allstate failed to file a timely answer. Pilgrim obtained an entry of default on May 17, 2000. Miller thereafter moved for relief pursuant to Rule 55(c), SCRCP. The trial court refused to lift the entry of default. (1) At a subsequent damages hearing, the trial court awarded Pilgrim $50,000 in actual damages and denied Miller's motion to set aside the default judgment under Rule 60(b)(1), SCRCP, or, in the alternative, to grant her a new trial.
The order denying Miller's Rule 55(c) motion states, "No specific reason was offered for the lack of response to the Summons and Complaint" and "[i]t is the finding of this Court that the Court has been presented with no reason to set aside this Default." The order denying Miller's Rule 60(b)(1) motion states, "[neither] the defendant nor the insurer offered any explanation for the failure to answer the Complaint." Miller appeals. We reverse. (2)
The dispositive issue here is whether the trial court abused its discretion in not setting aside an entry of default. As Professor James F. Flanagan, the reporter for the committee that drafted the new rules of civil procedure, (3) points out in his recent work South Carolina Civil Procedure, "The entry of default may be vacated upon a showing of good cause." (4) Indeed, "good cause" is the express requirement of the rule itself. (5)
Rule 55(c), this court has held, should be "liberally construed to promote justice and dispose of cases on the merits." (6) The question of whether a party seeking to set aside an entry of default has demonstrated "good cause" is one addressed to the sound discretion of the trial court. (7) This court, however, will set aside on appeal a trial court's discretionary ruling that lacks reasonable evidentiary support or is controlled by error of law. (8)
The findings by the trial court that Miller offered no "specific reason" or "explanation" for the failure to answer the complaint and that Miller gave the court "no reason" to set the default aside are simply wrong. As the record clearly shows, Miller's failure to answer the complaint resulted from Miller's expectation that Allstate would answer the complaint for her. The trial court should have accepted this explanation, especially in light of this court's decision in Ricks v. Weinrauch, (9) which relied on Sears, Roebuck & Co. v. Ramey, (10) a Georgia case in which the basic facts mirror the ones here.
In Ramey, Sears, the defendant, had received suit papers and turned them over to its insurer, believing the insurer would defend the action. The insurer, however, failed to answer the complaint. When Sears learned of this, it employed counsel and unsuccessfully moved to open the default. The Georgia Court of Appeals, applying the more rigorous standard of "excusable neglect," reversed, holding the trial court "abused its discretion in refusing to open the default." (11)
We believe Miller, like Sears, demonstrated good cause for setting aside the entry of default. She consulted a lawyer and followed his advice to deliver the suit papers to her insurance company. She had every right to believe Allstate would answer the complaint and defend her in the action. Her expectation was not in any way unreasonable. Once an insurer is made aware of a pending court action against its insured, the insured should be able to rely on the insurer to protect his or her rights. As the Georgia Court of Appeals reiterated in Ramey, "'[a] litigant should not unnecessarily be forced into default as a consequence of having reasonably relied upon the word of his fellow, particularly when no innocent party will suffer if the default is opened.'" (12) We find this principle even more compelling when, as here, the defendant has a meritorious defense to the plaintiff's claim for damages. (13)
Because Miller made a showing of good cause, we hold the trial court abused its discretion in refusing to set aside the entry of default and in not permitting her to respond to Pilgrim's allegations by answer or other proper pleading. The subsequent entry of default judgment against Miller, therefore, was erroneous. (14)
REVERSED AND REMANDED.
HEARN, C.J., and HUFF, J., concur.
1. The grant or denial of a Rule 55(c) motion is not directly appealable. Jefferson v. Gene's Used Cars, Inc., 295 S.C. 317, 368 S.E.2d 456 (1988).
2. Because oral argument would not aid the court in resolving the issue on appeal, we decide this case without oral argument pursuant to Rule 215, SCACR.
3. James F. Flanagan, South Carolina Civil Procedure, at ii (2d ed. 1996).
4. Id. at 437.
5. Rule 55(c), SCRCP, provides in pertinent part that "[f]or good cause shown the court may set aside an entry of default . . . ." See also Patterson v. McNeill-Patterson & Assocs., 312 S.C. 471, 472, n.2, 441 S.E.2d 328, 329 n.2 (Ct. App. 1994) (noting Rule 55(c) "requir[es] a showing of 'good cause' before the court may set aside an entry of default").
6. Dixon v Besco Eng'g, 320 S.C. 174, 178, 463 S.E.2d 636, 638 (Ct. App. 1995).
7. Id. at 178, 463 S.E.2d at 639; Wham v. Shearson Lehman Bros., 298 S.C. 462, 465, 381 S.E.2d 499, 501 (Ct. App. 1989).
8. Wham, 298 S.C. at 465, 381 S.E.2d at 501.
9. 293 S.C. 372, 360 S.E.2d 535 (Ct. App. 1987).
10. 318 S.E.2d 740 (Ga. Ct. App. 1984).
11. Id. at 742.
12. Ramey, 318 S.E.2d at 742 (quoting Cobb County Fair Ass'n v. Boyle, 240 S.E.2d 136, 138 (Ga. Ct. App. 1977)).
13. At the hearing to set aside the entry of default, counsel for Miller informed the court that, while Miller would admit liability, she would contest the extent of damages that Pilgrim allegedly suffered as a proximate result of the accident. Counsel described the accident as "an extremely minor" one. One issue that Miller included on appeal, which we do not address, concerned Pilgrim's medical bills and how they were related to that particular accident. Pilgrim was involved in another motor vehicle accident in March 1998.
14. We do not address the issue that Miller raises concerning Pilgrim's medical bills.