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2007-UP-543 - Shannon v. McGee

THIS OPINION HAS NO PRECEDENTIAL VALUE.  IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 239(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

Diane Shannon, Respondent,

v.

James McGee, Robert C. Hood, Sr., as Personal Representative of the Estate of Betty Hood and Robert C. Hood, Sr., d/b/a Hood’s Used Cars, Defendants, of whom Robert C. Hood, Sr., d/b/a Hood’s Used Cars is the Appellant.


Appeal From Marion County
Gerald M. Angelo, Special Referee


Unpublished Opinion No. 2007-UP-543
Submitted October 10, 2007 – Filed November 30, 2007


REVERSED


Johnny Gardner, of Conway, for Appellant.

George Jebaily and  Rangeley Chewning, both of Florence, for Respondent.

PER CURIAM: In this civil case, we reverse the Special Referee’s denial of a motion to set aside an entry of default.

FACTS

This case arises from an automobile accident that occurred in Marion County South Carolina.  A GMC vehicle failed to yield the right-of-way, striking a Dodge van.  The GMC vehicle was driven by James McGee (McGee).  Diane Shannon (Shannon) was a passenger in the Dodge van. 

As a result of the accident, Shannon suffered multiple injuries.  Specifically, Shannon underwent surgery to correct her right hand, right forearm, and left knee.  Unfortunately, Shannon’s left knee developed an infection, which required a second surgery.  The surgical sites became infected, which ultimately led to a partial amputation of Shannon’s left leg. 

A summons and complaint were filed on June 6, 2005, and Robert Hood, doing business as Hood’s Used Cars, was personally served two days later.  Hood failed to respond.  Consequently, Shannon filed a Motion for Entry of Default.  On July 13, 2005, an entry of default was entered, and the matter was referred to the Special Referee to ascertain damages. 

A hearing before the Special Referee was held on August 12, 2005.  Prior to this hearing, Hood was personally served with notice of the hearing and the order of entry of default on July 26, 2005.  Hood retained counsel on August 11, 2005, one day prior to the hearing before the Special Referee.  Hood made a motion to set aside the entry of default. 

The Special Referee found that at the time of the accident, the GMC vehicle was titled in Betty Hood’s name.  The Special Referee: (1) found McGee to be an employee of Hood’s Used Cars at the time of the accident; (2) held Robert Hood (Hood), doing business as Hood’s Used Cars, was negligent in entrusting a company vehicle to McGee; (3) concluded Shannon incurred and will incur substantial medical costs; and (4) refused to set aside the entry of default.  Ultimately, the Special Referee entered a judgment against Hood in the amount of $1,475,000. 

On appeal, Hood argues the Special Referee committed reversible error by not setting aside the entry of default.  Shannon maintains the grant or denial of a motion to set aside the entry of default is an interlocutory appeal, which is not immediately appealable.

STANDARD OF REVIEW

A court may set aside an entry of default if good cause is shown.  Rule 55(c), SCRCP.  Whether good cause is established is left to the sound discretion of the trial court.  Williams v. Vanvolkenburg, 312 S.C. 373, 375, 440 S.E.2d 408, 409 (Ct. App. 1994).  We will not disturb a discretionary ruling on appeal unless the ruling is without any evidentiary support or controlled by an error of law.  Id.

LAW/ANALYSIS

Before we address whether the Special Referee committed reversible error by not setting aside the entry of default, we confront the issue of whether this appeal is properly before us. 

A. This appeal is properly before us.  

Shannon initially argues this Court lacks jurisdiction to decide this case because this appeal constitutes an interlocutory appeal.  We disagree.

Generally, an appeal to this Court will be allowed only if there has been a final judgment.  Hagood v. Sommerville, 362 S.C. 191, 194, 607 S.E.2d 707, 708 (2005).  For the purposes of determining whether an order is appealable, “final judgment” refers to the disposition of all the issues in the case.  Doe v. Howe, 362 S.C. 212, 216, 607 S.E.2d 354, 356 (Ct. App. 2004).  The present case constitutes a “final judgment” by the Special Referee.

The Special Referee denied Hood’s motion to set aside the entry of default and entered a default judgment of $1,475,000.  This terminates the litigation because all Shannon must do to recover the judgment amount is collect.  See Ateyeh v. United of Omaha Life Ins. Co., 293 S.C. 436, 437, 361 S.E.2d 340, 340 (Ct. App. 1987) (An order setting aside an entry of default is not appealable absent a final judgment.); Thynes v. Lloyd, 294 S.C. 152, 153, 363 S.E.2d 122, 122 (Ct. App. 1987) (An order refusing to set aside an entry of default is not appealable until after final judgment.). However, even if we assume the Special Referee’s order is not a final judgment, this appeal is properly before us.

The following four situations permit a party to appeal absent a final judgment:

(1) intermediate judgments, orders or decrees involving the merits, (2) orders affecting substantial rights when such orders in effect determine the action and prevent a judgment from which an appeal may be taken or when the orders discontinue the action, (3) a final order in special proceedings, and (4) interlocutory orders [relating to injunctions].

 Walker v. Springs Indus., Inc., 298 S.C. 249, 251, 379 S.E.2d 729, 730 (Ct. App. 1989).

An order affects a substantial right if the order determines and discontinues the action.  Brown v. County of Berkeley, 366 S.C. 354, 361, 622 S.E.2d 533, 537 (2005).            The Special Referee’s order in the current case determines and discontinues the action.  The order determines the action because Hood is held liable for the injuries suffered by Shannon.  The order terminates the action because all Shannon must do to recover the judgment amount is collect.  Thus, this appeal is properly before us. 

B. The Special Referee committed reversible error in not setting aside the entry of default.

As noted above, the decision of whether to grant relief from an entry of default is a matter solely within the sound discretion of the trial court.  Bage, LLC v. Se. Roofing Co. of Spartanburg, Inc., 373 S.C. 457, 471, 646 S.E.2d 153, 160 (Ct. App. 2007).  An abuse of discretion arises if the lower court’s decision is controlled by an error of law or is without evidentiary support.  Id. at 464-65, 646 S.E.2d at 157.  Consequently, the question before us is not whether we believe good cause existed to set aside the entry of default, but whether the Special Referee’s determination is supported by evidence and not controlled by an error of law.  Id.

“For good cause shown the court may set aside an entry of default . . . .”  Rule 55(c), SCRCP.  Thus, the standard for granting relief from an entry of default is good cause.  Bage, LLC, 373 S.C. at 470, 646 S.E.2d at 160.  In this case, the Special Referee applied the good cause standard in denying the motion to set aside the entry of default.  The Special Referee applied the correct legal standard; therefore, the Special Referee’s decision is not controlled by an error of law.  Now, we must consider whether the Special Referee’s decision is supported by the evidence.

In determining whether to set aside an entry of default, the factors the Special Referee “should consider are: (1) the timing of the motion for relief; (2) whether the defendant has a meritorious defense; and (3) the degree of prejudice to the plaintiff if relief is granted.”  Id. at 472, 646 S.E.2d at 161.  The Special Referee did not make specific findings with respect to each of these three enumerated factors, but he did apply the factors in denying the motion to set aside the entry of default.  The Special Referee is not required to make specific findings in regard to these factors if sufficient evidence supports the finding of the lack of good cause.  Id. 

The first factor is the timing of the motion for relief.  In this case, Shannon filed the summons and complaint on June 6, 2005. Shannon personally served the summons and complaint on Hood on June 8, 2005.  Hood made the motion to set aside the entry of default on August 11, 2005.  Only two months elapsed between the time Hood was served with the summons and complaint and when he moved for relief.       

The second factor is whether the defendant has a meritorious defense.   A meritorious defense does not have to be a perfect defense nor does have to be guaranteed to prevail at a trial. Graham v. Town of Loris, 272 S.C. 442, 543, 248 S.E.2d 594, 599 (1978).   “It need be only one which is worthy of a hearing or judicial inquiry because it raises a question of law deserving of some investigation and discussion or a real controversy as to essential facts arising from conflicting or doubtful evidence.” Id.  This case arose due to an automobile accident.  Hood maintains that at the time of the accident, McGee was not acting as Hood’s employee.  The issue is worthy of investigation and thus the second factor weighs in favor of Hood.

The final factor is the degree of prejudice to the plaintiff if the entry of default is set aside.  We fail to see any prejudice that would result if entry of default is set aside.  It does not appear that evidence essential to the adjudication of this case on the merits will be affected by a reversal.  Thus, this factor weighs in favor of Hood. 

CONCLUSION

Accordingly, the Special Referee’s decision is

REVERSED. [1]

STILWELL, SHORT, and WILLIAMS, JJ., concur.


[1] We decide this case without oral arguments pursuant to Rule 215, SCACR.