New Court of Appeals Opinion suggests that late-filed Answer may not prevent a default judgment

All the good Nashville lawyers I know are so busy right now. This is a good problem to have, but, nevertheless, it is a problem. There’s simply too much demand right now.

I overheard one local lawyer telling a story about a frantic call he received from a client, who was freaking out because they hadn’t filed an Answer to a lawsuit, and it had been more than 30 days after service.

“Have they filed a Motion for Default yet? If not, then it’s not late.”

I’m sure the lawyer was more tactful in the actual conversation, but the reasoning has some basis in local custom. Often, in Davidson County courts, if a defendant files an Answer before the hearing on a Motion for Default Judgment and pleads a tenable defense, a court will not grant a judgment under Tenn. R. Civ. P. 55, under the theory that the justice system prefers that “matters be decided on the merits” not a technicality. (See, generally, Discover Bank v. Morgan, 363 S.W.3d 479, 491 (Tenn. 2012)).

A recent opinion from the Tennessee Court of Appeals shows that there are risks in waiting to file an Answer.

That case is Conserv Equip. Leasing, LLC v. Schubert Enterprises, LLC, No. E2022-00535-COA-R3-CV, 2023 WL 1489768 (Tenn. Ct. App. Feb. 3, 2023). There, the creditor filed a motion for default, and, a few days later, received a phone call from an attorney who “expected to be retained” by the defendants and asked for a 3 week continuance on the motion hearing. After the hearing was so continued, that defense attorney “fax-filed” an Answer at 3:59pm on the Friday before the Monday morning default hearing, with an original copy filed with the Clerk about 33 minutes before the hearing.

Defendant appeared at the hearing, objecting to the relief and presumably with filed Answer in hand, but the default judgment was nevertheless granted. At the trial court level, Defendants later tried to set aside the ruling on excusable neglect grounds and Tenn. R. C. P. 60.02.

The Court of Appeals noted that “[a]lthough courts construe Rule 60.02 ‘with liberality to afford relief from a default judgment,’ the movant bears the burden of showing ‘why the movant was justified in failing to avoid the … neglect’.” Id. at *2. The Court wrote that “[i]f the court finds that the defaulting party has acted willfully, the judgment cannot be set aside on ‘excusable neglect’ grounds…” and “[m]aking ‘deliberate choices’ amounts to willful conduct. Id.

In the end, the issue was remanded back to the trial court, whose order denying the Rule 60 motion failed to include findings of act and conclusions of law (per Tenn. R. Civ. P. 52.01). In short, the trial court didn’t provide any explanation for its ruling.

To be clear, though, the Court of Appeals didn’t say the trial court was wrong; instead, it sent it back down for the trial court to provide more explanation for its refusal to set aside the judgment. The most likely outcome, of course, is that the plaintiff will prepare a properly supported proposed order, the judge will sign it, and, then, that order will be appealed.

It’ll be an interesting case to watch, but, procedurally, it’s also a reminder: Don’t delay when dealing with court deadlines.

Don’t Lose Your Next Default Judgment Hearing: Why Some Judges Ask for an Affidavit

Under Tenn. R. Civ. P 55 (governing “Default”), if a defendant does not answer or defend a lawsuit, then the plaintiff can take a default judgment against the defendant. If they don’t answer, the court grants the motion and enters a judgment. Easy, right?

Yes, but, sometimes, some courts make it more complicated than that.

In some counties, even when the defendant hasn’t responded and doesn’t appear at the hearing, the Judge will: (1) ask if I filed an Affidavit; or (2) set the matter for a “damages hearing,” which can be months in the future and could require a witness to attend.

Having seen this happen, I’ve scoured Rule 55 and the various counties’ Local Rules, but have no idea where this idiosyncrasy comes from. But, over time, I started filing affidavits along with my motion for default in non-Davidson County counties.

But, recently, I saw a Davidson County Chancellor ask about an affidavit as part of an uncontested motion for default. When the plaintiff didn’t have one, the judge set a damages hearing to occur in 90 days.

I never, ever want a non-responding defendant to get an extra 90 judgment-free days, so I now carry around this recent opinion from the Court of Appeals, Judith Husk v. Brandon Thompson, No. M2016-01481-COA-R3-CV (Tenn. Ct. Apps. Aug. 10, 2017).

That opinion covers a lot of ground, including bases to set aside a default judgment, but I want to focus on the “damages” analysis. The opinion lays out the law as follows:

Generally, the rule in Tennessee ‘is that the defendant, by suffering a default judgment to be entered against him, impliedly confesses all of the material allegations of fact contained in his complaint, except the amount of the plaintiff’s unliquidated damages.’ …Thus, a default judgment establishes the non-defaulting party’s right to maintain the action and recover some damages, but the amount of damages remains an open question to be determined by proof. … If the amount of the plaintiff’s damages is liquidated, however, a trial court may immediately enter a final judgment without a determination by proof.

(Citations Omitted/emphasis added).

So, the issue comes down to whether the claim is for “liquidated” or “unliquidated” damages.

The Court noted that unliquidated damages are uncertain and the type that require a “determination by proof” and are “damages that cannot be determined by a fixed formula…”

“Liquidated damages” are the type that are for “a set amount of money, or a or a certain formula, expressly stipulated in a contract as the amount of damages to be paid by a party that breaches the agreement. Liquidated damages can also be defined as the amount which has been ascertained by judgment or by specific agreement of the parties or which are susceptible of being made certain by mathematical calculation from known factors…”

Long story short, a lawsuit alleging breach of contract for amounts due under a promissory note plus interest using the “math” laid out in the note? Liquidated.

A lawsuit alleging damages “in an amount to be determined at trial” as a result of an auto accident? Unliquidated.

In the Davidson County matter I saw, the Chancellor expressly referenced the Husk opinion, even though the Court was faced with a breach of contract action with liquidated damages.

Having seen that happen, then, I think it’s a good practice to always include an affidavit in support of your motions for default, just so there’s no question. Plus, it’s probably good to get the facts supporting the existence of the contract, the damages, and showing the “math” into the record.