Robert L. Bays
Ruley & Everett
Parkersburg, West Virginia
Counsel for Appellant
Louie S. Davitian
Parkersburg, West Virginia
Counsel for Appellee
This Opinion was delivered PER CURIAM.
1. "Although courts should not set aside default judgments or
dismissals without good cause, it is the policy of the law to favor
the trial of all cases on their merits." Syl. Pt. 2, McDaniel v.
Romano, 155 W. Va. 875, 190 S.E.2d 8 (1972).
2. "'[The following factors should be considered by a court
where there has been an appearance and late answer filed by the
defaulting party]: (1) The degree of prejudice suffered by the
plaintiff from the delay in answering; (2) the presence of material
issues of fact and meritorious defenses; (3) the significance of
the interests at stake; and (4) the degree of intransigence on the
part of the defaulting party.' Syllabus Point 3, as modified,
Parsons v. Consol. Gas Supply Corp., 163 W. Va. 464, 256 S.E.2d 758
(1979)." Syl. Pt. 2, Hively v. Martin, 185 W. Va. 225, 406 S.E.2d
This is an appeal by the Wirt County Bank (hereinafter
referred to as "Appellant" or "Bank") from an October 4, 1991,
order of the Circuit Court of Wirt County which denied the
Appellant's motion for leave to file a reply to a counterclaim and
granted a default judgment in favor of the Appellee, Delano H.
Smith, a/k/a H. Delano Smith (hereinafter referred to as
"Appellee" or "Smith"). The Appellant contends that the default
judgment should be set aside pursuant to Rule 55 of the West
Virginia Rules of Civil Procedure. We agree and hereby reverse the
decision of the Circuit Court of Wirt County.
On February 18, 1989, the Appellant filed a civil action
seeking recovery for two counts of default by the Appellee on
promissory notes made to the Appellant. These notes were secured
by certain items of collateral, including a machine known as a
ditch witch. The Appellee filed an answer and a counterclaim on
February 24, 1989.See footnote 1 The Appellant failed to reply to the
counterclaim until a motion for leave to file a reply was served on
June 22, 1989. The Appellee had filed a motion for default
judgment on June 13, 1989, and the lower court heard the two
motions on June 26, 1989. On October 4, 1991, the lower court
entered an order denying the Appellant's motion for leave to file
a reply and granting the Appellee's motion for default judgment.
The Appellant now seeks relief from this Court and contends that
the failure to answer the counterclaim in a timely fashion
constitutes excusable neglect within the meaning of West Virginia
Rule of Civil Procedure 60(b).See footnote 2
The Appellant has provided this Court with numerous reasons
for the failure to respond to the counterclaim in a timely fashion.
First, the Appellant has suggested that the manner in which the
counterclaim was presented within the answer did not provide a
clear indication that the Appellee was indeed filing a
counterclaim. The counterclaim was filed in a pleading entitled
"Answer." No mention was made of a "counterclaim" until the bottom
of the second page of the pleading. The Appellant concedes that
the "Answer" should have been read in its entirety, but raises this
issue as a partial explanation of the failure to respond in a
Second, the Appellant has presented an affidavit of original
counsel David G. PalmerSee footnote 3 enumerating factual reasons for the
inadvertence. Mr. Palmer sets forth a variety of factors which
allegedly limited his ability to invest appropriate attention in
this matter. These factors include the following: (a) moving to
a new law office in January 1989; (b) the death of counsel's
grandmother and the death of his primary secretary's father; (c)
counsel's marriage and honeymoon in February 1989; (d) the firing
of a secretary, the training of a new secretary, and the remodeling
of offices; (e) illness and vacation of primary secretary; and (f)
hospitalization of counsel's wife.
The Appellant has also indicated that evidence could be
adduced to refute liability for wrongful possession, that the
Appellee did not own the ditch witch on the date of repossession,
and that the ditch witch was available to the Appellee after he
cured his default. It is not within our province at this juncture
to decide those factual questions, and we make no comment or
judgment on their resolution. Our focus is solely upon the issues
concerning the propriety of the default judgment and the possible
grounds for setting it aside.
We have previously articulated this Court's preference for
resolution of cases on their merits. In syllabus point 2 of
McDaniel v. Romano, 155 W. Va. 875, 190 S.E.2d 8 (1972), for
instance, we explained that "[a]lthough courts should not set aside
default judgments or dismissals without good cause, it is the
policy of the law to favor the trial of all cases on their merits."
In syllabus point 2 of Hively v. Martin, 185 W. Va. 225, 406 S.E.2d
451 (1991), we reasoned:
'[The following factors should be considered
by a court where there has been an appearance
and late answer filed by the defaulting
party]: (1) The degree of prejudice suffered
by the plaintiff from the delay in answering;
(2) the presence of material issues of fact
and meritorious defenses; (3) the significance
of the interests at stake; and (4) the degree
of intransigence on the part of the defaulting
party.' Syllabus Point 3, as modified,
Parsons v. Consol. Gas Supply Corp., 163 W.
Va. 464, 256 S.E.2d 758 (1979).
When the present case is examined pursuant to this framework,
it appears that no significant prejudice was occasioned by the
delay.See footnote 4 The Appellee has made no affirmative showing of prejudice
which has convinced us to the contrary. Second, the Appellant has
presented issues which appear to constitute potentially meritorious
defenses and material issues of fact. The Appellant, for instance,
contends that the Appellee did not own the ditch witch on the
relevant dates and that the ditch witch was available to the
Appellee after he cured his default. Furthermore, the significance
of the interests at stake is sufficient to grant resolution on the
merits, and the intransigence of the Appellant is not so egregious
as to warrant denial of the right to a trial on the merits of this
We accept the proffered excuses for this inadvertence with
some degree of hesitancy and are not eager to embrace them as
proper justifications for reversal of a default judgment. However,
as addressed above, resolution of all issues on their merits is
favored by this Court, and in weighing all the circumstances, we
conclude that the goal of case resolution on their respective
merits justifies setting aside this default judgment. We therefore
reverse the decision of the Circuit Court of Wirt County and remand
this matter for the filing of a response to the counterclaim by the
Appellant and the resolution of this matter on its merits.
Footnote: 1The counterclaim alleged a wrongful repossession of the ditch witch that was collateral for one of the loans in question.
Footnote: 2Rule 55(c) of the West Virginia Rules of Civil Procedure provides that a judgment by default may be set aside in accordance with Rule 60(b). Rule 60(b), in pertinent part, provides as follows:
(b) Mistakes; inadvertence; excusable neglect; unavoidable cause; newly discovered evidence; fraud, etc. - On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons: (1) Mistake, inadvertence, surprise, excusable neglect, or unavoidable cause; . . . .
Footnote: 3Although Mr. Palmer initially represented the Appellant, counsel for this appeal is Mr. Robert L. Bays.
Footnote: 4While the Appellee contends that he was prejudiced to the extent that he will be limited in his ability to locate witnesses who have a recollection of the facts involved, we are not convinced that this constitutes any appreciable prejudice to the Appellee.