Green Seed Co. v. Harrison Tobacco Storage Warehouse, Inc.

663 S.W.2d 755, 1984 Ky. App. LEXIS 443
CourtCourt of Appeals of Kentucky
DecidedJanuary 27, 1984
StatusPublished
Cited by6 cases

This text of 663 S.W.2d 755 (Green Seed Co. v. Harrison Tobacco Storage Warehouse, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Green Seed Co. v. Harrison Tobacco Storage Warehouse, Inc., 663 S.W.2d 755, 1984 Ky. App. LEXIS 443 (Ky. Ct. App. 1984).

Opinion

HAYES, Chief Judge.

This appeal arises from a refusal to set aside a default judgment by the Harrison Circuit Court.

The appellee entered into a lease agreement with the appellant on May 16, 1979. The appellee filed suit against the appellant on September 28, 1981, seeking judgment for the entire rental payment due under the lease. On October 23, 1981, the appellant filed a petition for removal in the United States District Court, properly served the appellee and filed a copy with the Harrison Circuit Court. This petition was dismissed as defective on October 27, 1981.

Instead of amending this petition, the appellant filed a second petition for removal on November 5, 1981, longer than thirty days after the filing of the complaint. Neither the appellee nor the Harrison Circuit Court received notice or copy of this petition, although the appellant offered affidavits that notice and copy were mailed. On January 27,1982, the appellee applied for a default judgment because of the appellant’s failure to plead or otherwise defend the action. The appellant had made no answer in the trial court where both the appellee and the trial court thought the action to be because of the aforementioned failure in notice. The appellant also had made no answer or defense in the United States District Court where he thought the action to be.

On February 5, 1982, the trial court granted and entered the default judgment. The appellant appeared and made a motion to set aside the default judgment on February 16,1982, because the second petition for removal had not been remanded. Prior to ruling on this motion, the United States District Court, on April 1, 1982, dismissed the second petition for removal as being defective. The appellant, then, asked the trial court for leave to file an answer and counterclaim and to amend its motion to set aside the default judgment.

On August 6, 1982, the trial court denied the motion to set aside the judgment.

The issue before this Court is whether the trial court abused its discretion in failing to set aside the default judgment.

The law clearly disfavors default judgments. Bargo v. Lewis, Ky., 305 S.W.2d 757 (1957). Moreover, the trial court has wide discretion to set aside a default judgment. Northcutt v. Nicholson, 246 Ky. 641, 55 S.W.2d 659 (1932). The moving party, however, cannot have the judgment set aside and achieve his day in court if he cannot show good cause and a meritorious defense. CR 55.02; Jacobs v. Bell, Ky., 441 S.W.2d 448 (1969). Good cause is most commonly defined as a timely showing of the circumstances under which the default judgment was procured. The appellant asserts that his reliance on the removal of the trial court’s jurisdiction to the United States District Court is a sufficient showing of good cause. This Court does not agree.

Federal, not state, law governs all removal proceedings. Grubbs v. General Electric Credit Corp., 405 U.S. 699, 92 S.Ct. 1344, 31 L.Ed.2d 612 (1972). Removal of jurisdiction is effected after the movant files a petition and bond, gives notice to all adverse parties, and files a copy of the petition with the clerk of the state court. 28 U.S.C. § 1446(e). Once these steps are completed, the state court loses jurisdiction over the ease unless and until the case is remanded by the federal court. Id. The removal is effective the date of the petition. Howes v. Childers, 426 F.Supp. 358 (W.D.Ky.1977); contra, Wright, Miller & Cooper, 14 Federal Practice & Procedure § 3737 (1976). Since the state court retains its jurisdiction until it is notified of the removal petition, this procedure allows an interim period between the filing of the petition and the notice to the parties and the state court where the federal and state courts both have jurisdiction. Beberian v. Gibney, 514 F.2d 790 (1st Cir.1975), Howes, supra. [758]*758Dual jurisdiction remained in the instant case at least until February 16, 1982, when the appellant’s motion to set aside the default judgment first notified the appellee and the trial court of the second petition for removal. See Medrano v. State of Texas, 580 F.2d 803 (5th Cir.1978). Where no notice, actual or constructive, is given to the state court, the trial court’s actions are not void. Id. Obviously, conflicting actions can occur.

Most courts find concurrent jurisdiction means nothing more than that once the state court is notified of the removal, federal jurisdiction predominates in any conflicting actions during this interim period. 1A Moore's Federal Practice 0.168 [.3-8] (1983); Howes, supra; contra; Wright § 3737. In effect, then, the federal court can overturn any default judgment that had been granted during the period of dual jurisdiction. Id. Where, as in the case at bar, the federal court dismisses the petition, the removing party’s only recourse is a motion to set aside the judgment, and reliance on his petition for removal as good cause may fail. When the removing party fails to answer in compliance with either CR 12.01 or Fed.R.Civ.P. 81, the trial court does not abuse its discretion in finding such reliance inadequate as good cause.

CR 12.01 requires a defendant to serve his answer within twenty (20) days after service of' the summons upon him. The appellant waited almost seven (7) months before he served the appellee with his answer. The default judgment was not granted until over three (3) months had elapsed after the time the appellant was required to tender his answer. The appellant’s failure to file a timely answer is sufficient basis for a default judgment, and the appellant is not entitled to have the judgment set aside unless he can show reasonable excuse for the delay in answering and establish that he is not guilty of unreasonable delay. CR 55.01; Terrafirma, Inc. v. Krogdahl, Ky., 380 S.W.2d 86 (1964).

The appellant’s assertion that he believed the case had been removed is an unreasonable excuse when he has not complied with Fed.R.Civ.P. 81. This rule attempts to resolve the potential conflicts between the thirty (30) days allowed for removal under 28 U.S.C. § 1446, the twenty days allowed for an answer under Fed.R. Civ.P. 12, and the various times allowed for answers under state rules by providing,

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663 S.W.2d 755, 1984 Ky. App. LEXIS 443, Counsel Stack Legal Research, https://law.counselstack.com/opinion/green-seed-co-v-harrison-tobacco-storage-warehouse-inc-kyctapp-1984.