McClurg v. Deaton

671 S.E.2d 87, 380 S.C. 563, 2008 S.C. App. LEXIS 218
CourtCourt of Appeals of South Carolina
DecidedNovember 20, 2008
Docket4458
StatusPublished
Cited by26 cases

This text of 671 S.E.2d 87 (McClurg v. Deaton) is published on Counsel Stack Legal Research, covering Court of Appeals of South Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McClurg v. Deaton, 671 S.E.2d 87, 380 S.C. 563, 2008 S.C. App. LEXIS 218 (S.C. Ct. App. 2008).

Opinions

[567]*567HUFF, J.:

Harrell Wayne Deaton and New Prime, Inc. appeal from an order of the trial court denying their motions to set aside a default judgment in favor of Ann F. and Steve McClurg in the amount of $800,000. We affirm.

FACTUAL/PROCEDURAL HISTORY

Ann McClurg, along with her husband Steve, instituted this action for injuries Ann received as a passenger in a car involved in an August 5, 2002 motor vehicle accident with a truck owned by New Prime and driven by New Prime’s employee, Deaton. New Prime was insured by Zurich North America under a commercial trucker’s general liability policy containing a $2,000,000 deductible endorsement for liability claims for each accident. Zurich was notified of the accident almost immediately and began investigating the matter shortly thereafter.

In the following month of September 2002, Zurich received a letter of representation from the McClurgs’ counsel, beginning a course of contact between Zurich and counsel regarding injuries, medical treatment and settlement negotiations. Deaton left the employment of New Prime in October 2002, a little over two months following the accident, and there was no record of any communication between Deaton and New Prime during this time of negotiation subsequent to Deaton’s separation from employment. On April '23, 2004, Zurich received a proposed settlement package from counsel. On June 28, 2004, counsel sent Zurich a letter regarding “Ann D. McClurg and Steve McClurg v. New Prime and Harrell Wayne Deaton.” The letter requested settlement within the next week and stated, “If I haven’t heard from you by that time, I will file suit and serve the Defendant and send you a courtesy copy of the pleadings.” On October 6, 2004, counsel sent Zurich another letter, enclosing a copy of a complaint he prepared in the matter and indicating his intent to “proceed to litigation” if the matter was not soon settled. The draft complaint named only Ann McClurg as a plaintiff and New Prime as a defendant, and alleged New Prime was vicariously liable for Deaton’s actions and was also liable for its negligent hiring, retention, and training of Deaton. On October 18, 2004, [568]*568Zurich contacted counsel, who agreed to delay filing suit while Zurich reviewed the settlement demand. Between November 2004 and June 2005, Zurich and counsel exchanged telephone messages in regard to settlement, but did not reach a final agreement on the matter.

Unbeknownst to Zurich and New Prime, counsel filed a summons and complaint on April 27, 2005, naming only Deaton as a defendant. The complaint was filed on behalf of Ann McClurg, for injuries sustained in the accident, and her husband Steve, for loss of consortium. On May 8, 2005, the South Carolina Department of Motor Vehicles (the Department) received a copy of the summons and complaint pursuant to South Carolina Code Ann. § 15-9-350 and, on that same date, sent a copy of the summons and complaint by certified mail to Deaton at the Texas address listed on the accident report, but it was later returned as “Insufficient Address.” On June 27, 2005, the Department again received the summons and complaint and sent the summons and complaint to Deaton via certified mail, this time to a different address in Texas, found through the efforts of a private investigator hired by counsel. This time the return receipt indicated it was received by Deaton, as evidenced by signature. Deaton did not answer or otherwise appear, and an order of default was filed on August 1, 2005. Notice of a damages hearing was sent to Deaton at both Texas addresses, but Deaton again failed to respond or appear. In September 2005, judgment was entered against Deaton in favor of Ann McClurg in the amount of $750,000 and in favor of Steve McClurg in the amount of $50,000 for a total judgment of $800,000.

On October 5, 2005, Zurich contacted counsel’s office to determine the status of the settlement negotiations. After counsel’s staff would not divulge any information, Zurich contacted New Prime to confirm New Prime had not been served with a summons and complaint in the matter. On October 7, 2005, Zurich received by certified mail a copy of the default judgment entered against Deaton. After the services of several private investigators were engaged, Deaton was finally located on January 23, 2006. On that date, Deaton executed an affidavit denying he was served with a copy of the summons and complaint, or received notice of the entry of default or the default judgment hearing, and stating he did not notify [569]*569New Prime or Zurich of the above because he never received notice. Thus, it appears undisputed that neither Zurich nor New Prime was aware a complaint had been filed in the matter until October 7, 2005 when Zurich received a copy of the default judgment entered against Deaton. Notably, on May 11, 2005, after the summons and complaint were already filed by counsel and sent by the Department to Deaton at the first address, counsel continued the path of negotiation with Zurich, sending Zurich an additional medical report concerning the underlying cause of action.

Deaton moved to set aside the default judgment pursuant to Rules 60(b)(1) and 60(b)(3) of the South Carolina Rules of Civil Procedure. New Prime filed a motion to intervene and likewise moved to set aside the judgment pursuant to Rules 60(b)(1) and 60(b)(3). The trial court granted New Prime’s motion to intervene, but denied both New Prime’s and Deaton’s motions to set aside the default judgment. Both New Prime and Deaton made motions for reconsideration pursuant to Rule 59(e), SCRCP, which the trial judge denied with the exception of deleting some language from the order not at issue in this appeal. This appeal followed.

ISSUES

A. New Prime’s Appeal

1. Did the trial court err in failing to recognize New Prime’s status as a party and afford New Prime due process rights?

2. Did the trial court commit an abuse of discretion in denying New Prime relief from judgment based on surprise?

3. Did the trial court commit an abuse of discretion in denying New Prime relief from judgment based on misrepresentation and misconduct by Respondents’ attorney?

B. Deaton’s Appeal

1. Did the trial court err in failing to set aside the default judgment when it was procured based on fraud, misrepresentation, or other misconduct inasmuch as Respondents’ counsel actively concealed the lawsuit so no defense would be entered?

[570]*5702. Did the trial court err in failing to set aside the default judgment under Rule 60, SCRCP, when Deaton demonstrated that he was not properly served with the summons and complaint and that he did not receive notice of the hearing on unliquidated damages?

3. Should the default judgment be set aside because the actual judgment entered was incongruent with the damages alleged in the pleadings?

STANDARD OF REVIEW

The decision to grant or deny a motion for relief from judgment lies within the sound discretion of the trial court and will not be disturbed on appeal absent an abuse of discretion. BB & T v. Taylor, 369 S.C. 548, 551, 633 S.E.2d 501, 502-03 (2006). Thus, our standard of review limits this court to determining whether the trial court abused its discretion. Id.

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Cite This Page — Counsel Stack

Bluebook (online)
671 S.E.2d 87, 380 S.C. 563, 2008 S.C. App. LEXIS 218, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcclurg-v-deaton-scctapp-2008.