NCS Healthcare of Arkansas, Inc. v. W.P. Malone, Inc.

88 S.W.3d 852, 350 Ark. 520, 2002 Ark. LEXIS 567
CourtSupreme Court of Arkansas
DecidedNovember 7, 2002
Docket02-244
StatusPublished
Cited by11 cases

This text of 88 S.W.3d 852 (NCS Healthcare of Arkansas, Inc. v. W.P. Malone, Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
NCS Healthcare of Arkansas, Inc. v. W.P. Malone, Inc., 88 S.W.3d 852, 350 Ark. 520, 2002 Ark. LEXIS 567 (Ark. 2002).

Opinion

Annabelle Clinton Imber, Justice.

The appellant, NCS Healthcare of Arkansas, Inc., appeals from a default judgment in favor of the appellee, W. P. Malone, Inc. The default judgment was entered following an order of remand from a federal district court. In the first point on appeal, NCS makes two arguments in support of its claim that the circuit court abused its discretion and erred as a matter of law when it entered the default judgment against NCS: (1) the federal pleadings filed in state court after remand satisfy the requirement of Ark. R. Civ. P. 55(a) that a party “plead or otherwise defend”as provided by the Arkansas Rules of Civil Procedure; and (2) the ten-day grace period under Ark. R. Civ. P. 55(f) that begins running “after service of notice upon defendants that the order remanding such case has been filed[,]” was never triggered. Because we agree with the latter argument, the circuit court’s order of default judgment must be reversed.

The merits of the case in circuit court are not at issue on appeal; so, we will only briefly recite the underlying claim. Malone acquired accounts receivable from NCS, including $334,734.68 owed to NCS by PHP Healthcare Corp. PHP filed a Chapter 11 petition for bankruptcy and a preference complaint against Malone to recover the payments made on the NCS receivable.

In August 2000, Malone filed a complaint against NCS in Clark County Circuit Court alleging a breach of the asset purchase contract and requesting indemnity for all losses in connection with the PHP receivable. In September 2000, NCS removed the case to federal court. The case moved forward actively in federal court for almost a year. Upon reconsideration of its earlier denial of Malone’s motion to remand, the federal court issued an order on July 11, 2001, remanding the case back to state court for lack of diversity. By a transmittal letter dated July 24, 2001, the federal district court clerk sent the circuit court clerk the following: (1) a certified copy of the order of remand; (2) a copy of the district clerk’s docket entries; and (3) the original of sixty-six pleadings filed in federal court. The federal district court clerk copied the July 24, 2001 transmittal letter to all counsel of record. On July 27, 2001, the transmittal letter was stamped filed in the circuit court clerk’s office.

At the same time NCS was contending that the federal court pleadings had been filed with the circuit clerk, on July 27 and were legally sufficient to constitute an answer, NCS nonetheless filed an answer to Malone’s complaint in state court on August 31, 2001, “out of an abundance of caution.” Shortly thereafter, Malone filed a motion for default judgment based upon NCS’s failure to answer the complaint in a timely manner as required by Arkansas Rule of Civil Procedure 55(f).

On November 16, 2001, the circuit court entered an order granting default judgment. In that order, the circuit court found that the order of remand from the federal court was filed in the circuit court on July 27, 2001, and that the federal pleadings were filed “in bulk.” The court also ruled that “[t]he federal court pleadings do not conform to the Arkansas Rules of Civil Procedure and have no bearing on this action.” Upon concluding that NCS’s answer filed on August 31, 2001 was untimely, the circuit court struck the answer, and granted Malone’s motion for default judgment pursuant to Ark. R. Civ. P. 55(a) and (f). Similarly, the circuit court denied NCS’s motion to set aside the default judgment. NCS appeals from the order granting default judgment and the order denying NCS’s motion to set aside the judgment.

On appeal, NCS initially contends that its answer included in the federal pleadings filed “in bulk” in state court upon remand of the case was sufficient to satisfy the “plead or otherwise defend” requirements of Ark. R. Civ. P. 55(a). Alternatively, NCS makes four other arguments: (1) the ten-day grace period set forth in Ark. R. Civ. P. 55(f) was never triggered because NCS was not served with notice that the order remanding the case had been filed in state court; (2) the circuit court abused its discretion in granting the default judgment and in refusing to set it aside after entry because any default was a result of mistake, inadvertence, surprise, or excusable neglect, and NCS had a meritorious defense; (3) if this court concludes that NCS was in default under Arkansas law, then the circumstances warrant a modification or reversal of existing law; and (4) the complaint failed to plead facts sufficient to state a claim for indemnification; and, therefore, Malone was not entitled to a default judgment.

Standard of Review

The standard by which we review the granting of a default judgment and the denial of a motion to set aside the default judgment is whether the trial court abused its discretion. Southeast Foods, Inc. v. Keener, 335 Ark. 209, 979 S.W.2d 885 (1998); Arnold & Arnold v. Williams, 315 Ark. 632, 870 S.W.2d 365 (1994). However, resolution of the issues on appeal requires this court to interpret Rule 55 of the Arkansas Rules of Civil Procedure. We construe court rules using the same means, including canons of construction, as are used to construe statutes. Moon v. Citty, 344 Ark. 500, 42 S.W.3d 459 (2001). The first rule in considering the meaning and effect of a statute is to construe it just as it reads, giving the words their ordinary and usually accepted meaning in common language. Id. When the language of a statute is plain and unambiguous, there is no need to resort to rules of statutory construction, and the analysis need go no further. Id. We review issues of statutory construction de novo as it is for us to decide what a statute means. Hodges v. Huckabee, 338 Ark. 454, 995 S.W.2d 341 (1999). We are not bound by the decision of the trial court; however, in the absence of a showing that the trial court erred in its interpretation of the law, that interpretation will be accepted as correct on appeal. Id.

Rule 55 of the Arkansas Rules of Civil Procedure provides in pertinent part:

(a) When Entitled. When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend as provided by these rules, judgment by default may be entered by the court.
ifc sf: >fi
(f) Remand from Federal Court. Whenever a case has been removed to a United States court and thereafter remanded, no judgment by default shall be entered prior to the expiration of ten (10) days after service of notice upon defendants that the order remanding such case has been filed. Within such time the defendants may move or plead as they might have done had the case not been removed.

Ark. R. Civ. P, 55 (a), (f) (2002). We have held that default judgments are not favorites of the law and should be avoided when possible. B & F Engineering, Inc. v. Cotroneo, 309 Ark. 175, 830 S.W.2d 835 (1992).

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Charles E. Hamner v. Arkansas County Sheriff's Department & Detention Facility
2026 Ark. App. 56 (Court of Appeals of Arkansas, 2026)
Nissan North America, Inc. v. Harlan
2017 Ark. App. 203 (Court of Appeals of Arkansas, 2017)
Velek v. State (City of Little Rock)
222 S.W.3d 182 (Supreme Court of Arkansas, 2006)
National Enterprises, Inc. v. Kessler
213 S.W.3d 597 (Supreme Court of Arkansas, 2005)
NCS Healthcare of Arkansas, Inc. v. State
207 S.W.3d 552 (Supreme Court of Arkansas, 2005)
Wright v. Eli Lilly & Co.
66 Va. Cir. 195 (Portsmouth County Circuit Court, 2004)
Jurisdictionusa, Inc. v. loislaw.com, Inc.
183 S.W.3d 560 (Supreme Court of Arkansas, 2004)
Volunteer Transport, Inc. v. House
162 S.W.3d 456 (Supreme Court of Arkansas, 2004)
Barnett v. Howard
120 S.W.3d 564 (Supreme Court of Arkansas, 2003)
Epting v. Precision Paint & Glass, Inc.
110 S.W.3d 747 (Supreme Court of Arkansas, 2003)

Cite This Page — Counsel Stack

Bluebook (online)
88 S.W.3d 852, 350 Ark. 520, 2002 Ark. LEXIS 567, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ncs-healthcare-of-arkansas-inc-v-wp-malone-inc-ark-2002.