New Image Industries, Inc. v. Rice

603 So. 2d 895, 1992 Ala. LEXIS 635, 1992 WL 136153
CourtSupreme Court of Alabama
DecidedJune 19, 1992
Docket1910256
StatusPublished
Cited by4 cases

This text of 603 So. 2d 895 (New Image Industries, Inc. v. Rice) is published on Counsel Stack Legal Research, covering Supreme Court of Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
New Image Industries, Inc. v. Rice, 603 So. 2d 895, 1992 Ala. LEXIS 635, 1992 WL 136153 (Ala. 1992).

Opinion

KENNEDY, Justice.

The defendant, New Image Industries, Inc. (“New Image”), appeals from an order denying its motion to set aside a default judgment entered in favor of the plaintiffs, Ron Rice and Roland Howell, d/b/a Port of Hair (“Port of Hair”).

Port of Hair was sued by Bell Atlantic Tricon Leasing Corporation (“Bell Atlantic”) in the Circuit Court of Autauga County, Bell Atlantic claiming that Port of Hair had ceased payment on a lease-purchase of hair salon equipment manufactured by New Image. Port of Hair states that it had ceased payment because the equipment was generally defective and, presumably on this basis, it stated in its answer to Bell Atlantic’s complaint that it was not “indebted to the plaintiff.” Port of Hair filed a third-party complaint against New Image.

In count one of its third-party complaint against New Image, Port of Hair alleged a breach of contract. Port of Hair averred that as part of the equipment lease-purchase transaction through Bell Atlantic, New Image had agreed to provide installation of the equipment, repair service by qualified personnel, and free parts replacement in the event parts were found to be defective. Port of Hair alleged that New Image had not complied with this agreement and, by not complying, had breached its contract.

Port of Hair alleged that it had continued to make lease-purchase payments until “it became evident that [New Image] was not going to provide ... services which it had agreed to provide.”

In count two, Port of Hair alleged a breach of warranty. It alleged that New Image had expressly warranted the equipment for one year, and it stated that New Image had refused to make any repairs under the warranty after the one year, even though the equipment had been generally defective and in a state of disrepair since it was put into service.

Port of Hair alleged that New Image had been aware of serious problems with the equipment during the warranty period, problems, it says, that were covered under the warranty. Port of Hair further alleged that the warranty period elapsed without New Image’s having remedied the problems. It alleged that, thereafter, New Image invoked the lapse of the warranty as a reason for refusing to correct the continuing problems under the warranty. Port of Hair said that New Image had an obligation to make the repairs under the warranty and that its failure to do so was a breach of the warranty.

Port of Hair stated that New Image had wrongly put Port of Hair in the position of being forced to purchase an extended warranty in order to obtain redress.

New Image concedes that Lynn Up-church was its “agent” on March 7, 1991, the day the record indicates that Port of Hair’s complaint was received via certified mail by Upchurch at New Image’s corporate offices in Canoga Park, California.

New Image did not answer the complaint or otherwise respond within the time allowed by law. Approximately a month and a half after the complaint was served, Port of Hair moved for a default judgment. A default was entered on April 23, 1991. Later, an ore tenus hearing was held on the issue of damages, and on May 10, 1991, the trial court entered a final default judgment in favor of Port of Hair for $20,870.81. On June 10, 1991, New Image moved to set aside the default judgment “pursuant to ... Rules 55(c) and 60(b), Alabama Rules of Civil Procedure.” New Image specifically averred that it had “good and sufficient defenses to [the] action” and that they would be shown by affidavits to be filed by amendment at a later date. This motion was ultimately denied.

[897]*897The affidavits—those of New Image’s chairman, Robert Gurevitch, and a New Image employee, Doug Golay—were filed on July 25, 1991, as an amendment to New Image’s motion.

Gurevitch stated that he was “informed and believe[d]” that Lynn Unruh1 of New Image had received the complaint by certified mail on March 7, 1991, but, he suggested, because she was not New Image’s regular receptionist, she did not understand where to direct it. He said that he was “informed and believe[d]” that the complaint was “generally” addressed to “New Image,” and the record indicates this to be correct.2

Gurevitch added that he “did not recall” being informed of the receipt of the complaint and that he first realized the existence of this action when he received a notice indicating that a default judgment had been entered. He stated that if he had known about the lawsuit in time to file a timely response he would have done so.

Golay’s affidavit, discussed infra, does not address New Image’s failure to timely respond.

New Image argues that the principles underlying Rules 55(c) and 60(b), Ala.R.Civ. P., required that the trial court grant its motion to set aside the default.

Rule 60(b) requires, as an absolute prerequisite to relief from a judgment, proof one or more of the grounds enumerated therein. We have stated that “Rule 60(b) ... is an extreme remedy to be used only under extraordinary circumstances”; that “[rjelief pursuant to Rule 60(b) is a matter within the discretion of the trial court, subject to revision only upon an abuse of that discretion”; and that “[a] defaulting party seeking under Rule 60(b) to have a default judgment set aside must prove one of the grounds for relief set out in the rule.” Surette v. Brantley, 484 So.2d 435, at 435-36 (Ala.1986). (Citations omitted.)

Regarding Rule 60(b) grounds, New Image argues that it sufficiently established “excusable neglect.” See Ala.R.Civ.P. 60(b)(1).

However, it is evident that the trial court did not abuse its discretion in denying New Image’s motion under Rule 60(b). There was no pertinent, legally admissible evidence offered relating to the Rule 60(b) ground New Image asserts, excusable neglect. The only evidence tendered by New Image addressing the question of why it failed to timely respond is Gurevitche’s affidavit. The relevant matters it contains consist of inadmissible hearsay and speculation. Therefore, Gurevitche’s affidavit is insufficient to show excusable neglect. See Surette, 484 So.2d at 436 (stating that the movant must “prove” a ground under Rule 60(b)).

Thus, our focus is directed to Rule 55(c).

Like a ruling on a Rule 60(b) motion, a ruling on a Rule 55(c) motion will not be disturbed except where “the trial court’s decision constituted an abuse of discretion.” Kirtland v. Fort Morgan Auth. Sewer Serv., Inc., 524 So.2d 600, 603 (Ala.1988).

In order to prevail on a motion to set aside a default judgment under Rule 55(c), the movant must state, among other things, a meritorious defense to the underlying lawsuit. Kirtland, 524 So.2d at 605. “If a trial on the merits would not change the outcome, the court would be wasting its and the parties’ resources in setting the default judgment aside.” Kirtland, 524 So.2d at 606.

In determining whether the movant has advanced a meritorious defense, we look to whether “[tjhe defense proffered by the defaulting party [is] of such merit as to induce the trial court reasonably to infer that allowing the defense to be litigated could foreseeably alter the outcome of the case.” Id. In this regard, the “defaulting [898]

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Bluebook (online)
603 So. 2d 895, 1992 Ala. LEXIS 635, 1992 WL 136153, Counsel Stack Legal Research, https://law.counselstack.com/opinion/new-image-industries-inc-v-rice-ala-1992.