Civil Practice – Rule 60 – Motion to Set Aside – Default Judgment – Meritorious Defense

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McClurg v. Deaton (Lawyers Weekly No. 010-139-11, 11 pp.) (Costa M. Pleicones, J.) (Jean Hoefer Toal, Ch.J., dissenting) Appealed from Greenville County Circuit Court (Edward W. Miller, J.) S.C. S. Ct. Click here for the full-text opinion.

Holding: The circuit court’s denial of a motion to set aside a default judgment under Rule 60(b) SCRCP was proper where a defendant-employer who intervened in a case against one of its employees failed to raise a meritorious defense in its motion.

Facts

The plaintiffs were injured in an accident in which an employee of the defendant was driving a truck owned by the defendant. The plaintiffs brought suit and obtained a judgment by default in the amount of $800,000 against the employee.

When the defendant learned about the judgment, it intervened in the case and moved to set aside the default judgment. The trial court denied the motion to set aside the default judgment on the basis that the defendant failed to raise a meritorious defense.

The defendant appealed. The Court of Appeals affirmed. The defendant petitioned this court for a writ of certiorari. We granted the petition.

Majority Opinion

A meritorious defense is necessary in order for a judgment to be set aside under Rule 60(b). Mitchell Supp. Co. v. Gaffney, 297 S.C. 160 (Ct. App. 1988). Since the issue of a meritorious defense was neither raised to nor ruled upon by the circuit court, the decision of the Court of Appeals is affirmed.

Dissent

(Toal, Ch.J.) The defendant met its burden to set aside the default judgment by demonstrating the existence of surprise and misconduct under Rule 60(b)(1) and (3). The defendant’s supporting memoranda and affidavits to motions provided the court a basis for concluding that a contest on the merits might result in a different outcome by illustrating the discrepancy between the amount of damages awarded and the actual damages suffered by the plaintiffs or the settlement offer advanced by them.

It was an error of law for the trial court judge to determine that, because the defendant did not deny liability, it did not raise a meritorious defense.

Affirmed.