PLAINTIFF S OPPOSITION TO DEFENDANT EARTH FARE, INC. S MOTION TO SET ASIDE ENTRY OF DEFAULT

Transcription

1 STATE OF SOUTH CAROLINA COUNTY OF GREENVILLE Tracey Rose, v. Plaintiff, Central Realty Holdings, LLC; & Earth Fare, Inc., Defendants. IN THE COURT OF COMMON PLEAS C/A no CP PLAINTIFF S OPPOSITION TO DEFENDANT EARTH FARE, INC. S MOTION TO SET ASIDE ENTRY OF DEFAULT The court should deny Defendant Earth Fare s motion to set aside entry of default because its only explanation its insurance company mishandled the complaint is inadequate as a matter of law. Negligence of an insurance company is imputed to a defaulting litigant and cannot constitute good cause to relieve [the defaulting party] from the entry of default. Richardson v. P.V., Inc., 383 S.C. 610, (2009). [R]ules which require responsive pleadings within a limited time serve important social goals, and a party should not be permitted to flout them with impunity. Howell v. Haliburton, 205 S.E.2d 617 (N.C. Ct. App. 1974). Defendant Earth Fare, Inc. is in default. Earth Fare was added as a party defendant by amended complaint on January 14, 2018, and it was served January 18, On February 23, 2018, plaintiff filed her notice of entry of default and supporting affidavit. On April 20, 2018, plaintiff filed her motion for default judgment and requested a hearing on unliquidated damages. On April 25, 2018, a hearing on that motion was set for the June 11, 2018 motions roster. Plaintiff served notice of that hearing on Earth Fare 1

2 as required by Rule 55, SCRCP. Only after receiving notice of that hearing did Earth Fare make an appearance. Earth Fare filed its Memorandum of Law in Opposition to Plaintiff s Motion for Entry of Default on May 4, Earth Fare subsequently filed its Motion to Set Aside the Entry of Default on May 21, 2018 which is almost identical to its earlier memorandum. Because Earth Fare is already in default, plaintiff treats both filings as Earth Fare s motion to set aside entry of default. Plaintiff opposes each of Earth Fare s requests to set aside default and respectfully asks that the court DENY both requests. 1 BACKGROUND On May 10, 2016, Tracey Rose, a litigation paralegal with a Greenville, South Carolina law firm, was a customer at Earth Fare s Pelham Road location in Greenville. 2 Defendant Central Realty Holdings, LLC, owns the shopping center, and leases the store to Earth Fare. Mrs. Rose parked in front of Earth Fare that day. 3 As she walked to enter the store, she fell over an out-of-place parking stop that dangerously jutted out from its intended location: 1 Earth Fare also seeks a stay of plaintiff s motion for default judgment and unliquidated damages hearing in order to conduct discovery as to plaintiff s damages. This request is duplicative of Earth Fare s pending motion to stay which plaintiff also opposes. Plaintiff incorporates by reference her brief in opposition to that motion which was filed on May 18, Earth Fare, Inc. is a supermarket chain with over forty stores across a dozen states. 3 Am. Compl. at 13. 2

3 See Am. Compl. at 18. Google satellite images from April 21, 2016 confirm that the parking stop at issue was in the same dangerous condition weeks prior to Mrs. Rose s injury. See Plaintiff s affidavit of records custodian Exhibit 1 (filed January 25, 2018). Mrs. Rose s head slammed into the pavement as a result of the fall. She sustained a number of injuries including a broken arm and, tragically, a traumatic brain injury that has changed her life. Plaintiff asserted negligence claims against both defendants. 4 With respect to Earth Fare, plaintiff alleged it (1) knew or should have known of the dangerous parking stop; (2) knew its business invitees would use and traverse the parking lot; (3) had a duty to keep its business invitees safe or warn them of known, dangerous conditions; (4) had 4 Am. Compl. at

4 a duty to notify its landlord of known, dangerous conditions; and (5) breached those duties by failing to notify the landlord of the parking stop, fix the parking stop, or warn its business invitees of the parking stop. 5 Plaintiff initially filed suit against Defendant Central Realty Holdings. After filing plaintiff discovered that Earth Fare had failed to notify Central Realty Holdings of the dangerously positioned parking stop for weeks based on the Google satellite image taken weeks before the subject event and documents provided by Earth Fare in response to plaintiff s subpoena. Plaintiff then amended her complaint with the consent of Central Realty and served it on Earth Fare. On January 16, 2018, plaintiff served Earth Fare with a summons and amended complaint via certified mailing to its registered agent for service. 6 The certified mail return receipt indicated that it was received by Earth Fare s registered agent on January 18, Earth Fare s answer or other responsive pleading was due on February 19, Earth Fare failed to respond. Plaintiff filed an affidavit of service, an affidavit of default, and a notice of entry of default on February 23, Only after being served with notice of the June 11th hearing did Earth Fare make an appearance on April 27, 2018, sixtyseven days after its answer was due. In its motion to set aside default, Earth Fare acknowledges the following: (1) Earth Fare and its insurer knew of the claim prior to the filing of the lawsuit; (2) Earth Fare and its insurer attempted to tender the claim to Central Realty; (3) Central Realty did not 5 Am. Compl. at 12, 27-30, Affidavit of service, filed Feb. 23, Plaintiff served Paracorp Inc., 2 Office Park Ct, #103, Columbia, South Carolina as provided by the Secretary of State s office: 7 See Plaintiff s affidavit of service, Ex. A, filed Feb. 23,

5 respond to the tender; (4) Earth Fare was served with a copy of the summons and complaint; (5) Earth Fare immediately notified its insurer; and (6) [b]elieving that its insurer would be handling the case from that point, Earth Fare took no further actions. 8 Earth Fare offers no explanation for why its insurer failed to take any action for months following its receipt of the lawsuit. Earth Fare is insured by Liberty Mutual. ANALYSIS Earth Fare is in default as shown by plaintiff s entry of default and supporting affidavit. As a matter of law, Earth Fare cannot show good cause exists to relieve it from default where its only explanation is its insurance company failed to act. 1. Defendant Earth Fare is in default In both its memorandum and its motion to set aside default, Earth Fare argues that default has not been entered. 9 That is incorrect. All that is required for entry of default is that plaintiff make a showing by affidavit that a party has failed to appear, answer or otherwise defend the action. See Rule 55(a). "[W]hether default was actually entered is of no consequence since the entry of default is a purely ministerial act which the clerk was required to perform once the default was made to appear by the affidavit." Thynes v. Lloyd, 294 S.C. 152, (Ct. App. 1987) (where clerk failed to enter default in the file book); see also Stark Truss Co. v. Superior Const. Corp., 360 S.C. 503, 509 (Ct. App. 2004) ( entry of default is a ministerial act which a clerk is required to perform once default is made to appear by the affidavit of the moving party ). 8 Def s Motion to Set Aside Entry of Default, pp Default has not been entered in this case, nor should it be. Defendant s memorandum at p.3; see also Def s Motion to Set Aside Entry of Default at p.3. 5

6 Plaintiff has complied with Rule 55 and filed the necessary affidavit. 10 undisputed Earth Fare failed to answer the complaint in the time period required by rule. No further action is needed. Earth Fare is in default. 2. Earth Fare s insurance company s failure to respond or otherwise defend its insured is not good cause for relief In order to justify relief from entry of default, Earth Fare must provide an explanation for [its] default and give reasons why vacation of the default entry would serve the interests of justice. Sundown Operating Co. v. Intedge Indus., Inc., 383 S.C. 601, 607 (2009). A satisfactory explanation for the default is the threshold inquiry. Earth Fare gives no explanation for its default other than after being served it immediately provided a copy of this lawsuit to its insurance company and believed the matter handled. An insurance company s mishandling of a complaint is imputed to a defaulting litigant and cannot constitute good case to relieve [that litigant] from default. Richardson v. P.V., Inc., 383 S.C. 610, (2009) (emphasis added); see also Sundown, 383 S.C. at 609 ( law is clear that an attorney or insurance company s misconduct is imputable to the client ); Pilgrim v. Miller, 350 S.C. 637, (Ct. App. 2002), reh g denied, cert granted, vacated due to settlement (insurer s failure to handle summons and complaint It is imputed to defendant and not grounds for good cause). If a party can give a satisfactory explanation for the default then the trial court can consider the Wham factors: (1) timing of the motion for relief; (2) whether the defaulting party has a meritorious defense; and (3) degree of prejudice to plaintiff if relief granted. Sundown, 383 S.C. at The court is not required to make findings on the Wham 10 See Plaintiff s Notice of Entry of Default filed Feb. 28,

7 factors if sufficient evidence exists that good cause for default does not exist. Dixon v. Besco Engineering, Inc. 320 S.C. 174, 179 (Ct. App. 1995). Examination of the Wham factors is not necessary here because Earth Fare has not given a satisfactory explanation why its insurer failed to take action after it was provided with suit papers. See Regions Bank v. Owens, 402 S.C. 642, 649 (2013) (Wham factors not considered where no finding of good cause). a. Earth Fare gives no explanation for its insurer s failure to respond Earth Fare admits that both Earth Fare and its insurer had knowledge of the claim prior to filing, that it was served with the amended complaint, it immediately notified its insurance company of the amended complaint, and it believed its insurance company was handling it. Earth Fare admits that it finally appeared months after a responsive pleading was due. Earth Fare does not attempt to explain why its insurance company failed to act in any way until they received notice of a hearing on plaintiff s motion for default judgment. This is not an explanation and cannot be the basis for a finding of good cause. Our courts have repeatedly held that an insurance company s failure to act after receiving notice of suit against an insured is imputed to the defendant and does not warrant relief from default. See Richardson, 383 S.C. at ; Sundown, 383 S.C. at 609; Regions Bank, 402 S.C. at ; Pilgrim, 350 S.C. at 642; Bage, LLC v. Southeastern Roofing Co. of Spartanburg, Inc., 373 S.C. 457, 473 (Ct. App. 2007). The Supreme Court in Richardson directs, without exception, that an insurance company s negligence cannot justify relief from an entry of default. 383 S.C. at In Richardson, the defaulting party provided evidence that its insurance agent failed to 7

8 send the suit papers to the insurance company after getting them from the insured. The agent assumed they had also been sent to the insurance company. Id. at 618. The insurance company had not received a copy and its adjusting processes were not triggered. Id. Earth Fare offers less explanation than the defaulting litigant in Richardson. Earth Fare concedes it provided notice of the lawsuit to its insurance company, not an agent. In light of Richardson and Earth Fare s explanation of its default, there is no basis in law or fact for the court to find good cause and Earth Fare s motion to set aside default must be denied. b. The Wham factors do not weigh in favor of relief. Because Earth Fare fails to offer good cause for relief, no inquiry into the Wham factors is necessary. 11 Regions Bank, 402 S.C. at 649. Earth Fare argues the factors are met so they are addressed below. They do not weigh in favor of relief. 1. Earth Fare filed its motion for relief seventy days after entry of default Seventy days elapsed between the entry of Earth Fare s default and Earth Fare s memorandum in opposition to the entry of default. Sixty-seven days elapsed between the date Earth Fare s answer was due and its appearance in this case. Earth Fare argues this delay of a mere 63 days [sic] is reasonable. It is not. A fourteen-day-late answer and forty-one day delay between entry of default and the motion to set aside is insufficient to warrant relief from default. See Stark Truss Co. 11 After good cause for default has been given a court may consider the following factors in deciding whether to relieve a party from default: (1) the timing of the motion for relief; (2) whether the defaulting party has a meritorious defense; and (3) degree of prejudice to plaintiff. See Wham v. Shearson Lehman Bros., Inc., 298 S.C. 462, 465 (Ct. App. 1989). 8

9 v. Superior Constr. Corp., 360 S.C. 503, (Ct. App. 2004). A motion to set aside filed two months after entry of default is similarly insufficient. See Richardson, 383 S.C. at 619; see also Bage, 373 S.C. at 473 (two months from answer s due date and filing of motion for relief insufficient). In Sundown the defaulting party filed its motion to set aside sixteen days after the entry of default. Sundown, 383 S.C. at 605. That short delay did not justify relief where the defaulting party failed to show good cause for its failure to timely answer. Id. at The unreasonableness of Earth Fare s delay is worsened by other factors. First, the sophistication of both Earth Fare and its insurer weighs against a finding of reasonable delay. Earth Fare is a large corporation with a corporation service company designated as its agent for service of lawsuits in South Carolina. Earth Fare s insurer knows what to do with suit papers. In light of their knowledge and experience, any delay by Earth Fare or its insurer is unreasonable. Second, Earth Fare would not have finally appeared when it did had plaintiff not given notice of the default judgment hearing as required by Rule 55(b)(2). A plaintiff should not be punished for acting promptly in seeking default judgment and giving notice of the damages hearing. That would not serve the interests of justice. 2. Earth Fare does not present a meritorious defense Earth Fare argues it has a complete defense to plaintiff s claim based upon its lease agreement with Central Realty. Earth Fare claims that under the terms of the lease Central Realty had an obligation to maintain the parking lot where plaintiff was injured. While that may be true, plaintiff alleges Earth Fare had an independent obligation to either notify Central Realty of a dangerous condition of which it should have been aware 9

10 or fix it itself. Plaintiff was Earth Fare s invitee at the time of her injury. A concrete parking stop in front of Earth Fare s store was out of position and was jutting into the parking lot for weeks prior. Earth Fare was on notice of the dangerous condition and it neither informed Central Realty nor undertook to fix or warn of the dangerous condition. South Carolina law provides that a possessor of land can be liable for its failure to fix, warn of, or take other reasonable steps to protect its invitee from a dangerous condition that it anticipates its invitee may encounter. See Callander v. Charleston Doughnut Corp., 305 S.C. 123, (1991). Earth Fare s defense is that the lease agreement obliges Central Realty to maintain the parking lot. While the lease may provide grounds for a contribution crossclaim or indemnity, it is not a defense to plaintiff s claim against Earth Fare. Earth Fare cannot take an ostrich approach to a dangerous condition threatening the safety of its invitees and escape liability. The lease agreement contemplates this by giving Earth Fare the power to undertake repairs and maintenance of the common areas (which includes the parking lot under the lease s terms) if the landlord fails to make repairs after notice by Earth Fare: In the case of an emergency, if Landlord fails to immediately undertake to repair or maintain the Premises or common areas as required pursuant to this Section 11.2 or pursuant to Section 10.1 after oral notice from Tenant, Tenant may perform the repairs or maintenance and deduct the cost therof from the rentals next falling due hereunder, until the entire amount is absorbed, in addition to any other remedies Tenant may have hereunder or at law or in equity. 10

11 Earth Fare Central Realty lease agreement, Earth Fare s claim that it had no ability to fix or warn a dangerous condition threatening the safety of its customers for more than two weeks is wrong. Earth Fare does not have a meritorious defense. The lease may provide grounds for claims between Earth Fare and Central Realty but it does not shield Earth Fare from plaintiff s allegations. Earth Fare s assertion of the defenses raised in its answer should not be considered as it is in default. 3. Relief from default will prejudice plaintiff Plaintiff will suffer prejudice from further delay. Plaintiff and Central Realty Holdings have conducted significant discovery in this matter which has stalled because of Earth Fare s failure to participate. Earth Fare argues the entry of a scheduling order in this case is evidence of no prejudice. To the contrary, a scheduling order was necessary because the parties continued to wait for Earth Fare to show up. Plaintiff suffered a serious injury for which she continues to receive medical care. She continues to incur medical expenses that she is required to pay. She continues to miss work due to her injury. If Earth Fare obtains relief, plaintiff s day in court will be delayed further. This is sufficient prejudice to weigh against relieving Earth Fare for its lack of diligence. CONCLUSION As a matter of law, Earth Fare s belief that its insurance company was handling this matter cannot be the basis for good cause and relief from default under Richardson. 12 Earth Fare has filed a copy of the lease agreement as Exhibit A to its opposition to the entry of default, filed May 4,

12 Negligence of a party s insurance company is no excuse under South Carolina law. Earth Fare s motion to set aside default should be denied. Plaintiff asks that the court: 1. DENY Earth Fare s motion to set aside (and opposition to the entry of default); 2. STRIKE Earth Fare s answer and amended answer as untimely; 3. GRANT plaintiff s request for a hearing on unliquidated damages; & 4. ENTER default judgment as to Earth Fare in an amount to be determined by the court following a damages hearing. Respectfully submitted, RICHARDSON PATRICK WESTBROOK & BRICKMAN, LLC s/chris Moore Chris Moore 2700 Middleburg Drive Suite 220 Columbia, South Carolina T: F: cmoore@rpwb.com LAW OFFICE OF KENNETH E. BERGER Kenneth E. Berger 5205 Forest Drive Suite 2 Columbia, South Carolina kberger@bergerlawsc.com Dated: May 23, 2018 PLAINTIFF S LAWYERS CERTIFICATE OF SERVICE This is to certify that a copy of this opposition has been served on counsel for defendants by causing it to be filed electronically with the court. s/chris Moore Chris Moore Attorney for plaintiff 12