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Battery Alliance, Inc. v. Beiter

Court of Appeals of Tennessee, Jackson

December 19, 2019

BATTERY ALLIANCE, INC.
v.
CLINTON BEITER ET AL.

          Session November 13, 2019

          Appeal from the Circuit Court for Shelby County No. CT-003843-17 Robert Samual Weiss, Judge

         Defendants appeal the trial court's denial of its motion for relief from a default judgment. In support of its motion, defendants raised three grounds: (1) that the judgment was void due to improper service of process; (2) that the judgment was void due to improper notice related to the motion for default judgment; and (3) the judgment should be set aside due to mistake, inadvertence, surprise or excusable neglect. A thorough review of the record indicates that the trial court exercised its independent judgment to adjudicate only the first of the three grounds alleged. As such, we vacate the denial of the motion and remand for consideration of the remaining grounds.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Vacated and Remanded

          Jon W. Tidwell, Memphis, Tennessee, for the appellants, Clinton Beiter, and Stored Energy Products, Inc.

          Michael R. Marshall, Memphis, Tennessee, for the appellee, Battery Alliance, Inc.

          J. Steven Stafford, P.J., W.S., delivered the opinion of the court, in which D. Michael Swiney, C.J., and Kenny Armstrong J., joined.

          MEMORANDUM OPINION[1]

          J. STEVEN STAFFORD, JUDGE

         I. Background

         On September 18, 2017, Plaintiff/Appellee Battery Alliance, Inc. ("Battery Alliance") filed a complaint against Defendants/Appellants Clinton Beiter and Stored Energy Products, Inc. ("Stored Energy Products," and together with Mr. Beiter, "Appellants"). The complaint alleged breach of contract, unjust enrichment, and estoppel and sought compensatory damages of $216, 256.89, plus attorney's fees, costs, and additional charges that accrued after the complaint was filed. A copy of the complaint and summons was served on Appellants on October 4, 2017.[2] Appellants did not file an answer to the complaint, although negotiations between the parties' representatives were ongoing.

         On November 6, 2017, Battery Alliance filed a motion for default judgment. The motion did not state the date upon which the hearing on the motion would take place. The certificate of service on the motion stated that it was mailed to Appellants' address. A second motion was later filed to correct a typographical error. Again, the motion included a certificate of service to Appellants but no date was provided for the hearing. A hearing on the motion for default judgment took place on November 17, 2017. Appellants did not appear, and the trial court granted the motion for default judgment. The order granting the motion for default judgment directed Battery Alliance to file a motion for a writ of inquiry, which the order stated would take place on January 11, 2018, at 10:00 a.m. The order contained a certificate of service to Appellants' address. On the same day, Appellants filed a motion for a writ of inquiry; however, the certificate of service included with the motion indicated that it was inexplicably mailed to various unrelated persons with addresses in Idaho, including the Idaho Department of Correction, rather than Appellants' addresses in Florida. The writ of inquiry hearing occurred as scheduled, and Battery Alliance was awarded a judgment of $222, 644.74, plus costs and fees.

         A few months later, on May 8, 2018, Appellants filed a motion to set aside the final judgment against them, arguing that the judgment was void and/or that it should be set aside on the ground of excusable neglect.[3] Appellants attached to their motion the affidavit of Mr. Beiter, as well as a form indicating that Appellants had retained counsel near the time motion for default judgment was heard. In general, Appellants argued that they did not have proper notice of the action as a whole or the default judgment proceedings in particular.

         Battery Alliance responded in opposition to the motion to set aside on September 14, 2018. Therein, Battery Alliance asserted that Appellants were properly served with the complaint and summons and properly notified of the default judgment hearing. Moreover, Battery Alliance alleged that Appellants willfully failed to take any action to defend against the complaint and failed to assert a meritorious defense in their motion to set aside. In support, Battery Alliance attached affidavits from the private process server, a verified return of service, and various emails detailing the negotiations between the parties that were taking place at the time of the default judgment proceedings. Additionally, Battery Alliance provided a letter dated November 7, 2017, stating the date and time of the default judgment hearing. Although the letter states that it was "Sent via USPS and email" to Appellants, no email showing that the letter was sent was included in the documents attached to Battery Alliance's response.

         Appellants filed a reply to Battery Alliance's response on September 19, 2018, more fully detailing the grounds relied upon in their motion. According to Appellants, three grounds supported their request for relief from the default judgment: (1) although Appellants were served with the summons, they were not served with the complaint; (2) notice of the motion for default judgment was void due to a violation of Rule 55.01 of the Tennessee Rules of Civil Procedure; and (3) their failure to respond was due to mistake, inadvertence, surprise or excusable neglect as Appellants were reasonably relying on retained counsel to respond. Appellants also provided argument as to their meritorious defense.

         The motion to set aside was heard on October 19, 2018. The parties did not present testimony, instead relying on the statements of counsel and the documents attached to the parties' filings. During the hearing, service of process, Rule 55.01, and excusable neglect were argued. At the conclusion of the hearing, the trial court denied Appellants' motion to set aside the default judgment. Relying on Eluhu v. Richards, No. M2005-00922-COA-R3-CV, 2006 WL 1521158, at *1 (Tenn. Ct. App. June 2, 2006), the trial court ruled that service of process was proper and that Appellants could not have the judgment set aside where they thereafter took "no affirmative action." The trial court directed counsel for Battery Alliance to prepare a written order, which was entered on October 31, 2018. Appellants thereafter appealed to this Court. On May 6, 2019, an amended final order was entered to comply with Rule 58 of the Tennessee Rules of Civil Procedure.

         II. Issues Presented

         The parties each present two issues, with Appellants' two issues spanning nearing an entire page. In our view, the dispositive issue in this case is whether the trial court erred in denying Appellants' Rule 60.02 motion.

         III. Standard of Review

         Generally, a trial court's decision to grant or deny motion under Rule 60.02 of the Tennessee Rules of Civil Procedure is reviewed for an abuse of discretion. Patterson v. SunTrust Bank, 328 S.W.3d 505, 509 (Tenn. Ct. App. 2010); Tenn. Dep't of Human Serv. v. Barbee, 689 S.W.2d 863, 866 (Tenn. 1985). A trial court abuses its discretion only when it applies an incorrect legal standard, or reaches a decision which is against logic or reasoning that causes an injustice to the party complaining." Eldridge v. Eldridge, 42 S.W.3d 82, 85 (Tenn. 2001) (quoting State v. Shirley, 6 S.W.3d 243, 247 (Tenn. 1999)) (internal quotation marks and alterations omitted). Where the judgment is alleged to be void under Rule 60.02(3), however, we review the trial court's judgment de novo, with no presumption of correctness. Hussey v. Woods, 538 S.W.3d 476, 483 (Tenn. 2017).

         IV. ...


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