Morgan v. Century 21 Perry Real Estate

Larry D. Vaught, Judge. This is an appeal from an order denying appellant A1 Morgan’s motion to set aside a default judgment entered against him. On appeal, he contends that the trial court erred in finding (1) that there was no evidence of fraud in obtaining the default judgment, and (2) that there was no inadvertence, surprise or excusable neglect, nor any other reason justifying the setting aside of the default judgment. We affirm. On September 8, 2000, appellee Century 21 Perry Real Estate filed a complaint against appellant, alleging that he entered into an exclusive listing agreement to sell his property through appellee’s agent, Dennis Hughes, and that he violated the agreement by selling the property to Basil and Penny Kesterson. On September 29, 2000, Hughes filed an affidavit for warning order on behalf of appellee, stating, “According to the best information I have, from an investigation of the matter, the best known address of [appellant] is P.O. Box 413, Wickes, AR 71973. . . The affidavit requested that a warning order be issued and published to warn appellant of the action and that an attorney ad litem be appointed for the same purpose. Bob Keeter was appointed on September 29, 2000, as an attorney ad litem for the purpose of notifying appellant of the lawsuit and warning him that a judgment would be rendered against him if he did not respond within thirty days. The warning order was issued the same day. Bob Keeter filed a report on October 30, 2000, stating that he sent appellant a copy of the complaint, the affidavit for warning order, the warning order, and the order appointing an attorney ad litem to “A1 Morgan, P.O. Box 413, Wickes, AR 71973” on October 6, 2000, via certified mail, return receipt requested, restricted delivery. It was returned to sender bearing the notation “unclaimed.” The warning order was published in the Mena Star on October 5, 12, 19, and 26 of 2000. Appellant never filed an answer, and a default judgment was entered on November 15, 2000. Appellee was awarded $8850, plus costs and attorney’s fees. Appellee garnished monies owed by the Kestersons to appellant for the purchase of the house. Appellant filed a motion to set aside the default judgment on March 9, 2001, and an amended motion on March 12, 2001. Appellant alleged that the judgment should be set aside for the following reasons: he received no notice of the action; he was out of state, his mail was not forwarded, and he did not see the warning order published in the Mena Star; the default judgment was a surprise; appellee had no knowledge of his whereabouts and appellee’s agent signed an affidavit as to appellant’s best known address without having any knowledge of his whereabouts or how to locate him; no efforts were made by appellee or its agent to locate appellant; and that appellee committed fraud and misrepresentation in obtaining the listing agreement, which was the basis for its cause of action. After a hearing, the trial court denied the motion finding that there was no evidence of fraud in obtaining the judgment, that there was no mistake, inadvertence, surprise or excusable neglect, or any other reason justifying the setting aside of the judgment. A timely notice of appeal was filed on July 19, 2001. When a party against whom a judgment for affirmative relief is sought fails to plead or otherwise defend as provided by the Arkansas Rules of Civil Procedure, a default judgment may be entered against him. See Ark. R. Civ. P. 55(a). Rule 55(c) of the Arkansas Rules of Civil Procedure provides: The court may, upon motion, set aside a default judgment previously entered for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) the judgment is void; (3) fraud, misrepresentation, or other misconduct of an adverse party; or (4) any other reason justifying relief from the operation of the judgment. The party seeking to have the judgment set aside must demonstrate a meritorious defense to the action; however, if the judgment is void, no other defense to the action need be shown. Default judgments are not favorites of the law and should be avoided when possible. Miller v. Transamerica Com. Fin. Corp., 74 Ark. App. 237, 47 S.W.3d 288 (2001). When a trial judge denies a motion to set aside a default judgment, we must determine on appeal whether the trial judge abused his discretion. Id. Appellant first argues that the trial court erred in finding that there was no evidence of fraud in obtaining the judgment. Specifically, he contends on appeal that appellee committed fraud because its agent filed an affidavit for warning order without making a diligent inquiry as to appellant’s whereabouts. However, he did not make this argument to the trial court as a basis for his motion to set aside the default judgment. Rather, the motion only alleges that appellee’s agent committed fraud and misrepresentation in obtaining the fisting agreement and that the listing agreement was the basis for appellee’s cause of action; the fraud allegation was only a defense to appellee’s complaint. Appellant, at the hearing, testified that he was not alleging any type of fraud with respect to service, but only that appellee committed fraud in not complying with the agreement between the parties. Appellant’s argument is not preserved for our review because he failed to allege fraud in obtaining service of process as a basis for his motion to set aside the default judgment. It is well settled that we will not consider an issue raised for the first time on appeal. Sutter v. Payne, 337 Ark. 330, 989 S.W.2d 887 (1999). However, appellant did sufficiently raise the issue of the validity of service of process in his motion to set aside the default judgment by arguing that no efforts were made by appellee or its agent to locate the appellant. Appellee’s agent, Dennis Hughes, testified that the only address he had for appellant was the post office box in Wickes and that he knew that appellant had left the area. He called the post office to see if there was a forwarding address, and there was not. No other inquiry was made. Appellant testified that he left town, left no forwarding address, went to Alaska where he had no permanent address, did not check his mail, and had no one check it for him. There is no indication that appellee failed to use available information or even that appellant’s whereabouts could have been ascertained. Unlike Smith v. Edwards, 279 Ark. 79, 648 S.W.2d 482 (1983), where the record reflected that Smith could have easily discovered Edwards’s whereabouts, but he failed to utilize the available information, there is no indication from this record that Morgan could be located. Under these facts we do not find that the trial judge abused his discretion by denying the motion to set aside the judgment. Appellant also argues that the trial court erred in finding that there was no inadvertence, surprise or excusable neglect, nor any other reason justifying the -setting aside of the default judgment. Here, appellant testified that he kept the post office box and did not have a forwarding address in Alaska. He did not check his mail for a couple of months and did not have anyone check it for him. He also added that he was surprised when he learned of the default judgment. These facts do not demonstrate the surprise or excusable neglect contemplated in Rule 55 of the Arkansas Rules of Civil Procedure, and we cannot say that the trial court abused its discretion in refusing to set aside the default judgment. Affirmed. Stroud, C.J., Jennings, Bird, and Crabtree, JJ., agree. Pittman, Griffen, Neal, and Roaf, JJ., dissent.