Be Careful What You Ask For!

The Supreme Court of Virginia recently affirmed a Circuit Court’s Order denying plaintiff’s motion to set aside the default judgment she obtained against the defendant, even though the defendant was never properly served with the summons and complaint.

Sauder v. Ferguson arose out of an October 2009 motor vehicle accident.  Susan Sauder filed a complaint against Dennie Lee Ferguson seeking damages from the accident.  Sauder obtained posted service on Ferguson at an old address listed on the 2009 police report.  Sauder also served Rockingham Mutual Insurance Company by personal service on its registered agent, instead of Rockingham Casualty Company, her uninsured motorist carrier.

When responsive pleadings were not filed, Sauder filed a motion for entry of default judgment.  A second motion was filed in order to give Ferguson notice of the implications of not appearing at the hearing.  However, when Sauder attempted to serve Ferguson with the motion, notice, and proposed order at the same address at which she served the summons and complaint,  the proof of service was returned “not found” with a notation of “moved.”  Sauder then served the motion, notice, and proposed order on Ferguson by leaving it with his mother at an address Ferguson provided in a companion declaratory judgment action.

Ferguson did not appear at the hearing and an order of default judgment was entered.  Ferguson was then personally served with the order of default judgment, and a bench trial on damages was set.  No one appeared on Ferguson’s behalf at the trial on damages.  At the trial, the Circuit Court entered an order awarding Sauder $300,000 in damages, and  that Rockingham Mutual was liable for its contractual portion of Sauder’s uninsured motorist policy.

Rockingham Casualty filed a declaratory judgment action seeking a determination that Sauder was not legally entitled to collect the judgment because Ferguson was never served with the summons or complaint and Rockingham Casualty was never served as required under Virginia Code section 38.2-2206(F).  As a result, Sauder  filed a motion to set aside the default judgment in an effort to cure the defect.  The Circuit Court denied the motion.

The Supreme Court affirmed the Circuit Court’s refusal to set aside the default judgment under Va. Code § 8.01-428(A), which provides, in relevant part:

Upon motion of the plaintiff or judgment debtor and after reasonable notice to the opposite party, his attorney of record or other agent, the court may set aside a judgment by default or a decree pro confesso upon the following grounds: (i) fraud on the court, (ii) a void judgment, (iii) on proof of an accord and satisfaction, or (iv) on proof that the defendant was, at the time of service of process or entry of judgment, a person in the military service of the United States for purposes of 50 U.S.C. app. § 502.

Va. Code § 8.01-428(A) (emphasis added).  Because the General Assembly used the word “may” instead of “shall,” the Supreme Court held the Circuit Court had discretion as to whether to set aside the default judgment.

Second, the Supreme Court held that the Circuit Court did not abuse its discretion in denying the motion to set aside the default judgment.  Sauder filed the motion to set aside on the ground that the judgment was void for lack of personal service on Ferguson.  Although it was undisputed that the complaint and summons were not served on Ferguson, the Circuit Court did not reach the issue of whether the judgment was void.  Instead, it ruled that the facts did not justify the relief Sauder sought.  The Circuit Court concluded that Sauder failed to secure proper service, became aware of the service of process failure and did not correct the error by properly serving the complaint and summons.  Instead, she proceeded to seek and obtain a default judgment asserting valid service.  For these reasons, the Supreme Court concluded that the Circuit Court did not abuse its discretion, as Sauder was the architect of her own misfortune.

The declaratory judgment action remains pending in the Rockingham County Circuit Court, but Sauder may be stuck with an unrecoverable $300,000 default judgment.  A party must be careful what she asks for, as she may get just what she wanted.