Opinion
No. 569, 2003.
Submitted: April 23, 2004.
Decided: June 29, 2004.
Superior Court of the State of Delaware, in and for New Castle County, C.A. No. 03C-02-048
Before STEELE, Chief Justice, HOLLAND and BERGER, Justices
ORDER
This 29th day of June 2004, upon consideration of the briefs on appeal and the record below, it appears to the Court that:
(1) The defendant-appellant, John M. Kuhn, filed an appeal from the Superior Court's November 3, 2003 order denying his motion to set aside default judgment. We find no merit to the appeal. Accordingly, we AFFIRM.
(2) The plaintiff-appellee, Robert Selvocki, a lawyer and accountant, filed a complaint against Kuhn in the Superior Court alleging that Kuhn owed Selvocki approximately $64,000 in fees for professional services rendered. Without answering the complaint, Kuhn executed a document purporting to assign to Selvocki a portion of Kuhn's secured claim in a Chapter 13 bankruptcy distribution as payment of the debt. Kuhn used a form of assignment prepared by Selvocki; however, after the signature line, Kuhn inserted a handwritten addendum stating "signature doesn't constitute indebtedness."
(3) The Superior Court held two hearings on Kuhn's motion to open the default judgment. At the first hearing on October 20, 2003, Selvocki made the following representations concerning the assignment, which Kuhn did not dispute: In October 2002, Selvocki received a call from Kuhn's office manager offering to pay the debt by means of an assignment of bankruptcy proceeds. Selvocki consulted with the bankruptcy trustee, who approved a form of assignment. Selvocki sent the assignment to Kuhn twice, but received no response. Selvocki then filed the complaint on February 7, 2003.
(4) After being served with the complaint, Kuhn phoned Selvocki. Kuhn told Selvocki that he had received his letters containing the assignment, but had refused to open the envelopes. Selvocki's attorney then sent Kuhn another copy of the assignment, stating that, if the assignment were not properly executed, notarized and returned on or before March 19, 2003, a default judgment would be entered. Kuhn executed the assignment, with the addendum, and returned it to Selvocki. When Selvocki presented the bankruptcy trustee with the executed assignment and asked for payment, however, the bankruptcy trustee refused to pay him because of the presence of the addendum.
(5) On March 31, 2003, Selvocki filed with the Prothonotary a direction to enter default against Kuhn. On the same date, the Prothonotary entered a default judgment against Kuhn in the amount of the debt. After learning of the default, Kuhn filed his motion to open the judgment, which was denied by the Superior Court.
Super. Ct. Civ. R. 55(b)(1). The Superior Court docket reflects that Kuhn was personally served with the complaint on February 27, 2003.
(6) In this appeal, Kuhn claims that the Superior Court abused its discretion by denying his motion. He contends that he carried his burden under Delaware law by demonstrating, first, that, if relief were granted, the outcome might be different and, second, that opening the judgment would cause no substantial prejudice to Selvocki. Kuhn also claims that, because he "otherwise defended" Selvocki's lawsuit against him by placing the addendum next to his signature on the assignment, entry of a default judgment under Superior Court Civil Rule 55(b) was not appropriate.
(7) A motion to open a default judgment pursuant to Rule 60(b) (1) and (6) is addressed to the sound discretion of the Superior Court. In considering whether the Superior Court abused its discretion in denying a motion to open a default judgment, this Court considers two questions — first, whether the defaulting party made some showing that, if relief were granted, the outcome of the action might be different (i.e. whether the defaulting party asserted a meritorious defense) and, second, whether the non-defaulting party would be caused substantial prejudice if the motion were granted.
Battaglia v. Wilmington Savings Fund Society, 379 A.2d 1132, 1135 (Del. 1977).
Id.
(8) Kuhn's claim fails because he did not assert a meritorious defense to Selvocki's claim and made no showing that, if relief were granted, the outcome might be different. While his attorney stated at the hearing on the motion to open the default judgment that Selvocki's claim against Kuhn was "in dispute," he did not provide any factual support for that statement. Moreover, in his declaration attached to the motion, Kuhn stated only that he "disputed" Selvocki's claim, but provided no specifics as to which charges were disputed and why. In light of this as well as Kuhn's dilatory and, at least on its face, disingenuous conduct regarding the assignment, the Superior Court was within its discretion to deny Kuhn's motion to open the default judgment.
As the Superior Court observed, the fact that Kuhn purported to assign Selvocki $64,000 out of the bankruptcy proceeds suggests that he, in fact, did not dispute the claim.
(9) Under Rule 55(b), default judgment may be entered when a party against whom a judgment for affirmative relief is sought has failed to appear, plead or otherwise defend. While Kuhn argues that the addendum clearly was meant to contest his liability and, therefore, constitutes an "appearance" for purposes of the Rule, the language of the addendum is too ambiguous to draw any such conclusion. Moreover, while Kuhn cites Delaware Sand Gravel Company v. Bryson, 414 A.2d 207 (Del. 1980) in support of his argument, that case is distinguishable from the situation presented here. In Delaware Sand, this Court held that a stipulation for an extension of time filed with the Superior Court constituted an "appearance," rendering default judgment under Rule 55(b) unavailable. In this case, there was nothing filed in the Superior Court in response to the complaint.
Delaware Sand Gravel Company v. Bryson, 414 A.2d at 207-08.
NOW, THEREFORE, IT IS ORDERED that the judgment of the Superior Court is AFFIRMED.