Opinion
No. COA15-1267
07-05-2016
THE TOWN OF BEECH MOUNTAIN, Plaintiff, v. JOHN MILLIGAN and wife, SHARON MILLIGAN, Defendants.
Moffatt & Moffatt, PLLC, by Tyler R. Moffatt, for defendant-appellant John Milligan. Eggers, Eggers, Eggers & Eggers, PLLC, by Stacy C. Eggers, IV, for plaintiff-appellee.
An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure. Watauga County, No. 14CVS271 Appeal by defendant from order entered 12 August 2015 by Judge Gary Gavenus in Watauga County Superior Court. Heard in the Court of Appeals 30 March 2016. Moffatt & Moffatt, PLLC, by Tyler R. Moffatt, for defendant-appellant John Milligan. Eggers, Eggers, Eggers & Eggers, PLLC, by Stacy C. Eggers, IV, for plaintiff-appellee. DIETZ, Judge.
Defendant John Milligan appeals the trial court's denial of his motion to set aside a default judgment under Rule 60(b). The Town of Beech Mountain sued Milligan after he repeatedly failed to repair dangerous conditions on his property. Milligan retained an attorney but never filed an answer, and ultimately, the trial court entered a default judgment against him.
Milligan moved to set aside that default judgment under Rule 60(b) on the ground of excusable neglect. At a hearing on the motion, Milligan's attorney testified that he warned Milligan about the consequences of not answering the complaint but Milligan ignored that warning and instructed his attorney not to file an answer. Other witnesses also testified that Milligan appeared, without counsel, at a calendar call in his case after the time to answer had passed. There, the trial court personally warned Milligan that he was in default and that he must immediately file an answer. Milligan still did not do so, and several more months passed before Beech Mountain brought its motions for entry of default and default judgment for a hearing.
Following the hearing on Milligan's motion to set aside the default judgment, the trial court entered an order containing findings of fact and conclusions of law. The court found that Milligan's attorney was credible and Milligan was not credible. The court also found that Milligan was a sophisticated businessman with experience in litigation. The court then found that Milligan's failure to timely answer the town's complaint did not constitute excusable neglect.
As explained below, the trial court's fact findings are supported by competent evidence and are thus binding on appeal. In light of those findings, the trial court properly concluded that Milligan failed to show excusable neglect under Rule 60(b)(1). Accordingly, we affirm the trial court's order.
Facts and Procedural History
John Milligan owned a building in Beech Mountain. On 27 August 2013, a building inspector informed Milligan that the building violated town safety ordinances. On 6 September 2013, the town held a condemnation hearing and, several weeks later, issued an order outlining specific repairs that Milligan was required to make to the building to avoid demolition. The order gave Milligan 90 days to conduct the required repairs.
Milligan co-owned the property with his wife Sharon. The Milligans have since divorced and Sharon Milligan is not involved in this appeal.
Milligan did not make the repairs, and on 20 November 2013, Beech Mountain mailed a letter requesting an update on the status of the repairs and warning of potential civil penalties for failure to act. On 13 January 2014, with no further progress from Milligan, the town assessed a civil penalty in the amount of $100.00 per day. Finally, on 14 May 2014, Beech Mountain filed a complaint to demolish the building and collect the civil penalties.
Milligan hired attorney William Wallace Respess, Jr. to represent him. Respess secured an extension of time to respond to the complaint but did not file an answer or other responsive pleading. Beech Mountain corresponded with Respess for several months, eventually attaching paperwork to secure a default judgment based on Milligan's failure to answer the complaint. Milligan's wife, Sharon, answered the town's complaint separately and filed a crossclaim against Milligan for indemnification of any penalties the town sought to collect against her.
On 16 October 2014, Milligan attended an administrative calendar call without a lawyer. The trial court informed him that he was late in filing an answer and he either needed to retain counsel to answer the complaint or do so himself pro se.
On or about 14 December 2014, the trial court held a hearing on the town's motion for default judgment. Milligan appeared at the morning calendar call without counsel but stated he was represented by a new attorney (not Respess). Milligan then left the courtroom and could not be found when the court called the town's motion for hearing.
On 15 December 2014, the clerk entered default against Milligan. That same day, the trial court granted Respess's motion to withdraw as Milligan's attorney. On 8 January 2015, the trial court entered a default judgment against Milligan. On 6 March 2015, the clerk entered default against Milligan on his wife's crossclaim.
On 5 June 2015, Milligan filed a motion to set aside the default judgment in favor of Beech Mountain and the entry of default in favor of his wife. The trial court heard testimony from Milligan and Respess and received affidavits from the town's attorney and several other witnesses.
The trial court denied Milligan's motion in an order containing findings of fact and conclusions of law. The trial court found that Milligan was "not fully credible" and "ha[d] misrepresented facts to his Counsel and to the Court." The court's order did not mention the portion of Milligan's motion seeking to set aside the entry of default on his wife's crossclaim under Rule 55(d), but after entry of the order, Beech Mountain voluntary dismissed all its claims against Milligan's wife with prejudice.
Milligan timely appealed.
Analysis
Milligan argues that the trial court erred by denying his motion to set aside the default judgment. Specifically, he contends that his failure to timely file an answer on the facts in this case constitutes excusable neglect as a matter of law. We hold that the trial court's findings are supported by competent evidence and that the trial court properly found no excusable neglect in light of those findings.
Milligan's wife is not a party to this appeal, and neither Milligan nor Beech Mountain address the entry of default with respect to the wife's crossclaim. It appears from the record that Beech Mountain's voluntary dismissal with prejudice of all claims against Milligan's wife rendered her crossclaim for indemnification against her husband moot. Cf. Jennette Fruit & Produce Co. v. Seafare Corp., 75 N.C. App. 478, 483, 331 S.E.2d 305, 308 (1985).
Although the ultimate decision of whether to grant relief under Rule 60(b) is reviewed for abuse of discretion, whether particular conduct constitutes "excusable neglect" under Rule 60(b) is a question of law that this Court reviews de novo. Monaghan v. Schilling, 197 N.C. App. 578, 584, 677 S.E.2d 562, 566 (2009). But when the trial court makes fact findings in its adjudication of a Rule 60(b) motion, as happened here, this Court reviews those fact findings under the "competent evidence" standard. Carter v. Carr, 68 N.C. App. 23, 27, 314 S.E.2d 281, 284 (1984), aff'd, 312 N.C. 613, 324 S.E.2d 222 (1985). Under that standard, this Court is bound by the trial court's fact findings if there is any competent evidence in the record to support them. Id.
"[T]here is no clear dividing line as to what falls within the confines of excusable neglect as grounds for the setting aside of a judgment." Thomas M. McInnis & Assocs., Inc. v. Hall, 318 N.C. 421, 425, 349 S.E.2d 552, 554-55 (1986). Instead, "what constitutes excusable neglect depends upon what, under all the surrounding circumstances, may be reasonably expected of a party in paying proper attention to his case." Id. at 425, 349 S.E.2d at 555.
Here, there was conflicting testimony from Milligan and Milligan's lawyer, Wallace Respess. Respess testified that Milligan instructed him not to file an answer because Milligan was negotiating with town officials and building inspectors and had the matter "under control." Respess further testified that he warned Milligan of the consequences of failing to timely file an answer, including the risk of default. Respess wrote to Milligan in October warning him that the town was moving for entry of default against him. According to Respess, Milligan responded that he no longer needed legal representation from Respess.
To be sure, Milligan disputed much of this testimony. But the duty to weigh competing testimony and make credibility determinations rests soundly in the trial court. Macher v. Macher, 188 N.C. App. 537, 540, 656 S.E.2d 282, 284, aff'd per curiam, 362 N.C. 505, 666 S.E.2d 750 (2008). There was competent evidence supporting the trial court's determination that Respess was credible and Milligan was not, and this Court is therefore bound by the trial court's findings. Carter, 68 N.C. App. at 27, 314 S.E.2d at 284.
In light of those findings, Milligan failed to show excusable neglect. As the trial court found, Milligan is "a sophisticated businessman" who had previously been involved in litigation. His attorney advised him that he needed to file an answer to avoid a default, but Milligan ignored that advice and instructed his attorney not to file an answer. Moreover, Milligan personally appeared in court in October, and the trial court warned him that he must immediately file an answer or risk entry of default. Even after the direct warning from the court, Milligan did not file an answer. We agree with the trial court that Milligan's repeated and knowing inattention to Beech Mountain's lawsuit is unreasonable and does not constitute excusable neglect. We thus affirm the trial court's order denying his Rule 60(b) motion.
Conclusion
We affirm the trial court's order.
AFFIRMED.
Judges CALABRIA and DILLON concur.
Report per Rule 30(e).