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664 S.E.2d 531
IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
January 2008 Term
____________
No. 33528
____________
WILLIAM L. GROVES and HARROLYN B. GROVES,
husband and wife,
Plaintiffs Below, Appellees
v.
ROY G. HILDRETH AND SON, INC.;
ROY G. HILDRETH, JR., individually;
NITRO ENERGY, INC., GMH GAS CO., INC.;
THOMAS C. EVANS, III, individually; and
BOGGS NATURAL GAS, FLP,
Defendants Below
NITRO ENERGY, INC.,
Appellant
______________________________________________________
Appeal from the Circuit Court of Roane County
Hon. Robert G. Chafin, Special Judge
Case No. 05-C-62
REVERSED AND REMANDED
______________________________________________________
Submitted: February 26, 2008
Filed: June 3, 2008
Harrolyn B. Groves
Larry L. Skeen, Esq.
William L. Groves
Skeen & Skeen
Spencer, West Virginia Charleston, West Virginia
Pro se
Attorney for Appellant Nitro
Energy, Inc.
The Opinion of the Court was delivered PER CURIAM.
SYLLABUS BY THE COURT
1. “A motion to vacate a default judgment is addressed to the sound
discretion of the court and the court's ruling on such motion will not be disturbed on appeal
unless there is a showing of an abuse of such discretion.” Syllabus Point 3, Intercity Realty
Co. v. Gibson, 154 W.Va. 369, 175 S.E.2d 452 (1970) [overruled on other grounds by Cales
v. Wills, 212 W.Va. 232, 569 S.E.2d 479 (2002)].
2. “Appellate review of the propriety of a default judgment focuses on the
issue of whether the trial court abused its discretion in entering the default judgment.”
Syllabus Point 3, Hinerman v. Levin, 172 W.Va. 777, 310 S.E.2d 843 (1983).
3. “On an appeal to this Court the appellant bears the burden of showing
that there was error in the proceeding below resulting in the judgment of which he complains,
all presumptions being in favor of the correctness of the proceedings and judgment in and
of the trial court.” Syllabus Point 2, Perdue v. Coiner, 156 W.Va. 467, 194 S.E.2d 657
(1973).
4. “In determining whether a default judgment should be entered in the
face of a Rule 6(b) motion or vacated upon a Rule 60(b) motion, the trial court should
consider: (1) The degree of prejudice suffered by the plaintiff from the delay in answering;
(2) the presence of material issues of fact and meritorious defenses; (3) the significance of
the interests at stake; and (4) the degree of intransigence on the part of the defaulting party.”
Syllabus Point 3, Parsons v. Consolidated Gas Supply Corporation, 163 W.Va. 464, 256
S.E.2d 758 (1979).
5. ”When addressing a motion to set aside an entry of default, a trial court
must determine whether “good cause” under Rule 55(c) of the West Virginia Rules of Civil
Procedure has been met. In analyzing “good cause” for purposes of motions to set aside a
default, the trial court should consider: (1) the degree of prejudice suffered by the plaintiff
from the delay in answering; (2) the presence of material issues of fact and meritorious
defenses; (3) the significance of the interests at stake; (4) the degree of intransigence on the
part of the defaulting party; and (5) the reason for the defaulting party's failure to timely file
an answer.” Syllabus Point 4, Harwood Group v. LaRocco, 219 W.Va. 56, 631 S.E.2d 614
(2006).
6. “In addressing a motion to set aside a default judgment, “good cause”
requires not only considering the factors set out in Syllabus Point 3 of Parsons v.
Consolidated Gas Supply Corp., 163 W.Va. 464, 256 S.E.2d 758 (1979), but also requires
a showing that a ground set out under Rule 60(b) of the West Virginia Rules of Civil
Procedure has been satisfied.” Syllabus Point 5, Harwood Group v. LaRocco, 219 W.Va.
56, 631 S.E.2d 614 (2006).
7. “The Rules of Civil Procedure pertaining to the setting aside of default
judgments should be liberally construed in order to provide the relief from onerous
consequences of default judgments.” Syllabus Point 2, Parsons v. McCoy, 157 W.Va. 183,
202 S.E.2d 632 (1973).
Per Curiam:
The appellant, one of the defendants below, Nitro Energy, Inc. (“Nitro”),
appeals from an order denying Nitro's motion to set aside a default judgment. The trial
court entered a default judgment as to liability against Nitro, and several months later entered
a final default judgment for damages against Nitro in the amount of $704,000.00.
Subsequently, Nitro filed a motion to set aside the default judgment under Rule 60(b) of the West Virginia Rules of Civil Procedure. The trial court denied the motion on February 20,
2007.
For the reasons stated, infra, we reverse and remand this matter to the trial
court for further proceedings.
I.
On September 1, 2005, the appellees, William L. Groves and Harrolyn B.
Groves (“the Groves”), filed a
pro se complaint against Nitro,
et al. (See footnote 1) The Groves are owners
of real estate in Roane County. The Groves claim that they are entitled to certain mineral
rights underlying their real estate, as well as mineral rights under certain adjoining property.
The complaint asserts claims of (1) ejectment, (2) conversion, and (3) quiet title. The
Groves' request for relief included a request for damages in conjunction with the conversion
cause of action. The conversion claim was based on the assertion that various defendants
had converted the Groves' “right to lease their property to others.”
(See footnote 2)
On September 23, 2005, Roy G. Hildreth and Son, Inc., Roy G. Hildreth, Jr.,
GMH Gas Co., Inc. and Boggs Natural Gas, FLP filed a West Virginia Rules of Civil
Procedure, Rule 12(b)(6) motion to dismiss. The motion disputes the Groves' claim to
ownership in the oil, gas and other minerals. The motion was based, in part, on language in
the Groves' deed which was attached to the complaint and on the recorded instruments
relating to the original severance of minerals in a 1913 deed. The deed to Groves' real estate
contains the following language: “There is further excepted and reserved from the operation
of this conveyance all of the oil gas, and other minerals within and underlying the same.”
On October 6, 2005, BNG Producing and Drilling, Inc. (“BNG”) and B&R
Construction, Inc. (“B&R”), also filed a joint motion to dismiss. B&R's motion was based
upon an anticipated “release” of the lease which Nitro had assigned to Westside Exploration,
LLC.
On October 17, 2005, as a result of Nitro's failure to respond to the complaint,
the Groves filed a verified motion for default judgment. The motion was served on Nitro by
mail.
On October 19, 2005, the trial court issued a letter opinion granting a Rule
12(b)(6) motion to dismiss on favor of Roy G. Hildreth and Son, Inc., Roy G. Hildreth, Jr.,
GMH Gas Co., Inc. and Boggs Natural Gas, FLP. The court directed an order to be prepared
dismissing these parties; however, before the order was entered, on November 23, 2005, the
court signed an “ORDER GRANTING PLAINTIFFS LEAVE TO AMEND THE
PLEADINGS AND STAYING THE COURT'S LETTER DECISION ON THE
DEFENDANTS' MOTION TO DISMISS.”
On December 8, 2005, the Groves filed an “Amended/Supplemented
Complaint.”
(See footnote 3) The record indicates that service of the Amended/Supplemented Complaint
was served on all named defendants except Nitro. And, all defendants, except Nitro, filed
a response to the Amended/Supplemented Complaint.
On January 3, 2006, the Groves filed a notice of hearing on the default
judgment motion against Nitro. Notice was served on Nitro by mail.
On March 16, 2006, the trial court, without a hearing, entered an order granting
the Groves a default judgment “as to liability in this matter.” The judge's order states:
This matter came before the Court on the Plaintiffs' Motion for
Default Judgment against Defendant Nitro Energy, Inc. Having
reviewed the Plaintiffs' Motion, the entire record of this case,
and pertinent legal authorities, the Court is of the Opinion to
and does hereby GRANT the Plaintiffs' Motion for Default
Judgment as to liability against Defendant Nitro Energy, Inc. for
the following reasons:
Rule 55 of the West Virginia Rules of Civil Procedure
provides for default judgment to be entered by the court where
it appears that a party has failed to plead or otherwise defend a
complaint as provided by the Rules of Civil Procedure. In the
instant case, it appears to the Court that the Defendant Nitro
Energy, Inc. has failed to appear, answer, plead, or otherwise
defend the complaint. Additionally, the Court notes that the
Defendant Nitro Energy, Inc. has been properly served with the
Complaint in this matter, yet has still failed to respond thereto.
Therefore, the Court is of the opinion that entry of default
judgment against Defendant Nitro Energy, Inc. is appropriate.
Ruling
For the above mentioned reasons, the Court hereby GRANTS
the Plaintiffs' Motion for Default Judgment against Defendant
Nitro Energy, Inc.
It is hereby ORDERED that default judgment be entered
against Defendant Nitro Energy, Inc. as to liability in this
matter.
. . .
On June 7, 2006, the Groves joined in a motion to dismiss Boggs Natural Gas,
FLP as a defendant. The trial court approved the dismissal in a September 23, 2006 order.
On July 20, 2006, Roy G. Hildreth & Son, Inc., Roy G. Hildreth, Jr. and GMH
Gas Co., Inc. filed a motion for summary judgment with respect to the
amended/supplemented complaint
. On July 27, 2006, the Groves filed a notice for a hearing on damages
in
connection with the March 16, 2006 default judgment against Nitro.The certificate of
service does not indicate that Nitro was served with this notice of hearing.
On August 22,
2006, the trial court conducted an evidentiary hearing on the issue of damages, and at the
conclusion of the hearing, the trial court orally granted judgment. On September 2, 2006,
the trial court entered an order granting final judgment against Nitro Energy, Inc. for
$704,000.00.
(See footnote 4)
On October 10, 2006, after the entry of the $704,000.00 default judgment
against Nitro, the trial court conducted a hearing on the summary judgment motion of
defendants Roy G. Hildreth & Son, Inc., Roy G. Hildreth, Jr. and GMH Gas Co., Inc., and
orally granted defendants' motion; however, no written order was entered at that time.
On October 17, 2006, the trial court entered an order permitting the Groves to
withdraw some of the claims against Roy G. Hildreth & Son, Inc., Roy G. Hildreth, Jr. and
GMH Gas Co., Inc. The order recites that “. . . Plaintiffs' [Groves'] conversion claim was
satisfied by Plaintiffs' [Groves'] recovery against defaulting defendant Nitro Energy, Inc.”
and that other claims were reduced to “. . . a nominal level by the defendants'
acknowledgement [SIC] of the oil and gas lease that was quitclaimed
(See footnote 5) or assigned to
Plaintiffs by original Defendant Westside Exploration, LLC.”
On November 27, 2006, Nitro filed a motion to set aside the September 2,
2006, $704,000.00 default judgment. On December 13, 2006, the trial court conducted a
hearing on the motion; the judge orally denied the motion.
On December 14, 2006, one day after denying Nitro's motion to set aside
default judgment, the trial court entered an order granting summary judgment to defendants
Roy G. Hildreth & Son, Inc., Roy G. Hildreth, Jr. and GMH Gas Co. on the remaining issues
between the plaintiffs and these defendants. In the order the trial court confirmed ownership
of the oil and gas underlying the real estate in dispute to be in GMH, not the Groves. The
trial court specifically found that “[t]here is no evidence shown or suggested by which
plaintiffs [Groves] could prove any rights in the subject oil and gas interests.”
On February 20, 2007, the trial court entered a written order confirming the
December 13, 2006, oral decision denying Nitro's motion to set aside default judgment. It
is from this order that Nitro appeals.
II.
We review default judgments under an abuse of discretion standard. In
Syllabus Point 3 of Intercity Realty Co. v. Gibson, 154 W.Va. 369, 175 S.E.2d 452 (1970) [overruled on other grounds by Cales v. Wills, 212 W.Va. 232, 569 S.E.2d 479 (2002)], this
Court said:
A motion to vacate a default judgment is addressed to the
sound discretion of the court and the court's ruling on such
motion will not be disturbed on appeal unless there is a showing
of an abuse of such discretion.
The Court further discussed this standard in Syllabus Point 3 of Hinerman v. Levin, 172
W.Va. 777, 310 S.E.2d 843 (1983):
Appellate review of the propriety of a default judgment focuses
on the issue of whether the trial court abused its discretion in
entering the default judgment.
In accord, Syllabus Point 1, Cales v. Wills, 212 W.Va. 232, 569 S.E.2d 479 (2002).
Furthermore, this Court specified the burden of proof in setting aside a default
judgment as:
On an appeal to this Court the appellant bears the burden of
showing that there was error in the proceeding below resulting
in the judgment of which he complains, all presumptions being
in favor of the correctness of the proceedings and judgment in
and of the trial court.
Syllabus Point 2, Perdue v. Coiner, 156 W.Va. 467, 194 S.E.2d 657 (1973).
With these principles in mind we consider this case.
The appellant Nitro Energy, Inc. makes four assignments of error claiming an
abuse of discretion by the trial court by: (1) denying Nitro's motion to set aside default
judgment, (2) rendering a default judgment in an amount that “Was Speculative, Premature,
Erroneous, Arbitrary and Capricious,” (3) failing to make findings of fact and conclusions
of law upon which it based its default judgment rulings, and (4) allowing a manifest injustice
for the award of $704,000.00 for the conversion of minerals which the trial court found with
respect to other defendants were not owned by the plaintiffs.
We review this case in light of West Virginia Rules of Civil Procedure, Rules
55 and 60 and Parsons v. Consolidated Gas Supply Corporation, 163 W.Va. 464, 256 S.E.2d
758 (1979). In Parsons we held in Syllabus Point 3 that:
In determining whether a default judgment should be entered
in the face of a Rule 6(b) motion or vacated upon a Rule 60(b)
motion, the trial court should consider: (1) The degree of
prejudice suffered by the plaintiff from the delay in answering;
(2) the presence of material issues of fact and meritorious
defenses; (3) the significance of the interests at stake; and (4) the
degree of intransigence on the part of the defaulting party.
We also said in Parsons that “there is the necessity to show some excusable or unavoidable
cause to explain the delay in answering.” 163 W.Va. at 471, 256 S.E.2d at 726.
In 2006, this Court elaborated on the Parsons factors and stated in Syllabus
Point 4 and 5 of Harwood Group v. LaRocco, 219 W.Va. 56, 631 S.E.2d 614 (2006):
4. When addressing a motion to set aside an entry of default, a
trial court must determine whether “good cause” under Rule
55(c) of the West Virginia Rules of Civil Procedure has been
met. In analyzing “good cause” for purposes of motions to set
aside a default, the trial court should consider: (1) the degree of
prejudice suffered by the plaintiff from the delay in answering;
(2) the presence of material issues of fact and meritorious
defenses; (3) the significance of the interests at stake; (4) the
degree of intransigence on the part of the defaulting party; and
(5) the reason for the defaulting party's failure to timely file an
answer.
5. In addressing a motion to set aside a default judgment,
“good cause” requires not only considering the factors set out in
Syllabus Point 3 of
Parsons v. Consolidated Gas Supply Corp.,
163 W.Va. 464, 256 S.E.2d 758 (1979), but also requires a
showing that a ground set out under Rule 60(b) of the West
Virginia Rules of Civil Procedure has been satisfied.
(See footnote 6)
Applying these principles, we analyze the instant case with respect to the Parsons and Harwood factors.
1. The degree of prejudice: The initial inquiry under Parsons requires a
determination of the degree of prejudice to the non-defaulting party if the default judgment
is vacated. In the instant case the non-defaulting party is the Groves. The Groves argue, in
part, that they should not have to try their case against Nitro on the merits because Nitro's
default constitutes an admission of “. . . the allegations contained in Appellees' [Groves]
Complaint and Amended/Supplemental Complaint as a matter of law.” The Groves also
argue, in part, they are prejudiced by their voluntary dismissal of other defendants with
respect to some claims, particularly the conversion claim because those dismissals were
urged by the Groves in consideration of the fact that the trial court previously granted default
judgment against Nitro.
Nitro, on the other hand, argues that the Groves could not be prejudiced by
reversing the default judgment because the Groves admitted in their complaint that Nitro
never extracted minerals from the subject realty. Furthermore, Nitro argues that the Groves
would not be prejudiced by reversing the default judgment because Roy G. Hildreth & Son,
Inc., Roy G. Hildreth, Jr., and GMH were the primary defendants who would ultimately be
responsible to the Groves if their claims of ownership in the minerals were valid.
When discussing the West Virginia Rules of Civil Procedure this Court often
refers to, but does not consider binding, interpretations of the Federal Rules. See Footnote
6 of Harwood, supra. Federal courts have ruled that prejudice occurs when circumstances
have changed since the entry of the default judgment which impairs the plaintiff's ability to
prosecute its claim. On the other hand, federal courts have said that
. . . the fact that the plaintiff would have to try the case on the
merits if relief is granted is not the kind of prejudice that should
preclude relief. Similarly, the fact that reopening the judgment
would delay plaintiff's possible recovery has not, in itself, been
deemed to bar relief.
10A Fed. Prac. & Proc. § 2699 (Civ.3d. 1998). Also, the fact that a party may be required
to undergo the expense of preparing and conducting a trial on the merits is an insufficient
basis for denying relief from default. Furthermore, we believe the authority granted West
Virginia trial courts under Rule 60(b) when granting relief from a default judgment to impose
“. . . such terms as are just . . .” provides courts with the power to minimize the effect upon
the non-defaulting party when ordering relief from default judgments. We find these
principles consistent with our jurisprudence and applicable to the instant case.
In this case much of the Groves' complaint against Nitro is based on public
records. We find nothing in the record to indicate that circumstances have changed since the
entry of the default judgment which would impair the plaintiffs' ability to prosecute its claim
on the merits. After consideration of the briefs, arguments, and a review of the record, we
find nothing to indicate that the Groves would be prejudiced by vacation of the default
judgment against Nitro. We therefore find that no such prejudice exists.
2. The presence of material issues of fact and meritorious defenses: In
examining this factor we need only to determine whether “. . . there is . . . reason to believe
that a result different from the one obtained would have followed from a full trial.” Hinerman v. Levin, 172 W.Va. 777, 783-84, 310 S.E.2d 843, 850 (1983).
Nitro argues that the trial court's favorable ruling on the motion for summary
judgment filed by Roy G. Hildreth & Son, Inc., Roy G. Hildreth, Jr. and GMH supports
Nitro's claim of the presence of material issues of fact and meritorious defense. The trial
court found, in part, that the Groves' claim to the minerals at issue in this case were not
supported by the evidence in the record or by any theory of law.
(See footnote 7) Nitro further cites to the
deed granting the Groves their real estate which expressly reserves all minerals underlying
the Groves' land as evidence of a meritorious defense. Finally, Nitro argues that no fact
exists which
supports the validity of Groves' complaint against Nitro.
This Court makes no findings with respect to the Groves' rights to the minerals
at issue in this case. Still, upon consideration of the briefs, argument of counsel, and our
review of the record, we believe that Nitro has satisfied this aspect of the second Parsons analysis.
3. The significance of the interests at stake: The default judgment was in
the amount of $704,000.00. We consider a judgment in this amount to be significant;
therefore, the third factor of Parsons is satisfied.
4. The degree of intransigence by the defaulting party: Under Parsons'
fourth factor, we examine the degree of intransigence by Nitro in failing to respond to the
complaint. “In Parsons v. Consolidated Gas Supply Corporation, 163 W.Va. 464, 256
S.E.2d 758, 763 (1979) this court noted that any evidence of intransigence on the part of a
defaulting party should be weighed heavily against him in determining the propriety of a
default judgment.” Hinerman, supra, 172 W.Va. at 782, 310 S.E.2d at 849.
The record in this case shows that the complaint against Nitro was filed on
September 1, 2005. The Groves' certificate of service indicates that the complaint was
served on Nitro on that same date “through the West Virginia Secretary of State Process
Division.” There is nothing in the record to suggest that Nitro did not have actual notice of
the filing of the original suit.
The Groves' motion for default judgment was filed on October 17, 2005. The
certificate of service attached to the motion for default judgment indicates that Nitro Energy,
Inc. was served on October 17, 2005, with a copy of the motion by “First Class Mail to Nitro
Energy, Inc. 859 Foxboro Rd. Saginaw, MI 48603.” Again, there is nothing in the record to
suggest that Nitro did not have actual notice of the motion.
On January 3, 2006, the Groves filed a notice of hearing on their motion for
default judgment. The notice specified a hearing to be held on January 26, 2006. The
certificate of service attached to the notice of hearing indicates that Nitro Energy, Inc. was
served with a copy of the notice by mail at the same address as was the motion for default
judgment. Again, there is nothing in the record to suggest that Nitro did not have actual
notice of the notice of hearing. However, the record does not indicate that a hearing on the
motion for default judgment was conducted on January 26, 2006, as suggested by the notice.
On January 31, 2006, the Groves filed a memorandum in support of their
motion for default judgment. In this instance the certificate of service attached to the
memorandum indicates that the memorandum was served on other defendants in the case, but
the certificate of service does not indicate service on Nitro.
On March 26, 2006, approximately six months after the filing of the initial
complaint, the trial court entered an order granting the Groves' motion for default judgment
(See footnote 8) against Nitro
as to liability, but deferred the issue of damages.
On July 27, 2006, the Groves filed a notice “for hearing the determination of
damages as to Nitro Energy, Inc., a defendant in default.” The certificate of service attached
to the notice indicates service on all defendants except Nitro. A hearing was conducted on
August 22, 2006, and on September 2, 2006, the trial court entered an order awarding default
judgment against Nitro in the amount of $704,000.00. The record indicates that Nitro did not
attend the hearing.
Nitro argues, in part, that its failure to answer was based upon a good faith
belief that its interests were being protected by an attorney acting on behalf of another party,
Westside Exploration, LLC, in the case. On the other hand, the Groves argue that since Nitro
did not appear in the case until November 27, 2006, in excess of fourteen months after the
filing of the initial complaint, Nitro's intransigence should be considered significant. We
agree with the Groves' position in this regard, and therefore we find Nitro's intransigence
to be significant in Groves' favor under Parsons' fourth factor.
5. Under Parsons and Harwood, we consider a fifth factor. A defaulting
party must show excusable neglect, or that at least one of the grounds included in Rule 60(b)
of the West Virginia Rules of Civil Procedure has been satisfied. In this case we believe
there are potentially two grounds, Rule 60(b)(1) and Rule 60(b)(6), applicable to this case.
Rule 60(b)(1) requires showing of “Mistake, inadvertence, surprise, excusable neglect, or
unavoidable cause.” Rule 60(b)(6) requires a showing of “any other reason justifying relief
from the operation of the judgment.”
In support of its argument that good cause has been shown under Rule 60(b)(1),
Nitro relies upon an affidavit executed by William Boss, a principal of Westside Exploration,
LLC, a defendant in the instant case, which indicates that he contacted an attorney and
“instructed him to answer the suit on behalf of both Westside [Exploration, LLC] and Nitro.”
The affidavit also indicates that the attorney contacted William Boss and indicated that “we
needed to assign the oil and gas lease to the Groves to be clear of the litigation, which
Westside did.” The Groves, on the other hand, submitted an affidavit from the same attorney
which disclaimed the assertions in the affidavit submitted by Nitro. Furthermore, the trial
court held a hearing on the motion to set aside the default judgment on December 13, 2006,
and refused to find that Nitro met the requirement of Rule 60(b)(1).
The scant record before us sheds little light upon the this issue. While there
is some merit in Nitro assertions, the record is somewhat confusing and contradictory.
Therefore, we find that Nitro has failed to carry its burden of satisfying Rule 60(b)(1) as
required as an aspect of Parsons and Harwood.
Next we examine the applicability of Rule 60(b)(6), a “catch-all” ground in
granting relief in default judgment proceedings. While courts have discretion with respect
to the entry of defaults and default judgments, historically “. . . most courts traditionally
disfavor the entry of a default judgment.” 10 Moore's Federal Practice § 55.02 ( 3 Ed.
2008) See also Parsons, 163 W.Va. at 471, 256 S.E.2d at 762 (“In determining the discretion
issue, we have established as a basic policy that cases should be decided on their merits, and
consequently default judgments are not favored and a liberal construction should be accorded
a Rule 60(b) motion to vacate a default order.”).
A discussion on the sufficiency of the pleadings with respect to entry of
defaults and default judgments is found in 10 Moore's Federal Practice § 55.32[1][b] (3 Ed.
2008):
Although a defaulting party admits the factual basis of the
claims asserted against it, the defaulting party does not admit the
legal sufficiency of those claims. The claimant must state a
legally valid claim for relief, and the defaulting party may
challenge the claimant's pleadings for failure to do so. A court
may grant judgment by default only for relief that may lawfully
be granted on the well-pleaded facts alleged by the claimant.
(Emphasis added.) This principle has long been recognized in our jurisprudence where our
United States Supreme Court stated “. . . the matter of the bill [complaint] ought at least to
be opened and explained to the court when the decree is applied for, so that the court may
see that the decree is a proper one.” See Thompson v. Booster, 114 U.S.104, 113-114, 5
S.Ct. 739, 793, 29 L.Ed. 105 (1885). This principle is compatible with West Virginia
jurisprudence relating to default judgments.
The initial complaint had as an attachment the deed to the real estate owned by
the Groves, and the deed “excepted and reserved . . . all of the oil, gas, and other minerals.”The language in this deed strongly suggests that the entry of the default and default judgment
was improvident. The trial court's ruling on a summary judgment motion for other
defendants that concluded that the Groves did not own any of the minerals which they
claimed were the object of conversion by Nitro, and other named defendants also suggests
that the default judgment was improvident. We, therefore, find nothing in the pleadings or
trial court orders to support the basis for granting the default judgment except Nitro's failure
to respond to the complaint and the evidence presented as to the value of the underlying
minerals. For these reasons we find that Nitro has satisfied the requirement of Rule 60(b)(6).
Furthermore, in weighing the Parsons and Harwood factors, we recognize this
Court's language in Syllabus Point 2 of Parsons v. McCoy, 157 W.Va. 183, 202 S.E.2d 632
(1973) when we said:
The Rules of Civil Procedure pertaining to the setting aside of
default judgments should be liberally construed in order to
provide the relief from onerous consequences of default
judgments.
That cases should be decided upon their merits, and confirming the principle of the liberal
application of Rule 60(b) motions, is also found in Parsons v. Consolidated Gas Supply
Corporation, supra, 163 W.Va. at 471, 256 S.E.2d at 762. In this case we believe that the
record does not support a finding that undue prejudice would result against the Groves by
setting aside the default judgment. The appellant has defenses which may have merit, and
that the interests at stake are significant. However, these findings must be weighed against
Nitro's intransigence, which we find was significant. Although we find that Nitro is unable
to satisfactorily explain its intransigence under Rule 60(b)(1), we believe that Nitro has
provided sufficient reasons to satisfy Rule 60(b)(6).
Therefore, we believe that the good-cause requirement is satisfied under Rule
60(b)(6), and when considered with our findings relating to the lack of prejudice, the
existence of a meritorious defense, and significance of interest, reversal is justified.
Based on the foregoing, we find that the circuit court abused its discretion in
denying Nitro Energy, Inc.'s motion to set aside default judgment. We therefore reverse the
ruling of the trial court. Furthermore, under the terms of Rule 60(b), “On motion and upon
such terms as are just, the court may relieve a party . . . from a final judgment . . .,” we hold
that upon retrial of this matter on the merits, Nitro shall be prohibited from using trial court
rulings on summary judgment motions as to other defendants as collateral estoppel against
the Groves' claim against Nitro. (Emphasis added.)
For the foregoing reasons, we reverse the February 20, 2006, order of the trial
court and remand the case for further proceedings not inconsistent with this opinion.
The defendants named in the original complaint are as follows: Roy G. Hildreth and
Son, Inc.; Roy G. Hildreth, Jr., individually; Nitro Energy, Inc.; BNG Producing and
Drilling, Inc.; B&R Construction, Inc.; Westside Exploration, LLC; GMH Gas Co., Inc.; and
Boggs Natural Gas, FLP.
Footnote: 2 The complaint asserts, in part, that Roy G. Hildreth and Son, Inc. leased certain oil
and gas interests which are in dispute in this case to Nitro Energy, Inc., which in turn were
assigned to Westside Exploration, LLC. The complaint also asserts that “. . . Hildreth deeded
title to the 'oil, gas and other minerals. . .,'” to GMH Gas Co., Inc., which, in turn, leased the
interests to Boggs Natural Gas, FLP “. . . for all formations to a basement of 17,000 feet
below the surface.”
Footnote: 3 The Amended/Supplemented Complaint identifies the following defendants in the
Civil Case Information Statement: Roy G. Hildreth and Son, Inc., Roy G. Hildreth, Jr., GMH
Gas Co., Inc., Boggs Natural Gas, FLP, and Thomas C. Evans. While Nitro Energy, Inc. was
not named in the Civil Case Information Statement, Nitro Energy, Inc., was retained in the
list of named defendants in the Amended/Supplemented Complaint.
BNG Producing and Drilling, Inc., B&R Construction, Inc. and Westside Exploration,
LLC, were not named as defendants in the Amended/Supplemented Complaint.
Footnote: 4 The trial court's September 2, 2006 order states as follows:
FINAL JUDGMENT ORDER
This matter came before the Court on the 22nd day of August,
2006, on Motion by Plaintiffs William L. Groves and Harrolyn
B. Groves for entry of Default Judgment against Nitro Energy,
Inc. Having reviewed the Motion setting forth all requirements
in accordance with West Virginia Rule of Civil Procedure 55,
the entry of this Court's previous Order of Judgment as to
Liability, the entire record in this case, pertinent legal
authorities, and the testimony adduced at the hearing held this
day, the Court holds as follows:
The record indicates that the Complaint in the above-captioned
matter was filed in this Court and that a Summons and
Complaint were duly served upon Defendant Nitro Energy, Inc.
No answer or other defense or pleading has been filed by
Defendant Nitro Energy, Inc., and the defendant has failed to
appear, plead, or otherwise defend in this action in the time
permitted by law. The Court expressly determines that there is
no just reason for delay of final judgment in accordance with
West Virginia Rule of Civil Procedure 54, and that, on balance,
consideration of the Parsons factors supports entry of Default
Judgment.
Defendant Nitro energy, Inc., has not requested a jury, and
Plaintiffs expressly waive a jury as to Defendant Nitro Energy,
Inc., for purposes of Default Judgment. Plaintiffs have
requested judgment for the sum of $1,291,000, post-judgment
interest at 10% per annum in accordance with West Virginia
Code § 56-5-31, plus costs expended.
Ruling
For the above mentioned reasons, the Court hereby GRANTS
Plaintiffs' Motion for Default Judgment against Nitro Energy,
Inc.
It is hereby ORDERED that Default Judgment be entered
against Nitro Energy, Inc., in this matter.
It is additionally ADJUDGED and ORDERED that Plaintiffs'
Motion for Default Judgment be and is hereby GRANTED.
Further, it is ADJUDGED and ORDERED that Plaintiffs
William L. Groves and Harrolyn B. Groves do recover of and
from Defendant Nitro Energy, Inc., the sum of $704,000 with
post-judgment interest at the rate of 10% per annum from the
date of judgment until paid and costs expended.
The “SURRENDER AND RELEASE OF OIL AND GAS LEASES” dated October
21, 2005, contained the following language: “. . . and forever quitclaims any and all
rights . . ..”
Footnote: 6 West Virginia Rules of Civil Procedure, Rule 60(b) states the following grounds:
(b)
Mistakes; inadvertence; excusable neglect; unavoidable
cause; newly discovered evidence; fraud, etc. _ . . . (1) Mistake,
inadvertence, surprise, excusable neglect, or unavoidable cause;
(2) newly discovered evidence which by due diligence could not
have been discovered in time to move for a new trial under Rule
59(b); (3) fraud (whether heretofore denominated intrinsic or
extrinsic), misrepresentation, or other misconduct of an adverse
party; (4) the judgment is void; (5) the judgment has been
satisfied, released, or discharged, or a prior judgment upon
which it is based has been reversed or otherwise vacated, or it is
no longer equitable that the judgment should have prospective
application; or (6) any other reason justifying relief from the
operation of the judgment. . . .
Footnote: 7 The trial court order entered December 14, 2006, that granted summary judgment to
defendants Roy G. Hildreth & Son, Inc., Roy G. Hildreth, Jr. and GMH Gas Co. on
remaining issues between the Groves and these defendants contains, in part, the following
findings of fact and conclusions of law:
2. By virtue of said provision of said deed [Groves' deed],
plaintiffs received no part of the oil or gas or other minerals
within and underlying the land described in said deed.
. . .
8. There is nothing in the deed to plaintiffs, or in the deeds to
plaintiffs' mediate or immediate predecessors to the surface, to
show that plaintiffs were conveyed any minerals or that at the
time of any of said conveyances the parties thereto or any of
them expected or thought that any of them, including plaintiffs,
were receiving any minerals.
. . .
15. There is no evidence shown or suggested by which
plaintiffs could prove any rights in the subject oil and gas
interests.
Footnote: 8
Although the trial court used the language of “default judgment,” it would have been
more properly referred to as “default.” The default judgment, with damages, followed at a
later date.