BYS v. Smoudi (CA1 2/9/12)

This case’s only apparent contribution to the law is to confuse it.

BYS sued Smoudi for breach of contract and took default. There followed some email correspondence between him and BYS’s counsel about his either answering the suit or settling it. He did neither but eventually filed (apparently pro se) a pleading called “Application for Default Entry of Default, Request for Time Extension,” explaining why he hadn’t answered (basically, the dog ate his homework) and asking for more time. With it he paid the Answer fee. BYS filed a response.

BYS then moved for judgment. The trial court granted it without hearing, based on counsel’s sum-certain affidavit, and later denied Smoudi’s motion to set it aside. Smoudi appealed.

The Court of Appeals holds that the entry of default was effective because Smoudi hadn’t filed anything within ten days of the default notice as required by Rule 55(a).

(But Smoudi raised on appeal a new argument – that default should be set aside under Rule 55(c) because the service was invalid. “[B]ecause the trial court did not rule on this issue” the Court of Appeals does not, either, and says that Smoudi may raise it on remand. These things are dealt with mostly in a series of footnotes, which were apparently given as much thought as most footnotes are. The court forgets to explain why, the default being valid, not filing an explicit Rule 55(c) motion, and not filing a Rule 12 motion, and not raising the argument in the motions he did file that gave him ample opportunity to do so, and not giving the trial court the chance to “rule on the issue” didn’t waive anything.)

Smoudi also argued, though, that his “Application for Default Entry of Default, Request for Time Extension” was an appearance that entitled him to notice of the default-judgment hearing under Rule 55(b)(2); BYS didn’t disagree, contending instead that no hearing was necessary under 55(b)(1) because the amount was a sum certain. But 55(b)(2) requires notice and hearing whenever an appearance has been made. Failure to give notice renders the judgment void.  The court therefore sets it aside and remands.

(Having earlier said explicitly that setting aside a default judgment requires showing a meritorious defense, another thing the court forgets to explain is that that isn’t true when the judgment is void. That’s the key here, since Smoudi didn’t come close to showing a defense.)

In part (a small part, but a part), the blame for this case lies with Rule 55(b). Its division into two subsections was not artfully done and a poorly-worded amendment in 1984 made things worse. An incautious reader could miss, or misunderstand, the fact that subsection 1 deals with a specialized subset of cases conditioned by subsection 2. But don’t wait for improvement; the Supreme Court doesn’t encourage the amendment of rules merely because they’re badly worded, perhaps because someone might ask why it approved them in the first place. Instead, be cautious, read carefully, and – the real moral here – opt for a hearing if there’s any doubt. Many lawyers try to avoid them because they’re a hassle compared to filing an affidavit. But that’s penny-wise, as BYS discovered by losing its judgment and 2 1/2 years of interest.

Having complained about other footnotes we should mention that footnote 5 is an interesting one, if only because of its extraneousness. In it the court mentions, apparently sua sponte, the Maricopa County procedure that the clerk does nothing to enter default (other than to file the plaintiff’s application for it). “The Smoudis raise no challenge to this Administrative Order or the procedure it implements,” so the court raises the issue merely for the sake of raising it. Given such cases as American Asphalt this is perhaps an invitation, though one could argue that the County’s procedure is more an insult to the intent of the rule than to its strict wording.

This opinion adds nothing substantive to the law, so presumably the excuse for publishing is to call attention to an issue (Rule 111)(b)(2). What it mostly calls attention to is its sloppiness.


(link to opinion)