Searchtoppers v. Trustcash (CA1 12/20/12)

This opinion is written to disagree with BYS v. Smoudi about default judgments. It goes out of its way to do so since the issue was waived in the trial court. Whether it adds more light than heat, or merely buttresses our contention that the present rules are poorly-worded, is a matter of opinion.

BYS, says this opinion, stands for the proposition that “a party who has been defaulted in a liquidated damages case for failure to appear [is] nonetheless entitled to notice and an opportunity to be heard” – if, that is, he has appeared later. Trustcash filed an untimely Answer after default. The trial court nevertheless granted, without hearing, Searchtoppers’ motion for default judgment based on liquidated damages.

The court holds, basically, that Rule 55(b)(1) applies to liquidated damages, 55(b)(2) to unliquidated damages, and never the twain shall meet. Trustcash defaulted, damages were liquidated, so it wasn’t entitled to a hearing.

There is a dissent which, since its author wrote the unanimous opinion in BYS, agrees with that case.

The majority says that the rules are unambiguous. So we now have three judges of CA1 saying that those unambiguous rules mean one thing and two saying that they mean another. If this were an insurance case we’d be well on the way to prima facie ambiguity. But the government doesn’t hold itself to the same standards and so doesn’t have to worry about them.

(link to opinion)