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Liberty Mutual Fire Insurance Co. v. Quiroga-Saenz

Court of Appeals of Georgia, Fifth Division

October 27, 2017


          MCFADDEN, P. J., BRANCH and BETHEL, JJ.

          Branch, Judge.

         In August 2013, Maria Quiroga-Saenz rear-ended a car driven by her sister Armandina. On the day after Armandina obtained a default judgment of $1 million against Maria arising from this accident, Maria's insurer, Liberty Mutual Fire Insurance Company, retained counsel for Maria, who filed an answer and moved to set aside the default judgment. As part of a settlement with Armandina, however, Maria later withdrew the motion to set aside. Liberty Mutual then moved to intervene on grounds including that Maria had abandoned her own defense. On appeal, Liberty Mutual argues that the trial court did not have jurisdiction to enter the default judgment and erred when it denied Liberty Mutual's motion to intervene. We agree with the second of these contentions, and we therefore reverse.

         The relevant facts are not in dispute. On August 28, 2013, Maria and Armandina were on their way to a social function when Maria drove her car into the back of her sister's car, causing $1, 762.25 in damage to that car. Although Armandina did not seek medical treatment on the day of the accident, she eventually incurred approximately $5, 000 in medical expenses arising from it.

         In April 2015, Armandina filed a negligence complaint against Maria and provided a courtesy copy of the complaint to Liberty Mutual. On May 20, 2015, and although service on Maria had not yet been achieved, Armandina's counsel sent Liberty Mutual a written request to settle Armandina's claim for $25, 000, including her medical expenses and her pain and suffering.

         On August 7, 2015, Liberty Mutual sent Maria a letter advising her that the insurer "ha[d] reason to believe [that] a lawsuit may be [or] ha[s] been filed against" her by Armandina. The letter asked that Maria forward any materials she might receive concerning the lawsuit to Liberty Mutual and reserved Liberty Mutual's rights under the policy. Maria was served on October 7, 2015 - six months after the complaint was filed, and six weeks after the expiration of the two-year statute of limitation.[1] The return of service was filed on Thursday, November 5, 2015. Maria did not file an answer by Monday, December 7, 2015, [2] however, such that the case went into default on the following day, Tuesday, December 8.[3]

         Liberty Mutual states on appeal that it learned on December 14, 2015, that service had been effected on Maria, and that it retained counsel for Maria the following day. Maria's first counsel averred, however, that neither he nor anyone at his firm received "any pleadings on record with the Clerk of Court, " including the motion for default judgment and the default judgment, "until the afternoon of December 22, 2015." OCGA § 9-11-55 (a) provides that "[i]f [a] case is still in default after the expiration of the period of 15 days, the plaintiff at any time thereafter shall be entitled to verdict and judgment by default." (Emphasis supplied.) On Tuesday, December 22, however - only fourteen days after the case went into default[4] - Armanida moved for and obtained a default judgment against Maria in the amount of $1 million. On the following day (the fifteenth after default), Wednesday, December 23, Maria filed an answer asserting defenses including the statute of limitation and also moved to "vacate or set aside" the default judgment. On the same day, Liberty Mutual notified its insured, Maria's husband, that it was reserving its "right to seek a declaration of its rights and duties under the policy regarding defense and/or indemnity, " including Maria's failure to cooperate "in the investigation, settlement or defense" of Armanida's claim.

         On December 28, 2015, Armanida sent a letter to Maria's counsel offering not to enforce the default judgment against Maria in exchange for Maria's assignment of her claims against Liberty Mutual, as well as a promise that Maria not seek to set aside or appeal the default judgment, with this offer expiring on January 7, 2016. On January 6, 2016, Maria's original counsel withdrew and her new counsel appeared, with Maria's written consent. On January 7, Maria's new counsel moved to amend her previous motion to set aside the default judgment, arguing inter alia that the default judgment was void as entered before the expiration of the 15-day period for opening default as a matter of right. On the same day, however, Maria apparently accepted Armandina's offer of settlement, assigning Maria's claims against Liberty Mutual to Armandina and promising not to set aside or appeal the default judgment.[5]

         On January 18, Liberty Mutual moved to intervene in Armandina's action, arguing that by assigning her claims to Armandina, Maria had abandoned meritorious defenses (including the applicable statute of limitation) to Liberty Mutual's detriment. On January 26, Maria's new counsel represented to the trial court that "the parties have resolved any or all issues between them" and withdrew Maria's motion to set aside the default judgment, "waiv[ing] any and all rights of appeal that she may have in connection with this matter."

         On July 14, 2016, the trial court denied Liberty Mutual's motion to intervene on the grounds that (1) Armandina's counsel had "no obligation" to notify Maria that Armandina was seeking a default judgment; (2) Liberty Mutual had not conceded that it owed any obligation to Maria under the policy, and thus had not experienced any impairment in interest; and (3) Liberty Mutual had retained "two separate law firms to represent [Maria], yet waited almost a month after receiving notice of service and default before hiring its own counsel" to file the motion to intervene. This appeal followed.[6]

         1. Liberty Mutual first argues that the trial court must set aside its default judgment against Maria because her 15-day period to open default as a matter of right had not yet expired when the trial court entered the judgment, with the result that the trial court lost its subject matter jurisdiction. We disagree.

         Liberty Mutual is correct that the trial court erroneously entered the default judgment prematurely under the terms of OCGA § 9-11-55 (a).[7] However, "[a]n appeal must be filed by one who has standing to pursue it." Davis, 285 Ga. at 23 (citations omitted). As to the default judgment, Liberty Mutual "is not a 'losing party'; . . . in fact, [it] is no party at all." Id. at 24; see also Rice v. Champion Bldgs., 288 Ga.App. 597, 601 (2) (654 S.E.2d 390) (2007) (as non-parties to case culminating in a default judgment, appellants could not appeal that judgment). Liberty Mutual not being a party to Armanida's action against Maria, it had no right to appeal the default judgment entered in that action. Davis, 285 Ga. at 24 (dismissing appeal); Rice, 288 Ga.App. at 601 (2).

         While it is true that a non-party can collaterally attack a judgment void on its face, this trial court's default judgment is not void, but rather voidable.[8] See Logan v. Nunnelly, 128 Ga.App. 43, 46 (195 S.E.2d 659) (1973) (where a judgment "did not show on its face that it was void for lack of jurisdiction of the subject matter or of the parties[, ] it would only be subject to direct attack"). Only consideration of the evidence outlined above concerning the timeline of service, proof of service, and failure to answer would show that this default judgment was entered prematurely; accordingly, it is voidable rather than facially void. See Murphy v. Murphy, 263 Ga. 280, 282-283 (430 S.E.2d 749) (1003) (a judgment was not open to collateral attack under OCGA § 9-11-60 (a), but would have been open to a timely direct attack as containing a non-amendable defect).

         2. Liberty Mutual also asserts that the trial court erred when it denied ...

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