Factors to Consider When Moving to Set Aside a Default Judgment

Adam Dan Hilyer v. Betti Fortier, individually and as mother and next friend of M.M., a minor (Appeal from Elmore Circuit Court: CV-13-900405)

Adam Dan Hilyer appealed from the order of the Elmore Circuit Court ("the trial court") following the Court's remand of the case, denying Hilyer's motion filed pursuant to Rule 55(c), Ala. R. Civ. P., to set aside the default judgment entered against him and in favor of Betti Fortier, individually and as mother and next friend of M.M., a minor.

On appeal, the Court considered whether Hilyer's Rule 55(c) motion had properly alleged the three factors set out in Kirtland v. Fort Morgan Authority Sewer Service, Inc., 524 So. 2d 600 (Ala. 1988): 1) whether the defendant has a meritorious defense; 2) whether the plaintiff will be unfairly prejudiced if the default judgment is set aside; and 3) whether the default judgment was a result of the defendant's own culpable conduct.

The trial court held that the default judgment could not be set aside because the default judgment was a result of the Defendant’s “intentional” conduct. Namely, the trial court held that the insurance claims adjuster intentionally ignored correspondence from Plaintiff’s attorney regarding the claim. In opposition, the insurance adjuster submitted an affidavit that he incorrectly believed he had reassigned the case to a different adjuster and that he was not intentionally ignoring the correspondence from Plaintiff’s counsel.

The Alabama Supreme Court reviewed the record and held that the conduct of the insurance agent was only negligent and not intentional. Thus, the Court found that the Kirkland factors had not been properly applied by the trial court and reversed and remanded the case. 

UIM-Rejecting UIM Coverage in Writing

Jimmy L. Johnson, Jr. v. First Acceptance Insurance Company, Inc. (Appeal from Lowndes Circuit Court)

On July 28, 2014, Jimmy L. Johnson, Jr., filed in the Lowndes Circuit Court ("the trial court") a complaint against First Acceptance Insurance Company, Inc. ("First  Acceptance") seeking a judgment declaring that he was entitled to underinsured-motorist ("UIM") coverage under an insurance contract between Johnson and First Acceptance. In his complaint, Johnson also sought damages on claims of breach of contract and bad-faith failure to pay.

The materials submitted to the trial court indicate the following pertinent facts. On October 18, 2013, Johnson was involved in a motor-vehicle accident caused by an underinsured driver. Johnson had a policy of automobile insurance with First Acceptance, and he sought to recover UIM benefits under that policy. First Acceptance denied Johnson's claim, asserting that Johnson had declined UIM coverage.

Section 32-7-23(a) governs uninsured-motorist coverage and has been interpreted as requiring an applicant reject UIM coverage in writing. First Acceptance moved for summary judgment contending that Johnson signed the application for insurance electronically and that his signature declining UIM coverage is his electronic signature.

Plaintiff submitted affidavit testimony opposing the Motion for Summary Judgment stating that he never signed the electronic document. Despite Plaintiff’s affidavit, the trial court granted First Acceptance’s Motion for Summary Judgment.  On appeal, the Alabama Court of Civil Appeals found that a material issue of fact existed, i.e. whether Johnson electronically signed the portion of the application waiving UIM coverage.  As such, the Court held that the trial court erred in entering a summary judgment in favor of First Acceptance.