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Emery v. Greater Greenville Housing And Revitalization Association

Court of Appeals of Mississippi

June 12, 2018

ODIS EMERY APPELLANT
v.
GREATER GREENVILLE HOUSING AND REVITALIZATION ASSOCIATION APPELLEE

          DATE OF JUDGMENT: 09/02/2016

          WASHINGTON COUNTY CHANCERY COURT HON. MARIE WILSON TRIAL JUDGE

          ATTORNEYS FOR APPELLANT: DEREK D. HOPSON DEREK DEWAYNE HOPSON JR.

          ATTORNEYS FOR APPELLEE: ROBERT N. WARRINGTON ALEXANDRA HUTTON OGLESBY

          BEFORE LEE, C.J., CARLTON AND WESTBROOKS, JJ.

          CARLTON, J.

         ¶1. This case concerns a default judgment entered in a lawsuit in which Greater Greenville Housing & Revitalization Association ("Greater Greenville") sought to reform a warranty deed conveying certain property to Odis Emery in 2011. Over four years after executing and delivering the warranty deed to Emery, Greater Greenville discovered that the legal descriptions in the warranty deed contained four additional properties that Greater Greenville claims it did not intend to convey.

         ¶2. After it was unable to resolve the matter with Emery, Greater Greenville filed suit, seeking a decree reforming the warranty deed to exclude the four additional properties based upon mutual mistake and a scrivener's error. Emery was served with the summons and the complaint but failed to timely file an answer. Greater Greenville obtained a default judgment, and just over three weeks later, Emery filed his motion to set aside the default judgment.

         ¶3. The chancery court denied Emery's motion, applying the three-prong balancing test used in assessing whether a default judgment should be set aside under Rule 55(c) and Rule 60(b) of the Mississippi Rules of Civil Procedure.[1] The chancery court found that although Greater Greenville did not show it would be prejudiced if the default judgment were set aside, Emery had failed to show good cause for his default, and he failed to show he had a colorable defense to Greater Greenville's deed-reformation lawsuit.

         ¶4. Emery appeals, arguing that the chancery court's refusal to set aside the default judgment was an abuse of discretion because he had shown both good cause for his default, and that he had a colorable defense to Greater Greenville's lawsuit.

         ¶5. We find that the chancery court did not abuse its discretion in finding against Emery on the good cause prong of the Rule 60(b) three-prong balancing test; or in finding against Greater Greenville on the prejudice prong. We find, however, that the record shows that Emery demonstrated he had a colorable defense to Greater Greenville's lawsuit, and that the chancery court's determination that he did not have a colorable defense was based on an error of law. Accordingly, based on the record and the applicable law, we hold that the default judgment against Emery should be set aside under the Rule 60(b) three-prong balancing test. Therefore, we reverse the chancery court and remand this case for further proceedings.

         FACTS

         ¶6. Greater Greenville is a Mississippi non-profit corporation located in Greenville, Mississippi. Odis Emery lives in Hollandale, Mississippi. On March 2, 2011, Emery and Greater Greenville executed an option to purchase certain properties. Fredrick Spencer was the Executive Director of Greater Greenville at that time and executed the option to purchase on Greater Greenville's behalf. The option provided as follows:

         OPTION TO PURCHASE

         Greater Greenville Housing & Revitalization Association Inc. has agreed to s[ell] the following properties to Odis Emery of 609 Taft Street, Hollandale, MS 38748 for $75, 000.00:

• 510 Wright Street

Greenville, MS

• 544 S. Hinds Street

Greenville, MS

• 405 A & B North Street

Greenville, MS

• 464 Hughes Street

Greenville, MS

• 415 Slaughter Street

Greenville, MS

• 417 Slaughter Street

Greenville, MS

         This offer is contingent upon the buyer approval for financing.

         ¶7. The option contains no recital that Emery paid any consideration for it, and there is no evidence in the record that Emery did so. The option also does not contain a time frame within which Emery must exercise the option upon meeting the financing contingency.

         ¶8. According to Emery, and as supported by Spencer's affidavit, Emery and Spencer, as the agent for Greater Greenville, viewed the original six properties and then agreed to include four additional properties in the sale. As set forth in the Spencer affidavit, the reason for including the four additional properties was to assist Emery with the loan he had taken out to purchase the property[2]—and to address the pressure that the City of Greenville was putting on Greater Greenville to revitalize the subject properties, including the four additional properties. These four additional properties included the homes and surrounding property located at the following addresses:

• 542 South Hinds Street

Greenville, MS

• 509 Roach Street

Greenville, MS

• 511 Roach Street

Greenville, MS

• 427 Wright Street

Greenville, MS

         ¶9. On April 18, 2011, Emery paid Greater Greenville $75, 000.00, and Greater Greenville executed and delivered a warranty deed conveying certain real property to Emery. The legal property descriptions in the warranty deed contained all ten properties, the original six properties listed in the option, and the four additional properties listed above, which were described by lot and block designations and metes and bounds descriptions. Additionally, the legal descriptions for the properties located at "464 Hughes Street" and "415-417 Slaughter Lane" are labeled in the deed; there are notations in the margin for properties on "Wright Street, " "S. Hinds" and "North Street, " but they contain no specific street-number references. There were no notations or labels in the warranty deed regarding the legal description encompassing the Roach Street properties.[3]

         ¶10. Over four years after conveying the property to Emery, Greater Greenville discovered the discrepancy between the home addresses listed in the option to purchase and the warranty deed's legal descriptions, which included the original six properties listed in the option and the four additional properties. By a letter dated December 23, 2015, Greater Greenville attempted to resolve what it believed to be a scrivener's error in the deed's legal descriptions by contacting Emery and the attorney who represented him at that time, Willie Bailey. In that letter, Greater Greenville set out what it believed were the facts and issues relating to the deed's legal descriptions and detailed an offer to resolve the matter without the necessity of litigation.

         ¶11. The record contains the affidavit of Willie Bailey, in which he said that he withdrew from representing Emery on or about December 23, 2015, but before that time he had conveyed to Greater Greenville's counsel that Emery disputed the matter and would defend against any future litigation regarding the matter. Upon learning that Baily no longer represented Emery, Greater Greenville's counsel contacted Emery directly by a letter dated January 14, 2016, reiterating the facts and issues set out in the earlier letter it had sent to Bailey and proposing settlement.

         ¶12. When Greater Greenville did not received a response from Emery, it filed a Complaint to Reform Deed and for Other Relief in the Chancery Court of Washington County, Mississippi, naming Odis Emery, Planters Bank & Trust Company (Planters Bank), and Emery's two apparent judgment creditors, Tower Loan and the Mississippi Department of Revenue as defendants. Greater Greenville sought, among other things, to obtain a decree reforming the deed due to a mutual mistake and scrivener's error and confirming title in Greater Greenville for the four additional properties, namely the homes and surrounding property located at 542 South Hinds Street, 509 Roach Street, 511 Roach Street, and 427 Wright Street, in Greenville, Mississippi.

         ¶13. Emery was personally served with the summons and a copy of the complaint on January 28, 2016.[4] It is undisputed that Emery did not serve any responsive pleading within 30 days of service of the summons and complaint. To avoid repetition we will address the circumstances surrounding Emery's failure to timely answer in the discussion section below.

         ¶14. On March 2, 2016, counsel for Greater Greenville filed a request for entry of default against Emery. On that same day the clerk entered a default against Emery for failure to appear, plead, or otherwise defend the action. The next day, Greater Greenville filed its motion for default judgment and other relief and mailed a copy of the motion to Emery. On March 7, 2016, a final judgment was entered in which, among other forms of relief, the chancery court granted a default judgment against Emery; reformed the warranty deed from Greater Greenville to Emery dated April 18, 2011, to exclude the additional four properties due to mutual mistake and a scrivener's error; and ordered that Greater Greenville was the lawful holder of title to the four additional properties, exclusive of Emery's interests. The final judgment was amended the next day when it was discovered that part of the legal description had been omitted from the March 7 final judgment. The amended final judgment was entered on March 9, and the clerk filed this judgment in the land records of Washington County on March 15.[5]

         ¶15. Immediately following the entry of the default judgment, Greater Greenville had the four additional properties classified as tax exempt, paid the delinquent taxes on those properties, and had Planters Bank reinstate the deed of trust with Greater Greenville and release its deed of trust with Emery as to the four additional properties.

         ¶16. On April 1, 2016, just over three weeks after entry of the default judgment, Emery filed his motion to set aside the default judgment and for leave to file an answer. Counsel for Greater Greenville received a copy of this filing on April 4, after the actions it took in accordance with the default judgment had already taken place. Greater Greenville filed a response to Emery's motion on April 15, and the matter was set for an August 23 hearing. Four days before the hearing, Emery filed his rebuttal supporting his motion to set aside the default judgment.

         ¶17. After conducting a hearing, the chancery court entered its final order denying Emery's motion to set aside the default judgment. The chancery court first found that the default judgment was not void based upon Emery's argument that he was entitled to three-days notice prior to entry of default.[6] The chancery court then applied the three-prong balancing test used in assessing whether a default judgment should be set aside pursuant to Rules 55(c) and 60(b). Namely, the chancery court assessed (1) whether Emery had "good cause" for his default; (2) whether Emery had a "colorable defense" to Greater Greenville's lawsuit; and (3) the nature and extent of any prejudice to Greater Greenville if the default judgment were set aside. BB Buggies, Inc., 150 So.3d at 101 (¶23). Under this test, the chancery court held that although Greater Greenville would not suffer prejudice as that term is applied in the Rule 55(c) and Rule 60(b) context, Emery failed to show good cause for his default, and he did not show that he had a colorable defense to Greater Greenville's deed reformation lawsuit. Accordingly, the chancery court denied Emery's motion to set aside the default judgment.

         ¶18. On appeal, Emery asserts that (1) there was "good cause shown" for setting aside the entry of default and the chancery court abused its discretion in failing to do so; and (2) the chancery court abused its discretion in failing to set aside the default judgment because Emery showed (a) he had legitimate reasons (i.e., good cause) for default; (b) he has a colorable defense to Greater Greenville's reformation lawsuit; and (c) the delay between ...


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