AEP2, LLC v. BMW of North America, LLC

THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE
CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING
EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

AEP2, LLC f/k/a 2AM Group, LLC, Respondent,

v.

BMW of North America, LLC, Appellant.

Appellate Case No. 2017-002481

Appeal From Charleston County
J. C. Nicholson, Jr., Circuit Court Judge

Unpublished Opinion No. 2021-UP-337
Heard November 2, 2020 – Filed September 22, 2021

AFFIRMED

M. Dawes Cooke, Jr., of Barnwell Whaley Patterson &
Helms, LLC, of Charleston, SC, Ashley Bryan Abel, of
Jackson Lewis P.C., of Greenville, SC, and Anna Louise
Strandberg, of Greenville, NC, all for Appellant.

Thomas H. Pope, III, of Pope Parker Jenkins, P.A. of
Newberry, SC, and John P. Freeman, of Seattle, WA,
both for Respondent.

PER CURIAM: BMW of North America, LLC (BMW) appeals from the trial
court's order denying its motion for relief from the entry of default and the court's
order awarding AEP2, LLC, formerly known as 2AM Group, (AEP2) damages.
We affirm.

BMW argues the trial court abused its discretion in refusing to set aside the entry
of default. We disagree. See Richardson v. P.V., Inc., 383 S.C. 610, 614, 682
S.E.2d 263, 265 (2009) ("The decision whether to set aside an entry of default or a
default judgment lies solely within the sound discretion of the trial court."); id.
("The trial court's decision will not be disturbed on appeal absent a clear showing
of an abuse of that discretion."); In re Estate of Weeks, 329 S.C. 251, 259, 495
S.E.2d 454, 459 (Ct. App. 1997) ("An abuse of discretion . . . occurs when the
judge issuing the order was controlled by some error of law or when the order,
based upon factual, as distinguished from legal conclusions, is without evidentiary
support."); Stark Truss Co. v. Superior Constr. Corp., 360 S.C. 503, 510, 602
S.E.2d 99, 102 (Ct. App. 2004) ("Rule 55(c), [of the South Carolina Rules of Civil
Procedure (SCRCP)], allows the circuit court to set aside an entry of default 'for
good cause shown.'" (quoting Rule 55(c))); Williams v. Vanvolkenburg, 312 S.C.
373, 375, 440 S.E.2d 408, 409 (Ct. App. 1994) ("Whether good cause is
established is within the sound discretion of the [trial] court."); Sundown Operating
Co. v. Intedge Indus., Inc., 383 S.C. 601, 607, 681 S.E.2d 885, 888 (2009) ("This
standard requires a party seeking relief from an entry of default under Rule 55(c) to
provide an explanation for the default and give reasons why vacation of the default
entry would serve the interests of justice."); id. at 607-08, 681 S.E.2d at 888
("Once a party has put forth a satisfactory explanation for the default, the trial court
must also consider: (1) the timing of the motion for relief; (2) whether the
defendant has a meritorious defense; and (3) the degree of prejudice to the plaintiff
if relief is granted."); id. at 608, 681 S.E.2d at 888 ("The trial court need not make
specific findings of fact for each factor if there is sufficient evidentiary support on
the record for the finding of the lack of good cause."); id. at 608, 681 S.E.2d at 889
(stating that while "the criteria for obtaining relief from judgment under Rule
60(b)—mistake, inadvertence, excusable neglect, surprise, newly discovered
evidence, fraud, misrepresentation—are relevant in determining whether good
cause has been shown under Rule 55(c)[,] . . . [n]o trial court should ever find good
cause lacking based solely on the absence of a Rule 60(b) factor"); id. at 609, 681
S.E.2d at 889 (rejecting the petitioner's argument "that it should be granted relief
from the entry of default because it should not be held responsible for the
negligence of its insurance agent in failing to answer the complaint" and holding
the argument was without merit "as the law is clear that an attorney or insurance
company's misconduct is imputable to the client"); White Oak Manor, Inc. v.
Lexington Ins. Co., 407 S.C. 1, 12, 753 S.E.2d 537, 543 (2014) (finding no error in
the trial court's holding that losing the complaint did not constitute "good cause"
under Rule 55(c)); Campbell v. City of North Charleston, 431 S.C. 454, 462, 848
S.E.2d 788, 792-93 (Ct. App. 2020) (affirming the denial of relief from an entry of
default when the defendant's claims and insurance coordinator failed to take any
action after receiving an email of the complaint from defendant's risk manager and
"provided no explanation for her failure to open or forward the e-mail and only
stated it was 'out of character'"); id. (holding "the [trial] court did not abuse its
discretion by finding the failure to forward or open an e-mail did not satisfy the
good cause standard articulated in Rule 55(c), SCRCP"); Dixon v. Besco Eng'g,
Inc., 320 S.C. 174, 178-79, 463 S.E.2d 636, 638-39 (Ct. App. 1995) (affirming the
trial court's finding that the defendant's misunderstanding of a deadline did not
constitute good cause to set aside the entry of default); Heyman v. M.L. Mktg. Co.,
116 F.3d 91, 93, 96-97 (4th Cir. 1997) (holding plaintiff was not entitled to Rule
60(b) relief from dismissal after plaintiff's bankruptcy trustee ignored the litigation
file and missed the deadline for having new counsel enter an appearance, rejecting
trustee's excuse that he was overworked because he was assigned as trustee in
numerous other actions, and explaining that if the trustee "could not satisfactorily
perform his obligations, he should not have accepted the appointment"); but see
Columbia Pools, Inc. v. Galvin, 288 S.C. 59, 60-61, 339 S.E.2d 524, 524-25 (Ct.
App. 1986) (reversing trial court's failure to set aside a default judgment when
client told the attorney the incorrect date of service and the answer was one day
late); Mictronics, Inc. v. S.C. Dep't of Revenue, 345 S.C. 506, 511, 548 S.E.2d 223,
226 (Ct. App. 2001) (reversing administrative law judge's order dismissing case
when an attorney failed to appear at a hearing because he misunderstood the date
of the hearing).

We hold the trial court did not abuse its discretion in refusing to set aside the entry
of default. We find in-house counsel's actions in failing to recognize the complaint
as one involving a new case and filing it in an incorrect electronic folder were
similar to the employee in Campbell ignoring the email she received with a
complaint. See Campbell, 431 S.C. at 462, 848 S.E.2d at 792-93 (holding "the
[trial] court did not abuse its discretion by finding the failure to forward or open an
e-mail did not satisfy the good cause standard articulated in Rule 55(c), SCRCP").
In addition, we find misfiling the complaint in an electronic folder or as in-house
counsel stated in his first affidavit, "losing it in 'the proverbial shuffle,'" is not
significantly different from physically losing the document, as in White Oak
Manor, in which the supreme court upheld the trial court's refusal to lift the entry
of default. See White Oak Manor, 407 S.C. at 12, 753 S.E.2d at 543 (affirming the
trial court's holding that losing the complaint was not "good cause").
In addition, in the present case, in-house counsel received a copy of the complaint
on February 21, 2017. While this copy of the complaint did not have the date of
service on it, it did have the date of filing, which was February 8, 2017. Instead of
attempting to verify when service was made on BMW by contacting its own agent
for service, opposing counsel, or the Charleston County Clerk of Court's office,1
in-house counsel simply told local counsel to use February 21, 2017, the date he
received the courtesy copy of the complaint, as the date of service. See Nelson v.
Coleman Co., 41 F.R.D. 7, 10 (D.S.C. 1966) (stating "surely due care on [the
general counsel's] part required that he take action immediately by telephone with
this court's Clerk's office, or his local counsel to determine the date of service").
We find the evidence in the record supports the trial court's ruling that BMW's
actions in this case did not constitute good cause entitling BMW to relief under
Rule 55(c).2

2. We disagree with BMW's argument that because AEP2 failed to comply with
the notices of damages provision in the Agreement, it should be limited in its right
to damages and restricted from collecting prejudgment interest accrued before it
gave notice to BMW. See Nash v. Tindall Corp., 375 S.C. 36, 39, 650 S.E.2d 81,
83 (Ct. App. 2007) ("Procedural matters are to be determined in accordance with
the law of South Carolina, the lex fori." (quoting McDaniel v. McDaniel, 243 S.C.
286, 289, 133 S.E.2d 809, 811 (1963))); id. ("Lex fori refers to the law of the
forum."); State ex rel. Medlock v. Love Shop, Ltd., 286 S.C. 486, 488, 334 S.E.2d
528, 530 (Ct. App. 1985) ("[E]ntry of an order of default is an admission by the
defaulting party of the well-pleaded allegations of the complaint[.]"); id. at 489,
334 S.E.2d at 530 ("The defendant, by waiving a contest and suffering a default to
be taken against him, admits the truth of the allegations, set out in the plaintiff's
declaration or complaint. . . . Hence the default authorizes the entry of any

1
Counsel in the related action emailed the complaint in this action to in-house
counsel at 11:41 a.m., February 21, 2017. The affidavit of service was filed in the
clerk's office at 1:06 p.m. that same day.
2
Because we affirm the trial court's ruling that BMW did not establish good cause
entitling it to relief from the entry of default, we need not address BMW's
arguments about the remaining factors. See Sundown Operating Co., 383 S.C. at
608, 681 S.E.2d at 888 ("The trial court need not make specific findings of fact for
each factor if there is sufficient evidentiary support on the record for the finding of
the lack of good cause."); Futch v. McAllister Towing of Georgetown, Inc., 335
S.C. 598, 613, 518 S.E.2d 591, 598 (1999) (noting an appellate court need not
address appellant's remaining issues when its determination of a prior issue is
dispositive).
judgment warranted by the facts alleged." (quoting Gadsden v. Home Fertilizer &
Chem. Co., 89 S.C. 483, 487-88, 72 S.E. 15, 17 (1911))).

While the law of New Jersey applies to the contract, the law of South Carolina
regarding default applies in analyzing this procedural issue. In its complaint,
AEP2 alleged that under the Agreement, BMW was obligated to indemnify it for
withdrawal liability to the Western Conference of Teamsters Pension Fund.
BMW's argument concerning AEP2's failure to provide notice as required by the
notice of damages provision is a defense to its liability for damages rather than to
the amount of damages. Its liability for the damages is deemed admitted due to its
default.

3. BMW argues the trial court misapplied New Jersey law in determining the date
prejudgment interest began to accrue. We disagree. Under New Jersey Law,
awards of interest and the calculation of those awards are reviewed under an abuse
of discretion standard. See Belmont Condo. Ass'n, Inc. v. Geibel, 74 A.3d 10, 35
(N.J. Super. Ct. App. Div. 2013) ("A reviewing court must not disturb an award of
prejudgment interest unless the trial judge's decision represents 'a manifest denial
of justice.'" (quoting Musto v. Vidas, 754 A.2d 586, 598 (N.J. App. Div. 2000));
County of Essex v. First Union Nat'l Bank, 891 A.2d 600, 608 (N.J. 2006) ("Unlike
prejudgment interest in tort actions, which is expressly governed by [court rule],
the award of prejudgment interest on contract and equitable claims is based on
equitable principles."); id. ("In awarding prejudgment interest, '[t]he basic
consideration is that the defendant has had the use, and the plaintiff has not, of the
amount in question; and the interest factor simply covers the value of the sum
awarded for the prejudgment period during which the defendant had the benefit of
monies to which the plaintiff is found to have been earlier entitled.'" (quoting Rova
Farms Resort, Inc. v. Invs. Ins. Co., 323 A.2d 495, 512 (N.J. 1974))); Derfuss v.
N.J. Mfrs. Ins. Co., 666 A.2d 599, 604 (N.J. Super. Ct. App. Div. 1995) (granting
the trial court deference to affirm award of prejudgment interest only from the date
plaintiff was granted leave to amend her complaint to seek a trial de novo on her
underinsured motorist (UIM) claim and noting "not only was plaintiff's UIM claim
unliquidated prior to the arbitration award, but there is nothing to suggest that [the
UIM provider] failed to negotiate with plaintiff in good faith to settle the matter
during the pre-arbitration period" and that the UIM provider "did not delay or
obstruct the arbitration proceedings or the trial de novo"). We find Derfuss does
not limit a court to calculating prejudgment interest only from a date of the
plaintiff's first demand or notice. Instead, New Jersey law provides for great
deference to the trial courts and the calculation of prejudgment interest in
accordance with equitable principles. Here BMW has had the use of the funds that
would have been used to pay the withdrawal liability while AEP2 has not.
Because it is in default, BMW is deemed to have admitted it was obligated to
indemnify AEP2 for the payments AEP2 made for the withdrawal liability.
Therefore, granting the trial court deference, we hold the trial court did not abuse
its discretion in finding it would be equitable to award AEP2 prejudgment interest
from the date AEP2 made the payments.

AFFIRMED.

HUFF, WILLIAMS, and GEATHERS, concur.