Shannon v. McGee

THIS OPINION HAS NO
PRECEDENTIAL VALUE.  IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY
PROCEEDING EXCEPT AS PROVIDED BY RULE 239(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA

In The Court of Appeals

Diane Shannon, Respondent,

v.

James McGee,
Robert C. Hood, Sr., as Personal Representative of the Estate of Betty Hood
and Robert C. Hood, Sr., d/b/a Hood’s Used Cars, Defendants, of whom Robert
C. Hood, Sr., d/b/a Hood’s Used Cars is the Appellant.

Appeal From Marion County

Gerald M. Angelo, Special Referee

Unpublished Opinion No. 2007-UP-543

Submitted October 10, 2007 – Filed
November 30, 2007

REVERSED

Johnny Gardner, of Conway, for Appellant.

George Jebaily and  Rangeley Chewning, both of Florence, for
Respondent.

PER CURIAM: In
this civil case, we reverse the Special Referee’s denial of a motion to set
aside an entry of default.

FACTS

This case arises from an automobile accident that occurred in
Marion County South Carolina.  A GMC vehicle failed to yield the right-of-way,
striking a Dodge van.  The GMC vehicle was driven by James McGee (McGee).  Diane
Shannon (Shannon) was a passenger in the Dodge van. 

As a result of the accident, Shannon suffered multiple injuries. 
Specifically, Shannon underwent surgery to correct her right hand, right forearm,
and left knee.  Unfortunately, Shannon’s left knee developed an infection,
which required a second surgery.  The surgical sites became infected, which
ultimately led to a partial amputation of Shannon’s left leg. 

A summons and complaint were filed on June 6, 2005, and Robert
Hood, doing business as Hood’s Used Cars, was personally served two days
later.  Hood failed to respond.  Consequently, Shannon filed a Motion for Entry
of Default.  On July 13, 2005, an entry of default was entered, and the matter was
referred to the Special Referee to ascertain damages. 

A hearing before the Special Referee was held on August 12, 2005. 
Prior to this hearing, Hood was personally served with notice of the hearing
and the order of entry of default on July 26, 2005.  Hood retained counsel on
August 11, 2005, one day prior to the hearing before the Special Referee.  Hood
made a motion to set aside the entry of default. 

The Special Referee found that at the time of the accident, the
GMC vehicle was titled in Betty Hood’s name.  The Special Referee: (1) found McGee
to be an employee of Hood’s Used Cars at the time of the accident; (2) held Robert
Hood (Hood), doing business as Hood’s Used Cars, was negligent in entrusting a
company vehicle to McGee; (3) concluded Shannon incurred and will incur
substantial medical costs; and (4) refused to set aside the entry of default. 
Ultimately, the Special Referee entered a judgment against Hood in the amount
of $1,475,000. 

On appeal, Hood argues the Special Referee committed reversible
error by not setting aside the entry of default.  Shannon maintains the grant
or denial of a motion to set aside the entry of default is an interlocutory
appeal, which is not immediately appealable.

STANDARD OF REVIEW

A court may set aside an entry of default if good cause is shown. 
Rule 55(c), SCRCP.  Whether good cause is established is left to the sound
discretion of the trial court.  Williams v. Vanvolkenburg, 312 S.C. 373,
375, 440 S.E.2d 408, 409 (Ct. App. 1994).  We will not disturb a discretionary
ruling on appeal unless the ruling is without any evidentiary support or
controlled by an error of law.  Id.

LAW/ANALYSIS

Before we address whether the Special
Referee committed reversible error by not setting aside the entry of default,
we confront the issue of whether this appeal is properly before us. 

A. This appeal
is properly before us.  

Shannon initially argues this Court lacks jurisdiction to
decide this case because this appeal constitutes an interlocutory appeal.  We
disagree.

Generally,
an appeal to this Court will be allowed only if there has been a final judgment.  Hagood v. Sommerville, 362 S.C. 191, 194, 607 S.E.2d 707, 708 (2005).  For
the purposes of determining whether an order is appealable, “final judgment”
refers to the disposition of all the issues in the case.  Doe v. Howe,
362 S.C. 212, 216, 607 S.E.2d 354, 356 (Ct. App. 2004).  The present case
constitutes a “final judgment” by the Special Referee.

The
Special Referee denied Hood’s motion to set aside the entry of default and
entered a default judgment of $1,475,000.  This terminates the litigation because all Shannon must do to recover the judgment amount is collect.  See Ateyeh v. United
of Omaha Life Ins. Co., 293 S.C. 436, 437, 361 S.E.2d 340, 340 (Ct. App.
1987) (An order setting aside an entry of default is not appealable absent a
final judgment.); Thynes v. Lloyd, 294 S.C. 152, 153, 363 S.E.2d 122,
122 (Ct. App. 1987) (An order refusing to set aside an entry of default is not
appealable until after final judgment.). However, even if we assume the Special
Referee’s order is not a final judgment, this appeal is properly before us.

The
following four situations permit a party to appeal absent a final judgment:

(1)
intermediate judgments, orders or decrees involving the merits, (2) orders
affecting substantial rights when such orders in effect determine the action
and prevent a judgment from which an appeal may be taken or when the orders
discontinue the action, (3) a final order in special proceedings, and (4)
interlocutory orders [relating to injunctions].

 Walker v. Springs
Indus., Inc., 298 S.C. 249, 251, 379 S.E.2d 729, 730 (Ct. App. 1989).

An
order affects a substantial right if the order determines and discontinues the
action.  Brown v. County of Berkeley, 366 S.C. 354, 361, 622 S.E.2d 533,
537 (2005).            The Special Referee’s order in the current case determines
and discontinues the action.  The order determines the action because Hood is
held liable for the injuries suffered by Shannon.  The order terminates the
action because all Shannon must do to recover the judgment amount is collect.  Thus,
this appeal is properly before us. 

B. The Special
Referee committed reversible error in not setting aside the entry of default.

As noted above, the decision of whether to
grant relief from an entry of default is a matter solely within the sound
discretion of the trial court.  Bage, LLC v. Se. Roofing Co. of Spartanburg,
Inc., 373 S.C. 457, 471, 646 S.E.2d 153, 160 (Ct. App. 2007).  An abuse of
discretion arises if the lower court’s decision is controlled by an error of
law or is without evidentiary support.  Id. at 464-65, 646 S.E.2d at
157.  Consequently, the question before us is not whether we believe good cause
existed to set aside the entry of default, but whether the Special Referee’s
determination is supported by evidence and not controlled by an error of law.  Id.

“For good cause shown the court may set aside an entry of default .
. . .”  Rule 55(c), SCRCP.  Thus, the standard for granting relief from an
entry of default is good cause.  Bage, LLC, 373 S.C. at 470, 646 S.E.2d at
160.  In this case, the Special Referee applied the good cause standard in
denying the motion to set aside the entry of default.  The Special Referee
applied the correct legal standard; therefore, the Special Referee’s decision
is not controlled by an error of law.  Now, we must consider whether the
Special Referee’s decision is supported by the evidence.

In determining whether to set aside an entry of default, the
factors the Special Referee “should consider are: (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 472,
646 S.E.2d at 161.  The Special Referee did not make specific findings with
respect to each of these three enumerated factors, but he did apply the factors
in denying the motion to set aside the entry of default.  The Special Referee
is not required to make specific findings in regard to these factors if
sufficient evidence supports the finding of the lack of good cause.  Id. 

The first factor is the timing of the motion for relief.  In this
case, Shannon filed the summons and complaint on June 6, 2005. Shannon personally served the summons and complaint on Hood on June 8, 2005.  Hood made the
motion to set aside the entry of default on August 11, 2005.  Only two months
elapsed between the time Hood was served with the summons and complaint and
when he moved for relief.       

The second factor is whether the defendant has a meritorious defense.  
A meritorious defense does not have to be a perfect defense nor does have to be
guaranteed to prevail at a trial. Graham v. Town of Loris, 272 S.C. 442,
543, 248 S.E.2d 594, 599 (1978).   “It need be only one which is worthy of a
hearing or judicial inquiry because it raises a question of law deserving of
some investigation and discussion or a real controversy as to essential facts
arising from conflicting or doubtful evidence.” Id.  This case arose due
to an automobile accident.  Hood maintains that at the time of the accident,
McGee was not acting as Hood’s employee.  The issue is worthy of investigation
and thus the second factor weighs in favor of Hood.

The final factor is the degree of prejudice to the plaintiff if the
entry of default is set aside.  We fail to see any prejudice that would result
if entry of default is set aside.  It does not appear that evidence essential
to the adjudication of this case on the merits will be affected by a reversal. 
Thus, this factor weighs in favor of Hood. 

CONCLUSION

Accordingly,
the Special Referee’s decision is

REVERSED. [1]

STILWELL,
SHORT, and WILLIAMS, JJ., concur.

[1] We decide this case without oral arguments pursuant
to Rule 215, SCACR.