ARKANSAS COURT OF APPEALS

NOT DESIGNATED FOR PUBLICATION

JOHN B. ROBBINS, JUDGE

DIVISION III

TOM JEFFREY

APPELLANT

V.

PREECHA INPROM

APPELLEE

CA 00-1208

AUGUST 29, 2001

APPEAL FROM THE SEBASTIAN

COUNTY CIRCUIT COURT

FORT SMITH DISTRICT

[NO. CV-00-112(II)]

HONORABLE JAMES ROBERT

MARSCHEWSKI, CIRCUIT JUDGE

AFFIRMED

Appellant Tom Jeffrey, d/b/a Tom Jeffrey Roofing & Painting, appeals the entry by the Sebastian County Circuit Court of a default judgment against him and in favor of appellee Preecha Inprom, d/b/a Bangkok Video, concerning a metal roof installed by appellant on appellee's video store in Fort Smith, Arkansas. Appellant also appeals the denial of a new trial subsequently requested on the same basis. We affirm.

This action was initiated by appellee filing a complaint on February 9, 2000, alleging (1) breach of contract for appellant's failure to use the materials that he had told appellee he would use on the video store roof, (2) breach of warranty that ensured a ten-year maintenance of the integrity of the roof's performance and its materials, and (3) fraud or deceit. Appellee alleged that he was damaged in the amount of the entire contract, $19,200,

that was paid by appellee to appellant, and asserted that he was entitled to punitive damagesfor fraud or deceit, court costs, and attorney's fees. The summons and complaint were served on appellant by certified mail on February 22, 2000, and contained the following notice:

1. You are hereby notified that a lawsuit has been filed against you; the relief asked is stated in the attached complaint.

2. The attached complaint will be considered admitted by you and a judgment by default be entered against you for the relief asked in the complaint unless you file a pleading and thereafter appear and present your defense. Your pleading or answer must meet the following requirement.

(A) It must be in writing, and otherwise comply with the Arkansas Rules of Civil Procedure.

(B) It must be filed in the court clerk's office within 20 days from the day you were served with this summons.

3. If you desire to be represented by an attorney you should immediately contact your attorney so that an answer can be filed for you within the time allowed.

No answer was filed. On April 13, 2000, long after the expiration of twenty days, appellee moved for a default judgment.

At appellee's request, the trial court convened a hearing on the motion on June 13, 2000. Appellant was notified of the hearing and appeared with counsel. No answer had been filed to date. The court coordinator titled the hearing "Default Judgment/Damages Hearing." At the beginning of the hearing, the trial court stated that he was finding appellant in default and that the hearing was limited to the issue of damages.

During appellant's testimony, however, he explained why he thought he had additional time within which to answer. Appellant asserted that he went to the office ofappellee's attorney prior to expiration of the twenty days and agreed to fix the leaking roof and that appellee's attorney agreed to write a letter to his client regarding appellant's proposal. Appellant took this to mean that he had additional time in which to answer or that no answer was necessary at all. Appellant acknowledged, though, that appellee's attorney's secretary told him upon his initial presentation in the attorney's office that he needed to obtain his own lawyer. Upon objection by appellee's counsel to this line of questioning, the trial judge noted that he would not consider this testimony because the hearing was confined to damages, which were awarded at the conclusion of the hearing in the amount of $29,500. This figure represented compensatory damages for breach of contract, court costs, attorney's fees, and punitive damages.

The judgment was filed of record on June 27, 2000. Appellant filed a motion for new trial on July 7, 2000, asserting that irregularities in the proceeding prevented him from receiving a fair trial, citing to Ark. R. Civ. P. 59(a). Appellant attached his affidavit declaring what he understood from his meeting with appellee's counsel. The trial court conducted a hearing on this motion on July 25, 2001. Appellee's former attorney, who had stepped aside as attorney so that he could be a witness, testified that appellant did come to his office after being served with the complaint, but that he personally told appellant that he needed to get his own lawyer and that he needed to answer the complaint, regardless of any attempts to work the situation out. Appellant reasserted his recollection that he went to the attorney's office listed on the summons and complaint and explained that he intended to honor any repair needs for the duration of the warranty. Furthermore, appellant asserted thathe was told by the attorney that he did not need to get an attorney. The trial judge did not believe appellant's assertions and denied appellant's motion for a new trial, finding that appellant failed to demonstrate any of the grounds for a new trial pursuant to Ark. R. Civ. P. 59, failed to show any reason to have the default judgment set aside, and failed to demonstrate a meritorious defense. Appellant filed timely notices of appeal from the judgment and from the denial of his motion for a new trial. This appeal resulted.

Arkansas Rule of Civil Procedure 55 governs the manner in which default judgments are entered, and provides in pertinent part:

Rule 55. Default

(a) When Entitled. When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend as provided by these rules, judgment by default may be entered by the court.

(b) Manner of Entering Judgment. The party entitled to a judgment by default shall apply to the court therefor, but no judgment by default shall be entered against an infant or incompetent person. If the party against whom judgment by default is sought has appeared in the action, he (or if appearing by representative, his representative) shall be served with written notice of the application for judgment at least 3 days prior to the hearing on such application. If, in order to enable the court to enter judgment or to carry it into effect, it is necessary to take an account or to determine the amount of damages or to establish the truth of any averment by evidence or to make an investigation of any other matter, the court may conduct such hearings as it deems necessary and proper and may direct a trial by jury.

(c) Setting Aside Default Judgments. The court may, upon motion, set aside a default judgment previously entered for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) the judgment is void; (3) fraud, misrepresentation, or other misconduct of an adverse party; or (4) any other reason justifying relief from the operation of the judgment. The party seeking to have the judgment set aside must demonstrate a meritorious defense to the action; however, if the judgment is void, no other defense to the action need be shown.

Rule 55 of the Arkansas Rules of Civil Procedure provides for entry of a default judgment when a party fails to appear or otherwise defend. Meeks v. Stevens, 301 Ark. 464, 785 S.W.2d 18 (1990). Because Rule 55(a) provides that the court "may" grant a default-judgment motion in the event of failure to answer or otherwise defend, we apply an "abuse of discretion" standard in reviewing the granting of a default judgment. Collins v. Keller, 333 Ark. 238, 969 S.W.2d 621 (1998); Layman v. Bone, 333 Ark. 121, 967 S.W.2d 561 (1998). Default judgments are not favorites of the law and should be avoided when possible. B & F Engineering, Inc. v. Controneo, 309 Ark. 175, 830 S.W.2d 835 (1992). Rule 55, as revised in 1990, reflects a preference for deciding cases on the merits rather than on technicalities. Id. Because of its harsh and drastic nature, which can result in the deprivation of substantial rights, a default judgment should only be granted when strictly authorized and when the party affected should clearly know he is subject to default if he does not act in a required manner. Meeks, supra.

It is undisputed that appellant was properly served with a summons and appellee's complaint, that he never filed an answer, and that a motion for default judgment was filed more than twenty days after service on appellant. Moreover, appellant's counsel never filed any responsive pleading to the motion for default judgment, other than to ask for a continuance, which was granted. It was only at the hearing on the default judgment motion and damages that appellant attempted to explain why he failed to answer. His explanation was that he appeared at opposing counsel's office and thought that, since he agreed to fix the roof in accordance with the warranty, he did not need to answer the complaint. This wasflatly denied by counsel in the hearing on the motion for new trial, whose testimony was believed by the circuit judge. The trial judge rendered his findings from the bench:

Mr. Jeffrey, I believe you were properly served with the notice, but I believe Mr. Shue's testimony that you spoke with the secretary on February -- and his testimony was February 23^rd -- yours was the same day you got the notice which would have been February 22^nd; that your recollection and his coincides that you were advised to seek your own counsel. The notice provision says specifically -- that's the reason it is in the notice -- that you seek counsel or file an Answer. You don't have to have an attorney. All you had to do was file an answer. All you had to do was hand-write something out and bring it to the Court and file it and explain what your contention was or why you didn't think you were liable or responsible on this complaint. That wasn't done. I don't believe you spoke with Mr. Shue again until March the 13^th or 14^th. By then your time had almost expired and may have expired --no, wouldn't quite have expired -- for filing an answer. You would have been right up the last day of filing an answer. And that you didn't file one. I believe Mr. Shue advised you to file one and you disregarded that advice, thinking somehow that this was going to just work out, that you would be given an opportunity to go up there and repair the roof and that didn't happen, but you did not follow the procedures, notwithstanding, I believe, and I believe that you are in default, notwithstanding, as I did at the trial, I wanted to give you every opportunity to explain your condition. I allowed into evidence everything concerning the roof and what was done and why it was done and what happened and why you thought it wasn't your fault, and I allowed all that testimony in and I disagree with you in that regard. I believe that you were at fault, even though that was not the purpose of that hearing.

So, I do find that the --

And based upon what you have told me here today is that you wouldn't provide the Court with any new evidence for the Court to consider why it should be a new trial.

So, based upon that, I think the Motion for New Trial will be denied.

As we stated in Bell v. Lee, 8 Ark. App. 139, 142, 648 S.W.2d 524, 525 (1983), where we affirmed the trial court's denial of a motion to set aside a default judgment for failure to answer a complaint:

Although we realize that most litigants strive to resolve their differences outside of the courtroom and that many controversies are in fact settled on the courthouse steps, a party to a suit is not relieved of the responsibility of adhering to the rules of civilprocedure and must file an answer within the statutory time. Relief from default judgment is available only where the defaulting party is able to show excusable neglect, unavoidable casualty or other just cause.

See also Moore v. Taylor Sales, Inc., 59 Ark. App. 30, 953 S.W.2d 889 (1997). We hold that the circuit judge did not abuse his discretion in finding that appellant failed to demonstrate any legitimate basis to set the judgment aside.

We hold similarly with regard to the denial of a new trial because, upon revisiting the issue of the default judgment, the trial court permitted appellant to examine appellee's former counsel on his recollection of what was said to appellant in counsel's office. The motion for new trial indicated that there were "irregularities" that prevented a fair trial. Once again, the trial judge considered the issue of what occurred between appellant and counsel and whether appellant was fraudulently induced to refrain from filing an answer. The trial court did not err in denying the motion for new trial because appellant failed to persuade the trial court that an irregularity occurred. Due regard must be given to the circuit court that assessed the credibility of the witnesses. Ark. R. Civ. P. 52(a)(2000). In short, appellant was not excused from responding to the complaint and acted improvidently to his detriment. Even when potential settlement negotiations are pending, there is no provision in Arkansas law for waiver of the right to seek a default judgment. See Moore, supra. It was a matter of credibility as to whether there was an oral promise by opposing counsel that all would work out and that no formal answer was necessary, the resolution of which we do not disturb on appeal. To hold otherwise would give sanction to a slipshod treatment of summons by defendants. See B & F Engineering, supra. Substantial evidence supports the judgment,which is the standard of review on appeals from a denial of a motion for new trial. See Piercy v. Wal-Mart Stores, Inc., 311 Ark. 424, 844 S.W.2d 337 (1993).

Affirmed.

Griffen and Crabtree, JJ., agree.