Default Judgment

What Is A Default Judgment?

A default judgment is the court’s answer to a defendant who does not show up. When the defendant has been served and the time to respond has run, the plaintiff asks the clerk to note the default on the record. Once default is entered, the allegations of the complaint that go to liability are treated as established, because the defendant has not denied them. The court then determines what the plaintiff is entitled to recover and enters judgment for that amount.

The judgment is a real judgment. It can be enforced against the defendant’s property and wages like any other, it appears on the defendant’s record, and in a vehicle case it can reach the defendant’s insurer within the policy limits. It can also be set aside, which is why plaintiffs’ lawyers follow the rule carefully and why defendants who ignored a lawsuit often reappear once a judgment is entered.

How Does The Default Process Work Under North Carolina Rule 55?

In two stages. First, entry of default: when a party against whom relief is sought has failed to plead and that fact is shown by affidavit, by motion of the plaintiff’s attorney, or otherwise, the clerk enters the default under N.C. R. Civ. P. 55. Second, judgment by default. If the claim is for a sum certain, or an amount that can be computed, the clerk may enter judgment on the plaintiff’s affidavit of the amount due, provided the defendant was defaulted for failing to appear and is not a minor or incompetent person. In all other cases, which includes every personal injury claim, the plaintiff applies to a judge.

The judge’s stage has safeguards. No default judgment may be entered against a minor or incompetent person who is not represented by a guardian ad litem. A defendant who has appeared in the action in any way must be served with written notice of the application at least three days before the hearing. When the amount of damages must be determined, the judge may hold a hearing or order a reference and must allow a jury trial on damages where the constitution or a statute requires one. Rule 55 also allows the motion to be decided without a hearing when the motion says so and the defendant serves no written response within 30 days, and it bars a default judgment against the State unless the claim is proved by evidence.

Can A Default Judgment Be Set Aside In North Carolina?

Yes, and defendants often try. Rule 55 lets the court set aside an entry of default for good cause shown. Once a judgment has been entered, the standard shifts to N.C. R. Civ. P. 60, which permits relief from a final judgment for mistake, inadvertence, surprise, or excusable neglect; newly discovered evidence; fraud or misconduct by the other party; a void judgment, which is the usual argument when service was defective; a judgment that has been satisfied or discharged; or any other reason justifying relief. A motion on the first three grounds must be made within a reasonable time and not more than one year after the judgment.

The most common defense arguments are that the defendant was never properly served and that the failure to answer was excusable, for example because the papers were forwarded to an insurer that mishandled them. Plaintiffs protect a default by documenting service meticulously, by giving every notice the rule requires, and by presenting the damages evidence as if the defendant were in the room. A default that was taken sloppily is an invitation to a Rule 60 motion.

• Entry of default: set aside for good cause.
• Default judgment: set aside only under Rule 60(b), on the listed grounds.
• Deadline: a reasonable time; one year for mistake, excusable neglect, new evidence, or fraud.
• Void judgment: no time limit in the rule, which is why service is the usual battleground.

What Happens To A Default Judgment When The Defendant Has Car Insurance?

North Carolina’s Financial Responsibility Act anticipates the problem. Under N.C. Gen. Stat. § 20-279.21, the insurer’s liability under a required motor vehicle liability policy becomes absolute when the covered injury occurs, and for policies issued through the state’s assigned-risk and reinsurance system a default judgment against the insured cannot be used against the insurer unless the plaintiff’s lawyer forwarded the summons and complaint to the insurer by registered or certified mail. The insurer may then move to intervene and defend the suit in its insured’s name. If, after receiving the pleadings, it chooses not to defend and coverage exists, the statute binds it to the default judgment up to the policy limits, and the insured’s failure to cooperate is no defense.

Uninsured motorist claims have a parallel rule. When an injured person sues an uninsured driver and serves his or her own insurer under § 20-279.21, the insurer may defend in the name of the uninsured motorist or in its own name, and no default judgment may be entered while the insurer has timely filed an answer. The lesson for plaintiffs is that the insurer must be brought into the process from the start; a default taken without notice to the carrier may be worth nothing.

Why Does Contributory Negligence Still Matter In A Default Case?

Because it is the defense the defendant never filed. Contributory negligence must be pleaded affirmatively under N.C. R. Civ. P. 8 and proved by the party asserting it under N.C. Gen. Stat. § 1-139. A defendant who never answers never pleads it, which is one reason a default, properly taken, is powerful in North Carolina: the all-or-nothing fault rule that defeats so many claims is simply not in the case. But if the default is set aside, or an insurer intervenes and answers, contributory negligence comes in with the answer, and the claim must be proved and defended like any other.

A worked example: Jamal is hit in Durham by a driver who is served at his apartment and never responds. Jamal’s lawyer obtains entry of default, mails the pleadings to the driver’s insurer by certified mail, and applies to the judge for judgment. The insurer intervenes within the 30 days the statute allows, files an answer pleading contributory negligence, and the case proceeds to discovery as though the driver had answered on time. Had the insurer stayed silent, the judge would have heard Jamal’s damages evidence and entered a judgment the insurer was bound to pay within the policy limits.