Ginn v. Smurfit Stone Container Enterp., Inc., 2015 MT 81 (March 17, 2015) (Wheat, J.) (5-0, aff’d)
Issue: Whether district court properly held that mill failed to show its default was not willful and that the plaintiff would not be prejudiced by setting aside default judgment.
Short Answer: Yes.
Facts: Allen Ginn was a log truck driver for Ginn Trucking. In July 2008, Ginn drove to a mill owned by Smurfit to deliver a load of logs, and was severely injured when he released the logs and several fell on him.
In January 2009, Smurfit filed voluntary petitions for bankruptcy, and the bankruptcy court set a claim bar date of August 2009 for claims accruing prior to the petition.
In October 2011, Ginn and his wife moved the bankruptcy court for leave to file a late claim, relief from the plan injunction, and for the bankruptcy court to abstain from hearing the claim under 28 USC § 1334(c) so that Ginns could file in Montana. Smurfit and Ginn then entered into a stipulation, which was approved by the bankruptcy court in June 2012.
Among other things, Smurfit agreed not to seek to enforce the claim bar date and to allow Ginns to file in Montana state court without removing to federal court. Smurfit also agreed to set aside about $1.4 million and 25,000 shares of stock in Rock-Tenn Company (Smurfit’s successor in interest) to satisfy any possible settlement or judgment. Smurfit agreed to accept service of the complaint by mail to Christopher Berg, counsel for Rock-Tenn Company, at an address provided by Smurfit.
Ginns mailed the complaint and summons to the address provided in the stipulation. No acknowledgement of service was returned, and an answer was not filed within 21 days. Ginns’ counsel tried to reach Berg by phone twice, but the calls were neither returned nor acknowledged. Ginns served Smurfit via process server at the front desk at Rock-Tenn on Aug. 16, 2012. No reply or acknowledgement of service was returned.
Ginns moved for Smurfit’s default on Sept. 20, 2012, which the court entered on Sept. 27, 2012. On Oct. 19, 2012, Ginns moved for default judgment against Smiurfit, and Smurfit appeared through counsel on October 25, 2012. On Oct. 30, 2012, Smurfit moved the court to vacate entry of its default. The court denied the motion in December 2012, and held the parties could argue causation and damages to a jury.
Procedural Posture & Holding: On Jan. 21, 2014, after a four-day jury trial, the court entered judgment for Ginn for $3.47 million in damages, plus $500,000 to his wife, Laurie. Smurfit appeals, and the Supreme Court affirms.
Reasoning: Applying Essex, the Court affirms the district court’s holding that good cause did not exist to vacate the entry of default. When the parties have specifically negotiated and agreed upon a service procedure, the defaulting party’s failure to abide by the procedure weighs heavily against setting aside the default.