FROM THE CLEBURNE COUNTY CIRCUIT COURT [NO. 12CV-15-89]
HONORABLE TIM WEAVER, JUDGE
Wright, Lindsey & Jennings LLP, by: Charles T. Coleman,
Michael A. Thompson, and Jacob P. Fair, for appellants.
Law Firm, PLLC, by: Martin W. Bowen, for appellees.
F. VIRDEN, Judge
case arises out of a default judgment in the Cleburne County
Circuit Court. Patrick Malloy and John Callaghan raise the
following three arguments in support of their position that
the default judgment should be set aside: (1) Bruce and Jan
Smith (the Smiths) did not comply with New York law regarding
completion of service; (2) the Smiths' summonses do not
strictly comply with Ark. R. Civ. P. 4(b); and (3) the
default judgment against Malloy and Callaghan should be set
aside for the reasons stated above and also due to
"excusable neglect." Callaghan further argues that
Malloy's defense of excusable neglect due to illness
should inure to him under the common-defense doctrine. For
the reasons set forth below, we find no error and affirm the
1, 2015, the Smiths filed a complaint against New York
residents Patrick Malloy and John Callaghan in the Cleburne
County Circuit Court. In their complaint, they alleged that
Malloy and Callaghan only partially performed the contract
they executed with the Smiths and were therefore in breach.
The Smiths asserted that in order to meet the costs of
running a business owned by their son, Dane, they loaned
Malloy and Callaghan around $300, 000 between November 1,
2001, and June 27, 2013. According to the Smiths, Malloy and
Callaghan promised to repay the Smiths, but they failed to do
so after they had made a few payments.
29 and July 1, 2015, the Smiths personally served Malloy and
Callaghan at their places of business in New York. On July
13, 2015, the Smiths mailed a copy of the summonses to
Malloy's and Callaghan's business addresses. On July
16, 2015, both proofs of personal service were filed in the
Cleburne County Court. The June 29, 2015 proof of service
showed that it was delivered by process server to Patrick
Malloy's workplace, Malloy Enterprises, 14 Bay Street,
Sag Harbor, NY 11963, and that Jenny Pagano accepted the
summons. The proof of service of the summons dated July 1,
2015, showed that it was delivered by process server to John
Callaghan's place of business at 50 Route 111, Suite 315,
Smithtown, New York, 11787 and that it was left with Gloria
Scholz. The parties agree that a summons was mailed to
Malloy's and Callaghan's places of business on July
13, 2015; however, separate proofs of mailing the summonses
were not filed within twenty days of mailing.
Malloy nor Callaghan answered the Smiths' complaint, and
the Smiths filed a motion for default judgment on August 17,
2015. In their motion, they asserted that both Malloy and
Callaghan had been properly served, but neither party filed a
responsive pleading within thirty days, as required. The
Smiths requested a hearing on damages, and a notice of the
hearing was mailed to Malloy's and Callaghan's places
of business. Neither party responded. On October 5, 2015, the
damages hearing was conducted, and on October 19, the order
awarding the Smiths $285, 346.91 (with 10 percent
postjudgment interest) was entered.
and Callaghan filed a joint answer on November 6, 2015, in
which they denied they were in breach of contract. Malloy and
Callaghan also asserted that they had not been properly
served, and thus, the circuit court lacked personal
jurisdiction over the parties.
November 16, 2015, Malloy and Callaghan filed a motion to set
aside the default judgment in which they argued that the
default judgment against them was void due to insufficient
service of process according to both New York and Arkansas
law. Malloy and Callaghan also asserted that the court should
set aside the default judgment based on "excusable
neglect" due to Malloy's illness from June through
October 2015, and that Malloy's defense inured to
Callaghan under the common-defense doctrine. Malloy attached
an affidavit from his physician, Dr. William B. Kerr, in
which he stated that during May and June 2015, Malloy became
increasingly lethargic and that his health deteriorated after
a ruptured Achilles tendon on June 4. Dr. Kerr stated in his
affidavit that Malloy was in and out of consciousness for an
unspecified amount of time, that he was unable to speak
clearly, that he could not tend to his daily needs, and that
he required 24-hour nursing care. Dr. Kerr asserted that
Malloy remained in grave medical condition and had been in
the hospital off and on until around October 21, 2015, when
he seemed to regain relatively normal functioning. Malloy
submitted no other evidence or documentation of his illness.
Smiths responded that service was proper according to both
New York and Arkansas law and that Malloy's illness did
not constitute excusable neglect.
February 2, 2016, there was a hearing on the motion to set
aside the default judgment. The court ruled from the bench
that the Smiths met the requirements of Ark. R. Civ. P. 4
regarding service, and the circuit court rejected
Malloy's argument regarding excusable neglect, finding
that Malloy had failed to "attend to his
business[.]" The circuit court took the issue of New
York's requirements regarding proof of service under
advisement. On April 29, 2016, the circuit court entered an
order denying the motion to set aside the default judgment.
In the order, the circuit court found that after having
considered the testimony, documents filed in support,
arguments of counsel, and "all other evidence and
proof" the motion should be "denied in its
and Callaghan filed a timely notice of appeal.
Standard of Review
Rule of Civil Procedure 55(c) (2016) governs default
judgments, and subsection (c) sets forth the circumstances
under which a court may set aside a default judgment:
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 (whether heretofore denominated
intrinsic or extrinsic), 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.
standard of review for an order denying a motion to set aside
a default judgment depends on the grounds upon which the
appellant claims the default judgment should be set aside.
Steward v. Kuettel, 2014 Ark. 499, 450 S.W.3d 672.
In cases in which the appellant claims that the default
judgment is void, our review is de novo, and we give no
deference to the circuit court's ruling. Id.
their first and second points on appeal, Malloy and Callaghan
assert that the default judgment is void under Rule 55(c)(2)
for lack of proper service, and thus our review is de novo.
For their third point on appeal regarding excusable neglect,
this court reviews the circuit court's order denying the
motion to set aside default for abuse of discretion.
See Steward, supra.