Defending a Case in Default
By: Jack McCall
From time to time, insurers are faced with challenging claims where the insured defendant is either in default or is on the verge of default when the insurer learns of the claim. Failure to file a timely answer may result in the defendant being placed in default. Defendants in default admit the factual allegations of the complaint as true and are unable to introduce evidence to the contrary even if they are factually not liable.
There are many ways to challenge and open default, including challenging service, opening default as a matter of right within 15 days of default (in the State Court system) and filing a motion to open default. However, if all efforts to challenge default fail, not all hope is lost, as there are still ways to challenge the complaint and mitigate losses.
First, only the factual allegations of the complaint are accepted as true. The legal conclusions of the complaint can always be disputed even in default. EnduraCare Therapy Mgmt. v. Drake, 298 Ga. App. 809 (2009); Fink v. Dodd, 286 Ga. App. 363 (2007).
Lesson: If the factual allegations of the complaint taken as true do not state a claim upon which relief may be granted, then it is still possible to file a motion to dismiss for failure to state a claim.
Second, the plaintiff can waive default by proceeding with discovery and substantive motions without first obtaining an entry of default judgment. Laurel Baye Healthcare of Macon, LLC v. Neubauer, 315 Ga. App. 474 (2012); Ewing v. Johnston, 175 Ga. App. 760 (1985).
Lesson: It is possible to trap a plaintiff into waiving default by serving the plaintiff written discovery requests regarding the merits of the case and pushing substantive motions. This puts the plaintiff in an awkward position. She must either respond and risk waiving default or ignore discovery and risk waiving objections or possibly risk making its own admissions of fact by failing to respond to requests for admissions.
Third, in cases with unliquidated damages (damages that are not certain) the entry of default does not result in admission of the amount of damages claimed in the complaint. Russaw v. Burden, 272 Ga. App. 632 (2005). A defendant in default is entitled to an evidentiary hearing before a judge or jury requiring the plaintiff to prove her damages to a reasonable certainty. Singleton v. Varnedoe, 141 Ga. App. 311 (1977). A jury trial must still be specifically demanded. Stephenson v. Wildwood Farms, Inc., 194 Ga. App. 728 (1990). Additionally, a defendant must also file an answer, even if it is late, to be entitled to introduce evidence against damages. A defendant that fails to file an answer waives all rights and is not entitled to introduce evidence to challenge damages. Erwin v. Gibson, 205 Ga. App. 136, cert. denied, 205 Ga. App. 900 (1992).
Lesson: It is critical to always file an answer and ask for a jury trial even if in default. Moreover, it is important to treat every case as though it is going to trial and to have counsel capable of defending at trial.
Fourth, a defendant in default is entitled to engage in discovery necessary to challenge the amount of unliquidated damages. Newsome v. Johnson, 305 Ga. App. 579, 586 (2010); Taylor v. Stapp, 134 Ga. App. 468, 469 (1975).
Lesson: It is still critical to engage in discovery regarding damages. A good defense may be able to dramatically decrease the verdict just by challenging the amount of damages.
Fifth, although a defendant in default is not allowed to assert defenses concerning the plaintiff’s relative negligence such as comparative negligence or contributory negligence, a defendant in default is still allowed to assert defenses regarding the apportionment of fault to co-defendants and non-parties. Nw. Georgia Contracting, LLC v. St. Germain, 350 Ga. App. 568, 571 (2019) (“apportionment would be permitted here even though liability was established in a default judgment rather than by a trier of fact”); see also I.A. Grp. Co. v. RMNANDCO, Inc., 336 Ga. App. 461, 464 (2016) (assessment of fault for purposes of apportioning damages between the defendants does not violate the rule preventing a defendant in default from offering any defenses which would defeat the right of plaintiff’s recovery).
Lesson: In cases where there may be other parties that bear some, or all, of the responsibility for the harm alleged by the plaintiff, the defendant in default should file the appropriate notice of apportionment of fault pursuant to O.C.G.A. § 51-12-33. This could potentially result in an almost no-liability verdict despite the entry of default.
The above measures represent only a few of the ways defense counsel can assist in reducing risk associated with a case in default and potentially decrease the risk exposure of a case in default.
Attorney Contact Info
Jack McCall
jack.mccall@swiftcurrie.com
404.888.6152