More than 20 years ago, I had finished law school, passed the bar, and I was ready to start my career in law. I was traveling the State and interviewing with District Attorneys trying to become an Assistant DA. You see my wife and I just simply chose North Carolina as the State we wanted to live and raise a family. We otherwise had no family or friends in North Carolina. Hence, we had no network of such to find a job.
I finished my interview with the District Attorney in Rocky Mount and I was heading back to our apartment in Winston-Salem. I had one interview in Cary with a private law firm. I considered landing the job to be a long shot and the interview in Rocky Mount had already gone really well. I went in to my second interview that day relaxed and then practically went into shock when I got hired on the spot. This firm handled debt collection, collateral repossessions, and also provided foreclosure services. I remember being told that “We handle creditor rights cases” and trying my best to give the impression that I knew what that meant.
My boss was an amazing attorney and seemed to know how to handle every type of legal situation that arose. His best advice to me was “Jay, learn the rules of civil procedure. In and out. They are your best weapon.” I took his advice to heart and made sure that before every hearing, I was prepared for any argument an opposing attorney or any point a presiding judge might make on procedural grounds.
And then one day my boss said something that just did not ring true with me. He said it doesn’t matter what type of judgment you obtain, a judgment is a judgment. They are all the same.
I didn’t argue with him. He was my boss. After 2 years of being immersed in all types of creditor rights cases, I left the firm and opened my own office.
There are two main types of judgments, Default Judgments and Summary Judgments. There are other types such as Declaratory Judgments, Consent Judgments, and Confession of Judgments but I want to discuss the difference between Default Judgments and Summary Judgments.
Default Judgments are governed by Rule 55 and generally are entered because no Answer was filed by the Defendant. If no appearance is made in the case and if the complaint seeks only a money judgment, then the Clerk may enter judgment without a hearing. “Without a hearing” is a wonderful phrase for an attorney. We have to file suit where the debtor lives and if we can obtain a judgment without traveling to where the debtor lives, that’s a good thing. If an appearance is made in the case, e.g. extension of time to file an Answer is filed, then a hearing is required but only 3 days notice. So generally speaking, Default Judgments can be an easier way to obtain a judgment without having to leave the office.
Summary Judgments are governed by Rule 56 and generally are entered because an Answer was filed. However, at the Summary Judgment hearing, the Plaintiff shows that there is no issue as to the facts and the Plaintiff is entitled to judgment. In other words, it means that a trial is just not necessary because the facts are so clear. A Summary Judgment requires a hearing and at least ten days’ notice.
So far it seems like we should always hope for the Default Judgment, right? Sure but in my opinion, there is definitely at least one benefit a summary judgment has over a default type.
Rule 55 regarding default judgments states in part (d) Setting aside default. – For good cause shown the court may set aside an entry of default, and, if a judgment by default has been entered, the judge may set it aside in accordance with Rule 60(b).
Rule 60(b) states that “The motion shall be made within a reasonable time, and for reasons (1), (2) and (3) not more than one year after the judgment, order, or proceeding was entered or taken.” One whole year! This means that your default judgment is vulnerable to a motion to set aside for the next 12 months.
Rule 56 regarding Summary Judgments does not refer to Rule 60 and setting aside orders. Can Rule 60 apply to Summary Judgments? Yes but the bar a Defendant must meet is in my view and in my experience substantially higher.
The appeals period for all judgments is 30 days. When I obtain a summary judgment and 30 days have passed, I always feel like my Summary Judgment is a final judgment.
So for that first year after the judgment is signed and filed, it’s my opinion that a Summary Judgment is stronger than a Default Judgment.
In my next blog, I plan to discuss service of process by newspaper and which type of judgment should be sought in that circumstance. You see friends, not all judgments are truly the same.
A long time ago in a County far, far away, I was attending a Calendar Call of Cases scheduled for that week’s session of Court. When his case was called for a status review, another Debt Collection attorney I know answered and explained to the Judge that he needed more time to serve the Defendant. The case was apparently getting old and the Judge said he would continue it one more time.
During a recess, I asked the other attorney why not serve the Defendant by newspaper publication. He looked at me with big eyes and said that it was his firm’s practice never to serve by newspaper. I asked why and he said he really did not know the reason.
In North Carolina, a person may be served with legal process by Sheriff or by mail which is signed such as FedEx or Certified Mail. If both are tried and are unsuccessful then Rule 4 of the North Carolina Rules of Civil Procedure allow for service by publication. In my view, service by newspaper when approved by the Court should be given the same in weight as service by the other methods.
At The Green Law Firm, we generally attempt service first by Sheriff. If service is not perfected in a few weeks, then we send either certified mail or FedEx. If the Sheriff tells us that he thinks the Defendant is home but is evading service, then we send FedEx signature required. Otherwise, we send certified mail. If we have not perfected service near the end of the time limit in the initial Summons, 60 days, then we obtain an AP Summons which is sort of like a Summons with a new extension of time. We then search public records for a better address. If sources such as DMV or County Tax Records do not provide any other new address, then we serve the Defendant by newspaper.
Not only do we want to process cases quickly, we also have to contend with the controlling Statute of Limitations. All contracts not signed “under seal” have a three year limitations period. When a case is filed within the three year limitations period, then the time period for filing is satisfied. However, until the case is served, the Plaintiff must keep the Summons active. So long as it is timely renewed, it will date back to the date when the case was first filed. However, if the Plaintiff’s attorney renews that summons just one time late, then the date changes to the date of the new summons and the Plaintiff may then be outside the limitations period. This is yet one more reason why we do not waist time and worry over keeping a case alive through the issuance of multiple summons in order to serve a Defendant.
Service by newspaper is not subject to attack as easily as some attorneys believe. There is case law in North Carolina which we keep handy that says that even where service of process was performed incorrectly, e.g. published in the wrong County, that the Defendant must come forward with a meritorious defense before the judgment will be set aside and the case reopened to proceed to judgment. Debtors owe money after they cease making payments. There are not many meritorious defenses that can be raised in simple debt collection cases. Without a meritorious defense, Judges are reluctant to set aside another Judge’s Order, or their own.
Sometimes we have to serve a Defendant by newspaper. Our attempt by Sheriff has failed and the certified mail or FedEx package was not accepted. The Notice of Service of Process by Publication is published in a local newspaper for three consecutive weeks and the Defendant is given 40 days instead of the usual 30 days to file an Answer. The 40 days begin with the date of the first publication.
Once we know the deadline to file an Answer, we proceed to schedule the case for hearing. We are ready to proceed at the first opportunity once the deadline of 40 days passes. Some Counties which are small hold Court only a few times a year and the longer we wait to schedule, the longer it will take to seek entry o f judgment.
When we publish in a newspaper, we also mail a copy of the notice to the Defendant at his last known address. When we schedule the case for hearing, we send a notice of hearing to the Defendant. One might be surprised to hear that often times it happens that when we appear in Court, do does the Defendant!. Either the Defendant was evading and refusing service but receiving his mail or he heard about the newspaper publication from a friend. When a Defendant appears in Court, it is our practice to make this memorandum part of the case file.
Rule 55 allows for Default Judgments and when a party is served by publication, a bond is required. “(c) Service by publication. – When service of the summons has been made by published notice, no judgment shall be entered on default until the plaintiff shall have filed a bond, approved by the court.” Some Counties require that this cash bond be renewed every year. Our clients are trying to collect money, not spend money. They do not want to spend money on an annual bond.
We therefore do not proceed under Rule 55. We instead schedule a hearing and proceed under Rule 56 and seek entry of a Summary Judgment. A Summary Judgment requires a hearing but no bond and we have no problem traveling around the State in order to obtain this better result for our clients.
In summary, service by publication is a method of service of last resort but it is a method we are ready to utilize and we will then seek a judgment entered in such a way that avoids the bond requirement of Rule 55.