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The Virginia Appellate Lawyer’s Court of Appeals of Virginia Blog

Default, dear Brutus , is not in our stars, But in ourselves

Ok, I am quite sure I am not the first to butcher the Bard when the legal issue is a default judgment, but with only one new opinion from the Court of Appeals in published form and that being about a default judgment, I plead the necessity of the moment.


City-to-City Auto Sales, LLC, et al. v. Ronald Harris involves the sale of used commercial truck by the appellant to the appellee. Now, if you have ever bought a used vehicle of any type, you know to expect some . . . ahem . . . hyperbole from the salesman. Jan and Dean can tell you all about the previous owner.


In this case, the salesman promised Harris that the truck had been inspected and was in top condition except for an issue with the air conditioning. The sales contract included an arbitration clause, but Harris, obviously the trusting sort, wasn't worried about arbitration -- they truck, after all, had passed muster and the honest salesman even admitted the AC was shot.


Well, as it turned out, there was a little more wrong with the vehicle. It had issues with its wheel alignment, suspension, and emission system. It also had dirty oil, transmission fluid, and differential fluid. Less than a month after the purchase, the truck’s engine failed.


Harris sued, and while his complaint was not a Cadillac of legal acumen, it stated a cause. The dealership did not file an answer of any model within the 21 days and Harris moved for a default judgment a few weeks later.


At the hearing on the motion about six weeks later, the dealership appeared with an answer in hand. After kicking the tires of the defense's motion to file a late pleading, the court ruled that no good cause had been shown for not filing the answer in a timely fashion . . . or at any point prior to walking into court and asking the judge to take the answer out for a spin.


A trial solely on damages was set, but shortly there after the dealership filed a motion to continue and compel arbitration and also to set aside the default judgment. The court denied the continuance and arbitration motions as untimely because default had already been entered and wasn't going to set aside. A jury awarded Harris the value of the contract ($33,000) and punitive damages of $50,000. The court added on attorney's fees.


The appeal challenges the failure to enforce the arbitration clause, the sufficiency of the evidence to prove the special damages, and the award of punitive damages and attorney's fees. Chief Judge Decker, joined by Judges Malveaux and Chaney, writes a 14 page opinion to affirm.


The arbitration issue is resolved neatly by the doctrine of implied waiver. The arbitration clause required that at least one party ask for arbitration, and Harris obviously did not. The dealership knew (or was charged with knowledge of the right to seek arbitration), but did nothing until it was facing a default judgment, and even then showed up to court prepared to answer the complaint. Only when it was found to be in default did it attempt to assert arbitration and, as the circuit court observed, that was too late. Likewise, the issue of damages was not subject to arbitration because that issue was controlled by the law of default judgment. As to damages, giving deference to the jury's verdict and finding that the amount award was not shocking to the court's conscience, those too are affirmed.


Now, as to the fault in ourselves bit, we come to the issue of attorney's fees. The Court observes that "[t]he pages that the appellants’ brief cites as showing where they preserved this objection [the attorney's fees] do not in fact do so." Rut Ro Raggy! The dealership has spun out on the dead man's curve of Rule 5A:18.






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