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MEDIA GENERAL, INC. v. SMITH



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MEDIA GENERAL, INC.

v.

SMITH


September 15, 2000

Record No. 992609

MEDIA GENERAL, INC.

v.

WILLIAM F. SMITH, JR.

FROM THE CIRCUIT COURT OF GLOUCESTER COUNTY

William H. Shaw, III, Judge

Present: All the Justices


OPINION BY JUSTICE ELIZABETH B. LACY

In this appeal, we consider whether the trial
court properly dismissed a bill of complaint filed by Media
General, Inc., pursuant to Code ? 8.01-428(D), seeking to
set aside a default judgment entered against it.

On August 28, 1995, William F. Smith, Jr., was
injured when the vehicle he was driving collided with a vehicle
driven by Gale A. Aldrich. In April 1997, Smith filed suit
against Aldrich alleging that he was injured as a result of
Aldrich’s negligent operation of a motor vehicle. Smith filed an
amended motion for judgment adding Media General as a defendant,
asserting that at the time of the accident Aldrich was acting in
the scope of his employment as a newspaper carrier for Media
General, the parent corporation of Richmond Newspapers, Inc.
Smith served George L. Mahoney, the General Counsel and
Registered Agent for Media General. Media General did not file
any pleadings in response to Smith’s motion for judgment.

On March 24, 1998, the trial court entered a
default judgment against Media General. At a subsequent hearing,
the court awarded damages of $405,246.50 against Media General.

On October 13, 1998, Media General filed a bill
of complaint pursuant to Code ? 8.01-428(D) seeking to set
aside the default judgment entered against it. The trial court
denied Media General the relief sought and dismissed the bill of
complaint, finding that Media General was "not free from
fault or negligence" in failing to respond to Smith’s motion
for judgment.

On appeal, Media General assigns eight errors
to the judgment of the trial court. These assignments of error
address four general issues: (1) whether the trial court erred in
finding that Media General was "not free from fault or
negligence"; (2) whether the trial court erred in failing to
adopt "excusable neglect" as an alternative standard
for determining negligence under Code ? 8.01-428(D); (3)
whether the trial court erred in concluding that Media General
was a proper party; and (4) whether the trial court erred in
refusing to admit evidence regarding the effectiveness of Media
General’s system of accepting documents served on it. We consider
these questions in order.

I.

The evidence is not in dispute. In April 1996,
Smith’s attorney notified the Richmond Times Dispatch, by letter,
of Smith’s claim against Aldrich. This letter was forwarded to
Mahoney, and a file was established at Media General for Smith’s
claim. In September 1996, D. Page Cooper, Media General’s Risk
Manager, responded to an inquiry from Smith’s uninsured motorist
liability insurance carrier regarding Aldrich’s employment status
and the applicability of certain automobile liability insurance
carried by Media General. In April 1997, Media General received a
subpoena duces tecum requesting information
regarding Cooper’s response to Smith’s 1996 inquiry. The request
was forwarded to Media General’s counsel, who prepared and
forwarded a response. Media General’s file on Smith’s claim was
sent to storage in July 1997.

On August 18, 1997, Mahoney received Smith’s
amended motion for judgment and dictated a memorandum referring
the matter to Cooper with instructions that the case be forwarded
to Media General’s insurance carrier. Neither the memorandum nor
the amended motion for judgment was received by Cooper or the
insurance carrier. There is no evidence showing what happened to
these documents. The record also reflects that Smith’s attorney
mailed various notices to Mahoney, such as the notice for hearing
on the default judgment motion, but Mahoney testified that he did
not recall receiving any of them. Following the entry of the
default judgment against Media General, Smith’s counsel informed
Media General by certified letter that he intended to proceed
with the collection of the judgment, and that, in the absence of
a response, Smith would proceed with collection of this debt.

II.

Code ? 8.01-428(D) allows a court to
"entertain at any time an independent action to relieve a
party from any judgment or proceeding." To prevail in an
action filed under this provision, the applicant for such relief
has the burden to prove: (1) that the default judgment should
not, in equity and good conscience, be enforced; (2) that it had
a good defense to the alleged cause of action on which the
judgment is founded; (3) that fraud, accident, or mistake
prevented it from obtaining the benefit of its defense; (4) that
there was an absence of fault or negligence by the defendant; and
(5) that the applicant for relief under this Code section was
without an adequate remedy at law. Charles v. Precision Tune,
Inc.
, 243 Va. 313, 317-18, 414 S.E.2d 831, 833 (1992).

At issue in this case is whether Media General
produced sufficient evidence to satisfy the fourth element of the
cause of action, i.e., that it was free from fault or negligence.
Media General argues that it met its burden of proof in this case
with its evidence that it had a system in place for receiving and
responding to service of process, that the system was reasonable,
had operated well in the past, and "appears to have been
triggered appropriately" when Smith’s motion for judgment
was received. Media General argues that, although it does not
know what happened to the amended motion for judgment, it had a
system for handling such matters in place, and, consequently, its
lack of knowledge as to why its system apparently did not work
properly does not rise to the level of negligence or fault on its
part. Therefore, Media General concludes, the trial court erred
in finding that Media General was not "free from fault or
negligence."

We reject Media General’s argument. Media
General had the burden to produce evidence showing that it was
neither at fault nor negligent. The evidence recited above shows
only that a system failed. It does not provide any showing as to
how or why the system failed and thus provides no evidence that
Media General was free from fault or negligence when it did not
respond to Smith’s motion for judgment.

Media General next argues that in determining
whether it was negligent, the trial court should have applied the
broader standard of "excusable neglect," a standard
utilized under Rule 60(b) of the Federal Rules of Civil Procedure
and a number of other jurisdictions, in considering whether to
set aside default judgments. See, e.g., Paige v.
City of Chariton
, 252 N.W.2d 433, 437 (Iowa 1977); White
v. Berryman
, 418 S.E.2d 917, 925 (W. Va. 1992); Jackson
Hole Community Hous. Trust v. Scarlett
, 979 P.2d 500, 502
(Wyo. 1999).

The General Assembly has not incorporated the
excusable neglect standard into Code ? 8.01-428, and we
decline Media General’s invitation to do so here. As we have
stated on previous occasions, principles of certainty and
finality of judicial proceedings require that the provisions of
subsection (D) of Code ? 8.01-428 be narrowly construed. See
Precision Tune, 243 Va. at 317, 414 S.E.2d at 833, and
cases cited therein. Accordingly, we conclude that the trial
court did not err in refusing to apply a standard of excusable
neglect and did not err in finding that Media General was not
free from negligence or fault in failing to respond to Smith’s
amended motion for judgment.

Media General also assigns error to the trial
court’s finding that it was a proper party to Smith’s action.
This assertion is raised in the context of establishing the first
element of an independent action under Code ? 8.01-428(D)
recited above. Media General’s argument on this point can be
summarized as asserting that the default judgment should not be
enforced "in equity and good conscience" because Media
General was named as a defendant "under the incorrect
assumption that Aldrich was a Media General employee." Media
General contends that there was "no basis for holding Media
General liable for any act of Aldrich."

To prevail in an action under Code
? 8.01-428(D), all five elements of the independent action
must be established. Because we have already concluded that Media
General did not meet its burden of proving that it was without
fault or negligence in failing to respond to Smith’s amended
motion for judgment, we need not address the question whether
Media General met its burden of proving that enforcing the
judgment against Media General was inequitable or unconscionable.

Finally, Media General asserts that it should
have been allowed to introduce evidence regarding the "good
track record" of its system for receiving and referring
documents served on it. Specifically, Media General sought to
introduce testimony that "there had never been a default
judgment taken against Media General." The trial court
refused to admit this statement, finding it irrelevant. We agree.
Such evidence does not indicate what happened to the documents in
this case, nor does the evidence show whether Media General was
free from fault or negligence in failing to respond to Smith’s
amended motion for judgment.
[1]

For the reasons stated, we will affirm the
judgment of the trial court.

Affirmed.

FOOTNOTES:

[1] On brief before this Court, Media General argues that
the evidence in question should have been admitted to show that
Media General’s reliance on its system was reasonable. That
argument was not made before the trial court, and we do not
consider it here. Rule 5:25.

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