Where plaintiff had previously gotten a default judgment as to defendant’s liability in a car accident case, and plaintiff had subsequently filed an amended complaint seeking increased damages but defendant was not served with the amended complaint, the Court of Appeals affirmed the ruling that the judgment based on the amended complaint was void and plaintiff had not proven “exceptional circumstances to deprive the defendant of Rule 60 relief.”
In Higgins v. McCord, No. M2021-00789-COA-R3-CV (Tenn. Ct. App. April 1, 2022), plaintiff filed this negligence suit against defendant after the two were involved in a car accident. Plaintiff’s initial complaint was filed in May 2009 and sought $1 million in compensatory damages and $1 million in punitive damages. Defendant was served with this complaint but never filed an answer or other responsive pleading, and a default judgment as to liability only was entered in December 2009.
Nothing further happened in this case until October 2016, when plaintiff filed an amended complaint increasing the damages sought to $2 million in compensatory damages and $1 million in punitive damages. Defendant was never served with this amended complaint, but the trial court entered a final judgment awarding plaintiff $3 million in total damages in August 2017.
In November 2017, defendant attempted to sell real property but was unable to close due to the lien from this judgment. Plaintiff and defendant negotiated, and plaintiff “executed a partial lien release in exchange for a $30,000 payment toward the judgment from Defendant.”
In May 2020, defendant filed a Rule 60.02(3) motion seeking relief from the judgment on the grounds that it was void. The trial court ultimately granted defendant’s motion and found that the judgment was void, which the Court of Appeals affirmed.
On appeal, plaintiff conceded that the judgment was void because defendant was not served with the amended complaint. Plaintiff argued, however, that the trial court should not have granted defendant’s Rule 60.02(3) motion for two reasons.
First, plaintiff argued that defendant’s Rule 60.02(3) motion was untimely, as it was filed almost three years after the judgment was entered. While motions under subsections (1) and (2) of Rule 60.02 must be filed “within one year of entry of the judgment,” the “reasonable time filing requirement of Rule 60.02 does apply to petitions seeking relief from void judgments under Rule 60.02(3).” (internal citations omitted). In fact, “void judgments may be attacked at any time.” (internal citation omitted). Because defendant’s motion was filed under Rule 60.02(3), then, it was not untimely and plaintiff’s argument on this basis failed.
Second, plaintiff argued that “relief from a void judgment may be denied if certain exceptional circumstances exist,” which plaintiff alleged she had shown. (internal citation omitted). In Turner v. Turner, 473 S.W.3d 257 (Tenn. 2015), the Tennessee Supreme Court ruled that relief from a void judgment should be denied “if the following exceptional circumstances exist: (1) the party seeking relief, after having had actual notice of the judgment, manifested an intention to treat the judgment as valid; and (2) granting the relief would impair another person’s substantial interest of reliance on the judgment.” The first requirement can be met where the party against whom the judgment was entered is “later in a position where he would be expected to deny the effect of the judgment but does not do so.” (internal citation omitted). In this case, the first requirement was met when defendant agreed to pay $30,000 toward the judgment, as the Court ruled that this action “manifested an intent to treat the judgment as valid[.]”
Although the first requirement was met, the Court of Appeals agreed with the trial court that plaintiff failed to assert that “granting relief from the judgment would impair another person’s substantial interest of reliance on the judgment.” (internal citation omitted). Because detrimental reliance by another person is required to prove exceptional circumstances, and plaintiff failed to even allege such reliance, the Court affirmed the ruling that plaintiff had not shown exceptional circumstances such that relief from this void judgment should be denied. Accordingly, the trial court’s decision to grant defendant relief from the 2017 judgment was affirmed.
Plaintiff asserted that the 2009 default judgment could serve as a substitute for the void final judgment, but the Court of Appeals disagreed. The Court explained that the 2009 default judgment did not dispose of all the issues in the case, as it made no ruling regarding damages, and it was thus an interlocutory order rather than a final judgment. While the Court agreed with plaintiff that Tenn. Code Ann. § 28-3-110(a)(2), the ten-year statute of limitations on judgments, did not apply to the 2009 default judgment, it also held that the default judgment could not be used as a “substitute final judgment for the August 18, 2017 Judgment.”
Note: This opinion was released four months after this case was assigned on briefs.