BYS Inc., v. Salah Smoudi dba Me Too Me Too – 2/9/2012

February 13, 2012

Arizona Court of Appeals Division One Applies Hearing and Notice Requirements to Motion for Default Judgment in Sum Certain Cases.

BYS Inc. filed suit for breach of a lease agreement against Salah Smoudi  When Smoudi failed to file an answer within the time period prescribed by Arizona Rule of Civil Procedure 12(a)(1)(A), BYS filed an application for entry of default.  After the entry of default became effective under Rule 55(a)(2), Smoudi contacted counsel for BYS, who agreed to a five day extension of time for Smoudi to file an answer. After those five additional days had passed, Smoudi paid the civil answer fee and filed a letter with the court that asked the court not to enter default judgment.  Subsequently, BYS filed a motion for default judgment accompanied by a sum certain affidavit.  Without notice to Smoudi or a hearing, the court entered default judgment in a specific sum in favor of BYS.  The court later denied Smoudi’s motion to set aside that default judgment.

The court of appeals affirmed the entry of default against Smoudi, because by the time Smoudi made an appearance and sought to defend, the ten-day period under Rule 55(a)(2) had expired.  The court also held that BYS’s agreement to a five-day extension was invalid because that occurred after the ten-day period.  Even if the agreement had been valid, the court reasoned, Smoudi’s appearance occurred after the additional extension.  

The court vacated the trial court’s entry of default judgment in favor of BYS.  It held that Rule 55(b)(2) required BYS to serve Smoudi with written notice of the application for judgment at least three days prior to the hearing on the application.  BYS had not provided Smoudi with such notice.  The court of appeals rejected BYS’s argument that Rule 55(b)(2) was inapplicable in a sum certain case.  In a sum certain case, BYS maintained, Rule 55(b)(1) applies and does not require notice or a hearing.  The court held that once a defendant has appeared, a default judgment can only be obtained after a hearing upon three days’ written notice—regardless of the nature of the damages in the case.

Judge Orozco authored the opinion, Presiding Judge Johnsen and Judge Norris concurred.