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Supreme Court No. 2001-317-Appeal. (KC00-238) R.C. Associates v. Centex General Contractors, Inc. : : :

Present: Williams, C.J., Lederberg, Flanders, Goldberg and Shea (Ret.), JJ. OPINION PER CURIAM. This breach of contract action came before the Court for oral argument on November 6, 2002, pursuant to an order that had directed the parties to appear and to show cause why the issues raised in this appeal should not summarily be decided. After reviewing the record and the memoranda filed by the parties,1 we are of the opinion that cause has not been shown and shall proceed to decide the case at this time. The defendant, Centex General Contractors, Inc. (Centex), appeals from the denial of its motion to set aside the entry of a default for failure to answer the two-count breach of contract claim filed by the plaintiff, R.C. Associates (RC). Joseph M. Vieira (Vieira) is the principal of Centex. On April 1, 2000, he personally was served with notice of this claim on behalf of the corporation. In his affidavit supporting the motion to vacate the default, Vieira stated that he gave the notice to attorney David Megna, who is licensed to practice in Massachusetts but not in Rhode Island. Attorney Megna did not answer the complaint on behalf of Centex. In his

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affidavit, attorney Megna represented that upon realizing that the suit had been filed in Rhode Island, he notified Centex, through a secretary named Janet, that he could not represent Centex in Rhode Island.2 Janet allegedly assured attorney Megna that Centex had employed a Rhode Island attorney previously and that "she would forward the case to him."3 Meanwhile, RC filed a motion for entry of default for failure to answer the complaint. Default was entered on May 31, 2000. On July 25, 2000, RC filed a motion for an oral proof of claim and requested a hearing date for August 18, 2000. Shortly thereafter, Vieira received notice of the motion and brought it to the attention of attorney Megna. Attorney Megna informed Vieira that he could not represent Centex and offered to refer Vieira to a Rhode Island attorney. On August 22, 2000, RC moved to continue the hearing on the oral proof of claim until September 22, 2000. Notice of the continuance was sent to Vieira, who

acknowledged in court that he had received the notice. On September 12, 2000, almost five and one-half months after receiving notice that the case had been filed, Megna arranged for Vieira to meet with Rhode Island counsel. The local attorney attempted unsuccessfully to persuade RC's attorney to allow the default to be vacated. He entered his appearance and filed a motion to vacate the default on September 21, 2000. Hearing on the motion to vacate began on September 22, 2000. The trial justice then continued the matter until September 29, 2000, to allow the parties to submit memoranda. After examining the memoranda and hearing testimony
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The parties rested on their memoranda. Centex did not produce an affidavit from Janet.

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and the further arguments of counsel, the trial justice denied the motion. A default judgment later was entered in the amount of $67,695.77, plus interest, after a hearing on the oral proof of claim. Centex appealed. Centex argues that RC was not substantially prejudiced by its delay in answering the complaint, and that the denial of its motion to vacate prevented it from both filing its counterclaim and presenting a meritorious defense to the breach of contract claims. Centex argues that under Rule 55(c) of the Superior Court Rules of Civil Procedure, "there is a general policy of liberality toward allowing motions for relief from default entries, with all doubts being resolved in favor of the party seeking relief." It asserts that the trial justice improperly blamed Vieira for his conduct rather than blaming the inaction of attorney Megna. For all these reasons, Centex asserts that the trial justice erred in denying its motion to vacate the entry of default. "Judgment by default is a drastic remedy which should only be employed in extreme situations." McKinney & Nazareth, P.C. v. Jarmoszko, 774 A.2d 33, 36 (R.I. 2001) (per curiam) (quoting Medeiros v. Hilton Homes, Inc., 122 R.I. 406, 410, 408 A.2d 598, 600 (1979)). Rule 55(a), which regulates defaults, provides that "[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend as provided by these rules and that fact is made to appear by affidavit or otherwise, the clerk shall enter the party's default." "After default is entered, judgment by default may be entered pursuant to Rule 55(b)." McKinney, 774 A.2d at 37. "The court is empowered by the terms of Super.R.Civ.P. 55(c) to `set aside' a default `for good cause shown,' and, if a default judgment has been entered, relief might be obtained It is unclear how Janet could have forwarded the case to the Rhode Island attorney because attorney Megna retained all the paperwork in the case until September 2000. 3
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through the relevant provisions of Super.R.Civ.P. 60(b)." McKinney, 774 A.2d at 37 (quoting Medeiros, 122 R.I. at 409, 408 A.2d at 599). "A Rule 55(c) motion also may be granted whenever the court finds that the default was not the result of gross neglect, that the nondefaulting party will not be substantially prejudiced by the reopening, and the party in default has a meritorious defense." Security Pacific Credit (Hong Kong) Ltd. v. Lau King Jan, 517 A.2d 1035, 1036 (R.I. 1986) (quoting 10 Wright, Miller & Kane, Federal Practice and Procedure: Civil 2d

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