Civil Practice – Motion for Relief – Summary Judgment Motion & Hearing – Notice – New Address – Meritorious Defense – Unauthorized Use of Account

Southland Distributors of North Carolina, LLC v. Hamilton (Lawyers Weekly No. 12-16-0770, 21 pp.) (Martha A. Geer, J.) Appealed from Henderson County District Court. (Peter Knight, J.) N.C. App. Unpub. Full-text opinion.

Holding: Although it appears the trial court found that plaintiff’s counsel received a letter from defendant setting out defendant’s new address, the court made no finding regarding whether counsel received the letter prior to mailing plaintiff’s motion for summary judgment and notice of hearing to defendant at his old address. The date that plaintiff’s counsel received defendant’s letter was a material issue that needed to be determined before the court could decide whether defendant had shown excusable neglect for failing to respond to plaintiff’s motion for summary judgment.

We vacate the trial court’s order denying defendant’s motion under N.C. R. Civ. P. 60(b), and we remand for further proceedings.

The trial court also failed to make findings as to whether plaintiff’s counsel knew or should have known about three separate returns of service stating that defendant did not live at the address on the summons and the last one providing counsel with defendant’s new address. The court made no finding regarding whether plaintiff’s counsel made any attempt to identify defendant’s new address in Mars Hill once he knew that the summons and complaint had been forwarded there. These issues are relevant to the question of excusable neglect.

Even though the trial court was not required to make findings of fact because neither party requested findings, the trial court exercised its discretion to make findings of fact and conclusions of law in denying defendant’s motion. Once it chose to do so, it was required to make sufficient findings to support its conclusions of law.

The trial court should also have addressed whether defendant did in fact receive the summary judgment motion and notice of hearing.

As to defendant’s claim of a meritorious defense, he was sued on a personal guaranty. Therefore, plaintiff must establish that the amount it seeks from defendant was a debt of the principal debtor.

Defendant’s verified motion and attached letter asserted that his account with plaintiff was paid in full, that he had paid for all materials that he had purchased, and that subsequent charges to his account were not authorized. Defendant further claimed that plaintiff negligently or intentionally allowed an unauthorized third party to make charges on his account.

If defendant successfully proves that the charges were not authorized, then there was no debt owed to plaintiff, and nothing due on his guaranty.

While the trial court seemed to focus on the fact that defendant might also have a claim against the third parties, the existence of such a claim does not negate defendant’s defense that the charges on his account were not authorized.

Since defendant has sufficiently forecast a meritorious defense, the issue of excusable neglect must be decided.

Vacated and remanded.