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Vacating A Default Judgment in Alabama – Alabama Debt and Credit Attorney Judson E. Crump

September 17, 2018 by Attorney Judson E Crump Leave a Comment

When a collection lawsuit is filed against you, failure to file a written answer with the court can result in a default judgment. If that happens, what can you do about it?

Failing to file a timely answer to a lawsuit is a very bad thing. A default judgment is just as enforceable as a regular judgment. Legally, it is just like you went to trial and had a verdict entered against you. Fortunately, Alabama law does provide you with some help. Under the classic case of Kirtland v. Fort Morgan Authority Sewer Service, Inc., 524 So.2d 600 (Ala. 1988), the Alabama Supreme Court made it clear that the laws of our state have a strong policy favoring the resolution of cases on the merits, rather than by default. Under the rule in Kirtland, the courts are supposed to liberally entertain motions to avoid default judgments if they were entered in violation of due process or the rules of civil procedure.

As a practical matter, there are generally two reasons why default judgments get vacated: either the defendant was not properly served with the original lawsuit paperwork, or the defendant had a good reason for not answering in time, and moves the vacate the default judgment within 120 days of it being entered.

Rule 55 of the Alabama Rules of Civil Procedure governs default judgments, and states that a default can be vacated for any reason within 30 days of being entered. If you ask the court to vacate a default within 30 days of it being entered, then you usually have a very good chance of getting the judgment set aside and having your day in court.

The best way to get a judgment vacated is to be able to prove that you never received notice of the lawsuit in the first place. This is not easy, though. You can’t just stand in court and say you were never served: you have to present persuasive evidence contradicting the plaintiff’s proof of service. Before a default judgment can be entered against you, the plaintiff has to file a Service Return with the court. This document states when and how the plaintiff served you with notice of the lawsuit. For instance, if a sheriff’s deputy or private process server delivered the papers to your residence, then they will file a document with the court showing just that. If the Service Return states falsely that you were served personally, then you may need to prove that you were not living at that address at the time you were allegedly served. Or you may be able to show that they served the wrong person. Keep in mind, though, that they are allowed to leave the summons at your residence with any adult who lives there.

If you were served with the lawsuit summons, then your options are narrower. Rule 60 of the ARCP governs judgments generally, and allows a judgment – including a default judgment – to be vacated within 120 days of being entered if the defendant can show that the judgment was entered due to “excusable neglect.” This includes, for instance, where a consumer debtor hired a lawyer or debt settlement company who was supposed to handle the case, but failed to file an answer or appearance on time. It could also include a situation where a consumer defendant sent an answer directly to a collection law firm, but failed to file one with the court. The most important thing to remember about these sorts of motions to vacate default judgments is the 120 day rule. If the motion to vacate is not filed within 4 months of the entry of the default, then you lose, even if you had a good reason for not answering in time.

The trial judge has a lot of discretion and may require testimony as to why the default should be vacated, but in my experience, they usually try to give the honest defendant a chance to have their day in court.

Alabama Legislature Working Hard to Protect Scammers, Pyramid Schemes, and False Advertisers – Alabama Consumer Rights Lawyer Judson E. Crump

July 6, 2017 by Attorney Judson E Crump 1 Comment

Pyramid Schemes. False Advertising. Deceptive Sales Scams. This behavior has been officially protected by the Alabama Legislature.

In March of 2016, Mr. Phillip “Phil” Williams, an Alabama state Senator from Huntsville, offered a huge favor to fraudulent businesses: he proposed SB270. This was a law that amended the Alabama Deceptive Trade Practices Act. The ADTPA is Alabama’s version of what most states call a UDAP (Unfair and Deceptive Acts and Practices) statute. Every state has one. These statutes regulate things like false advertising, door-to-door or telephone sales, sweepstakes scams, pyramid schemes, bait-and-switch advertising, and outright deceit. Basically, really bad stuff that some businesses do in order to make mor emoney. The sort of stuff that everybody in their gut knows is just morally wrong.

The Alabama Deceptive Trade Practices Act is pretty weak compared to other states, because it requires a 15 day advance warning letter, it exempts insurance companies and financial institutions, and it bans class actions in state court.

But apparently it wasn’t weak enough for the big money lobby. See, federal courts follow their own rules of civil procedure, and therefore allow class actions in federal court, even where the state law may not allow that. When the Eleventh Circuit recently confirmed that principle in the case of Lisk v. Lumber One Wood Preserving. That case was a typical deceptive trade practices case. What happened was this: a man bought some “treated” wood to build a fence that was supposed to be, well, “treated.” Which means that it is supposed to be protected from rot and termites. Well, Lumber One didn’t treat the wood. And it rotted. So Mr. Lisk was left with a worthless, rotting fence. He sued for himself and for everyone else that Lumber One had ripped off. The Eleventh Circuit confirmed that yes, you can do that in federal court.

You wouldn’t think this would be a big deal, right? I mean, who wants to protect a corporation that sells people rotting wood? Senator Phil Williams and the rest of the Alabama Legislature, that’s who.

As they do for every lawsuit, big businesses all across the country threw a hissy fit. They saw signs of the apocalypse. “If we don’t protect businesses from scams that leave people with rotting fences, jobs will leave! The economy will crash!” The corporate lawyers that represent them echoed the party line:

Obviously, this is a load of crap. Lumber One didn’t face a class action because some judges in Atlanta went crazy. They faced a class action because they cheated hundreds of honest paying customers out of millions of dollars. That’s how it always is.

But even when they’ve genuinely done wrong, big businesses hate having to pay the consequences of their actions. They hate class actions because if they can shut down class actions, they can get away with millions of small frauds and ripoffs as long as they only swindle a hundred bucks or so from each customer. So when they wanted a get-out-of-jail free card, they went to Senator Phil Williams, and asked him to pass a bill they wrote.

And guess what? It passed. Nearly unanimously. The bill changes the label on the no-class-action provision in an attempt to circumvent the federal rules. In other words, they want the state court rules to apply in federal court too.

This bill was utterly unnecessary. The ADTPA was rarely used anyway, because of its preexisting limitations. Fortunately, the Alabama legislature doesn’t have power over the federal courts. So hopefully, this anti-consumer sellout of our legislature will be ingored by the federal courts.

Alabama Legislature Proposes to Help Credit Card Companies Sue their Customers – Alabama Debtor’s Rights Attorney Judson E. Crump

April 20, 2017 by Attorney Judson E Crump Leave a Comment

The Credit Industry Lobby has Succeeded in Convincing the Alabama Legislature to Make it Easier to Sue Customers.

Once again, a big business lobby has convinced some of the fools in Montgomery to propose a bill that would help the huge-money finance industry at the expense of ordinary working people. It’s a move that is pretty typical for Alabama’s Hyper-Conservative legislature, the majority of which is always ready to do the bidding of industry lobbyists.

The bill, which doesn’t yet have a name, would give credit card companies six years to sue its customers, regardless of which legal theory they are suing under.

Alabama’s current law on credit card statutes of limitations is surprisingly complex, because the statutes were written way before credit cards had been invented. Suffice it to say that some credit card cases can be brought within 6 years after the date of default, but others must be brought within three years.

The three year statute that applies to credit card lawsuits brought under the “open account” legal theory has helped thousands of Alabamians save hundreds of thousands of dollars from wage garnishments and adverse credit reporting. Is this a good thing?

Well, sure, sometimes this allows people to get away from paying debts, but despite what the credit industry would have you think, very very few collection lawsuits are filed against deadbeats. Most people want to pay their bills and try very hard to do so. But sometimes they just can’t. Maybe because they’ve been laid off, or their wife got cancer, or they got a nasty divorce that took all their assets. So escaping a wage garnishment or judgment is often the thing that saves people from being forced into bankruptcy.

So shame on State Rep. Marcel Black for proposing this law. One can only wonder what “favors” he received from the finance industry for betraying the citizens of this state.

And also, what’s wrong with requiring banks to sue within 3 years? That’s plenty of time to gather your evidence and hire a lawyer to file a lawsuit. Whenever I represent a human against a debt collector reporting false information or a car dealer who’s defrauded them, I’m stuck with a one-year or two-year statute of limitations. Do I complain? No. I just do my job and act with diligence.

There’s nothing unfair about requiring them to act almost as responsibly as I do when I sue them.

One final thought that you need to remember. Every time the credit industry pays Congress or a state legislature to pass a bill helping them at the expense of consumers, they justify it with the same argument: if you don’t pass this bill, it will increase the cost of credit and make credit less available to those who need it most. This is total bullshit. The data shows that deregulation of the banks doesn’t actually help consumers. It just increases profits. The only “credit” that is affected by most regulations is on the sketchy end of the legitimate<—->predatory spectrum. So next time you hear your lawmakers debating a handout to the finance industry, don’t think for a moment that you’ll benefit. Because you won’t.

How to Reverse a Default Judgment, Part III – Alabama Consumer Credit Attorney Judson E. Crump

February 6, 2017 by Attorney Judson E Crump Leave a Comment

How to Get the Court to Undo a Default Judgment for Fraud on the Court.

If you were served with the lawsuit, there is still one other way to get a default judgment vacated: fraud on the Court. This is not very common, and it is not easy, either. But just what does it mean to say that a default judgment creditor has committed fraud on the court?

Basically, they lied to the Court in order to get the judgment entered.

Consider the case of Hartigan v. Hartigan, 182 So.2d 725 (Ala. 1961). A New York resident filed a lawsuit alleging she lived in Alabama and was an Alabama citizen. She did this to get the Alabama Court to take jurisdiction over her divorce. Why? A little history here: back then, Alabama allowed for quicker divorces in most states, so there was a cottage industry here of divorce lawyers who specialized in filing quickie divorces for rich people from out of town. They’d fly in, sign the papers, do a quick deposition, and their lawyers would do the rest. They’d have a divorce days or a few weeks later.

Anyway, they tried to modify their divorce 6 years later, and the court realized they were not from Alabama, and so they vacated the judgment for the lies they submitted in their divorce affidavits. The decision was upheld by the Alabama Supreme Court, and the original divorce judgment was vacated.

The same logic applies to default judgments. If a default affidavit was filed with the court and contained false information, then that is fraud on the Court and can be grounds to reverse the judgment.

Fraud on the court can come in many forms. They may have lied about the amount of the debt, or clearly miscalculated it. They may have lied about the date of the contract or last payment, so as to avoid the statute of limitations. (Note that unlike ordinary contract cases, most suits involving a repossession deficiency are subject to a 4 year statute of limitations.) They may just have the wrong guy. Whatever false statement you are complaining about has to be something important. It can’t just be a minor error like your age. But if there are demonstrably false statements in their default motion or affidavit, and these statements are material to the case – meaning that the judgment either wouldn’t have been entered at all or would have been a substantially different amount – then you can ask the court to vacate the judgment.

Judges have a lot of discretion on whether or not to uphold default judgments, so your lawyer will have to prepare the case and do some convincing. But most judges are concerned about avoiding clearly unfair results, and will at least give you a chance.

The key to overturning a default judgment for fraud is carefully reviewing the default motion and all the records in the case. Your lawyer will need to look for errors that could have provided some defense either to liability or the amount of the debt.

Caselaw Flashback: The Tattoo Parlor Slander Case – Alabama Consumer Rights Attorney Judson E. Crump

August 18, 2016 by Attorney Judson E Crump Leave a Comment

Tanner v. Ebbole – The Tattoo Parlor Slander Case

I can’t open Facebook without seeing blatantly false political “news” and other alarmist garbage every time I scroll down my news feed. And I know that politics and the health benefits of essential oils and saran wrap aren’t the only thing people lie about on social media. Which is why I am surprised that we don’t see more defamation cases nowadays. But today I want to talk about a case of defamation that occurred in social media and RL (“real life”).

Back in 2008, downtown Mobile’s Lower Dauphin St neighborhood (LoDa, as the lazy refer to it) was quite different. Fancy-food favorites like Noble South and Dumbwaiter and SaiSho weren’t there. But you know what was? LA Body Art and Demented Needle. These two tattoo parlors were neighbors: same block, same street, same side of the street. But they were not friends. Somehow an animosity developed between the two. Whether personal or competitive in origin, I don’t know. But apparently the folks at Demented Needle had such a low opinion of their skin-pricking brethren down the street that they told various customers, tattoo-artist job seekers, and others that the proprietress of LA Body Art had certain diseases of an alarming and scandalous nature. These individuals were so bold as to post their slanderous opinions on paper bulletins on the wall and, more unfortunately for everyone, on MySpace. (For those who may not know, MySpace was a crazy, disorganized predecessor to Facebook in the social media world. By the time you read this, it may no longer exist).

But some of the things these folks said about LA Body Art’s tattooista were not true. And if you make a public statement about someone which is false and portrays them in a negative light, then you can be held liable for defamation. Written defamation is called libel; oral defamation is slander. In other words, if you’re going to talk bad about someone, you need to be sure that what you’re saying is true. Or you may find yourself in court. Which is what happened to the folks at the Demented Needle.

A trial was held, and the jury found for the plaintiff. And though they awarded her only $1 in compensatory damages (meaning that they agreed with her side of the story, but didn’t think she proved any actual financial loss), they awarded punitive damages of $200,000 against Demented Needle, and separate punitive damages awards of $100,000 and $10,000 against two of the folks who worked at Demented Needle.

If she couldn’t prove any direct financial harm, why were the awards so big? Because they had accused the plaintiff of having veneral diseases, and this sort of insult is considered so serious that the law treats it as slander per se. And “when the plaintiff has proven slander per se, the law presumes injury to reputation and mental suffering.”Liberty Nat’l Life Ins. Co. v. Daugherty, 840 So.2d 152, 162 (Ala.2002). ”

A reputation is worth more than gold.

Of course,like all defendants who have been hit with a punitive damages judgment for doing bad things, these folks appealed. But the Alabama Court of Civil Appeals upheld most of the verdict. Which is the real reason this opinion is remarkable: the Alabama Court of Civil Appeals isn’t known for its friendliness to punitive damages verdicts, but they upheld a big punitive damages verdict against the defendants in this case. They even cited Shakespeare:

“Iago says to Othello:

“`Good name in man and woman, dear my lord,

Is the immediate jewel of their souls.

Who steals my purse steals trash;

‘Tis something, nothing;

‘Twas mine, `tis his, and has been slave to thousands;

But he that filches from me my good name

Robs me of that which not enriches him, And makes me poor indeed.’

“Othello, Act III, scene 3.”

You can read the full opinion here: Tanner v. Ebbole Opinion