In Central Mutual Ins. Co. v. Kicklighter, et al., the Court of Appeals of Georgia reversed the trial court’s order denying the insurer’s motion to set aside a default judgment. The default judgment had been obtained ex parte and then intentionally withheld from the insurer until the time to appeal or file a motion to reconsider had run.

After the insureds’ house burned down, the insurer paid them sums under their homeowners policy. The insureds, however, contended they were owed the full amount of the policy and sued the insurer for bad faith. In response, the insurer filed a motion to dismiss, but not an answer. Thereafter, at an ex parte hearing, the trial court met with the insureds’ counsel and signed an order entering a default judgment against the insurer. The insurer was not given notice of that hearing.

The trial court ruled that the insurer was in default because its motion to dismiss could not be construed as an answer. The trial court did not provide a copy of the default judgment to the insurer and the insured’s counsel never mentioned the order to the insurer’s counsel. After the 30-day period for filing a notice of appeal from the order had expired and the term of the court had ended, the insureds’ counsel made a demand for payment of the default judgment. The insureds’ counsel acknowledged that he delayed notice for purposes of ensuring that the insurer could not appeal. The trial court denied the insurer’s motion to set aside the default judgment without any explanation and the appellate court granted review.

On review, the appellate court found that the failure to give the insurer notice of a hearing in which the trial court considered whether the insurer’s motion to dismiss constituted an answer requires the grant of the insurer’s motion to be set aside (See Brown v. Brown, 217 (1995)). The appellate court also found that the trial court erred in entering default judgment without first disposing of the insurer’s pending motion to dismiss (See US Professional, LLC v. Directlink India (P) Ltd., (2001)). Citing to OCGA §9-11-60(d)(3) and Hiner Transp., Inc. v. Jeter, (2008), the appellate court found that the record demonstrated that the trial court entered the default on an improper basis and should have granted the insurer’s motion to set aside.

This case emphasizes that courts will not look kindly on underhanded and inappropriate attorney conduct intended to take advantage of the judicial process.