Supreme Court Clarifies Procedure for Setting Aside Default Judgments and for Determining Damages for Loss of Credit

March 27, 2012

Nashville, Tenn.In a unanimous opinion, the Tennessee Supreme Court clarified that a judgment, if it resolves fewer than all the claims among the parties to a civil lawsuit, remains subject to revision by the trial court under Rule 54 of the Tennessee Rules of Civil Procedure. The Court also reiterated what rules of procedure apply when parties seek to revise judgments entered in other contexts. Finally, the Court defined the elements which must be shown to recover for loss of available credit. 

The case, Discover Bank v. Joy A. Morgan, arose from a collection action initiated by Discover Bank against Morgan. The collection action was for charges made on Morgan’s deceased husband’s credit card. Morgan then filed a counter-complaint asserting that Discover Bank had injured her credit by improperly filing the original suit and freezing her credit. When Discover Bank failed to answer the counter-complaint, the trial court granted a default judgment to Morgan citing Tennessee Rules of Civil Procedure 60. Discover Bank moved to set aside the default judgment, but offered no explanation of why it failed to respond for several months. The trial court declined to set aside the default judgment and dismissed the original complaint. Morgan was awarded $375,600 for her loss of credit.

Today’s ruling affirms the Court of Appeals decision which upheld the default judgment, but vacated the award of damages. The case was remanded to the trial court for a new hearing on the amount of damages.

To read the Discover Bank v. Joy A. Morganopinion authored by Chief Justice Cornelia A. Clark, visit http://www.tncourts.gov/sites/default/files/discoverbank-morgan_opn.pdf.

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