{
  "id": 6136369,
  "name": "NATIONAL SECURITY FIRE & CASUALTY COMPANY v. Karen BARNES",
  "name_abbreviation": "National Security Fire & Casualty Co. v. Barnes",
  "decision_date": "1999-01-13",
  "docket_number": "CA 98-669",
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  "last_updated": "2023-07-14T20:05:27.101250+00:00",
  "provenance": {
    "date_added": "2019-08-29",
    "source": "Harvard",
    "batch": "2018"
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  "casebody": {
    "judges": [
      "Robbins, C. J., and Birjd, J., agree."
    ],
    "parties": [
      "NATIONAL SECURITY FIRE & CASUALTY COMPANY v. Karen BARNES"
    ],
    "opinions": [
      {
        "text": "Margaret Meads, Judge.\nThis case involves a default judgment entered against appellant, National Security Fire & Casualty Company. The jury awarded appellee Karen Barnes $25,000 in compensatory damages and $500,000 in punitive damages. Upon being notified that a default judgment had been entered against it, appellant moved to set the judgment aside or, in the alternative, for a remittitur of damages. The trial court denied the motion to set aside, but reduced the punitive damage award to $250,000. On direct appeal, appellant asserts numerous points of error, two of which merit reversal. On cross-appeal, appellee challenges the reduction of the punitive damage award.\nThe relevant facts are as follows. In July 1993, appellee applied for automobile insurance through Rebsamen Insurance, Inc., an insurance agency. Rebsamen placed the coverage with appellant. In September 1995, appellee was involved in an accident with an uninsured motorist. She informed Rebsamen of the accident, but was told she had no uninsured motorist coverage. Upon appellee\u2019s request, Rebsamen showed her a document purporting to be her signed rejection of such coverage.\nIn January 1997, appellee filed suit against Rebsamen and appellant, claiming that her signature on the uninsured motorist rejection form was a forgery. The complaint alleged that Rebsa-men was the general agent of appellant and that appellant was Ha-ble for Rebsamen\u2019s misconduct through the doctrine of respondeat superior. The complaint was served on both defendants. Rebsa-men filed a timely answer denying the allegation of forgery and asserting that appellee had in fact rejected uninsured motorist coverage. Appellant, due to an administrative error, failed to answer the complaint. Trial on the case was set for December 3, 1997.\nOn the day of trial, Rebsamen appeared ready to defend. Appellant, not having received notice of trial, did not appear. Before the trial could begin, appellee and Rebsamen entered into a settlement agreement, whereby Rebsamen paid appellee $10,000 in exchange for being dismissed from the lawsuit. After this agreement was entered into, a jury was empaneled to determine the amount of damages to be awarded against appellant. Appel-lee\u2019s counsel informed the jury during his opening statement that appellant, by its failure to file an answer, admitted that the forgery was done on purpose, in bad faith, maliciously, and intentionally. The court instructed the jury that appellant had admitted liabifity in the case and that they need only decide the amount of damages. After a short deliberation, the jury returned with the aforementioned verdict.\nWithin a few days after the jury\u2019s verdict was rendered, appellant was informed that a default judgment had been entered against it. Appellant moved to set the judgment aside arguing, among other things, that it was not in default because Rebsamen\u2019s answer inured to its benefit, and that appellee\u2019s settlement with Rebsamen released it from liability. After a hearing, the trial court'denied the motion to set aside, but reduced the punitive damage award to $250,000. It is from this order that appellant brings its appeal and appellee brings her cross-appeal.\nThe first issue we address is whether Rebsamen\u2019s answer to appellee\u2019s complaint inured to appellant\u2019s benefit, thus preventing a default. A default judgment is not a favorite of the law and should be avoided where fairly possible. Allied Chemical Corp. v. Van Buren School Dist. No. 42, 264 Ark. 810, 575 S.W.2d 445 (1979). If a trial court denies a motion to set aside a default judgment, we must decide on appeal whether the trial court abused its discretion. Id.\nAs a general rule, one defendant cannot assert the rights of a codefendant who does not answer. Firestone Tire & Rubber Co. v. Little, 269 Ark. 636, 599 S.W.2d 756 (Ark. App. 1980). However, when a defense asserted by an answering defendant goes to the merits of the whole case and answers allegations directed to it and common to nonanswering defendants, the answer of the first defendant inures to the benefit of his codefendants. Id.; Dean Leasing, Inc. v. Van Buren County, 27 Ark. App. 134, 767 S.W.2d 316 (1989). In this case, Rebsamen\u2019s answer denied the allegation of forgery and asserted that appellee had signed the rejection form. That defense went to the merits of the whole case and was common to Rebsamen and appellant. Therefore, Rebsamen\u2019s answer inured to appellant\u2019s benefit, and appellant was not in default for failure to answer.\nAppellee concedes it is likely that Rebsamen\u2019s answer inured to appellant\u2019s benefit. However, she argues, once Rebsamen was dismissed from the case, Rebsamen\u2019s answer was no longer operative, and could not work in favor of appellant. Appellee\u2019s argument is contrary to our supreme court\u2019s holding in Schueck Steel, Inc. v. McCarthy Bros., Inc., 289 Ark. 436-A, 717 S.W.2d 816 (1986)(supp. op. on rehearing). There, the court held that even when an answering defendant is no longer in the case at the time a default judgment is requested, its answer continues to inure to the benefit of the party against whom the default judgment is sought. Appellee attempts to distinguish Schueck on the basis that it involved a defendant dismissed by a nonsuit rather than a settlement. However, the opinion makes no such distinction, nor is there a rational basis for such a distinction. Once an answer inures to a defendant\u2019s benefit, it would be illogical to retract that benefit upon dismissal of the answering defendant. If such a retraction were allowed, plaintiffs could subvert the rule by nonsuiting or settling with an answering defendant.\nWe turn now to the issue of whether appellee\u2019s settlement with Rebsamen precluded further litigation against appellant. Where the liability of a master for the tort of a servant is based solely on the doctrine of respondeat superior, a valid release of the servant operates to release the master. Rhodes v. Progressive Cas. Ins. Co., 36 Ark. App. 185, 820 S.W.2d 293 (1991). However, such a release does not preclude further action against a master for the master\u2019s own conduct. Id. The question in this case is whether appellee sought recovery against appellant for appellant\u2019s own conduct or merely as Rebsamen\u2019s principal. Our review of appellee\u2019s complaint and the modicum of evidence presented at the default-judgment hearing convinces us that recovery was sought against appellant based solely upon its relationship to its agent, Rebsamen Insurance, Inc. The complaint contains no allegations that appellant participated in the alleged forgery. Further, appellee asserts in her complaint that, under the doctrine of respon-deat superior, appellant was liable for the acts of its agent, Rebsa-men. The complaint also refers to Rebsamen as acting in its capacity as appellant\u2019s agent. Finally, the complaint alleges that the rejection form was forged by \u201cthe defendants acting through their agents\u201d and by \u201cagents of the defendants.\u201d Nothing in the complaint indicates any basis for appellant\u2019s liability other than respondeat superior.\nLikewise, during the trial on damages, no evidence was adduced regarding any independent tortious conduct of appellant. It is noteworthy that appellee\u2019s counsel stated to the judge that appellant was responsible based upon the theory of \u201crespondeat superior if at all, because of what Rebsamen did.\u201d\nAppellee argues that she does in fact possess evidence of appellant\u2019s independent misconduct. In her response to appellant\u2019s, motion to set aside the judgment, she argued for the first time that certain documentary evidence showed appellant\u2019s participation in the forgery. She claimed that a copy of the rejection form she received from appellant prior to the lawsuit being filed showed an \u201cX\u201d beside the rejection option. However, a copy of the form she received from Rebsamen during the discovery process did not contain an \u201cX.\u201d Appellee argues that appellant must have been guilty of marking the box rejecting uninsured motorist coverage. Despite such allegations, appellee did not indicate in any way prior to the entry of the default judgment or prior to the execution of the settlement agreement that she sought recovery against appellant on any theory other than respondeat superior. Therefore, under the rule announced in Rhodes v. Progressive Casualty Ins. Co., supra, appellee\u2019s settlement agreement with Rebsa-men inured to the benefit of appellant.\nBecause our resolution of these two issues is dispositive of appellant\u2019s appeal, we do not address appellant\u2019s remaining arguments. Further, our disposition of the direct appeal makes it unnecessary for us to reach appellee\u2019s cross-appeal.\nReversed and dismissed.\nRobbins, C. J., and Birjd, J., agree.",
        "type": "majority",
        "author": "Margaret Meads, Judge."
      }
    ],
    "attorneys": [
      "Laser, Wilson, Bufford & Watts, P.A., by: Dan P. Bufford and Brian A. Brown, for appellant.",
      "Everett & Mars, by: John C. Everett and Jason H. Wales, for appellee."
    ],
    "corrections": "",
    "head_matter": "NATIONAL SECURITY FIRE & CASUALTY COMPANY v. Karen BARNES\nCA 98-669\n984 S.W.2d 80\nCourt of Appeals of Arkansas Division III\nOpinion delivered January 13, 1999\nLaser, Wilson, Bufford & Watts, P.A., by: Dan P. Bufford and Brian A. Brown, for appellant.\nEverett & Mars, by: John C. Everett and Jason H. Wales, for appellee."
  },
  "file_name": "0013-01",
  "first_page_order": 35,
  "last_page_order": 40
}