Both in litigation and in arbitration, a party sued is required to file an appearance in court or in the arbitration forum and answer and/or cross complain within a specified period of time or a default may be taken against the party. In Court, a default is a process by which a party sued is no longer allowed to appear and answer or cross complain and, instead, must petition the court to be allowed a late appearance. In arbitration, there is no “default” but failure to respond allows the other party to select the arbitrator and proceed with the hearing without the presence of the defaulting party.
In both forums, failure to appear in a timely fashion allows the other party to seek to enter a judgment, normally requiring a hearing. Some Court cases allow seeking a judgment by merely filing documents substantiating the damages with the Court, but most often a default results in the plaintiff seeking to obtain a judgment against the defaulting party by seeking a hearing in Court and in arbitration a hearing is required to prove the entire case, although the other party is not present.
As described in our article on American Litigation, the process for entering a default in not complex…normally just filing some papers with the Court along with proof of service. What is then, required, however, is entry of default judgment so that execution may follow and, depending on the relief sought, the Courts often and the arbitrators always require that the plaintiff attend a hearing in which proof is established to the satisfaction of the Trier of fact as to the prima facie case of the plaintiff and the damages sought.
These default hearings are usually performed without notice to and involvement of the opposing parties and one could thus conclude that they are pro forma processes. Often that is the case, but just as often the Court or arbitrator will require a full “prove up” hearing and the plaintiff is well advised to prepare fully to demonstrate the entire case to the satisfaction of an often suspicious Trier of fact.
This article shall discuss the basic preparation needed for such hearings and the tactical considerations that should be kept in mind.
The Basic Hearing:
In Court, the hearing is normally before a judge, sometimes a commissioner, and the liability aspect of the case is presumed as proven and the party seeking relief is to put on evidence of actual damages. Witnesses are called to testify under oath and a full damages case is to be presented to the satisfaction of the Court. Such hearings can take a half hour if the damages are easily proven…or can last days.
In arbitration, it is normally required to put on the entire case, proving both liability and damages. While the responding party is not present, the arbitrator will not allow the claimant to proceed directly to proving damages without first proving why the damages should be awarded.
While the above difference may seem substantial, as a realistic matter many courts will want the plaintiff to demonstrate basic liability in any event and if significant attorneys fees or damages are sought, few judges will award them without hearing what the entire matter was about.
In both hearings the defense is not present but the Trier of fact, be it court or arbitrator, is often found to cross examine the witnesses on his or her own to develop a full understanding of the case. It is unwise in the extreme to refuse to answer the questions posed by the court or arbitrator because it is merely a default hearing. Thus any witness should be fully prepared to answer any questions the judge or arbitrator may present.
Whether in Court or before an arbitrator, the procedure is usually the same. At least one witness is sworn in to testify as to damages (or the entire case) and is asked questions by counsel as in any standard direct examination. Documents are entered into evidence with the same formality as in any court or arbitration appearance and at the conclusion of the direct evidence it is common for the judge or arbitrator to cross examine the witness to some extent.
Once the plaintiff has presented his or her case, the matter is submitted to the court or arbitrator who normally renders a judgment in the next thirty days. That judgment is equivalent to any verdict rendered by a judge or arbitrator and can allow full enforcement by writs of execution, abstracts of judgment, etc. See our article on American Litigation and Debt Collection-The Tools Available to Enforce Judgments.
Preparing for the Hearing:
It is vital to have a witness who is fully prepared to answer questions as to all aspects of the case that the Court or arbitrator may wish to know about. Unlike a trial or arbitration hearing, the party on the “other side” cross examining is the Trier of fact. Often, Courts or arbitrators are going to lean over backwards to make sure the party not in the hearing is protected and that the plaintiff does not try to take advantage of the situation. Thus, many courts or arbitrators will engage in tough cross examination of the witness and if they discover the witness is not fully versed in the case, will refuse to enter judgment. Further, one’s own legal counsel cannot easily object to a question posed by the Court or arbitrator without risk of alienating them so in some ways the hearing may be even more difficult than a standard cross examination.
In most instances, the Trier of fact is not inclined to be so aggressive and merely listens to the evidence, perhaps asks one or two questions for clarification, and enters the judgment. However, the wise party will not so assume and will prepare to respond to any relevant question that may be posed by the Court or arbitrator.
The documents that support the case will also have to be entered into evidence formally and that will require the appropriate testimony of the witness with full authentication of the documents. We have found it extremely useful to prepare charts and summaries of more complex documents… a list of invoices or contracts, for instance…which the witness can verify and submit to the court or arbitrator. However, while that summary will be useful and is normally appreciated by the Trier of Fact, the underlying supporting documents must also be entered into evidence to satisfy the Court.
Any error discovered in the substantiation or exaggeration or half truth discovered by the Trier of fact can have disastrous consequences. Without opposing parties there to contest the facts, most Triers of fact are extremely diligent in making sure the evidence that is accepted is valid. Credibility of the witness is vital in the uncontested forum and no Trier of fact will enter a judgment if he or she does not believe the validity of the claim. As such, extreme care must be taken to ensure that all the evidence being presented is both accurate and substantiated by appropriate paper work if possible.
We normally recommend to clients that we “play act” the full hearing testimony with them including full entry of evidence and direct examination likely to be required and further practice answering questions that might be posed by the arbitrator or judge. We recommend preparation of a simple and one page summary of the computation of sums due to give to the Trier of fact so that they may follow the testimony easily.
The hearing should be brief and business like, putting in the evidence calmly and professionally. Seeking to create an emotional response is only useful if seeking punitive damages and the preparation for such an unusual hearing requires multiple witnesses and exhibits if the Trier of fact is to be emotionally engaged enough to award those types of damages.
Any and all evidence that the Court or arbitrator may wish to see should be available though not necessarily entered into evidence. The theme should be presentation of only enough evidence to meet the prima facie case (in arbitration) and to prove damages (in both arbitration and Court) but to have available all the evidence that a careful Trier of fact may wish to review. Keep in mind that to authenticate the evidence for entry one must have the appropriate witness (otherwise one encounters hearsay problems) so if an issue is likely to be considered important by the Judge or arbitrator, have the witness present.
A well prepared hearing appears deceptively simple, with a quick entry of evidence, all done calmly and efficiently, and over in less than an hour in most instances. What is important to note is that each hour of hearing probably required five hours of careful preparation.
As Eisenhower once stated, it is when things look easy that you know that someone prepared long and hard to make it look easy.
The Strategy of Default Hearings:
The Trier of fact is unlikely to have studied the case. They will know a default was taken, not know or care why it was taken, but will probably be interested in making sure that the hearing proceeds without endangering any rights of the absent party. Many Triers of fact can become defacto defenders of the missing party, seeking to lean over backwards to protect them to avoid later claims of unfairness. Most will not help the party seeking the default and will require full authentication of evidence and a full case being presented.
Any inaccuracy in the documents or failure to give the full truth while testifying will probably result in refusal to enter the judgment. This writer had the misfortune decades ago to have a witness fail to bring the correct invoice documents in error and the Judge refused to allow entry of judgment despite the fact that the witness did have the correct monthly statements and personal knowledge of the account.
It is vital to have the Trier of fact aware that you are fully prepared to put on your entire case in detail. One veteran of the craft would ask his client to bring in boxes of evidence if at all possible. He would ostentatiously pile the boxes on the counsel table while the judge or arbitrator looked on in dread, afraid that the rest of the day would be spent pouring over thousands of documents. The lawyer would then tell the Trier of fact that the evidence was here and ready if the Court wished it but that he had prepared a brief summary of the basic facts and had the witness ready to testify as to those. He always obtained his default judgment.
One client was outraged that the judge seemed to be defending the opposing party who was not even in the court room. This writer calmed him down, explaining that the judge was there to protect rights of the parties, including the parties not there, and that reacting emotionally to the judge’s questions would only hurt the case. Eventually, the judge granted us all we asked.
It is common in some Courts to have the lawyer prepare ahead of time (with blanks for the Court to fill in) a judgment ready for the Court to sign. Most arbitrators have thirty days to render a decision and will simply advise the claimant to await the judgment at that time.
Assuming that for some reason the hearing is not going well…the judge seems disinclined to grant some relief or a key document is missing…it is possible to stop the hearing and tell the judge you will reset it at a later time. The worst that can happen is that the judge or arbitrator will refuse to enter judgment and the party can again apply at a later time when the defect in pleading or evidence is cured…but the party must be ready to explain to the judge why the matter is now capable of being concluded.
As with so much at law, preparation is the most important task for entry of a default judgment. Preparing the documents and the witnesses, anticipating any questions the Court or arbitrator may have, and being flexible enough to adjust to their concerns is the key.
Technically, no “default” is taken in an arbitration. Once simply puts on one’s entire case without the other party being there. In Court, liability is assumed and only damages need be proven.
But the wise party will presume that the Court and arbitrator may be interested in any aspect of the case and will be prepared to satisfy their curiosity and concern in the hearing.
And, once completed, the next step is enforcement of judgment, discussed elsewhere.