NOTICE: This opinion is subject to motions for reargument under V.R.A.P. 40 as well as formal
revision before publication in the Vermont Reports. Readers are requested to notify the Reporter
of Decisions by email at: JUD.Reporter@vermont.gov or by mail at: Vermont Supreme Court, 109
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before this opinion goes to press.
2017 VT 38
No. 2016-226
Laura A. Cramer (Billado) Supreme Court
On Appeal from
v. Superior Court, Franklin Unit,
Civil Division
James E. Billado, III January Term, 2017
Thomas Z. Carlson, J.
Daniel S. Triggs, Milton, for Plaintiff-Appellee.
Karen R. Shingler, Burlington, for Defendant-Appellant.
PRESENT: Reiber, C.J., Dooley, Skoglund, Robinson and Eaton, JJ.
¶ 1. ROBINSON, J. Defendant James Billado appeals the trial court’s denial of his
motion to set aside a default judgment of foreclosure on the grounds that the trial court erred in
allowing service of the foreclosure complaint by tack order and in declining to set aside the default
foreclosure judgment in light of his defenses. Plaintiff Laura Cramer argues that defendant’s
appeal was untimely and we thus need not consider the merits of his appeal. We conclude that the
trial court’s orders were within its discretion and accordingly affirm.
¶ 2. The events leading to this appeal are rooted in the parties’ 2007 divorce. In
September 2005, the parties entered into a final stipulation that provided, among other things, that
defendant was to pay plaintiff $50,000 on or before November 15, 2005, to buy out her interest in
defendant’s business. Before the court entered a divorce judgment, defendant sought to set aside
his uncounseled stipulation on the ground that, since signing the stipulation, he learned that while
acting as bookkeeper, plaintiff had been stealing money from the business. After an evidentiary
hearing, the trial court rejected his claim, concluding that plaintiff had not engaged in any
deception. The court found that the parties treated the various business accounts as personal
accounts, withdrawing funds at will to pay for vacations, credit card debt, and other personal
expenses. Defendant left the bookkeeping to plaintiff, and turned a blind eye to poor bookkeeping
practices since both he and plaintiff received the financial benefit. Given this record, the trial court
declined to set aside the parties’ stipulation. In a February 2007 final judgment of divorce, the
court incorporated the stipulation and ordered defendant to pay plaintiff $50,000. This Court
considered defendant’s arguments and affirmed the final order on appeal. See Billado v. Billado,
No. 2007-099, 2007 WL 5313617, at *3 (Vt. Nov. 1, 2007) (unpub. mem.),
https://www.vermontjudiciary.org/sites/default/files/documents/eo07-099.pdf.
¶ 3. Plaintiff recorded a certified copy of the judgment in the Bakersfield, Vermont land
records to perfect her judgment lien on defendant’s property. On May 11, 2015, plaintiff filed this
foreclosure action alleging that defendant had failed to pay on the 2007 judgment.
¶ 4. On June 18, 2015, pursuant to Vermont Rule of Civil Procedure 4(d)(1), plaintiff
sought alternative service through a tack order, which would allow the sheriff to leave a copy of
the summons and complaint at defendant’s home. The accompanying affidavit of diligent search
from a deputy sheriff stated that he tried to serve the papers in person at defendant’s residence on
May 23, a Saturday, but got no answer. He noted that there were no vehicles present at defendant’s
home at that time. The affidavit reflected that on May 27, a Wednesday, he spoke with defendant
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by telephone and defendant promised to collect the paperwork in St. Albans. And the affidavit
also reflected that on Sunday morning, June 7, the deputy sheriff again went to defendant’s
residence and got no answer.
¶ 5. By order dated July 2, the trial court granted plaintiff’s motion for alternative
service, finding that plaintiff had shown that, despite due diligence, personal service of process in
this matter could not be made on defendant, that plaintiff’s proposed method of service was
reasonable and appropriate, and that the method of service proposed by plaintiff was preferable to
an order that service be made by publication. The court ordered that service of the summons and
complaint for foreclosure, and other process, notices, and orders, could be made “by securely
affixing a copy of such process on the main entrance of [defendant’s home], reasonably protected
from weather.” The deputy sheriff effected service by tack order on July 18.
¶ 6. Defendant did not answer the foreclosure complaint, and on January 14, 2016,
plaintiff filed a motion for default judgment of foreclosure and the issuance of a clerk’s accounting.
The trial court awarded plaintiff default judgment, and on February 8, 2016, issued a judgment
and decree of foreclosure by judicial sale. Considering accrued interest on the 2007 debt,
attorney’s fees, and recording fees, the court calculated an outstanding judgment of $112,527.23.
¶ 7. Several days later, through counsel, defendant filed a verified motion to set aside
the default judgment. He said that the judgment of foreclosure was the first document he had ever
received in the foreclosure action, that he did not see any prior pleadings “tacked” to the premises,
and that personally serving him pursuant to the rule should have been easy since he has a high
personal profile in the community, has lived in the same location for years, and owns a local
Because of the delay caused by multiple attempts to serve defendant, the trial court had
granted plaintiff an enlargement of time to effect service of the foreclosure pleadings.
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business. Following an evidentiary hearing focused primarily on the deputy sheriff’s initial efforts
to serve defendant, as well as on service of the pleadings pursuant to the tack order, defendant filed
a supplemental memorandum laying out his underlying defenses to the foreclosure as an alternative
basis to support his motion to set aside the default judgment. Defendant argued that he was entitled
to a set-off against plaintiff’s judgment because she had improperly diverted funds from his
business prior to their divorce.
¶ 8. Based on the parties’ pleadings and the evidence presented at the evidentiary
hearing, the trial court found that the deputy sheriff had attempted to serve defendant at his home
on two weekends, and also reached defendant between those efforts to try to make arrangements
for service of the summons and complaint. The court credited the deputy sheriff’s testimony,
including his recollection that defendant agreed to come to the courthouse during the day to accept
service but then failed to do so, and his observation that defendant understood that plaintiff was
taking legal action to pursue her outstanding claims against him. The court also credited the deputy
sheriff’s testimony that in executing the tack order he secured the pleadings to defendant’s door in
a weatherproof bag. The court concluded that the service by tack order was lawful and sufficient.
¶ 9. In addition, the court concluded that defendant had not pled sufficient grounds
under Vermont Rule of Civil Procedure 60(b) to set aside the default judgment on the merits. The
court determined that defendant had not presented any meritorious defenses to the judgment. It
reasoned that the allegations supporting defendant’s claim for a set-off against the amount he owes
plaintiff under the final order had already been litigated. In 2007, the family court thoroughly
litigated very similar if not identical allegations against plaintiff in connection with defendant’s
effort to set aside the parties’ stipulation. Moreover, the court rejected defendant’s argument that
the court should revisit the previously litigated allegations because defendant had new evidence to
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support them. Defendant’s new evidence consisted of the findings of an accountant who reviewed
the 2003-2005 business books in 2013 and found what he believed to be payroll tax diversions
while plaintiff was managing the books. Those problems did not come to light until 2008, when
the IRS contacted defendant about unmet payroll tax obligations. The court noted that defendant
made no effort to reopen the divorce or otherwise seek a remedy against plaintiff in 2008, when
the IRS raised its concern, or even in 2013, when his accountant reviewed the business books from
2003-2005. The court concluded that any claims that defendant had against plaintiff on account
of this alleged diversion were barred by the principle of claim preclusion and the six-year limitation
of actions set forth in 12 V.S.A. § 511.
¶ 10. Although the trial court acknowledged the general presumption in favor of
resolution on the merits rather than judgment by default, it also recognized that “it would be an
idle exercise and a waste of judicial resources for a court to set aside a judgment if, in fact, there
is no genuine justiciable controversy.” Lafrance Architect v. Point Five Dev. S. Burlington, LLC,
2013 VT 115, ¶ 20, 195 Vt. 543, 91 A.3d 364 (quotation omitted). Accordingly, in its May 27,
2016 order, the court denied defendant’s motion to set aside the default judgment of foreclosure.
¶ 11. On June 27, 2016, defendant filed a notice of appeal. On appeal, he contends that:
(1) the trial court committed reversible error when it found that service in this case was sufficient
and denied his motion to set aside the default judgment for lack of personal service, and (2) the
trial court committed reversible error when it failed to vacate the default judgment in light of
defendant’s defenses to the judgment.
¶ 12. While this case was pending, this Court on its own initiative issued an order
requesting defendant to show cause why his appeal should not be dismissed for failure to file a
timely motion for permission to appeal pursuant to 12. V.S.A. § 4601 (requiring court permission
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for appeal of judgment “for the foreclosure of a mortgage”) and Vermont Rule of Civil Procedure
80.1(m) (requiring that request for permission to appeal be filed within ten days of entry of
judgment or order appealed from “[w]hen the judgment is for foreclosure of the mortgage”).
Defendant argues that by their plain terms, the above requirements apply only to judgments
foreclosing a mortgage, and not to judgments of foreclosure based on a judgment lien. Plaintiff
argues that pursuant to 12 V.S.A. § 2903(d), the foreclosure of judgment liens is subject to the
same requirements as the foreclosure of a mortgage. We decline to decide this jurisdictional
question because we conclude that even if defendant’s appeal was timely, his claims on appeal fail
on the merits.
¶ 13. First, we conclude that the trial court’s findings were supported by the evidence
and its conclusions were consistent with law and supported by its findings. “On review, we will
uphold the trial court’s findings as long as they are supported by any credible evidence in the
record, and we review questions of law without deference to the trial court.” Mongeon Bay Props.,
LLC v. Mallets Bay Homeowner’s Ass’n, 2016 VT 64, ¶ 22, __ Vt. __, 149 A.3d 940.
¶ 14. Vermont Rule of Civil Procedure 4(d)(1) provides:
The court, on motion, upon a showing that service as prescribed
above cannot be made with due diligence, may order service to be
made by leaving a copy of the summons and of the complaint at the
defendant’s dwelling house or usual place of abode, or to be made
by publication pursuant to subdivision (g) of this rule, if the court
deems publication to be more effective.
If personal service could not be made with due diligence, then a tack order was appropriate in this
case.
¶ 15. The court’s findings concerning the deputy sheriff’s attempts to serve defendant
were supported by the evidence. The deputy sheriff testified to facts relied upon by the trial court,
and the court was entitled to credit his testimony even though defendant testified otherwise. See
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Everlasting Mem’l Works v. Huyck Mem’l Works, 128 Vt. 103, 107, 258 A.2d 845, 848 (1969)
(“Questions of credibility of the witnesses and the weight of the evidence were for the trier of facts
to decide . . . .”).
¶ 16. Moreover, the court’s conclusion that personal service could not be made with due
diligence was supported by its findings. We do not suggest that two unsuccessful trips to
someone’s residence, especially when no vehicles are present during one of the visits, qualifies as
“due diligence.” But in this case, the court’s findings that a deputy sheriff personally spoke by
telephone to defendant, that defendant indicated an understanding of the nature of the pleadings
the deputy sheriff sought to serve, and that defendant agreed to come pick up the pleadings at the
courthouse but then failed to do so during the ensuing weeks, support the trial court’s legal
conclusion. A defendant is not obligated to agree to travel to the process server to personally
accept service, but when a defendant does agree to do so, a court may find that the process server’s
reliance on that agreement is consistent with due diligence. Accordingly, the determination that
service in this case was sufficient was within the trial court’s discretion.
¶ 17. Second, we conclude that the trial court did not abuse its discretion in declining to
set aside the default judgment in this case. Although a meritorious defense may be a strong basis
for setting aside a default judgment in a case like this, the trial court did not err in concluding that
defendant had not presented a meritorious defense.
¶ 18. We review the trial court’s denial of the motion to set aside the judgment for abuse
of discretion. LaFrance Architect, 2013 VT 115, ¶ 9.
¶ 19. We have acknowledged that a trial court “should give substantial weight to a
meritorious defense when determining whether to vacate a default judgment.” Id. ¶ 11; see also
Courtyard Partners v. Tanner, 157 Vt. 638, 639, 595 A.2d 287, 288 (1991) (mem.) (“Although the
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trial court should first consider the degree of defendants’ negligence in failing to appear, even a
willful default may be excused if defendants’ position on the merits is so strong that it would be
unjust to affirm the judgment.”). Accordingly, if defendant in this case made a persuasive case
that he had meritorious defenses to the judgment, the trial court’s discretion to decline to set aside
the default judgment may have been more limited.
¶ 20. The trial court’s conclusion that defendant did not present meritorious defenses was
within its discretion. Defendant does not deny that plaintiff had a judgment against him for
$50,000 from 2007, that plaintiff duly perfected her judgment lien, or that he paid any amounts
toward that judgment. Instead, he essentially argues that he was entitled to an offset of plaintiff’s
judgment on account of her prior misappropriation of funds from his business. As the trial court
noted, collateral estoppel and the statute of limitations are both obstacles to his set-off claims in
response to plaintiff’s foreclosure action.
¶ 21. Collateral estoppel is a bar to defendant’s claims because defendant’s allegations
in support of a set-off against plaintiff’s judgment are essentially the same allegations he litigated
before the family court in 2007. Then, as now, he alleged that before the final divorce judgment
in the parties’ divorce, plaintiff improperly diverted funds from his business to her own personal
use. The court in the parties’ divorce took evidence on the matter and found that plaintiff did not
deceive defendant and that, though she may have engaged in bad bookkeeping practices with
defendant’s acquiescence, she did not commit fraud against him. Defendant’s attempt to relitigate
these very same claims nine years later in the context of this foreclosure case is barred by collateral
estoppel: he was a party to the 2007 litigation in the family court, the issue at hand was resolved
by a final judgment on the merits, the issue here is the same as the one raised in the later action,
there was a full and fair opportunity to litigate the issue in the earlier action, and applying
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preclusion in this case is fair. See Trepanier v. Getting Organized, Inc., 155 Vt. 259, 265, 583
A.2d 583, 587 (1990) (listing criteria for applying collateral estoppel).
¶ 22. Moreover, the statute of limitations would preclude defendant’s claims against
plaintiff in any event. The alleged misconduct on which defendant bases his claims predates the
parties’ 2007 final divorce judgment. Defendant was clearly on notice prior to the final divorce
order because he litigated these claims in the 2007 divorce hearing. Even if we concluded that he
did not know and cannot be said to reasonably ought to have known until 2008—the year his expert
identifies as the time the bookkeeping inconsistencies came to light—defendant is still well outside
the six-year general statute of limitations for civil actions. 12 V.S.A. § 511.
¶ 23. Given these considerations, and the absence of any substantial defense to plaintiff’s
action for foreclosure, the trial court’s denial of defendant’s motion to set aside the default
judgment in this case was within the trial court’s discretion.
Affirmed.
FOR THE COURT:
Associate Justice
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