NO. 88-375
I N THE SUPREME COURT OF THE STATE O F MONTANA
1988
ROBERT A . MYERS,
P l a i n t i f f and R e s p o n d e n t ,
-vs-
ALL WEST TRANSPORT,
D e f e n d a n t and A p p e l l a n t .
APPEAL FROM: D i s t r i c t C o u r t of t h e T w e n t i e t h J u d i c i a l D i s t r i c t ,
I n and f o r t h e C o u n t y of L a k e ,
T h e H o n o r a b l e C . R . M c N e i l , Judge p r e s i d i n g .
COUNSEL O F RECORD:
For Appellant:
S t e w a r t A. Pearce, TI, Missoula, M o n t a n a
For Respondent:
Don V e r n a y , R i g f o r k , Montana
. a S u b m i t t e d on B r i e f s : Nov. 17, 1988
Decided: December 22, 1988
Clerk
Mr. Justice Fred J. Weber delivered the Opinion of the Court.
All West Transport (All West) appeals from an order
refusing to set aside a default judgment against it. The
District Court for the Twentieth Judicial District, Lake
County, ruled that All West had failed to satisfy any of the
requirements of Rule 60(b), M.R.Civ.P. We affirm.
The issue is whether the District Court abused its
discretion in refusing to set aside the default judgment.
On January 14, 1988, plaintiff Mr. Myers filed his
complaint against All West for wrongful delivery of lumber to
a consignee in Denver, Colorado. The complaint alleges that
while the shipment was in transit Mr. Myers contacted All
West to order that the shipment be stopped and rerouted, but
that All West intentionally and wrongfully delivered the
lumber as originally instructed. Damages of $6,800, for the
value of the lumber, plus interest, attorney fees, and costs,
were claimed. All West was served with the complaint on
January 15, 1988. On February 9, 1988, the clerk of court
entered default judgment against All West.
On March 14, 1988, All West filed its affidavit and
motion to set aside the default judgment. The motion was
orally argued and on May 2, 1988, the court entered its order
refusing to set aside the default iudgment.
Did the District Court abuse its discretion in refusing
to set aside the default judgment?
Rule 60(b), M.R.c~~.P.,allows a court to relieve a
party from a final judgment if, within a reasonable time, not
more than 60 days after the judgment was entered, a showing
is made of mistake, inadvertence, surprise, or excusable
neglect.. All West argues that it has made such a showing.
This Court has stated that if a district court s3.ightly
abused its discretion in refusing to set aside a default
judgment, its refusal is reversible. Griffin v. Scott (Mont.
1985), 710 P.2d 1337, 1338, 42 St.Rep. 1695, 1697. The partv
seeking to set aside the default has the burden of proof.
Siewing v. Pearson Co. (Mont. 1987), 736 P.2d 120, 122, 44
St.Rep. 800, 802.
The affidavit submitted with the motion to set aside the
default sets forth the following statement of facts. The
complaint was served upon Betty Edwards at the offices of A1.l
West. (Betty Edwards and her husband do business as A . I1
West.) She delivered the complaint and summons to the office
of All West's attorney about two weeks later, on January 2 9 ,
1988. The attorney was out of town at that time and did not
return until February 3, 1988. On that date, the attorney
phoned Betty Edwards and told her that, to represent All
West, he would require all supporting documentation underly-
ing this claim, a retainer fee, and filing fees. On February
8, 1988, All West's truck suffered transmission failure,
requiring immediate repair. That depleted All West's cash
reserves, and All West was unable to forward the required
money to the attorney. The default judgment was entered with
no further notice to All West and the judgment was executed
upon on February 23, 1988. All West then filed its notice to
set aside the default.
In its brief, All West argues that its motion to set
aside the default judgment should have been granted. It
stated that the motion was filed promptly, there is a good
possibility that a trial on the merits would have produced a
different result, and any reasonable doubt as to whether to
set aside a default judgment is to be resolved by setting
aside the default. This Court stated the standard of review
to which All West refers in Kootenai Carp. v. Dayton (1979),
184 Mont. 19, 26, 601 P.2d 47, 51: the party moving to set
a s i d e t h e d e f a u l t must show t h a t i t p r o c e e d e d w i t h d i l i g e n c e ,
t h a t i t s excusable n e g l e c t caused t h e d e f a u l t t o be e n t e r e d
against it, and that there is evidence of a meritorious
defense.
In discussing the arguments of A l l West for setting
a s i d e t h e d e f a u l t , t h e D i s t r i c t Court s t a t e d :
The a f f i d a v i t o f M r s . Edwards and h e r t e s t i m o -
ny i n t r o d u c e d a t o r a l argument upon D e f e n d a n t ' s
motion e s t a b l i s h a f a c t u a l s i t u a t i o n o f f i n a n c i a l
h a r d s h i p on t h e p a r t o f t h e D e f e n d a n t . A s a prac-
t i c a l m a t t e r , Defendant a p p l i e d i t s l i m i t e d funds
t o t h e u n e x p e c t e d r e p a i r s needed f o r one o f i t s
t r u c k s r a t h e r t h a n p a y t h e c o s t s and f e e r e t a i n e r
r e q u e s t e d by i t s c o u n s e l .
F a i l u r e by a c l i e n t t o pay i t s a t t o r n e y d o e s
n o t c o n s t i t u t e e x c u s a b l e n e g l e c t by a p a r t y w i t h i n
t h e meaning o f R u l e 6 0 ( b ) . N e i t h e r d o e s f a i l u r e o f
an a t t o r n e y t o f i l e an appearance because he h a s
n o t been p a i d c o n s t i t u t e e x c u s a b l e n e g l e c t by a n
attorney within said rule i f , i n fact, the attorney
agreed t o t i m e l y f i l e an appearance.
I n e i t h e r e v e n t , t h e Defendant h a s presented
t h e C o u r t no a u t h o r i t y t o s u p p o r t a f i n d i n g o f
excusable neglect s u f f i c i e n t t o set a s i d e t h e
D e f a u l t Judgment m e r e l y b e c a u s e t h e D e f e n d a n t
f a i l e d t o p a y t h e a d v a n c e c o s t s and f e e r e t a i n e r
r e q u e s t e d by t h e a t t o r n e y a s a c o n s e q u e n c e o f which
no a p p e a r a n c e was f i l e d b e f o r e d e f a u l t was e n t e r e d .
The C o u r t s u g g e s t s t h a t t h e D e f e n d a n t h a s n o t
c i t e d any s u c h a u t h o r i t y i n s u p p o r t o f i t s m o t i o n
b e c a u s e t h e r e i s no s u c h a u t h o r i t y n o r s h o u l d t h e r e
be any. The D e f e n d a n t h a s w h o l l y f a i l e d t o s a t i s f y
any o f t h e r e q u i r e m e n t s o f R u l e 6 0 ( b ) , and i t s
m o t i o n t o s e t a s i d e t h e D e f a u l t Judgment o f Febru-
a r y 9 , 1988 i s d e n i e d .
The above d i s c u s s i o n i n d i c a t e s t h a t t h e D i s t r i c t C o u r t was
n o t c o n v i n c e d t h a t t h e r e was e x c u s a b l e n e g l e c t .
The t e s t t o d e t e r m i n e w h e t h e r t h e n e g l e c t i s
e x c u s a b l e and s u f f i c i e n t t o s e t a s i d e a d e f a u l t i s :
. . .w h e t h e r t h e r e a s o n s g i v e n f o r t h e ne-
g;ect a r e s u c h t h a t r e a s o n a b l e minds m i g h t
d~ffer in their conclusions concerning
excusable neglect. If so, doubt should be
resolved in favor of a trial on the merits.
United States Rubber Co. v. Communitv Gas & oil Co.
(1961), 139 Mont. 36, 39, 359 P.2d 375, 376.
Griffin, 710 P.2d at 1338.
Here, the actions of both Betty Edwards and her attorney
may be said to have contributed to the entry of the default.
All West's attorney should have been aware of the need to act
quickly, as there were only a few days left to answer the
complaint when he first saw it in his office. The general
ru1.e is that neglect of an attorney is attributable to the
client. Lords v. Newman (1984), 212 Mont. 359, 367-68, 688
P. 2d 290, 295. In Lords, an exception to that general rule
was recognized for cases in which the defaulting party expe-
rienced total abandonment by its attorney. That is not the
case here.
This Court has held that failure to appear to defend an
action due to forgetfulness, the press of other business, or
inattention to mail do not establish excusable neglect.
-
Siewing, 736 P.2d at 122. All West's reasons for failing to
respond are similar to the reasons listed in Siewing. The
situation in this case is a far cry from Kootenai, in which
excusable neglect was found when there were six days between
service of process and entry of the default judgment, and
where the defaulting party submitted an affidavit stating
that he mistakenly believed that he needn't appear in the
action until another party was served. Here, 25 days elapsed
between the time Betty Edwards was served with process and
the entry of default judgment. The summons served upon her
stated that if the complaint was not answered within 20 days,
judgment would be taken against All West by default. All
West chose to apply its limited funds to the repair of a
truck rather than to the defense of this action. All West
made no further attempt to get legal representation or other-
wise respond to the summons. We conclude that the District
Court did not abuse its discretion in refusing to find that
the reasons given for All West's failure to act constituted
excusable neglect.
Affirmed..
We Concur:
Thief Justice Y
Justices
Mr. Justice R. C. McDonough dissents as follows:
I dissent. The majority cites the correct rules but
fails to apply them. Generally, decisions denying motions to
set aside default judgments under Rule 60(b), M.R.Civ.P.,
should be reversed on a showing of slight abuse of discre-
tion, doubts should be resolved in favor of the moving party,
and each decision should be reviewed on a case by case basis.
The majority in applying these rules misreads - -
Siewing and
Lords to hold against All West.
In Siewing, this Court affirmed the decision of the
lower court to denv a metion to set aside a default iudqment
hecause:
a failure to appear caused by inattention to perti-
nent documents, the resignation of a company offi-
cer and the taking of a summer vacation by another
officer do not establish excusable neglect.
Siewing, 736 P.2d at 122. In this case the excuses discussed
are financial hardship and neglect of counsel. These com-
plaints differ from the unexplained neglect in Siewing, and
they create doubts on whether to find excusable neglect.
In Lords this Court stated that generallv, courts impute
counsel's neglect to clients, hut went on to state:
"'This court has been hesitant to impute the ne-
glect of an attorney to his client; and has been
loathe to permit this neglect to bar a hearing on
the merits. Whether or not the varying shades of
excusable neglect [neglect 'by counsel! previously
remarked on can be distinguished, we choose to
think that where reasonable minds might differ in
their conclusions of excusable neglect, the doubt
shou!d be resolved on the merits.""
Lords, 688 P.2d at 295 (emphasis added). The exception, that
is, finding excusable neglect for counsel's neglect, appears
to have swallowed the general rule that courts impute to the
client the neglect of counsel. See 6 J. Moore,
Moores Federal Practice 55.10, at 55-66 (2d ed. 1988). And
this Court has further recognized that under the principles
governing the decision to set aside default iudgments, Mon-
tana has moved away from the rule that the client is "abso-
lutely responsible for her attorney's neglect." Graham v.
Mack (Mont. 1984), 699 P.2d 590, 594. The failure of counsel
to act quickly here weighs for finding excusable neglect.
The majority also holds that All West's temporary in-
ability to provide a retainer for counsel provides no excuse
for failing to respond. According to the majority, All West
chose to apply its limited funds for truck repair rather than
for defense of the action. This reasoning does not reflect
resolution of doubt in favor of setting aside a default
judgment. Choosing to provide funds for one's business
instead of paying for a response to a complaint may consti-
tute willful disregard for the legal process. However, where
the repairs are essential to the day to day operations of the
business, the failure to respond due to an unexpected happen-
ing may be reasonably excused. Roth the temporary lack o f
funds and counsel's neglect in acting quickly weiqh for
granting the motion to set aside the default judgment.
The majority and the District Court err in their reli-
ance on distinguishable case law. The Court cites the rule
that each case must be reviewed individual-ly, but the result
arrived at here fails to judge the motion to set aside on the
merits o f the uniau-e facts presented.
Justice
Mr. Justice John C. Sheehy and Mr. Justice William E. Hunt, Sr.:
We concur in the dissent of Mr. Justice McDonough.
Justices