NO. 95-166
IN THE SUPREME COURT OF THE STATE OF MONTANA
1996
LOUIS WILLIAM KARLEN and
BETTY J. KARLEN,
Plaintiffs/Respondents,
v.
BRUCE ALLEN EVANS,
Defendant/Appellant.
APPEAL FROM: District Court of the Eighth Judicial District,
In and for the County of Cascade,
The Honorable Thomas McKittrick, Judge presiding
COllTSEL OF RECORD:
For Appellant:
Neil E. Ugrin & Roger T. Witt, Ugrin, Alexander,
Zadick & Higgins, Great Falls, Montana
For Respondent:
Jason G. Dykstra & David A. Hopkins, Marra, Wenz,
Johnson & Hopkins, Great Fails, Montana
Submitted on Briefs: November 30, 1995
Decided: April 16, 1996
Filed:
Justice James C. Nelson delivered the Opinion of the Court
Bruce Allen Evans (Evans) filed a Motion to Dismiss for
failure to prosecute the complaint filed against him by Louis and
Betty Karlen (the Xarlens) in the Eighth Judicial District Court,
Cascade County. The District Court granted Evans' motion and
dismissed the complaint with prejudice. Several months later, upon
motion by the Karlens, the District Court ordered the dismissal set
aside pursuant to Rule 60 (b)(6), M.R.Civ.P. Evans appeals. We
affirm.
The issues presented for review are:
1. Did the District Court err in setting aside the prior
dismissal of the Karlens' complaint under Rule 60(b) (6),
M.R.Civ.P.?
2. Did the District Court err in finding that the Karlens
brought their motion for relief within a reasonable time?
Background Facts
On August 13, 1987, Evans' vehicle rear ended the Karlens'
vehicle in Cascade County. The Karlens, residents of South Dakota,
retained Paul Dold, a South Dakota attorney, to represent them in
pursuing a negligence action against Evans. After an unsuccessful
attempt to file their claim in federal district court in South
Dakota, and with only a few days remaining before the statute of
limitations expired, Dold contacted Joe Marra, a Montana attorney,
to assist in filing the complaint in Montana. At Dold's request,
Marra filed a complaint in the Eight Judicial District Court,
Cascade County, on August 10, 1990.
2
After the complaint was filed, Evans retained Neil Ugrin to
represent him in this action. Attorneys Ugrin and Marra discussed
the case and Ugrin requested that Marra produce certain documents
so that Ugrin could assess the Karlens' claims of liability and
damages. Pursuant to this request, Marra sent numerous letters to
Dold requesting information. Marra also attempted to contact Dold
by phone, but his attempts were unsuccessful.
On November 2, 1993, Evans filed a motion to dismiss the case
for failure to prosecute pursuant to Rule 41(b), M.R.Civ.P. The
District Court granted the motion on December 23, 1993, and ordered
the case dismissed with prejudice.
On January 13, 1995, the Karlens filed a motion to set aside
the Order of Dismissal pursuant to Rule 60(b) (ti), M.R.Civ.P. The
Karlens alleged that they were completely unaware that their case
had been dismissed. It was only after they attempted to contact
Dold to do some additional work for them that they discovered Dold
was incarcerated in the South Dakota State Penitentiary for
embezzling from his clients' trust accounts and that he had been
disbarred. Due to Dold's incarceration, the Karlens were unable to
obtain a copy of their file until the latter part of 1994. After
reviewing the file, they learned that Dold had misled them into
believing that their case was progressing on schedule when, in
actuality, it had been dismissed.
A hearing on the Karlens' motion was held on February 16,
1995. On February 23, 1995, the District Court issued an Order
setting aside the earlier Order of Dismissal and allowing the case
to proceed to trial on its merits. Evans appeals the District
Court ' s Order
Issue 1
Did the District Court err in setting aside the prior
dismissal of the Karlens' complaint under Rule 60(b)(6),
There must be some point at which litigation ends and the
respecrive rights between the parties are forever established.
Under ordinary circumstances, once this point is reached a party
will not be allowed to disturb a judgment. However, Rule 60 (b),
M.R.Civ.P., is an exception to the doctrine of finality of
judgments. In re Marriage of Waters (1986), 223 Mont. 183, 186, 724
Rule 60 (b), M.R.Civ.P., provides, in part:
On motion and upon such terms as are just, the court
may relieve a party or a party's legal representative
from a final judgment, order, or proceeding for the
following reasons: (1) mistake, inadvertence, surprise,
or excusable neglect; . . . or 16) any other reason
justifying relief from the operation of the judgment.
Rule 60(b) also proscribes limits on the time within which a motion
may be made:
The motion shall be made within a reasonable time, and
for reasons (1), (2), and (3) when a defendant has been
personally served, whether in lieu of publication or not,
not more than 60 days after the judgment, order or
proceeding was entered or taken, or, in a case where
notice of entry of judgment is required by Rule 7'7(d),
not more than 60 days after service of notice of entry of
judgment .
Rule 60(bi, M.R.Civ.P.
The KarLens brought their motion for relief from the judgment
under Rule G0(b! (G!, M.R.Civ.F. Evans argued before the District
Court and now on appeal that the misconduct of the Karlens'
attorney is not an appropriate basis for relief under subsection
( 6 ) of Rule 60 (b). Evans contends that, based on prior Montana
case law, attorney misconduct is more appropriately addressed under
subsection (1) of that rule. Furthermore, Evans argues that since
relief under subsection (1) must be sought within G O days of a
judgment, and the Karlens' motion was not filed until nearly 13
months after the motion to dismiss was granted, their Rule 60(b)
motion is untimely.
The District Court disagreed with Evans and determined that
Dold's conduct toward the Karlens' was much more than the "mistake,
inadvertence, surprise, or excusable neglect" set forth in
subsection (1) of Rule GO(b). The court found that Dold's conduct
more properly falls under the "any other reason" clause of
subsection (6) as it constitutes "gross neglect and is
inexcusable." Thus the court determined that the motion was not
time barred because motions made pursuant to subsection ( 6 ) may be
made "within a reasonable time."
The degree of appellate scrutiny of a trial court's ruling on
a Rule GO(b) motion depends on whether or not the trial court set
aside the judgment. As a general rule, cases are to be tried on
their merits and judgments by default are not favored. Maulding v.
Hardman (1993), 257 Mont. 18, 23, 847 P.2d 292, 296 (citing Lords
v. Newman (1984), 212 Mont. 359, 363, 688 P.2d 290, 293). If the
trial court refused to set aside the judgment, then only a slight
abuse of discretion need be shown to warrant reversal. Lords, 688
P.2d at 293. If the trial court has set aside the judgment and the
appellant requests that the judgment be reinstated, then a manifest
abuse of discretion must be shown to warrant reversal. Lords, 688
P.2d at 293.
Since Evans contends that attorney misconduct falls under
subsection (1) of Rule 60(b) and since a party is precluded from
relief under subsection (6) when the facts or circumstances would
bring the case under one of the first five subsections of Rule
60(b), Maulding, 847 P.2d at 297, we must examine our prior case
law to determine which clause of Rule 60(b) properly addresses the
factual circumstances of the case before us.
Montana's Rule 60(b) is patterned after Rule 60(b) of the
Federal Rules of Civil Procedure. Montana's Rule, however,
provides for a 60-day limit on motions made under subsections (I),
(2) and (3), while the Federal Rule allows for a 1-year limit.
In 1982, this Court denied an appellant's motion to set aside
a default judgment under subsections (1) and (6) of Rule 60 (b).
,
Schmidt v. Jomac Inc., (1982) 196 Mont. 323, 639 P.2d 517. In
Schmidt, we held that failing to file an answer because counsel
mistakenly relied on the automatic stay provision of the Bankruptcy
Code was not a reason sufficient to justify relief from the
operation of the judgment under either section of Rule 60(b). A
mistake of law is not such a mistake as will support vacating a
default judgment. Schmidt, 639 P.2d at 519. Moreover, appellants
were precluded from using subsection (1) to set aside the judgment
because they did not file their motion until 231 days after entry
of the judgment.
A few months after the decision in Schmidt, this Court was
again confronted with a case involving attorney neglect or
misconduct as the basis for a Rule 60ib) motion. In Ring v.
Hoselton (1982), 197 Mont. 414, 643 P.2d 1165, counsel was unable
to adequately defend the rights of his clients before and during
trial because of emotional problems. Affidavits presented to the
trial court indicated counsel's failure to introduce factual
evidence, to prepare and submit findings and conclusions, and to
keep the client apprised of the status of the case. In m, we
said that
in cases in which a plenary trial was held, but through
extraordinary circumstances the movant's claim or defense
was not presented, or was presented in such a manner that
the judgment entered against him was akin to a default
judgment, relief has been granted on motion under Rule
60 ib) (6).
Rinq, 643 P.2d at 1172 (citing 7 Moore's Federal practice
60.27121, at 357 (2d ed. 1979)).
In deciding Rinq, we relied on opinions from several other
jurisdictions, including a case factually similar to the case
before us on appeal; L.P. Steuart, Inc. v. Matthews (C.A.D.C.
1964), 329 F.2d 234. In Steuart, the court dismissed plaintiff's
case for failure to prosecute due to the neglect of counsel. Two
years later, plaintiff filed a motion to vacate the judgment. In
support of the motion, plaintiff filed an affidavit stating that he
had made numerous inquiries of counsel, but that counsel refused to
answer these inquiries and continually assured plaintiff that the
7
case was proceeding. The court of appeals held that under the
circumstances, the district court had not abused its discretion in
granting relief under subsection (6) and that
[cjlause (1) of Rule 60(b) is not and clause (6) is broad
enough to permit relief when as in this case personal
problems of counsel cause him grossly to neglect a
diligent client's case and mislead the client.
Steuart, 329 F.2d at 235
Two years later, in Lords v . Newman (1984),212 Mont. 359, 688
P.2d 290, this Court held that where an attorney's failure to
represent a client constitutes actual misconduct, the client should
be granted relief from the default. Counsel in that case made a
general appearance on behalf of his clients who had neither been
served with process nor authorized counsel to so act. Counsel then
abandoned his clients and disappeared
In m, we relied on the "excusable neglect" provision of
subsection (1) to set aside a default judgment. Quoting an earlier
Montana case, we stated that
[tlhis court has been hesitant to impute the neglect 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 previously
remarked on can be distinguished, we choose to think that
where reasonable mlnds might differ in their conclusions
of excusable neglect, the doubt should be resolved in
favor of a trial on the merits.
Lords, 688 P.2d at 295 [quoting Worstell v . Devine (19591, 135
Mont. 1, 6, 335 P.2d 305, 307)
The following year, in Griffin v. Scott (1985), 218 Mont. 410,
710 P.2d 1337, we refused to set aside a default judgment under
subsection (1) when counsel failed to respond to a complaint and
summons forwarded to him by his clients. Counsel cited the
accumulation of mail and work in his office and his absence over
the Christmas holiday as the reason for failing to read his
clients' letter for several weeks. Relying on our decision in
Lords, we stated that the neglect of an attorney generally may be
attributed to the client except where the attorney's action
constitutes actual misconduct and the clients are blameless.
Griffin, 710 P.2d at 1338-39. In Griffin we determined that the
attorney's inaction did not approach the misconduct of the attorney
in Lords. Furthermore, the clients in Griffin were not blameless
as they did not mail the complaint and summons to the attorney
promptly after receiving them, they did nothing to check on the
progress of the suit, and they did not inform their attorney that
the matter would require prompt attention.
Conversely, the next year we reversed the denial of a motion
to set aside a default judgment under subsection (1) when we
determined that counsel was negligent in not properly withdrawing
and not notifying his former clients of the pending motion for
judgment of default. Twenty-Seventh Street, Inc. v. Johnson
(1986), 220 Mont. 469, 716 P.2d 210.
In 1991 we again examined subsections (1) and (6) of Rule
60(b) in a case in which counsel's mistake in failing to notice the
rescheduled date of a hearing caused a default judgment to be
entered against his client. In re Marriage of Castor (1991), 249
Mont. 495, 817 P.2d 665. In Castor, we affirmed the district
cart's refusal to set aside the judgment and we said
"mistake," "inadvertence," and "excusable neglect"
require some justification for an error beyond mere
carelessness or ignorance of the law on the part of the
litigant or his attorney. Lomas and Nettleton Co. v.
Wiseley (7th Cir. 19891, 884 F.2d 965, 967.
[Moreover], relief is afforded under subsection (6) of
Rule 60(b) in extraordinary situations when circumstances
go beyond those covered by the first five subsections or
when a party in whose favor judgment was entered has
acted improperly. Fuller v. Quire (6th Cir. 1990), 916
F.2d 358, 360; In re Marriage of Tesch (19821, 199 Mont.
240, 245, 648 P.2d 293, 296.
Castor, 817 P.2d at 667-68. By considering both subsections of
Rule 60(b), we reopened the door for consideration of attorney
misconduct under subsection (6) of the Rule.
Two years later, we examined a case wherein appellant sought
relief under subsections (1) ( 3 ) and (6) of Rule 60 (b).
, However,
we determined that the motion should have been based on subsection
(6) and we analyzed it under that subsection alone. Maulding v.
Hardman (1993), 257 Mont. 18, 847 P.2d 292.
In Mauldinq, appellant received a letter from opposing counsel
60 days after entry of judgment informing him of the judgment,
requesting payment, and offering to settle the case for an amount
less than the judgment. In our opinion, we noted that the timing
of this letter prevented appellant from claiming relief under the
first three subsections of Rule 60(b) due to the 60-day limit and
we concluded that appellant was entitled to relief under subsection
(6) because of the manner in which opposing counsel handled the
case and the manner in which damages were established and awarded.
We reiterated in Mauldinq, that relief may be afforded under
subsection (6) in extraordinary sitcations when circumstances go
beyond those covered by the first five subsections of Rule 60ib).
Mauldinq, 847 P.2d at 297 (quoting Castor, 817 P.2d at 668).
In 1994, we examined two cases involving attorney neglect or
misconduct and Rule 60(b). In the first, In re Marriage of Broere
(1994), 263 Mont. 207, 867 P.2d 1092, respondent, acting pro se,
failed to file his response to the petition for dissolution with
the district court. Based on information in the summons,
respondent mistakenly believed that filing his response with
opposing counsel would suffice. Upon learning of the error,
opposing counsel filed a praecipe for default and the district
court subsequently entered a decree of dissolution by default. On
appeal, we reversed the district court's refusal to set aside the
default judgment basing our decision on subsection (1) of Rule
60 (b). In our opinion, we defined "mistake" as "some unintentional
act, omission, or error arising from ignorance, surprise,
imposition, or misplaced confidence." Broere, 867 P.2d at 1094
(quoting Black's Law Dictionary 1152 (4th ed. rev. 1975)).
A few weeks later, in Shultz v. Hooks (1994), 263 Mont. 234,
867 P.2d 1110, we declined to address an appeal in relation to the
district court's ruling on "excusable neglect" under subsection (I!
of Rule 60(b). Instead, we based our decision to reverse the
district court on subsection (6) of that Rule. In Shultz, we
determined that the failure of a district courr: judge to disqualify
himself from presiding over a case involving a prior client was a
sufficient reason justifying relief from the operation of a
judgment under subsection (6) of Rule 60(b). Shultz, 867 P.26 at
In our most recent decision involving attorney neglect or
misconduct and subsections (1) and (6) of Rule 60(b!, we concluded
that bad advice from counsel does not rise to a level of gross
neglect as would warrant setting aside a judgment under subsection
( 6 ). Falcon v. Faulkner (Mont. 19951, 903 P.2d 197, 52 St .Rep.
1011.
In Falcon, counsel erroneously advised his client, who had
been sued in Montana for breach of contract, that the client need
not answer the complaint or appear in the suit as Montana lacked
personal jurisdiction over him. A default judgment was entered
against the client in Montana and subsequently registered in
Illinois, the client's state of residence.
In reaching our decision in F , we relied on our prior
m
decisions in Castor and Rinq to state that, although the situation
in Falcon did not require relief from the judgment, relief is
warranted under subsection (6) of Rule 60(b) in extraordinary
situations when circumstances go beyond those covered by the first
five subsections and include gross neglect of a diligent client's
case. Falcon, 903 P.2d at 201-02 (citing u, P.2d at
643 1172;
and Castor, 817 P.2d at 6681. We also noted that the appellant in
Falcon was not diligent as he waited more than five years before
moving the court to set aside the judgment
Accordingly, from a review of our prior case law it is
apparent that in cases of an attorney's mistake, inadvertence,
misconduct or neglect in the representation of a client, either
subsection ii) or subsection (6) may be applicable, depending upon
the facts, the nature and the seriousness of the mistake,
inadvertence, misconduct or neglect involved. In ordinary
circumstances, subsection (1) of Rule 60(b) will be applicable.
However, where the moving party can meet the higher burden of
demonstrating extraordinary circumstances, gross neglect or actual
misconduct, that the client was blameless and he or she acted to
set aside the default within a reasonable period of time, then,
under our case law, subsection (6) of Rule 60(b) is available.
Necessarily, the decision on which subsection of the Rule will be
applicable in a given set of circumstances will depend upon the
facts of the case, upon how the motion is pled and, ultimately,
will be left to the sound discretion of the trial court.
Turning to the case before us on appeal, we hold that the
facts presented in this case are such extraordinary circumstances
as would qualify for relief under subsection (61 of Rule 60 (b).
The Karlens' former attorney intentionally misled them into
believing that their case was progressing and concealed from them
the fact that the case had actually been dismissed. As shown, our
prior case law permits attorney misconduct of such an egregious
nature to fall within the "any other reasonn clause of subsection
(6) of Rule 60 (b). Furthermore,
liln determining what the ambiguous phrase "any other
reason" means, the United States Supreme Court has
stated:
In simple English, the language of the 'other
reason' clause, for all reasons except the
five particularly specified, vests power in
courts adequate to enable them to vacate
judgments whenever such action is appropriate
to accomplish justice.
Klapprott v. United States (1949),335 U.S. 601, 614-615,
69 S.Ct. 384, 390, 93 L.Ed. 266, 277.
In re Marriage of Waters (19861, 223 Mont. 183, 187, 724 P.2d 726,
Evans has not shown the existence of a manifest abuse of
discretion that would warrant reversing the District Court's Order.
Accordingly, we hold that the District Court did not err by
granting the Karlens' Rule 60 (b)(6) motion to set aside the court's
previous order dismissing their case and we affirm on this issue.
Issue 2
Did the District Court err in finding that the Karlens brought
their motion for relief within a reasonable time?
Since we have determined that the attorney misconduct shown in
this case does rise to the level of gross neglect and is an
extraordinary circumstance compelling relief under subsection (6)
of Rule 60(b), we must also determine whether the Karlens' motion
was made within a reasonable time. Rule 60(b), M.R.Civ.P
In its February 23, 1995 Order setting aside the prior Order
of Dismissal, the District Court stated that:
Under the circumstances, the prejudice to Mr. Evans is
minimal. Further, the Karlens acted reasonably. Once
they learned that Mr. Dold had been disbarred and
imprisoned, they had difficulty retrieving their file
since no one was left in charge of Mr. Dold's files.
Once the Karlens regained possession of their file, with
the help of ' h i new South Dakota [counsel], they were
:er
able to determine what had happened to their case. At
that point, they moved to set aside the Order of
Dismissal.
This analysis by the District Court on the question of timeliness
follows our decision in Waters where we said that:
What is a reasonable time will depend on the particular
facts of the individual case. Questions of timeliness
under the rule are addressed to the sound discretion of
the court, and the court's judgment will be overturned
only upon a showing of abuse of discretion. [Citation
omitted.1 Relevant to the determination of timeliness is
prejudice to the party opposing the motion and the basis
for the moving party's delay. [Citation omitted.]
Waters, 724 P.2d at 730
Accordingly, we hold that the District Court did not err in
findinq that the Karlens brought their motion for relief within a
reasonable time and we affirm the decision of the District Court
Affirmed .
April 16, 1996
CERTIFICATE O F SERVICE
I hereby certify that the following certified order was sent by United States mail, prepaid, to the
following named:
i
Neil E. Ugrin & Roger T. Win
UGRIN, ALENXANDER, ZADICK & HIGGINS, P.C.
P.O. Box 1746
Great Falls MT 59403-1746
Jason F. Dykstra & David A. Hopkins
MARRA, WENZ, JOHNSON & HOPKINS, P.C.
P.O. Box 1525
Great Falls MT 59403-1525
ED SMITH
CLERK OF THE SUPREME COURT
STATE O F MONTANA