No. 85-04
I N THE SUPREME COURT OF THE STATE O F MONTANA
1985
NEAL PAXSON and FLORA PAXSON,
P l a i n t i f f s and R e s p o n d e n t s ,
-vs-
ALDEN F . RICE,
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 S i x t e e n 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 G a r f i e l d ,
T h e H o n o r a b l e A. B. M a r t i n , Judge p r e s i d i n g .
COUNSEL OF RECORD:
For Appellant:
Sandall, C a v a n , S m i t h , Howard & Grubbs; Timothy Cavan
argued, B i l l i n g s , M o n t a n a
F o r Respondents:
Brown & Huss; G e o r g e W. H u s s argued., Pliles C i t y ,
Montana
Submitted: June 2 5 1 1 9 8 5
Decided: September 10, 1985
Filed: SEP 10 '1985
4
F
22452 *,dw
Clerk
Mr. Chief Justice J. A. Turnage delivered the Opinion of the
Court.
Default judgment was entered against Alden Rice in the
Sixteenth Judicial District, Garfield County, on March 22,
1984. Rice moved to vacate the judgment on March 30, 1984.
Following hearing on April 18, 1984, the judge denied the
motion to vacate and ordered another hearing on the amount of
damages. At the damages hearing on August 14, 1984, the
court renewed the $40,000 judgment. Rice appeals. Neal and
Flora Paxson, the parties obtaining judgment, challenge this
Court's jurisdiction on the grounds that this appeal is
untimely. We hold that the appeal is timely and affirm the
District Court.
Rice raises two issues:
1. Did the District Court err in refusing to vacate
the default judgment?
2. Did the District Court err in refusing to allow
evidence that mitigated damages?
Alden Rice did construction work in Jordan, Montana.
In October 1983 Neal and Flora Paxson sued Rice for breach of
contra.ct, breach of the implied warranty of habitability,
negligent construction, and bad faith. They sought
$50,000--$30,000 repairs, $5,000 substitute housing, $5,000
inconvenience, and $10,000 punitive damages. Rice was served
on October 11, 1983, and his attorney filed a motion to
dismiss on October 28, 1983. This unbriefed motion was
denied on December 16, 1983. No answer was filed within
twenty days.
The Paxsons' attorney, George Huss, wrote three letters
to Rice's attorney, Robert Morin, on January 18, February 14,
and February 23, 1984, urging Morin to answer or he would
seek default. Huss filed a notice of intent to enter default
on March 5, 1984, and gave eleven days notice although only
required to give three da.ys notice. On March 15, 1984, Morin
told Huss he would mail the answer that day but did not do
so. A judgment by default for $40,000 was entered without
hearing March 22, 1984.
On March 30, 1984, Morin filed a motion to vacate the
default. The grounds stated for vacating were that during
this time Morin was leaving the Berger Law Firm and his
inattention was excusable neglect and. mistake. The District
Court heard and denied the motion in April and ordered an
evidentiary hearing on the amount of damages.
A.fter this hearing the District Court upheld the de-
fault judgment and renewed the $40,000 judgment on August 14,
1984. Rice filed a notice of appeal on September 12, 1984.
Timeliness of Appeal
Before considering the substantive issues, we will
discuss why this appeal is timely. The relevant statute is
Rule 55 (b)(2), M.R.Civ.P. :
"In all other cases the party entitled
to a judgment by default shall apply to
the court therefor; ... If, in order
to enable the court to enterjudgment or
-
- carry - -
to it into effect, it is necessary
to take an account or to determine the
amount of damages or to establish the
truth of any averment by evidence or to
make an investigation of any other
matter, - court may conduct such
the
hearings - order such references - -
or as it
deems necessary and proper and shall
accord a right of trial by jury to the
parties when and as required by any
statute of the state of Montana." (Em-
phasis added.)
A Rule 55(b) (2) hearing must be held on unliquidated
damages, and logically the hearing should be held before a
judge enters the amount of damages in a default judgment. In
this case the District Court entered default judgment for
$40,000, refused to vacate the default, then had a hearing on
the amount.
Rice's motion to vacate was denied April 18, 1984; the
$40,000 judgment was renewed August 14, 1984; and this appeal
was filed September 12, 1984. To be a timely appeal the
August, not the April, order must constitute the final judg-
ment. The finality of the judgment depends on whether a
damages hearing was mandatory or discretionary. Smotherman
v. Christianson (1921), 59 Mont. 202, 195 P. 1106, required a
hearing to determine unliquidated damages. In this case a
hearing was mandatory because the damages were unliquj-dated.
Therefore, the April order could not be final. Montana and
federal rules are identical, and many federal cases require
the hearing before determining the amount of judgment.
"It is we1.l settled that a default
judgment for money may not be entered
without a hearing unless the amount
claimed is a liquidated sum or capable
of mathematical calculation." Davis v.
Fendler (9th Cir. 1981), 650 F.2d 1154,
1161.
The fact that a judge, not a clerk, entered the default
judgment does not negate the need for a hearing on damages.
A clerk may enter a default when the claim is for a sum
certain under Rule 55(b) (I), M.R.Civ.P., and for that a
hearing i s not required.
. Except for the narrow circumstances
of Rule 55(b) ( I ) , judgment by default can only be entered by
a judge. This does not mean a judge can enter a default
judgment for unliquidated damages without a hearing. The
judge has nothing on which to base the amount of judgment. A
defaulting party loses his defenses against the claim, but
the claim should only be for the amount of damages actually
suffered. We hold that the judgment of August 14, 1984, was
the final judgment here, and. appeal from that judgment was
timely taken.
Issue 1--Error in refusing to vacate the default
judgment?
In Lords v. Newman (Mont. 19841, 688 P.2d 2901 41
St.Rep. 1793, we stated the standard of review where a Dis-
trict Court has refused to set aside a default:
". . . [Wlhere th.e trial court has re-
fused to set aside the default, the
proper standard of review is that no
great abuse of discretion need be shown
to warrant a reversal. ... It is clear
that the issue of abuse of discretion
must be decided on a case-by-case basis."
Lords. 688 P.2d at 294.
The general ru1.e is that the neglect of an attorney is at-
tributable to his client so that mere attorney neglect is
insufficient to set aside a default. However, we recognized
in Lords that we have found attorney neglect excusable on the
part of the client upon the proper showing. Lords, 688 P. 2d
at 295. Therefore, in reviewing the decision of the lower
court we need not find a great abuse of discretion, but we
must find some abuse and a proper showing to excuse neglect
in order to set aside the default.
In Lo2ds the attorney had totally abandoned his clients
and this Court concluded that it would be unconscionable to
charge the client with the attorney neglect. We held that
the trial court abused its discretion. in not setting aside
the default where the attorney completely abandoned the
clients who had diligently tried. to correct the court's
action. Lords. 688 P.2d at 296.
The facts in the present case are distinguishable from
Lords. In Lords, the attorney abandoned his clients after he
made a general appearance on behalf of some of the clients
who had not been served with process and had not authorized
such general appearance. In the present case, we find a
continuing effort on the part of the attorney for plaintiffs
to obtain an answer from d-efendant's attorney, Morin. This
included writing letters, filing notices and telephoning, all
to no avail. However, Morin did. not abandon his clients and
leave the state. He received notices and talked on the phone
on behalf of the clients, but failed to do anything in re-
sponse to the numerous requests by opposing counsel. More-
over, once default had been entered on March 22, in eight
days attorney Morin moved to vacate that default. As demon-
strated in the telephone conversation of March 15, attorney
Morin intended to file an answer, but again postponed the
preparation and filing of that pleading. That procra.stina-
tion is a type of neglect which is properly attributable to a
client, and which we distinguish from the abandonment in
Lords.
This is not a factual situation where reasonable minds
might conclude that the conduct of attorney Morin was excus-
able. We find no abuse of discretion in the District Court's
conclusion that the conduct was not excusable neglect. We
affirm the action of the District Court in refusing to vacate
the default judgment.
Issue 2--Error in refusing evidence at damages hearing?
Rice contends that the District Court did not allow
evidence which mitigated damages. He correctly asserts that
evidence that mitigates damages should be allowed. He cites
Lindsey v. Drs. Keenan, Andrews & Allred (1946), 118 Mont.
312, 165 P.2d 804, for the rule that evidence mitigating
damages may be introduced. In fact, the plaintiff has a
burden of showing a nexus between the default liability and
the damages. Trans World Airlines, Inc. v. Hughes (2nd ~ i r .
1971) , 449 F. 2d 5 1 , 70. Evidence that establishes a defense
may also mitigate damages and that evidence should be admit-
ted as relevant to damages.
Rice did not establ-ish that evidence mitigating damages
was excluded. The single incident he pointed to in his brief
may be relevant to liability but its relevance to damages is
not apparent. Liability was no longer an issue, so the
evidence was excludable. Henry v. Sneiders (9th ~ i r .1974) ,
The judgment is affirmed.
\
Chief Justice
.L
We concur: