Jonathan Bryce Miller & Barbara Lou Miller Trust v. Cox

Decision Date28 August 2020
Docket NumberNo. 121,190,121,190
Citation469 P.3d 686 (Table)
Parties JONATHAN BRYCE MILLER AND BARBARA LOU MILLER TRUST, Appellee, v. Keith D. COX and Gloria G. Cox, Appellants.
CourtKansas Court of Appeals

Brian E. Vanorsby and Ronald L. Campbell, of Fleeson, Gooing, Coulson, & Kitch, L.L.C., of Wichita, for appellants.

No appearance by appellee.

Before Green, P.J., Atcheson and Gardner, JJ.

MEMORANDUM OPINION

Per Curiam:

Gloria Cox appeals from a judgment of the trial court denying her motion to set aside default judgment. Gloria argues that the trial court erred (1) when it ruled that she did not have a meritorious defense and (2) when it ruled that her failure to timely answer plaintiff's petition for relief was inexcusable neglect. We disagree and affirm. Gloria also argues that the trial court incorrectly determined prejudgment and postjudgment interest to be awarded in this action. We agree and reverse. And so, we affirm in part, reverse in part, and remand with directions.

In January 2017, the Sumner County District Court entered a default judgment ordering the Coxes to pay attorney fees to the plaintiff in Miller Trust v. Henning, et al. , No. 12 CV 50 (Sumner County Dist. Ct.) (the underlying case).

The facts of the underlying case center on the sale of approximately 118.4 acres of property located at 1550 E. 113th Avenue North in Bell Plaine, Kansas (the Property). In June 2001, Keith and Gloria Cox sold the Property by installment contract to Gray and Lou Cinda Miller, and the Millers' business partner, Alvin Henning. The same day, Gloria and her husband executed a warranty deed conveying an undivided one-half interest to the Millers and an undivided one-half interest to Henning. The Coxes' attorney held the warranty deeds in escrow for delivery upon final payment of the installment contract.

Immediately, the Millers began making payments on the contract. In 2004, the Millers assigned their property interest to a trust named the Jonathan Bryce Miller and Barbara Lou Miller Trust, dated June 23, 1983 (Miller Trust). Miller Trust continued making the Millers' payments. Meanwhile, Henning made no payments except the initial $18,000 balance paid at signing of the 2001 contract for deed. In March 2010, the Coxes sent out a notice of default stating that Miller Trust and Henning were behind on payments. The Coxes accelerated the amount due under the contract and demanded the balance. In May 2010, Henning paid the remaining balance to the Coxes.

Once Henning paid the balance, the Coxes assigned the contract for deed to Briar Patch Investments, LLC (Briar Patch), an entity owned by Henning and John P. Smith. Miller Trust contested this assignment of contract by filing the quiet title action in the underlying case. Miller Trust argued that by assigning the contract for deed to Briar Patch, the Coxes had breached an agreement and had clouded title to the Property. Miller Trust initially named the Coxes as defendants in the underlying case. But the Coxes disclaimed any interest in the property, resulting in the court dismissing them from the suit under a stipulated journal entry in 2012.

For five years, litigation in the underlying case continued without the Coxes. After a bench trial, the trial court entered a judgment for Miller Trust. The trial court partitioned the Property and assessed the costs and fees of the quiet title and partition against the Property. Miller Trust elected to take the Property at the appraised value of $260,000. Miller Trust, therefore, needed to buy Henning's half of the property at 50% of the appraised value minus costs chargeable in the partition. The trial court found that those costs were $117,700.94 in attorney fees and expenses, plus $1,555 in Commissioner's fees and expenses, for a total of $119,255.94. Then, the trial court deducted that amount from the appraised value, that is, $260,000 - $119,255.94 = $140,744.06. Thus, the amount Miller Trust would owe Henning to obtain his half-interest in the Property was $70,372.03, before considering other factors.

Next, the trial court considered contributions that Miller Trust had made to the Property, including paying property tax and removing debris that Briar Patch had dumped on the Property. The trial court found that Miller Trust's contributions totaled $78,003.61. As a result, the trial court granted the Property to Miller Trust and ordered Henning to pay $7,631.58 to Miller Trust. The litigation in the underlying case ended with this judgment, dated January 10, 2017.

On April 17, 2018, Keith Cox committed suicide. As described in declarations of Gloria and her son, Rick Cox, Gloria "has not been the same since her husband's death." The declarations stated that Gloria has had bouts of extreme grief with emotional breakdowns and has had trouble concentrating and making thoughtful decisions for herself. Also, she had become forgetful at times. Gloria also has had to deal with additional stressors after her husband's death. For example, her great-grandson was diagnosed with a benign brain tumor

. Two weeks later, Gloria's son told her that he had lung cancer. Another son, age 17, had trouble coping with his father's suicide.

In July 2018, Miller Trust filed the present lawsuit, naming the Coxes as defendants. The petition sought indemnification for breach of warranty of title. Miller Trust argued that the Coxes had refused to defend its title and, thus, forcing Miller Trust to pursue a quiet title action and incur attorney fees. Miller Trust served its petition and summons on the Coxes through certified mail.

When Gloria received the petition and summons, she signed for them but did not open the envelopes. Instead, she placed them in a file cabinet and forgot about them. And so, Gloria neither answered the petition nor appeared in court. The trial court entered a default judgment in favor of Miller Trust against the Coxes in the amount of $119,255.94, plus prejudgment and postjudgment interest and costs.

In October 2018, Gloria moved to set aside the default judgment. After a hearing on the motion, the trial court ruled that the judgment was not void as to Gloria but was void as to Keith Cox because he had died before the proceedings began. Also, the court ruled that Miller Trust would not be prejudiced by setting aside the default judgment.

The court also ruled that Gloria's failure to answer Miller Trust's petition was not excusable neglect. The court further ruled that Gloria had no meritorious defenses, except that the amount of the default judgment was incorrect because attorney fees had already been charged against partition sale proceeds in the underlying case. Thus, the default judgment represented a double recovery of half of the attorney fees. For this reason, the court told counsel for Miller Trust the following: "I would be willing to deny this motion if you'll reduce your judgment by half. That would then reflect the true amount of attorney fees that haven't been reimbursed." Miller Trust agreed. And the trial court entered judgment for Miller Trust against Gloria for $59,627.97, plus 10 percent interest from January 10, 2017, until paid.

Gloria timely appeals the trial court's denial of her motion to set aside default judgment.

Standard of Review

An appeal from an order denying a motion to set aside a judgment brings up for review only the order of denial itself and not the underlying judgment. Giles v. Russell , 222 Kan. 629, Syl. ¶ 4, 567 P.2d 845 (1977). "A decision to set aside a default judgment rests within the discretion of the district court. This decision is subject to review under an abuse of discretion standard." First Management v. Topeka Investment Group , 47 Kan. App. 2d 233, 239, 277 P.3d 1150 (2012). A judicial action constitutes an abuse of discretion under the following conditions: (1) if no reasonable person would take the view adopted by the trial court; (2) if it is based on an error of law; or (3) if it is based on an error of fact. Wiles v. American Family Life Assurance Co. , 302 Kan. 66, 74, 350 P.3d 1071 (2015).

K.S.A. 2019 Supp. 60-260(b)(1) provides relief from a final judgment, order, or proceeding when there is a "mistake, inadvertence, surprise or excusable neglect." Default judgments are not favored by the law but are necessary when the inaction of one party frustrates the administration of justice. Jenkins v. Arnold , 223 Kan. 298, 299, 573 P.2d 1013 (1978) ; Garcia v. Bell , 303 Kan. 560, Syl. ¶ 3, 363 P.3d 399 (2015) (holding that the law "disfavors default judgments, especially in matters involving large sums of money"). The court may set aside a default judgment for good cause. In First Management , this court stated the following condition for good cause:

"A motion to set aside a default judgment will only be granted if the movant has proven by clear and convincing evidence (1) that the nondefaulting party will not be prejudiced by the reopening, (2) that the defaulting party has a meritorious defense, and (3) that the default was not the result of inexcusable neglect or a willful act.’ " First Management , 47 Kan. App. 2d at 239 (quoting Montez v. Tonkawa Village Apartments , 215 Kan. 59, 64, 523 P.2d 315 [1974]).

In determining whether a plaintiff will be prejudiced by setting aside a default judgment, the normal burdens associated with the trial process do not constitute prejudice. A party is not prejudiced by having to establish at trial his or her entitlement to a judgment. French v. Moore , No. 102,170, 2010 WL 481280, at *3 (Kan. App. 2010) (citing Montez , 215 Kan. at 65 ). Prejudice to the nondefaulting party results under the following conditions: (1) if it has undertaken action in reliance on the default judgment, (2) if its ability to pursue its claim has been hindered since the entry of default, or (3) if evidence has been destroyed. Garcia , 303 Kan. at 571 ; French , 2010 WL 481280, at *4.

Here, the trial court ruled that Miller Trust would not be prejudiced. This issue is not disputed...

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