Agnello v. Walker

• Citation: 306 SW 3d 666
• Decision Date: 27 April 2010
• Docket Number: No. WD 71013.,WD 71013.
• Parties: Joe AGNELLO and Elizabeth Agnello, Respondents, v. Kent WALKER d/b/a Hardwood Productions, Appellant.
• Court: Missouri Court of Appeals

306 S.W.3d 666

Joe AGNELLO and Elizabeth Agnello, Respondents, v. Kent WALKER d/b/a Hardwood Productions, Appellant.

No. WD 71013.

Missouri Court of Appeals, Western District.

March 23, 2010.

As Modified April 27, 2010.

Tamara Putnam, Kansas City, MO, for Appellant.

John L. Mullen and Pamela J. Welch, Kansas City, MO, for Respondents.

Before Division III: JAMES EDWARD WELSH, Presiding Judge, and MARK D. PFEIFFER and KAREN KING MITCHELL, Judges.

MARK D. PFEIFFER, Judge.

Joe and Elizabeth Agnello (Agnello) filed suit against Kent Walker d/b/a Hardwood Productions (Walker) in the Circuit Court of Jackson County (trial court) alleging that Walker was liable to them under theories of breach of contract and fraud related to Walker's construction and installation of custom cabinetry in their home. Walker failed to respond to the Agnello petition in a timely manner and the trial court entered default judgment in favor of Agnello after conducting an evidentiary hearing on the issue of damages. Walker now appeals the trial court's denial of his motion to set aside that default judgment and argues that the default judgment is both erroneous and not supported by substantial evidence. On appeal, Walker raises three points. In his first point, Walker argues that the trial court abused its discretion in not setting aside the default judgment because Walker claims that he demonstrated both a meritorious defense to the Agnello petition and also showed good cause as to why he failed to respond to the petition. In his second point on appeal, Walker argues that the default judgment erroneously awards damages other than that which was demanded in the petition and was not otherwise supported by substantial evidence. In his final point, Walker argues that the trial court abused its discretion in refusing to reconsider its order denying the motion to set aside the default judgment because Walker claims he produced additional evidence of good cause that the trial court refused to consider. We affirm in part and reverse in part.

Factual Background

Walker was hired by Agnello to construct and install custom cabinetry in the Agnello home. Pursuant to the Agnello-Walker contract,¹ the cabinets were to be constructed using clear alder wood. Walker constructed and installed cabinetry in the Agnello home and received payment from Agnello in the amount of approximately $49,000. After paying Walker, Agnello encountered problems with the cabinets sagging and tilting. Agnello consulted with another contractor who informed them that where the cabinetry was painted, the cabinets had been constructed with poplar wood, a cheaper alternative to clear alder wood. The contractor provided them with an estimate of $53,300 to remove and replace the defective cabinets. Agnello hired attorney John Mullen (Mullen). Mullen sent a letter of representation to Walker. Upon receiving the letter, Walker hired attorney Justin Meeks (Meeks), who notified Mullen that he was representing Walker and requested that all further contact and correspondence be directed to him. Mullen filed suit on behalf of Agnello on August 8, 2008, but did not send a courtesy copy of the petition to Meeks.² Walker was personally served on August 27, 2008, and while there is no competent evidence on the topic in the record before us, Walker argues that between he and Meeks, they mishandled the internal office filing of the petition and mistakenly failed to file a responsive pleading as required by law. Thirty-six days after service of process upon Walker, Agnello filed a motion for interlocutory order of default and judgment on October 2, 2008. There being no requirement that a party in default for failure to appear be provided notice of the filing of motions or written notice of hearings,³ Agnello did not provide notice of the motion for interlocutory order of default and judgment, nor did Agnello provide notice of the October 15, 2008 default judgment evidentiary hearing.⁴

In their petition, Agnello asserted five counts, alleging breach of contract, fraud, negligent misrepresentation, intentional misrepresentation, and violation of the Missouri Merchandising Practices Act (MMPA), RSMo 407.025.⁵ Counts I, II, and V each alleged identical actual or compensatory damages, to-wit:⁶

A. Cost to remove, repair and replace the defective cabinets which same will exceed $50,000;

B. Loss of use of plaintiffs' kitchen while repairs are undertaken;

C. Attorney's fees incurred in this action; and

D. Prejudgment and post judgment interest as permitted by law.

At the default judgment hearing, Elizabeth Agnello testified and evidence was presented that the cost of removing and replacing the defective Walker-constructed cabinetry would be $53,300 and that the entire removal and replacement of all of the Walker cabinetry was required because repair was not a reasonable option. Though not pled as damages in the petition, Elizabeth Agnello also testified that Walker was also paid to construct and install pocket doors with a TV swivel, appliance cabinetry, painting labor, and staining the kitchen island, but Walker failed to do so and Agnello was thereby additionally damaged. No evidence was presented that the contract between the parties contained any sort of agreement authorizing a prevailing party to receive attorney's fees from the other party. However, Agnello and Agnello's trial counsel requested attorney's fees in relationship to Count V, the MMPA count, and represented that a fair and reasonable award of attorney's fees for work performed by Agnello's attorneys should be $25,000. Finally, Agnello requested punitive damages of $100,000 to be assessed against Walker on Count II of the petition.⁷

At the default judgment hearing, counsel for Agnello⁸ submitted a proposed judgment for the trial court, including handwritten notations for additional damages that were added by counsel for Agnello at the default judgment hearing. Counsel for Agnello advised the court that she had made handwritten corrections to the proposed judgment based upon documents she had received that morning. The handwritten modifications altered the actual or compensatory damages awarded for Count II and Count V of the Agnello petition. The proposed judgment was accepted and entered by the trial court immediately following the presentation of evidence at the default judgment hearing. The default judgment awarded damages as follows:

A. Count I—compensatory damages of $53,300;

B. Count II—compensatory damages of $6,089 and punitive damages of $100,000; and

C. Count V—compensatory damages of $6,089 and reasonable attorney's fees of $25,000.

Shortly thereafter, Walker received notice of the entry of default judgment. Walker retained new counsel, Tamara Putnam, for the purpose of attempting to convince the trial court to set aside the default judgment. Walker filed a motion to set aside the default judgment on November 14, 2008, arguing that Walker had good cause for failing to timely respond to the petition and that he had meritorious defenses to the petition. The motion was supported by signed affidavits from both Walker and his wife, Diana, also an employee of his woodworking business. The affidavits addressed the topic of meritorious defenses but failed to address the topic of the facts constituting good cause for failing to timely respond to the petition. No other affidavits or evidence were submitted to the trial court in support of the motion to set aside the default judgment. After a hearing on March 24, 2009, at which both sides made arguments but where no additional evidence was presented, the trial court entered an order on April 1, 2009, denying the motion to set aside for the express reason that Walker had failed to meet his evidentiary burden to show good cause for setting aside the default judgment.

Walker responded by filing a motion to reconsider and motion for relief under Rule 74.06, arguing that the failure to timely respond to the petition was due to an internal filing error on the part of Walker's former attorney's office. Walker even attached a hearsay letter from Walker's former attorney. But, Walker failed to provide any additional affidavit or evidentiary support for his motion to reconsider and motion for relief under Rule 74.06. The trial court denied the motion without a hearing on May 7, 2009. This appeal timely followed.

Denial of Motion to Set Aside Default Judgment

Walker first claims that the trial court erred in failing to set aside the default judgment in response to either the motion to set aside default judgment pursuant to Rule 74.05(d) or the motion to reconsider and for relief under Rule 74.06(b). We disagree.

A motion to set aside a default judgment is governed by Rule 74.05(d), which provides that a default judgment may be set aside "upon motion stating facts constituting a meritorious defense and for good cause shown." (Emphasis added.) The trial court is vested with discretion to rule upon a motion to set aside a default judgment and we will not disturb a trial court's ruling under Rule 74.05(d) absent an abuse of discretion. Brungard v. Risky's Inc., 240 S.W.3d 685, 688 (Mo. banc 2007). However, it is a well-established principle of Missouri law that our courts disfavor default judgment and prefer that cases be decided on the underlying merits of the case. Id. at 687-88. Consequently, a trial court has broader discretion in granting a motion to set aside a default judgment than in overruling such a motion. In re Marriage of Callahan, 277 S.W.3d 643, 644 (Mo. banc 2009); Distribution Transp. Servs., Inc. v. Salihovic, 2 S.W.3d 822, 823-24 (Mo.App. E.D.1999). Conversely, a motion to set aside a default judgment is not a self-proving motion. Gorzel v. Orlamander, 352 S.W.2d 675, 678 (Mo.1961); First Cmty. Bank v. Hubbell Power Sys., Inc., 298 S.W.3d 534, 540 (Mo.App. S.D.2009); Jew v. Home Depot USA, Inc., 126 S.W.3d 394, 396 (Mo.App. E.D.2004). The motion must itself be...