Beckmann v. Miceli Homes, Inc.

• Decision Date: 01 May 2001
• Parties: (Mo.App. S.D. 2001) Kevin C. Beckmann, et al., Respondents, v. Miceli Homes, Inc., et al., Defendant/Appellant. ED78435 0
• Court: Missouri Court of Appeals

45 S.W.3d 533 (Mo.App. S.D. 2001)

Kevin C. Beckmann, et al., Respondents, v. Miceli Homes, Inc., et al., Defendant/Appellant.

ED78435

Missouri Court of Appeals Eastern District

05/01/2001

Appeal From: Circuit Court of St. Louis County, Hon. Brenda Stith Loftin

Counsel for Appellant: Garry Seltzer

Counsel for Respondent: Stephen G. Bell

Opinion Summary: Midwest Floor Company, one of two defendants in Plaintiffs' action alleging defects in the construction of their new home, appeals the entry of default judgment against it for $12,500. Midwest argues on appeal that the court erred in: (1) entering a default judgment purporting to assess damages without any proof of damages; (2) denying Midwest's motion to set aside the default upon showing of good cause and meritorious defense; and (3) denying Midwest's motion to dismiss it as a party defendant when Plaintiffs, following the denial of Midwest's motion to set aside the default, filed a second amended petition which failed to either name Midwest as a defendant or incorporate by reference the default judgment.

Division One holds: (1) Although an interlocutory order of default was properly entered since there is no dispute that Midwest failed to respond to the petition after service of process, it was error for the court to enter a default judgment assessing damages when there was no proof of damages; (2) the court did not err in denying Midwest's motion to set aside under Rule 74.05(d), as Midwest failed to meet its burden of establishing "good cause;" (3) since the default judgment against Midwest was not yet final, Plaintiffs abandoned all claims against Midwest when they filed an amended pleading which failed to name it as a party defendant and failed to incorporate the previously asserted claims against Midwest. Accordingly, the trial court erred in denying Midwest's motion to dismiss it as a party defendant.

R. Dowd, Jr., P.J., and Rhodes Russell, J., concur.

Richard B. Teitelman, Judge

Plaintiff homebuyers sued the general contractor (Miceli Homes) and a subcontractor (Midwest Floor Company, hereinafter "Midwest") regarding various alleged defects in the construction of their new home. Plaintiffs were granted a default judgment against Midwest when Midwest, having been served, failed to appear or answer the petition; the case remained pending against Miceli Homes. After the court denied Midwest's motion to set aside the default judgment, Plaintiffs filed a second amended petition which named only Miceli Homes as a party defendant and did not incorporate the default judgment against Midwest. Midwest then filed a motion to dismiss it as a party defendant, contending Plaintiffs had abandoned any claim against it as a result of their amended pleading. Midwest now appeals the order denying its motion to dismiss, which was certified as final for purposes of appeal pursuant to Rule 74.01(b), and also appeals the order denying its motion to set aside default judgment. We reverse and remand.

FACTUAL AND PROCEDURAL BACKGROUND

Kevin C. Beckmann and Betty M. Beckmann (Plaintiffs) purchased a new home built by Miceli Homes, Inc. They subsequently filed a three-count petition which named Miceli Homes as the sole defendant. It alleged that the home was not built in accordance with plans and specifications in that the dormers were not properly constructed, the carpet was improperly installed and "from multiple dye lots," and items on the punch list had not been repaired or corrected. The petition sought "less than $25,000" in damages and alleged breach of contract, breach of warranty and negligent construction as alternate theories of recovery.

Several months later Plaintiffs were granted leave to file their First Amended Petition. It named Midwest, the subcontractor who had installed the carpet during the construction of Plaintiffs' home, as an additional defendant. The amended petition retained the same three counts against Miceli Homes as were pleaded in the original petition, but added three counts against the new defendant, Midwest. The three counts pleaded against Midwest were nearly identical to the ones pleaded against Miceli Homes, except that they were limited to the alleged defects concerning the carpet and carpet installation. Overall damages were sought in the same sum, an amount "less than $25,000."

After Plaintiffs filed their First Amended Petition and obtained valid service of process upon Midwest, Midwest failed to appear in court on the return date and failed to otherwise answer the allegations of the petition. As a result of its failure to appear and answer, the court entered an interlocutory order of default against Midwest on that date, May 4, 1999. It was denominated "Order" and read in full: "Upon application of Plaintiffs, Interlocutory Order of Default is granted against Defendant Midwest Floor Company. Cause remains on docket of May 25, 1999 at 9:00 AM for proceedings against Defendant Miceli Homes, Inc."

On that same date, very shortly after obtaining the above-mentioned interlocutory order of default, Plaintiffs sought and were granted by the court what purported to be a default judgment. The judgment assessed the damages at $12,500. Although it is thus clear from its substantive content that the judgment was of the type that is normally deemed to be a "final" default judgment (that is, one for both liability and damages), and although the judgment was contained on the court's pre-printed "Judgment in Default" form, it nevertheless was denominated as an "Interlocutory Judgment in Default." (emphasis added) This was accomplished by means of Plaintiffs' counsel hand-inserting the word "interlocutory" in front of the document's title, "Judgment in Default." Plaintiff asserts---and Midwest does not dispute---that this was done specifically at the trial court's request. Because the case remained pending against Defendant Miceli Homes and the default judgment therefore was not a final judgment in the sense that it disposed of all parties, the trial court expressed concern that unless the word "interlocutory" was inserted the court's clerical staff might mistakenly close the entire case file upon seeing that a "default judgment" had been entered.

When this Default Judgment¹ was taken, no proof of damages was submitted to the court. Plaintiffs' counsel wrote in $12,500 as the amount of damages on the judgment form.

Midwest subsequently filed a Rule 74.05(d) motion to set aside the Default Judgment. The motion was supported by affidavits of "good cause" and "meritorious defense." Specifically, Midwest's corporate president submitted an affidavit asserting various arguable legal theories that would constitute meritorious defenses; and Mr. Dave Vergano, the Midwest employee who had been served with the suit papers by a deputy sheriff, submitted an affidavit asserting that he was unfamiliar with legal documents, did not know what had become of the summons and petition after he had been served with them, and that his actions were not intentionally or recklessly designed to impede the judicial process. An evidentiary hearing on Midwest's motion to set aside was held on November 4, 1999. Midwest chose to rely solely on its affidavits and not present live witnesses. Plaintiffs presented the testimony of the deputy sheriff who had served the summons and petition on Mr. Vergano. On November 15, 1999, the court entered its order denying the motion to set aside Default Judgment.

Thereafter, Plaintiffs filed a Second Amended Petition. It named only Miceli Homes as a party defendant, and did not mention Midwest or incorporate by reference the Default Judgment against Midwest. It reasserted the previous allegations against Miceli Homes with greater specificity and detail, except that it deleted all allegations related to the carpeting and carpet installation.

Midwest then filed a motion seeking to dismiss it from the action as a party defendant. Midwest argued in its motion that by filing the new pleading which did not name Midwest as a party defendant and did not incorporate the Default Judgment, Plaintiffs had "abandoned" their claims against Midwest. Initially the trial court agreed, and on February 24, 2000 entered its order dismissing Midwest as a party defendant. However, following a hearing on Plaintiffs' timely motion to reconsider that ruling, the court on April 27, 2000 entered an order reversing itself and reinstating the Default Judgment.

Thereafter, Midwest filed a motion requesting the court to reverse its April 27th order and once again dismiss Midwest as a party defendant. On July 13, 2000, the court entered an order denying this motion. Then on August 23, 2000, following Midwest's request, the trial court entered an order amending its July 13, 2000 order, making that order immediately subject to appeal pursuant to Rule 74.01(b) and certifying that there is "no just reason for delay." This appeal follows.

DISCUSSION

I. Jurisdiction

Though neither party has questioned this court's jurisdiction over the instant appeal, a reviewing court has the duty to determine its jurisdiction sua sponte. Trust by Sherman v. Wilson, 928 S.W.2d 897, 898 (Mo. App. E.D. 1996). "A prerequisite to appellate review is that there be a final judgment." Boley v. Knowles, 905 S.W.2d 86, 88 (Mo. banc 1995). A judgment is final for purposes of appeal "only when it disposes of all the issues for all parties in the case and leaves nothing for further determination." O'Neill v. O'Neill, 864 S.W.2d 7, 8 (Mo. App. E.D. 1993). Rule 74.01(b), however, permits the trial court to designate as final a judgment which disposes of one or more claims but fewer than all claims. Committee For Educational Equality v. State, 878 S.W.2d 446, 450 (Mo. banc 1994). "Assuming that there is at least one claim fully resolved as to at least one party," then Rule 74.01(b) grants circuit courts the discretion to declare "that aspect" of its order, action or decree final for...