Blume v. Metropolitan Life Ins. Co., 89-567
| Decision Date | 03 May 1990 |
| Docket Number | No. 89-567,89-567 |
| Parties | Cylene BLUME, Plaintiff and Respondent, v. METROPOLITAN LIFE INSURANCE COMPANY, Defendant and Appellant. |
| Court | Montana Supreme Court |
George C. Dalthorp and Dennis Nettiksimmons, Crowley, Haughey, Hanson, Toole & Dietrich, Billings, for defendant and appellant.
Frank C. Richter, Richter & Torkelson, Billings, for plaintiff and respondent.
Metropolitan Life Insurance Company appeals the denial of its motion to set aside a default judgment issued by the Thirteenth Judicial District Court, Yellowstone County. We find the District Court improperly denied the motion to set aside. We reverse.
The sole issue to be decided is whether the District Court abused its discretion in failing to set aside the default judgment entered against the defendant Metropolitan Life Insurance Company.
Plaintiff Cylene Blume filed a complaint against her former employer, Metropolitan Life Insurance Company (Metropolitan) alleging wrongful termination. Because Metropolitan is an out-of-state corporation, service was made through the State Auditor and Commissioner of Insurance, Andrea "Andy" Bennett, who sent the complaint, summons and discovery documents by certified mail, return receipt requested. The certified mail containing the summons, complaint and documents was received and entered in Metropolitan's mail log, but was apparently lost before anyone in a position of authority at Metropolitan ever saw the summons and complaint. Metropolitan failed to file an answer and a default judgment was eventually entered against Metropolitan in the amount of $185,986.43. Upon discovering the default judgment, Metropolitan immediately moved to set it aside and accompanied the motion with supporting affidavits. Because the District Court failed to rule on the motion within 45 days, it was deemed denied pursuant to Rule 60(c), M.R.Civ.P.
The Montana Rules of Civil Procedure allow for the setting aside of a default judgment:
For good cause shown the court may set aside an entry of default and, if a judgment by default has been entered, may likewise set it aside in accordance with Rule 60(b).
On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; ... 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 77(d), not more than 60 days after service of notice of entry of judgment.
. . . . .
Where a trial court denies a motion to set aside a default judgment the standard of review is that "no great abuse of discretion need be shown to warrant reversal," or, alternatively, " 'slight abuse' is sufficient to reverse an order refusing to set aside a default." Lords v. Newman (1984), 212 Mont. 359, 364, 688 P.2d 290, 293. The Lords court, which drew a distinction between the standards of review applied to cases where motions to set aside default judgments had been granted and those that had been denied based its holding on two basic tenets: (1) every litigated case should be tried on its merits and default judgments are not favored and (2) trial courts have a certain amount of discretion when considering a motion to set aside a default judgment. Lords at 363, 688 P.2d at 293. Keeping in mind these underlying concerns we now turn to the merits of the appellant's arguments.
Clearly, the burden of proof rests on the party seeking to set aside the default judgment. Rule 55(c), M.R.Civ.P. and Siewing v. Pearson Co. (1987), 226 Mont. 458, 461, 736 P.2d 120, 122.
As noted in Rule 55(c), a default judgment may only be set aside "for good cause shown." We have previously specified what is necessary to establish such good cause:
"In order to justify the district court in granting the motion, the defendant was required to show: (a) That he proceeded with diligence; (b) his excusable neglect; (c) that the judgment, if permitted to stand, will affect him injuriously, and that he has a defense to plaintiff's cause of action upon the merits."
Kootenai Corp. v. Dayton (1979), 184 Mont. 19, 26, 601 P.2d 47, 51 (quoting Eder v. Bereolos (1922), 63 Mont. 363, 368, 207 P. 471, 472).
Metropolitan presented a great deal of evidence to support its motion to set aside the default judgment, including:
1. Metropolitan's mail room log, with an entry showing receipt of mail from Andrea Bennett on February 9, 1989.
2. An affidavit from a general clerk in the administrative staff in the law department in Metropolitan's home office, explaining the standard procedure for distributing mail such as that received from Andrea Bennett which is not addressed to a particular member of the law department, and stating the mail from Ms. Bennett should have been delivered to Janine Wright.
3. An affidavit from Janine Wright, senior paralegal at Metropolitan who receives all new litigation cases against Metropolitan, stating that she has no record of ever having received the mail from Ms. Bennett and concluding it never arrived in her in-box to be processed.
4. An affidavit from Marianne Feller, the administrative manager in Metropolitan's law department, stating that all mail not directed by name to a member of the law department would be given to her or a member of her staff from Janine Wright and that she has no independent recollection of ever having seen the mail in question.
5. An affidavit from Lynn DiStasio, assistant general counsel for Metropolitan, detailing (a) correspondence between her and plaintiff's counsel, Frank Richter, regarding Richter's representation of the plaintiff and other employees in Metropolitan's Billings office in a separate matter; (b) communication, by letter and by telephone, between her and Richter regarding...
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