Cuevas v. Barraza

• Citation: 198 P.3d 740,146 Idaho 511
• Decision Date: 24 June 2008
• Docket Number: No. 34421.,34421.
• Court: Court of Appeals of Idaho
• Parties: Juan Manuel CUEVAS and Yrene Baez, individuals, Plaintiffs-Respondents, v. Bernardino BARRAZA, an individual, Defendant-Appellant, and Liobaldo Garza, an individual, and Does I through X, unknown claimants to the real property described in Exhibit "A", commonly known as 29452 Pear Road, Parma, Idaho, Defendants.

198 P.3d 740

146 Idaho 511

Juan Manuel CUEVAS and Yrene Baez, individuals, Plaintiffs-Respondents, v. Bernardino BARRAZA, an individual, Defendant-Appellant, and Liobaldo Garza, an individual, and Does I through X, unknown claimants to the real property described in Exhibit "A", commonly known as 29452 Pear Road, Parma, Idaho, Defendants.

No. 34421.

Court of Appeals of Idaho.

June 24, 2008.

Rehearing Denied July 30, 2008.

Review Denied December 10, 2008.

Robert W. Ward of Hall, Friedly & Ward, Mountain Home, for appellant.

Mark D. Perison, Boise, for respondents.

PERRY, Judge.

Bernardino Barraza appeals from the district court's order denying his motion to set aside a default judgment. For the reasons set forth below, we reverse the order, vacate the default judgment, and remand to the district court.

I. FACTS AND PROCEDURE

In March 2001, Juan Manuel Cuevas and Yrene Baez (hereinafter referred to as "Cuevas") allegedly entered into an agreement with Bernardino Barraza and Liobaldo Garza regarding real property (hereinafter "the ranch") owned by Cuevas. On May 6, 2002, Barraza recorded a form legal document titled "Claim of Lien," which was signed by Garza and himself on April 1, 2002. As filled in, the lien asserted that Cuevas contracted Barraza and Garza to furnish "labor, service or materials consisting of unpaid refund in the amount $20,000.00 for the payments on real estate title on" the ranch. (Filled-in portions of form in italics). The lien also asserted that the $20,000 remained unpaid and the "lienor furnished the first of the items on the fifth day of January, 2002," and the "last of the items on the fifth day of January, 2002." The lien also stated that "lienor" had provided the "contractor" with notice of the lien on March 7, 2002.

On April 2, 2007, Cuevas filed a complaint seeking to quiet title to the ranch and seeking damages for slander of title. Barraza received service of the complaint on April 15, 2007.¹ Barraza having filed no answer, Cuevas filed a motion for default judgment and supporting affidavits on May 9, 2007. On May 15, 2007, the district court entered an order of default judgment.

On May 24, 2007, Barraza filed a motion to set aside the default judgment, pursuant to I.R.C.P. 60(b), with an affidavit of counsel for Barraza and a proposed answer to the complaint and counterclaim.² The answer and counterclaim alleged that Cuevas executed a written contract to sell the ranch to Barraza on March 6, 2001, for $80,000, and Barraza paid $22,635.76, as a down payment. Barraza attached as an exhibit the purported contract, which consists of two pages, one of which is written in Spanish. Barraza further alleged that Cuevas later orally promised to reimburse Barraza $20,000 upon re-sale of the ranch to another party if Barraza would vacate the premises. Barraza pled that he vacated the property and Cuevas had not reimbursed the $20,000. Barraza's answer also alleged affirmative defenses that Barraza was the owner of the ranch, Cuevas should be equitably estopped from denying he sold the ranch to Barraza, and the statute of limitation barred Cuevas' claims. The answer also included counterclaims of breach of a written contract, breach of an oral contract, breach of an implied in-fact contract, unjust enrichment, equitable estoppel, and a claim to quiet title to the ranch in Barraza. In the affidavit, Barraza's counsel averred that Barraza had previously retained him as counsel with regard to the dispute over this land several months before the complaint was filed but did not contact him promptly when served with the complaint. According to counsel's affidavit, Barraza believed that he did not need to contact counsel due to counsel's prior representation. Counsel further averred that Barraza spoke very little English and thus could not understand the summons requiring a responsive pleading in twenty days.

Cuevas filed a brief in opposition to the motion with a supporting affidavit and evidence of correspondence between his counsel and counsel for Barraza. The first letter, faxed from counsel for Cuevas to counsel for Barraza on March 19, 2007, requested that Barraza and Garza release the lien and indicated that, if they failed to do so, Cuevas would file a complaint to quiet title after March 23, 2007. The letter also included a copy of the complaint to be filed and indicated that, if counsel was still representing Barraza and Garza, he should contact them to make them aware of the impending litigation. In the second letter, faxed from counsel for Cuevas to counsel for Barraza on May 21, 2007, counsel indicated that he had received a phone message from Barraza's counsel stating that Barraza had "surfaced" and wished to defend against the action. Cuevas asserted in the brief that Barraza had not established excusable neglect with the affidavit of his counsel and that Barraza did not have a meritorious defense against the quiet title action.

At a hearing, the district court ruled that Barraza had not established a mistake or excusable neglect because Rule 60(b) does not mention a language barrier or lack of knowledge of the legal system as bases to set aside a default judgment. The district court stated that a reasonable person who received a summons in a foreign language "would have contacted a lawyer if they were familiar with the lawyer to advise them." The district court also ruled that Barraza had not pled facts that would establish a meritorious defense to the quiet title action because Barraza had not set forth facts that Barraza had a valid lien on the ranch. Regarding the effect of the lien, the district court stated:

Even if I said there was a land sale agreement for this particular piece of property, which I would have to assume that's what the Spanish document says and that's referring to this piece of property, the lien says we're not claiming any ownership of that property any longer. All we're claiming is that when he sold it he was going to give us $20,000.

The district court reasoned that, although Barraza may have alleged facts that would establish a meritorious claim for $20,000 in monetary damages, the default judgment only affected the validity of the lien and did not preclude any future action for monetary damages. Because the statute of limitation had run with regard to any claims based on the lien, the district court concluded that Barraza did not have a meritorious defense against the quiet title action. The district court subsequently entered an order denying Barraza's motion to set aside the default judgment. Barraza appeals.

II. STANDARD OF REVIEW

A default judgment may be set aside where it resulted from, inter alia, excusable neglect or mistake of fact. I.R.C.P. 60(b). A trial court's refusal to set aside a default judgment is reviewed under an abuse of discretion standard. Idaho State Police, ex. rel. Russell v. Real Property Situated in County of Cassia, 144 Idaho 60, 62, 156 P.3d 561, 563 (2007). On review of the trial court's application of law to the facts found on a motion to set aside a default judgment upon the grounds set forth in Rule 60(b)(1), the reviewing court will consider whether appropriate criteria were applied and whether the result is one that logically follows. Tyler v. Keeney, 128 Idaho 524, 526, 915 P.2d 1382, 1384 (Ct.App.1996). Thus, if: (a) the trial court makes findings of fact which are not clearly erroneous; (b) the court applies to those facts the proper criteria under Rule 60(b)(1) (tempered by the policy favoring relief in doubtful cases); and (c) the trial court's decision follows logically from the application of such criteria to the facts found, then the trial court will be deemed to have acted within its sound discretion, and its decision will not be overturned on appeal. Id.

III. ANALYSIS

A. Mistake of Fact or Excusable Neglect

Barraza asserts that the district court erred in ruling that he had not established that his failure to timely file an answer to the complaint was due to a mistake or excusable neglect. Cuevas asserts that Barraza did not present any admissible evidence establishing excusable neglect because Barraza relied entirely on the inadmissible hearsay statements contained in his counsel's affidavit. Cuevas also asserts that the inability to speak or read English is not a sufficient basis to establish mistake or excusable neglect under Rule 60(b)(1).

We first address Cuevas' assertion that Barraza presented no admissible evidence supporting his assertion of mistake or excusable neglect. Barraza presented only the inadmissible hearsay statements contained in an affidavit by Barraza's counsel as to Barraza's mistake. See I.R.E. 801, 802. Cuevas, however, did not object to the admissibility of the affidavit at the hearing on the motion to set aside default. When ruling on a motion for summary judgment, a trial court may consider an affidavit containing statements that fail to comply with the admissibility requirements of I.R.C.P. 56(e) in the absence of a timely objection and motion to strike.³ See State, Dept. of Agric. v. Curry Bean Co. Inc., 139 Idaho 789, 792, 86 P.3d 503, 506 (2004); Tolmie Farms, Inc. v. J.R. Simplot Co., Inc., 124 Idaho 607, 610, 862 P.2d 299, 302 (1993); Camp v. Jiminez, 107 Idaho 878, 881, 693 P.2d 1080, 1083 (Ct.App. 1984). The same rule should apply to the failure to properly object to the admissibility of statements contained in an affidavit submitted to establish excusable neglect to set aside a default judgment. Although Cuevas asserted in the brief in opposition to the motion to set aside default that the affidavit was hearsay, he did not move to strike nor object to its consideration by the district court. Rather than object, counsel for Cuevas provided little argument in opposition to Barraza's theory of mistake or excusable neglect. Indeed, counsel stated "I think if the meritorious defense issue weren't here in front of us, I wouldn't be here. I would have...