DeFillippo v. Neil

• Decision Date: 21 June 2002
• Docket Number: No. 21,748.,21,748.
• Citation: 51 P.3d 1183,132 N.M. 529
• Parties: Patrick DeFILLIPPO, Stephanie DeFillippo, Gary Lizzi and Patricia Lizzi, Plaintiffs-Appellees, v. Eva NEIL, Defendant-Appellant.
• Court: Court of Appeals of New Mexico

51 P.3d 1183

132 N.M. 529

Patrick DeFILLIPPO, Stephanie DeFillippo, Gary Lizzi and Patricia Lizzi, Plaintiffs-Appellees, v. Eva NEIL, Defendant-Appellant.

No. 21,748.

Court of Appeals of New Mexico.

June 21, 2002.

Leof T. Strand, Albuquerque, NM, Steven L. Tucker, Tucker Law Firm, P.C., Santa Fe, NM, for Appellees.

Kim E. Kaufman, Albuquerque, NM, for Appellant.

OPINION

BUSTAMANTE, Judge.

{1} Plaintiffs Patrick DeFillippo, Stephanie DeFillippo, Gary Lizzi, and Patricia Lizzi filed suit against Eva Neil (Neil) claiming damages for personal injuries suffered as a result of the collapse of a balcony. Neil filed her answer to the complaint one day late, and the trial court entered a "default judgment" against her in favor of Plaintiffs. Neil filed a motion to set aside the default, pursuant to Rules 1-055(C) and 1-060(B) NMRA 2002. The trial court denied this motion as well as her request for a jury trial on the issue of damages. Neil appeals from the denial of her motion to set aside the default and from the trial court's denial of a jury trial on the issue of damages.

{2} To resolve the case, we analyze the applicability of Rules 1-055(C) and 1-060(B) as well as the discretion accorded a trial judge under Rule 1-055(C). We reverse the trial court's refusal to set aside the default and remand the case for a trial on the merits.

BACKGROUND

{3} This action arises from injuries assertedly sustained by two of the Plaintiffs, Patrick DeFillippo and Gary Lizzi, on June 18, 1995, when an apartment complex balcony on which they were standing suddenly collapsed. Neil owned the apartment complex and had rented one of the units to Gary and Patricia Lizzi. Plaintiffs alleged Patrick and Gary suffered damages in the forms of physical injuries, pain and suffering, permanent disability, and economic losses as a result of the accident. Their wives alleged they suffered past and future loss of their husbands' services and loss of consortium.

{4} Plaintiffs filed suit on June 4, 1998. Service was effected by leaving a copy of the summons and complaint at Neil's residence on June 11. There is no allegation that service was improper. The answer to the complaint was due by July 13. On the morning of July 14, Plaintiffs filed a certificate as to the state of the record and non-appearance, an affidavit for entry of default, and an application for default judgment. The trial court entered a "default judgment" the morning of July 14. Neil's answer was fax-filed with the court on the afternoon of July 14, and filed again in person on July 15.

{5} Neil filed a "Motion To Set Aside Default Judgment" on July 24, and a "Jury Demand" on July 23. In her motion, Neil argued that the answer had been filed one day late because her insurance claims adjuster erred in calculating the due date for the answer and did not deliver the summons and complaint to her attorneys until July 14. Neil's motion cited Rules 1-055 and 1-060 as grounds for relief and also asserted the existence of a meritorious defense. As a practical matter, the majority of Neil's arguments asserted she had met the "excusable neglect" standard set forth in Rule 1-060(B)(1) for setting aside a default judgment.

{6} The trial court initially denied Neil's request for relief. On Neil's oral motion for reconsideration, the trial court reversed itself and ruled in her favor. Plaintiffs thereafter moved for reconsideration of the trial court's second ruling. Ultimately, on March 11, 1999, the trial court issued an order denying Neil's motion to set aside default judgment. The trial court concluded that Neil "did not carry her burden of demonstrating that her insurer's conduct met the standard for relief under [R]ule 1-060(B)(1)." This Court, on April 27, 1999, denied Neil's application for leave to file an interlocutory appeal on the issue. After a bench trial on the issue of damages, judgment was entered for Plaintiffs in the amount of $919,478.56, plus costs.

PRESERVATION

{7} On appeal, Neil argues that the trial court erred as a matter of law in applying the Rule 1-060(B) standard as opposed to the more lenient Rule 1-055(C) standard for setting aside a default "[f]or good cause shown." She asserts that the order filed on the morning of July 14, 1998, was "mistakenly characterized as a default judgment, rather than a default" because the trial court was required to hold a hearing and decide damages before it could enter a final default judgment.

{8} Plaintiffs counter that, despite citing to Rule 1-055(C) in her motion, Neil did not file a motion to set aside "entry of default" under the good cause provision in Rule 1-055(C); she filed a motion to set aside "default judgment" under Rule 1-060(B). Thus, Plaintiffs argue we should not reach the issue of whether the trial court should have applied the more liberal good cause standard under Rule 1-055(C) rather than the excusable neglect standard under Rule 1-060(B) because it was not properly preserved. Rule 12-216 NMRA 2002; Woolwine v. Furr's, Inc., 106 N.M. 492, 496, 745 P.2d 717, 721 (Ct.App. 1987). Plaintiffs also note that the preservation requirement is at least partially a matter of fairness to other parties in a lawsuit. Hinger v. Parker & Parsley Petroleum Co., 120 N.M. 430, 440, 902 P.2d 1033, 1043 (Ct. App.1995).

{9} We do not believe Neil's nomenclature is of any particular import. Under the circumstances, where a document entitled "Default Judgment" was entered by the trial court, Neil was well advised to caption her motion as she did, while addressing the standards applicable to defaults and default judgments in the body of her motion. Furthermore, as Wright, Miller & Kane observes, "[a]lthough Rule 55(c) envisions a formal motion for relief, the courts have shown considerable leniency in treating other procedural steps as equivalent to a motion, particularly when the conduct evidences a desire to correct the default." CHARLES ALAN WRIGHT, ARTHUR R. MILLER & MARY KAY KANE, FEDERAL PRACTICE AND PROCEDURE, Civ.3d, § 2692, at 85-86 (1998); see also 10 JAMES W. MOORE, MOORE'S FEDERAL PRACTICE § 55.50[1][b][i] (3d ed. 2001) and cases cited therein. This liberality of construction comports with the judicial preference for deciding matters on the merits.

{10} Neil's motion to set aside default judgment specifically referred to the good cause standard of Rule 1-055(C) and the excusable neglect standard of Rule 1-060(B), as well as the factors to be considered under each of the rules, the liberal construction accorded to these factors, and the courts' general attitude of disfavor toward defaults and default judgments. Neil's counsel also cited Rule 1-055(C) and the good cause standard in the course of his argument at the hearing held on the motion. We hold that, while the matter is not entirely free from doubt, Neil properly preserved her argument that the trial court should apply the Rule 1-055(C) standard for setting aside a default.

{11} Plaintiffs cite EEOC v. Mike Smith Pontiac GMC, Inc., 896 F.2d 524, 527-28 (11th Cir.1990), for the proposition that an appellate court should not apply the "good cause shown" standard even when dealing with a motion to set aside an entry of default when a defendant fails to bring the standard to the trial court's attention. We do not disagree with the holding of the case, but it is clearly distinguishable. The defendant in Mike Smith Pontiac apparently never mentioned the good cause shown standard in its pleadings to the trial court. Here, Neil raised Rule 1-055(C) and the good cause standard both in her pleadings and her oral arguments. In addition, the defendant in Mike Smith Pontiac displayed a completely different attitude towards its default, in that it failed to respond at all to the complaint or entry of default, despite notice of each, until four months after the entry of default was served on it. Under these circumstances, it is understandable that the appellate court was reluctant to exercise its discretion to overlook a complete lack of preservation below.

{12} Our finding of adequate preservation does no violence to the prudential bases of the preservation rule. In fact, it furthers them. The primary purposes of the preservation requirement are (1) that the trial court be alerted to the potential error and have an opportunity to avoid mistakes, and (2) that opposing parties be given a fair opportunity to meet the objection. Garcia v. La Farge, 119 N.M. 532, 540, 893 P.2d 428, 436 (1995). Both of the purposes are honored by finding preservation on this record. There is no evidence of any thought or effort by Neil to "sandbag" the trial court or Plaintiffs. There was simply inartful practice. Looking beyond the muddle does not improperly prejudice Plaintiffs or pose a danger to the orderly, efficient processing of cases through the courts.

{13} Finding that the issue was adequately preserved also complies with the New Mexico appellate courts' approach to "construe the rules of appellate procedure liberally so that causes on appeal may be determined on their merits." Danzer v. Prof'l Insurors, Inc., 101 N.M. 178, 180, 679 P.2d 1276, 1278 (1984), (cited with approval in Aken v. Plains Elec. Generation & Transmission Coop., Inc., 2002-NMSC-021, ¶ 10, 132 N.M. 401, 49 P.3d 662 (2002)).

{14} Finally, and alternatively, the Rules of Appellate Procedure specifically authorize this Court, at our discretion, to review an issue that was not properly preserved if the issue is of "general public interest." Rule 12-216(B); see also Pineda v. Grande Drilling Corp., 111 N.M. 536, 539, 807 P.2d 234, 237 (Ct.App.1991)

(holding that question involving procedure required of workers' compensation agency to promulgate valid rules was of general public interest); United Salt Corp. v. McKee, 96 N.M. 65, 67, 628 P.2d 310, 312 (1981) ("The proper procedure to be followed in cases involving multiple defendants is an issue of substantial public interest."). We view the issue presented...