Edwards v. Black Twig Mktg. & Commc'ns LLC
| Decision Date | 05 November 2013 |
| Docket Number | No. ED99581,ED99581 |
| Parties | FORREST EDWARDS d/b/a STRIKE TEAM MEDIA, Appellant, v. BLACK TWIG MARKETING AND COMMUNICATIONS LLC d/b/a BLACK TWIG COMMUNICATIONS, Respondent. |
| Court | Missouri Court of Appeals |
Appeal from the Circuit Court of
St. Louis County
Honorable Thea Sherry
Forrest Edwards d/b/a Strike Team Media (Plaintiff) appeals the judgment of the Circuit Court of St. Louis County in favor of Black Twig Marketing and Communications LLC d/b/a Black Twig Communications (Defendant) on Plaintiff's petition to pierce the corporate veil and establish successor liability. Plaintiff argues that the trial court erred in granting Defendant's "motion to set aside default judgment" because the trial court: (1) lacked jurisdiction to rule on the motion; (2) "exceeded its authority in that it acted as a one-judge court of appeals"; (3) improperly applied Rule 74.05 when the judgment was not a default judgment; and (4) improperly applied Rule 74.06(b) because there was no mistake, inadvertence, surprise, or excusable neglect. Plaintiff also asserts that the trial court erred in rendering judgment for Defendant after trial because the evidence showed that Defendant purchased the most valuableassets of Kupper Parker Communications, Inc. (KPC) and was liable to Plaintiff as KPC's corporate successor.1 We affirm.
In 2006, Plaintiff filed a breach of contract action in a California state court against KPC. Plaintiff obtained a judgment against KPC and registered the judgment in the Circuit Court of St. Louis County, which gave the California judgment full faith and credit.
In 2007, Plaintiff filed a "petition to pierce the corporate veil and establish successor liability" against Defendant in the Circuit Court of St. Louis County. Plaintiff alleged that Defendant was obligated to pay him the full amount of his California judgment against KPC on equitable principles of successor liability. Defendant filed an answer to the petition.
On May 21, 2009, Plaintiff's counsel appeared for a scheduled settlement conference. Defendant's counsel did not appear. The trial court entered an order striking Defendant's pleadings and entering "default" in favor of Plaintiff. The trial court scheduled a "default and inquiry hearing" for June 3, 2009. The record reflects no notice of hearing was served upon Defendant. Between May 21 and June 3, the case was assigned to a different judge.
On June 3, 2009, the trial court held a "default and inquiry hearing." Counsel for Plaintiff appeared, but Defendant's counsel did not appear. The trial court entered judgment against Defendant on Plaintiff's petition.
On July 24, 2009, Defendant filed a "motion to set aside default judgment." Defendant alleged that it did not receive the trial court's May 21, 2009 order, notice of the June 3, 2009hearing, or the June 3, 2009 judgment. Defendant claimed that it was entitled to relief under Rule 74.05(d). Defendant also asserted that it was entitled to relief under Rule 74.06(b) for the following reasons: (1) counsel's mistake and inadvertence in failing to attend the May 21, 2009 settlement conference; (2) the judgment was irregular because it was entered without notice; and (3) it was no longer equitable for the judgment to remain in force.
On September 1, 2009, the trial court held a hearing on Defendant's motion. The trial court granted the motion without specifying which rule was the basis for its decision. The trial court set aside the May 21, 2009 order and June 3, 2009 judgment. The parties continued to litigate the matter for over three years.
In November 2012, the trial court held a bench trial. Defendant presented the testimony of Bruce Kupper, who was formerly the chief executive officer of KPC, and was at the time of trial an employee of Defendant. Mr. Kupper testified that by March 2006, KPC was "broke" and in default on its obligations to Missouri State Bank and Trust Company (the "Bank"). Mr. Kupper stated that the Bank seized the assets of KPC that secured the loans and notified KPC of its intent to sell the assets. According to an asset purchase agreement introduced in evidence, the Bank sold certain seized assets to Defendant but specifically excluded from the sale KPC's cash and accounts receivable.
On December 31, 2012, the trial court entered an order and judgment. The trial court stated that "credible evidence was lacking that the sale of [certain] assets from the Bank to [Defendant] was a sale that would constitute 'all or substantially all' of KPC's assets, which is the first step in the analysis" of corporate successor liability. The trial court concluded that Defendant was not the successor company to KPC and was not liable for KPC's debt to Plaintiff. The trial court entered judgment in favor of Defendant. Plaintiff appeals.
In his first four points on appeal, Plaintiff argues that the trial court erred on September 1, 2009 when it granted Defendant's "motion to set aside default judgment." We address these points out of order for ease of analysis.
"The trial court is vested with broad discretion when acting on a motion to set aside a judgment." Greasel Conversions, Inc. v. Massa, 399 S.W.3d 456, 458 (Mo. App. S.D. 2013) (quotation omitted). "This Court should not interfere unless the record convincingly demonstrates an abuse of discretion." Id. "Judicial discretion is abused only when that ruling was clearly against the logic of the circumstances then before the trial court and is so arbitrary and unreasonable as to shock the sense of justice and indicate a lack of careful consideration." Id. (quotation omitted). "Further, the discretion not to set aside is a good deal narrower than the discretion to set aside, and thus an appellate court is more likely to interfere with the trial court's decision when the motion to set aside the judgment has been denied." Id. (quotation omitted).
In his first point on appeal, Plaintiff argues the trial court lacked jurisdiction to rule on Defendant's motion to set aside the June 3, 2009 judgment because the court lost jurisdiction thirty days after the judgment became final. We disagree.
Rule 75.01 provides: "The trial court retains control over judgments during the thirty-day period after entry of judgment and may, after giving the parties an opportunity to be heard and for good cause, vacate, reopen, correct, amend, or modify its judgment within that time." Rule 75.01 (emphasis added). However, a Rule 74.06(b) motion "shall be made within a reasonable time and for reasons (1) and (2) and (3) of subdivision (b) not more than one year after thejudgment or order was entered." Rule 74.06(c). "Thus, Rule 74.06 provides specific limited authority for trial courts to alter or modify final judgments more than thirty days old . . . ." State ex rel. Willey v. Gum, 902 S.W.2d 857, 859 (Mo. App. W.D. 1995) (emphasis added). Likewise, "Rule 74.05(d) provides that a default judgment may be set aside upon motion made within a reasonable time not to exceed a year." Lunde v. Am. Family Mut. Ins. Co., 297 S.W.3d 88, 92 (Mo. App. W.D. 2009).
Here, Defendant filed the motion to set aside judgment on July 24, 2009, approximately fifty-one days after entry of the judgment. Since the motion was filed within one year after the judgment was entered, the motion was timely. Accordingly, the trial court had the authority to hear Defendant's motion. See, e.g., Thompson v. St. John, 915 S.W.2d 350, 357 (Mo. App. S.D. 1996). Point one is denied.
Having found the court had authority to consider Defendant's motion to set aside judgment, we address Plaintiff's remaining points on appeal. In his third point, Plaintiff claims that the trial court erred in setting aside the June 3, 2009 judgment based on Rule 74.05. More specifically, Plaintiff asserts that the judgment was not a "default judgment" because Defendant filed an answer and, therefore, Rule 74.05 did not apply. While we agree with Plaintiff that Rule 74.05 did not apply, that does not entitle him to relief for the reasons discussed below.
On May 21, 2009, Defendant did not appear for a scheduled settlement conference, and the trial court struck Defendant's pleadings and entered "default" in favor of Plaintiff. A "default and inquiry hearing" was scheduled for June 3, 2009. Defendant did not receive notice of the June 3 hearing and was not present. After conducting the hearing, the trial court entered judgment in favor of Plaintiff. Defendant filed a "motion to set aside default judgment," asserting that it was entitled to relief under Rules 74.05(d) and 74.06(b). The trial court grantedDefendant's motion and set aside the court's May 21, 2009 order and June 3, 2009 judgment without stating which rule was the basis for its decision.
Both Defendant and the trial court incorrectly referred to the June 3, 2009 judgment as a "default judgment." Rule 74.05 provides that a trial court may enter a default judgment "[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend as provided by these rules." Rule 74.05(a) (emphasis added). "Where a party has filed an answer, a subsequent judgment is not a default judgment, but a judgment on the merits." Treetop Vill. Prop. Owners Ass'n v. Miller, 139 S.W.3d 595, 600 (Mo. App. S.D. 2004). Where a party has filed a responsive pleading but then fails to appear at a hearing on the case, a resulting adverse judgment is a judgment on the merits even if the court has struck the party's pleadings. In re Marriage of DeWitt, 946 S.W.2d 258, 261 (Mo. App. W.D. 1997). Here, Defendant filed an answer to Plaintiff's petition. Therefore, the June 3, 2009 judgment against Defendant was a judgment on the merits rather than a default judgment, even though the trial court had struck Defendant's pleadings.
"Rule 74.05 only attends when the judgment entered was a...
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