Franklin v. Bartsas Realty, Inc., 10923

• Docket Nº: No. 10923
• Citation: 95 Nev. 559, 598 P.2d 1147
• Case Date: August 21, 1979
• Court: Supreme Court of Nevada

Page 1147

598 P.2d 1147 95 Nev. 559 Albert FRANKLIN, Oleta Franklin and J. T. Franklin, Appellants,
v.
BARTSAS REALTY, INC., Respondent. No. 10923. Supreme Court of Nevada. Aug. 21, 1979.

[95 Nev. 560]

Page 1148

L. Earl Hawley, Las Vegas, for appellants.

Lionel, Sawyer & Collins, Las Vegas, for respondent.

[95 Nev. 561] OPINION

MOWBRAY, Chief Justice:

The appellants Albert and Oleta Franklin and J. T. Franklin commenced this action against Bartsas Realty, Inc. seeking an injunction to prevent the enforcement of an $80,000 judgment which was predicated on an alleged real estate commission due Bartsas and entered against each of the Franklins without notice. The court below denied the Franklins any relief and this appeal followed. We reverse and remand.

THE FACTS

The default judgment at issue was based upon Bartsas' claim that the Franklins, then owners of the City Center Motel in Las Vegas, had employed Bartsas, a licensed real estate broker, to procure a buyer for the property; that Bartsas had procured a ready, willing and able buyer; and that the Franklins had refused to pay the "reasonable and agreed upon" commission of $80,000. Complaint and summons were personally served upon J. T. Franklin on August 30, 1977, and upon Albert and Oleta Franklin on September 12, 1977. The summons contained the usual admonition that each defendant was required to serve upon plaintiff's attorney "an answer to the Complaint which is herewith served upon you, within 20 days" and that failure to comply would result in judgment by default.

On September 9, 1977, J. T. Franklin sent by registered mail the following letter to plaintiff's attorney:

"Dear Sir:

I fail to recognize any obligation to you or your client, because I had no contractual relationship with your client.

Yours Trully (sic),

J. T. Franklin"

Page 1149

A similar letter was later sent on behalf of Albert and Oleta. There was no further communication between the parties.

On September 20, 1977, default was entered against J. T. Franklin, and on September 21 Bartsas applied for a judgment [95 Nev. 562] by default. The court was not informed of Franklin's letter, nor was Franklin given notice of the application for judgment. Default judgment against Franklin was entered by the court on October 7, 1977. After similar preliminaries, a default judgment was entered against Albert and Oleta on October 17.

At the hearing on the Franklins' motion for a preliminary injunction, J. T. Franklin testified that he had first learned of the entry of the judgment about seven months later, when the bank notified him of the attachment of his account. This action was filed shortly thereafter. He further testified that in reference to receiving the summons, "I wrote this letter. I answered his summons."

By their amended complaint, the Franklins sought relief on the grounds of mistake and fraud, and also on the ground that the judgment of default was void because it was taken without notice after an appearance by the defendants. The trial court found that appellants "failed to answer the complaint" in the time allowed by law, though "J. T. Franklin assumed that because of (his) letter no further action was necessary in the case." The court also found that no fraud was committed in connection with the entry of the default judgment, and thereupon denied appellants' motion for a preliminary injunction.

THE PRELIMINARY INJUNCTION

1. The Standard of Review.

Whether a preliminary injunction should be granted is a question addressed to the discretion of the trial court, and will be reversed only if abuse is demonstrated. Berryman v. Int'l Bhd. Elec. Workers, 82 Nev. 277, 416 P.2d 387 (1966); Nevada Escrow Service, Inc. v. Crockett, 91 Nev. 201, 533 P.2d 471 (1975).

The standard of review in equitable actions, as in cases at law, is that this court will not disturb the finding of the lower court when supported by substantial evidence. Close v. Flanary, 77 Nev. 87, 360 P.2d 259 (1961).

However, this court has observed that:

(E)ven within the area of discretion where the court's discernment is not to be bound by hard and fast rules, its exercise of discretion in the process of discernment may be Guided by such applicable legal principles as may have become recognized as proper in determining the course of [95 Nev. 563] justice. A clear ignoring by the court of such established guides, without apparent justification, may constitute abuse of discretion.

Goodman v. Goodman, 68 Nev. 484, 489, 236 P.2d 305, 307 (1951). One of the proper guides to the exercise of discretion is:

The basic underlying policy to have each case decided upon its merits. In the normal course of events, justice is best served by such a policy. Because of this policy, the general observation may be made that an appellate court is more likely to affirm a lower court ruling Setting aside a default judgment than it is to affirm a Refusal to do so.

Hotel Last Frontier v. Frontier Prop., 79 Nev. 150, 155, 380 P.2d 293, 295 (1963).

2. The Appearance by the Franklins.

The trial court made no finding as to whether appellants had Appeared in the action. It simply found that appellants had failed to Answer the complaint in the time allowed by law, and that no fraud had been committed. These findings do not address the issue raised in the Franklins' complaint and addressed to the court in this appeal: Did the Franklins, although not filing a legally sufficient answer to the complaint, nevertheless sufficiently appear in the action so as to preclude the entry of a default

Page 1150

judgment against them without prior notice as required by NRCP 55(b)(2)? ¹

In Christy v. Carlisle, 94 Nev. 651, 584 P.2d 687 (1978), this court addressed the issue of the sufficiency of an...