Gepner v. FUJICOLOR PROCESSING

• Decision Date: 21 December 2001
• Docket Number: No. 20010022.,20010022.
• Citation: Gepner v. FUJICOLOR PROCESSING, 637 N.W.2d 681, 2001 ND 207 (N.D. 2001)
• Parties: Lynetta K. GEPNER and Donald Kroll, Plaintiffs and Appellants, v. FUJICOLOR PROCESSING, INC. OF SIOUX FALLS, SOUTH DAKOTA, U.S.A., and Fuji Photo Film U.S.A., Inc., principle consolidated subsidiaries of Fuji Photo Film Co., Ltd. of Tokyo, Japan, Defendants and Appellees.
• Court: North Dakota Supreme Court

637 N.W.2d 681

2001 ND 207

Lynetta K. GEPNER and Donald Kroll, Plaintiffs and Appellants, v.FUJICOLOR PROCESSING, INC. OF SIOUX FALLS, SOUTH DAKOTA, U.S.A., and Fuji Photo Film U.S.A., Inc., principle consolidated subsidiaries of Fuji Photo Film Co., Ltd. of Tokyo, Japan, Defendants and Appellees.

No. 20010022.

Supreme Court of North Dakota.

December 21, 2001.

Rehearing Denied January 25, 2002.

Bruce A. Schoenwald, Stefanson, Plambeck, Foss & Fisher, Moorhead, MN, for plaintiffs and appellants.

Daniel J. Dunn, Maring Williams Law Office, Fargo, for defendants and appellees.

NEUMANN, Justice.

[¶ 1]Lynetta Gepner and Donald Kroll appeal from a judgment entered upon a jury verdict awarding Gepner damages for a work-related injury, finding Fujicolor Processing, Inc.("Fujicolor") had not wrongfully terminated Gepner's employment, and refusing to award damages to Kroll for loss of consortium.We affirm.

I

[¶ 2] Gepner worked as a film delivery driver for Fujicolor.Gepner picked up film at retail stores in North Dakota and Minnesota and delivered it to a relay driver, who transported the film to Fujicolor's processing plant in South Dakota.The processed film was then returned to Gepner, who delivered it back to the stores.Gepner did not travel into South Dakota on her route.

[¶ 3] On August 4, 1998, Gepner injured her back while lifting film bags out of her car at the Wal-Mart in Grand Forks.Gepner was able to complete her route that day with assistance from her husband, Donald Kroll.Gepner subsequently advised her supervisor, Jill Campbell, about her injury.Campbell believed that Gepner would continue to deliver the route with assistance from Kroll.For the next several weeks, however, Kroll delivered Gepner's route alone.Gepner signed and submitted route manifests and timecards indicating she was delivering the film.Under Fujicolor's policies for its delivery drivers, an employee may receive assistance from a non-employee, but the employee must personally deliver the film, interact with customers, and sign the route manifests documenting delivery of the film.

[¶ 4] On August 20, 1998, Gepner contacted Campbell about her injury, and Campbell filled out a form entitled "South Dakota Employer's First Report of Injury."Campbell sent the form to Gepner for her signature, but Gepner returned it unsigned because it contained the wrong date of her injury.

[¶ 5] At some point, Fujicolor learned Kroll was delivering the route alone.On September 11, Kroll met the Fujicolor relay driver in Fargo.The relay driver was supposed to deliver Gepner's paycheck, but had forgotten it in Sioux Falls.Kroll refused to complete the deliveries without Gepner's paycheck, and Campbell was notified.Campbell called Gepner and asked her to arrange to have the film delivered.Gepner told Campbell she was physically unable to deliver the film.Campbell then told Gepner she was fired.[¶ 6] Gepner had filed a claim with the North Dakota Workers Compensation Bureau on September 3, 1998.The Bureau contacted Fujicolor, which advised the Bureau that Gepner was a South Dakota employee based out of Sioux Falls who made deliveries in North Dakota, South Dakota, and Minnesota, and that a claim had been filed with Great American Insurance Companies ("GAIC"), Fujicolor's South Dakota workers compensation insurer.Based on this information, the Bureau dismissed Gepner's claim on September 11, 1998.

[¶ 7] GAIC denied coverage because Gepner was a North Dakota employee injured in North Dakota, and GAIC's policy did not provide coverage in this state.Fujicolor concedes that it had failed to secure coverage in North Dakota through the Bureau as required by law.Gepner reapplied for benefits in North Dakota under N.D.C.C. § 65-09-02 as an employee of a noncomplying employer, and the Bureau eventually awarded benefits to her in February 1999.

[¶ 8] Gepner and Kroll commenced this action against Fujicolor, seeking damages for the work injury, wrongful termination, and loss of consortium.The summons and complaint were mailed to Fujicolor on October 6, 1998, and received on October 8.On October 21, 1998, Fujicolor sent the complaint to GAIC, where it was received by Merrick McCarthy, GAIC's Director of Liability—Japanese Division, on October 23.Although an answer to the complaint was due within a few days, McCarthy did not refer the file to an attorney or otherwise initiate a responsive pleading.

[¶ 9] On December 11, 1998, a default judgment was entered against Fujicolor awarding Gepner $228,670.05 and awarding Kroll $51,027.40.On December 15, 1998, McCarthy, unaware a default judgment had been entered, contacted Gepner's attorney to discuss the claim and was advised of the default judgment.

[¶ 10] On January 12, 1999, Fujicolor filed a motion to vacate the judgment under N.D.R.Civ.P. 60(b)(i), alleging mistake, inadvertence, and excusable neglect.The district court granted the motion and vacated the default judgment.The matter was eventually tried to a jury, which awarded Gepner $11,946.25 in damages for her work injury, found Gepner had not been wrongfully terminated, and awarded no damages on the loss of consortium claim.Judgment was entered on the jury verdict, and Gepner and Kroll appealed.

II

[¶ 11] Gepner alleges the district court abused its discretion when it vacated the default judgment against Fujicolor.We disagree.

[¶ 12]Rule 60(b), N.D.R.Civ.P., governs the trial court's authority to vacate a judgment:

On motion and upon such terms as are just, the court may relieve a party or a party's legal representative from a final judgment or order in any action or proceeding for the following reasons: (i) mistake, inadvertence, surprise, or excusable neglect....

[¶ 13] A motion to vacate a judgment under N.D.R.Civ.P. 60(b)(i) lies within the sound discretion of the trial court, and its decision will not be disturbed on appeal unless the court has abused its discretion.Kopp v. Kopp,2001 ND 41, ¶ 7, 622 N.W.2d 726;Follman v. Upper Valley Special Educ. Unit,2000 ND 72, ¶ 10, 609 N.W.2d 90;Red River State Bank v. Reierson,533 N.W.2d 683, 688(N.D.1995).An abuse of discretion by the trial court is never assumed; the burden is on the party seeking relief to affirmatively establish it.US Bank Nat'l Ass'n v. Arnold,2001 ND 130, ¶ 23, 631 N.W.2d 150;Braunberger v. Interstate Eng'g, Inc.,2000 ND 45, ¶ 7, 607 N.W.2d 904;First Nat'l Bank of Crosby v. Bjorgen,389 N.W.2d 789, 794(N.D.1986).The trial court abuses its discretion only when it acts in an arbitrary, unreasonable, or unconscionable manner.Kopp,at ¶ 7;Follman,at ¶ 10.A trial court acts in an arbitrary, unreasonable, or unconscionable manner when its decision is not the product of a rational mental process by which the facts and law relied upon are stated and considered together for the purpose of achieving a reasoned and reasonable determination.Kopp,at ¶ 7.We will not overturn the trial court's decision merely because it is not the one we may have made if we were deciding the motion.US Bank,at ¶ 23.

[¶ 14]This Court has emphasized that N.D.R.Civ.P. 60(b) is to be liberally construed and applied, and trial courts should be more lenient in granting motions to vacate default judgments than in vacating judgments in cases which have been tried on their merits.First Fed. Sav. and Loan Ass'n v. Hulm,328 N.W.2d 837, 840(N.D.1982);Suburban Sales & Serv., Inc. v. District Court of Ramsey County,290 N.W.2d 247, 252(N.D.1980).The relevant factors were summarized in CUNA Mortgage v. Aafedt,459 N.W.2d 801, 803(N.D.1990)(citations omitted):

This court has long encouraged trial courts to be more lenient when entertaining Rule 60(b)motions to vacate default judgments as distinguished from "litigated" judgments, that is, judgments entered after trial on the merits.While a trial court certainly has discretion to grant or deny a Rule 60(b)motion to vacate a default judgment, the range of that discretion is limited by three important considerations.First, Rule 60(b) is remedial in nature and should be liberally construed and applied.Second, decisions on the merits are preferable to those by default.Third, as a consequence of the first two considerations, "`[w]here timely relief is sought from a default judgment and the movant has a meritorious defense, doubt, if any, should be resolved in favor of the motion to set aside the judgment so that cases may be decided on their merits.'"King v. Montz,219 N.W.2d 836, 839(N.D.1974)[quoting7 Moore's Federal Practice¶ 60.19, at p. 60-156].

See alsoThrondset v. L.L.S.,485 N.W.2d 775, 778-79(N.D.1992).The Court noted that, "[a]gainst this backdrop,"parties seeking to show that a trial court abused its discretion in vacating a default judgment "shoulder a heavy burden."CUNA Mortgage,at 803.

[¶ 15]We have also cautioned that, when the inadvertence or neglect has been committed by a party's attorney or insurer, we are reluctant to attribute the error to a client who was not personally responsible.SeeCUNA Mortgage,459 N.W.2d at 803;Hulm,328 N.W.2d at 841;King v. Montz,219 N.W.2d 836, 840(N.D.1974).

[¶ 16] In this case, the failure to file a timely answer to the complaint was due to the inadvertence and neglect of GAIC, Fujicolor's insurer.Upon learning of the default judgment a few days after it was entered, GAIC immediately referred the matter to a North Dakota attorney, who contacted Gepner's attorney and filed a motion to vacate the judgment.Gepner does not allege the motion was untimely.With its motion to vacate the judgment, Fujicolor filed an answer raising meritorious defenses to claims in the complaint.Under these circumstances, we conclude the trial court did not abuse its discretion in granting the motion to vacate the default judgment.

III

[¶ 17] Gepner asserts the trial court erred in allowing Fujicolor to present evidence challenging Gepner's claimed damages...