IN RE MARRIAGE OF SHANNON

• Decision Date: 05 February 2004
• Docket Number: No. 03-482.,03-482.
• Citation: 84 P.3d 645,2004 MT 25
• Court: Montana Supreme Court
• Parties: In re the MARRIAGE OF Florence SHANNON, Petitioner and Respondent, and William Shannon, Respondent and Appellant.

84 P.3d 645

2004 MT 25

In re the MARRIAGE OF Florence SHANNON, Petitioner and Respondent, and

William Shannon, Respondent and Appellant.

No. 03-482.

Supreme Court of Montana.

Submitted on Briefs December 4, 2003.

Decided February 5, 2004.

For Appellant: Karl Knuchel, Livingston, Montana.

For Respondent: Kellie A. Voyich, Anderson & Voyich, Livingston, Montana.

Justice W. WILLIAM LEAPHART delivered the Opinion of the Court.

¶ 1 William Shannon and Florence Shannon were married. Florence Shannon petitioned for a legal separation to which William did not respond. After entry of default, William moved the court to set aside his default. William now appeals the court's denial of that motion. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 2 Florence Shannon petitioned the District Court for a decree of legal separation from her husband, William Shannon, on September 17, 2002. Service of process was achieved on William on September 27, 2002, when William brought a signed and notarized receipt of the petition and proposed parenting plan to the office of Florence's attorneys. On October 22, 2002, Florence moved the Clerk of District Court for an entry of default, which the Clerk entered on October 23, 2002. The parenting plan, findings of fact and conclusions of law and decree of legal separation were entered on April 2, 2003. On April 21, 2003, Florence petitioned the court to withhold William's income for child support. On April 22, the court ordered William's employer to withhold $338.00 a month from William's paycheck for child support. Three days later, William moved the court to set aside the default. The court denied William's motion to set aside the default, and he now appeals that decision.

DISCUSSION

¶ 3 The sole issue raised on appeal is whether the District Court abused its discretion when it denied William's request to set aside the default judgment.

¶ 4 On review of a district court's denial of a motion to set aside a default judgment, the finding of even a slight abuse of discretion is sufficient to reverse the order. In re Marriage of Winckler, 2000 MT 116, ¶ 10, 299 Mont. 428, ¶ 10, 2 P.3d 229, ¶ 10. We consistently recognize that (1) default judgments are not favored and every litigated case should be tried on its merits; and (2) trial courts have a certain amount of discretion when deciding whether or not to set aside a default judgment. Empire Lath & Plaster v. American Cas. (1993), 256 Mont. 413, 416, 847 P.2d 276, 278.

¶ 5 Rule 55(c), M.R.Civ.P., allows for the setting aside of a default judgment:

For good cause shown the court may set aside an entry of default and, if a judgment by default has been entered, may likewise set it aside in accordance with Rule 60(b).

¶ 6 Rule 60(b), M.R.Civ.P., states in its pertinent part:

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, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; ... or (6) any other reason justifying relief from the operation of the judgment.

¶ 7 When considering a motion to set aside the entry of a default judgment, the court must determine whether the moving party first satisfied the criteria for establishing good cause under Rule 55(c). In re Marriage of McDonald (1993), 261 Mont. 466, 469, 863 P.2d 401, 403. There are four criteria a party must meet to "show good cause" under the first part of Rule 55(c): (1) the defaulting party proceeded with diligence; (2) the defaulting party's neglect was excusable; (3) the defaulting party has a meritorious defense to the claim; and (4) the judgment, if permitted to stand, will affect the defaulting party injuriously. McDonald, 261 Mont. at 468, 863 P.2d at 402.

¶ 8 William places considerable reliance on our decision of In re Marriage of Winckler, 2000 MT 116, 299 Mont. 428, 2 P.3d 229, where we set aside a default judgment. Although the present case has similarities to Winckler, it differs sufficiently as to each of the good cause factors.

¶ 9 Under the first criterion of diligence, we have looked to the conduct of the parties both prior to and after the default. In Winckler, the defaulting party was diligent when he obtained counsel and filed motions for relief from default within one week of receiving the notice of default judgment, which also met the criterion of filing within sixty days of entry of judgment pursuant to Rule 60(b), M.R.Civ.P. Winckler, ¶ 18. In Blume v. Metropolitan Life Ins. Co. (1990), 242 Mont. 465, 467, 791 P.2d 784, 786, the evidence showed that Metropolitan had received the complaint and summons via certified mail, but despite procedures to handle such mail, it was never directed to a person in authority. Also, within one week of discovering the default, Metropolitan had hired a Billings firm and filed a motion to set aside the default, which was sufficient diligence. Blume, 242 Mont. at 469,791 P.2d at 787. In Waldher v. FDIC, the defaulting party acted diligently when both parties were actively engaged in on-going settlement negotiations which continued after the default was taken. Waldher v. FDIC (1997), 282 Mont. 59, 935 P.2d 1101. But, in Empire Lath & Plaster, filing a motion to set aside one week after the default was insufficient where the defaulting party was aware of the dispute and had actual notice of the filed complaint, yet took no action. Empire Lath & Plaster,256 Mont. at 413,847 P.2d at 276.

¶ 10 In the present case, William was not served with a notice of default judgment. Accordingly, William claims he thought he and Florence were only getting a legal separation, not a dissolution with a final division of property. He continued to go to counseling with Florence and their son, Johnathan, and thought they were working things out with the possibility of reconciliation. William was unaware of the status of the case until he received in the mail the court's findings of fact, conclusions of law, and final decree around April 8, 2003. William filed his motion to set aside the default on April 25, seventeen days later.

¶ 11 In regard to the second criterion of excusable neglect, in Winckler we noted that the defaulting party had relied on language in a letter from his spouse's attorney, which accompanied the paperwork. That letter made references to a possible negotiated settlement, which led the defaulting husband to believe he would receive a settlement offer...