Kan. City Live LLC v. Bukovac

• Decision Date: 03 May 2016
• Docket Number: WD 78882
• Citation: Kan. City Live LLC v. Bukovac, 494 S.W.3d 573 (Mo. App. 2016)
• Parties: Kansas City Live LLC, Appellant, v. Virginia Bukovac, Respondent.
• Court: Missouri Court of Appeals

494 S.W.3d 573

Kansas City Live LLC, Appellant,

v.Virginia Bukovac, Respondent.

WD 78882

Missouri Court of Appeals, Western District.

OPINION FILED: May 3, 2016

Motion for Rehearing and/or Transfer to Supreme Court Denied May 31, 2016

Application for Transfer Denied August 23, 2016

Michelle R. Stewart and Jennifer R. Johnson, Overland Park, KS, for appellant.

John E. Turner and Christopher P. Sweeny, Kansas City, MO, for respondent.

Before Division Three: Gary D. Witt, Presiding Judge, James E. Welsh, Judge and Anthony Rex Gabbert, Judge

Gary D. Witt, Judge

Appellant Kansas City Live LLC (“KC Live”) appeals the denial by the Circuit Court of Jackson County of its Motion to Set Aside Interlocutory Order of Default (“Motion to Set Aside”). The Order of Default was entered against KC Live in a lawsuit filed by the Respondent/Plaintiff Virginia Bukovac (“Bukovac”) against defendants KC Live and the City of Kansas City, Missouri, in which Bukovac alleged that she was injured when she tripped and fell on an uneven sidewalk in downtown Kansas City due to the defendants' combined negligence. KC Live failed to respond to Bukovac's amended petition, and Bukovac was granted an interlocutory judgment of default against KC Live. KC Live sought to have that interlocutory order of default set aside. The trial court, in denying the Motion to Set Aside, found that KC Live had failed to meet the requirements of Rule 74.05(d)¹ in that KC Live (1) failed to prove it had a meritorious defense and (2) failed to show good cause to set aside the default. KC Live now appeals both of these findings. We affirm.

Factual Background

In April of 2014, Bukovac filed a petition against the City of Kansas City, Missouri in which she alleged that she sustained an injury when she tripped and fell on an uneven sidewalk in or near what is commonly referred to as the Power and Light District in Kansas City. She claimed that the city was negligent in failing to maintain and warn of the unsafe condition of the sidewalk. In August of 2014, Bukovac amended her petition and added KC Live as a defendant, alleging that KC Live had a contractual duty to maintain and clean the sidewalk where she fell. She alleged KC Live was negligent in its maintenance of the sidewalk and in its failure to warn of and remedy the unsafe condition.

KC Live was served with Bukovac's amended petition through its registered agent, CSC–Lawyers Inc. Service Company (“CSC”), on August 19, 2014. CSC, pursuant to KC Live's instructions, emailed the summons and amended petition to three attorneys, all of whom work for KC Live. KC Live failed to timely answer the amended petition.

On October 23, 2014, Bukovac moved for an interlocutory judgment of default pursuant to Rule 74.05, solely as to KC Live. In that motion, Bukovac further requested that a hearing be set to determine appropriate damages. On October 27, 2014, the trial court granted Bukovac's motion and entered an interlocutory judgment of default in favor of Bukovac against KC Live.

Michael Stoltz (“Stoltz”), KC Live's Associate General Counsel, discovered on January 13, 2015 that he had received Bukovac's amended petition in his email, but had failed to forward the suit papers to KC Live's insurance carrier, which was his standard practice. Stoltz admits to opening and moving the email into a different email folder that he used for storing emails dealing with the service of suits at the time he received the amended petition in August of 2014. However, he alleged that he made a mistake and inadvertently failed to appropriately respond to the amended petition and summons or forward it to the company's insurance carrier. There is no dispute that the email indicated that KC Live was the entity being served with the petition. Upon learning of his mistake, Stoltz proceeded to forward the paperwork to KC Live's insurance carrier.

On January 15, 2015, KC Live filed its unverified Motion to Set Aside. In the Motion to Set Aside, KC Live argued there was good cause to set aside the judgment of default because the service papers were inadvertently overlooked with no intent or interest in impeding the judicial process. KC Live also submitted an affidavit from Stoltz to support the motion. The affidavit solely addressed the facts regarding Stoltz's receiving and handling of the service email.

Regarding its meritorious defenses, KC Live stated in its Motion to Set Aside that KC Live “does not believe it owned or controlled the area of the sidewalk where Plaintiff fell” as the sidewalk was property of the City of Kansas City. KC Live also alleged that “the alleged dangerous condition of the sidewalk was open and obvious,” and Bukovac failed to maintain a proper lookout. No affidavit or other sworn statements or testimony were submitted to support the facts giving rise to KC Live's alleged meritorious defenses.

Stoltz was deposed by Bukovac regarding KC Live's failure to respond to the amended petition and the facts regarding his handling of the email sent to him by CSC. CSC was the registered agent of KC Live, and KC Live had established a policy that when CSC received service on KC Live's behalf, CSC was to email the documents it received to three attorneys at KC Live, including Stoltz. CSC followed this policy in this case. Even though three attorneys for KC Live received the service email from CSC, Stoltz testified in his deposition that the suit in this case was his responsibility. He could offer no explanation for his failure to forward the amended petition to KC Live's insurance carrier other than that he had made a mistake in either overlooking the email or in not comprehending its contents. Stoltz also testified that KC Live has no written policies or procedures for how to respond when KC Live is served with a complaint or summons.

Following oral argument on KC Live's Motion to Set Aside, the trial court denied the motion. Upon request by KC Live, the court entered its Judgment/Amended Order, denying KC Live's Motion to Set Aside. First, the trial court found that KC Live failed to meets its burden under Rule 74.05(d) to show it has a meritorious defense. The trial court noted that no sworn testimony or affidavits were submitted to support or establish the factual basis for KC Live's arguments regarding its meritorious defenses. The trial court also found that KC Live failed to demonstrate good cause to set aside the interlocutory judgment of default as KC Live's actions in this case regarding its handling of the service email were reckless.

KC Live now appeals.

Standard of Review

Pursuant to Rule 74.05(d), a motion to set aside a default judgment is an “independent action,” and, as such, a judgment granting or denying such a motion is a final judgment eligible for immediate appellate review. Saturn of Tiffany Springs v. McDaris, 331 S.W.3d 704, 708–09 (Mo.App.W.D.2011). We review the trial court's denial of a motion to set aside a default judgment under an abuse of discretion standard. Brungard v. Risky's Inc., 240 S.W.3d 685, 686 (Mo. banc 2007). While the trial court has broad discretion in deciding to set aside a default judgment, its discretion to deny such a motion is “narrowed” because public policy favors cases be decided on the merits. Coble v. NCI Bldg. Sys., Inc., 378 S.W.3d 443, 447 (Mo.App.W.D.2012) (citing Brungard, 240 S.W.3d at 686–87 ). “The trial court abuses its discretion when its ruling is clearly against the logic of the circumstances then before the trial court and is so unreasonable and arbitrary that the ruling shocks the sense of justice and indicates a lack of careful deliberate consideration.” McDaris, 331 S.W.3d at 709 (quoting Peters v. Gen. Motors Corp., 200 S.W.3d 1, 23 (Mo.App.W.D.2006) ).

Analysis

In its first point on appeal, KC Live argues that the trial court erred in denying its Motion to Set Aside because it set forth allegations which, if supported by evidence, would defeat or adversely affect Bukovac's claims in that KC Live relied on Bukovac's factual averments from her petition and amended petition and further made specific factual allegations identifying its defenses that it did not own or control the property where Bukovac fell and that she was at fault for her own injuries.

Rule 74.05(d) provides that “[u]pon motion stating facts constituting a meritorious defense and for good cause shown, an interlocutory order of default or a default judgment may be set aside.” (emphasis added). “The movant in a motion to set aside [a] default judgment bears the evidentiary burden of proving entitlement to the relief requested. Failure to establish either the ‘meritorious defense’ element or the ‘good cause’ element of a motion pursuant to Rule 74.05(d) is fatal to the motion.” McDaris, 331 S.W.3d at 709 (quoting Agnello v. Walker, 306 S.W.3d 666, 673 (Mo.App.W.D.2010) ).

In order to satisfy the meritorious defense requirement of Rule 74.05(d), the movant “must set forth sufficient facts to establish an arguable theory of defense.” Id. at 710. An arguable defense constitutes any defense which is likely to have a “material effect on the substantive result of the case.” Id. The defense does not need to be conclusively proven, but the motion must contain allegations that “if supported by evidence found credible by the fact-finder, would defeat the plaintiff's claim.” Id. ; see also Snelling v. Reliance Auto., Inc., 144 S.W.3d 915, 918 (Mo.App.E.D.2004).

In addition, although not expressly stated in Rule 74.05(d), Missouri courts have consistently held that motions to set aside are not self-proving and must be verified or otherwise supported by affidavit or sworn testimony. See McDaris, 331 S.W.3d at 712–13 ; Agnello, 306 S.W.3d at 673 ; First Cmty. Bank v. Hubbell Power Sys., Inc., 298 S.W.3d 534, 540 (Mo.App.S.D.2009). The most recent pronouncement on the subject by the Missouri Supreme Court has reaffirmed this principle. See In re Marriage of Callahan, 277 S.W.3d 643, 644 (Mo. banc 2009) (“A motion to set aside a...