Kerth v. Polestar Ent.

• Decision Date: 22 June 2010
• Docket Number: No. ED 93435.,ED 93435.
• Citation: 325 S.W.3d 373
• Parties: Susan KERTH, in her capacity as Personal Representative of The Estate of Alfred H. Kerth, III, Deceased, Respondent, v. POLESTAR ENTERTAINMENT, Glenn Tobias, and Besdine Management Company, Appellants.
• Court: Missouri Court of Appeals

325 S.W.3d 373

Susan KERTH, in her capacity as Personal Representative of The Estate of Alfred H. Kerth, III, Deceased, Respondent,

v.POLESTAR ENTERTAINMENT, Glenn Tobias, and Besdine Management Company, Appellants.

No. ED 93435.

Missouri Court of Appeals, Eastern District,Division Three.

June 22, 2010.

COPYRIGHT MATERIAL OMITTED.

COPYRIGHT MATERIAL OMITTED.

Jeff N. Dunphy, St. Louis, MO, for appellants.

Andrew D. Dillon, St. Louis, MO, for respondent.

LAWRENCE E. MOONEY, Judge.

Introduction

The defendants-Polestar Entertainment, Glenn Tobias, and Besdine Management Company-appeal the circuit court's judgment denying their motion to set aside a judgment entered by the trial court in 2007 in favor of the plaintiff. Because the defendants were not provided notice of the 2007 trial setting, the defendants' due-process rights were violated and the trial court's judgment must be set aside as void. We reverse and remand.

Factual and Procedural Background

The plaintiff, Susan Kerth, in her capacity as personal representative of the estate of Alfred H. Kerth, III, filed suit against the defendants, seeking damages for common-law fraud and breach of contract. The plaintiff alleged that in 1999 defendants Tobias and Polestar Entertainment, ¹ a film production company, approached Mr. Kerth about investing in a venture to acquire the rights to and produce a sequel to the film “Easy Rider.” By written agreement, Mr. Kerth invested $125,000 in the project. After he died in 2002, attorneys for his estate discovered the investment contract and, after investigation, filed suit in 2004 on behalf of his estate. The defendants filed answers to the petition on October 19, 2004.

Procedurally, the cause was passed for settlement and placed on the dismissal docket in June of 2006. On September 11, 2006, the plaintiff filed a request for trial setting; the trial court did not act on this request. The next day, September 12, 2006, defense counsel moved to withdraw as counsel for the defendants. Counsel sought leave to withdraw on the grounds that the defendants had failed to cooperate with counsel in defense of the action and had failed to contact counsel in the previous five months despite numerous efforts by counsel to contact the defendants by telephone and mail. The trial court held a hearing on October 2, 2006, and granted defense counsel's motion.

Over five months later, on March 15, 2007, the plaintiff moved to have the case removed from the dismissal docket and placed on a trial docket “approximately four months from this date.” A copy of this motion was mailed to the defendants, at an address on Olympic Boulevard in Los Angeles, California, the same address used by the plaintiff when serving the defendants. The trial court granted plaintiff's motion and set trial for July 9, 2007. There is no record of the plaintiff mailing notice of this trial setting to the defendants. Also, there is no record of the court clerk mailing notice of the trial setting to the defendants. However, the trial setting was published in the June 14, 2007 edition of The St. Louis Daily Record.

The trial court called the cause for trial on July 9, 2007. The defendants did not appear. Following presentation of the plaintiff's evidence, the trial court entered judgment in favor of the plaintiff and against the defendants in the amount of $699,360. This total amount represented $188,000 in compensatory damages, $135,360 in pre-judgment interest, and $376,000 in punitive damages.

Defendant Tobias asserts that he did not learn of the judgment's existence until February 17, 2009, when the plaintiff initiated collection efforts. Mr. Tobias knew in October of 2006 that his Missouri attorneys had withdrawn; however, he did not retain new Missouri counsel for the case. At the time, Mr. Tobias was involved in other lawsuits in California, Taiwan, Europe, and the Bahamas. After consulting with his solicitor, Mr. Marriott, ² Mr. Tobias decided to give priority to these other lawsuits over the Missouri lawsuit. Mr. Tobias did not ask Mr. Marriott to monitor the status of the Missouri lawsuit, and Mr. Marriott made no efforts to keep apprised of the status of the Missouri case. Mr. Tobias did not contact counsel for the plaintiff; he presumed instead that the plaintiff would contact him. He did not direct any of his employees at the two defendant corporations to look into the status of the Missouri lawsuit. Mr. Tobias had another attorney in California, Mr. Williamson, who began representing him in early 2008. Mr. Williamson was also counsel for defendant Besdine Management Company, but not defendant Polestar Entertainment. Mr. Tobias did not inform Mr. Williamson of the pending case in Missouri. In sum, Mr. Tobias made no effort whatsoever to keep himself informed about the status of the Missouri case between October 2006, when his Missouri counsel withdrew, and February 2009, when his California attorney informed him that the plaintiff's attorneys had started collection efforts. Mr. Tobias stated he had “a lot of things on his plate,” so his “curiosity was not piqued.” Rather he presumed he would be notified if a trial was set.

As mentioned above, the defendants had an initial address on Olympic Boulevard, in Los Angeles, California. Sometime in 2006 or 2007, after the plaintiff had filed suit and served the defendants, Mr. Tobias and the two defendant corporations moved. By the spring of 2007, when the trial court set this case for trial, the defendants were located at an address on Mulholland Drive, in Los Angeles, California. Mr. Tobias was unsure if he placed a change-of-address and forwarding order at the post office for the two defendant corporations. He noted that the two businesses were inactive at the time. He stated that the post office had a forwarding address from the Olympic Boulevard address for him on file. Mr. Tobias did not personally notify the Missouri court of his change of address, but noted that the October 2006 motion to withdraw he had received from his attorneys contained his new address, and that this motion had been both filed with the court and mailed to plaintiff's counsel.

On March 16, 2009, over twenty months after judgment was entered, the defendants filed a motion pursuant to Rule 74.06 to set aside the judgment. The defendants alleged their due-process rights had been violated because they were not provided notice of the trial setting. In consequence, they argued, the court's July 9, 2007 judgment was void and must be set aside.

The circuit court denied the defendants' motion. In so doing, the court found that the defendants had not received notice of the trial setting. The court concluded, however, that the July 9, 2007 judgment was, if anything, an irregular judgment but not a void judgment. The court noted that it may grant relief from an irregular judgment under Rule 74.06(b)(3), but that this path was unavailable, as the defendants' motion was filed too late. ³ The court further concluded that to the extent the judgment could be considered void under Rule 74.06(b)(4), it would be a voidable judgment and not a judgment void from its inception. Noting two propositions of law holding that a party has a duty to keep abreast of all proceedings in his case, and that a party can waive his due-process rights to be heard by voluntarily absenting himself from the proceedings, the court declined to set aside the judgment because of the defendants' conduct. In particular, the court faulted Mr. Tobias for making no effort to keep himself informed of the proceedings in the case. The court found that Mr. Tobias's conscious decision to ignore this case and devote his attention to other litigation was no ground for setting aside a judgment. Further, the court concluded that if the judgment could be deemed void, the defendants were not entitled to relief as their motion to set aside had not been filed within a reasonable time as required by Rule 74.06(c).

The defendants now appeal, alleging the circuit court erred in denying their motion to set aside the judgment. ⁴ They maintain the judgment was void from its inception. The defendants further argue the judgment, being void, was not subject to the “reasonable-time” requirements of Rule 74.06(c). And they contend their actions or inactions did not constitute a waiver of their due-process rights to notice of the trial setting.

Standard of Review

Ordinarily, we review the circuit court's ruling on a motion to set aside a judgment under Rule 74.06 for an abuse of discretion. In re Marriage of Hendrix, 183 S.W.3d 582, 587 (Mo. banc 2006). However, whether a judgment should be vacated because it is void is a question of law that we review de novo; we give no deference to the circuit court's decision. O'Hare v. Permenter, 113 S.W.3d 287, 289 (Mo.App. E.D.2003); Smith v. Square One Realty Co., 92 S.W.3d 315, 316 (Mo.App. E.D.2002).

Discussion

“An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.” Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 94 L.Ed. 865 (1950). “The fundamental requisite of due process of law is the opportunity to be heard.” Id. “This right to be heard has little reality or worth unless one is informed that the matter is pending and can choose for himself whether to appear or default, acquiesce or contest.” Id. Our Missouri courts have likewise held that “[c]onstitutional due process requires that for a judgment entered against a party not in default to be valid, there must have been notice of the trial setting and an opportunity to be heard must have been granted at a meaningful time and in a meaningful manner.” Breckenridge Material Co. v. Enloe, 194 S.W.3d 915, 921 (Mo.App. E.D.2006); see...