Lee v. Sage Creek Refining Co., 96-292

• Decision Date: 06 November 1997
• Docket Number: No. 96-292,96-292
• Citation: 947 P.2d 791
• Parties: Gene LEE and Georgine Lee, husband and wife, Appellants (Defendants), v. SAGE CREEK REFINING CO., a Wyoming corporation, Appellee (Plaintiff).
• Court: Wyoming Supreme Court

Page 791

947 P.2d 791

Gene LEE and Georgine Lee, husband and wife, Appellants (Defendants), v. SAGE CREEK REFINING CO., a Wyoming corporation, Appellee (Plaintiff).

No. 96-292.

Supreme Court of Wyoming.

Nov. 6, 1997.

Joel M. Vincent, Vincent & Vincent, Riverton, for Appellants.

Vance T. Countryman, Hooper Law Offices, PC, Riverton, for Appellee.

Before TAYLOR, C.J., and THOMAS, MACY, GOLDEN and LEHMAN JJ.

THOMAS, Justice.

The resolution of this case turns upon the validity of the contention by Gene Lee and Georgine Lee (Lees) that the district court abused its discretion in refusing to set aside their default entered by the clerk of the district court pursuant to WYO. R. CIV. P. 55(a). The Lees failed to answer or otherwise plead to the Complaint filed by Sage Creek Refining Co. (Sage Creek) within the thirty days provided by WYO. R. CIV. P. 12(a), after service of process was made upon them in Arizona pursuant to the provisions of WYO. R. CIV. P. 4(l )(2). More than thirty days after service was completed, Sage Creek applied for entry of default, and an Entry of Default was made by the clerk of the district court. The Lees were unsuccessful in persuading the district court to set aside the entry of default, and after an appropriate hearing on damages, the court entered judgment against the Lees in the amount of $26,200.00 plus costs of $3,000.00. A collateral issue relates to the impropriety of the theory invoked by the trial court to arrive at damages. We hold that the trial court did not abuse its discretion in refusing to set aside the default, and the Order providing a judgment in favor of Sage Creek against the Lees is affirmed.

In the Brief of Appellants, the Lees state the issues in this way:

a.

Whether the Trial Court abused its discretion in refusing to set aside the Entry of Default.

b.

Whether the Trial Court erred as a matter of law in awarding any amount as judgment on the claim for breach of the implied covenant to provide water and sewer.

Sage Creek, in its Brief of Appellee, sets forth three issues to be addressed by the Court:

Whether the trial of [sic] court abused its discretion when it denied the Appellants' motion to set aside the entry of default.

Whether the Court abused its discretion by failing to give Appellants 3 days notice prior to the entry of default.

Whether judgment for the claim for breach of the implied covenant to provided [sic] water and sewer is proper as a matter of law.

In 1970 Sage Creek leased property from the Lees for a term of forty years. In a collateral agreement, the Lees agreed to provide Sage Creek with water for the leased premises from a well located on adjacent property owned by the Lees, and they also agreed to permit Sage Creek to place a septic tank on that property. Sage Creek took possession of the leased premises and constructed a convenience store and gas station there. In the course of that construction Sage Creek installed a septic system on the adjacent property.

In 1982 the Lees leased the property on which the water well and the septic tank were located to Sage Creek. The lease of the adjacent property permitted Sage Creek's customers and suppliers to drive completely around the convenience store building. The lease was for a ten year period, and in the early 1980's, Sage Creek drilled a new water well on the property because the existing well went bad. The parties intended that the new well would replace the original well.

After the ten year period of the second lease expired, the Lees demanded an additional Three Hundred Dollars ($300.00) a month rent from Sage Creek to renew that lease. When Sage Creek refused to agree to the additional rent, the Lees threatened to, and in fact did, cut Sage Creek's business premises off from access to the water well and refused to supply Sage Creek with water.

Sage Creek then filed the Complaint in this action and a summons was issued, but it was not served. Sage Creek sought a temporary restraining order, and counsel for the Lees appeared via telephone at a hearing. Not long after that, counsel for Sage Creek requested counsel for the Lees to accept service, but counsel for the Lees refused, asserting lack of authorization to accept service. Subsequently, counsel for the Lees represented them at the deposition of the president of Sage Creek. Prior to that deposition, counsel for Sage Creek again requested that counsel for the Lees accept service, or at least enter an appearance, but counsel for the Lees again refused to accept service and did not enter an appearance.

On December 7, 1992 the Lees received copies of the summons and Complaint and the Temporary Restraining Order which were served on them in Arizona by certified mail. The Lees did not answer, appear, or plead to the Complaint, and on January 29, 1993, Sage Creek applied to the clerk of the district court for Entry of Default. Default was entered on February 1, 1993, and the Lees then moved to set it aside requesting an enlargement of the time to answer. The district court denied that motion, and an effort was made to appeal that ruling. This Court dismissed that appeal, holding that the order denying a motion to set aside an entry of default is not an appealable order. Lee v. Sage Creek Refining Co., Inc., 876 P.2d 997 (Wyo.1994).

As styled by the district court, a "trial," which constituted the hearing on the application of Sage Creek for the entry of a judgment, was conducted on October 31, 1995, concluding on January 3, 1996. On May 7, 1996, the trial court entered an Order awarding judgment in favor of Sage Creek and against the Lees for $26,200.00, with interest at the statutory rate and costs in the sum of $3,000.00. Both parties sought to have the district court reconsider that Order, and their respective motions were denied. The Lees then took this appeal.

Seeking reversal of the Order, the Lees contend that the district court abused its discretion in refusing to set aside the entry of default. Their arguments focus on WYO. R. CIV. P. 55(c), which states: "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)." A party must substantiate reasons pursuant to WYO. R. CIV. P. 60(b) in order to establish "good cause" for setting aside the entry of default. Vanasse v. Ramsay, 847 P.2d 993, 999 (Wyo.1993). The Lees rely upon reasons (1) and (6) found in WYO. R. CIV. P. 60(b), which states:

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.

We review the ruling of a trial court on motions presented pursuant to WYO. R. CIV. P. 60(b)(1) and (6) only for an abuse of discretion. Vanasse, 847 P.2d at 996; Carlson v. Carlson, 836 P.2d 297, 301 (Wyo.1992); U.S. Aviation, Inc. v. Wyoming Avionics, Inc., 664 P.2d 121, 126-27 (Wyo.1983). Essentially the resolution of such motions is left to the sound discretion of the trial court, as defined in Martin v. State, 720 P.2d 894, 897 (Wyo.1986):

Judicial discretion is a composite of many things, among which are conclusions drawn from objective criteria; it means a sound judgment exercised with...