Marck Indus., Inc. v. Lowe

• Decision Date: 18 November 2019
• Docket Number: No. SD 35892,SD 35892
• Citation: 587 S.W.3d 737
• Parties: MARCK INDUSTRIES, INC., and RL Transport, LLC, Respondents, v. Cathy LOWE and Billy Rouse, Appellants.
• Court: Missouri Court of Appeals

587 S.W.3d 737

MARCK INDUSTRIES, INC., and RL Transport, LLC, Respondents,

v.Cathy LOWE and Billy Rouse, Appellants.

No. SD 35892

Missouri Court of Appeals, Southern District, Division One.

FILED: November 18, 2019

Appellants’ attorney: Gregory R. Bridges.

Respondents’ attorney: Patrick R. Baird.

GARY W. LYNCH, P.J.

Cathy Lowe ("Lowe") and Billy Rouse ("Rouse") (collectively, "Appellants") appeal the trial court’s entry of a judgment against them as a discovery sanction. Because Appellants have failed to demonstrate the trial court committed any reversible error, we affirm the judgment.

Facts and Procedural Background

Respondents Marck Industries, Inc. and RL Transport, LLC (collectively, "Respondents") filed a petition against Appellants for conversion, fraud, civil conspiracy, punitive damages, and breach of fiduciary duty. Appellants filed an answer to the petition. The matter was set for a one-day bench trial beginning on October 27, 2017.

On July 26, 2017, Respondents served Appellants with their Second Set of Interrogatories and Second Request for Production of Documents (collectively, "Second Discovery Requests"). Appellants filed a motion for additional time to answer the Second Discovery Requests. On August 31, 2017, the trial court granted Appellants' request for more time and gave them an additional twenty days to respond to the Second Discovery Requests, making their responses due on or before September 20, 2017.

Appellants failed to respond to the Second Discovery Requests, and on September 27, 2017, Respondents filed a motion to enforce discovery and sanctions. A hearing on that motion was held on October 2, 2017.¹ Following that hearing, the trial court entered an order providing that "[i]f [Appellants] have not provided complete discovery answers before 5:00 PM on October 9, 2017, this Court shall strike the pleadings of [Appellants] and enter a default judgment in favor of [Respondents] and against [Appellants]."

On October 10, 2017, Appellants filed certificates of service of responses to the Second Discovery Requests. The next day, Respondents filed a motion for sanctions, alleging Appellants did not provide any bank records of the individuals for the relevant time and no records at all for C&B Trucking, LLC. Appellants filed a response on October 12, 2017. A motion hearing was held on October 26, 2017, the day before the scheduled trial, and Appellants were "ordered to produce all requested discovery without fail." The trial was reset for March 8, 2018.

On January 12, 2018, Respondents filed a second motion for sanctions alleging that discovery was incomplete. Appellants did not file a response to this motion. The court scheduled a hearing on the motion for February 5, 2018.

On January 31, 2018, Appellants provided bank records for C&B Trucking. Appellant Rouse, however, provided only two of his individual bank statements: an August 2013 statement from Security Bank and a February 2013 statement from People’s Bank.

On February 5, 2018, a hearing was held and the court granted Respondents' second motion for sanctions and struck Appellants' pleadings as a discovery sanction. Thereafter, Respondent filed a motion for default judgment.

Appellants filed a motion to reconsider the striking of Appellants' pleadings ("Motion to Reconsider"). In their motion, Appellants alleged that they "believe that all documents responsive to all of the requests of [Respondents] have been produced" and that "while Appellant, Cathy Lowe has been convicted of embezzling funds from [Respondents], the co-defendant, Billy Rouse, was never indicted or charged for that crime." Respondents filed suggestions in opposition to the Motion to Reconsider, arguing that Appellant Rouse failed to produce "complete records for three (3) bank accounts he purportedly maintained during the relevant time period."

On June 4, 2018, the trial court held a hearing on Appellants' Motion to Reconsider and Respondents' Motion for Default Judgment. At the hearing, Appellants' counsel stated that they had produced "everything that’s out there...."² The trial court denied Appellants' Motion to Reconsider and entered an Order of Default on June 5, 2018. An evidentiary hearing was then scheduled for the purpose of determining Respondents' damages.

On November 21, 2018, after a hearing on damages, the court entered judgment against Appellants jointly and severally in the amount of $130,957.02. On December 19, 2018, Appellants filed a "Motion to Vacate, Reopen, Correct, Amend, or Modify Judgment Pursuant to Missouri Rule of Civil Procedure 75.05(d),³ or Alternatively for a New Trial Pursuant to Missouri Rule[s] of Civil Procedure 78.01 and 78.04" (the "Motion to Set Aside"). In that motion, Appellants "request[ed] that the default [j]udgment be set aside since [Appellants] have a meritorious defense and good cause exists."

Appellants filed a timely Notice of Appeal. The trial court never ruled on Appellants' Motion to Set Aside.

Discussion

Before we can turn to the merits of Appellants' appeal, we must resolve whether we have jurisdiction to hear Appellants' appeal. There can be no appeal absent a final judgment. Giesler v. Burling Northern R. Co. , 791 S.W.2d 491, 492 (Mo.App. 1990). "Because finality of judgment is a jurisdictional prerequisite, this Court must dismiss an appeal from an order that is not final." Id.

Respondents argue that we are without jurisdiction to review this matter because a party may not directly appeal the entry of a default judgment and the trial court has not ruled on Appellants' Motion to Set Aside. "Generally, a default judgment is not appealable." Heineck v. Katz , 509 S.W.3d 116, 122 (Mo.App. 2016). A default judgment can only be appealed if the trial court heard a motion to set aside or vacate the judgment under Rule 74.05(d). Id. Such a motion filed "under ... Rule 74.05(d), even if filed within 30 days after judgment, is an independent action and not an authorized after-trial motion subject to Rule 78.04, 78.06, or 81.05." Rule 74.05(d). We reject Respondents' argument, however, because the judgment entered in this case is not a default judgment as contemplated under Rule 74.05.

Judgment on the Merits—Not a Default Judgment

Respondents' argument fails to take into consideration the distinction between a default judgment entered as a consequence of failing to appear or respond to pleadings and a "default judgment" entered as a discovery sanction. "A default judgment entered by way of a court-imposed sanction for discovery violations is not a true default judgment." Norber v. Marcotte , 134 S.W.3d 651, 662 (Mo.App. 2004). Such a judgment is a judgment on the merits. See Keithley v. Shelton , 421 S.W.3d 502, 506 (Mo.App. 2013). "[I]t is well-established that Rule 74.05(d)’s prerequisites for a motion to set aside are inapplicable when the record shows that the defendant pleaded an answer to the petition or otherwise defended against the petition." Beeman v. Beeman , 296 S.W.3d 514, 517 (Mo.App. 2009). Rule 74.06 governs the setting aside of a judgment rendered on the merits.⁴ Rule 74.06⁵ ; Am. Econ. Ins. Co. v. Powell , 134 S.W.3d 743, 746 (Mo.App. 2004). Accordingly, the case law cited by Respondents standing for the proposition that a party may not directly appeal the entry of a default judgment absent a ruling on a Rule 74.05 motion is not applicable here.

The Western District of our court addressed a similar jurisdictional challenge in Houchins v. Houchins , 727 S.W.2d 181, 183 (Mo.App. 1987). There, the court held that an appellate court has jurisdiction to review the appeal of a "default judgment" that was entered as a discovery sanction even in the absence of filing a motion to vacate the judgment. See id. The court explained that the rationale requiring a party to file a motion to set aside a true default judgment is inapplicable where the judgment is entered as a discovery sanction. Id. This is because the rule in the former instance "rests on the proposition that no review of alleged trial court error should be permitted where the lower court has been given no opportunity to take corrective action." Id. However, in the case of a judgment entered as a result of a discovery sanction, the

trial court entered the order striking appellant’s pleadings after a hearing at which appellant appeared. The merits of the sanction were reviewed when appellant moved for reconsideration of the order. The trial court had the opportunity to review its own action in imposing the sanctions and a post-judgment motion would have added nothing of substance.

Id. (emphasis added).

Like in Houchins , the judgment entered in this case was the result of a discovery sanction. The trial court entered the order striking Appellants' pleadings after a hearing for reconsideration during which it had an opportunity to consider the merits of Appellants' argument. Accordingly, we have jurisdiction to entertain this appeal.

Failure to Comply with Briefing Requirements Impedes Appellate Review

While we may have the jurisdiction to reach the merits of Appellants' appeal, we must now decide whether we should. Respondents assert that we should not because Appellants' point relied on does not comply with Rule 84.04 in that it fails to state the legal principles that the trial court should have applied and is multifarious.

Our preference ... to resolve matters on the merits ... is not a license for non-compliance with Rule 84.04. We wield our discretion to overlook briefing violations with caution because each time we review a noncompliant brief ex gratia , we send an implicit message that substandard briefing is acceptable. It is not.

Nichols v. Belleview R-III School District , 528 S.W.3d 918, 927 n.15 (Mo.App. 2017) (internal quotations and citations omitted).

Appellate review is guided by four policy interests: "(1) we presume the challenged judgment is correct; (2) we presume the trial court knows and applies the law; (3) we will affirm the outcome on any...