Maulding v. Hardman

• Decision Date: 11 February 1993
• Docket Number: No. 92-409,92-409
• Citation: 847 P.2d 292,257 Mont. 18
• Parties: Russell Eric MAULDING, Plaintiff and Respondent, v. Robert HARDMAN, Defendant and Appellant.
• Court: Montana Supreme Court

Page 292

847 P.2d 292

257 Mont. 18

Russell Eric MAULDING, Plaintiff and Respondent, v. Robert HARDMAN, Defendant and Appellant.

No. 92-409.

Supreme Court of Montana.

Submitted on Briefs Dec. 3, 1992.

Decided Feb. 11, 1993.

Joe Seifert, Gough, Shanahan, Johnson & Waterman, Helena, for defendant and appellant.

John C. Doubek, Small, Hatch, Doubek & Pyfer, Helena, for plaintiff and respondent.

HARRISON, Justice.

This is an appeal from the District Court of the First Judicial District, Lewis and Clark County, the Honorable Jeffrey M. Sherlock presiding. Appellant Robert Hardman (Hardman) appeals from the denial of his Motion to Set Aside Default Judgment which was deemed denied under Rule 60(c), M.R.Civ.P., because the District Court failed to rule on it within 45 days of its filing. We set aside the default judgment and remand for a trial on the merits.

The sole issue is whether Hardman is entitled to have the default judgment set aside in favor of a trial on the merits.

In the early morning hours of September 5, 1989, Hardman, respondent Russell Maulding (Maulding), Dan Forsina, and Crickett Martin were driving in the Sieben Ranch area near Helena. Hardman was driving his mother's car. According to Hardman's testimony at the hearing on the motion, while rounding a curve the car slid off the road due to loose gravel. The car came to a stop in the ditch without hitting any obstructions. While Maulding drove, the other three pushed the car out of the ditch, scraping a fence and knocking out a post along the way. After getting out of the ditch they drove home. No one appeared injured or complained of being injured at the time, but when a highway patrolman cited Hardman around 5:00 p.m. the next day for not reporting an accident, he learned that Maulding had visited the hospital. Hardman later pled guilty to the charge of not reporting an accident and paid a fine.

On September 13, 1989, John Doubek, Maulding's attorney, sent a letter to The Farmers Insurance Group of Companies demanding payment of Maulding's medical expenses. On September 20, James Higgins, a claims representative with Farmers, spoke with Doubek and took Hardman's statement regarding the accident. Given Hardman's version of the incident, Higgins questioned liability and denied payment at that time. According to Higgins, Dan Forsina's statement, which he took on January 3, 1990, corroborated Hardman's description of the incident, and he conveyed this to Doubek that day.

The only documents presented to Higgins to substantiate the claimed injury were the emergency room record, which indicated only that Maulding was to rest his back, and a copy of a prescription. He received no other documents substantiating Maulding's claim. Nor did he receive a copy of the Montana Highway Patrol report from Doubek as he expected. Higgins also tried to contact Doubek regarding the case, but Doubek did not return his calls. He had no further contact with Doubek on this matter until Doubek sent a letter in May 1992 requesting payment of the judgment.

Maulding filed suit against Hardman on May 19, 1991, alleging a much different version of the accident than given by Hardman. Maulding alleged that Hardman was under the influence of alcohol, driving carelessly and recklessly and at excessive speed, and that they went over an embankment resulting in serious bodily injury to Maulding. The complaint was served on Hardman on May 1, 1991. Because Hardman was convinced that nothing had happened, he put the documents in a drawer, took no action, and told no one of them.

On June 24, Doubek requested that the clerk enter Hardman's default for failing to answer or otherwise appear. On November 8, 1991, the District Court entered default judgment on the issue of liability with damages to be determined later upon the proper showing. The court held a hearing on damages on March 17, 1992, and on March 19 entered judgment in the amount of $81,306.31. On May 19, Doubek requested that the clerk issue an execution writ against Hardman. On the previous day Higgins received a letter from Doubek informing him of the proceedings and offering to settle the matter for $75,000 if paid immediately.

The insurer responded by providing counsel for Hardman, who moved to set aside the default judgment on May 22. The court set a hearing on the motion for July 16, 1992. At the hearing, Doubek raised the issue of whether the hearing was timely, citing Rule 60(c), M.R.Civ.P., which in conjunction with Rules 59(d) and (g) requires the court to rule on the motion within 45 days of filing or it is deemed denied and the court loses jurisdiction to decide the matter. The court took that issue under advisement and heard the testimony regarding the motion to set aside the default judgment. The judge required the parties to brief the timeliness issue.

After reading Maulding's brief, Hardman conceded that the District Court lost jurisdiction to decide the motion on July 7, 1992, the date on which it was deemed denied. Hardman filed his Notice of Appeal on July 24, 1992.

The issue before this Court is whether Hardman is entitled to have the default judgment set aside in favor of a trial on the merits.

Maulding argues that there simply is no evidence in the record upon which Hardman or this Court may rely in deciding this issue. He points out that Hardman's attorney did not present any affidavits in support of his motion. However, an affidavit of merit is no longer required under our Rules of Civil Procedure. Blume v. Metropolitan Life Ins. Co. (1990), 242 Mont. 465, 470, 791 P.2d 784, 787; Keller v. Hanson (1971), 157 Mont. 307, 309, 485 P.2d 705, 707; see also Rule 11 and Rule 60(b), M.R.Civ.P. In this case, Hardman's brief in support of his motion set forth the facts and the evidence he intended to show at the hearing on the motion. That is all that was required at that point.

Maulding next argues that because the District Court lost jurisdiction to entertain the motion, the evidence presented at the hearing is not part of the record and may not be cited by Hardman or relied on by this Court. Under Rule 60(c), M.R.Civ.P., the motion was deemed denied because the 45-day time limit had expired. Therefore, the District Court lost jurisdiction to entertain the motion. In re the Marriage of McKinnon (1992), 251 Mont. 347, 350, 825 P.2d 551, 553; In re the Marriage of Miller (1989), 238 Mont. 108, 112, 776 P.2d 1218, 1220.

However, it is within this Court's power under Sec. 3-2-204, MCA, to consider any trial court proceedings that affect the parties' substantial rights, and we may for good cause remand this case for further proceedings. United Farm Agency v. Blome (1982), 198 Mont. 435, 438, 646 P.2d 1205, 1207. See also Cabalceta v. Standard Fruit Co. (11th Cir.1989), 883 F.2d 1553, 1555 (in determining whether to exercise its inherent equitable power to supplement the record, appellate court should evaluate all factors, issues, and circumstances including whether accepting the material into the record would establish beyond a doubt the proper resolution of the pending issue and whether remand would be contrary to the interests of justice and judicial economy); and Turk v. United States (8th Cir.1970), 429 F.2d 1327, 1329 (in the interest of justice the appellate court may order record enlarged in order to review testimony in transcript of preliminary hearing).

In this case, Maulding had full opportunity to prepare for the hearing, to cross-examine Hardman's witnesses, and to present his own evidence. There is no claim of an evidentiary error at the proceeding, and we see none in the transcript. Further, that evidence was necessary for Hardman to support his motion. More importantly, that evidence is necessary for this Court to make an informed decision on this matter. Therefore, in the interest of justice and judicial economy, this Court will consider the evidence presented at the July 16 hearing. To remand this case to the District Court for a second hearing on the motion would be nonsensical.

We now turn to Hardman's motion to set aside the default judgment. That motion is governed by Rule 60(b), M.R.Civ.P. As a general rule, cases are to be tried on the merits and judgments by default are not favored. Lords v. Newman (1984), 212 Mont. 359, 363, 688 P.2d 290, 293; Little Horn State Bank v. Real Bird (1979), 183 Mont. 208, 210, 598 P.2d 1109, 1110. Where the motion is made and "supported by a showing that leaves responsible minds in doubt, courts tend to resolve [those] doubts in favor of the motion, since courts favor a trial on the issues over a default judgment." Twenty-Seventh Street, Inc. v. Johnson (1986), 220 Mont. 469, 471, 716 P.2d 210, 211. Furthermore, if the District Court had denied the motion, rather than allowing it to be deemed denied, we would only be required to find a slight abuse of discretion in order to reverse the denial. Twenty-Seventh Street, Inc., 716 P.2d at 210.

However, a party seeking to set aside a default judgment must show both a good cause for doing so under Rule 60(b) and the existence of a meritorious defense. First Nat'l Bank of Cut Bank v. Springs (1987), 225 Mont. 62, 67, 731 P.2d 332, 335. We will discuss the good cause requirement shortly. As for a meritorious defense, Hardman testified at the hearing that the car simply slid off the road due to loose gravel and that no one was injured, and Higgins testified that the statement he took from Dan Forsina, a non-party, corroborated Hardman's version of the accident. Although the merits are to be finally decided at trial, Hardman has met his burden at this point.

Turning now to the justification under Rule 60(b), Hardman specifically cited subsections (1), (3), and (6) of that rule which provide:

Rule 60(b). Mistakes--inadvertence--excusable neglect--newly discovered evidence--fraud, etc. On motion and upon such terms as are just, the court may relieve a party or a party's legal representative from a...