Midwest Clearance Ctrs. v. St. Louis Retail Outlet, LLC

• Docket Number: ED111193
• Decision Date: 28 November 2023
• Parties: MIDWEST CLEARANCE CENTERS, LLC, Appellant, v. ST. LOUIS RETAIL OUTLET, LLC, AND NAMDAR REALTY GROUP, LLC, Respondents.
• Court: Missouri Court of Appeals

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MIDWEST CLEARANCE CENTERS, LLC, Appellant,
v.
ST. LOUIS RETAIL OUTLET, LLC, AND NAMDAR REALTY GROUP, LLC, Respondents.

No. ED111193

Court of Appeals of Missouri, Eastern District, Second Division

November 28, 2023

Appeal from the Circuit Court of St. Louis County Honorable Joseph S. Dueker

KURT S. ODENWALD, PRESIDING JUDGE

Introduction

Midwest Clearance Centers, LLC ("Appellant") appeals from the trial court's ruling setting aside a purported default judgment entered in September 2022 ("September Judgment"). Appellant raises two points on appeal, arguing the trial court erred in granting a motion by St. Louis Retail Outlet, LLC and Namdar Realty Group, LLC ("Respondents") to set aside the September Judgment under the procedural mechanisms of either Rule 74.05(d) or Rule 75.01.^[1] First, Appellant maintains the trial court lacked authority to set aside the judgment under Rule 74.05(d) because there was no default judgment to set aside in that Respondents filed an answer to the petition and litigated the case before failing to appear at trial. Second, Appellant contends the trial court lacked authority to vacate the September Judgment pursuant to Rule 75.01 because

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Respondents did not adduce good cause to vacate the judgment as required under the rule. Because there is no final judgment in the case, we lack jurisdiction to review the appeal. Specifically, as both parties acknowledge, Respondents answered the petition and defended the action. Accordingly, the September Judgment cannot be deemed a default judgment. Absent a default judgment in the record, we cannot premise our jurisdiction on the immediate right to an appeal taken from a trial court's ruling on a Rule 74.05(d) motion to set aside a default judgment. Further, to the extent that the trial court vacated the September Judgment under Rule 75.01 prior to it becoming a final judgment, that action is unreviewable absent a final judgment in the case. Accordingly, we must dismiss the appeal.

Factual and Procedural History

Appellant filed an action in the circuit court against Respondents arising out of a commercial lease dispute. Counsel ("Counsel") and another attorney from the same firm ("Co-Counsel") entered their appearances on behalf of Respondents. Respondents moved for extensions of time in which to answer Appellant's original and first amended petitions. Respondents later filed a Motion to Dismiss or in the Alternative a Motion for More Definite Statement. Following a hearing, the trial court granted Respondents' motion, dismissing two counts of the First Amended Petition without prejudice and granting Appellant leave to file a Second Amended Petition.

Appellant filed its Second Amended Petition on February 7, 2020, adding a third defendant and bringing claims for breach of contract and alter ego as well as a declaratory judgment concerning the lease. Between February 25 and May 11, 2020, Respondents filed six Motions for Extension of Time to File Responsive Pleadings to the Second Amended Petition, which the trial court granted. Respondents filed their Answer and Affirmative Defenses to the Second Amended Petition on May 20, 2020.

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All parties appeared at a case management conference on July 22, 2020, where they consented to continue the case for approximately one year due to the COVID-19 pandemic. The parties appeared before the trial court again on October 21, 2021, where the matter was set for trial. The trial court referred the parties to alternative dispute resolution, and the parties unsuccessfully attempted mediation. All parties appeared at pre-trial conferences in March 2021 and May 2021, at which the circuit court continued the trial setting.

Co-Counsel for Respondents moved for leave to withdraw from representation in June 2021, which the trial court granted. Throughout 2021, the parties appeared at various pre-trial and settlement conferences, and a trial date was ultimately set for September 6, 2022. Counsel for Respondents moved for leave to withdraw from representation on May 27, 2022, alleging nonpayment of attorneys' fees. Counsel affirmed she complied with the notice of termination requirements set forth in state and local rules. Counsel amended her motion for leave to withdraw, and the trial court set her motion for a hearing on July 7, 2022 via Webex. Counsel attested she sent notice of the hearing to Respondents. Respondents failed to appear at the withdrawal hearing conducted by the trial court on July 7, 2022. Following the hearing, the trial court granted Counsel leave to withdraw as counsel of record for Respondents, leaving Respondents acting pro se.

The case was called for a jury trial on September 6, 2022. Appellant appeared and announced ready for trial. No one appeared on behalf of Respondents. The trial court found Respondents waived a jury trial by failing to appear at trial pursuant to Rule 69.01(b)(1). At Appellant's request, the trial court entered an Interlocutory Order of Default and Partial Judgment in favor of Appellant, striking Respondents' pleadings and directing Appellant to file an affidavit as to damages and a proposed final judgment.

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On September 13, 2022, Appellant filed an affidavit from its owner ("Owner") with five supporting exhibits, setting forth liability for the allegations in the Second Amended Petition and damages therefrom. Appellant concurrently filed a proposed order and final judgment.

On September 15, 2022, the trial court entered the September Judgment in favor of Appellant. The September Judgment stated that the case was tried and submitted based on the pleadings and Owner's affidavit. The September Judgment held Respondents jointly and severally liable and awarded damages and attorneys' fees and costs with post-judgment interest. The September Judgment did not mention the word "default" and was denoted "Judgment Entered" in the docket. However, a separate docket entry also denoted the September Judgment as a "Default Judgment." The parties and trial court have repeatedly referred to the September Judgment as a default judgment.

On October 6, 2022, Counsel reentered her appearance and filed on behalf of Respondents a Motion to Set Aside the Default Judgment pursuant to Rule 74.05(d). Respondents argued they had good cause and a meritorious defense to the claims raised in the Second Amended Petition to allow the default judgment to be set aside. Respondents attached an affidavit in support from their new in-house counsel ("In-House Counsel"). Respondents explained they were unable to obtain new outside counsel in time for trial. In-House Counsel stated by affidavit that he had not learned that Respondents were without counsel until the case was called for trial, at which time he called the court clerk and spoke with Appellant's counsel, who was in the courtroom for the trial and did not agree to continue the trial setting. The following day, October 7, 2022, Respondents moved to shorten time for a hearing on the motion to October 12, 2022, arguing it should be heard before the September Judgment became final. The same day, the trial court set the motion for October 12 as requested. Appellant opposed

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Respondents' motion to set aside, arguing that no facts or law supported setting aside the September Judgment. Appellant further stated it was prepared to cross-examine In-House Counsel at the motion hearing.

At the hearing on Respondents' Motion to Set Aside the Default Judgment, all parties appeared by counsel and restated the arguments in their briefing. In addition to arguing the trial court should set aside the September Judgment for good cause and a meritorious defense under Rule 74.05(d), Respondents suggested that the trial court also retained discretion to amend the September Judgment under Rule 75.01 because thirty days had not yet run from the entry of the September Judgment. Over Appellant's objection that Respondents had only briefed setting aside the September Judgment under Rule 74.05(d), Respondents explained that the September Judgment was an "irregular" default judgment because Respondents had moved to dismiss, answered, and filed affirmative defenses. Respondents reasoned that the trial court therefore lacked any justification or authority to have entered an interlocutory order or judgment of default under Rule 74.05. Respondents further argued that the trial court appropriately vacated the September Judgment because Appellant had the opportunity to try the case on the merits despite the Respondents' absence but did not do so, and because Owner's affidavit alone did not prove Appellant's claims on the merits, particularly the claims of alter ego and lost profits.

The trial court granted Respondents' Motion to Set Aside the Default [September] Judgment. The trial court stated it was going to "grant the motion for the reasons stated in the [Respondents'] motion and under Rules 74.05 and 75.01." In its order entered on October 12, 2022, the trial court stated: "[Respondents'] Motion to Set Aside the Default Judgment is called, heard, and granted. Pursuant to Rules 74.05 and 75.01, the Court sets aside the Judgment dated September 15, 2022."

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Appellant asked the trial court to denominate the October 12 order as a judgment under Rule 74.01(a), and also filed its appeal from the order with this Court. Because the trial court had not yet ruled on Appellant's request to denominate the October 12 order as a judgment, this Court issued an order to show cause why the appeal should not be dismissed for lack of a final judgment. On April 6, 2023, the trial court held a hearing on Appellant's request to denominate the October 12 order as a judgment. The trial court restated its belief that the October 12 order setting aside the Judgment was a non-appealable, interlocutory order. However, over Respondents' objection, the trial court denominated the October 12 order as a judgment (the "2023 Judgment")....