New Mexico Educators Federal Credit Union v. Woods

• Decision Date: 24 October 1984
• Docket Number: No. 15342,15342
• Citation: 690 P.2d 1010,102 N.M. 16,1984 NMSC 101
• Parties: NEW MEXICO EDUCATORS FEDERAL CREDIT UNION, Plaintiff-Appellee, v. Kenneth D. WOODS, Defendant, and Arlene Woods, Defendant-Appellant.
• Court: New Mexico Supreme Court

Page 1010

690 P.2d 1010

102 N.M. 16

NEW MEXICO EDUCATORS FEDERAL CREDIT UNION Plaintiff-Appellee, v. Kenneth D. WOODS, Defendant and Arlene Woods, Defendant-Appellant.

No. 15342.

Supreme Court of New Mexico.

Oct. 24, 1984.

Rehearing Denied Nov. 13, 1984.

Robert L. Schwartz, UNM Clinical Law Program, Albuquerque, for defendant-appellant.

Paskind, Lynch & Dow, Will Jeffrey, Albuquerque, for plaintiff-appellee.

OPINION

FEDERICI, Chief Justice.

New Mexico Educators Federal Credit Union (Credit Union) brought suit against Arlene DuBois, formerly Arlene Woods, (DuBois), and her former husband, Kenneth Woods (Woods), for (1) money due on an open-end credit account, and (2) overdrafts on a share-draft account. The District Court of Bernalillo County entered a default judgment against DuBois and Woods and denied DuBois' motion to set aside the judgment under NMSA 1978, Civ.P.Rule 60(b)(1) (Repl.Pamp.1980). DuBois appeals from the denial of her motion. We affirm the district court.

DuBois and Woods, as husband and wife, established with Credit Union an open-end credit account on November 10, 1981, and a joint owner share-draft account on December 1, 1982. In early February 1983, Woods fraudulently withdrew money from the share-draft account and was subsequently indicted and charged with seven counts of fraud. He entered into a plea and disposition agreement to make restitution. DuBois and Woods divorced on April 8, 1983.

Credit Union filed its complaint against DuBois and Woods on March 21, 1983, for money due on their accounts. DuBois, acting pro se, mistakenly filed an answer within the 30-day time limit in metropolitan court rather than in district court. On May 12, 1983, Credit Union moved for and was granted a default judgment against DuBois and Woods. DuBois was served with notice of a foreclosure suit to recover the default judgment on September 29, 1983. On October 25, 1983, she filed an answer to the foreclosure suit and a motion to set aside the default judgment. The motion was denied by the district court.

DuBois contends that the district court abused its discretion in denying her motion to set aside the default judgment on the grounds of excusable neglect. To set aside a default judgment under Rule 60(b)(1), a court must initially find (1) mistake, inadvertence, surprise or excusable neglect, and (2) a meritorious defense. Dean Witter Reynolds, Inc. v. Roven, 94 N.M. 273, 609 P.2d 720 (1980). If these two elements are found and there are no intervening equities in favor of the other party, a court should set aside the judgment. Id. The district court determined that DuBois lacked a meritorious defense. We agree.

Although default judgments are not favored and a case should be heard on its merits whenever possible, the granting of a default judgment is within the sound discretion of the trial court. Franco v. Federal Building Service, Inc., 98 N.M. 333, 648 P.2d 791 (1982). Setting aside a default judgment is also within the trial court's discretion. Gallegos v. Franklin, 89 N.M. 118, 547 P.2d 1160 (Ct.App.), cert. denied, 89 N.M. 206, 549 P.2d 284 (1976). A trial court's ruling on a motion to set aside a default judgment will only be reversed for an abuse of discretion. United Salt Corp. v. McKee, 96 N.M. 65, 628 P.2d 310 (1981); Otis Engineering Corp. v. Grace, 86 N.M. 727, 527 P.2d 322 (1974). We find no abuse of discretion in this case.

DuBois' primary defense theory is that the overdrafts were the result of Woods' separate tort and that, as such, only Woods should be liable for this debt. She also contends that Woods agreed in their marital settlement agreement to be responsible for his separate debts and for all community debts incurred on or after February 14, 1983. We agree with the district court that both contentions are without merit.

This Court has previously recognized "there is no universally accepted standard as to what satisfies the requirement that a party show a meritorious defense." Springer Corp. v. Herrera, 85 N.M. 201, 203, 510 P.2d 1072, 1074 (1973). Even if we were to agree, however, that the overdrafts were the result of Woods' separate tort and that Woods contracted with DuBois to be liable for his separate debts and certain community debts, DuBois still would not be absolved of liability under her agreements with Credit Union. Her liability is based upon her contractual relationship with Credit Union, not upon her marital status.

Although married, DuBois had the right to contract with other parties as if unmarried. NMSA 1978, Sec. 40-2-2 (Repl.Pamp.1983). In Cabot v. First National Bank, 81 N.M. 793, 474 P.2d 476 (19...