Perkins Family Holdings, LLC v. The Tile Guys, LLC
| Decision Date | 24 January 2023 |
| Docket Number | DA 22-0159 |
| Citation | 2023 MT 17 N |
| Parties | PERKINS FAMILY HOLDINGS, LLC, a Montana Limited Liability Company, Plaintiff and Appellant, v. THE TILE GUYS, LLC, and MARSHAL RAY BUTTERFIELD, an individual, Defendants and Appellees. |
| Court | Montana Supreme Court |
For Appellant:
Rufus I. Peace, Christian, Samson & Baskett, PLLC, Missoula Montana
For Appellees:
Joseph R. Nevin, Attorney at Law, Helena, Montana
¶1 Pursuant to Section I, Paragraph 3(c), Montana Supreme Court Internal Operating Rules, this case is decided by memorandum opinion and shall not be cited and does not serve as precedent. Its case title, cause number, and disposition shall be included in this Court's quarterly list of noncitable cases published in the Pacific Reporter and Montana Reports.
¶2 Plaintiff and Appellant Perkins Family Holdings, LLC, (PFH) appeals from the deemed denial of its January 7, 2022 Mont R Civ. P. 60(b) motion for relief from the December 23, 2021 Findings of Fact, Conclusions of Law and Order on Motion to Set Aside Default and Default Judgment issued by the Eleventh Judicial District Court, Flathead County. We reverse and remand for the District Court to conduct an M. R. Civ. P 55(c) good cause analysis of Butterfield's motion to set aside default.
¶3 In early 2020, Defendant and Appellee Marshal Butterfield, under his business name The Tile Guys (collectively "Butterfield"), provided an estimate to PFH for tile work to be done at a residential property owned by PFH in Kalispell. Butterfield was paid by PFH and began doing both tile and drywall work on the property. After Butterfield began working on the property, the two sides had a falling out and PFH stopped payment on a check to Butterfield. On November 19, 2020, PFH sent Butterfield a Notice of Termination, which terminated Butterfield's services and demanded a refund. Butterfield thereafter retained counsel, but fired his attorney a short time later. In 2021, Butterfield and the manager of PFH had a discussion regarding Butterfield paying back PFH $1,213.07, but did not come to a final agreement and no payment was made.
¶4 On August 2, 2021, PFH filed its Complaint in this matter, seeking damages of not less than $14,013.07 and for those damages to be trebled pursuant to Montana's Consumer Protection Act. PFH served Butterfield with the Summons and Complaint on August 19, 2021. On September 13, 2021, after Butterfield did not respond to the Summons and Complaint, PFH filed a Request for Entry of Default and Default Judgment. PFH requested the entry of a default judgment in the total amount of $43,386.71-representing $14,013.07 in damages, trebled to $42,039.21 under the Consumer Protection Act, and $1,347.50 in attorney fees and costs. The Clerk of Court entered an Order of Default and Default Judgment, granting PFH a default judgment in the amount of $43,386.71, on September 15, 2021. On September 21, 2021, the Clerk of Court issued a Writ of Execution on Default Judgment directing the Sheriff of Ravalli County to execute on the judgment. On October 12, 2021, the Clerk of Court issued a Writ of Execution on Default Judgment directing the Sheriff of Flathead County to execute on the judgment. On October 15, 2021, Glacier Bank notified PFH's counsel it was responding to a levy on Butterfield's bank account and would send $1,009.39. Butterfield contacted PFH's counsel later that same day.
¶5 On November 17, 2021, Butterfield, now represented by counsel, filed a Motion to Set Aside Default and Default Judgment, along with a brief in support and the Affidavit of Marshal Butterfield. The motion asserted the default and default judgment should be set aside pursuant to M. R. Civ. P. 55(c) and 60(b), though Butterfield's brief only addressed the Rule 55(c) standard for setting aside a default. Butterfield's affidavit asserted he contacted law firms after receiving the summons and complaint, but only heard back from one attorney who did not want to represent him and "didn't know what else to do." In addressing the Rule 55(c) good cause standard, Butterfield's brief spent three sentences declaring his default was not willful and one sentence declaring PFH would not suffer prejudice from setting the default aside, before spending several paragraphs asserting Butterfield had meritorious defenses to PFH's suit. In its response brief, PFH first addressed each of the Rule 60(b) standards in arguing the District Court should not set aside the default judgment, before turning to the Rule 55(c) good cause standard and asserting Butterfield's default was willful, PFH would be prejudiced from setting aside the default, and Butterfield's alleged meritorious defenses all failed. In reply, Butterfield again asserted there was "good cause" to set aside the default and, for the first time, specifically cited to Rule 60(b)(4) and contended it applied because the default judgment was void. Butterfield asserted the default judgment was void because PFH was not a consumer and therefore the Consumer Protection Act could not apply.
¶6 On December 23, 2021, the District Court issued its Findings of Fact, Conclusions of Law and Order on Motion to Set Aside Default and Default Judgment. Though Butterfield moved to set aside both a default and a default judgment, the District Court did not address M. R. Civ. P. 55(c) and its good cause standard for setting aside a default. The court's order instead addressed only the Rule 60(b) standards for setting aside a default judgment and determined the default judgment entered by the Clerk of Court was void and therefore must be set aside pursuant to Rule 60(b)(4). The District Court determined the default judgment was void "for a different reason than that offered by Butterfield," finding the Clerk of Court did not have authority to award treble damages on a default judgment under the Consumer Protection Act, because such awards are matters of discretion for the court. After determining the default judgment was void and must be set aside pursuant to Rule 60(b)(4), the District Court performed no analysis regarding the propriety of setting aside the default as well, but simply granted Butterfield's motion to set aside both the default and default judgment in full, quashed the pending writs of execution, and issued an order allowing Butterfield to file an answer to the complaint within 21 days.
¶7 On December 28, 2021, Butterfield filed an Answer and Counterclaim. On January 7, 2022, PFH filed its Motion and Brief for Relief from Final Order under [M. R. Civ. P. 60(b)(6)]. PFH asserted the District Court erred by setting aside the default when the court did not find good cause to do so under Rule 55(c), but accepted the court was correct in setting aside the default judgment for the reasons given by the court in its order. In its brief, PFH repeatedly cited to our unpublished opinion in Rennick v. Sec. Mortg., Inc., No. 00-037, 2000 MT 245N, 2000 Mont. LEXIS 255, as an example of why the default should not be set aside even when a default judgment is properly set aside as void.[1]PFH's brief then went on to assert Butterfield did not establish good cause to set aside the default. After Butterfield filed a brief in opposition and PFH filed a reply brief, PFH filed a Notice of Issue on February 23, 2022, informing the District Court the motion for relief was fully briefed and ripe for ruling.
¶8 The District Court did not rule on PFH's motion for relief (or issue an extension of time for ruling) and it was deemed denied by the operation of law after 60 days. M. R. Civ. P. 59(f), 60(c)(1). PFH appeals. We restate the issue on appeal as follows: whether the District Court manifestly abused its discretion by not addressing the M. R. Civ. P. 55(c) good cause standard when setting aside Butterfield's default.
¶9 We generally review a district court's ruling on an M. R. Civ. P. 60(b)(6) motion for an abuse of discretion. Essex Ins. Co. v. Moose's Saloon, Inc., 2007 MT 202, ¶ 16, 338 Mont. 423, 166 P.3d 451 (Essex v. Moose's). An exception to this general rule exists when the motion implicates a district court's ruling on a motion to set aside a default or default judgment. Essex v. Moose's, ¶¶ 17-18. When the Rule 60(b) motion follows a district court granting a motion to set aside a default or default judgment, we review its ruling for a manifest abuse of discretion. See Essex v. Moose 's, ¶¶ 17-18. A manifest abuse of discretion is one that is obvious, evident, or unmistakable. Netzer Law Office, P.C. v. State ex rel. Knudsen, 2022 MT 234, ¶ 9, 410 Mont. 513, 520 P.3d 335.
¶10 As a preliminary matter, we note PFH's Rule 60(b) motion for relief did not seek relief from the portion of the District Court's order which set aside the default judgment against Butterfield because it was void under Rule 60(b)(4). On appeal, PFH again takes no issue with the propriety of setting aside the default judgment as void and we therefore need not address the District Court setting aside the default judgment in this case and do not interfere with that portion of the court's order.
¶11 On appeal, both parties argue the facts of the case and whether good cause existed to set aside Butterfield's default. As it did below, PFH asserts the good cause analysis is subject to a four-part test, first articulated by this Court in Blume v. Metropolitan Life Ins. Co., 242 Mont. 465, 791 P.2d 784 (1990), overruled in part by JAS Inc. v. Eisele, 2014 MT 77, ¶ 34, 374 Mont. 312, 321 P.3d 113 (...
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