Pinkham v. Plate
| Docket Number | 48954 |
| Decision Date | 28 November 2023 |
| Parties | SCOTT PINKHAM, an individual; and NATALIE PINKHAM, an individual, Plaintiff-Counterdefendants- Respondents, v. DAVID PLATE, an individual; THREE PEAKS HOMES, LLC, an Idaho limited liability company; REBECCAH JENSEN, an individual, Defendants-Counterclaimants- Appellants and LEGACY MANAGEMENT ENTERPRISES, LLC, a Wyoming limited liability company, Defendants-Counterclaimants and DOUG HALL, an individual; REBEL CREW CONSTRUCTION, LLC, a Wyoming limited liability company, Defendants. |
| Court | Idaho Supreme Court |
1
SCOTT PINKHAM, an individual; and NATALIE PINKHAM, an individual, Plaintiff-Counterdefendants- Respondents,
v.
DAVID PLATE, an individual; THREE PEAKS HOMES, LLC, an Idaho limited liability company; REBECCAH JENSEN, an individual, Defendants-Counterclaimants- Appellants
and LEGACY MANAGEMENT ENTERPRISES, LLC, a Wyoming limited liability company, Defendants-Counterclaimants and DOUG HALL, an individual; REBEL CREW CONSTRUCTION, LLC, a Wyoming limited liability company, Defendants.
No. 48954
Supreme Court of Idaho
November 28, 2023
Appeal from the District Court of the Seventh Judicial District of the State of Idaho, Bonneville County. Bruce L. Pickett, District Judge.
The judgment of the district court is affirmed in part and reversed in part.
Hawley, Troxell, Ennis & Hawley, LLP, Pocatello, for Appellants.
Jetta H. Mathews argued. Parsons, Behle & Latimer, Idaho Falls, for Respondents. Jon A. Stenquist argued.
MOELLER, Justice.
This appeal concerns a default judgment awarded to Scott and Natalie Pinkham ("the Pinkhams") against David Plate, Rebeccah Jensen, and their company, Three Peaks Homes, LLC (collectively "Appellants"). When Appellants' attorney withdrew in the middle of the case, Appellants failed to timely designate new counsel as required by Idaho Rule of Civil Procedure 11.3. Accordingly, a default was entered by the district court. Later, the district court, using a form prepared by the Pinkhams' attorney, awarded the Pinkhams a default judgment of almost $650,000 without (1) the amount of damages being specified in the Pinkhams' complaint or (2) the presentation of any proof of the amount of damages the Pinkhams were claiming. Appellants later retained an attorney and attempted to set aside the default and the default judgment, asserting that both had been improperly entered. The district court denied both requests.
Appellants now appeal from the district court's denial of their motion to set aside the entry of default and default judgment against them. For the reasons stated below, we affirm the district court's judgment in part and reverse in part.
I. Factual and Procedural Background
The Pinkhams signed a contract with Three Peaks Homes, LLC, a company owned by Plate and Jensen, for the construction of a custom home at the fixed price of $1,000,000. When construction did not go as planned, the Pinkhams terminated the contract before the home was completed. Three Peaks subsequently filed two $600,000 mechanics' liens against the Pinkhams' home. The Pinkhams then filed an unverified complaint against David Plate, Rebeccah Jensen, Three Peaks, Rebel Crew Construction, LLC, and Legacy Management Enterprises, LLC, asserting several causes of action: (1) breach of contract; (2) breach of implied warranty of workmanship; (3) fraud; (4) replevin; (5); trespass; (6) slander of title; (7) quiet title; and (8) unjust enrichment. The Pinkhams later filed an amended complaint-also unverified-that added claims seeking injunctive relief and one to pierce the corporate veil. Neither the complaint nor the amended complaint specified the amount of monetary damages sought, but instead prayed for "an award of damages to Plaintiffs in [sic] amount to be determined at trial." Additionally, the Pinkhams filed notices of lis pendens against two properties owned by Legacy on the basis that Three Peaks used materials and labor, paid for by the Pinkhams, in projects on those properties.
Plate and Jensen appear to own both Three Peaks and Legacy, although the record is unclear as to their exact ownership interests or the management structure of those businesses. Plate,
Jensen, Three Peaks, and Legacy were initially represented by the same attorney, Lance Schuster. Plate, Jensen, and Three Peaks filed a combined answer and counterclaim, while Legacy filed a separate answer and counterclaim. Three Peaks asserted that the Pinkhams had breached the construction contract and sought to foreclose on their liens against the Pinkhams' home. Legacy's counterclaim asserted claims for abuse of process and slander of title, and sought to have the lis pendens removed from the public record.
The Pinkhams and Legacy filed cross motions for partial summary judgment. The Pinkhams' motion sought the removal of Three Peaks' mechanics' liens filed against the Pinkhams' home. A declaration from Scott Pinkham supporting the motion was filed, which included an attachment showing all the checks and bank draws used to pay for Three Peaks' work, totaling $648,296.02. The summary judgment decision is not included in the record on appeal, but based on other parts of the record, it appears the district court denied the Pinkhams' motion.
On November 13, 2020, Schuster filed a motion for leave to withdraw as counsel for Plate, Jensen, Three Peaks, and Legacy under Rule 11.3(b). He averred that his clients had failed to communicate or provide requested information and that neither Three Peaks nor Legacy had met their financial obligations to him. In his motion, Schuster provided Appellants' last known addresses. Schuster provided the same address for all four parties.
On December 10, 2020, the district court entered an order granting Schuster's motion for leave to withdraw. The order directed Appellants to "appoint another attorney to appear on their behalf, or to appear in person by filing a written notice with the [c]ourt stating how they will represent themselves" within twenty-one days of service of the order. The order also required that Schuster serve Appellants with a copy of the order by certified mail, at the Appellants' last known address. Finally, the order stated, should [Appellants] fail to file and serve a written appearance in this action either in person or through a newly appointed attorney within twenty-one (21) days of the date of service of this Order, such failure shall be sufficient grounds for entry of judgment against them, without further notice, or dismissal of this action.
That same day, the court clerk served a copy of the withdrawal order on Appellants via first class mail to the last known address provided by Schuster. On December 11, Schuster served two copies of the order on Appellants, one via certified mail and the other via first class mail, to the same last known address.
On December 23, 2020, the district court received a letter from Jensen and Plate that stated,
Three Peaks Homes, David Plate and Rebeccah Jensen have heard that our lawyer will no longer be representing us. We haven't received any official notification of this as of yet. We are requesting additional time to find representation as we haven't been able to find any due to the holidays.
The return address on the letter was the same last known address provided by Schuster, and the same address to which the clerk and Schuster had mailed copies of the order granting the motion to withdraw. The district court did not take any action in response to Appellants' letter.
On January 6, 2021, the Pinkhams moved for the entry of default, a default judgment against Appellants, and the dismissal of Appellants' counterclaims with prejudice. The Pinkhams asserted a default judgment was proper under Rule 11.3 because Appellants failed to file "a notice of appearance of a new attorney or a notice of self-representation . . . within 21 days" of service of the district court's December 10 order. The Pinkhams acknowledged Appellants' December 23 letter but argued it did not constitute a written appearance as required by Rule 11.3. The motion stated it was supported by Schuster's declaration confirming he served two copies of the order on the Appellants, and "the pleadings and records on file herein." The Pinkhams' counsel served the motion on Appellants on January 6, 2021, via first class mail to the last known address identified by Schuster.
From the record, it appears that the Pinkhams also submitted a proposed order granting their motion and a proposed default judgment to the district court. The record does not indicate whether the Pinkhams served copies of the proposed order and judgment on Appellants. Neither the Pinkhams' motion nor their memorandum in support of the motion identified the amount of damages sought. Notably, the Pinkhams submitted no sworn statements or documentary evidence directly supporting the damage award included in the proposed default judgment. Nevertheless, the proposed default judgment included an award of damages in the amount of $647,331.95.
Five days later, on January 11, 2021, the district court granted the Pinkhams' motion without a hearing. The district court found that Appellants had not filed a notice of appearance or self-representation as required by Rule 11.3 and the district court's December 10, 2020, order. The district court entered default against Appellants and ordered that judgment be entered by default against Appellants "in accordance with the relief sought in Plaintiffs' Amended Complaint, as set forth in the Judgment." The district court signed the proposed order and default judgment submitted by the Pinkhams without making any changes to either document. The judgment stated: Defendants Three Peaks Homes LLC, David Plate, Rebecca [sic] Jensen, Legacy Management Enterprises, LLC[,] and Rebel Crew Construction, LLC[,] are
jointly and severally liable to the Plaintiffs Scott Pinkham and Natalie Pinkham, husband and wife, in the amount of $647,331.95.
The district court did not issue a separate decision explaining the basis for its damage award. The deputy court clerk served copies of the default order and default judgment on Appellants at their last known address.
Appellants later secured new counsel and on April 5, 2021, filed a motion to set aside the default and default judgment under Idaho Rule of Civil Procedure 60(b)(1), (4), and (6). They argued that the default and default judgment should be set aside based on...
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