Saturn of Tiffany Springs v. Mcdaris

• Citation: 331 S.W.3d 704
• Decision Date: 22 February 2011
• Docket Number: No. WD 72509.,WD 72509.
• Parties: SATURN OF TIFFANY SPRINGS, et al., Appellant,v.Shaun McDARIS, Respondent.
• Court: Court of Appeal of Missouri (US)

331 S.W.3d 704

SATURN OF TIFFANY SPRINGS, et al., Appellant,

v.Shaun McDARIS, Respondent.

No. WD 72509.

Missouri Court of Appeals, Western District.

Feb. 22, 2011.

Joseph T. Welsh, Kansas City, MO, for appellant.Brian J. Klopfenstein, Kearney, MO, for respondent.Before Division Three: CYNTHIA L. MARTIN, Presiding Judge, JAMES E. WELSH, Judge and GARY D. WITT, Judge.CYNTHIA L. MARTIN, Judge.

Saturn of Tiffany Springs (“Saturn”) appeals from the trial court's judgment setting aside a default judgment entered in its favor and against Shaun McDaris (“McDaris”). The default judgment vacated an arbitration award previously entered in McDaris's favor. Saturn contends that the trial court erred in setting aside the default judgment because McDaris failed to satisfy the requirements of Rule 74.05(d), in that McDaris did not demonstrate “good cause” for failing to timely answer Saturn's petition, and in that McDaris did not establish a meritorious defense to Saturn's petition. We affirm.

Factual and Procedural History

McDaris was employed by Saturn as a mechanic. On August 2, 2005, McDaris filed a charge of discrimination with the Equal Employment Opportunity Commission (the “EEOC”) alleging same sex sexual harassment. The Saturn employment handbook purported to require arbitration of such disputes.

The EEOC issued McDaris a notice of right to sue on February 15, 2006. Several weeks later, McDaris proposed a list of potential arbitrators. Several months later, McDaris proposed a schedule for the arbitration proceeding. No agreement about a schedule was reached. A few months later, McDaris proposed a change of arbitrator. No further action was taken to advance the arbitration proceedings until February 6, 2009, when McDaris notified Saturn that arbitration had been scheduled before the Honorable Ward Stuckey on February 16–18, 2009.

Saturn submitted a motion to dismiss the arbitration, claiming the arbitration was not timely filed or pursued by McDaris. Judge Stuckey overruled this motion on May 1, 2009. The arbitration proceeded. Judge Stuckey entered an arbitration award in favor of McDaris on the merits of his sexual harassment claim.

On February 9, 2010, Saturn filed a petition to vacate the arbitration award in the Circuit Court of Clay County, Missouri. Saturn claimed the arbitration award should be vacated because the arbitrator exceeded the power afforded him by the parties' arbitration agreement, which prohibited the arbitrator from making “decisions contrary to or inconsistent with applicable federal or state law.” Saturn contended that McDaris did not follow the procedures set forth in the Saturn employment handbook in pursuing his claims. Saturn thus contended that Judge Stuckey's May 1, 2009 decision to overrule Saturn's motion to dismiss the arbitration proceedings was inconsistent with applicable federal and state law and that, as a result, the arbitration award exceeded Judge Stuckey's powers.¹

Saturn's petition to vacate the arbitration award was served on McDaris on February 10, 2010. A return of service was filed by Saturn on February 25, 2010. On March 19, 2010, Saturn filed a motion for default judgment alleging McDaris had not timely filed an answer to the petition as required by Rule 55.25. A copy of the motion for default judgment was not served on McDaris, nor was a courtesy copy provided to his counsel. On March 24, 2010, the trial court granted Saturn's motion for default judgment and entered a judgment vacating the arbitration award.

Unaware of the default judgment, McDaris filed an answer to Saturn's petition on March 30, 2010.² McDaris then learned of the default judgment. On April 5, 2010, McDaris filed a motion to set aside default judgment. The motion advised the trial court of two other actions between the same parties involving enforcement of the arbitration award, both of which were pending when Saturn filed its lawsuit. A breach of contract action had been filed by McDaris in the Circuit Court of Platte County, Missouri. An enforcement action was also filed by McDaris in the Circuit Court of Jackson County, Missouri, as the arbitration had been conducted in Jackson County. McDaris advised that after Saturn filed suit in Clay County, Missouri, the parties had been in frequent contact discussing an agreement to consolidate the pending lawsuits in Clay County. McDaris complained that notwithstanding the pending litigation between the parties, the discussions about consolidation, and Saturn's knowledge that McDaris was represented by counsel, Saturn chose not to provide McDaris notice of the motion for default judgment.³

Saturn filed suggestions in opposition to McDaris's motion to set aside default judgment. The trial court's docket sheet reflects that a hearing was conducted on McDaris's motion to set aside the default judgment on April 21, 2009.⁴ The docket sheet reflects that, following the hearing, the matter was taken under advisement.

On May 12, 2010, the trial court entered judgment setting aside the judgment of default. The judgment notes that “Defendant McDaris reports that there are cases in three (3) different counties, Clay, Platte and Jackson.” The judgment further notes that “Defendant McDaris filed an Answer, after the default judgment was entered. Clearly, the parties are contesting the legitimacy of the Arbitration award entered by retired Judge Ward Stuckey.” The judgment concludes that “[a]fter review of the case, the Court sustains Defendant's Motion to Set Aside the Judgment of Default for good cause shown.”

Saturn appeals.

Standard of Review

“A motion [to set aside a default judgment] filed under Rule 74.05(d) ... is an independent action....” Rule 74.05(d). Thus, a judgment granting or denying a motion to set aside a default judgment is a final judgment eligible for immediate appellate review. See Kuhlman v. Arnold, 154 S.W.3d 430, 431 (Mo.App. W.D.2005). “We apply an abuse of discretion standard to the circuit court's setting aside of a default judgment under Rule 74.05(d).” Barsto Constr., Inc. v. Gladstone Senior Partners, L.P., 270 S.W.3d 440, 442 (Mo.App. W.D.2008) (citing Brungard v. Risky's Inc., 240 S.W.3d 685, 687–88 (Mo. banc 2007)). “The trial court abuses its discretion when its ruling is clearly against the logic of the circumstances then before the trial court and is so unreasonable and arbitrary that the ruling shocks the sense of justice and indicates a lack of careful deliberate consideration.” Peters v. Gen. Motors Corp., 200 S.W.3d 1, 23 (Mo.App. W.D.2006).

“Missouri appellate courts have traditionally afforded significant deference to the circuit court's decision to set aside a default judgment because of the public policy favoring the resolution of cases on the merits and the ‘distaste our system holds for default judgments.’ ” Brungard, 240 S.W.3d at 686 (quoting Cont'l Basketball Ass'n v. Harrisburg Prof'l Sports Inc., 947 S.W.2d 471, 473 (Mo.App. E.D.1997)); Agnello, 306 S.W.3d at 673. “[W]hile the trial court's discretion to deny a motion to set aside a default judgment is ‘narrowed,’ its discretion to grant such a motion is ‘broad.’ ” Barsto, 270 S.W.3d at 442. “Consequently, ‘appellate courts are more likely to reverse a judgment which fails to set aside a default judgment than one which grants that relief.’ ” Wilderman v. Drawbond, 267 S.W.3d 772, 775 (Mo.App. S.D.2008) (quoting CBD Enters., Inc. v. Braco Mfg., Inc., 181 S.W.3d 129, 131 (Mo.App. S.D.2005)). Evidence supporting the motion to set aside the default, whether it consists of exhibits and affidavits or live testimony, is afforded the same deference. Barsto, 270 S.W.3d at 442.

Analysis

For its sole point on appeal, Saturn contends that the trial court erred in setting aside the default judgment because McDaris failed to satisfy the requirements of Rule 74.05(d). Saturn claims that McDaris failed to establish “good cause” for not filing a timely answer to Saturn's petition and failed to establish the existence of a meritorious defense to Saturn's petition seeking to vacate the underlying arbitration award. We disagree.

Rule 74.05(d) provides that “[u]pon motion stating facts constituting meritorious defense and for good cause shown ... a default judgment may be set aside.” (Emphasis added.) “The movant in a motion to set aside [a] default judgment bears the evidentiary burden of proving entitlement to the relief requested. Failure to establish either the ‘meritorious defense’ element or the ‘good cause’ element of a motion pursuant to Rule 74.05(d) is fatal to the motion.” Agnello, 306 S.W.3d at 673 (citations omitted).

Good Cause

“Good cause” is defined by Rule 74.05(d) to include “a mistake or conduct that is not intentionally or recklessly designed to impede the judicial process.” “Reckless” has been defined as meaning “lacking in caution” or “deliberately courting danger.” Barsto, 270 S.W.3d at 442. A person acts recklessly if the person is intentionally indifferent to the harmful consequences of his actions. Id. at 443. If there is a reasonable doubt as to whether conduct was intentionally designed or irresponsibly calculated to impede the work of the courts, it should be resolved in favor of good faith. Id. at 442. In a close case, deference must be afforded to the trial court's determination about whether conduct is excusable or reckless. Bell v. Bell, 849 S.W.2d 194, 198 (Mo.App. W.D.1993).

In his motion to set aside default judgment, McDaris advised that two other lawsuits involving the arbitration and its enforcement had been filed by McDaris and were pending in two other counties before Saturn filed its lawsuit in Clay County. McDaris provided the case numbers for these lawsuits. McDaris acknowledged that he had been served with Saturn's Clay County petition. However, McDaris advised that since the filing of Saturn's petition, the parties had been in discussions about how to consolidate their disputes, suggesting this as the explanation for...