U.S. Aviation, Inc. v. Wyoming Avionics, Inc.

• Citation: 664 P.2d 121
• Decision Date: 03 June 1983
• Docket Number: No. 5845,5845
• Parties: U.S. AVIATION, INC., a Wyoming corporation, d/b/a AIR U.S., Appellant (Defendant), v. WYOMING AVIONICS, INC., a Wyoming corporation, Appellee (Plaintiff).
• Court: United States State Supreme Court of Wyoming

Page 121

664 P.2d 121

U.S. AVIATION, INC., a Wyoming corporation, d/b/a AIR U.S., Appellant (Defendant), v. WYOMING AVIONICS, INC., a Wyoming corporation, Appellee (Plaintiff).

No. 5845.

Supreme Court of Wyoming.

June 3, 1983.

Patricia M. Baird of Williams, Porter, Day & Neville, P.C., Casper, and Donald Marturano of Lee & Marturano, P.C., Englewood, Colo., signed the brief on behalf of appellant. Ms. Baird appeared in oral argument.

Ronald A. Kastanek, Casper, signed the brief and appeared in oral argument on behalf of appellee.

Before ROONEY, C.J., and RAPER, THOMAS, ROSE, and BROWN, JJ.

RAPER, Justice.

Wyoming Avionics, Inc. (appellee), a Wyoming corporation, brought suit against U.S. Aviation, Inc. (appellant), a Wyoming corporation, for payment of past due accounts. A default judgment was entered in favor of appellee when appellant failed to file an answer. Appellant moved to set the default judgment aside and to quash any orders issued thereunder. The district court denied the motion. It is from the district court's order denying appellant's motion that appellant appeals. The issues on appeal are:

I. "Should the district court have set aside the default judgment of appellee for failure to give the 3-day notice before entering default as required by Rule 55(b), W.R.C.P. when appellee knew that appellant was represented and intended to defend?"

II. "Did the district court err in failing to set aside the default judgment for mistake, inadvertence, surprise, or excusable neglect inasmuch as appellant had no actual notice of the lawsuit, and substitute service was utilized, and appellant relied on the representation of appellee's counsel that he would respond to appellant's telephone contacts?"

III. "If the district court was correct in denying the motion to set aside the default judgment for the above reasons should the default judgment have been vacated under the court's broad remedial power pursuant to Rule 60(b)(6) 'for any other reason justifying relief from the operation of the judgment', given the facts of substitute service, no actual notice and the misconduct of appellee's counsel?"

We will affirm.

On August 27, 1982, appellee filed a complaint against appellant in the district court alleging that over the preceding sixteen months appellee, at appellant's request, had performed services and supplied materials for which it had not been paid. Although appellant made sporadic payments on the account during that time, appellee claimed appellant owed $19,853.73 on the account when suit was brought. Appellee alleged that, in the face of demands for payment, no payments on the account had been received from appellant since May 25, 1982.

On August 27, 1982, a summons was issued for service on appellant's registered agent for service located in Fremont County, Wyoming. The summons was returned unserved by the Fremont County Sheriff with the notation that "[a]fter due & diligent search," appellant's agent for service could not be found in Fremont County. Thereafter appellee sent a copy of the summons and complaint to the Secretary of State as agent for the defendant. Section 17-1-111(b), W.S.1977, infra fn. 3. The Secretary of State advised appellee that she was unable to locate appellant, a Wyoming corporation, at its last known address.

Appellant stipulated that it had failed to maintain a registered agent for service of process in Wyoming since 1978. Appellant further stipulated that it had not had a corporate office in Wyoming since 1978 when it moved its offices to Denver, Colorado.

At appellee's request, the clerk of court then entered default against appellant for failure to file an answer. Rule 55(a), W.R.C.P. ¹ A default judgment was thereafter entered by the district judge on October 25, 1982, in favor of appellee and against appellant for $19,853.73 plus interest.

On November 8, 1982, appellant made its first appearance in the case and filed a motion to set aside the default judgment for the reasons that: (1) the judgment was void for lack of proper service; (2) appellant had no actual notice until a garnishment order was served on its Wyoming bank account; (3) appellant's Colorado attorney had not been notified despite the fact that his existence was well known to appellee; and (4) appellant had several unspecified meritorious defenses to appellee's complaint. That same day, appellant moved to quash execution on the default judgment and any orders and summons issued thereunder.

After a hearing, the district judge, on November 11, 1982, entered an order denying appellant's motions. In the order the district court found: (1) it had jurisdiction to act in the matter since service upon appellant had been proper; (2) the default judgment had been properly entered and was valid and enforceable; and (3) appellant had failed to show good cause for setting aside the default judgment in accordance with Rules 55(c) and 60(b), W.R.C.P.

This appeal followed.

I

In its first argument, appellant urges that Rule 55(b)(2), W.R.C.P., required that it be given written notice three days prior to the hearing on appellee's application for a default judgment. Rule 55(b)(2) provides in pertinent part:

"(b) Judgment by default may be entered as follows:

* * *

* * *

"(2) By the Court.--In all other cases the party entitled to a judgment by default shall apply to the court therefor; but no judgment by default shall be entered against an infant or incompetent person unless represented in the action by a general guardian, guardian ad litem, trustee, or other such representative who has appeared therein. If the party against whom a judgment by default is sought has appeared in the action, he (or, if appearing by representative, his representative) shall be served with written notice of the application for judgment at least 3 days prior to the hearing on such application. * * * " (Emphasis added.)

The rule clearly provides that the three-day notice requirement is triggered when "the party against whom a judgment by default is sought has appeared in the action." It is undisputed that the three-day notice was not given. The query then is whether appellant made an appearance. An appearance in an action involves some submission or presentation to the court by which a party shows his intention to submit himself to the jurisdiction of the court. Cockrell v. World's Finest Chocolate Co., Inc., Ala., 349 So.2d 1117 (1977) (construing Rule 55(b)(2)).

Appellant failed to allege or argue this position before the district court in its motion to set aside the default judgment. It is aired for the first time in this court. As a general rule of appellate procedure, we refuse to consider issues not raised in the trial court unless they go to jurisdiction or a fundamental right. ABC Builders, Inc. v. Phillips, Wyo., 632 P.2d 925 (1981). Because appellant failed to raise a Rule 55(b)(2) claim in the district court, we will consider it waived and not consider it. Bell v. West, W.Va., 284 S.E.2d 885 (1981); United States v. $22,640.00 in United States Currency, 615 F.2d 356 (5th Cir.1980) (decided on similar Rule 55(b)(2), F.R.C.P.); see also, Robison v. Sales and Use Tax Div., State Tax Comm'n, Wyo., 524 P.2d 82 (1974).

II

Appellant's motion to set aside the default judgment was grounded in Rule 55(c), W.R.C.P., which allows the district court to set aside a default judgment for good cause shown in accordance with Rule 60(b), W.R.C.P., which provides in pertinent part:

"On motion, and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect * * *. The motion shall be made within one (1) year after the judgment, order, or proceeding was entered or taken. A motion under this subdivision (b) does not affect the finality of a judgment or suspend its operation. * * * " (Emphasis added.)

Appellant argues that because it had received no actual notice of the proceedings against it, it was entitled to relief from the default judgment under Rule 60(b)(1). Appellant contends that the district court committed reversible error when it denied its motion to set aside the default judgment.

As noted earlier, appellant was a Wyoming corporation when the suit was filed. Appellee served notice of the suit on appellant in accordance with Rule 4(d)(4), W.R.C.P. ² , and the corporation laws of the state. ³ Appellant does not question the manner in which appellee served notice of the suit. Appellant's claim is that despite the fact that service of notice was proper, it is nonetheless entitled to its requested relief because it was without actual notice of the suit until after the default judgment was entered.

In reviewing this question, we are cognizant of the language in Rule 55(c) which allows courts to set aside default judgments when good cause is shown together with the law that has developed around Rule 60(b)(1). Motions brought under Rules 55(c) and 60(b)(1) are addressed to the sound discretion of the court in which they are brought, and that court's decision will be reviewed only for an abuse of its discretion. Atkins v. Household Finance Corp. of Casper, Wyo., 581 P.2d 193 (1978); Booth v. Magee Carpet Co., Wyo., 548 P.2d 1252 (1976). A Rule 60(b)(1) motion must be clearly substantiated by adequate proof; the burden is on the movant to bring himself within the rule. Atkins v. Household Finance Corp. of Casper, supra. An individual, in view of the foregoing, has no absolute right to have a default judgment set aside. Booth v. Magee Carpet Co., supra.

Appellant acknowledges that it had failed to maintain either a registered office or a registered agent for service of process as required by our statutes, fn. 3 supra, yet it would have us say that the trial court abused its discretion in denying appellant's motion for lack of actual notice. We decline the invitation to do so.

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