Whitehorn v. Lovik, 85-1759

• Citation: 398 N.W.2d 851
• Decision Date: 14 January 1987
• Docket Number: No. 85-1759,85-1759
• Parties: Laura WHITEHORN, Appellant, v. Steve LOVIK, Appellee.
• Court: United States State Supreme Court of Iowa

Page 851

398 N.W.2d 851

Laura WHITEHORN, Appellant, v. Steve LOVIK, Appellee.

No. 85-1759.

Supreme Court of Iowa.

Jan. 14, 1987.

James Prescott and Jeffrey L. Clark, Student Legal Services, Iowa City, for appellant.

James H. Martinek, Iowa City, for appellee.

Considered en banc.

NEUMAN, Justice.

Plaintiff Laura Whitehorn is a tenant who brought an action in the small claims division of district court to recover from her landlord the balance retained from her damage deposit upon the termination of her tenancy. Her landlord, Steve Lovik, counterclaimed for additional damages and ultimately obtained judgment by default. Upon discretionary review of the district court's ruling affirming the magistrate's adjudication, we consider plaintiff's dual challenge: (1) that the magistrate improperly denied her timely motion to set aside the default judgment; and (2) that the magistrate improperly construed Iowa Code section 562A.12(3) by entering judgment on the landlord's counterclaim for damages not previously withheld from the tenant's damage deposit. We reverse in part, affirm in part and remand.

The facts are largely undisputed. Upon the expiration of her tenancy at Lovik's apartment, Whitehorn furnished Lovik with her forwarding address and, in conformity with Iowa Code section 562A.12(3) thereafter received from him all but approximately $100 of her damage deposit of $550. Disputing the amount withheld, Whitehorn filed a pro se petition in small claims division, demanding the sum of $114.84. Lovik responded with a general denial and counterclaim in the sum of $315 "based on additional damages in the apartment rented by plaintiff which were not itemized as part of deductions from damage deposit but which are due and owing because of plaintiff's occupancy of the subject premises."

Hearing on Whitehorn's petition was scheduled for October 14, 1985 at 2:30 p.m. Whitehorn sought legal counsel, who, on October 4, 1985, filed a motion to dismiss Lovik's counterclaim. Whitehorn also mistakenly informed her counsel that the trial was to be held October 17, 1985 at 2:30 p.m. On October 17, Whitehorn, her counsel and witness appeared for trial at the appointed time, only to be advised that judgment by default had been entered against her on October 14. Whitehorn promptly filed a motion to set aside the default judgment. The motion was denied by the magistrate who concluded that Whitehorn must suffer the consequences of her carelessness. Upon appeal in accordance with the provisions of section 631.13, Whitehorn challenged not only the denial of her motion to set aside default but the magistrate's entry of judgment on Lovik's counterclaim. The district associate judge hearing the appeal affirmed the magistrate's decision on both counts.

I. We first address the court's ruling on Whitehorn's motion to set aside default judgment.

Iowa Code section 631.10 (1985), the small claims counterpart to Iowa Rule of Civil Procedure 230, provides that "if the plaintiff fails to appear but the defendant appears, the claim shall be dismissed with prejudice by the court with costs assessed to the plaintiff; and if the plaintiff appears but the defendant fails to appear, judgment may be rendered against the defendant by the court." Section 631.12 directs that a party moving to set aside a default judgment in small claims shall do so in the manner provided by rule of civil procedure 236.

By its terms, rule 236 allows the setting aside of a default judgment only for "good cause shown" based on "mistake, inadvertence, surprise, excusable neglect or unavoidable casualty." Numerous decisions of this court have enunciated the principles by which we are bound to apply these statutes and rules to the facts of the particular case before us.

Preliminarily, we note that a trial court is vested with broad discretion in ruling on a motion to set aside a default judgment and such a ruling will be reversed on appeal only if that discretion is abused. Paige v. Chariton, 252 N.W.2d 433, 437 (Iowa 1977). Generally, abuse will be found only where there is a lack of substantial evidence to support the trial court's ruling, for the trial court's findings of fact in deciding the motion have the force of a jury verdict. First National Bank in Lenox v. Claiser, 308 N.W.2d 1, 3 (Iowa 1981); Paige, at 437; Dealers Warehouse Co. v. Wahl & Associates, 216 N.W.2d 391, 394 (Iowa 1974). Nevertheless, if there is no factual issue, the question is one of law and we are not bound by the determination of the trial court. Hobbs v. Martin Marietta Company, 257 Iowa 124, 130, 131 N.W.2d 772, 776 (1964); Sher v. Burche, 353 N.W.2d 859, 863 (Iowa Ct.App.1984).

We are further guided by the principle that the purpose of rule 236 is to allow determination of controversies on their merits rather than on the basis of nonprejudicial inadvertence or mistake. First National Bank in Lenox, 308 N.W.2d at 3; Paige, 252 N.W.2d at 437; Wharff v. Iowa Methodist Hospital, 219 N.W.2d 18, 22 (Iowa 1974); Gordon v. Gordon, 200 N.W.2d 527, 528 (Iowa 1972).

Turning to the magistrate's ruling in this case, we are advised that "[t]he reason for Plaintiff's failure to appear at the time set for hearing is not disputed." The ruling goes on to succinctly give us the factual and legal basis for its decision to overrule Whitehorn's motion:

Plaintiff, for some reason, misread the notice of hearing and believed her case to be set for a later date. Plaintiff did not provide the notice of hearing to her attorneys and clearly caused her counsel to rely upon her understanding. Plaintiff's actions were at best negligent and probably careless. The court finds that the resulting default herein was the sole result of plaintiff's own conduct and could have been easily avoided.

The plaintiff brought this claim and has a duty to pursue it with diligence. The defendant appeared with his attorney and incurred personal inconvenience and expense. The evidence given in support of his counterclaim clearly reflected that he had been damaged.

In this case the plaintiff must suffer the consequences of her carelessness. While the law favors a determination on the merits of a dispute, setting aside the default herein would not work a just result.

The issue thus presented is whether, as a matter of law, the magistrate erred in concluding that Whitehorn's actions fell outside the ambit of protection afforded litigants for mistake, inadvertence or excusable neglect under rule 236.

In Gordon v. Gordon, 200 N.W.2d 527 (Iowa 1972), we addressed a strikingly similar factual situation. The defendant in that case was properly served with a notice of hearing which he subsequently misplaced and thereafter inadvertently advised his attorney by telephone that the hearing would be at 10:00 o'clock on December 10. In fact, the hearing was held on December 8 and judgment by default entered on December 9. In sustaining the defendant's motion to set aside default we held

[I]t is apparent from the record defendant in good faith intended to defend against the application of plaintiff for modification of decree but, due to inadvertence or mistake, failed to appear and defend at the time fixed for hearing. His diligence and that of his counsel appears to us to have been established. The purpose of rule 236, R.C.P., is to allow determination of controversies on their merits rather than on the basis of nonprejudicial inadvertence or mistake. We conclude the trial court erred in refusing to set aside defendant's apparent default and by not permitting the cause to proceed to a determination on its merits.

Id. at 528.

Other cases, decided both before and after Gordon have emphasized proof of the defaulting party's diligence in defending the suit as a factor tending to evidence good cause. Hobbs v. Martin Marietta Company, 257 Iowa 124, 130, 131 N.W.2d 772, 775 (1964); Paige v. City of Chariton, 252 N.W.2d 433, 437 (Iowa 1977); Wharff v. Iowa Methodist Hospital, 219 N.W.2d 18, 22 (Iowa 1974).

Additionally, our cases have drawn a distinction between justifications which amount to no more than excuse, plea, or apology, and those reasoned explanations which affirmatively show that the movant intended and set out to defend but failed to do so because of some misunderstanding, accident, mistake or excusable neglect. Compare In re Marriage of Huston, 263 N.W.2d 697, 699 (Iowa 1978) (a bald assertion of intention to defend is insufficient) and Dealers Warehouse v. Wahl & Associates, 216 N.W.2d 391, 395 (Iowa 1974) (fact finder could conclude defendant more interested in ignoring the case than defending it) with Paige v. Chariton, 252 N.W.2d 433, 437 (Iowa 1977) and Gordon v. Gordon, 200 N.W.2d 527, 528 (Iowa 1972).

We are persuaded that the magistrate blurred this distinction in the case before us. The magistrate faulted Whitehorn for not having pursued her case with diligence. Yet it is undisputed that after filing a pro se petition she sought counsel, filed a motion to dismiss the counterclaim (on a legal theory she has pursued through this appeal), prepared for trial and appeared at the courthouse with counsel and a witness. No greater effort can reasonably be expected of...