Wittich Law Firm, P.C. v. O'Connell

• Decision Date: 18 June 2013
• Docket Number: No. DA 12–0199.,DA 12–0199.
• Citation: 304 P.3d 375,370 Mont. 103
• Parties: WITTICH LAW FIRM, P.C., Plaintiff and Appellee, v. Valery Ann O'CONNELL and Daniel O'Connell, Defendants and Appellants.
• Court: Montana Supreme Court

370 Mont. 103

304 P.3d 375

WITTICH LAW FIRM, P.C., Plaintiff and Appellee,

v.Valery Ann O'CONNELL and Daniel O'Connell, Defendants and Appellants.

No. DA 12–0199.

Supreme Court of Montana.

Submitted on Briefs Jan. 9, 2013.

Decided May 7, 2013.

Rehearing Denied June 18, 2013.

For Appellants: Daniel O'Connell, self-represented, Valery O'Connell, self-represented; Emigrant, Montana.

For Appellee: Carrie R. Wasserburger, Arthur V. Wittich; Wittich Law Firm, P.C.; Bozeman, Montana.

Justice MICHAEL E. WHEAT delivered the Opinion of the Court.

[370 Mont. 104]¶ 1 Plaintiff and Appellee Wittich Law Firm, P.C., (WLF) filed a complaint seeking unpaid legal fees in the Sixth Judicial District Court, Park County. The District Court entered a default judgment in favor of WLF. Defendants and Appellants Valery Ann and Daniel O'Connell (the O'Connells) moved to vacate the entry of default judgment some nine months later. The District Court denied the motion, and the O'Connells appealed this denial pro se. We affirm.

STATEMENT OF THE ISSUES

¶ 2 We restate the issues on appeal as follows:

¶ 3 1. Did the District Court slightly abuse its discretion by denying the O'Connells' motion to vacate its entry of default judgment?

¶ 4 2. Did the District Court err by awarding attorney fees and costs to the Wittich Law Firm, P.C.?

¶ 5 3. Did the District Court err by denying the O'Connells' M.R. Civ. P. 59(e) and M.R. Civ. P. 60(b) motions seeking to either alter or set aside the court's January 6, 2012 denial of the O'Connells' motion to vacate the entry of default judgment?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 6 Plaintiff WLF filed a complaint on October 27, 2010 alleging that the O'Connells and WLF had previously entered into a contract for legal services and that the O'Connells had breached this contract by failing to fully pay for the legal services performed by WLF. The complaint requested a judgment in the amount of $2,892.26, interest, attorney fees, and costs. The O'Connells were each personally served with the complaint and a summons on November 1, 2010. The summonses notified the O'Connells that their answer was due within 20 days after the completion of service of the summons and complaint. SeeM.R. Civ. P. 12(a) (2009).

¶ 7 The O'Connells failed to file an answer or otherwise appear within the required time period. WLF and the O'Connells did communicate about the alleged owed payments, however. WLF sent the O'Connells a letter on November 17, 2010, advising them that the account in question showed an outstanding balance of $2,232.56. This lower balance reflected a June 10, 2010 transfer of $662.25 from another of the O'Connells' trust accounts with WLF. The letter requested that the O'Connells “pay the remaining $2,232.56 immediately so we can close out your account.” The O'Connells thereafter paid $2,138.57 on December 2, 2010. Immediately after receiving this payment, WLF sent the O'Connells another letter stating that they still owed the firm $93.99 and asking the O'Connells to remit this remaining payment by December 10, 2010. On December 1, 2010, while this correspondence was occurring, WLF requested an entry of default from the Clerk of the District Court, and the clerk ordered entry of a default on December 3, 2010. SeeM.R. Civ. P. 55(a) (2009).

¶ 8 The O'Connells did not send the requested $93.99 by December 10, and WLF filed an Application for Default Judgment on December 16, 2010. The attached brief and affidavit claimed that the O'Connells had last submitted a payment to WLF for outstanding legal fees on December 2, 2010, and claimed that the O'Connells still owed $93.99. An affidavit from Arthur Wittich attached a copy of the legal services contract between the O'Connells and WLF. This contract provided that the failure to pay costs and fees incurred in the course of WLF's representation would subject the O'Connells to “all collection costs, including attorney fees, for any action necessary” and that overdue balances would accrue interest at 12% per year. An attached accounting of the costs and fees WLF had incurred while pursuing the action showed a balance of $808.80. The District Court subsequently entered an order of default judgment against the O'Connells for $902.79 on March 9, 2011.

¶ 9 The O'Connells filed a “Motion to Vacate Default/Order” on December 5, 2011, roughly nine months after the entry of default judgment. Their motion sought to vacate the default judgment pursuant to M.R. Civ. P. 60(b). ¹ While the O'Connells did not state which Rule 60(b) reason their motion was based on, their motion largely contested WLF's accounting of the owed legal fees, alleged various newly discovered “errors and hidden deceits,” and alleged that a WLF bookkeeper had committed fraud by leading them to believe that WLF's complaint would be dropped.

¶ 10 The O'Connells' motion also assumed that it was operating under the 2011 version of the Montana Rules of Civil Procedure, which provide that motions made under Rule 60(b)(1)–(3) must be made no more than a year after the entry of judgment or order or the date of the proceeding. The 2009 version of Rule 60(b) required that motions made for reasons (1)–(3) under Rule 60(b) must be made within 60 days of the judgment or order or service of the entry of judgment. The 2011 amendments to the Montana Rules of Civil Procedure became effective October 1, 2011. See Sup. Ct. Ord. No. AF 07–0157, April 26, 2011, eff. Oct. 1, 2011; M.R. Civ. P. 86 (2011). Because the O'Connells' Rule 60(b) motion was made roughly nine months after the court's order of default judgment, determining which version of Rule 60(b) applied to their motion would determine its initial validity if it alleged reasons (1)–(3) as a basis for relief.

¶ 11 The District Court denied the O'Connells' December 5, 2011 motion to vacate the default judgment in a January 6, 2012 order. The court construed the O'Connells' motion as most clearly alleging reason (3) as a basis for relief. The court also determined that the 2009 version of Rule 60(b) governed the O'Connells' motion, rendering the motion untimely. The court also considered M.R. Civ. P. 60(b)(6) (2009) as a possible basis for the O'Connells' motion. Rule 60(b)(6) (2009) allowed relief from a judgment pursuant to “any other reason” if filed “within a reasonable time.” See also, Bartell v. Zabawa, 2009 MT 204, ¶ 30, 351 Mont. 211, 214 P.3d 735 (“A successful M.R. Civ. P. 60(b)(6) motion requires that (1) the movant demonstrate extraordinary circumstances, (2) the movant acted to set aside the judgment within a reasonable time, and (3) the movant was blameless.”). The court denied the O'Connells' motion under Rule 60(b)(6), finding that they failed to meet any of the standards that we set in Bartell. The court also ordered the O'Connells to pay WLF's attorney fees and costs incurred in responding to the December 5, 2011 motion to set aside the default judgment. WLF submitted a request for an award of $2,860.00 in attorney fees and costs on January 12, 2012. The O'Connells failed to object to or otherwise contest the WLF's accounting and the court ordered the O'Connells to pay the $2,860.00 in a February 3, 2012 judgment.

¶ 12 The O'Connells subsequently filed two conglomerated motions, one on January, 31, 2012 (the January motion), and another on February 24, 2012 (the February motion). The January motion specifically asked for relief from the court's January 6 order and alleged M.R. Civ. P. 59(e) and M.R. Civ. P. 60(b) as bases for relief. The February motion sought to alter or amend the court's February 3 judgment awarding attorney fees and costs pursuant to Rule 59(e) and requested a stay of that judgment pursuant to M.R. Civ. P. 62. The District Court denied both motions in a March 20, 2012 order, finding that the O'Connells did not timely object to the award of attorney fees and that they provided insufficient justification for either an amendment or stay of the judgment.

¶ 13 The O'Connells filed a notice of appeal to this Court on March 23, 2012 indicating that they intended to appeal the January 6, 2012 order denying their motion to vacate the default judgment, the February 3 judgment awarding attorney fees and costs, and the March 9, 2011 order of default judgment. Their brief on appeal, however, claims they are appealing the January 6, 2012 order, February 3 judgment, and March 20, 2012 order denying the O'Connells' January and February motions. For the reasons stated below, we affirm the decisions of the District Court on all counts and decline to address the O'Connells' appeal of the March 20, 2012 order. SeeM.R.App. P. 4(4)(a).

STANDARD OF REVIEW

¶ 14 Our standard of review of a district court's ruling on a motion pursuant to M.R. Civ. P. 60(b) depends upon the nature of the final judgment, order, or proceeding from which relief is sought and the specific basis of the Rule 60(b) motion. Essex Ins. Co. v. Moose's Saloon, Inc., 2007 MT 202, ¶ 16, 338 Mont. 423, 166 P.3d 451. Here, because we do not favor default judgments, we will review the denial of the motion to set aside the default judgment for only a slight abuse of discretion. Nikolaisen v. Adv. Transformer Co., 2007 MT 352, ¶ 14, 340 Mont. 332, 174 P.3d 940. The party who seeks to set aside a default judgment bears the burden of persuasion. Nikolaisen, ¶ 14.

¶ 15 A decision on a request for an award of attorney fees is reviewed for an abuse of discretion unless a contract requires an award of fees, in which case a district court lacks the discretion to deny the request. Gibson v. Paramount Homes, 2011 MT 112, ¶ 10, 360 Mont. 421, 253 P.3d 903. An abuse of discretion occurs when a court acts arbitrarily without employment of conscientious judgment or exceeds the bounds of reason resulting in substantial injustice. Boyne USA, Inc. v. Spanish Peaks Dev., LLC, 2013 MT 1, ¶ 30, 368 Mont. 143, 292 P.3d 432. Last, we review a district court's conclusions of law to determine if they are...