Case Title: Lawrence-Allison and Associates West, Inc. v. Archer

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1989-01-13T00:00:00Z

Document:
Lawrence-Allison and Associates West, Inc. v. Archer1989 WY 14767 P.2d 989Case Number: 87-184Decided: 01/13/1989Supreme Court of Wyoming
LAWRENCE-ALLISON 
AND ASSOCIATES WEST, INC., APPELLANT (DEFENDANT),

 
 
v.

 
 
JOHN 
ARCHER, CLINT EDWARDS, AND FRED NOLL, DEFENDANTS, v. BRIAN LORENSEN, APPELLEE 
(PLAINTIFF).

 
 
Appeal from 
the District Court, NatronaCounty, Dan Spangler, 
J.

 
 
Harry G. 
Bondi of Harry G. Bondi, P.C., Casper, 
for appellant.

 
 
Frank R. 
Chapman of Beech Street Law Office, Casper, and Dwight F. Hurich of Preuit, Sowada 
& Hurich, Gillette, for 
appellee.

 
 
Before BROWN, C.J.*, and THOMAS, CARDINE, URBIGKIT and MACY, 
JJ.

 
 

* Retired 
June 30, 1988.

 
 

BROWN, Chief 
Justice, Retired.

 
 

[¶1.]     Appellant 
Lawrence-Allison & Associates West, Inc., appeals a judgment awarding 
damages and costs to appellee Brian Lorensen. Underlying this dispute is a tort 
action based on the termination of appellee's employment contract with 
appellant. This appeal addresses the propriety of the trial court's entry of 
default on liability against appellant for failure to appear at trial with 
counsel. Appellant also challenges an order of partial summary judgment 
collaterally estopping it from litigating certain factual issues raised in an 
April 1984 administrative decision concerning appellee's eligibility for 
unemployment compensation benefits. Appellant frames the issues 
as:

 
 
1. Were the 
issues decided at the administrative hearing identical to the issues to be 
decided by the trial court in order for the trial court to properly apply 
collateral estoppel to prevent Appellant from defending the 
allegations?

 
 
2. Did the 
burden of proof in the two proceedings remain the same; or was the burden of 
proof upon the Appellant at the administrative proceeding and upon the Appellee, 
as a party Plaintiff, in his civil lawsuit? If so, does such shift in burden of 
proof prevent application of principles of collateral 
estoppel?

 
 
3. Was it 
error for trial court to permit withdrawal of counsel and then hold Appellant in 
default?

 
 
4. Was it 
abuse of discretion in refusing to set aside the default?

 
 
5. Are the 
awards for past lost wages, future lost wages, and loss on annuity supported by 
the evidence?

 
 

[¶2.]     Appellee frames the 
issues in this way:

 
 
1. Did the 
Trial Court Err in Failing to set aside the Default Entered against 
Appellant?

 
 
2. Did the 
Trial Court Erroneously Apply Collateral Estoppel to the Employment Security 
Commission Administrative Hearing?

 
 
3. Is the 
Judgment Supported by the Competent Evidence?

 
 

[¶3.]     While we seriously 
question the trial court's application of collateral estoppel in this case, we 
reverse on the issue of entry of default and remand the case for further 
proceedings.

 
 
FACTS

 
 

[¶4.]     Appellant was the prime 
contractor with the United States Department of Energy for management of certain 
activities on the United States Petroleum Reserve No. 3, north of Casper, Wyoming. Appellant subcontracted work projects 
on the Reserve to oil field service companies, including a subcontract under 
which appellee was employed as a tool pusher. The subcontract specified that all 
employees on the Reserve would use Government Service Administration (GSA) 
vehicles, and that the vehicles would be used only for business purposes. 
Hunting on the Reserve was also prohibited.

 
 

[¶5.]     During the 1983 
antelope hunting season, appellee allegedly violated these terms of his 
employment contract by shooting an antelope on the Reserve and transporting it 
to Casper in a 
GSA pickup. After an investigation into the matter, appellee was terminated on 
October 20, 1983.

 
 

[¶6.]     Appellee then applied 
for unemployment benefits, and appellant protested. After an April 3, 1984, 
hearing, the Wyoming Employment Security Commission (ESC) granted benefits. In 
an April 18 decision letter, the ESC found no evidence supporting the hunting 
violation and further found that transporting the antelope carcass in the GSA 
pickup was not "misconduct" under ESC regulations sufficient to justify a denial 
of unemployment benefits. Appellant did not appeal from the ESC 
decision.

 
 

[¶7.]     Appellee filed a 
complaint in district court on December 26, 1985, naming appellant and three 
individuals as defendants in an action for wrongful termination. The complaint 
included a jury demand. Appellant answered and also demanded a jury trial. 
Appellee moved for partial summary judgment on the issue of liability on the 
contract. A hearing was held on February 27, 1987. On March 2, the trial court 
issued an order finding the parties to be collaterally estopped from litigating 
issues determined in the ESC decision and denying appellee's motion for partial 
summary judgment.

 
 

[¶8.]     On March 1, 1987, 
appellant had a meeting with its counsel during which appellant apparently 
complained about the way its case was being prepared for trial, which was to 
begin March 2. The record is unclear concerning the outcome of this meeting; 
however, defense counsel apparently left the meeting with the initial impression 
that his attorney-client relationship with appellant had been 
terminated.

 
 

[¶9.]     Acting on this belief, 
defense counsel participated in a telephone conference with plaintiff's counsel 
and the trial court on the afternoon of March 1, in which he moved to withdraw 
from the case. The trial court apparently questioned defense counsel about his 
motion, although no record of the conference was made, and then allowed the 
withdrawal. Defense counsel notified his client by telephone that afternoon, 
leaving appellant only Sunday evening to find new defense counsel for trial the 
next morning.

 
 

[¶10.]  On the morning of March 2, a written 
motion to withdraw and a corresponding order were submitted to the court and 
filed. The motion to withdraw gave the following explanation of the 
circumstances leading up to the March 1 telephone 
conference:

 
 
     2. On March 1, 1987 I 
came to Casper, Wyoming to prepare my client[']s testimony and 
arrived in the early afternoon. Upon arrival at the office of Lawrence-Allison 
and Associates, I was greeted by the general manager, Jim Watson, and after 
discussing the status of the case with Mr. Watson he informed me that as the 
representative of the corporate defendant and speaking on behalf of the 
individual defendants that my services as the attorney for all of the defendants 
were no longer desired and they wished to obtain other counsel to represent them 
in this matter.

 
 

[¶11.]  Appellant's general manager, Mr. James 
Watson, appeared that morning for the beginning of trial without replacement 
counsel and unable to proceed. The trial began with the following 
colloquy:

 
 
     THE COURT: As I 
understand it the corporate defendant here has discharged their attorney. Do you 
have another attorney to represent the company?

 
 
     MR. WATSON: No, sir, I 
do not, and I would like to make a statement about discharging Mr. Horn. This is 
the first time I have seen the Motion here from Mr. Horn, and I really have to 
disagree with it, Your Honor.

 
 
     We disagreed, 
expressed our lack of confidence in Mr. Horn in representing us, discussed the 
possibility of changing attorneys, the possibility of bringing in other 
attorneys, to give him additional support. Mr. Horn said, if you don't have 
confidence in me as your attorney, I don't want to represent you, got up, took 
his box of files and left. And he filed this motion, which I say, we had not 
seen until this morning. So I had assumed at this point his Motion to Withdraw 
was based upon the disagreement and not the fact that said we had discharged 
him, which is not the case, Sir.

 
 
     I expressed a serious 
concern for his ability to represent us and have listed several reasons that 
were stated to him, if I may give them to you, Sir.

 
 
After Mr. 
Watson explained his impressions of the March 1 meeting with original defense 
counsel, the trial court gave the following reply:

 
 
     THE COURT: From what 
you have said and from what Mr. Horn has told me, it appears to me, first, that 
this difference of opinion between the corporation and Mr. Horn as to his 
handling of the case is something that has been going on for quite some time, 
and should have been dealt with before the eve of trial. The problem is we have 
got a courtroom full of jurors, witnesses here for the other side, and as far as 
I know the other side is ready to go. This trial has been scheduled for quite 
some time. I think the differences between the corporation and Mr. Horn should 
have been resolved long before now. From what you have said and what he has 
said, it appears to me he was either discharged, as he claims, or else his 
position in the case was made untenable, and at the last minute by all the 
objections and criticisms of him. So I don't think that the fact that the 
corporation is without an attorney at this time is the fault of anyone but the 
corporation itself.

 
 
     So, I won't grant a continuance to obtain 
further counsel at this stage then the corporation is in default, and judgment 
can be entered against it. (Emphasis added.)

 
 

[¶12.]  The trial court allowed appellee to amend 
his complaint against the individual defendants, and granted those defendants a 
continuance so they could obtain independent counsel. The trial court then 
adjourned the proceedings without requiring appellee to prove his case. A 
default judgment for $1,437,063.44 plus $3,224.06 in costs was entered the next 
day, March 3, based solely on an affidavit of one of appellee's witnesses. 
Appellant went off in search of a new attorney, and appellee filed execution on 
the judgment on March 10.

 
 

[¶13.]  On March 11, through new defense counsel, 
appellant moved the trial court to set aside entry of default and the default 
judgment, to grant a new trial and to alter or amend the judgment. Attached to 
this omnibus motion were a series of affidavits, including a supplemental 
affidavit from original defense counsel. This affidavit gave a softened version 
of the events and impressions that resulted from the March 1 meeting between 
appellant and its first attorney:

 
 
     2. On Sunday, March 1, 
1987, I visited with Jim Watson, the General Manager, for the Defendant 
Lawrence-Allison & Associates West, Inc., hereinafter "L.A.W.". Also present 
at the meeting, was Mr. Dave Kelly, an employee of L.A.W. The tenor and tone of 
the questioning put to me by Mr. Watson in questioning my legal abilities to 
properly represent all of the Defendants in the captioned matter was of great 
concern to me and very upsetting to me. I had the distinct impression that Mr. 
Watson wanted to have additional or other counsel represent the Defendants in 
the trial scheduled for March 2, 1987.

 
 
     3. As a result of the 
meeting with Mr. Watson, and the fact that he and his associates were 
uncomfortable with me continuing to represent them in this proceeding, I advised 
Mr. Watson and Mr. Kelly during our meeting of March 1, 1987, that I would 
withdraw as their counsel if that was their desire and allow them to obtain 
other counsel to represent them. I also told Mr. Kelly and Mr. Watson that I 
would talk to the judge about withdrawing from the case. I subsequently spoke 
with Judge Spangler and briefly related to him some of the foregoing information 
and I was orally advised by Judge Spangler that he would permit my withdrawal as 
counsel for the Defendants.

 
 
     4. After my discussion 
with Judge Spangler, I then telephoned Mr. Watson and advised him that the judge 
had granted my request for withdrawal.

 
 
     5. During my 
discussion in the afternoon of March 1, 1987, with Judge Spangler and Frank 
Chapman, I was under the impression that the judge would allow my former clients 
time to obtain other counsel especially when Judge Spangler commented during our 
telephone conversation that a corporation could not proceed without an 
attorney.

 
 

[¶14.]  On March 13, appellant moved the trial 
court to stay any further attempts at execution on the judgment. On March 27, 
the trial court conducted a hearing on appellant's omnibus motion to set aside 
entry of default and default judgment. Appellant mounted a three-pronged 
argument in favor of setting aside entry of default and default judgment by 
asserting that: (1) the trial court should not have entered default under 
W.R.C.P. 37 and 55, and that doing so denied appellant due process of law; (2) 
that there was good cause shown under W.R.C.P. 55(c) to set aside the entry of 
default, and there was also mistake, inadvertence, surprise and neglect to 
justify relief under W.R.C.P. 60(b)(4) and (6); and, (3) that appellant had 
never received written notice of the application for default judgment at least 
three days before its submission to the court as required by W.R.C.P. 55(b)(2). 
Appellant's new attorney had a lengthy exchange with the court concerning what 
really transpired on March 1 that led to the withdrawal of original defense 
counsel. After this exchange, the trial court set aside the default judgment but 
preserved the entry of default. The trial court further found that no 
meritorious defense remained on the issue of liability, and ordered the parties 
to submit affidavits and other evidence so that damages could be re-assessed 
after a subsequent hearing.

 
 

[¶15.]  An abbreviated hearing on damages took 
place on May 18. The trial court issued a decision letter on May 20, and entered 
an order on June 2, awarding total damages and costs of $254,005.18. This appeal 
from the denial of appellant's motion to set aside entry of default 
followed.

 
 

[¶16.]  Appellant's first two issues suggest 
strongly that the trial court should not have applied collateral estoppel to the 
"issues" addressed in the ESC decision letter. We will not address those issues, 
however, because the trial court's entry of default on March 2, 1987, provides 
an independent basis for reversal.

 
 
STANDARD OF 
REVIEW

 
 

[¶17.]  We begin analysis of this case by noting 
that it involves a direct appeal from the trial court's order denying 
appellant's motion to set aside entry of default under W.R.C.P. 60(b)(4).1 Dexter v. O'Neal, 649 P.2d 680, 681 
(Wyo. 1982). 
See also 11 C. Wright and A. Miller, Federal Practice and Procedure, § 2871 at 
258 (1973). A judgment or order is void and subject to attack under Rule 
60(b)(4) if the court that rendered it "acted in a manner inconsistent with due 
process of law." Aguchak v. Montgomery Ward Co., Inc., 520 P.2d 1352, 1354 
(Alaska 1974); 
see also 11 C. Wright and A. Miller, supra, § 2862 at 199-200. Due process of 
law in this context is guaranteed to a party with a legitimate property or 
liberty interest at stake under the U.S. Const. amends. IV and V and Wyo. Const. art. 1 § 6. 
White v. Board of Trustees of Western Wyoming Community College District, 648 P.2d 528, 535 (Wyo. 1982), cert. denied, 459 U.S. 1107, 103 S. Ct. 732, 74 L. Ed. 2d 956 (1983). Appellant has a property interest at stake sufficient to invoke 
these guarantees and carries the burden of proving that it was denied due 
process of law when the trial court entered default against it under the 
circumstances of this case. Holm v. State, 404 P.2d 740, 743 (Wyo. 
1965).

 
 

[¶18.]  Normally, when appealing from the denial 
of a motion for relief from a judgment or an order under W.R.C.P. 55(a) and 
60(b)(1)-(3), (5)-(6), the movant must show that the denial of the motion was an 
abuse of discretion. Farrell v. Hursh Agency, Inc., 713 P.2d 1174, 1180-81 
(Wyo. 1986). 
The movant must then show that he could have asserted a meritorious defense to 
the action had the motion been granted. Adel v. Parkhurst, 681 P.2d 886, 889 
(Wyo. 1984); 
see also 11 C. Wright and A. Miller, supra, § 2862 at 197.

 
 

[¶19.]  An appeal from the denial of a W.R.C.P. 
60(b)(4) motion, on the other hand, presents a direct attack on the validity of 
the judgment or order itself, hence, a pure question of law. "Once a judgment is 
determined to be void, there is no question of discretion on the part of the 
court when a motion is made under Rule 60(b)(4)." 2-H Ranch Company, Inc. v. 
Simmons, 658 P.2d 68, 73 (Wyo. 1983). Cf. Cates v. Eddy, 669 P.2d 912, 
916, 50 A.L.R.4th 821 (Wyo. 1983). Further, the movant is not 
required to show the availability of a meritorious defense before he can receive 
relief from the judgment or order appealed. Mickens v. Calame, 497 So. 2d 505, 
506 (Al.Civ.App. 1986). Applying these principles to this case, the only issue 
before us is whether the order entering default against appellant is void, as a 
matter of law, because its entry was erroneous as a matter of 
law.

 
 
ENTRY OF 
DEFAULT

 
 

[¶20.]  Since there is no evidence in the record 
suggesting that the trial court entered default under W.R.C.P. 37(b)(2)(C) or 
(D) as a discovery sanction, the trial court must have based its actions on 
W.R.C.P. 55(a), which provides:

 
 
(a) Entry. 
- When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend 
as provided by these rules and that fact is made to appear by affidavit or 
otherwise, the clerk shall enter his default. (Emphasis 
added.)

 
 
In this 
case, appellant's pleadings were in order and had been properly served upon the 
opposing party. Appellant never withdrew its responsive pleadings and jury 
demand, and never gave any indication that it was not prepared to defend the 
case. The sole basis for entering default against appellant seems to have been 
the trial court's perception that appellant fired its attorney on March 1, and 
thereby failed to "otherwise defend" under W.R.C.P. 55(a), when it appeared at 
trial without counsel.

 
 
FEDERAL DUE 
PROCESS

 
 

[¶21.]  W.R.C.P. 55(a) is identical to F.R.C.P. 
55(a). From that starting point, appellant directs us to a group of federal and 
state cases involving the entry of default under Rule 55(a). These cases arise 
from fact patterns where a defendant's attorney has withdrawn from the case 
shortly before trial, and the defendant is unable to proceed and/or does not 
appear for trial. These cases are all rooted in the Fifth Circuit decision in 
Bass v. Hoagland, 172 F.2d 205, 210-11 (5th Cir.), cert. denied, 338 U.S. 816, 70 S. Ct. 57, 94 L. Ed. 494 
(1949).

 
 

[¶22.]  Bass involved a collateral attack on a 
default judgment entered against the defendant under F.R.C.P. 55(a), after 
neither the defendant nor his attorney appeared for trial. Appellant's attorney 
had withdrawn from the case shortly before trial and appellant claimed he never 
had notice of the proceeding. The trial court entered default and the defendant 
did not receive notice of the subsequent default judgment until the plaintiff 
tried to enforce the judgment in another jurisdiction over two years later. With 
the time for appeal from the default having passed, defendant attacked the entry 
of default collaterally, claiming he had been denied due process of law under 
the Fifth Amendment. In a rather vague opinion, the Fifth Circuit agreed and 
stated:

 
 
Rule 55(a) 
authorizes the clerk to enter default "When a party against whom a judgment for 
affirmative relief is sought has failed to plead or otherwise defend as provided 
by these rules." This does not require that to escape default the defendant must 
not only file a sufficient answer to the merits, but must also have a lawyer or 
be present in court when the case is called for a trial. The words "otherwise 
defend" refer to attacks on the service, or motions to dismiss, or for better 
particulars, and the like, which may prevent default without presently pleading 
to the merits. When Bass by his attorney 
filed a denial of the plaintiff's case neither the clerk nor the judge could 
enter a default against him. The burden of proof was put on the plaintiff in any 
trial. When neither Bass nor his attorney appeared at the trial, no default was 
generated; the case was not confessed. The plaintiff might proceed, but he would 
have to prove his case. If there was an erroneous idea that the absence of 
counsel caused a default, still Rule 55(b)(2) required three days notice to Bass 
or his counsel before a judgment by default could be considered. Bass under the 
admitted facts knew he was not in default, did not know his counsel had 
withdrawn, and had no notice that a judgment by default was to be asked. To get such a judgment without evidence and 
without notice is not in our opinion due process of 
law.

 
 
Bass, 172 F.2d  at 210 (emphasis added).

 
 

[¶23.]  This language was widely adopted in 
ensuing years for the proposition that a party who has properly filed and served 
responsive pleadings cannot be defaulted under Rule 55(a) for failing to appear 
at trial, because doing so would violate federal due process requirements. See, 
e.g., Ohio Valley Radiology Associates, Inc. v. Ohio Valley Hospital 
Association, 28 Ohio St.3d 118, 502 N.E.2d 599, 602 (1986) and cases cited 
therein; Coulas v. Smith, 96 Ariz. 325, 327, 395 P.2d 527, 529 (1964); Reuther 
v. Gang, 146 Vt. 540, 507 A.2d 972, 973 (1986).

 
 

[¶24.]  Limiting the entry of default under Rule 
55(a) on federal due process grounds is attractive because it is straightforward 
and simple. We are not convinced, however, that the holding in Bass stands for 
that proposition when that case is viewed in light of more recent Fifth Circuit 
caselaw. The scope of Bass has always been suspect in terms of Rule 55(a) and 
Fifth Amendment due process requirements, because it never clearly articulated 
what factor(s) resulted in a denial of due process to the defendant. See, e.g., 
Note, Extending Collateral Attack: An Invitation To Repetitious Litigation, 59 
Yale L.J. 345, 347-53 (1950). The Fifth Circuit apparently recognized this 
problem, at least in terms of its effect on the availability of collateral 
attack on default judgments, and used a 1982 decision to clarify the basis for 
the denial of due process that occurred in Bass:

 
 
The leading 
case allowing collateral attack of a default judgment for procedural errors 
during the course of a jurisdictionally proper proceeding is Bass v. Hoagland, 
172 F.2d 205 (5th Cir.), cert. denied, 359 U.S. 816, 70 S. Ct. 57, 94 L. Ed. 494 
(1949), noted in Recent Cases, 62 Harv.L.Rev. 1400. In Bass the plaintiff sued 
to enforce a default judgment obtained in another federal court. In the original 
trial court the defendant appeared, answered, and requested a jury trial. 
Defense counsel then withdrew. On the day of trial defendant was not present. 
The trial judge treated the defendant in default because of the earlier 
withdrawal of his counsel and entered judgment for the plaintiff in the precise 
amount requested in his complaint, without a jury trial and apparently without 
taking any evidence. Defendant was not aware of the trial date, was given no 
notice prior to the entry of the default judgment, and was fraudulently not 
informed of the judgment until more than two years after it was entered. The 
court held that the combination of these errors resulted in a denial of due 
process.

 
 
Fehlhaber 
v. Fehlhaber, 681 F.2d 1015, 1027 (5th Cir. 1982), cert. denied, 464 U.S. 818, 
104 S. Ct. 79, 78 L. Ed. 2d 90 (1983) (emphasis added). Accord Williams v. New 
Orleans Public Service, Inc., 728 F.2d 730, 735 (5th Cir. 1984); and Irvin L. 
Young Foundation, Inc. v. Damrell, 607 F. Supp. 705, 709 (D.Me. 1985). The 
Fehlhaber language arguably limits the due process implications of Bass to the 
facts in that case, and also shifts the emphasis in Bass from the Rule 55(a) 
"otherwise defend" language, to procedural defects that caused a lack of notice. 
Because of this, we choose not to rely on case law addressing Rule 55(a) that is 
based on Bass, and its application of the Fifth Amendment.

 
 
STATE DUE 
PROCESS

 
 

[¶25.]  Our inquiry, however, does not end with 
that conclusion. We now consider the actions of the trial court under Wyo. 
Const. art. 1, § 6.2 We may decide a case based upon the 
requirements of the Wyoming Constitution as a "bona fide separate, adequate, and 
independent [state] grounds * * *." Michigan v. Long, 463 U.S. 1032, 1041, 103 S. Ct. 3469, 3476, 77 L. Ed. 2d 1201 (1983), cited in Rocky Mountain Oil and Gas 
Association v. State Board of Equalization, Department of Revenue and Taxation, 
749 P.2d 221, 223, n. 15 (Wyo. 1987). The holding in this case is rendered 
exclusively under the Constitution of the State of Wyoming, and references 
to federal case law are included only for comparison or 
explanation.

 
 

[¶26.]  The most troublesome aspect of this case, 
in terms of state due process, is the way the trial court determined that 
appellant actually fired its attorney on March 1 so that default could be 
entered against it on March 2. Viewing the entire record, and the transcript of 
the March 27 motion hearing in particular, it is clear that the trial court 
entered default based upon the impressions it had formed in the March 1 
telephone conference with original defense counsel and plaintiff's counsel. The 
following colloquy between replacement defense counsel and the trial court about 
this problem is illustrative:

 
 
[MR. BONDI] 
* * * The crux of the motion is probably on Point 5, in discussing Mr. Horn's 
rendition of the facts, and I am going to refer to Mr. Horn's supplemental 
affidavit, I think it clearly establishes good cause. One of the things that Mr. 
Horn's affidavit establishes at paragraph 2, he was clearly not terminated, 
paragraph 2 of Mr. Horn's affidavit dated March 9, 1987, quotes the tenor and 
tone of questioning was of great concern to me. Those, Your Honor, are not words 
of termination, civil litigants and criminal litigants sometimes ask their 
counsel in ways that are discerning to us and make us uncomfortable, to use Mr. 
Horn's expression, I don't think that gives me grounds for withdrawal. Mr. 
Horn's affidavit again at paragraph 2, "I had the distinct impression that Mr. 
Watson wanted to have additional or other counsel represent the defendants." 
Now, he doesn't say that Mr. Watson had the distinct impression, he clearly 
says, I have an impression. You know, his impression is different than saying 
you are out of this.

 
 
     THE COURT: The trouble 
with the affidavit, Mr. Bondi, is it is not true.

 
 
     MR. BONDI: Which 
affidavit?

 
 
     THE COURT: Mr. Horn's, 
Mr. Horn told me that he had been fired.

 
 
     MR. BONDI: Your Honor, 
I don't have a record of those proceedings, if the defendant had had that 
opportunity I don't know if Mr. Horn was under oath when speaking with you on 
Sunday afternoon, with no opportunity for the defendant to express his views. 
Mr. Horn says under oath, I had the distinct impression Mr. Watson wanted me to 
obtain other counsel.

 
 
     I think Mr. Horn's 
statement, which supplements his first motion to this Court should be given and 
treated with deference by the Court.

 
 
     THE COURT: Well, not 
when he told me something else earlier.

 
 
     MR. BONDI: Well, from 
Defendant's point of view, Defendant should have an opportunity to contest that, 
put that in issue, particularly before a ruling is made. It is our position 
-

 
 
     THE COURT: To contest 
what?

 
 
     MR. BONDI: Whether or not he was terminated. The point 
is the Court apparently took that, if I may argue that, the Court took Mr. 
Horn's ex parte communication with Mr. Chapman on the telephone Sunday 
afternoon, at face value without being put under oath, without having 
-

 
 
     THE COURT: Mr. Horn 
told me, Mr. Bondi.

 
 
     MR. BONDI: I think I 
understand what you are saying. This would be the Sunday afternoon telephone 
conversation.

 
 
     THE COURT: 
Right.

 
 
     MR. BONDI: With 
respect, Mr. Horn was not under oath when talking to you, and he is under oath 
in this affidavit. Point 2, he didn't inform counsel, excuse me, didn't inform 
the defendant of what he was saying or the defendant, what was the defendant to 
do on Sunday, the first crack the defendant had at the 9 o'clock hour, less than 
24 hours, he took exception with that. But I understand what the Court is 
saying, but, I think, his affidavit is one statement, and his unsworn statement 
to you is another, simply didn't give the opportunity for the defendant to be 
heard on what he was representing to you on Sunday. (Emphasis 
added).

 
 

[¶27.]  It is basic that, before a property interest can be 
terminated, except in emergency situations, due process must be afforded to 
litigants in the form of notice and a meaningful opportunity to be heard. In the 
Matter of GP, 679 P.2d 976, 986-87 (Wyo. 1984); and White, 648 P.2d  at 535. A 
meaningful opportunity to be heard necessarily requires a hearing involving 
elements of formality and procedure dependent upon "the importance of the 
interests involved and the nature of the subsequent proceedings." Boddie v. 
Connecticut, 401 U.S. 371, 378, 91 S. Ct. 780, 786, 28 L. Ed. 2d 113 
(1971), cited in In the Matter of GP, 679 P.2d 976, 987 (Wyo. 
1984).

 
 

[¶28.]  The entry of default in this case was 
entirely dependent upon the trial court's finding that appellant had, of its own 
accord, fired its attorney less than a day before trial and, as a result, failed 
to "otherwise defend" the case under W.R.C.P. 55(a). We construe this language 
in the rule to mean that a defendant must show by his conduct that he no longer 
intends to defend the case on the merits. We believe unusual circumstances could 
arise that would allow a trial court to properly default a corporate defendant 
under W.R.C.P. 55(a), for refusing to appear at trial with counsel.3 Such an extreme action by a trial 
court, however, must be recognized for what it is. Entry of default under Rule 
55(a) injects a strong possibility that the corporation will never be able to 
litigate its case. Default judgments are not favored in the law, and when 
possible, a case should be decided on its merits. Westring v. Cheyenne National 
Bank, 393 P.2d 119, 122 (Wyo. 1964).

 
 

[¶29.]  When the basis for entry of default 
against a corporation is failure to appear with counsel, and particularly when 
the corporation has no attorney because the trial court allowed counsel's 
withdrawal only hours before trial, the findings underlying the entry of default 
should be rendered after a fair hearing.4 Due process demands at least an 
informal hearing for presentation of evidence and explanations of the defendant, 
its counsel, and the opposing party. The trial court should allow both parties, 
and the corporate defendant's counsel, to present evidence and explanations of 
the reason for a motion by defense counsel to withdraw on the eve of trial, 
before making findings that will lead to a Rule 55(a) default. This is the type 
of hearing contemplated by Rule 55(a) in this fact situation.5

 
 

[¶30.]  We hold that the trial court denied 
appellant due process of law under Wyo. Const. art. 1, § 6, when it entered 
default based on the impressions it gained in the ex parte March 1 telephone 
conference. A minimal due process hearing was necessary before default could 
have been properly entered. Further, we stress that this holding is limited to 
the specific factual and procedural circumstances of this 
case.

 
 

[¶31.]  Reversed and remanded for further 
proceedings consistent with this opinion.

 
 

THOMAS, J., filed 
a specially concurring opinion.

 
 
FOOTNOTES

 
 

1 W.R.C.P. 
60(b)(4), which is identical to its federal counterpart, 
provides:

 
 
(b) 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: * * * (4) the judgment is void * * *.

 
 

2 Although 
due process under Wyo. Const. art. 1, § 6, was not raised specifically in the 
trial court, we may consider it now, because it involves appellant's fundamental right to due process of law. 
See Duffy v. State, 730 P.2d 754, 758 (Wyo. 1986).

 
 

3 This is 
only possible because a corporation must plead or appear in court through a 
licensed attorney. Starrett v. Shepard, 606 P.2d 1247, 1253 (Wyo. 1980). The only situations we have found where a 
corporate defendant evidenced a sufficient desire to cease defending its case 
under Rule 55(a), are those in which the corporation failed to obtain 
replacement counsel after ignoring eight months or more of court orders to do 
so. See Dow Chemical Pacific Ltd. v. Rascator Maritime, S.A., 782 F.2d 329, 336 
(2d Cir. 1986); Shapiro, Bernstein & Co. v. Continental Record Co., 386 F.2d 426, 427 (2d Cir. 1967); Cf. Transportes Aereos De Angola v. Ronair, Inc., 104 F.R.D. 482, 504-509 (D.Del. 1985).

 
 
     Another trial court 
option, when confronted with a corporate defendant who appears without counsel, 
is to go forward with the trial as scheduled. The plaintiff is allowed to put on 
his case and then judgment is entered based on that evidence and the record. See 
J. Moore, W. Taggart & J. Wicker, Moore's Federal Practice, ¶ 56.02[3] n. 12 (2d. 
ed. 1988).

 
 

4 Withdrawal 
because an attorney "can't get along" with a client should rarely be allowed and 
should not have been allowed here. When a withdrawal is requested, the trial 
court should carefully consider the factors set out in the Wyoming Rules of 
Professional Conduct 1.16. If withdrawal is allowed, it must be accomplished by 
court order. Uniform Rules for the District Courts 102(c).

 
 

5 The 
situation here is factually different from cases involving W.R.C.P. 37, 
discovery sanctions. See, e.g., Farrell v. Hursh Agency, Inc., 713 P.2d 1174, 
1179-80 (Wyo. 
1986).

 
 

THOMAS, Justice, 
specially concurring.

 
 

[¶32.]  I have attempted to persuade myself that 
the issues in this case are of constitutional dimensions. I cannot agree that 
they are. I see simply errors of law on the part of the district court which 
prevented the entry of the judgment in favor of the appellee. We can correct 
this error by reversing without justifying a conclusion that the judgment is 
void.

 
 

[¶33.]  As the majority opinion holds, the 
district judge did not understand the limited significance of the phrase "failed 
to plead or otherwise defend" found in Rule 55(a), W.R.C.P. This was not an 
instance in which the corporate defendant had failed to plead or otherwise 
defend, and there was no justification for invoking Rule 55, W.R.C.P. Certainly, 
any claim of the plaintiff to judgment by default would have required the notice 
set forth in Rule 55(b)(2), W.R.C.P., and, obviously, that procedure was not 
followed. Consequently, the default judgment must be set 
aside.

 
 

[¶34.]  The conclusion that the trial court erred 
in entering a default judgment in this instance is consistent with the rationale 
in Bass v. Hoagland, 172 F.2d 205 (5th Cir. 1949), cert. denied 338 U.S. 816, 70 S. Ct. 57, 94 L. Ed. 494 
(1949). The only necessity to invoke due process concepts in Bass related to the 
fact that the case was not appealed but, instead, the default judgment was the 
subject of a collateral attack. In this instance, there is an appeal from the 
erroneous judgment, and the error of law committed by the trial judge adequately 
disposes of any concern about the abuse of discretion.

 
 

[¶35.]  Under prior cases from this court, the 
trial court might have been justified in going forward with trial because of the 
facts that it perceived, which were that the defendant had discharged its 
attorney on the eve of trial in order to secure a continuance. No trial was had, 
however. If one had been held, it would have been clear that the trial judge had 
abused his discretion because of the failure to take the trouble to become 
informed of the facts prior to a determination. Ex parte dialogue with the 
attorney whom the court believed to have been discharged does not count for that 
purpose.