Case Title: Whitney v. McDonough

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1995-03-27T00:00:00Z

Document:
Whitney v. McDonough1995 WY 44892 P.2d 791Case Number: 94-121Decided: 03/27/1995Supreme Court of Wyoming

Cory 
J. WHITNEY, Appellant (Defendant),

v.

Chester H. McDONOUGH, Appellee 
(Plaintiff).

 

Appeal 
from District Court of Natrona County, Dan Spangler, 
J.

 

Kay Lynn Bestol and George 
E. Powers, Jr. of Sundahl, Powers, Kapp & Martin, Cheyenne, Rex O. Arney of 
Murane & Bostwick, Casper, for 
appellant.

Frederick J. Harrison, 
Rawlins, for 
appellee.

Before GOLDEN, C.J., and THOMAS, MACY, TAYLOR and 
LEHMAN, JJ.

GOLDEN, 
Chief Justice.

[¶1]      In this appeal, 
we consider whether a motion to set aside a default judgment was properly denied 
by the trial court. Appellant claims the trial court erred in rendering the 
default judgment and erred in awarding damages upon insufficient evidence at a 
hearing.

[¶2]      We affirm the 
order denying the motion to set aside the default 
judgment.

[¶3]      Appellant 
presents this issue:

Did the District Court abuse its discretion, when it 
refused to set aside a judgment by default, and thereby ratified and left 
standing a judgment by default, which was based upon incompetent, inadmissible 
and fraudulent evidence?

[¶4]      Appellee states 
the issue as:

Whether the District Court properly denied 
Appellant's motion under W.R.C.P. 60(b) after Appellant failed to demonstrate 
mistake, inadvertence, surprise, excusable neglect or other reason justifying 
relief from a default judgment.

FACTS

[¶5]      In May of 1993, 
appellee Chester H. McDonough and appellant Cory J. Whitney were involved in an 
automobile collision in Casper, Wyoming. On October 13, 1993, McDonough filed a 
complaint for negligence against Whitney. Whitney was served by a deputy sheriff 
on October 21, 1993, but did not answer the complaint. According to Whitney's 
insurance adjuster, McDonough's attorney contacted him on November 18 and 
informed the adjuster that Whitney had been served a summons and complaint one 
month earlier and was in default. McDonough's attorney was amenable to granting 
an extension on the answer date and, upon hearing that the adjuster would 
forward the summons to an attorney, agreed to fax a copy of the summons to the 
adjuster. Although Whitney disputes that a fax was sent, telephone records, fax 
confirmation records and the affidavit of the secretary of McDonough's attorney 
indicate a fax was sent. McDonough's attorney did not receive a response and his 
later phone calls to the insurance adjuster were not 
returned.

[¶6]      Default was 
entered on December 10, 1993, by the court clerk and a damages hearing was 
conducted by the court on December 20, 1993. Following the hearing, the court 
entered its judgment, which recites in relevant part:

7.         That 
pursuant to Rule 55(b)(2), in order to enable the court to enter judgment or to 
carry it into effect, it was necessary to take an account or to determine the 
amount of damages, and the Plaintiff has submitted herewith, through his 
attorney, an affidavit with documents attached setting forth his damages by way 
of an economist's reports and by way of said economist's curriculum 
vitae.

8.         
Further, the Plaintiff has set forth his injuries and damages by way of 
affidavits and has further testified to the court.

IT IS THEREFORE ORDERED, ADJUDGED AND DECREED that 
the Plaintiff have judgment against the Defendant as 
follows:

1.         For 
medical expenses incurred to date in the sum of $4,446.13;

2.         For 
loss of Plaintiff's car valued at $1,200.00;

3.         For 
impairment of the ability to perform work and permanent disability and damage in 
the sum of $202,435.00;

4.         For 
past and future pain, suffering, mental anguish, loss of energy, strength, 
enjoyment of life, and hedonic damages in the sum of 
$154,546.00;

5.         For 
costs of this action in the sum of $100.00;

6.         For a 
total judgment as of the date hereof of $362,727.13, which shall accrue interest 
from this date and hereafter at the rate of ten percent (10%) per annum until 
paid.

[¶7]      In February, 
McDonough began proceedings to collect the judgment by serving a subpoena on the 
insurance adjuster. On February 10, Whitney's attorney filed a motion for 
permission to file an answer and a motion to set aside the default judgment 
under Rule 60(b)(1) for excusable neglect. In his accompanying brief, Whitney 
also challenged the amount of damages awarded and requested an opportunity to 
challenge the accuracy of McDonough's proof of damages. After hearing testimony 
and argument on the motion, the court denied the motion. This appeal 
followed.

DISCUSSION

1. STANDARD OF REVIEW

[¶8]      Default judgments 
are governed by WYO.R.CIV.P. 55 and setting aside a default judgment is governed 
by Rule 55(c). WYO. R.CIV.P. 55 (1992). Generally, there is no appeal from a 
default judgment unless an appropriate motion for relief under Rule 60(b) has 
first been made to the district court. Adel v. Parkhurst, 681 P.2d 886, 889 
(Wyo. 1984); Robison v. Sales and Use Tax Div., State Tax Comm'n, 524 P.2d 82, 
83 (Wyo. 1974). Rule 60 provides a method to set aside default judgment, Dexter 
v. O'Neal, 649 P.2d 680 (Wyo. 1982), and allows relief from a final judgment for 
six categories of reasons. WYO.R.CIV.P. 60(b)(1)-(6) (1992). The movant carries 
the burden of bringing himself within the rule's provisions. Carlson v. Carlson, 
836 P.2d 297, 301 (Wyo. 1992). An order denying relief under Rule 60(b) is 
appealable. Dexter, 649 P.2d  at 681.

[¶9]      Whether the 
motion states a reason for relief under Rule 60 is a question of law and is 
reviewed for correctness. See Ackermann v. United States, 340 U.S. 193, 202, 71 S. Ct. 209, 213, 95 L. Ed. 207 (1950); Klapprott v. United States, 336 U.S. 949, 
69 S. Ct. 384, 93 L. Ed. 266, modified, 336 U.S. 942, 69 S. Ct. 877, 93 L. Ed. 1105 
(1949). If a reason is stated, then it is within a district court's discretion 
whether or not relief should be granted or denied on the facts of the particular 
case. Whether or not a district court should set aside a default judgment under 
Rule 60(b) rests in the sound discretion of the court. Vanasse v. Ramsay, 847 P.2d 993, 996 (Wyo. 1993). A denial of a motion to set aside a default judgment 
will generally only be reversed upon a showing of an abuse of discretion. 
Vanasse, 847 P.2d  at 996 (Wyo. 1993).

[¶10]   The decision of whether to set 
aside a default judgment is controlled by the trial court's consideration as to 
whether the movant has established one of the enumerated grounds for relief and 
demonstrated a meritorious defense. The court must then determine whether the 
plaintiff will be prejudiced and whether culpable conduct of the defendant led 
to the default. Vanasse, 847 P.2d  at 998; Carlson, 836 P.2d  at 301-02 & 304 
(Wyo. 1992). We review the record only to determine whether an abuse of 
discretion has occurred. Carlson, 836 P.2d  at 301.

2. EXCUSABLE NEGLECT

[¶11]   Whitney's reason for failure to 
answer was excusable neglect. This Court has defined excusable neglect "as such 
behavior as might be the act of a reasonably prudent person under the 
circumstances." Carlson, 836 P.2d  at 303. Whitney testified that he did not 
answer the complaint because he was unable to contact an attorney. After the 
complaint was served on him, he looked up the telephone number of Legal Aid but 
gave up when he could not find a listing. He attempted to visit an attorney who 
had previously represented him, but upon learning that this attorney no longer 
had a private practice, he stopped looking for an attorney. Whitney contacted 
the district court clerk who instructed him that an answer must be filed within 
20 days. Whitney testified he attempted to compose an answer, but gave up after 
the twenty days had passed. Whitney never contacted his insurance 
company.

[¶12]   Sufficient grounds for relief do 
not exist when a party is dilatory in obtaining legal counsel and default 
judgment is entered against him. On these facts, the trial court could not have 
found excusable neglect was present and set aside the default judgment. There 
was no abuse of discretion.

3. DAMAGES

[¶13]   Whitney challenges McDonough's 
evidence of damages. He contends this Court's requirement that unliquidated 
damages in a default judgment be proved by affidavit or hearing testimony 
permits our review of the admissibility and competence of the evidence. Whitney 
also contends his remedy on this issue is for this Court to either set aside the 
default judgment or permit him to conduct discovery and participate in a hearing 
on the issue of damages. We believe Whitney misunderstands the finality of a 
default judgment and the limited relief and review available to a defaulted 
party who does not appear. See Vanasse, 847 P.2d  at 
1000-01.

[¶14]   Vanasse thoroughly discussed the 
purpose to be served by the court's ability to impose default and explained the 
default judgment's role in the policy of providing finality to proceedings and 
deterring delay. Vanasse, 847 P.2d  at 1000. This purpose and policy are achieved 
by Rule 55 and Rule 60 and we have difficulty accepting Whitney's contention 
that damages' evidence can be reviewed on appeal without first presenting 
grounds for relief under Rule 60(b) to the district court. The difficulty is 
increased when we consider the portion of Rule 60(b) which 
states:

the procedure for obtaining any relief from a 
judgment shall be by motion as prescribed in these rules or by an independent 
action.

[¶15]   The reviewability of this issue 
without specifying Rule 60(b) grounds deserves exploration. See Spitzer v. 
Spitzer, 777 P.2d 587, 589-90 (Wyo. 1989). However, we are unable to examine 
this issue further since Whitney has not included the transcript of the hearing 
on damages as part of the record. Whitney takes issue with that part of the 
district court's order which states McDonough testified at the damages hearing. 
In such a case, the rule in Wyoming is clear; this Court presumes that a 
judicial record speaks the truth. In re Estate of Sullivan, 506 P.2d 813, 816 
(Wyo. 1973). Where damages are unliquidated in a default judgment, a district 
court may only award damages supported by affidavit or testimony. Midway Oil 
Corp. v. Guess, 714 P.2d 339, 345-47 (Wyo. 1986); Halberstam v. Cokeley, 872 P.2d 109, 113 (Wyo. 1994). Without a record as to what testimony was presented 
to the district court, we presume the order correctly states that the award of 
damages was based upon affidavit and testimony and there is no basis for review 
or relief.

[¶16]   Affirmed.

TAYLOR, 
J., files a dissenting opinion.

TAYLOR, 
Justice, dissenting.

[¶17]   I dissent.

[¶18]   Surely Chester McDonough must feel 
as though he has just won the lottery. Just as surely, Cory Whitney is wishing 
he had sent his entry in on time.

[¶19]   McDonough and Whitney were involved 
in a minor traffic accident resulting in injuries to McDonough and damage to his 
automobile. Whitney's insurer paid McDonough promptly for his property damage 
and a great portion of his medical expenses.

[¶20]   Through a series of snafus,1 Whitney failed to respond and 
suffered entry of a default. Thereafter, McDonough applied for a default 
judgment, primarily in reliance upon his own affidavit and the unsworn statement 
of an "economist." Based upon the "economist's" statement, and little else, 
McDonough struck it rich at the judgment hearing. That hearing was notable for 
the absence of medical testimony; tax record production; evidence of income; 
competent or admissible evidence of damages;2 or sworn testimony of any 
ilk.

[¶21]   Judgment was entered in the amount 
of $362,727.13 - more than sixty fold actual damages claimed by McDonough. 
Perhaps the damages awarded are fair recompense - we cannot know from the 
materials relied upon by the district court and contained in the record on 
appeal.

[¶22]   No apologia by Whitney can gainsay 
the neglect which precipitated this judgment. One must, however, disregard 
apparent symmetry to ask if Whitney's neglect was so egregious as to countenance 
the majority's disregard of McDonough's failure to prove his damages. Damages 
should make McDonough whole for his injuries, avoiding the temptation to punish 
Whitney for his neglect.

[¶23]   The majority acknowledges that 
unliquidated damages may only be awarded when supported by affidavit or sworn 
testimony. Midway Oil Corp. v. Guess, 714 P.2d 339, 347 (Wyo. 1986). Judicially 
glossed over is the proposition that without such evidence, entry of a default 
judgment on damages constitutes an abuse of discretion. Halberstam v. Cokeley, 
872 P.2d 109, 113 (Wyo. 1994) (citing Midway Oil Corp., 714 P.2d at 
345).

[¶24]   We have authority to remand for 
rehearing on damages only. Texas West Oil and Gas Corp. v. Fitzgerald, 726 P.2d 1056, 1065 (Wyo. 1986); cf. Wheatland Irrigation Dist. v. McGuire, 562 P.2d 287, 
291 (Wyo. 1977). The sticking point is the misconception that requiring a proper 
hearing on damages necessarily bootstraps an opportunity to appear therein for 
Whitney. W.R.C.P. 60(b) provides that relief may be obtained from a judgment 
"upon such terms as are just * * *." Justice, in this case, hinges upon a proper 
showing of damages by the non-defaulting party rather than necessarily affording 
the defaulting party with an unmerited opportunity to 
appear.

[¶25]   The opening of a default judgment 
should go no further than placing the parties in that position they occupied on 
the day the judgment was entered. Thorpe v. Thorpe, 364 F.2d 692, 694 (D.C. Cir. 
1966). The object of imposing "such terms as are just" should be to see that the 
non-defaulting party is not prejudiced by the requirement that his proof of 
damages comport with the law. Hritz v. Woma Corp., 732 F.2d 1178, 1182 (3rd Cir. 
1984).

[¶26]   By allowing this damage award 
without putting McDonough to his proof, we sacrifice compensation for actual 
damages on the altar of punitive damages, plain and simple. The better course 
would be to vacate the default judgment as to damages, remanding to the district 
court. That court may then impose such conditions (including standing to appear 
vel non) as will mitigate prejudice to McDonough and place the parties in the 
position they occupied the day the vacated judgment was entered. Littlefield v. 
Walt Flanagan & Co., 498 F.2d 1133, 1136 (10th Cir. 
1974).

FOOTNOTES

1 Born of World War II, an acronym for 
situation normal, all fouled up.

2 As with testimony not given under oath, 
we are disinclined to attribute evidentiary weight to unsworn written 
statements. Matter of EB, 795 P.2d 1212, 1215 n. 3 (Wyo. 
1990).