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Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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PUBLISH 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

: 

FILED 

United S,tates Court of Appeals r .... ..,th Cir~uit 

JAN 14 1988 

ROBERT L. HOECKER 

Clerk 

GREENWOOD EXPLORATIONS, LTD., 

Plaintiff/Appellee. CASE NO. 85-2634 

vs. 

MERIT GAS AND OIL CORPORATION, 

INC., BENMOR INTERNATIONAL, 

INC., and SAM MOR, ajk/a SAM 

MERIT, a/k/a SAM MOALEN, an 

individual, 

Defendants/Appellants, 

Appeal from the United States District Court 

for the Northern District of Oklahoma 

(D.C. No. 83-C-1068B) 

H. I. Aston, of Tulsa, Oklahoma, for Defendants/Appellants. 

Daniel Doris, of Tulsa, Oklahoma, for Plaintiff/Appellee. 

Before MOORE and BARRETT, Circuit Judges, and A. ANDERSON,* 

District Judge. 

A. ANDERSON, Senior District Judge. 

*Honorable Aldon J. Anderson, Senior Judge, United States 

District court, District of Utah, sitting by designation. 

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Appellate Case: 85-2634 Document: 01019290333 Date Filed: 01/14/1988 Page: 1 
Submitted on the briefs. 

INTRODUCTION 

This case is an appeal from the District Court's denial of 

defendants' Motion to Vacate Judgment under Rule 60(b) or in the 

alternative, Motion for New Trial under Rule 59. On April 5, 

1985, the District Court for the Northern District of Oklahoma, 

Thomas R. Brett, Judge, entered its Findings of Fact and 

Conclusions of Law in the present case, holding in plaintiff's 

favor and awarding plaintiff $11,180,000.00 in damages, plus 

costs and attorney fees. Throughout the litigation, defense of 

the case was virtually non-existent due to defendants' failure to 

cooperate--or even communicate--with their hired counsel. 

Defense counsel appeared at trial but was unable to present any 

serious arguments because of his lack of familiarity with the 

case, through no fault of his own. Upon the court's entry of 

judgment in plaintiff's favor, defendants requested that the 

court either vacate the judgment or grant a new trial. 

Defendants argued before the District Court, first, that they had 

not been heard at trial because of mistake, inadvertence, 

surprise and excusable neglect, and second, that the damages 

awarded plaintiff were inconsistent with both Oklahoma law and 

the parties' agreement. The court denied defendants 1 motions, 

finding that defendants were guilty of gross carelessness in 

their handling of the case. It is from that ruling that 

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Appellate Case: 85-2634 Document: 01019290333 Date Filed: 01/14/1988 Page: 2 
their handling of the case. It is from that ruling that 

defendants now appeal. 

FACTS 

On December 28, 1983, plaintiff filed its Complaint alleging 

that on September 22, 1981, it entered into a contract with 

defendants whereby defendants agreed to drill seven oil wells and 

have them completed by November 18, 1981. The agreement provided 

for liquidated damages to be taken from production revenues, in 

the amount of $1,000.00 per uncompleted well per day. 

(Agreement, paragraph 16.) When the November 18 deadline passed 

with none of the wells completed, damages began accruing at the 

rate of $7,000.00 per day until May 1, 1982, when one well was 

completed. (Trial Transcript, p. 9) Damages thereafter accrued 

at the rate of $6,000.00 per day until the filing of the 

Complaint, at which time the six wells were still uncompleted. 

Plaintiff's Amended Complaint requested liquidated damages from 

the uncompleted wells amounting to $4,760.000.00.1 

Defendants filed an Answer which emphasized that the 

$1,000.00 per well per day was to be taken from the production 

1plaintiff also requested $1,610,000.00 for the stock it 

allegedly issued to defendant as part of the transaction, and 

$250,000.00 in damages for a gas gathering system which defendant 

agreed to provide but allegedly never did. 

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Appellate Case: 85-2634 Document: 01019290333 Date Filed: 01/14/1988 Page: 3 
revenues. Since there were not yet any such revenues, defendants 

argued, no liability existed under the liquidated damages 

clause.2 

Trial was scheduled for November 26, 1984. On November 21, 

defense counsel, Kenneth G. Shouse, moved the court for 

permission to withdraw from the case. The court granted Shouse's 

motion and, also on November 21, Eric W. Spooner entered as 

defendants' new counsel. In response to this change, the court 

continued the trial from November 26, 1984 to March 25, 1985. 

On January 17, 1985, Spooner sent a letter to defendants 

informing them that he would withdraw as counsel and would do no 

more work for them on the case. On March 15, Spooner sent 

another letter to defendants telling them that trial was still 

set for March 25 and requesting permission to withdraw from the 

case. Spooner has stated in his affidavit that defendants have 

never responded to either of these letters and have never given 

him permission to withdraw. 

On March 18, Spooner moved the court for permission to 

withdraw. In his Motion he stated: 

[T]he client has wholly, intentionally and wantonly 

failed to communicate and cooperate with attorney in 

the pursuit of a defense in [this case]. The client 

2oefendants also responded that plaintiff 

transferred to them certain property, known as the 

property, as agreed. (Defendants' Answer, p. 2) 

4 

had not 

Hathcoat 

Appellate Case: 85-2634 Document: 01019290333 Date Filed: 01/14/1988 Page: 4 
has wholly failed to respond to attorney's requests for 

information. The client has wilfully defied the 

attorney's advice by not answering interrogatories and 

producing documents lawfully requested by opposing 

counsel. The client has left the attorney with the 

undeniable impression that his service, counsel, 

representation and advice are no longer necessary, 

required or desired by the client in the pursuit of 

this action. 

On March 19, Spooner sent a letter to defendants informing 

them that he had filed a Motion to Withdraw and again told 

defendants that the trial was still set for March 25. (Exhibit D 

to Kurt Johnson's affidavit of September 27, 1985.) In his 

affidavit, Kurt E. Johnson, general counsel for defendant Benmor, 

claims that, upon receipt of the letter, he assumed that 

Spooner's motion to withdraw would be granted and that the trial 

would be continued until defendants could obtain new counsel. 

Apparently on the basis of that assumption, defendants took no 

action on the case at that time. In fact, Judge Brett did not 

grant the motion, though the trial was continued two days until 

March 29. In his affidavit, Johnson claims that he did not learn 

until March 22 that the trial was still scheduled. He says that, 

by that time, it was too late to get in touch with defendant Sam 

Merit. 

Spooner appeared at the trial and again requested the judge 

to allow him to withdraw. Since defendants had not responded to 

Spooner's letters, Spooner was still the attorney of record, 

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Appellate Case: 85-2634 Document: 01019290333 Date Filed: 01/14/1988 Page: 5 
absent court permission to withdraw. The judge told him that he 

was free to do so, but that he would prefer that he stayed on so 

the case could be· resolved expeditiously. Spooner agreed to stay 

on, but, since defendants had not cooperated throughout the 

litigation, 

questions. 

claim, on 

he was able to do no more than ask perfunctory 

(Trial Transcript, pp 4, 8, 9, 12, 15.) Defendants 

the other hand, that Spooner was already discharged 

and therefore they were not represented at trial. Defendants 

also claim that Spooner did not raise the proper defenses at 

trial. 

On April 5, 1985, Judge Brett issued his Findings of Fact 

and Conclusions of Law and his Judgment based thereon, holding 

that defendants breached the contract, that plaintiff performed 

its obligations under the contract, and that plaintiff should be 

awarded $11,181,000.00 as damages, with interest at 10.08% per 

annum from March 27, and attorney's fees. 

Defendants claim that they did not receive a copy of the 

Findings and Conclusions until July 29. They say that they then 

promptly filed their Rule 59 and 60 motions the next day, and 

therefore did not violate the requirement in Rule 59 (b) that a 

motion for new trial be filed within ten days after entry of 

judgment. Defendants requested a new trial on grounds that they 

were unrepresented at trial since Spooner was no longer attorney 

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Appellate Case: 85-2634 Document: 01019290333 Date Filed: 01/14/1988 Page: 6 
of record, that Spooner did not raise the proper defenses, and 

that the damages award was not in accordance with the parties' 

agreement. Defendants also filed a Rule 60(b) motion to vacate 

judgment, again on the grounds that they were unrepresented at 

trial. Judge Brett rejected defendants' motions, stating that 

their carelessness did not amount to mistake, inadvertence, 

surprise or excusable neglect. 

DISCUSSION 

Rule 60 (b) provides that the court may relieve a party of 

final judgment for mistake, inadvertence, surprise or excusable 

neglect, or for any other reason justifying relief from operation 

of the judgment. Rule 59(a) (2) says that in a case tried without 

a jury the court may grant a new trial for any reason for which 

rehearings have traditionally been granted in equity suits. Rule 

59(b) requires that the motion for a new trial be filed within 

ten (10) days after entry of judgment. 

Defendants plead surprise since they assumed that the March 

25 trial date would be continued and insist that they were unable 

to file the motion for a new trial on time since they didn't 

receive a copy of the court's Findings and Conclusions until more 

than three months after entry of judgment. 

A motion to vacate judgment under Rule 60(b) is left almost 

entirely up to the discretion of the trial court. 

7 

Thompson v. 

Appellate Case: 85-2634 Document: 01019290333 Date Filed: 01/14/1988 Page: 7 
Kerr-McGee Refining Corp., 660 F.2d 1380, 1385 (lOth Cir. 1981). 

In Cessna Finance Corp. v. Bielenberg Masonry Contracting, Inc., 

715 F.2d 1442, 1~45 (lOth Cir. 1983), this court explained the 

standards for evaluating a Rule 60 (b) motion. It said that 

granting relief under Rule 60(b) is an extraordinary procedure. 

Id. at 1444. See also V.T.A. Inc. v. Airco, Inc., 597 F.2d 220, 

223 (lOth Cir. 1979). The movant must plead and prove the 

mistake or excusable neglect. On the other hand, a Rule 60(b) 

motion should be liberally construed and every effort should be 

made to try cases on their merits. See Thompson, 660 F. 2d at 

1385. 

A Rule 59 motion is subject to essentially the same 

standards. Its grant or denial is in the trial court's 

discretion. Baum v. Great Western Cities, Inc. of New Mexico, 

703 F.2d 1197, 1211 (lOth Cir. 1983). In the present case, the 

trial court found that the facts did not justify relief from the 

order. 

On review of the trial court's determination, the appellate 

court should review only if there was a "manifest abuse of 

discretion" on the trial court's part. Caribou Four Corners, 

Inc. v. Truck Insurance Exchange, 443 F.2d 796, 799 (lOth Cir. 

1971). The trial court is in a better position to evaluate the 

facts of the case than is this court. Mid-West Underground 

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Appellate Case: 85-2634 Document: 01019290333 Date Filed: 01/14/1988 Page: 8 
Storage, Inc. v. Porter, 717 F.2d 493, 502 (lOth Cir. 1983). 

We find that the district court did not abuse its 

discretion. The second attorney to represent defendants tried to 

withdraw from the case because of defendants' disinterest and 

lack of cooperation in the case. Defendants never communicated 

with counsel and never responded to his request for permission to 

withdraw. Counsel appeared at trial at the court's request, in 

order to expedite resolution of the case. The court granted 

continuances for discovery deadlines and trial dates in order to 

be fair to defendants, but defendants ignored the deadlines 

anyway. Defendants were aware of the case, the discovery 

deadlines, and the trial dates, but consistently refused to act 

on them. Only after an $11 million judgment was handed down 

against them did they express any interest in the case. The only 

reasons they offer for their behavior are that they assumed a 

substantial continuance would be granted upon Spooner's Motion to 

Withdraw, and that they did not receive a copy of the court's 

Findings and Conclusions until July 29. These are not 

explanations; they are only excuses. A modicum of diligence, 

such as a telephone call, would have enabled defendants to 

confirm or deny their "assumptions" and to determine if the court 

had yet entered its order. What would otherwise be excusable 

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Appellate Case: 85-2634 Document: 01019290333 Date Filed: 01/14/1988 Page: 9 
neglect is not such when it is just another act in a long course 

of indefensible behavior. By late March, 1985, defendants should 

have realized that they were walking on thin ice and been 

particularly diligent to protect themselves. Defendants give no 

reasons for their inaction before March 1985 and the excuses they 

give for their behavior after that are merely post hoc 

rationalizations of indefensible conduct. As this court said in 

Cessna, 715 F.2d at 1444, litigants are not free to appear before 

the court at their pleasure. They must exercise reasonable 

diligence in observing the court's rules of procedure. 

It is established that, in default cases, the party 

requesting Rule 60(b) relief must show that he has a meritorious 

defense. Cessna, 715 F.2d at 1445. The diligent party should be 

protected from delay and uncertainty. Since Spooner did question 

and cross-examine witnesses, it cannot be said that defendants 

defaulted. Nonetheless, defendants made no serious effort to 

defend the suit and it is reasonable to consider on this appeal 

whether they have demonstrated the existence of a meritorious 

defense. 

The only defenses presented were that the agreement provided 

that damages were to come from production revenues and that 

plaintiff failed to transfer the Hathcoat property. (Defendants' 

Answer.) In September 1985, defendant Sam Merit filed a 

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Appellate Case: 85-2634 Document: 01019290333 Date Filed: 01/14/1988 Page: 10 
certification in Support of Vacation of Judgment in which he 

alleged that he and other defendants were released from their 

obligations to perform under the contract by plaintiff's alleged 

breach. The district court was not persuaded by this argument at 

trial and we do not feel that, without more, it constitutes a 

meritorious defense. 

Even if defendants did have a meritorious defense, we would 

still uphold the district court's denial of their Rule 59 and 

60 (b) motions. While defendants insist that the judgment was 

improper, they offer no reasonable explanation for their failure 

to defend the case. A Rule 60(b) motion is not to be used as a 

substitute for appeal. Morris v. Adams-Millis Corp., 758 F. 2d 

1352, 1357 (lOth Cir. 1985). The movant must still show that his 

conduct was excusable. These defendants have not done this. 

As we said in Porter, 717 F.2d at 502, the trial court is in 

a better position than the appellate court to evaluate the 

movant's conduct. We see no abuse of the trial court's 

discretion on the facts of this case. 

Affirmed. 

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