NO. 88-375
IN THE SUPREME COURT OF THE STATE OF MONTANA
1988

ROBERT A. MYERS,
Plaintiff and Respondent,-vsALL WEST TRANSPORT,
Defendant and Appellant.

APPEAL FROM: DistrictCourtof theTwentiethJudicialDistrict, Inand for the Countyof Lake, TheHonorableC.R. McNeil, Judge presiding.
COUNSEL OF RECORD:
ForAppellant:
StewartA. Pearce, TI, Missoula, Montana
ForRespondent: DonVernay, Rigfork, Montana



### . a Submittedon Briefs: Nov. 17, 1988 Decided: December 22, 1988

ClerkMr. Justice Fred J. Weber delivered the Opinion of the Court.

All West Transport (All West) appeals from an order refusing to set aside a default judgment against it. The District Court for the Twentieth Judicial District, Lake County, ruled thatAll West had failed to satisfy any of the requirements of Rule 60(b),M.R.Civ.P. We affirm. The issue is whether the District Court abused its discretion in refusing to set aside the default judgment. On January 14, 1988, plaintiff Mr. Myers filed his complaint againstAll West for wrongful delivery of lumber to
a consignee in Denver,Colorado. The complaint alleges that while the shipment was in transit Mr. Myers contacted All West to order that the shipment be stopped and rerouted,but that All West intentionally and wrongfully delivered the lumber as originally instructed. Damages of $6,800, for the value of the lumber, plus interest,attorney fees,and costs,
were claimed. All West was served with the complaint on January 15, 1988. On February 9, 1988, the clerk of court entered default judgment againstAll West. On March 14, 1988, All West filed its affidavit and motion to set aside the default judgment. The motion was orally argued and onMay 2, 1988, the court entered its order refusing to set aside the default iudgment.

Did the District Court abuse its discretion in refusing to set aside the default judgment? Rule 60(b), M.R.c~~.P., allows a court to relieve a party froma final judgment if,within a reasonabletime,not more than 60 days after the judgmentwas entered, a showing is made of mistake, inadvertence, surprise, or excusable neglect.. All West argues that it has made such a showing. This Court has stated that if a district court s3.ightlyabused its discretion in refusing to set aside a default judgment, itsrefusal is reversible. Griffinv. Scott (Mont. 1985), 710 P.2d 1337, 1338, 

### 42 St.Rep. 1695, 1697. Thepartv seeking to set aside the default has the burden of proof. Siewing v. Pearson Co. (Mont. 1987), 736 P.2d 120, 122, 44 St.Rep. 800, 802. The affidavit submittedwith themotion to setaside the default sets forth the following statement of facts. The complaintwas servedupon Betty Edwards at the offices ofA1.l West. (Betty Edwards and her husband do business as AI.1 West.) She delivered the complaintand summonsto the office of All West's attorney about twoweeks later,on January 29, 1988. The attorneywas out of town at that time and did not return until February 3, 1988. On that date, the attorney phoned Betty Edwards and told her that, to represent All West, he would require all supporting documentation underlying this claim, a retainer fee,and filing fees. On February 8, 1988, All West's truck suffered transmission failure, requiring immediate repair. That depleted All West's cash reserves, and All West was unable to forward the required money to the attorney. The default judgmentwas enteredwith
no further notice to All West and the judgmentwas executed upon on February 23, 1988. All West then filed its notice to set aside thedefault. In its brief, All West argues that its motion to set aside the default judgment should have been granted. It stated that the motion was filed promptly, there is a good possibility that a trial on themerits would have produced a different result, and any reasonable doubt as to whether to set aside a default judgment is to be resolved by setting aside the default. This Court stated the standard of review to which All West refers in Kootenai Carp. v. Dayton (1979), 184 Mont. 19, 26, 601 P.2d 47, 51: the party moving to setasidethedefaultmust show thatit proceeded with diligence, that its excusable neglect caused the default tobe entered against it, and that there is evidence of a meritorious defense. In discussing the arguments of All West for setting asidethedefault, the District Court stated:
The affidavitof Mrs. Edwards and her testimony introduced at oral argument upon Defendant's motion establish a factual situation of financial hardship on thepart of theDefendant. As a practical matter, Defendant applied its limited funds to the unexpected repairs needed for one of its trucks rather than pay the costs and fee retainer requested by itscounsel. Failure by a client topay its attorney does not constitute excusable neglect by a partywithin themeaning of Rule 60(b). Neither does failureof an attorney to file an appearance because he has not been paid constitute excusable neglect by an attorney within saidruleif, infact, theattorney agreed totimely filean appearance. In either event, the Defendant has presented the Court no authority to support a finding of excusable neglect sufficient to set aside the Default Judgment merely because the Defendant failed to pay the advance costs and fee retainer requested by theattorneyasa consequence of which no appearancewas filedbefore defaultwas entered. The Court suggests that the Defendant has not cited any such authority in support of its motion because thereisno such authoritynor should there be any. The Defendanthaswholly failedtosatisfy any of the requirements of Rule 60(b), and its motion to set aside theDefault Judgment of February 9, 1988 isdenied. The above discussion indicates that the District Court was not convinced thattherewas excusable neglect. The test to determine whether the neglect is excusable and sufficienttoset asidea default is:



# . . . whether the reasons given for the neg;ect are such that reasonable minds might d~ffer in their conclusions concerningexcusable neglect. If so, doubt should be resolved in favor of a trial on the merits. United States Rubber Co. v. Communitv Gas & oil Co.

(1961),139Mont. 36, 39, 359 P.2d 375, 376. Griffin, 710 P.2d at 1338. Here, the actionsofboth Betty Edwards and her attorney may be said to have contributed to the entry of the default. All West's attorney should have been aware of the need to act quickly, as there were only a few days left to answer the complaint when he first saw it in his office. The general ru1.e is that neglect of an attorney is attributable to the client. Lords v. Newman (1984), 212 Mont. 359, 367-68, 688 P.2d 290, 295. In Lords, an exception to that general rule
was recognized for cases in which the defaulting party experienced total abandonment 

### by its attorney. That is not the
casehere. This Court has held that failure to appear to defend an action due to forgetfulness,the press of other business, or inattention to mail do not establish excusable neglect. Siewing, - 736 P.2d at 122. All West's reasons for failing to respond are similar to the reasons listed in Siewing. The situation in this case is a far cry from Kootenai, in which excusable neglect was foundwhen there were six days between service of process and entry of the default judgment, and where the defaulting party submitted an affidavit stating that he mistakenly believed that he needn't appear in the actionuntil anotherparty was served. Here, 25 days elapsed between the time Betty Edwards was served with process and the entry of default judgment. The summons served upon her stated that if the complaintwas not answered within 20 days, judgment would be taken against All West by default. All West chose to apply its limited funds to the repair of a truck rather than to the defense of this action. All Westmade no further attempt toget legal representation or otherwise respond to the summons. We conclude that the District Court did not abuse its discretion in refusing to find that the reasons given for All West's failure to act constituted excusable neglect. Affirmed..

We Concur:

Thief Justice

### Y

JusticesMr. Justice R. C. McDonough dissents as follows:

I dissent. The majority cites the correct rules but fails to apply them. Generally, decisionsdenying motions to set aside default judgments under Rule 60(b), M.R.Civ.P., should be reversed on a showing of slight abuse of discretion,doubts shouldbe resolved in favor of themoving party, and each decision should be reviewed on a caseby casebasis. The majority in applying these rules misreads -- Siewing and Lords tohold againstAll West. In Siewing, this Court affirmed the decision of the lower court to denv a metion to set aside a default iudqment hecause:

a failure to appear caused by inattention topertinent documents, the resignation of a company officer and the taking of a summervacation by another officer do not establish excusable neglect. Siewing, 736 P.2d at 122. In this case the excuses discussed are financial hardship and neglect of counsel. These complaints differ from the unexplained neglect in Siewing, and they create doubts on whether to find excusable neglect. In Lords this Court stated that generallv, courts impute counsel's neglect to clients,hutwent on to state:

"'This court has been hesitant to impute the neglect of an attorney to his client; and has been loathe to permit this neglect to bar a hearing on the merits. Whether or not the varying shades of excusable neglect [neglect'by counsel! previously remarked on can be distinguished, we choose to think that where reasonable minds might differ in their conclusions of excusable neglect, the doubt shou!d be resolved on themerits.""Lords, 

### 688P.2d at 295 (emphasisadded). The exception,that is, finding excusable neglect for counsel's neglect, appears to have swallowed the general rule that courts impute to the client the neglect of counsel. See 6 J. Moore, Moores Federal Practice 55.10, at 55-66 (2ded. 1988). And this Court has further recognized that under the principles governing the decision to set aside default iudgments, Montana has moved away from the rule that the client is "absolutely responsible for her attorney's neglect." Graham 

### v. Mack (Mont.1984), 699P.2d 590, 594. The failureof counsel to act quickly here weighs for finding excusable neglect. The majority also holds that All West's temporary inability to provide a retainer for counselprovides no excuse for failing to respond. According to themajority, All West chose to apply its limited funds for truck repair rather than for defense of the action. This reasoning does not reflect resolution of doubt in favor of setting aside a default judgment. Choosing to provide funds for one's business instead of paying for a response to a complaintmay constitute willful disregard for the legalprocess. However,where the repairsare essential to the day today operations of the business, the failure to respond due to an unexpected happening may be reasonably excused. Roth the temporary lack of funds and counsel's neglect in acting quickly weiqh for granting themotion to setaside the default judgment. The majority and the District Court err in their reliance on distinguishable case law. The Court cites the rule that each casemust be reviewed individual-ly,but the result arrived athere fails to judge themotion to set aside on the merits of the uniau-efactspresented.

JusticeMr. Justice John C. Sheehy and

### Mr. JusticeWilliam E. Hunt, Sr.:
We concur in thedissent 

### ofMr. JusticeMcDonough.

Justices