No. 79-80 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1980 

AUDIT SERVICES, INC., a Montana Corp., 

Plaintiff and Respondent, 

KRAUS CONSTRUCTION, INC., a corp., 

and JAMES KRAUS, SR., d/b/a KRAUS 

CONSTRUCTION 

Defendants and Appellants. 

Appeal from: District Court of the Eighth Judicial District, 

In and for the County of Cascade, The Honorable 

Joel G. Roth, Judge presiding. 

Counsel of Record: 

For Appellant: 

Barry T. Olson, Great Falls, Montana 

For Respondent : 

Cure and Borer, Great Falls, Montana 

Submitted on Briefs: May 27, 1980 

Decided: July 22, 1980 

Filed: JUL 2 3 1980 
Mr. Justice John Conway Harrison delivered the Opinion of 

the Court. 

Appellants Kraus Construction, Inc., and James Kraus, 

Sr., appeal from an entry of a default judgment and an order 

refusing to vacate the judgment. The order of default was 

entered by the trial court due to appellants' failure to 

comply with earlier discovery orders. The sole issue before 

this Court is whether the trial court erred in failing to 

set aside the default judgment entered against appellants 

for failure to answer the interrogatories under the circumstances set forth below. 

Respondent Audit Services, Inc., is a collection agency 

for a union trust fund. As such, it brought this action to 

enforce appellants' alleged obligation to make contributions 

to the trust fund under a collective bargaining compliance 

agreement. 

Although the judgment here was entered on March 5, 

1979, this lawsuit was initiated over three and one-half 

years earlier in October 1975. The facts reveal that this 

appeal is not concerned with the typical "first appearance" 

default judgment in which a defendant is served with summons 

and a complaint but fails to appear within twenty days as 

allowed by law. Rather, here the record initially presents 

a picture of a vigorously contested lawsuit. The record 

indicates that appellants were represented by three consecutive law firms. It further reveals that appellants 

subsequently abandoned their defenses, and only after 

several unsuccessful attempts by the District Court to have 

appellants reinvolve themselves did the court finally enter 

a default. Now, following the entry of the default by the 

District Court, appellants attack the default judgment 

essentially on procedural, rather than substantive, grounds. 
In its original complaint filed October 6, 1975, respondent sought to collect $5,095.03 in delinquent contributions 

owed by appellant Kraus Construction, Inc., to respondent's 

assignors, trustees of a certain Montana construction industry employee benefit trust fund, together with reasonable 

attorney fees. Having been served with process, appellants 

failed to appear within twenty days of the service. A 

"first appearance" default judgment was entered. Execution 

issued and a judgment was collected by the Cascade County 

sheriff. The execution by the sheriff on funds of Kraus 

Construction, Inc., prompted appellants to take action. 

Appellants moved to set aside the default judgment, and 

following a hearing on December 11, 1975, the District Court 

granted the motion. On December 16, 1975, appellants filed 

their answer and added a counterclaim for a refund of $477.09 

for alleged overpayments to respondent's assignors. 

In January 1976 appellant moved for a return of the 

funds collected under the sheriff's levy. On February 4, 

1976, the District Court ordered the return of a portion of 

those funds with the balance being deposited with the clerk 

of the court. On April 29, 1976, an affidavit of disqualification was filed by Pat Kraus. Pat Kraus is the wife of 

James Kraus, Sr., but the affidavit failed to allege any 

relation to the then sole defendant, Kraus ~onstruction, 

Inc. Pursuant to the affidavit, the district judge disqualified himself and the Honorable R. J. Nelson assumed jurisdiction. 

Discovery was initiated on June 25, 1976, with appellants' first interrogatories and requests for admissions. 

The balance of 1976 and the first ten months of 1977 were 

consumed by repeated appearances before the ~istrict Court 
over the sufficiency of respondent's answers to those requests and interrogatories, and by amending and supplementing versions of the interrogatories profounded by appellants 

and respondent's subsequent responses to them. During this 

time, Judge Nelson retired from the bench and was succeeded 

by the Honorable H. William Coder in January 1977. Because 

Judge Coder's former law firm was representing appellants, 

he disqualified himself, calling i n f i r s t the Honorable W. 

W. Lessley and subsequently, the Honorable Joel G. Roth. It 

was not until November 1, 1977, that appellants had filed 

and Audit Services had answered four sets of interrogatories. 

In the interim, there had been two hearings called by appellants to question the sufficiency of those responses. 

Respondent's discovery began with the deposition of 

James Kraus, Sr., taken November 17, 1977. He was the 

principal in Kraus Construction, Inc., and an originallynamed defendant. (It should be noted that the Kraus Construction, Inc., was not organized as a corporation until 

February 1976, some five months after the lawsuit began.) 

Also in November 1977, a representative of respondent conducted a new audit of appellants' records covering the 

period of May 1, 1975 to June 30, 1977. 

Following the deposition of James Kraus, Sr., respondent moved to amend its complaint to combine the amounts 

claimed in the original complaint with the delinquencies 

revealed by the audit conducted in November 1977. The 

amended complaint also sought to hold James Kraus, Sr., 

personally liable for the debts of Kraus Construction, Inc. 

A hearing on the request to amend the complaint was set 

for December 21, 1977. However, one day before that hearing, appellants' attorneys moved ex parte to withdraw. The 
motion indicated that a copy had been served on appellants. 

On the same day, the court ordered that the attorneys could 

withdraw. The court's order stated that a copy was to be 

served by the sheriff on James Kraus, Sr., and that appellants were to appear through new counsel within twenty days. 

Respondent, in turn, vacated its December 21, 1977, hearing. 

Appellants failed to comply with the court's order and 

did nothing. On January 30, 1978, respondent renoticed its 

hearing on the motion for leave to amend the complaint. 

Hearing on the motion was set for February 15, 1978. Since 

appellants had failed to retain new counsel, a copy of the 

notice was served upon their former attorneys and upon James 

Kraus, Sr., personally. 

On February 15, 1978, appellants retained new counsel 

and appeared at the hearing on the motion for leave to amend 

the complaint. On February 23, 1978, the court granted 

respondent Services leave to file a portion of its amended 

complaint. Appellants filed their answer on March 14, 1978. 

On April 27, 1978, respondent filed its first requests 

for admissions. These requests set forth respondent's 

theory of its case, asking Kraus Construction, Inc., to 

admit that it was a party to various collective bargaining 

agreements and trust agreements underlying respondent's 

claim. Appellants were further asked to admit the accuracy 

of the audits underlying the dollar amount of the amended 

complaint. Copies of these audits were attached to the 

exhibits for the requests for admission. Appellants filed a 

timely response to the requests. They denied the accuracy 

of the audits, specifically denying first that all of the 

persons listed in the audit were employees and second, that 

the persons listed therein performed work coming under the 
scope of relevant collective bargaining agreements. 

Based on those denials, respondent filed its first 

interrogatories on June 2, 1978. Those interrogatories 

sought specific information underlying appellants' denial-- 

asking which of the persons listed in the audits of appellants' payroll records were not in fact its employees, and 

which of them did not perform work coming within the scope 

of the collective bargaining agreements. Appellants failed 

to answer those interrogatories or to tender any objections 

to them. 

Having received no answers to the interrogatories, on 

October 3, 1978, respondent moved for an order compelling 

appellants under Rule 37, M.R.Civ.P. A hearing on this 

motion was set for October 25, 1978. One day before the 

hearing, on October 24, 1978, appellants' attorneys made an 

ex parte application to the District Court to withdraw as 

counsel. This application was granted, and another of 

respondent's motions to bring this lawsuit to fruitation had 

to be put off. As with the withdrawal of appellants' first 

counsel, the District Court ordered a copy of the order 

allowing the withdrawal of appellants' second counsel and 

requiring new counsel to appear within twenty days to be 

served upon James Kraus, Sr. Once again, appellants failed 

to obey the court's order. 

On Jandary,3, 1979, respondent, after waiting approximately two months for appellants to do something, renoticed 

its request for a hearing on the long-pending motion to 

compel answers to the interrogatories submitted some seven 

months earlier. Hearing was set for January 17, 1979. Once 

again, a copy was sent to James Rraus, Sr., and to his 

former attorneys. The District Court on its own initiative 
reset the hearing from January 17, 1979 to January 25, 1979, 

because of a conflict in its calendar. An order for the 

change of this date was served on James Kraus, Sr., and 

there is no denial that he received it. 

Pursuant to the court's order, a hearing on respondent's 

motion to compel answers to interrogatories was finally held 

on January 25, 1979. No appearance was made by or on behalf 

of appellants. However, the relief awarded by the District 

Court was strictly in accord with that provided by Rule 37, 

M.R.Civ.P. Appellants were given an additional twenty days 

to answer the interrogatories, or in lieu thereof, their 

answer was deemed stricken such that their default could be 

entered. A copy of this order dated January 29, 1979, was 

served on James Kraus, Sr., and he does not deny receiving 

it. Appellants failed to obey the final order of the court 

by answering the interrogatories, and no new counsel appeared 

for them regarding this litigation. 

On February 26, 1979, respondent filed a notice of its 

intention to apply for a judgment of default on March 5, 

1979, at the Cascade County Courthouse. Kraus was served 

with a copy of this notice also, and he does not deny receiving it. 

The hearing on respondent's application for default 

judgment was held on March 5, 1979. No one appeared on 

behalf of appellants. Respondent's attorneys were sworn and 

testified concerning attorney fees. A judgment in conformance with the default was entered on arch 7, 1979. 

Notice of its entry was mailed by the clerk of the court to 

James Kraus, Sr., and he does not deny receiving it. 

Following entry of the default, appellants did nothing. 

On March 8, 1979, on application of respondent, the District 
Court signed an order releasing the funds which had been 

held by the clerk of the court since their original deposit 

in 1975 when the first default judgment was set aside. A 

copy of that order was filed on James Kraus, Sr., and he 

does not deny receiving it. On March 14, 1979, a writ of 

execution was issued, and levy was made by the Cascade 

County sheriff's office on March 19, 1979, which resulted in 

securing $2,100 on deposit in a bank account of one of 

appellants. This execution apparently brought appellants 

around to doing something, and on the same day James Kraus, 

Sr., delivered files to a new attorney. 

Immediately after and early in April 1979 a number of 

pleadings were filed by appellants' new counsel. A notice 

of appeal was filed and later withdrawn. Then a motion for 

a new trial was filed, even though there had never been a 

trial. Thereafter, appellants filed a motion to set aside 

the withdrawal of their second counsel along with a motion 

to set aside the default judgment supported by an affidavit 

of James Kraus, Sr. Appellants then ex parte sought and 

obtained a stay of execution. 

The motion concerning the withdrawal of appellants' 

second attorneys was heard on April 20, 1978. Based on the 

affidavit of James Kraus, Sr., and on the fact that the 

motion of the law firm did not indicate that appellants had 

assented to or acknowledged the withdrawal of the firm, the 

~istrict Court determined that the order permitting the 

withdrawal of counsel was improper and set the same aside. 

The District Court deferred a hearing on appellants' postjudgment motions pending their decision as to who was going 

to represent them thereafter. A proper substitution of 

counsel was signed on May 17, 1979, and served on all concerned 

on May 23, 1979. 
Despite the time limits set in Rule 60, M.R.Civ.P., for 

the determination of motions to vacate default judgments, 

appellants did nothing regarding their pending post-judgment 

motions until July 11, 1979, when they noticed them for 

hearing on August 9, 1979. At that time a hearing was held 

in court chambers. No testimony was taken; the hearing 

consisted solely of appellants' arguments. After hearing 

the arguments, the District Court refused to grant any of 

appellants' motions, and the default judgment was allowed to 

stand. Appellants thereafter filed this appeal from the 

District Court's order of August 9, 1979. 

The sole issue for review is whether the trial court 

erred in failing t o s e t aside the default judgment and 

default entered against appellants for failure to answer interrogatories under the circumstances of this case. 

Appellants make two arguments for setting aside the 

default judgment. The first is that the District Court 

abused its discretion in imposing such a harsh sanction. 

Second, appellants contend that the withdrawal of their 

second counsel retroactively set aside as improper, "tainted" 

all subsequent proceedings and, therefore, the default 

judgment must be set aside. We find neither argument to 

have merit. 

Appellants rely strongly on the general rule that 

default judgments are not favored and no great abuse of 

discretion need be found by this Court to set aside such a 

judgment. Appellants rely principally on the following 

cases: Kootenai Corp. v. Dayton (1979), Mont. I 

601 P.2d 47, 36 St.Rep. 1785, 1790-1791; Little Horn State 

Bank v. Real Bird (1979), - Mont. - , 598 P.2d 1109, 36 

St.Rep. 1495; Shields v. Pirkle Refrigerated Freightlines, 
Inc. (1979), - Mont. - , 591 P.2d 1120, 1125, 36 St.Rep. 

472. We have reviewed these authorities and find them not 

in point with this case. Each of them deal with "first 

appearance" default judgments. Another case cited and 

relied upon by appellants, Simpkins v. Simpkins (1894), 14 

Mont. 386, 36 P. 759, deals with a default other than the 

"first appearance" default. However, Simpkins can easily be 

distinguished. There the litigation was still in its preliminary stages and the default entered was solely due to 

the negligence of an out-of-state attorney. Such is not the 

case here. 

We can, however, find cases from other jurisdictions 

analogous to the circumstances of this case, particularly 

where the appellant deliberately refused to participate in 

discovery or to comply with an order of the court issued 

pursuant to Rule 37 of the Rules of Civil Procedure and 

whose attorney withdraws during the course of this noncompliance. Most analogous is Gallegos v. Franklin (1976), 89 

N.M. 118, 547 P.2d 1160, cert. den. 549 P.2d 284. There the 

appellate court carefully reviewed the record which indicated 

that the appellants had failed to answer interrogatories or 

otherwise cooperate with pretrial discovery. In that case 

appellantst attorneys withdrew during the proceedings. 

Thereafter the plaintiffs served upon the appellants a 

notice of application for a default judgment. The default 

was based on the appellantst noncompliance with the rules of 

discovery and the explicit authorization for entry of such a 

default under Rule 37. In Gallegos the default judgment was 

allowed to stand, with the court stating as authority language from H. F. Livermore Corp. v. ~ktiengesellschaft 

Gebruder Loepfe (D.C. Cir. 1970), 432 F.2d 689, where the 

court held: 
"Given this approach, the default judgment must 

normally be viewed as available only when the 

adversary process has been halted because of 

an essentially unresponsive party. In that 

instance, the diligent party must be protected 

lest he be faced with interminable delay and 

continued uncertainty as to his rights. The 

default judgment remedy serves as such a protection. Furthermore, the possibility of a 

default is a deterrent to those parties who 

choose delay as part of their litigative strategy* " 432 F.2d at 691. 

After quoting Livermore, the court in Gallegos went on to 

say: 

"From January 29, 1974, to November 18, 1974, 

a period of ten months, the defendants failed 

to comply with the Rules of Civil Procedure. 

A default judgment may be entered. See Rules 

55(a) and 37(d) of the Rules of Civil Procedure. 

"In addition, defendants filed a consent to the 

withdrawal of attorneys after the default judgment was entered. Defendants, having notice 

of the motion for withdrawal, failed to obtain 

other attorneys, failed to appear at the hearing on the motion for default judgment, and 

failed to show any cause, oral or written, why 

the default judgment should not be entered. 

"To grant the defendants a reversal now means 

that we would give credence to essentially 

unresponsive parties, and consent that they may 

halt the adversary process and endlessly delay 

the rights of plaintiff. The philosophy of 

the law of civil procedure militates against 

this protracted wearisome conduct." Gallegos, 

547 P.2d at 1164-1165. 

The same reasoning can be applied to appellants here. 

See also Johnson v. Matelich (1971), 165 Mont. 329, 517 P.2d 

As to the second part of appellants' argument, in the 

affidavit filed with the motion to set aside the default 

judgment, James Kraus, Sr., stated that he thought that his 

second counsel was still representing appellants until 

January 29, 1979, even though the District Court had permitted their withdrawal on October 24, 1978. Appellants 

make much of the argument that there were no counteraffidavits and so Kraus's affidavit was the only evidence upon 
which the District Court should have based its decision. We 

find this argument without merit. 

As to the first point, the af fidavit has to be accepted 

for what it actually is--a self-serving document drawn by 

appellants1 attorney. The general rule is that affidavits 

"are commonly regarded as weak evidence, to be received with 

caution," and that "they are not conclusive of the facts 

stated therein even though not contradicted by counteraffidavits." 32A C.J.S. Evidence 81032 at 706. See also 

Lohman v. Lohman (1946), 29 Cal.2d 144, 173 P.2d 657, 660. 

Here the record before the trial court belied the 

testimony of Krausls affidavit, even though the trial court 

later nullified the withdrawal order. There is no question 

that a copy of the'order allowing the withdrawal of the firm 

was served on James Kraus, Sr. A receipt was attached to 

the order of withdrawal indicating that the Cascade County 

sheriff served Kraus with a copy of the order permitting 

withdrawal on October 28, 1978. While appellants claim that 

they had no "notice" of the October 24 order, they did not 

counter the fact that it was served upon Kraus and that he 

was personally served with all the motions, notices and 

orders subsequently filed. There is no question that Kraus, 

an experienced, capable businessman, had sufficient notice 

to know what was going on and yet chose to ignore it at 

considerable risk to himself and his corporation. 

In Johnson v. Matelich, supra, in refusing to set aside 

a default judgment against another deliberately unresponsive 

litigant, this Court noted: 

"Defendant has made no showing of why he failed 

to file an answer within the time granted by 

the district court. Defendant now asserts that 

he will be prejudiced because he has a good defense to the claims and now will be unable to 
assert the defense. If defendant is in any 

way prejudiced, the record clearly shows that 

it is by his own failure and disregard to assert his rights when available to him." 163 

Mont. at 335, 517 P.2d at 734. 

We note particularly the trial court's order of January 

29, 1979. Noncompliance with it formed the basis of the 

default judgment under Rule 37. That order required appellants to answer interrogatories served eight months earlier 

on June 2, 1978. As of the date of respondent's brief 

before us, some twenty-two months af ter the interrogatories 

were filed, appellants made no attempt to answer the interrogatories or conform in the slightest with the trial court's 

order. On this record we cannot find an abuse of discretion 

in the refusal of the trial court to set aside the default 

judgment. Appellants did not offer proper answers to the 

interrogatories at any time or explain or justify their 

refusal to comply. Such matters, in our opinion, would be 

a prerequisite to establishing an abuse of discretion. 

Given the length of time involved, appellants' default 

coupled with their ongoing refusal to rectify it, we are 

convinced that appellants failed to meet a showing required 

under Rule 60(d), M.R.Civ.P., and the District Court was 

correct in refusing to set aside its default judgment. 

The next issue raised was whether the withdrawal of 

appellants' second set of attorneys voided all subsequent 

proceedings. Appellants rely upon McPartlin v. Fransen 

(1978) - Mont. , 582 P.2d 1255, 35 St.Rep. 1191. In 

McPartlin this Court ruled under section 93-2104, R.C.M. 

1947, now section 37-61-405, MCA, that when an attorney 

withdraws without consent of his client, the opposing party 

must "notify" the unrepresented party to have counsel appear 

before the former may proceed with the action. Appellants 
now claim that respondent did not meet that requirement. We 

disagree. 

In McPartlin we noted that there was no hard-and-fast 

rule on how the statutory "notice" must be given to the 

unrepresented party and stated: 

"We do not believe actual notice must be personally served on the unrepresented party opponent. But we do hold the represented party 

must make a positive showing he has attempted 

to communicate adequate notice to the unrepresented party. If the represented party can 

show he made a good-faith effort to notify 

the unrepresented party and advise him he 

should substitute counsel or appear in person, 

and the notice also sets forth the date of the 

next hearing or action in the matter pending, 

then the represented party will be deemed to 

have satisfied the requisites of section 93- 

2104, R.C.M. 1947." 582 P.2d at 1259. 

Here, appellants were served with an order of the court 

requiring them to do what the "notice" asks them to do. In 

addition, the October 25, 1978 order was personally served 

on appellants, even though in McPartlin this Court deemed 

such a service not required by the statute. The order of 

the court exceeds in impact the "notice" from opposing 

counsel where both the notice and the order convey the same 

information. In this case, further notice of counsel would 

have been redundant and serve no useful purpose. 

In arguing that the court's order of October 25, 1978, 

was improperly served so as to retroactively make void all 

intervening proceedings, the affidavit of James Kraus, Sr., 

filed on January 25, 1979, indicates that he knew he was not 

represented by counsel. Here, appellants had full knowledge 

on January 25, 1979. In addition, they had full notice of 

the court's order of that date giving them twenty days to 

file answers to the interrogatories. They chose to do 

nothing. Indeed, they did not even move the court for 
reconsideration of that order during the twenty days between 

the service of the order upon them and the service of respondent's application for a default judgment. They chose not 

to appear at the time set for hearing the application for 

default judgment, even though respondent's notice was served 

upon them seven days before the hearing rather than merely 

the three days required by Rule 55, M.R.Civ.P. Following 

that, they did nothing for over thirty days after receipt 

from the clerk of the court of a notice of entry of judgment, a procedural courtesy not provided in the case of 

"first appearance" default. They did nothing following 

their receipt of the court order allowing the clerk to 

release their monies to respondent. Under these circumstances, we can see no reason to afford them the relief 

requested. 

The District Court awarded respondent $3,150 for attorney fees where the amended complaint only asked for $3,000. 

This was not objected to at the District Court level. Now 

on appeal, appellants object to the additional $150. At the 

hearing on the application for a default dated March 1, 

1979, respondent's attorney offered testimony to indicate 

that a reasonable attorney fee would be $3,150. In view of 

this fact we find no reason to reduce the amount awarded as 

being excessive. 

The judgment of the District Court is affirmed with the 

additur of $150 for attorney fees for defending the same. 
We concur: 

Chief Justice 

PJ~& Justices