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IN THE COURT OF APPEALS OF THE STATE OF IDAHO

Docket No. 38519

DAVE DORION,

Plaintiff-Respondent,

v.

RICHARD KEANE and LISA KEANE, 

husband and wife, KEANE LAND 

COMPANY, LLC, an Idaho limited liability 

company, KEANE AND CO. 

CONSTRUCTION, INC., an Idaho 

corporation,

Defendants-Appellants.

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2012 Opinion No. 35

Filed: June 27, 2012

Stephen W. Kenyon, Clerk

Appeal from the District Court of the Second Judicial District, State of Idaho, Nez 

Perce County. Hon. Jeff M. Brudie, District Judge. 

Order of the district court denying motion to set aside entry of default under 

Rule 55(c), reversed and case remanded.

Elam & Burke, P.A., Boise, for appellants. Jeffrey A. Thomson argued.

Clark & Feeney, Lewiston, for respondent. Douglas L. Mushlitz argued.

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SCHWARTZMAN, Judge Pro Tem

Richard Keane, Lisa Keane, Keane Land Company, LLC, and Keane and Co. 

Construction, Inc. (collectively “the Keanes”) appeal from the entry of default judgment. The 

Keanes assert that the district court abused its discretion by denying their motion to set aside the 

entry of default, and erred by refusing to grant relief from a void judgment. 

I.

BACKGROUND

On February 24, 2009, Dave Dorion filed a complaint against the Keanes asserting 

various claims including breach of contract and unjust enrichment. Dorion asserted that he was 

entitled to a one-half ownership interest in an airplane hangar, a leasehold interest in the 
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underlying property, and compensation for labor performed constructing the hangar. The Keanes 

did not respond and default was entered on March 27. However, on May 21 the court granted 

the Keanes’ motion to set aside the entry of default. The Keanes then filed an answer on 

May 27, denying most of the allegations set forth in the complaint and asserting that Dorion had 

failed to state a claim upon which relief could be granted, that Dorion’s cause of action--which 

sought specific performance of a contract for real property--was not evidenced by a writing and 

was thus barred by the statute of frauds, and that Richard Keane and Lisa Keane should be 

removed as individual parties because they acted through their businesses.

More than fourteen months later, after a trial setting had been vacated in favor of 

mediation which proved unsuccessful, the Keanes’ attorney requested leave to withdraw as 

counsel. On August 5, 2010, the district court entered an order (hereinafter “order to appear”) 

granting the motion and directing the Keanes to “appoint another attorney to appear, or to appear 

in person by filing a written notice with the Court stating how they will proceed without an 

attorney, within twenty (20) days,” and providing notice that the failure to do so “shall be 

sufficient grounds for entry of default and default judgment against you without further notice.” 

The Keanes apparently contacted another attorney, who in turn called Dorion’s attorney on 

August 30 to request additional time for the Keanes to decide whether or not to retain him, 

explaining that he had spoken with the Keanes, but had not yet been retained. Based on his 

conversation with opposing counsel, the attorney believed that Dorion would wait a “reasonable 

time” before pursuing default. Dorion’s attorney, however, stated that he agreed only to wait 

twenty-four hours. Dorion filed a motion for entry of default on September 1, which the court 

granted on September 9.

On September 17, the Keanes’ new attorney entered an appearance and filed a motion to 

set aside the entry of default on the ground that the default was the result of a miscommunication 

between the attorneys representing the parties. The court took the issue under advisement and, 

on December 29, entered an order denying the Keanes’ motion to set aside the entry of default 

and granting Dorion’s competing motion for default judgment. Judgment was entered on 

January 14, 2011, awarding Dorion a one-half ownership interest in both the airplane hangar 

building and the leasehold interest in the property, together with a money judgment of $10,220.

The Keanes filed a notice of appeal on February 4. On March 21, the Keanes filed a 

motion for relief from the default judgment under Idaho Rule of Civil Procedure 60(b)(4)
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asserting, for the first time, that the order to appear did not strictly comply with the notice 

provisions of Rule 11(b)(3), and that Dorion’s motion for entry of default was filed prematurely 

in violation of Rule 11(b)(3). Based on these alleged defects, the Keanes argue the default 

judgment was void. The district court denied the Keanes’ Rule 60(b) motion. This appeal 

followed.

II.

ANALYSIS

The Keanes assert that the district court abused its discretion by denying Keane’s motion 

to set aside the entry of default pursuant to Rule 55(c). We agree, and decline to address the 

Rule 60(b)(4) issue.

A. Relief from Entry of Default Under I.R.C.P. 55(c)

“The legal standard for a motion to set aside a default or default judgment under 

I.R.C.P. 55(c) is either ‘for good cause shown’ or the grounds found in I.R.C.P. 60(b).” Bach v. 

Miller, 148 Idaho 549, 552, 224 P.3d 1138, 1141 (2010). Because judgments by default are not 

favored, a trial court should grant relief in doubtful cases in order to decide the case on the 

merits. Meyers v. Hansen, 148 Idaho 283, 287, 221 P.3d 81, 85 (2009). A court’s refusal to set 

aside entry of default is reviewed for abuse of discretion. McGloon v. Gwynn, 140 Idaho 727, 

729, 100 P.3d 621, 623 (2004); McFarland v. Curtis, 123 Idaho 931, 933, 854 P.2d 274, 276 (Ct.

App. 1993). Where the trial court makes factual findings that are not clearly erroneous, applies 

correct criteria pursuant to the applicable legal standards to those facts, and makes a logical 

conclusion, while keeping in mind the policy favoring relief in doubtful cases and resolution on 

the merits, the court will be deemed to have acted within its discretion. See Idaho State Police ex 

rel. Russell v. Parcel I: Lot 2 in Block 3, 144 Idaho 60, 62, 156 P.3d 561, 563 (2007); Suitts v. 

Nix, 141 Idaho 706, 708, 117 P.3d 120, 122 (2005); Shelton v. Diamond Int’l Corp., 108 Idaho 

935, 938, 703 P.2d 699, 702 (1985); Avondale on Hayden, Inc. v. Hall, 104 Idaho 321, 326, 658 

P.2d 992, 997 (Ct. App. 1983). “One of the requirements of good cause is the showing of a 

meritorious defense.” Bach, 148 Idaho at 553, 224 P.3d at 1142. This policy recognizes that it 

would be an idle exercise and a waste of judicial resources for a court to set aside a judgment or 

entry of default if there is in fact no genuine justiciable controversy. Id.; Meyers, 148 Idaho at

289, 221 P.3d at 87; Ponderosa Paint Mfg., Inc. v. Yack, 125 Idaho 310, 317, 870 P.2d 663, 670 

(Ct. App. 1994). Other primary considerations of good cause include whether the default was 
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willful, and whether setting aside the default would prejudice the opponent. See McFarland, 123 

Idaho at 936, 854 P.2d at 279. Accord United States v. Signed Pers. Check No. 730 of Yubran S. 

Mesle, 615 F.3d 1085, 1091 (9th Cir. 2010); Traguth v. Zuck, 710 F.2d 90, 94 (2d Cir. 1983).

1. Meritorious defense

A party may satisfy the meritorious defense requirement by pleading facts which, if 

established, would constitute a defense to the action. Meyers, 148 Idaho at 289, 221 P.3d at 87; 

Russell, 144 Idaho at 62, 156 P.3d at 563. A party moving to set aside a default judgment is not 

required to present evidence in order to have the default judgment set aside. Cuevas v. Barraza, 

146 Idaho 511, 518, 198 P.3d 740, 747 (Ct. App. 2008). The meritorious defense requirement is 

a pleading requirement, not a burden of proof. Russell, 144 Idaho at 63, 156 P.3d at 564; 

Cuevas, 146 Idaho at 518, 198 P.3d at 747. See also Reinwald v. Eveland, 119 Idaho 111, 114, 

803 P.2d 1017, 1020 (Ct. App. 1991) (rejecting an argument that defendant failed to tender a 

meritorious defense when the defendant’s “answer to the complaint already was on file, it 

contained her defenses and it had not been stricken.”). However, factual details must be pled 

with particularity. Russell, 144 Idaho at 63, 156 P.3d at 564. Cf. Bach, 148 Idaho at 553, 224 

P.3d at 1142 (“a party may not rely on an ordinary pleading to prove a meritorious defense”). 

The district court briefly discussed the meritorious defense requirement without making an 

explicit finding, as follows:

This is not the first time Defendant has sought to have default set aside in 

this matter. When the Court set aside the default in 2009, it found Defendant’s 

affidavit was weak at best in presenting a meritorious defense. The affidavit filed 

in support of his current motion to set aside offers no additional facts that would 

allow the Court to find Defendant has shown a meritorious defense. However, 

even if the Court were to find Defendant has offered sufficient facts so as to have 

presented a meritorious defense, the Court is unable to find Defendant has shown 

good cause to set aside the second Entry of Default. 

We understand the district court’s frustration with the Keanes’ sporadic efforts. 

Nevertheless, the implication that the Keanes failed to sufficiently present a meritorious defense 

for purposes of setting aside entry of default is erroneous. Whatever showing had been made for 

the purposes of setting aside the first entry of default was augmented by the defenses raised in 

the Keanes’ answer. Therein, the Keanes denied making an agreement with Dorion, and asserted 

that Dorion’s claims were barred by the statute of frauds. Furthermore, the Keanes asserted that 

the claims naming Richard Keane and Lisa Keane, in their individual capacities, should be 
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dismissed to the extent that they were acting through their businesses, Keane Land Company, 

LLC, and Keane and Co. Construction, Inc. The allegations pleaded in the Keanes’ answer 

would constitute, at the very least, a partial defense. During oral argument, Dorion asserted that 

the defenses would not have been successful. We decline to address whether the defenses would 

ultimately have been successful because that determination would require the resolution of 

disputed factual issues more appropriate for trial. Dorion did not seek summary judgment of any 

of the Keanes’ defenses below, and none of the defenses were dismissed. Instead, the case had 

been set for a jury trial, and the parties attempted mediation. The history of the case indicates 

that the Keanes had presented plausible defenses, which, if established, would have entitled them 

to various forms of relief. Dorion also argues that we should presume the Keanes abandoned 

their defenses by failing to comply with the order to appear. However, such a presumption 

would be inconsistent with the meritorious defense requirement of a good cause analysis. The 

defenses pleaded in Dorion’s answer were not abandoned and were sufficient to satisfy the 

meritorious defense requirement.

2. Willfulness and prejudice

The weight that a court assigns both to the conduct of a party, when that conduct leads to 

entry of default, and to the prejudice that would result to the opposing party if the default were 

set aside, is left to the discretion of the trial court. Courts should keep in mind that under 

Rule 60(b)(1), a party’s mistake, inadvertence, surprise, or excusable neglect may serve as the 

basis for relief. However, the required good cause showing to set aside a default under 

Rule 55(c) is “lower or more lenient than that required to set aside a default judgment” under 

Rule 60(b). McFarland, 123 Idaho at 936, 854 P.2d at 279 (citing 10 WRIGHT, MILLER & KANE,

FEDERAL PRACTICE AND PROCEDURE: CIVIL 2D §§ 2681-2702 (1983)). This more lenient 

approach in setting aside a default, as opposed to a default judgment, is consistent with an 

application of the policy that cases should be decided on their merits. Furthermore, at the earlier 

stage of entry of default where no judgment has been entered, a liberal approach is less likely to 

create unfair prejudice to the nonmoving party. See McFarland, 123 Idaho at 936, 854 P.2d at 

279. 

The district court made implicit findings of culpability as follows:

In 2009, Defendant presented as good cause for setting aside the entry of 

default his belief that he had retained counsel to represent him but, because of a 

miscommunication, he had not retained counsel and only discovered the problem 
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after default had been entered. Now, some sixteen (16) months later Defendant 

Keane seeks to have a second Entry of Default set aside, despite acknowledging 

his failure to timely retain new counsel as required by the Court’s Order, but 

asserting, through his new counsel, that he had obtained an additional indefinite 

extension of time in which to hire an attorney.

The Court finds Defendant Keane has failed to show good cause to set 

aside the current Entry of Default. While Defendant Keane may not have 

understood the need to timely address the lawsuit in the beginning, it should have 

been blatantly apparent after the first default was entered. Instead, Defendant 

simply neglected the matter, not once but twice, with the consequence being entry 

of default. Keane’s excuse was plausible once, but not twice. The lawsuit has 

been pending for nearly two years, during which time Plaintiff has made every 

effort to prosecute the matter while Defendant has failed to take the matter 

seriously and has chosen instead to neglect the lawsuit, addressing it only after 

defaults have been entered. 

The district court’s finding that the Keanes addressed the lawsuit only after defaults had been 

entered is erroneous. The Keanes contacted an attorney within the time period prescribed in the 

order to appear,1 and that attorney contacted opposing counsel in an attempt to obtain additional 

time to enter an appearance. Although the parties dispute the length of the agreed upon 

extension of time, it is clear that the Keanes were not totally ignoring the lawsuit. Furthermore, 

the record does not support the implication that the Keanes had not participated in the lawsuit 

other than to ask the court to set aside entries of default. After the first entry of default was set 

aside in 2009, the Keanes filed an answer and the case was set for trial. The Keanes actively 

opposed Dorion’s motion for a temporary restraining order and participated in mediation after 

the trial date was vacated. Although the court described the Keanes’ conduct as “blatant” and

“neglect[ful],” the record does not support an inference that the Keanes willfully allowed default 

to be entered against them. 

On appeal, Dorion suggests that the district court’s finding that the Keanes had neglected 

the lawsuit, and that Dorion had made every effort to prosecute the matter, indicates that “the 

district court recognized prejudice to Dorion in the form of time and money spent litigating this 

case with no disposition.” While the delay caused by the Keanes’ conduct may have resulted in 

some minimal harm, especially when considering that this was the second time an entry of 

 

1 The order was mailed on August 9. Rule 6(e)(1) provides three extra days to the twentyday period required by I.R.C.P. 11(b)(3) when the order of withdrawal is mailed to the party. 

See Blanc v. Laritz, 119 Idaho 359, 362, 806 P.2d 452, 455 (Ct. App. 1991). Thus, the Keanes 

had until September 2 to comply with the order. 
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default had been entered, “[t]o be prejudicial, the setting aside of a judgment must result in 

greater harm than simply delaying resolution of the case.” TCI Group Life Ins. Plan v. 

Knoebber, 244 F.3d 691, 701 (9th Cir. 2001). Dorion has not articulated any harm beyond the 

ordinary expenses of continued litigation. As explained by the Ninth Circuit Court of Appeals: 

It should be obvious why merely being forced to litigate on the merits 

cannot be considered prejudicial for purposes of lifting a default judgment. For 

had there been no default, the plaintiff would of course have had to litigate the 

merits of the case, incurring the costs of doing so. A default judgment gives the 

plaintiff something of a windfall by sparing her from litigating the merits of her 

claim because of her opponent’s failure to respond; vacating the default judgment 

merely restores the parties to an even footing in the litigation.

Id. The Keanes filed a motion to set aside the entry of default approximately one week after 

default was entered. Dorion has not demonstrated any prejudice caused by this short delay. 

Again, we appreciate the court’s frustration caused by the Keanes’ failure to timely 

comply with the court’s orders, permitting defaults to be entered, not once, but twice. However, 

the Keanes sufficiently presented a meritorious defense, did not engage in deliberately 

intentional conduct evidencing willfulness, and no prejudice has been shown. While it was not 

improper for the district court to review the Keanes’ conduct over the case as a whole, doing so 

without giving full regard to the above factors, and general policy favoring a decision on the 

merits, amounted to an abuse of discretion. Accordingly, we conclude that the district court 

erred by refusing to set aside the entry of default.

B. Attorney Fees

Both parties seek attorney fees pursuant to Idaho Code § 12-120(3), which allows 

recovery of attorney fees by the prevailing party in any commercial transaction. The parties do 

not dispute that this case involves a commercial transaction. However, “it remains to be seen 

[who] will be the prevailing party in the action, and, therefore, entitled to attorney fees under 

I.C. § 12-120(3).” Mackay v. Four Rivers Packing Co., 145 Idaho 408, 415, 179 P.3d 1064, 

1071 (2008). Therefore, we decline to award attorney fees.2

 

2 The district court, upon final resolution of the case, may consider fees incurred on appeal 

when it makes a determination as to the prevailing party.
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III.

CONCLUSION

The Keanes sufficiently pled a meritorious defense, their conduct leading to entry of 

default was not culpably willful, and Dorion would not have been prejudiced if the default had 

been set aside. Therefore, we reverse the denial of the motion to set aside the entry of default 

and remand the case for further proceedings on the merits. We award costs, but not fees, to the 

Keanes.

Chief Judge GRATTON and Judge MELANSON CONCUR.