NO. 93-374 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1994 

HAMILTON G. KENNER, and 

ERNO, INC. , 

Plaintiffs and Appellants, 

v. 

LARRY W. MORAN, Trustee, 

Defendant and Respondent. 

APPEAL FROM: District Court of the Fifth Judicial District, 

In and for the County of Madison, 

The Honorable Frank M. Davis, Judge presiding. 

COUNSEL OF RECORD: 

For Appellants: 

Hamilton G. Kenner, Pro Se, 

Cameron, Montana 

For Respondent: 

Michael P. Sand, Sand Law Office, 

Bozeman, Montana 

Submitted on Briefs: November 23, 1993 

Decided: February 11, 1994 

Filed: 

~d Smid 

CLERK OF SUPREME COURi 

STATE OF MOlrllPIOIP, Clerk . . 
Justice Terry N. Trieweiler delivered the opinion of the Court. 

Hamilton G. Kenner filed a complaint in the District Court for 

the Fifth Judicial District in Madison County to set aside a 

default judgment entered against him in a quiet title action 

initiated by Larry W. Moran against Kenner and others. At the time 

of the hearing on Kennerls complaint to set aside the default 

judgment, Moran filed a counterclaim in which he sought specific 

performance of the parties1 contract for deed. The court denied 

Kennerls request to set aside the default judgment and granted 

summary judgment in favor of Moran on the counterclaim, Kenner 

appeals the orders and judgment of the ~istrict Court. 

We reverse. 

The issues on appeal are restated as follows: 

1. Did the District Court abuse its discretion when it 

refused to set aside the default judgment based upon its finding 

that Kenner had received adequate notice prior to entry of the 

decree? 

2. Did the District Court err when it granted summary 

judgment in Moran8s favor and ordered specific performance of the 

contract for deed? 

In 1980, trustee Larry W. Moran, as seller, entered into a 

contract for deed with ~amilton G, Kenner and Central States 

Investment Company (CSI) for the sale and purchase of 1938 acres of 

real property located south of Ennis, adjacent to the Madison 

River. After Kenner and CSI failed to make the November 1, 1984, 

annual payment, Moran and Kenner negotiated a modification 
agreement which permitted Kenner to cure the default and changed 

the annual due date. 

In June 1985, Kenner requested a release of 280 acres of 

river-front property in consideration for payments already made on 

the contract. Based on Kenner's alleged representations that all 

property taxes and BLM lease payments were current on these 

parcels, and that all future contract payments would be timely, 

Moran quitclaimed this property to Kenner on July 2, 1985. Moran 

alleges that Kenner defaulted on those contract payments and has 

remained in default since that time. 

On September 2, 1986, Moran filed a complaint to quiet title 

to all the property subject to the purchase agreement, including 

the parcels which had been quitclaimed to Kenner. He alleged he 

had been induced to quitclaim that parcel based on Kenner's 

misrepresentation that the taxes and lease payments were current. 

In addition to Kenner and CSI, eight other persons or entities who 

claimed an interest in the property were named as defendants. 

On December 8, 1986, and January 23, 1987, Kenner appeared in 

the quiet title action by filing motions to dismiss. These motions 

were denied on May 5, 1987, because no supporting briefs were 

filed, and Kenner was given 20 days in which to further plead. 

On June 15, 1987, Moran wrote to Kenner's attorney, Larry 

Jent, proposing an agreement which would allow Kenner to reinstate 

the contract by bringing all payments up to date, and offering a 

settlement of the quiet title litigation. On July 13, 1987, Jent 
notified Moran that Kenner would accept the terms of the settlement 

proposal if Moran would quiet title against the other defendants. 

A quiet title decree was entered against all defendants except 

Kenner on August 4, 1987. Moran then informed Jent that he was 

prepared to proceed with the settlement agreement. However, he 

received no response. On several occasions thereafter, Moran 

notified Jent that the quiet title action would proceed against 

Kenner if the terms of the settlement agreement were not fulfilled 

as agreed upon by Kenner and if no response was received. Moran 

received no response to these communications. 

On February 9, 1990, Moran moved the clerk of court for entry 

of default against Kenner due to his ttfailure to plead or otherwise 

defend1' in the quiet title action for nearly three years. On that 

same date, he moved the court to enter a judgment against Kenner on 

the basis that the time to answer the summons and complaint had 

expired and Kenner had Itnot answered or plead herein." However, 

Moran did not first notify Jent or Kenner of his intention to apply 

for the default or the default judgment. 

The clerk entered Kenner's default on February 9, and the 

court entered a default judgment on February 20, 1990, in which 

Moran's title to the entire parcel under the contract for deed, 

including the parcels quitclaimed to Kenner, was quieted. However, 

no notice of entry of judgment was semed on Kenner or Jent. 

In July 1991, Kenner attempted to sell one of the quitclaimed 

properties. He discovered that a judgment had been entered against 

him when a title insurance company refused to issue a policy. 
On September 23, 1992, Kenner and ERNO, Inc., the successor in 

interest to the disputed properties, filed an independent action 

pursuant to Rule 60(b), M.R.Civ.P., to set aside the default 

judgment on two grounds. Kenner alleged that he had neither been 

notified of the application for a default judgment, nor of the 

entry of judgment, and furthermore, that the decree had been 

obtained on the basis of fraud upon the court. 

Kenner moved for summary judgment and a hearing was held on 

February 9, 1993. At the time of the hearing, Kenner was served 

with a counterclaim by Moran seeking specific performance of the 

contract for deed. Morants attorney then requested the court to 

enter summary judgment on the counterclaim in favor of Moran. He 

acknowledged that no motion for summary judgment had been filed, 

but asserted that no motion was required because Kenner had already 

sought judgment in his favor. After the hearing, Kenner filed an 

answer to the counterclaim in which he set forth six affirmative 

defenses. 

The court issued its findings and order on May 7, 1993. The 

court found that Kenner had made two appearances in the quiet title 

action by virtue of his motions to dismiss. Therefore, pursuant to 

5 25-3-401, MCA, Kenner or his attorney were entitled to notice of 

all subsequent proceedings "of which notice is required to be 

given." The court found that notice had not been provided as 

required under Rule 55(b)(2), M.R.Civ.P. However, the court noted 

that a default judgment entered without notice is voidable and the 

lack of notice should be considered in light of surrounding 

5 
circumstances. The court found that Kenner had been "clearly and 

consistently forewarned that Moran intended to proceed with his 

quiet title action against Kenner soon.mt Moreover, the court found 

no "good causem to set aside the decree because Kenner offered no 

excuse for his failure to answer and was not an %nsuspecting and 

unawareqf defendant. Therefore, the court concluded that the lack 

of notice did not require setting aside the decree because Kenner 

had "adequate actual personal notice prior to the entry of 

default. 

The court further concluded that there had been no commission 

of extrinsic fraud or fraud upon the court to justify setting aside 

the decree. 

In its judgment entered on May 24, 1993, the court denied 

Kennerls motion for summary judgment and refused to set aside the 

quiet title decree entered by default. It granted summary judgment 

on Moranfs counterclaim, and ordered Kenner to specifically perform 

the settlement agreement entered into with Moran on July 13, 1987. 

From this judgment, Kenner appeals. 

ISSUE 1 

Did the District Court abuse its discretion when it refused to 

set aside the default judgment based upon its finding that Kenner 

had received adequate notice prior to entry of the decree? 

Rule 55(c), M.R.Civ.P., allows for the setting aside of an 

entry of default when there is good cause and "if a judgment by 

default has been entered, [the court] may likewise set it aside in 

accordance with Rule 60(b)." 
Rule 60(b), M.R.Civ.P., sets forth reasons entitling a party 

to relief from a final judgment or order when a timely objection is 

made. In addition, the rule contains the following residual 

clause: 

This rule does not limit the power of a court to 

entertain an independent action to relieve a party from 

a judgment, order, or proceeding, or to arant relief to 

a defendant not actuallv ~ersonallv notified as mav be 

rewired bv law, or to set aside a judgment for fraud 

upon the court. [Emphasis added]. 

Kennerts action to set aside the default judgment was filed 

pursuant to this residual clause. Although Kenner asserts that 

grounds exist to set aside the judgment on the basis of extrinsic 

fraud and fraud upon the court, KennerSs primary contention is that 

he is entitled to relief because he was not personally served with 

notice as required by law, 

Kenner directs this Court's attention to Rule 55(b) (2), 

M,R.Civ.P., which provides that: 

If the party against whom judgment by default is sought 

has appeared in the action, the party (or, if appearing 

by representative, the party's representative) shall be 

served with written notice of the application for 

judgment at least 3 days prior to the hearing on such 

application. 

It is undisputed that Kenner "appeareda' in the quiet title 

action when he filed motions to dismiss, and that Moran did not 

serve written notice of the application for default judgment on 

Kenner or his attorney prior to the hearing on Morants application, 

On this basis, Kenner contends that he is entitled to have the 
judgment set aside because he was not "actually personally 

notified1* as required by law. 

In support of this contention, Kenner relies on our holding in 

Big Spring v. Blackj2et %be (1978) , 175 Mont. 258, 573 P. 2d 655, where we 

made clear that if a party appears by filing a motion, he is 

entitled to notice of all subsequent proceedings. Kenner asserts 

that it was an abuse of discretion for the court to deny his 

summary judgment motion when the facts clearly demonstrate that he 

was entitled to written notice of the application for a default 

judgment . 

Where a trial court fails to grant a motion to set aside a 

default judgment, the finding of even a slight abuse of discretion 

is sufficient to justify reversal of such an order. In re Mam'age of 

McDonald (1993), 863 P.2d 401, 50 St. Rep. 1411; EmpireLathv.American 

Casuahy (1993), 256 Mont. 413, 847 P.2d 276. 

This Court has stated on several occasions that the failure to 

provide notice to the defaulting party as required under 

Rule 55 (b) (2) , M.R. Civ. P., renders a default judgment premature and 

voidable. Marriage of Neneman (l985), 217 Mont. 155, 159, 703 P.2d 

164, 167. 

In this instance, the District Court conceded that Kenner had 

appeared in the quiet title action and was entitled to actual 

written notice as required under Rule 55(b)(2), M.R.Civ.P. 

However, it concluded that Moran had communicated to Kenner and his 
attorney Ifadequate personal noticenn of his intent to pursue the 

litigation, and therefore, failure to comply with the notice 

requirements did not require setting aside the decree. 

After reviewing the record and considering the surrounding 

circumstances, we concludethatMoranns informal threats to proceed 

with his case were not the equivalent of notice that he would apply 

for a default judgment and notice of a date on which Kenner could 

appear and object to the entry of a judgment by default. This 

failure to notify of the application for default was compounded by 

Moran's failure to notify Kenner pursuant to Rule 77(d), 

M.R.Civ.P., that judgment had in fact been entered. On that basis, 

this case is distinguishable from our prior decisions in Williamsv. 

SuperiorHomes,Inc. (1966), 148 Mont. 38, 417 P.2d 92, and Sikodi&Sons 

v.Sikonla' (1973), 162 Mont. 442, 512 P.2d 1147, where we declinedto 

set aside default judgments for lack of notice. In this instance, 

we conclude that the court abused its discretion when it refused to 

set aside the decree. 

We do not condone Kennerns own disregard for the procedural 

rules that he was required to follow in the quiet title action. 

However, Rule 55 (b) (2) , M.R. Civ. P., presumes that the defaulting 

party has not complied with the rules in some respect and still 

requires that notice be given to that party. Moranns noncompliance 

with our rules cannot be justified on the basis of Kennerns earlier 

noncompliance with those rules. 
Taking all of the facts into consideration, we conclude that 

the circumstances of this case justify setting aside the default 

judgment . 

ISSUE 2 

Did the District Court err when it granted summary judgment in 

Moranls favor and ordered specific performance of the contract for 

deed? 

This Court reviews an order of summary judgment by utilizing 

the same criteria used by a District Court initially under Rule 56, 

M.R.Civ.P. Minniev.CityofRoundup (19931, 257 Mont. 429, 849 P.2d 

212. Summary judgment is proper when no genuine issues of material 

fact exist and the moving party is entitled to judgment as a matter 

of law, Minnie, 849 P.2d at 214. 

At the time of the hearing on Kenner's summary judgment motion 

to set aside the decree, Moran filed a counterclaim seeking 

specific performance of the settlement agreement that had been 

entered into after default was taken against the other defendants, 

Although no summary judgment motion was made on the counterclaim in 

accordance with Rule 56, H.R.Civ.P., the court, in its order, 

granted summary judgment in favor of Horan on the counterclaim. 

Moran contends that no separate motion was required and that the 

court had authority to render summary judgment on the counterclaim 

based on this Court's decision in Canal Insurance Company v. Bunday 

(1991), 249 Mont, 100, 813 P.2d 974. 
In Canal, 813 P.2d at 979, we held that this Court could 

reverse a district court's order granting summary judgment and 

order it to enter summary judgment in favor of the other party when 

there are no issues of material fact and all of the facts bearinq 

on the issues are before the court. In such a situation, a court 

could determine that the undisputed facts entitle the non-moving 

party to summary judgment. 

The situation presented here, however, is not comparable to 

Canal. Here, Kenner moved for summary judgment based on his 

complaint to set aside the default judgment. Moran filed a 

counterclaim seeking specific performance of a settlement 

agreement. The court heard testimony to determine whether there 

were grounds to set aside the judgment. The evidence did not 

relate to whether the settlement agreement was enforceable or 

whether Moran was entitled to equitable relief in the form of 

specific performance. The facts and issues pertinent to the 

counterclaim are not the same as those pertinent to the issue of 

setting aside the default judgment. The transcript reveals that 

Kenner did not offer testimony on the issues germane to Moran's 

counterclaim and the court did not address the affirmative defenses 

raised by Kenner after the hearing. 

Under Rule 56 (a) , M.R. Civ. P., a claimant is allowed to move 

for summary judgment twenty days after the action is commenced. 

Rule 56(c), M.R.Civ.P., requires service of written notice upon the 

adverse party ten days before the time fixed for hearing on the 
motion. These procedural safeguards insure that an adverse party 

is given a full and fair opportunity to resist a summary judgment 

motion and demonstrate the presence of justiciable issues of fact. 

We conclude that the facts bearing on issues raised in the 

counterclaim were not before the court and that Kenner was not 

given the proper opportunity to offer evidence in opposition to 

Moran's request for summary judgment. Therefore, we hold that the 

court erred when it granted summary judgment on the counterclaim in 

the absence of a motion complying with Rule 56, M.R.Civ.P. 

The judgment of 

The default judgment 

action is set aside. 

the District Court is reversed and vacated. 

entered against Kenner in the quiet title 
February 11, 1994 

CERTIFICATE OF SERVICE 

I hereby certify that the following order was sent by United States mail, prepaid, to the following 

named: 

Hamilton G. Kenner, Esq. 

607 Highway 98 East 

Destin, FL 32541 

Michael P. Sand, Esq. 

Sand Law Office 

1700 West Koch 

Bozeman, MT 59715 

ED SMITH 

CLERK OF THE SUPREME COURT 

BY: