No. 85-04 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1985 

NEAL PAXSON and FLORA PAXSON, 

Plaintiffs and Respondents, 

-vsALDEN F. RICE, 

Defendant and Appellant. 

APPEAL FROM: District Court of the Sixteenth Judicial District, 

In and for the County of Garfield, 

The Honorable A. B. Martin, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Sandall, Cavan, Smith, Howard & Grubbs; Timothy Cavan 

argued, Billings, Montana 

For Respondents: 

Brown & Huss; George W. Huss argued., Pliles City, 

Montana 

Submitted: June 251 1985 

Decided: September 10, 1985 

Filed: SEP 1 0 '1985 

4F 

22452 *,dw 

Clerk 
Mr. Chief Justice J. A. Turnage delivered the Opinion of the 

Court. 

Default judgment was entered against Alden Rice in the 

Sixteenth Judicial District, Garfield County, on March 22, 

1984. Rice moved to vacate the judgment on March 30, 1984. 

Following hearing on April 18, 1984, the judge denied the 

motion to vacate and ordered another hearing on the amount of 

damages. At the damages hearing on August 14, 1984, the 

court renewed the $40,000 judgment. Rice appeals. Neal and 

Flora Paxson, the parties obtaining judgment, challenge this 

Court's jurisdiction on the grounds that this appeal is 

untimely. We hold that the appeal is timely and affirm the 

District Court. 

Rice raises two issues: 

1. Did the District Court err in refusing to vacate 

the default judgment? 

2. Did the District Court err in refusing to allow 

evidence that mitigated damages? 

Alden Rice did construction work in Jordan, Montana. 

In October 1983 Neal and Flora Paxson sued Rice for breach of 

contra.ct, breach of the implied warranty of habitability, 

negligent construction, and bad faith. They sought 

$50,000--$30,000 repairs, $5,000 substitute housing, $5,000 

inconvenience, and $10,000 punitive damages. Rice was served 

on October 11, 1983, and his attorney filed a motion to 

dismiss on October 28, 1983. This unbriefed motion was 

denied on December 16, 1983. No answer was filed within 

twenty days. 

The Paxsons' attorney, George Huss, wrote three letters 

to Rice's attorney, Robert Morin, on January 18, February 14, 
and February 23, 1984, urging Morin to answer or he would 

seek default. Huss filed a notice of intent to enter default 

on March 5, 1984, and gave eleven days notice although only 

required to give three da.ys notice. On March 15, 1984, Morin 

told Huss he would mail the answer that day but did not do 

so. A judgment by default for $40,000 was entered without 

hearing March 22, 1984. 

On March 30, 1984, Morin filed a motion to vacate the 

default. The grounds stated for vacating were that during 

this time Morin was leaving the Berger Law Firm and his 

inattention was excusable neglect and. mistake. The District 

Court heard and denied the motion in April and ordered an 

evidentiary hearing on the amount of damages. 

A.fter this hearing the District Court upheld the default judgment and renewed the $40,000 judgment on August 14, 

1984. Rice filed a notice of appeal on September 12, 1984. 

Timeliness of Appeal 

Before considering the substantive issues, we will 

discuss why this appeal is timely. The relevant statute is 

Rule 55 (b) (2), M.R.Civ.P. : 

"In all other cases the party entitled 

to a judgment by default shall apply to 

the court therefor; . . . If, in order 

- to enable the court to enterjudgment or 

- to carry -- it into effect, it is necessary 

to take an account or to determine the 

amount of damages or to establish the 

truth of any averment by evidence or to 

make an investigation of any other 

matter, - the court may conduct such 

hearings - or order such references -- as it 

deems necessary and proper and shall 

accord a right of trial by jury to the 

parties when and as required by any 

statute of the state of Montana." (Emphasis added.) 

A Rule 55(b) (2) hearing must be held on unliquidated 

damages, and logically the hearing should be held before a 
judge enters the amount of damages in a default judgment. In 

this case the District Court entered default judgment for 

$40,000, refused to vacate the default, then had a hearing on 

the amount. 

Rice's motion to vacate was denied April 18, 1984; the 

$40,000 judgment was renewed August 14, 1984; and this appeal 

was filed September 12, 1984. To be a timely appeal the 

August, not the April, order must constitute the final judgment. The finality of the judgment depends on whether a 

damages hearing was mandatory or discretionary. Smotherman 

v. Christianson (1921), 59 Mont. 202, 195 P. 1106, required a 

hearing to determine unliquidated damages. In this case a 

hearing was mandatory because the damages were unliquj-dated. 

Therefore, the April order could not be final. Montana and 

federal rules are identical, and many federal cases require 

the hearing before determining the amount of judgment. 

"It is we1.l settled that a default 

judgment for money may not be entered 

without a hearing unless the amount 

claimed is a liquidated sum or capable 

of mathematical calculation." Davis v. 

Fendler (9th Cir. 1981), 650 F.2d 1154, 

1161. 

The fact that a judge, not a clerk, entered the default 

judgment does not negate the need for a hearing on damages. 

A clerk may enter a default when the claim is for a sum 

certain under Rule 55(b) (I), M.R.Civ.P., and for that a 

hearing i.s not required. Except for the narrow circumstances 

of Rule 55(b) (I), judgment by default can only be entered by 

a judge. This does not mean a judge can enter a default 

judgment for unliquidated damages without a hearing. The 

judge has nothing on which to base the amount of judgment. A 

defaulting party loses his defenses against the claim, but 

the claim should only be for the amount of damages actually 
suffered. We hold that the judgment of August 14, 1984, was 

the final judgment here, and. appeal from that judgment was 

timely taken. 

Issue 1--Error in refusing to vacate the default 

judgment? 

In Lords v. Newman (Mont. 19841, 688 P.2d 2901 41 

St.Rep. 1793, we stated the standard of review where a District Court has refused to set aside a default: 

". . . [Wlhere th.e trial court has refused to set aside the default, the 

proper standard of review is that no 

great abuse of discretion need be shown 

to warrant a reversal. . . . It is clear 

that the issue of abuse of discretion 

must be decided on a case-by-case basis." 

Lords. 688 P.2d at 294. 

The general ru1.e is that the neglect of an attorney is attributable to his client so that mere attorney neglect is 

insufficient to set aside a default. However, we recognized 

in Lords that we have found attorney neglect excusable on the 

part of the client upon the proper showing. Lords, 688 P. 2d 

at 295. Therefore, in reviewing the decision of the lower 

court we need not find a great abuse of discretion, but we 

must find some abuse and a proper showing to excuse neglect 

in order to set aside the default. 

In Lo2ds the attorney had totally abandoned his clients 

and this Court concluded that it would be unconscionable to 

charge the client with the attorney neglect. We held that 

the trial court abused its discretion. in not setting aside 

the default where the attorney completely abandoned the 

clients who had diligently tried. to correct the court's 

action. Lords. 688 P.2d at 296. 

The facts in the present case are distinguishable from 

Lords. In Lords, the attorney abandoned his clients after he 

made a general appearance on behalf of some of the clients 
who had not been served with process and had not authorized 

such general appearance. In the present case, we find a 

continuing effort on the part of the attorney for plaintiffs 

to obtain an answer from d-efendant's attorney, Morin. This 

included writing letters, filing notices and telephoning, all 

to no avail. However, Morin did. not abandon his clients and 

leave the state. He received notices and talked on the phone 

on behalf of the clients, but failed to do anything in response to the numerous requests by opposing counsel. Moreover, once default had been entered on March 22, in eight 

days attorney Morin moved to vacate that default. As demonstrated in the telephone conversation of March 15, attorney 

Morin intended to file an answer, but again postponed the 

preparation and filing of that pleading. That procra.stination is a type of neglect which is properly attributable to a 

client, and which we distinguish from the abandonment in 

Lords. 

This is not a factual situation where reasonable minds 

might conclude that the conduct of attorney Morin was excusable. We find no abuse of discretion in the District Court's 

conclusion that the conduct was not excusable neglect. We 

affirm the action of the District Court in refusing to vacate 

the default judgment. 

Issue 2--Error in refusing evidence at damages hearing? 

Rice contends that the District Court did not allow 

evidence which mitigated damages. He correctly asserts that 

evidence that mitigates damages should be allowed. He cites 

Lindsey v. Drs. Keenan, Andrews & Allred (1946), 118 Mont. 

312, 165 P.2d 804, for the rule that evidence mitigating 

damages may be introduced. In fact, the plaintiff has a 
burden of showing a nexus between the default liability and 

the damages. Trans World Airlines, Inc. v. Hughes (2nd ~ir. 

1971) , 449 F. 2d 51, 70. Evidence that establishes a defense 

may also mitigate damages and that evidence should be admitted as relevant to damages. 

Rice did not establ-ish that evidence mitigating damages 

was excluded. The single incident he pointed to in his brief 

may be relevant to liability but its relevance to damages is 

not apparent. Liability was no longer an issue, so the 

evidence was excludable. Henry v. Sneiders (9th ~ir. 1974) , 

The judgment is affirmed. 

\ 

Chief Justice 

.L 

We concur: