No. 05-236 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

2006 MT 9N 

_______________________________________ 

BOB WILLIAMS, TRISON III, LLC, RICHARD GATES, 

GAIL JOHNSON, PATRICIA DUTOIT, and STEVE 

STETNER, 

 Plaintiffs and Respondents, 

 v. 

GLOBAL FINANCIAL SERVICES, INC., GLOBAL 

EXPRESS MARKETING, KINITIC BUSINESS 

SOLUTIONS, INC., CLYDE AUSTIN, CEDRIC NELSON, 

RODNEY D. BROWN, SR., JOE POTEAT, JAMES 

ZIMMERMAN, NORTHSTAR, LC, JOHN DOES I-X AND 

JANE DOES I-X, A&B MANAGEMENT SERVICE, INC., 

CERTIFIED BOOKKEEPING ACCOUNTING SERVICE, 

 Defendants and Appellants. 

______________________________________ 

APPEAL FROM: District Court of the Fourth Judicial District, 

 In and for the County of Missoula, Cause No. DV 2002-517 

 The Honorable Edward P. McLean, Judge presiding. 

COUNSEL OF RECORD: 

 For Appellants: 

 Sean Morris, Worden, Thane, P.C., Missoula, Montana 

 For Respondents: 

 Samuel M. Warren, St Peter & Warren, P.C., Missoula, Montana 

____________________________________ 

 Submitted on Briefs: December 7, 2005 

 Decided: January 10, 2006 

Filed: 

______________________________________ 

Clerk 

Justice Brian Morris delivered the Opinion of the Court. 
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¶1 Pursuant to Section I, Paragraph 3(c), Montana Supreme Court 1996 Internal 

Operating Rules, the following decision shall not be cited as precedent but shall be filed 

as a public document with the Clerk of the Supreme Court and shall be reported by case 

title, Supreme Court cause number and result to the State Reporter Publishing Company 

and to West Group in the quarterly table of noncitable cases issued by this Court. 

¶2 Appellants Rodney Brown, Sr. (Brown), Cedric Nelson (Nelson), A&B Asset 

Management Services, Inc., and Certified Bookkeeping Accounting Services (hereafter 

collectively “the Corporations”) appeal from the denial of their respective motions to set 

aside the default judgments entered against them in the Fourth Judicial District, Missoula 

County, in an action by Bob Williams, Patricia Dutoit, Gail Johnson, and other plaintiffs 

(hereafter collectively “Williams”). We affirm in part and remand in part for further 

proceedings. 

¶3 We review the following issues on appeal: 

¶4 Whether the District Court properly denied the motions to set aside the default 

judgments entered against Brown, Nelson, and the Corporations. 

¶5 Whether the District Court properly awarded compensatory and treble damages. 

¶6 Whether the District Court properly awarded punitive damages. 

PROCEDURAL AND FACTUAL BACKGROUND 

¶7 This case arises from a fraudulent investment scheme allegedly perpetrated by 

Brown, Nelson, and the Corporations on a number of Montana investors. Brown, Nelson, 

and the Corporations purportedly induced Williams to invest a substantial amount of 

money in a Las Vegas real estate scheme. The investment scheme turned out to be 

fraudulent and Williams and the other plaintiffs lost their investments. 
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¶8 Williams filed a complaint against Brown, Nelson, and the Corporations on May 

29, 2002, alleging breach of contract, breach of fiduciary duty, misrepresentation, and 

deceptive and unfair business practices. Serving them proved difficult due to the fact that 

many lived within gated communities in Las Vegas and the individual defendants 

required personal service. Williams managed to serve Nelson personally on October 25, 

2002. Williams personally served Brown at his home on February 13, 2004. Brown and 

Nelson both failed to provide any response to the complaint. 

¶9 The District Court entered default judgments for Williams against Nelson and 

Brown on May 24, 2004. The District Court awarded compensatory damages, including 

treble damages as provided by § 30-14-133(1), MCA, interest, and attorney’s fees 

totaling approximately $2 million. The District Court also awarded around $1.65 million 

in punitive damages. 

¶10 Williams filed an amended complaint on September 29, 2004, to add the 

Corporations as defendants. Williams served these new parties on or about October 18, 

2004, and October 20, 2004. The District Court entered default judgments against the 

Corporations on December 6, 2004. Brown filed a motion to set aside the default 

judgments the next day. Nelson and the Corporations filed separate motions on 

December 9, 2004, to set aside the default judgments against them. 

¶11 The District Court held a hearing on January 27, 2005, on the various motions to 

set aside the default judgments. Brown, Nelson, and the Corporations provided an 

assortment of justifications for their failure to answer or otherwise enter an appearance in 

an action against them that sought millions of dollars in damages. Without exception, all 

of these rationales placed the blame for their failure squarely on the shoulders of others. 
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¶12 Nelson alleged that his original attorney had lied to him about having had the case 

removed to federal court and then dismissed. Brown contends that after he had been 

served, Samuel Warren (Warren), counsel for Williams, assured him that service had 

been deficient and he need not respond. The Corporations claim that a secretary at 

Warren’s office advised them that service had been the result of a clerical mistake and 

that the time to respond had been extended. 

¶13 Williams argued that the motions to set aside the default judgments merely 

represented a delay tactic to allow Brown, Nelson, and the Corporations sufficient time to 

divert their assets to avoid collection on the judgment. The District Court issued an order 

on January 28, 2004, requiring Brown, Nelson, and the Corporations to file a security 

bond within one week to ensure that they were not merely attempting to delay judgment. 

Brown, Nelson, and the Corporations failed to file a security bond. The District Court 

did not rule on their motions to set aside the default judgments within sixty days. The 

District Court’s failure to rule on the motions within sixty days resulted in them being 

deemed denied pursuant to Rule 60(c), M.R.Civ.P. 

¶14 Brown, Nelson, and the Corporations then filed a motion on February 8, 2005, to 

certify the default judgments against them as final, pursuant to Rule 54(b), M.R.Civ.P., 

or, alternatively, to stay execution of the default judgments. They argued that their 

motion satisfied all of the factors needed to certify a partial judgment as final as set forth 

in Roy v. Neibauer (1980), 188 Mont. 81, 87, 610 P.2d 1185, 1189. They further 

contended that Williams’s efforts to execute on the default judgments in their home state 

of Nevada supported certification. The District Court agreed and granted final 

certification for the default judgments on March 14, 2005. The District Court also 
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allowed Brown, Nelson, and the Corporations to postpone further efforts by Williams to 

execute on the default judgments by presenting documentation of sufficient collateral to 

satisfy the judgments. This appeal followed. 

STANDARD OF REVIEW 

¶15 As a general rule, cases should be tried on the merits and we do not favor 

judgments by default. Bahm v. Southworth, 2000 MT 244, ¶ 4, 301 Mont. 434, ¶ 4, 10 

P.3d 99, ¶ 4. A party needs to show only a slight abuse of discretion to warrant reversal 

from a denial of a motion to set aside a default judgment. Bahm, ¶ 4. 

DISCUSSION 

¶16 Brown, Nelson, and the Corporations argue on appeal that no evidence supports 

the District Court’s award of damages and that the District Court improperly awarded 

punitive damages. 

Default Judgments

¶17 The party moving to set aside a default judgment carries the burden of proof. In re 

Marriage of Winckler, 2000 MT 116, ¶ 10, 299 Mont. 428, ¶ 10, 2 P.3d 229, ¶ 10. The 

moving party first must satisfy the “good cause” criteria of Rule 55(c), M.R.Civ.P., and 

then satisfy the more stringent criteria of Rule 60(b), M.R.Civ.P. See Winckler, ¶ 17. 

Our conclusion that Brown, Nelson, and the Corporations do not satisfy the requirements 

of Rule 60(b) forecloses the need to decide whether they could meet the good cause 

standard of Rule 55(c). 

¶18 A party may be relieved from a final judgment under Rule 60(b)(1), M.R.Civ.P., 

for “mistake, inadvertence, surprise, or excusable neglect.” Brown, Nelson, and the 
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Corporations put forth a variety of excuses on appeal for their failure to file a timely 

response similar to those it raised before the District Court. 

¶19 Brown contends that the District Court should have granted his motion to set aside 

the default judgment entered against him due to “mistake” in the form of his misplaced 

confidence in the advice allegedly provided by telephone to his wife by Williams’s 

counsel. He contends that his wife’s initial conversation with Warren, Williams’s 

counsel, led him to believe he had been served improperly. Brown makes no claim that 

he attempted to seek advice from his own counsel, as opposed to Williams’s counsel, as 

to whether his service had been proper. Brown also makes no claim that he spoke 

personally with opposing counsel regarding the adequacy of his service. Instead he 

suggests that his decision to rely on his wife’s alleged conversation with opposing 

counsel justifies the lack of any further inquiry on his part. 

¶20 Nelson contends that his reliance on his previous counsel’s representations nearly 

two years before that the matter had been removed to federal court and then dismissed 

satisfies the standard of Rule 60(b), M.R.Civ.P. Nelson urges us to determine his 

misplaced reliance sufficient to satisfy Rule 60(b) despite no apparent efforts on his part 

to obtain confirmation of his original counsel’s representations. Nelson apparently never 

asked his former counsel to provide a copy of the order removing the matter to federal 

court or a copy of the federal court’s order dismissing the case. 

¶21 Brown, Nelson, and the Corporations further contend that they all relied on the 

alleged statements of a secretary at the office of the opposing counsel, Warren, who 

informed them that Williams would agree to set aside the default judgment and to extend 

the time to file a response to the amended motion for default. None of these parties 
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apparently deemed this potential multi-million dollar liability sufficiently important, 

however, to speak directly with Warren, rather than take the advice of Warren’s 

secretary. And none of the parties apparently requested that Warren’s secretary at least 

put her legal advice in writing in the form of a letter confirming that Williams had agreed 

to set aside the default judgment and had agreed to extend the response time. 

¶22 The excuses offered by Brown, Nelson, and the Corporations for not filing timely 

responses to the complaints ring hollow. The numerous affidavits filed by Brown, 

Nelson, representatives of the Corporations, their counsel, and their counsel’s staff 

regarding the various efforts they allegedly undertook fail to address the basic question of 

why, when facing a multi-million dollar judgment, they simply did not file an appearance 

of some sort in district court rather than relying on the alleged representations of their 

former counsel, of opposing counsel, and of opposing counsel’s secretary. In the end, 

their excuses stretch credulity beyond the breaking point and fail to persuade us that the 

District Court abused its discretion, even slightly, in denying their motions to set aside 

the default judgments. 

Rule 54(b) Certification

¶23 Brown, Nelson, and the Corporations also assert a novel defense based upon Rule 

54(b), M.R.Civ.P. As previously discussed, ¶ 13, supra, Brown, Nelson, and the 

Corporations moved the District Court to certify the default judgments against them as 

final pursuant to Rule 54(b), M.R.Civ.P. They sought this certification to counteract the 

efforts by Williams to execute on the default judgments in their home state of Nevada. 

The District Court certified the default judgments as final in an order dated March 14, 

2005. 
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¶24 They now contend, however, that the District Court’s entry of default judgments 

against only four of the six remaining named defendants prevented the District Court 

from entering a final order until it had made “an express determination that there is no 

just reason for delay and upon an express direction for the entry of judgment.” Rule 

54(b), M.R.Civ.P. The District Court’s order of March 14, 2005, admittedly failed to 

address all of the criteria appropriate for Rule 54(b) certification set forth in Kohler v. 

Croonenberghs, 2003 MT 260, ¶¶ 14-16, 317 Mont. 413, ¶¶ 14-16, 77 P.3d 531, ¶¶ 14-

16. This omission alone normally would be sufficient to conclude that the certificate 

order does not vest jurisdiction in this Court to entertain the appeal. Kohler, ¶ 9. 

¶25 In this instance, however, judicial estoppel bars any attacks on the adequacy of the 

District Court’s certification order. Judicial estoppel binds a party to their judicial 

declarations and precludes a party from taking a position “inconsistent with previously 

made declarations in a subsequent action or proceeding.” Kauffman-Harmon v. 

Kauffman, 2001 MT 238, ¶ 15, 307 Mont. 45, ¶ 15, 36 P.3d 408, ¶ 15. Brown, Nelson, 

and the Corporations previously argued to the District Court that the facts of this case 

supported Rule 54(b) certification. They cannot be allowed to argue now that the District 

Court improperly certified their default judgments as final when they sought the 

certification in the first instance. 

Compensatory Damages

¶26 Brown, Nelson, and the Corporations contend that the District Court’s award of 

compensatory damages under the default judgments cannot be upheld due to Williams’s 

failure to present any evidence supporting the amount. Williams presented detailed 
 9

information in support of their damages, however, in the motions for default judgments. 

This information supports the compensatory damages awarded by the District Court. 

¶27 Brown, Nelson, and the Corporations also maintain that the District Court’s award 

of treble damages pursuant to § 30-14-133(1), MCA, requires the District Court to 

provide an analysis that this Court can review to determine whether the District Court 

abused its discretion. The District Court’s decision to award treble damages is purely 

discretionary. Plath v. Schonrock, 2003 MT 21, ¶ 28, 314 Mont. 101, ¶ 28, 64 P.3d 984, 

¶ 28. 

¶28 Section 30-14-133(1), MCA, allows for a district court to award treble damages 

when a consumer suffers a pecuniary loss due to a practice declared unlawful by § 30-14-

103, MCA. The statute includes no requirement that the District Court provide an 

analysis of its decision to award treble damages. Moreover, the failure of Brown, Nelson, 

and the Corporations to answer the complaint and the District Court’s entry of a default 

judgment constitutes an admission of the allegations contained in the complaint. Lane v. 

Farmers Union Ins., 1999 MT 252, ¶ 21, 296 Mont. 267, ¶ 21, 989 P.2d 309, ¶ 21. The 

complaint alleges a fraudulent real estate scheme perpetuated by Brown, Nelson, and the 

Corporations. Such a fraudulent real estate scheme qualifies as a deceptive trade practice 

under § 30-14-103, MCA. This fact alone would support treble damages and the District 

Court cannot be said to have abused its discretion in awarding treble damages under these 

circumstances. 

Punitive Damages

¶29 Brown, Nelson, and the Corporations also take issue with the District Court’s 

decision to award punitive damages. A district court may award reasonable punitive 
 10

damages when a defendant has been found to have engaged in actual fraud or malice. 

Section 27-1-221(1), MCA. A district court awarding punitive damages pursuant to this 

statute, “shall state the reasons for making the award in findings of fact and conclusions 

of law.” Section 27-1-211(7)(b), MCA. 

¶30 The District Court entered default judgments against Brown, Nelson, and the 

Corporations for their participation in a fraudulent real estate scheme. The District Court 

did not state the reasons for awarding punitive damages, however, in its findings of fact 

or conclusions of law as required by § 27-1-211(7)(b), MCA. We cannot uphold an 

award of punitive damages without such reasons being included in the findings of fact 

and conclusions of law. Thus, we deem it appropriate to remand this matter to the 

District Court for the limited purpose of having the court provide the reasons, if any, for 

its decision to award punitive damages. 

¶31 Affirmed in part and remanded in part for further proceedings. 

 /S/ BRIAN MORRIS 

We Concur: 

/S/ W. WILLIAM LEAPHART 

/S/ JOHN WARNER 

/S/ PATRICIA O. COTTER 

/S/ JAMES C. NELSON