No. 92-409 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1993 

RUSSELL ERIC MAULDING, 

Plaintiff and Respondent, 

-vsROBERT HARDMAN, 

Defendant and Appellant. 

APPEAL FROM: District Court of the First Judicial District, 

In and for the County of Lewis and Clark, 

The Honorable Jeffrey Sherlock, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Joe Seifert: Gough, Shanahan, Johnson & Waterman, 

Helena, Montana 

For Respondent: 

John C. Doubek: Small, Hatch, Doubek & Pyfer, 

Helena, Montana 

D Submitted on Briefs: December 3, 1992 . ' Decided: February 11, 1993 

~iledfEB 11 1993 

STATE OF. ffiONS' 
Justice John Conway Harrison delivered the Opinion of the Court. 

This is an appeal from the District Court of the First 

Judicial District, Lewis and Clark County, the Honorable Jeffrey M. 

Sherlock presiding. Appellant Robert Hardman (Hardman) appeals 

from the denial of his Motion to Set Aside Default Judgment which 

was deemed denied under Rule 60(c), M.R.Civ.P., because the 

District Court failed to rule on it within 45 days of its filing. 

We set aside the default judgment and remand for a trial on the 

merits. 

The sole issue is whether Hardman is entitled to have the 

default judgment set aside in favor of a trial on the merits. 

In the early morning hours of September 5, 1989, Hardman, 

respondent Russell Maulding (Maulding), Dan Forsina, and Crickett 

Martin were driving in the Sieben Ranch area near Helena. Hardman 

was driving his mother's car. According to Hardmants testimony at 

the hearing on the motion, while rounding a curve the car slid off 

the road due to loose gravel. The car came to a stop in the ditch 

without hitting any obstructions. While Maulding drove, the other 

three pushed the car out of the ditch, scraping a fence and 

knocking out a post along the way. After getting out of the ditch 

they drove home. No one appeared injured or complained of being 

injured at the time, but when a highway patrolman cited Hardman 

around 5:00 p.m. the next day for not reporting an accident, he 

learned that Maulding had visited the hospital. Hardman later pled 

guilty to the charge of not reporting an accident and paid a fine. 

On September 13, 1989, John Doubek, Mauldingts attorney, sent 

2 
a letter to The Farmers Insurance Group of Companies demanding 

payment of Maulding's medical expenses. On September 20, James 

Higgins, a claims representative with Farmers, spoke with Doubek 

and took Hardman's statement regarding the accident. Given 

Hardman's version of the incident, Higgins questioned liability and 

denied payment at that time. According to Higgins, Dan Forsina's 

statement, which he took on January 3, 1990, corroborated Hardman's 

description of the incident, and he conveyed this to Doubek that 

day. 

The only documents presented to Higgins to substantiate the 

claimed injury were the emergency room record, which indicated only 

that Maulding was to rest his back, and a copy of a prescription. 

He received no other documents substantiating Maulding's claim. 

Nor did he receive a copy of the Montana Highway Patrol report from 

Doubek as he expected. Higgins also tried to contact Doubek 

regarding the case, but Doubek did not return his calls. He had no 

further contact with Doubek on this matter until Doubek sent a 

letter in May 1992 requesting payment of the judgment. 

Maulding filed suit against Hardman on May 19, 1991, alleging 

a much different version of the accident than given by Hardman. 

Maulding alleged that Hardman was under the influence of alcohol, 

driving carelessly and recklessly and at excessive speed, and that 

they went over an embankment resulting in serious bodily injury to 

Maulding. The complaint was served on Hardman on May 1, 1991. 

Because Hardman was convinced that nothing had happened, he put the 

documents in a drawer, took no action, and told no one of them. 
On June 24, Doubek requested that the clerk enter Hardman's 

default for failing to answer or otherwise appear. On November 8, 

1991, the District Court entered default judgment on the issue of 

liability with damages to be determined later upon the proper 

showing. The court held a hearing on damages on March 17, 1992, 

and on March 19 entered judgment in the amount of $81,306.31. On 

May 19, Doubek requested that the clerk issue an execution writ 

against Hardman. On the previous day Higgins received a letter 

from Doubek informing him of the proceedings and offering to settle 

the matter for $75,000 if paid immediately. 

The insurer responded by providing counsel for Hardman, who 

moved to set aside the default judgment on May 22. The court set 

a hearing on the motion for July 16, 1992. At the hearing, Doubek 

raised the issue of whether the hearing was timely, citing Rule 

6O(c), M.R.Civ.P., which in conjunction with Rules 59(d) and (g) 

requires the court to rule on the motion within 45 days of filing 

or it is deemed denied and the court loses jurisdiction to decide 

the matter. The court took that issue under advisement and heard 

the testimony regarding the motion to set aside the default 

judgment. The judge required the parties to brief the timeliness 

issue. 

After reading Maulding's brief, Hardman conceded that the 

District Court lost jurisdiction to decide the motion on July 7, 

1992, the date on which it was deemed denied. Hardman filed his 

Notice of Appeal on July 24, 1992. 

The issue before this Court is whether Hardman is entitled to 
have the default judgment set aside in favor of a trial on the 

merits. 

Maulding argues that there simply is no evidence in the record 

upon which Hardman or this Court may rely in deciding this issue. 

He points out that Hardman's attorney did not present any 

affidavits in support of his motion. However, an affidavit of 

merit is no longer required under our Rules of Civil Procedure. 

Blume v. Metropolitan Life Ins. Co. (1990), 242 Mont. 465, 470, 791 

P.2d 784, 787; Keller v. Hanson (1971), 157 Mont. 307, 309, 485 

P.2d 705, 707; see also Rule 11 and Rule 6O(b), M.R.Civ.P. In this 

case, Hardman's brief in support of his motion set forth the facts 

and the evidence he intended to show at the hearing on the motion. 

That is all that was required at that point. 

Maulding next argues that because the District Court lost 

jurisdiction to entertain the motion, the evidence presented at the 

hearing is not part of the record and may not be cited by Hardman 

or relied on by this Court. Under Rule 60(c), M.R.Civ.P., the 

motion was deemed denied because the 45-day time limit had expired. 

Therefore, the District Court lost jurisdiction to entertain the 

motion. In re the Marriage of McKinnon (1992) , 251 Mont. 347, 350, 

825 P.2d 551, 553; In re the Marriage of Miller (1989), 238 Mont. 

108, 112, 776 P.2d 1218, 1220. 

However, it is within this Court's power under 5 3-2-204, MCA, 

to consider any trial court proceedings that affect the parties' 

substantial rights, and we may for good cause remand this case for 

further proceedings. United Farm Agency v. Blome (1982), 198 Mont. 
435, 438, 646 P.2d 1205, 1207. See also Cabalceta v. Standard 

Fruit Co. (11th Cir. 1989), 883 F.2d 1553, 1555 (in determining 

whether to exercise its inherent equitable power to supplement the 

record, appellate court should evaluate all factors, issues, and 

circumstances including whether accepting the material into the 

record would establish beyond a doubt the proper resolution of the 

pending issue and whether remand would be contrary to the interests 

of justice and judicial economy); and Turk v. United States (8th 

Cir. 1970), 429 F.2d 1327, 1329 (in the interest of justice the 

appellate court may order record enlarged in order to review 

testimony in transcript of preliminary hearing). 

In this case, Maulding had full opportunity to prepare for the 

hearing, to cross-examine Hardman's witnesses, and to present his 

own evidence. There is no claim of an evidentiary error at the 

proceeding, and we see none in the transcript. Further, that 

evidence was necessary for Hardman to support his motion. More 

importantly, that evidence is necessary for this Court to make an 

informed decision on this matter. Therefore, in the interest of 

justice and judicial economy, this Court will consider the evidence 

presented at the July 16 hearing. To remand this case to the 

District Court for a second hearing on the motion would be 

nonsensical. 

We now turn to Hardman's motion to set aside the default 

judgment. That motion is governed by Rule 60(b), M.R.Civ.P. As a 

general rule, cases are to be tried on the merits and judgments by 

default are not favored. Lords v. Newman (1984), 212 Mont. 359, 
363, 688 P.2d 290, 293; Little Horn State Bank v. Real Bird (l979), 

183 Mont. 208, 210, 598 P.2d 1109, 1110. Where the motion is made 

and "supported by a showing that leaves responsible minds in doubt, 

courts tend to resolve [those] doubts in favor of the motion, since 

courts favor a trial on the issues over a default judgment." 

Twenty-Seventh Street, Inc. v. Johnson (1986), 220 Mont. 469, 471, 

716 P.2d 210, 211. Furthermore, if the District Court had denied 

the motion, rather than allowing it to be deemed denied, we would 

only be required to find a slight abuse of discretion in order to 

reverse the denial. Twentv-Seventh Street, Inc., 716 P.2d at 210. 

However, a party seeking to set aside a default judgment must 

show both a good cause for doing so under Rule 60(b) and the 

existence of a meritorious defense. First Nattl Bank of Cut Bank 

v. Springs (1987), 225 Mont. 62, 67, 731 P.2d 332, 335. We will 

discuss the good cause requirement shortly. As for a meritorious 

defense, Hardman testified at the hearing that the car simply slid 

off the road due to loose gravel and that no one was injured, and 

Higgins testified that the statement he took from Dan Forsina, a 

non-party, corroborated Hardman's version of the accident. 

Although the merits are to be finally decided at trial, Hardman has 

met his burden at this point. 

Turning now to the justification under Rule 60(b), Hardman 

specifically cited subsections (I), (3), and (6) of that rule which 

provide: 

Rule 60(b). Mistakes - inadvertence - excusable neglect 

- newly discovered evidence - fraud, etc. On motion and 

upon such terms as are just, the court may relieve a 

party or a party's legal representative from a final 
judgment, order, or proceeding for the following reasons : 

(1) mistake, inadvertence, surprise, or excusable 

neglect; . . . (3) fraud (whether heretofore denominated 

intrinsic or extrinsic), misrepresentation, or other 

misconduct of an adverse party; . . . (6) any other 

reason justifying relief from the operation of the 

judgment. 

Rule 60(b) further provides that "[tlhe motion shall be made 

within a reasonable time, and for reasons (I), (2), and (3) when a 

defendant has been personally served, . . . not more than 60 days 

after the judgment, order or proceeding was entered . . .. II 

Maulding cites Libby Rod & Gun Club v. Moraski (D.C. Mont. 

1981) 519 F.Supp. 643, 647, where the court said, "[Ilt is 

generally held that if a party seeks relief under any other 

subsection of Rule 60(b), it cannot also claim relief under 

60(b) (6)" to support his argument that Hardman is precluded from 

claiming relief under subsection (6). And because relief under 

subsections (1) and (3) is time barred, he argues, Hardman is not 

entitled to any relief at all under Rule 60(b). However, the above 

quote from Libbv Rod & Gun Club is not a full or fair statement of 

the law as this Court views it. We stated our interpretation in 

Wright and Miller cite several federal cases construing 

Federal Rule 60(b), which is almost identical to the 

Montana Rule, and state: 

These cases certainly seemed to establish that 

clause (6) and the first five clauses are 

mutually exclusive and that relief cannot be 

had under clause (6) if it would have been 

available under the earlier clauses. This 

reading seems required also by the language of 

the rule. 

We agree with Wright and Miller's interpretation that 

relief cannot be obtained under Rule 60(b)(6), 
M.R.Civ.P., if that relief is available under Rule 

6O(b) (1) to (5), M.R.Civ.P. 

731 P.2d at 334 (citation omitted). 

A party is precluded from relief under subsection (6) when the 

facts or circumstances would bring the case under one of the first 

five subsections. In that instance, the party is not entitled to 

relief under subsection (6) based on the same facts or 

circumstances. Here, however, the fact that Hardman requested 

relief under subsections (1) and (3) and also under subsection (6) 

is not fatal. Our recent opinion in Koch v. Billings School Dist. 

No. 2 (Mont. 1992), 833 P.2d 181, 49 St.Rep. 517, where we said 

that the plaintiff should have chosen between subsection (5) and 

(6) because they are mutually exclusive, illustrates this. The 

plaintiff's failure to make this choice did not prevent the 

District Court or this Court from determining which subsection was 

proper. We conclude that in this case Hardman's motion should have 

been based on subsection (6), and we will analyze it under that 

subsection alone. 

A motion under subsection (6) must be "made within a 

reasonable time. I' Rule 60 (b) , M.R.Civ.P. In this case, Higgins 

received a letter from Doubek 60 days after entry of judgment 

informing him of the judgment, requesting payment, and offering to 

settle the case for $75,000 if paid immediately. We note that the 

timing of this letter prevented Hardman from claiming relief under 

the first three subsections of Rule 60(b) due to the 60-day 

requirement. The insurance company hired an attorney who filed the 

motion and supporting brief four days later. The motion was made 

9 
within a reasonable time and with due diligence under these 

circumstances. 

We conclude that Hardman is entitled to relief under Rule 

60(b)(6) for two reasons. The first reason is the manner in which 

Doubek handled this case. The second reason is the manner in which 

damages were established and awarded. 

This Court said in In re Marriage of Castor (1991), 249 Mont. 

495, 500, 817 P.2d 665, 668, "Generally, relief is afforded under 

subsection (6) of Rule 60(b) in extraordinary situations when 

circumstances go beyondthose covered by the first five subsections 

or when a party in whose favor judgment was entered has acted 

improperly.I1 In this case Doubek initially made a demand on the 

insurance company a week after the accident and requested a $75 

payment a week after that. However, the only documents he sent the 

insurance adjuster were a copy of an emergency room report and a 

copy of a prescription. These documents did not give a history of 

the injury or any other information. Although Higgins requested a 

copy of the highway patrol report, Doubek did not send one or 

indicate why he could not. Nor did Doubek provide any further 

documentation to substantiate this claim. Further, he failed to 

return Higgins' telephone calls regarding this matter. He then 

sought payment from the insurance company once he had obtained a 

judgment although he did not inform Higgins of any of the 

proceedings. We realize that as a general rule, Doubek was not 

required to inform the insurance company of the proceedings. 

However, he clearly knew of the insurance company's interest in 
resulting to third parties is to b, 

motion. See Ring v. Hoselton (1982), 

John J. Ming, Inc. v. District Court 

907. 

We are also mindful of Rule 3.3 

this lawsuit and proceeded at all times with an eye toward 

collecting from the insurance company once he obtained a judgment 

for Maulding. We have previously recognized that prejudice 

e considered in a Rule 60(b) 

197 Mont. 414, 643 P.2d 1165; 

(l97O), 155 Mont. 84, 466 P. 2d 

of the Rules of Professional 

Conduct and our decision in Madson v. Petrie Tractor & Equipment 

Co. (1938), 106 Mont. 382, 77 P.2d 1038. Rule 3.3 requires a 

lawyer in ex parte proceedings to inform the court of all material 

facts known by the lawyer whether or not they are adverse. In 

Madson we vacated a default judgment partly because the plaintiff's 

attorney did not speak up at a hearing and correct defendant's 

attorney who stated there had been no service of process on his 

clients. Although plaintiff's attorney knew that the defendant had 

been served because he had received the sheriff's return of 

service, he waited until he moved for entry of default to 

acknowledge it. 

In the present case, Doubek was aware that an insurance policy 

covered the claim, and he was informed by Higgins that Dan 

Forsina's statement corroborated Hardman's version of the accident. 

We believe Doubek should have informed the District Court of these 

facts. 

We now turn to the manner in which the damages were 

established and awarded in this case. We first look at the award 
of punitive damages. At the close of the hearing, the District 

Court awarded $25,000 for punitive damages. This award is based on 

an allegation in the complaint that stated, "Plaintiff is uncertain 

as to whether defendant was operating his vehicle while under the 

influence of alcohol but, upon information and belief, alleges that 

said defendant had been drinking prior to driving his vehicle." 

"[Nlo plaintiff is ever entitled to exemplary damages as a 

matter of right, regardless of the situation or the sufficiency of 

the facts." Davis v. Sheriff (1988), 234 Mont. 126, 133, 762 P.2d 

221, 226. Section 27-1-221(5), MCA, requires that all elements of 

a claim for punitive damages be proven by clear and convincing 

evidence, and 5 27-1-221(7) (b) , MCA, requires the judge to "clearly 

state his reasons for making the award in findings of fact and 

conclusions of law, demonstrating consideration of each of [nine 

enumerated factors]." The only evidence presented here is an 

unsubstantiated claim in the complaint. As to the second 

requirement, the only reasons stated consist of a statement in the 

Judgment prepared by Doubek that "the evidence showed that the 

damages sustained by the Plaintiff were for personal injury caused 

by DefendantHardmanls operation of a motor vehicle while Defendant 

Hardman was intoxicated from using alcohol." As we said above, 

there was no evidence. Further, this statement does not satisfy 

the requirements of 9 27-1-221(7)(b), MCA. See Ward v. Vibrasonic 

Laboratories, Inc. (1989), 236 Mont. 314, 769 P.2d 1229 (district 

court erred by not making findings pursuant to 9 27-1-221, MCA). 

We next look at the way the medical evidence was presented in 
order to establish damages. Doubek was allowed to give an 

unqualified expert medical opinion regarding Hardman's condition 

and prognosis for recovery. The District Court should not have 

accepted this testimony because, on these matters, it should depend 

on qualified expert testimony. See Rules 701 and 702, M.R.Evid.; 

Shahrokhfar v. State Farm Mut. Auto. Ins. Co. (1981), 194 Mont. 76, 

634 P.2d 653; Hill v. Squibb & Sons, E.R. (1979), 181 Mont. 199, 

592 P.2d 1383. We conclude that this hearing was conducted as a 

matter of form over substance and that justice would not be served 

by requiring Hardman or his insurer to answer for damages 

established in this manner. 

Lastly, Maulding argues that he would be prejudiced if the 

default judgment were vacated. However, there is no indication in 

the record that any of the witnesses are unavailable or that 

Maulding will be unable to produce documentation of the accident 

and any treatment he underwent. Furthermore, any prejudice that 

might arise is attributable to Maulding. The incident giving rise 

to this lawsuit occurred on September 5, 1989. Although Doubek 

made demands on the insurance company a week later, he failed to 

substantiate the claim or to return Higgins' calls regarding this 

matter. He then waited for a year and a half to file his complaint 

and another 40 days after that to serve Hardman. Then he waited 

nearly two months before requesting that Hardman's default be 

entered. In January 1992 the court had to prompt him to request a 

hearing on damages. This hearing was finally held and the court 

granted judgment on March 17, 1992. Doubek then waited for two 
more months to pass before requesting an execution be issued and 

before contacting Higgins. Any prejudice that might result from 

delay is attributable only to Maulding, 

Based on the foregoing, we vacate the default judgment and 

remand to the District Court for a trial on the merits. 
Justice Karla M. Gray, dissenting. 

I respectfully dissent from the opinion of the majority. 

The majority opinion strongly implies, without quite saying in 

so many words, that respondent Maulding's counsel engaged in slsharp 

practicesI1 in his handling of this case. I do not disagree. It is 

my view, however, that in its concern over counselps actions and 

its determination to right a wrong, the majority fails to do an 

appropriate and precise Rule 6O(b)(6), M.R.Civ.P., analysis. The 

result is a further clouding of a Rule already so murky as to be of 

little guidance to trial courts and counsel. For this reason, I 

cannot join in the majority opinion. 

In my opinion, an appropriate Rule 60 (b) (6) analysis supports 

setting aside the entry of default judgment on damages by the 

District Court. It does not allow the setting aside of the earlier 

default judgment on liability against appellant Hardman. 

The critical difference lies in the fact that the challenge to 

the judgment on liability is grounded on actions of both Hardman 

himself and Maulding's counsel which bring it squarely within 

subsections (1) and (3) of the Rule. The 60-day limitation for 

motions brought pursuant to those subsections expired on or about 

January 8, 1992--60 days after the default judgment on liability 

was entered November 8, 1991. The challenge to the default 

judgment on damages, on the other hand, is a legitimate Igany other 

reasonpp motion pursuant to Rule 60 (b) (6) , premised as it is on 

significant irregularities at the hearing on damages. Therefore, 
that motion need not have been made within 60 days subsequent to 

the entry of default judgment on damages on March 19, 1992. 

This analysis comports with the majority's correct statement 

that a "party is precluded from relief under subsection (6) when 

the facts or circumstances would bring the case under one of the 

first five subsections.~~ Here, motions under subsections (1) and 

(3) were premised on events relating to the entry of judgment on 

liability; thus, they were not timely made due to the fact that 

more than 60 days had elapsed from the time of the liability 

judgment to the date the motions were made. 

The subsection (6) motion, however, was based on different 

facts and circumstances--those surrounding the hearing on damages 

and the default judgment entered thereon. These facts and 

circumstances do not fall within one of the other subsections of 

the Rule; thus, Hardman is not precluded from relief under 

subsection (6). This portion of the motion--timely under the 

"reasonable time" limitation for Rule 60(b) (6) motions--properly 

can and should be granted. 

In addition, the majority's reliance on dicta from In re 

Marriage of Castor (1991), 249 Mont. 495, 817 P.2d 665, will haunt 

this Court and Rule 60(b) practice for a long time to come. In 

Castor, we stated correctly that relief is afforded under 

subsection (6) of Rule 60(b) "in extraordinary situations when 

circumstances go beyondthose covered by the first five subsections 

. . . .'I Unfortunately, we went on to say--both needlessly, under 

the facts of Castor, and erroneously, in my view--that relief was 
also available under subsection (6) "when a party in whose favor 

judgment was entered has acted improperly-l1 Castor, 817 P.2d at 

668. That portion of our statement had no applicability to the 

case before us: nor, indeed, was it supported by the cases we cited 

therein. 

It is my view that the "when a party in whose favor judgment 

was entered has acted improperlyt1 criterion for Rule 60(b)(6) 

applicability is entirely inappropriate. Such considerations 

clearly come within subsection (3):s "fraud . . . , misrepresentation, or other misconduct of an adverse partywt language. As 

such, motions on that basis would be untimely unless brought within 

60 days of the judgment. By erroneously including that language 

within the applicability of subsection (6) of the Rule in Castor, 

we departed from the fundamental requirement that subsection (6) 

relief is not available when the facts or circumstances would bring 

the case under one of the first five subsections and from our 

appropriate reliance on Wright and Miller. That fundamental 

requirement will be impossible for us to apply in the future so 

long as we refuse to say in a straightforward manner that the 

quoted Castor language was erroneous dicta. Having joined in the 

Castor opinion, I am willing to admit my error; I wish that the 

majority would see fit to do the same in order that the salutary 

purposes of Rule 60(b) can continue to be met. 

Finally, the majority appears to "believelt that Maulding1s 

counsel violated Rule 3.3 of the Rules of Professional Conduct. If 

the majority is sincere in this belief, it appears to me that the 
Canons of Judicial Ethics may require it to refer the matter to the 

Commission on Practice. Absent such a referral, I question whether 

statements about violations of the Rules of Professional Conduct 

have an appropriate place in our decisions. 

I would reverse only the denial of Hardman's Rule 60(b) (6) 

motion and remand for further proceedings on damages. While this 

result might not be entirely Itfairlt to Hardmanas insurer, it would 

preserve the integrity of Rule 60(b) and provide appropriate and 

necessary guidance to practitioners and trial courts.