Opinion ID: 64232
Heading Depth: 3
Heading Rank: 3

Heading: Support for Setting Aside the Default Judgment

Text: In ruling on a Rule 60(b) motion, courts are not required to state findings or conclusions. [45] Therefore, in the absence of such an optional statement, a remand for specific findings is not necessary if `the record would not support' a finding in the appellant's favor, and if such a finding would be deemed clearly erroneous had it been made. [46] We first address whether Dr. Beitel has presented a meritorious defense, as a refusal to set aside a default judgment is proper in the absence of such a defense. [47] In determining whether a meritorious defense exists, `[t]he underlying concern is ... whether there is some possibility that the outcome of the suit after a full trial will be contrary to the result achieved by the default.' [48] On careful review, we cannot say that the record could not support a finding that Dr. Beitel has a meritorious defense. Dr. Beitel submitted an affidavit that he borrowed only $290,000 from OCA  not the more than $600,000 that OCA alleges  and his office manager submitted an affidavit with similar assertions. Dr. Beitel also contends that the promissory notes functioned as open lines of credit that he had not drawn down to the extent OCA alleges. On the discrete facts of this case, this factual basis is sufficient in theory to support a conclusion that there is a possibility that the outcome after trial would not mirror the default judgment. We must also determine whether the record precludes a finding in Dr. Beitel's favor on the issue of willfulness. [49] Our discussion of willfulness confirms that this is an issue that turns largely on testimony that the bankruptcy court labeled he said, she said evidence. Weighing each party's statement, a function peculiarly within the trial court's domain, is likely determinative on the willfulness issue. Thus, we cannot say that the record precludes a finding in favor of Dr. Beitel on this issue. The other relevant, but not singularly determinative, factors  (1) prejudice to OCA, (2) the effect, if any on the public interest, (3) whether there was significant financial loss to Dr. Beitel, and (4) whether Dr. Beitel acted expeditiously to correct the default  are not so heavily weighted against Dr. Beitel that they alone would support our affirming the default judgment against him. [50] At least two of these factors likely weigh in Dr. Beitel's favor: (1) Dr. Beitel's loss  several hundred thousand dollars  is likely significant to him, and (2) Dr. Beitel appears to have acted expeditiously following entry of the default judgment by immediately thereafter filing an amended answer and then actively attempting to set aside that judgment. The public-policy factor may cut both ways because there is a value both in allowing trial of cases on the merits and in adhering to procedural rules. And, only one factor likely weighs in OCA's favor: It would likely experience some harm, perhaps minimal, in having to re-prove its liability and damages. We conclude that the record does not offer sufficient support for the district court  nor this court  to make an independent determination that the bankruptcy court's decision was within its discretion.