Opinion ID: 883300
Heading Depth: 1
Heading Rank: 2

Heading: issues

Text: Did the District Court abuse its discretion when it entered and refused to set aside appellant's default? Our review standard of a trial court's refusal to set aside a default is that no great abuse of discretion need be shown to warrant reversal, and our review is on a case-by-case basis. Lords, 688 P.2d at 294. Policy favors that a litigated case should be decided on its merits, and judgments by default are not favored. In re the Marriage of Whiting (1993), 259 Mont. 180, 854 P.2d 343. The burden of proof is on the one seeking to set aside the default. Siewing v. Pearson Co. (1987), 226 Mont. 458, 461, 736 P.2d 120, 122. An entry of default may be set aside by showing good cause; default judgment may be set aside pursuant to Rule 60(b), M.R.Civ.P. Rule 55(c), M.R.Civ.P. Good cause is shown by: the defendant proceeded with diligence to set aside the default judgment; the defendant's excusable neglect; the judgment will be injurious to the defendant if allowed to stand; and the defendant has a meritorious defense to the plaintiff's cause of action. Blume v. Metropolitan Life Ins. Co. (1990), 242 Mont. 465, 467, 791 P.2d 784, 786. Rule 60(b)(1), M.R.Civ.P., allows a default judgment to be set aside due to mistake, inadvertence, surprise, or excusable neglect. After reviewing the record and applying the above analysis, we determine that the District Court abused its discretion when it failed to grant the motion to set aside the default. Appellant proceeded with diligence after the District Court entered the June 11, 1993, judgment by default by retaining an attorney and filing a motion to set aside the default on June 23, 1993. In order to set aside default, an appellant must demonstrate excusable neglect. Respondent argues that appellant was sufficiently warned by letter several times that she would proceed as necessary if he did not answer. Respondent does not direct us to the record, and the only reference to the letter in the record was in the transcript of the August 11, 1993, hearing where respondent's attorney stated to the court that she sent a letter to appellant in December 1992 informing him that she would proceed as necessary if he failed to respond. The letter dated December 1992 was not entered as evidence nor filed with the District Court, and is not within the record. Those papers and exhibits filed in the district court are part of the record on appeal. Rule 9, M.R.App.P. A party's mere reference to certain documents does not bring them within the record. 4 C.J.S. Appeal and Error § 456 (1993). Because the documents are not in the record, we cannot review them on appeal. Appellant contends that the District Court erred by not finding excusable neglect because his case is similar to In re Marriage of Broere (1994), [263 Mont. 207], 867 P.2d 1092, 51 St. Rep. 17, where the appellant, acting pro se in the dissolution case, was affirmatively misled by the respondent's attorney that his telefaxed response had been filed. Appellant argues that the present case is analogous to Broere because respondent's attorney repeatedly communicated to him that nothing could happen in the dissolution proceedings until he filed a formal response. On May 1, 1992, respondent's attorney wrote to appellant, stating in pertinent part: Dear Mr. Martin: It will be necessary for you to file a formal response with the Court in this matter so that I can request that a trial date be set. The Court will not set a trial date unless the case is at issue, which requires that the Respondent file a Response. I would appreciate your filing your Response by May 15, 1992, so that we can proceed with this matter. Thank you. [Emphasis added]. On May 19, 1992, appellant answered the letter, and received the following reply from respondent's attorney: Dear Mr. Martin: In response to your letter of May 19, 1992, in this matter, I must repeat my request that you file a formal Response with the Court so that we can proceed with this matter. I cannot request a Court date until you have done so, and while I am hopeful that a trial will not be necessary, I do not want to further delay getting a date from the Court. ... The process will be infinitely cheaper, easier and quicker if you will cooperate with Rex Boller. If you choose not to do so, we will have to obtain the necessary information from you through formal means, such as interrogatories, requests for production... . This is not intended as a threat, but simply to make clear that we intend to proceed with a valuation of all property, and will do so formally if necessary. ... The extent to which the process becomes adversarial depends upon whether or not you and Carol cooperate to the fullest extent of your ability. [Emphasis added]. Threats to proceed formally if necessary would be clear to an attorney trained in the law. Those untrained in the law are often misled and get entire different meanings from conversations than one trained in the legal field. Broere, 867 P.2d at 1094 (citing Waggoner v. Glacier Colony of Hutterites (1953), 127 Mont. 140, 148, 258 P.2d 1162, 1166). In Broere, after receiving appellant's telefaxed letter responding to the petition of dissolution, the respondent's attorney mistakenly sent the appellant a note of issue stating that his response had been filed. A few days later default was granted and respondent's motion to set aside the default was denied. This Court held that the district court abused its discretion by not setting aside the default because the appellant was affirmatively, though innocently, misled by the respondent's attorney that his response had been filed. Broere, 867 P.2d at 1094. Similarly, in the present case appellant was misled by respondent's attorney who communicated to him that the matter would not proceed in court until he filed his formal response, and then entered default during a two week period when appellant was out of town. Prior to the default, appellant communicated to both respondent and her attorney his objections to respondent's division of marital assets, and also communicated his desire to settle the matter without court intervention. See Whiting, 854 P.2d at 346 (finding that appellant's default was unwillful by her attempts to resolve the dissolution issues for weeks prior to the default). Moreover, the judgment will be injurious to appellant if allowed to stand because the record reveals that a portion of the assets awarded were corporate assets, part of which appellant argues are required in the operation of the business, which further indicates that appellant has a meritorious defense to the property distribution. Respondent argues that she would be prejudiced if this Court set aside the default because it would violate the interests of justice that require finality of the case. However, respondent waited 17 months before attempting to put appellant in default which shows a lack of urgency to finalize matters. In contrast, the harm to appellant is great by having the default entered against him without any possibility of presenting his arguments. We hold that the District Court abused its discretion by not setting aside the default and the denial of the District Court is reversed.