Opinion ID: 878396
Heading Depth: 1
Heading Rank: 2

Heading: Neglect As Grounds For Setting Aside Default

Text: Appellants argue that the default should be set aside because Newman was not properly served with process and the attorney Simmons neglected his duties. Defective service of process in this case is a subsidiary issue to the alleged neglect. Due to the nature of our decision, the subissue need not be reached. Simmons made a general appearance on behalf of all the appellants and the main thrust of their argument is the neglect of the case from that day forward. Appellants technically are appealing both the refusal of the trial court to set aside the entry of default made December 6, 1983, and the default judgment filed February 2, 1984. Rule 55(c), M.R.Civ.P., states in relevant part: For good cause shown the court may set aside an entry of default and, if a judgment by default has been entered, may likewise set it aside in accordance with Rule 60(b) ... Rule 60(b), M.R.Civ.P., provides: On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons: (1) Mistake, inadvertence, surprise, or excusable neglect ... Thus, the question before us is whether the District Court erred when it found that the neglect of Simmons was not good cause or excusable neglect for setting aside the default. The general rule followed in Montana and many other jurisdictions is that the neglect of an attorney is attributable to the client. The attorney's neglect is imputed to the client and is insufficient by itself to set aside a default. First State Bank v. Larsen (1925), 72 Mont. 400, 233 P. 960. Within our case law, however, there are numerous instances where an attorney's neglect has been excused upon the proper showing. See for example, Worstell v. Devine (1959), 135 Mont. 1, 335 P.2d 305; Reynolds, supra; Eder, supra. In Worstell, this Court thoroughly reviewed neglect cases and offered the following explanation for the exceptions: This court has been hesitant to impute the neglect of an attorney to his client; and has been loathe to permit this neglect to bar a hearing on the merits. Whether or not the varying shades of excusable neglect previously remarked on can be distinguished, we choose to think that where reasonable minds might differ in their conclusions of excusable neglect, the doubt should be resolved in favor of a trial on the merits. 335 P.2d at 307. In the case at bar, Simmons' actions do not constitute mere bungling of his duties or ineffective representation. Simmons totally abandoned his clients and disappeared from sight. To add insult to injury, before disappearing, Simmons made a general appearance on behalf of the clients who had neither been served with process nor authorized him to so act. Under these circumstances we find it unconscionable to apply the general rule charging the client with the attorney's neglect. Newman in her testimony indicates that reasonable attempts were made to check on the progress of the case. Where an attorney's failure to represent a client constitutes actual misconduct, the client should be granted relief from default. Our reasoning here is in tune with several other jurisdictions that have developed an exception to the general rule imputing neglect. For example, Nevada and California both recognize the exception. Orange Empire National Bank v. Kirk (1968), 259 Cal. App.2d 347, 66 Cal. Rptr. 240; Daley v. County of Butte (1964), 227 Cal. App.2d 380, 38 Cal. Rptr. 693; Staschel v. Weaver Bros., Ltd. (1982), 98 Nev. 559, 655 P.2d 518. California has narrowed its exception by requiring a showing of positive misconduct by which the client has been effectively and unknowingly deprived of representation. Carroll v. Abbot Laboratories (1982), 32 Cal.3d 892, 187 Cal. Rptr. 592, 654 P.2d 775. Nevada recognizes actual misconduct by the attorney as grounds for granting a client's motion to vacate default. Examining the factual circumstances of this case we hold that the total abandonment of the clients' interest by attorney Simmons constituted good cause for setting aside the entry of default by the District Court on December 6, 1983. The record indicates that the appellants acted promptly by filing their motion to set aside the default fourteen days later on December 20, 1983. The record also discloses that the defendants may have had a meritorious defense to the collection action; certain equipment at the motel that was represented as being in good condition by the sellers was alleged by the defendants to be in a state of disrepair. Finally, the respondents have failed to demonstrate how the setting aside of this default would prejudice their cause of action. The District Court judge in this case was motivated in part by his fear that granting the motion to vacate the default would compromise a future malpractice action against the real culprit in the controversy  the attorney Simmons. While such concern is laudable, the adequacy of a malpractice remedy in this situation is questionable. Even assuming the clients would prevail in such an action, Simmons' lack of malpractice insurance and personal assets would make the victory a decidedly hollow one. Summarizing our analysis, we conclude that the trial court abused its discretion by failing to set aside a default in a situation where the defendants were completely abandoned by their attorney, preceded with diligence to rectify the court's action and alleged a potential defense to the action. The litigants in this case were blameless and should not be penalized for misconduct attributable to a lawyer. The default and default judgment are vacated, and the case remanded to the District Court for further proceedings. HARRISON, GULBRANDSON, SHEEHY and SHEA, JJ., concur.