Opinion ID: 1193875
Heading Depth: 1
Heading Rank: 3

Heading: the default judgment should be set aside to the extent it includes personal liability because jacobsen established a meritorious defense and excusable neglect.

Text: Jacobsen asserts that the district court abused its discretion when it denied his motion to set aside the default judgment under I.R.C.P. 60(b)(1). Under this rule a party may request relief from a default judgment on the grounds of mistake, inadvertence, surprise, or as Jacobsen claimsexcusable neglect. Additionally, the moving party must plead facts which would constitute a meritorious defense to the entry of default. Hearst Corp., 100 Idaho at 12, 592 P.2d at 68. A. Meritorious Defense Jacobsen has asserted a meritorious defense to the claim for personal liability, and Montane has not disputed the asserted defense. Normally, little more need be said about this prong, but the nature of the defense bears upon the question of excusable neglect. From the record it does not appear that Montane had a reasonable basis to seek a personal judgment against Jacobsen. It also appears that Montane's sole cause of action was for the payment of logging-related work performed between June 1, 1994, and July 3, 1995, secured by a loggers' lien. The Idaho loggers' lien statutes under Title 45, Chapter 4 of the Idaho Code make no provision for personal liability. Foreclosure of a loggers' lien is an in rem action under I.C. § 45-412. In the analogous case of Pierson v. Sewell, 97 Idaho 38, 539 P.2d 590 (1975), this Court held that a foreclosure of a mechanics' lien was strictly an action in rem and not an in personam proceeding. Id. at 44, 539 P.2d at 596. A lien claimant is not entitled to personal judgment against a party for any deficiency which might remain after a foreclosure sale if there is no direct contractual relationship between the parties. Id. at 44-45, 539 P.2d at 596-97. Montane did not dispute the existence of a meritorious defense. Instead, it focused on Jacobsen's non-responsiveness to the service of the summons and complaint. Counsel for Montane made this statement in the proceedings before the district court: I have no idea what the legal merits are at this point, because I haven't been able to do any discovery or anything, but that is absolutely immaterial until they first convince this Court that they somehow have some excusable neglect, mistake, surprise, inadvertence. The nature of a claim for foreclosure of a loggers' lien and the absence of evidence of an agreement between Jacobsen and Montane impact the reasonableness of Jacobsen's failure to respond to the complaint when the allegations of the complaint are analyzed. B. Excusable Neglect Excusable neglect is conduct that might be expected of a reasonably prudent person under the same circumstances. Hearst Corp., 100 Idaho at 11, 592 P.2d at 67. Jacobsen argues that his actions constituted excusable neglect under this definition, claiming that when he received the complaint he thought that it only sought to foreclose the loggers' lien, not to hold him personally liable for the alleged debt. The threshold issue is whether the complaint gave Jacobsen clear notice that a personal judgment was sought against him. This issue involves a question of law over which this Court exercises free review, similar to the question of whether a contract is ambiguous or not. See Rath v. Managed Health Network, Inc., 123 Idaho 30, 31, 844 P.2d 12, 13 (1992). A review of the complaint demonstrates that it does not clearly state a claim for money judgment against Jacobsen and that it was reasonable for him to think that all that was sought against him was foreclosure of the loggers' lien. The complaint makes the following assertions: 1. That Plaintiff and the Defendants, through Richard Green[e], entered into an agreement whereby the Plaintiff provided labor and assistance preparing timber for sale for which the Defendants were to pay for said labor and assistance. 2. The Defendants Dick and Linda Green[e] were married before said labor and assistance was completed and, therefore, the amounts claimed herein are obligations of the community. 3. Plaintiff has made demand upon the Defendants for all amounts owed, but the Defendants have failed to pay said amounts. 4. There now remains past due and owing by the Defendants to Plaintiff the sum of $11,119.99, plus interest through February 13, 1996, in the amount of $744.75, and thereafter at the rate of 10.875%. 5. It has been necessary for the Plaintiff to employ Dial, Looze & May, Chartered, Attorneys at Law, for collection of the amounts due. A reasonable attorney fee, should this matter be uncontested is the sum of $2,500, but should this matter be contested, such other and further amount as the Court deems reasonable. Attorney's fees to be awarded pursuant to I.C. §§ 12-120 & 121 and § 45-413. 6. A Logger's Lien was recorded in Power County on September 1, 1995, as Instrument No. 164143, and notice of the filing of the lien was given to Defendants. 7. Richard Green[e] and Heber Jacobsen are the reputed owners of the Real Property. 8. The Defendants claim some right, title, and interest in the Real Property. 9. The Plaintiff has incurred costs for foreclosure in the sum of $205.67. While paragraph 1 of the complaint can be read to include Jacobsen, paragraph 2 names as defendants Dick and Linda Greene. Paragraph 3 uses the term Defendants without specifying which persons that includes. Paragraph 4 makes the claim for money due, designating Defendants. Jacobsen is not named in the body of the complaint until paragraph 7, after the claim for money damages, when reference is made to him as a reputed owner of the real property. The manner in which the complaint is drawn can lead a reasonable person to different understandings. One, sponsored by Montane, is that it alleges Jacobsen, along with the Greenes, entered into an agreement with Montane to perform services on the land. Another, as understood by Jacobsen, is that the complaint alleged an agreement between the Greenes and Montane for the performance of services by Montane for which the Greenes were liable. The only reason to include Jacobsen was to foreclose any interest he might have in the logs that were subject to the lien. As far as Jacobsen was concerned, he had no reason to contest the complaint. He had no interest in the logs upon which foreclosure was sought. There was no clear assertion that personal liability was sought against him. He would not be prejudiced by a default judgment to foreclose the loggers' lien. He knew in fact that he had no agreement with Montane that would subject him to personal liability. A reasonable reading of the complaint is that it asserts a claim of personal liability against the Greenes and a claim against Jacobsen to foreclose any interest he might have in the logs. Jacobsen's failure to respond to the complaint and summons was excusable. He did not oppose foreclosure of the loggers' lien, and the complaint did not give unequivocal notice to him that personal judgment was sought against him. At the least, this case is a doubtful one in which relief is favored. Clear Springs, 123 Idaho at 143, 845 P.2d at 561.