Opinion ID: 3166754
Heading Depth: 1
Heading Rank: 2

Heading: analysis

Text: K.S.A. 60-255(b) provides that a default judgment may be set aside for any of the grounds listed in K.S.A. 60-260(b), which states: 8 On motion and upon such terms as are just, the court may relieve a party or said party's legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under K.S.A. 60-259(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have been prospective application; or (6) any other reason justifying relief from the operation of the judgment. The Court of Appeals majority primarily relied upon a preservation determination to limit its review to determining whether the excusable neglect reason listed in K.S.A. 60-260(b)(1) was applicable to Ball. The panel majority believed that Ball had only argued excusable neglect in both the district court and on appeal. Garcia, 50 Kan. App. 2d at 201. We discern from the record that Ball did not rely exclusively on excusable neglect to support his motion to set aside default judgment. In the first instance, the Motion to Set Aside Default Judgment that Garcia filed in the district court specifically stated that it was being brought pursuant to K.S.A. 60260(b)(1) and (b)(6). Further, the motion set forth allegations that would be applicable to a subsection (b)(6) determination, rather than a (b)(1) excusable neglect finding, such as the averments that the defendant has a meritorious defense, and [t]here is no factual basis for the amount of the judgment entered. Then, the district court did not rely on excusable neglect to grant the motion, but rather it held that relief was justified by the existence of a meritorious defense and by the 9 premise that the law disfavors default judgments. Those findings fit within the category of any other reason justifying relief. K.S.A. 60-260(b)(6). Moreover, even if Ball had not specifically cited to K.S.A. 60-260(b)(6), there is precedent that would have permitted the panel majority to consider whether the district court's order could have been upheld for any of the reasons set forth in K.S.A. 60-260(b), i.e., that the ruling was correct for a different reason. See In re Estate of Hessenflow, 21 Kan. App. 2d 761, 772-73, 909 P.2d 662 (1995) (order setting aside final judgment upheld under K.S.A. 60-260[b][3], even though neither moving party nor court referred to that specific provision), rev. denied 259 Kan. 928 (1996); see also Mynatt v. Collis, 274 Kan. 850, 873, 57 P.3d 513 (2002) (trial court's reason for decision is immaterial if ruling correct for any reason). In short, the applicability of K.S.A. 60-260(b)(6) was not procedurally foreclosed in this case. The panel majority also opined that Ball was legally precluded from relying on both subsections (b)(1) and (b)(6). The majority cited to In re Marriage of Leedy, 279 Kan. 311, Syl. ¶ 4, 109 P.3d 1130 (2005), for the proposition that the two grounds for relief are always mutually exclusive. Garcia, 50 Kan. App. 2d at 201. Leedy held that the general catch-all provision of K.S.A. 60-260(b)(6) cannot be used to circumvent the 1- year limitation applicable to the specific grounds in the first three subsections, K.S.A. 60260(b)(1)-(3). See also Wilson v. Wilson, 16 Kan. App. 2d 651, 658, 827 P.2d 788 (Relief cannot be granted under K.S.A. 60-260[b][6] if the real basis for relief is one of the reasons listed in 60-260[b][1]-[3] and more than a year has gone by.), rev. denied 250 Kan. 808 (1992). Leedy's prohibition is not applicable here. For one thing, the district court did not find that Ball was entitled to relief under both K.S.A. 60-260(b)(1) and (b)(6). Therefore, even if the two subsections are mutually exclusive, K.S.A. 60-260(b)(6) could apply 10 where K.S.A. 60-260(b)(1) does not apply. Further, Ball was not attempting to circumvent the 1-year time limitation of K.S.A. 60-260(b)(1), as evidenced by the fact that he filed his motion within 1 year of the default judgment. If a movant is not attempting to use the catch-all provision of K.S.A. 60-260(b)(6) to circumvent the 1-year time limitation, he or she is not required to specify only one ground for relief under K.S.A. 60-260(b). See In re Marriage of Hunt, 10 Kan. App. 2d 254, 260, 697 P.2d 80 (1985) (party not required to seek relief under only one of K.S.A. 60-260[b]'s six subsections, but party may not use K.S.A. 60-260[b][6] to circumvent 1-year time limitation). In sum, there was no legal impediment to Ball seeking relief under K.S.A. 60260(b)(6). Next, we turn to a consideration of whether, pursuant to K.S.A. 60-260(b)(6), the district court abused its discretion in its determination that relief from the default judgment was justified for reasons other than excusable neglect. To reiterate, the district court relied in part upon the legal premise that the law dislikes default judgments. That premise is well established. See, e.g., Reliance Insurance Companies v. ThompsonHayward Chemical Co., 214 Kan. 110, 116, 519 P.2d 730 (1974) (default judgments not favored by law). Likewise, the district court noted the factual circumstance that Ball had a meritorious defense. Whether the defaulting party has a meritorious defense is a factor for the district court to consider in a motion to set aside a default judgment. See, e.g., Jenkins v. Arnold, 223 Kan. 298, 300, 573 P.2d 1013 (1978). Additionally, the district court announced that it disliked default judgments in matters of this nature. Although the district court did not explicitly describe the nature to which it was referring, the matter before the court involved large sums of unliquidated damages. There is precedent for the proposition that '[m]atters involving large sums 11 should not be determined by default judgments if it can reasonably be avoided.' Montez v. Tonkawa Village Apartments, 215 Kan. 59, 63, 523 P.2d 351 (1974) (quoting Tozer v. Charles A. Krause Milling Co., 189 F.2d 242, 245 [3d Cir. 1951]). Finally, [i]n determining whether to set aside a default judgment, a court should resolve any doubt in favor of the motion so that cases may be decided on their merits. Jenkins, 223 Kan. at 299. Accordingly, one cannot say that the district court abused its discretion in granting relief from its default judgment. Garcia challenges the district court's finding that Ball had a meritorious defense, arguing that Ball did not present any evidence of a defense. That argument is weakened considerably by the fact that the district court found Ball's exoneration rule defense—to be discussed below—actually required dismissal of the action. The facts necessary for that defense, as well as Ball's subsequent stated statute of limitations defense, were readily discernible from Garcia's petition. The district court's ruling was factually grounded. Also, Garcia argues that Ball's failure to establish excusable neglect means that he did not establish all of the prerequisites for setting aside a default judgment, originally set forth in Montez and, thus, referred to as the Montez factors. Those factors were stated as follows: A motion to set aside a default may be granted whenever the court finds (1) that the nondefaulting party will not be prejudiced by the reopening, (2) that the defaulting party has a meritorious defense, and (3) that the default was not the result of inexcusable neglect or a willful act. 215 Kan. 59, Syl. ¶ 4. 12 Montez involved a trial court's refusal to set aside a default judgment on the defendant's plea of inadvertence and excusable neglect. 215 Kan. at 59. In other words, Montez reversed the district court's refusal to set aside a default judgment because of the evidence in the record supporting the defaulting party's claim of excusable neglect and inadvertence. In that instance, it was logical for one of the factors to be that the default was not the result of inexcusable neglect or a willful act, i.e., that the movant had established excusable neglect. The same logic does not apply to extending that requirement to a subsection (b)(6) claim, because if a movant can show that the default was not the result of inexcusable neglect, then the movant has shown that the default was the result of excusable neglect. In that case, the movant can simply rely on the excusable neglect reason in subsection (b)(1), rendering subsection (b)(6) always superfluous. See State v. Frierson, 298 Kan. 1005, 1013, 319 P.3d 515 (2014) (court presumes legislature does not intend to enact useless or meaningless legislation; courts interpret statutes to avoid absurd or unreasonable results). Moreover, the Montez factors are not gleaned from the plain language of K.S.A. 60-260(b) but instead were adapted from federal caselaw. See Montez, 215 Kan. at 64 (quoting Schartner v. Copeland, 59 F.R.D. 653, 656 [M.D. Pa. 1973]). And, a review of federal caselaw indicates that the factors are based in equity. See Jennings v. Rivers, 394 F.3d 850, 856-57 (10th Cir. 2005) (Determination of whether neglect is excusable under Fed. R. Civ. Proc. 60[b] is an equitable one, taking into consideration, inter alia, prejudice to the party, reasons for the delay, and whether the movant has a meritorious defense.); Tozer, 189 F.2d at 246 (Because relief from a default judgment is equitable in nature, court may consider whether nondefaulting party will be prejudiced if judgment is set aside.); Trueblood v. Grayson Shops of Tennessee, Inc., 32 F.R.D. 190, 196 (E.D. Va. 1963) (The bare wording of Rule 60[b] does not require the showing of the existence of 13 a meritorious defense but this is judicially established and apparently is left within the sound discretion of the trial court. [Emphasis added.]). In that vein, the Montez factors should be considered viable benchmarks for judicial discretion in determining whether relief from a default judgment is warranted under K.S.A. 60-260(b) but should not be rigidly adhered to when determining the existence of any other reason justifying relief pursuant to K.S.A. 60-260(b)(6). Cf. State v. Aguilar, 290 Kan. 506, 231 P.3d 563 (2010) (harmonizing the court-created Edgar factors with the plain language of K.S.A. 223210[d][1]). Ultimately, K.S.A. 60-260(b)(6) is to be liberally construed 'to preserve the delicate balance between the conflicting principles that litigation be brought to an end and that justice be done in light of all the facts.' In re Estate of Newland, 240 Kan. 249, 260, 730 P.2d 351 (1986); see also Wirt v. Esrey, 233 Kan. 300, 311, 662 P.2d 1238 (1983) (holding that K.S.A. 60-260[b][6] should be liberally construed to grant relief from default judgment). But see Gonzalez v. Crosby, 545 U.S. 524, 535, 125 S. Ct. 2641, 162 L. Ed. 2d 480 (2005) (confining Rule 60[b][6] to extraordinary circumstances warranting relief). As noted, the district court found that movant had meritorious defenses and that the law disfavors default judgments. The record discloses no prejudice to Garcia by reopening the case. See Montez, 215 Kan. at 65 (plaintiff's burden to prove case is not considered prejudice when deciding whether to set aside a default judgment). Garcia does not allege that evidence had been destroyed or that he had undertaken any action in reliance of the default judgment. The petition was filed in May 2011, the default judgment was filed in October 2011, and the motion to set aside the default judgment was filed in November 2011. In conclusion, using the Montez factors as viable benchmarks, we conclude that the district court did not abuse its discretion in granting Ball's motion to set aside the default judgment pursuant to K.S.A. 60-260(b)(6). 14 EXONERATION RULE/STATUTE OF LIMITATIONS Garcia's cross-petition for review requested a determination that Canaan's exoneration rule does not require that a court make a finding that a criminal defendant is actually innocent before he or she can bring a legal malpractice action against his or her criminal defense attorney. In addition, he requests this court to decide when his cause of action accrued for purposes of the statute of limitations. Pursuant to our recent holding in Mashaney v. Board of Indigents' Defense Services, 302 Kan. ___, 355 P.3d 667 (2015), we hold that Garcia was not required to demonstrate actual innocence in order to bring his legal malpractice claim against Ball and that his cause of action accrued when the district court signed the nunc pro tunc order that acknowledged and corrected his illegal sentence.