Opinion ID: 883503
Heading Depth: 1
Heading Rank: 6

Heading: Did the District Court err in failing to find sufficient other reasons existed to justify setting aside the default judgment?

Text: Rule 60(b)(6), M.R.Civ.P., provides that [o]n motion and upon such terms as are just, the court may relieve a party ... from a final judgment, order, or proceeding for ... any other reason justifying relief from the operation of the judgment. Thomas alleges several other reasons why the default judgment should be set aside. Relief is warranted under subsection (6) of Rule 60(b), M.R.Civ.P., in extraordinary situations when circumstances go beyond those covered by the first five subsections or when a party in whose favor judgment was entered has acted improperly. In re Marriage of Castor (1991), 249 Mont. 495, 500, 817 P.2d 665, 668. Other reasons sufficient to set aside a default judgment include lack of subject matter jurisdiction ( In re Marriage of Oltersdorf (1992), 256 Mont. 96, 844 P.2d 778), unavoidable absence or unavailability of counsel ( Ring v. Hoselton (1982), 197 Mont. 414, 643 P.2d 1165), or potential judicial bias ( Shulty v. Hooks (1994), 263 Mont. 234, 867 P.2d 1110). Thomas first alleges fraud between the parties on the same grounds by which he alleges fraud upon the court. However, false representations made by a party constitute intrinsic fraud and are not reason enough to set aside a default judgment. Lance, 635 P.2d at 574. The intrinsic fraud Thomas alleges is addressed by subsection (3) of Rule 60(b). A party is given 60 days in which to file a motion under subsection (3); Thomas is therefore time-barred from raising this issue. Thomas next alleges the settlement offer made to him indicates Falcon's damages were inflated. However, settlement offers are not admissible to prove liability for or invalidity of a claim or its amount. Rule 408, M.R.Evid. Furthermore, as stated above, the question of damages is properly decided at trial. Since Thomas did not appear in this action, the District Court awarded damages based on the evidence Falcon presented. A party's desire to retroactively argue a factual issue in the case is not a reason justifying the setting aside of a default. Thomas also argues the judgment should be set aside because he received no notice of Falcon's intent to enter the default. Rule 55(b), M.R.Civ.P., requires a party who has appeared in an action to be given at least three day's notice of intent to enter a default. However, despite being duly served as a party to the case, Thomas never appeared in the action. Since he never entered an appearance, he was not entitled to specific notice of intent to enter a default. Therefore, Falcon's failure to notify him is not a reason to set aside the default judgment. Lance, 635 P.2d at 575. Thomas last argues that the negligence of his attorney should be reason enough to set aside the default judgment. Thomas' failure to appear in the Montana action was due to the advice of his Illinois attorney, who incorrectly believed Montana did not have personal jurisdiction over Thomas. Generally, mistake or neglect fall within subsection (1) of Rule 60(b) and therefore must be alleged within 60 days of the entry of judgment. Further, [t]he 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 to set aside a default. Lords, 688 P.2d at 295, citing First State Bank v. Larsen (1925), 72 Mont. 400, 233 P. 960. We have found in the past, however, that gross neglect of a diligent client's case may be enough to warrant setting a default judgment aside under subsection (6). Ring, 643 P.2d at 1172. The advice of Thomas' Illinois attorney, which hindsight reveals was very bad indeed, nevertheless does not rise to the level of gross neglect. He believed Thomas was not subject to Montana jurisdiction, but he was wrong. He did not, however, abandon Thomas mid-way through an action, or misrepresent to Thomas the steps he was taking on Thomas' behalf. Thomas points out, however, that this attorney did not carry malpractice insurance and is now bankrupt, making him essentially judgment-proof. These circumstances, while unfortunate, are not relevant to the question of whether the default should be set aside. The actions of Thomas' Illinois attorney did not constitute gross neglect. As such, they are not reason enough to set aside the default judgment. Finally, we note that Thomas waited over five years before moving the court to set aside the judgment, during the first two of which he was actively challenging the validity of the judgment in the Illinois courts. Even after the Illinois appellate court ruled the judgment was valid in 1991, Thomas waited over three years before moving the court to set aside the judgment. Thomas offers no reason for this inexcusable delay. Since Thomas failed to show fraud upon the court or a valid other reason to set aside the default judgment against him, the District Court did not abuse its discretion in denying his motion. Affirmed. TURNAGE, C.J., and NELSON, GRAY and LEAPHART, JJ., concur.