Court Opinion

ID: 9902233
Source: CourtListenerOpinion
Date Created: 2023-11-24 15:06:15.961946+00
Date Added: 2024-06-11T09:21:47.933947
License: Public Domain

FILED
                                                                      IN THE OFFICE OF THE
                                                                   CLERK OF SUPREME COURT
                                                                       NOVEMBER 24, 2023
                                                                    STATE OF NORTH DAKOTA

                  IN THE SUPREME COURT
                  STATE OF NORTH DAKOTA

                                2023 ND 216

Olson Family Limited Partnership,                       Plaintiff and Appellee
      v.
Velva Parks, LLC,                                   Defendant and Appellant

                                No. 20230108

Appeal from the District Court of McHenry County, Northeast Judicial
District, the Honorable Michael P. Hurly, Judge.

AFFIRMED.

Opinion of the Court by McEvers, Justice.

Jacob C. Maxson, Minot, ND, for plaintiff and appellee; submitted on brief.

William C. Black, Bismarck, ND, for defendant and appellant; submitted on
brief.
           Olson Family Limited Partnership v. Velva Parks
                            No. 20230108

McEvers, Justice.

[¶1] Velva Parks, LLC, appeals from an order denying its motion to vacate
default judgment. We affirm, concluding the district court did not abuse its
discretion in denying Velva Parks’ motion to vacate.

                                       I

[¶2] On December 12, 2022, Olson Family Limited Partnership (“Olson”)
served a summons and complaint on Velva Parks through Velva Parks’
registered agent, Legalinc Corporate Services Inc. (“Legalinc”). Olson alleged
it entered into a contract for deed with Velva Parks for the sale of its mobile
home park to Velva Parks. Olson alleged Velva Parks breached their contract
for deed by failing to pay the final balloon payment of $406,414 when it became
due on December 1, 2022. Olson sought to have the contract judicially
terminated and canceled.

[¶3] Velva Parks failed to answer or otherwise appear within 21 days after
being served with the summons and complaint. On January 3, 2023, Olson
moved for default judgment. The next day, the district court issued its findings
of fact, conclusions of law, and order for judgment, and entered default
judgment against Velva Parks, terminating and canceling the contract for deed
and ordering Olson’s immediate right to possession of the mobile home park.

[¶4] On January 20, 2023, Velva Parks moved to vacate default judgment
under N.D.R.Civ.P. 60(b). In support of the motion, Velva Parks filed an
affidavit from Scott Kramer, who stated he is Velva Parks’ owner, and, although
Legalinc is Velva Parks’ registered agent, he was not notified of the service of
the summons and complaint in this action. Kramer submitted a photograph of
his computer screen purporting to show the electronic notifications he received
from Legalinc. Kramer stated the photograph contains a true and accurate
listing of all of the documents he was notified of from Legalinc and shows he
was not notified of the summons and complaint. Velva Parks argued its failure

                                       1
to respond to the complaint was due to mistake, inadvertence, or excusable
neglect, and it has meritorious defenses to Olson’s claims, such as agreeing to
extend the balloon payment deadline. Velva Parks filed a proposed answer and
counterclaim with its motion, and requested a hearing without specifying
whether the request was for oral argument, presenting evidence, or both.

[¶5] A hearing on the motion to vacate was held where the parties provided
oral argument. Neither party called a witness or presented evidence. The
district court denied the motion to vacate, concluding Velva Parks failed to
show mistake, inadvertence, or excusable neglect justifying vacating default
judgment. Specifically, the court noted that Velva Parks failed to provide any
evidence from Legalinc regarding service and that the computer photograph
without supporting testimony was “unreliable.”

                                        II

[¶6] Velva Parks argues the district court abused its discretion in denying its
motion to vacate. Rule 60(b), N.D.R.Civ.P., allows the court to relieve a party
from a final judgment for: “(1) mistake, inadvertence, surprise, or excusable
neglect; . . . or (6) any other reason that justifies relief.” We review the court’s
denial of a Rule 60(b) motion for an abuse of discretion. DCI Credit Servs., Inc.
v. Plemper, 2021 ND 215, ¶ 7, 966 N.W.2d 904. The court abuses its discretion
only when it acts in an arbitrary, unreasonable, or unconscionable manner, or
when it misinterprets or misapplies the law. Monster Heavy Haulers, LLC v.
Goliath Energy Servs., LLC, 2016 ND 176, ¶ 10, 883 N.W.2d 917. An abuse of
discretion by the court is “never assumed and must be affirmatively
established.” AE2S Constr., LLC v. Hellervik Oilfield Techs. LLC, 2021 ND 35,
¶ 10, 955 N.W.2d 82. A movant under Rule 60(b) has the burden of establishing
sufficient grounds for disturbing the finality of the judgment. Plemper, at ¶ 7.
The movant must “show more than that the lower court made a ‘poor’ decision,
but that it positively abused the discretion it has in administering the rule. We
will not overturn that court’s decision merely because it is not the one we may
have made if we were deciding the motion.” Id. The court generally has “greater
liberty in granting motions under N.D.R.Civ.P. 60(b) when the matter involves
a default judgment rather than a judgment following a full trial on the merits.”

                                         2
Bickler v. Happy House Movers, L.L.P., 2018 ND 177, ¶ 12, 915 N.W.2d 690. A
Rule 60(b) motion, however, “is not a substitute for appeal and should not be
used to relieve a party from free, calculated and deliberate choices he or she
has made.” Id.

[¶7] In AE2S Construction, default judgment was entered against Hellervik
after its registered agent received the summons and complaint and it did not
answer or otherwise respond within 21 days from service of the summons and
complaint. 2021 ND 35, ¶ 2. Hellervik moved to vacate default judgment under
N.D.R.Civ.P. 60(b)(1), arguing mistake, inadvertence, or excusable neglect
because it erroneously believed its pre-suit attorney would respond to the
complaint. Id. at ¶¶ 11, 13. We concluded “Hellervik’s disregard of service of
process does not constitute mistake, inadvertence, or excusable neglect under
N.D.R.Civ.P. 60(b)(1).” Id. at ¶ 13. We also rejected Hellervik’s N.D.R.Civ.P.
60(b)(6) argument that “under the liberal construction and application of
Rule 60(b), the circumstances of this case justify relief.” Id. at ¶ 17 (citation
omitted).

[¶8] It is undisputed Legalinc is Velva Parks’ registered agent, Velva Parks
through Legalinc was properly served with the summons and complaint, and
Velva Parks did not answer or otherwise appear within 21 days from service.
See N.D.R.Civ.P. 12(a)(1)(A) (requiring defendant to answer within 21 days).
Velva Parks argues that it did not answer or otherwise appear due to mistake,
inadvertence, or excusable neglect. Specifically, it argues its registered agent
did not notify it of the summons and complaint. In AE2S Construction,
Hellervik failed to answer believing its pre-suit attorney would answer. Here,
Velva Parks’ owner stated it did not answer because he was unaware of the
summons and complaint. The cases are similar in that the registered agents
for the companies were properly served and the companies failed to answer or
appear. Here, we similarly conclude Velva Parks’ failure to adequately show it
was unaware of the summons and complaint based on its agent’s lack of
notification amounts to disregard of service of process which does not
constitute mistake, inadvertence, or excusable neglect under N.D.R.Civ.P.
60(b)(1). AE2S Constr., 2021 ND 35, ¶ 13; see also State v. $33,000.00 U.S.

                                       3
Currency, 2008 ND 96, ¶ 14, 748 N.W.2d 420 (“A simple disregard of legal
process is, of course, not excusable neglect under the rule.”).

[¶9] This Court has recognized that N.D.R.Civ.P. 60(b) may include relief
from the mistake or neglect of others. Kulm Credit Union v. Harter, 157 N.W.2d
700, 707 (N.D. 1968). To the extent Velva Parks argues there is a material
difference between its neglect and its registered agent’s neglect, we conclude
the district court did not err in determining the photograph showing
notifications was unreliable without further supporting testimony or
documentation. The photograph appears to show the electronic notifications
Kramer received from Legalinc, of which, the summons and complaint appear
to be absent based on the titles. However, as the court noted, all eight
notifications in the photograph were “unread.” The court also noted there was
no testimony or documents from Legalinc concerning what the registered agent
did, if anything, after being served by Olson. Thus, we conclude the court did
not err in concluding Velva Parks failed to meet its burden of establishing
sufficient grounds for disturbing the finality of the judgment.

[¶10] Velva Parks argues the district court abused its discretion by failing to
liberally construe its motion and cites Murdoff v. Murdoff for the proposition
that “[w]hen a defaulting party has a meritorious defense and timely seeks
relief, doubt, if any, should be resolved in favor of the motion to set aside the
judgment.” 517 N.W.2d 402, 404 (N.D. 1994) (quotations omitted). Olson
argues that although the court found the motion to vacate timely, Velva Parks
has not shown a meritorious defense.

[¶11] Kramer stated in his affidavit, “Upon knowledge and belief, Velva Parks
LLC has meritorious defenses against the claims in the Complaint.” In its
proposed answer, Velva Parks alleged the complaint fails to state a claim upon
which relief can be granted, estoppel, release, waiver, and “any or all of the
affirmative defenses contemplated by [N.D.R.Civ.P.] 8.” Olson contends
Kramer’s conclusory statement that Velva Parks has meritorious defenses is
insufficient to vacate judgment. Bare assertions without credible facts or
specific legal grounds do not give rise to an allegation of a meritorious defense
under N.D.R.Civ.P. 60. $33,000.00 U.S. Currency, 2008 ND 96, ¶ 19.

                                       4
[¶12] Velva Parks provided nothing to specifically support any of the alleged
affirmative defenses. However, as a part of its proposed counterclaim, Velva
Parks alleged that they “agreed that an extension would be granted, through
January of 2023, to make said balloon payment.” Velva Parks does not
specifically argue on appeal that its allegation that they agreed to extend the
final balloon payment provides a meritorious defense. Indeed, the allegation
appears as a part of its proposed breach of contract counterclaim, not as one of
its affirmative defenses. However, the allegation in the counterclaim about
extension is similar in substance to the affirmative defense of waiver. See In re
Estate of Sande, 2020 ND 125, ¶ 19, 943 N.W.2d 826 (“A waiver occurs when a
person voluntarily and intentionally relinquishes a known right or privilege.”).
The purpose of N.D.R.Civ.P. 8(c) is to prevent surprise from affirmative
defenses raised for the first time at trial. First Nat’l Bank of Belfield v. Burich,
367 N.W.2d 148, 152 (N.D. 1985). Failure to comply precisely with Rule 8(c) is
not always fatal. Id.

[¶13] Olson responded to the allegation in an affidavit, stating no agreement
for extension had been reached. Even if the district court had broadly
construed the counterclaim as an affirmative defense, Velva Parks failed to
present any evidence at the hearing either through documentation or
testimony that the parties actually agreed to an extension. Accordingly, we
conclude the “extension” allegation is unsupported by credible facts and Velva
Parks has not presented a meritorious defense warranting reversal. See
$33,000.00 U.S. Currency, 2008 ND 96, ¶ 19 (rejecting alleged meritorious
defenses because they were not supported with “enough credible facts or
specific legal grounds to vacate the judgment”).

[¶14] We conclude the district court did not abuse its discretion in denying the
motion to vacate judgment.

                                       III

[¶15] The order denying Velva Parks’ motion to vacate default judgment is
affirmed.

                                         5
[¶16] Jon J. Jensen, C.J.
      Daniel J. Crothers
      Lisa Fair McEvers
      Jerod E. Tufte
      Douglas A. Bahr

                            6