Court Opinion

ID: 8245968
Source: CourtListenerOpinion
Date Created: 2022-10-16 09:33:29.331479+00
Date Added: 2024-06-11T16:42:41.731513
License: Public Domain

SANDSTROM, Justice,
dissenting.
[¶ 16] In the interest of justice and under the laws of the state, I would reverse and remand. I would direct the district court to vacate the default judgment because:
• The judgment is unconscionable and goes far beyond what was asked for in the complaint.
• The record reflects that the plaintiff executed a false affidavit and that her attorney, knowing it was false, filed it with the court.
• The district court abused its discretion when it refused to vacate an unconscionable judgment.
• The district court abused its discretion when it refused to vacate a judgment entered contrary to law.
• There is no presumption that a wrongly addressed notice was delivered.
• The district court inexplicably relied on alleged settlement negotiations and on material not in the record.
I
[¶ 17] Joan Warnke sued David Warnke for divorce. He admitted personal service of the complaint on December 9, 2009. In the complaint, she asked for physical custody of the children with liberal visitation for David Warnke, “an equitable division of the debts incurred by the parties during the marriage,” and “an equitable division of personal and real property of the parties.” She also asked that David Warnke be ordered to pay child support under the guidelines and that “neither party pay to the other any spousal maintenance.”
[¶ 18] Joan Warnke moved for a default judgment, executing in support of it an affidavit falsely swearing “[t]hat all debts and property have been divided to both parties!’] satisfaction pursuant to a signed stipulation, it is agreed that the stipulation is fair and equitable.” Her lawyer, Thomas Omdahl, knowing the affidavit to be false, filed it with the district court. In fact, there has never been such a stipulation in this case.
[¶ 19] David Warnke appeared at the hearing on June 28, 2010, and the apparently flustered attorney Omdahl admitted, “It wasn’t anticipated that Mr. Warnke was going to be here, and so now he has shown up, and there’s just a couple issues.” And Omdahl said, “[S]o there’s not going to be any default here.” David Warnke spoke only 27 words at the hearing.
[¶ 20] Omdahl scheduled another hearing for August 16, 2010. He claims he mailed a notice of the hearing to David Warnke. Omdahl acknowledges he addressed the notice to Campbell Avenue even though David Warnke lives on Campbell Drive.
[¶ 21] At the hearing, Omdahl presented a “stipulation” that had been signed by Joan Warnke but not by David Warnke. Even though Omdahl did not represent David Warnke and N.D.R.Ev. 408 precluded the admissibility of settlement discussions, Omdahl said, “We made the changes I think that I understood they had agreed to and he was provided a copy and he never came in to sign it and he didn’t get an attorney and I am assuming it’s acceptable to him.” In fact, the “stipulation” Omdahl filed at the hearing reflects that Joan Warnke signed the document on April 2, 2010. The first hearing occurred after that date, and therefore the document could not have reflected the subsequently agreed-upon changes. During the hearing, the district court permitted Joan Warnke to testify about alleged settlement negotiations, even though N.D.R.Ev. 408 precluded the evidence’s admissibility. The district court received the “stipula*612tion” into evidence even though it had not been signed by David Warnke.
[¶ 22] The district court divided all of the property as orally requested by Joan Warnke, going far beyond the equitable division she had requested in her complaint, giving her substantial net assets and giving David Warnke substantial net debt. The district court offered no explanation for this substantial disparity. The district court also ordered that the parties split the cost of the children’s college education, even though that education would occur after their majority and it had not been requested in the complaint.
[¶ 28] Upon learning of the default judgment, David Warnke promptly sought relief. He submitted an affidavit stating he had not received notice of the hearing, it was not sent to his correct address, and he had not agreed to the alleged stipulation. He swore, “Based on the stipulation, I told Joan and Attorney Omdahl that the terms were unacceptable and I would not agree to the terms or sign the stipulation as presented.” He also swore, “I was awaiting another draft or acceptable terms to be presented but nothing arrived from Joan or Attorney Omdahl.”
[¶ 24] Thomas Omdahl submitted affidavits about the notice and what he claimed were the substance of negotiations.
[¶ 25] Although no hearing was held, the district court apparently chose to believe the affidavits of those who had previously submitted false affidavits to the court in this case, including inadmissible statements about settlement negotiations. The district court also quoted from a letter that is not in the record of this proceeding. That letter, as quoted by the district court in its order, reflects that immediately upon receiving the notice of entry of judgment, the defendant wrote to the judge, “I just received a letter in the mail from my wife’s attorney and nothing from the clerk of courts stating that I had any upcoming court date.”
II
[¶ 26] The district court abused its discretion in refusing to grant relief from the default judgment. And, it failed to follow the law in doing what it needed to do even if it was a default divorce case.
A
[¶ 27] Upon receiving the default judgment, David Warnke immediately sought a reversal. Although the district court may have been entitled to rely on the affidavits and testimony of one who had signed a false affidavit in the course of the proceeding and her lawyer who submitted a false affidavit to the court in the course of the proceeding, the district court was not entitled to rely on evidence of settlement negotiations, nor was it entitled to rely on evidence that was not in the record. In addition, at the June 28 hearing, Thomas Omdahl stated, “[T]here’s not going to be any default here.”
[¶ 28] The majority says, at ¶ 8, “There is a rebuttable presumption that ‘a letter duly directed and mailed was received in the regular course of the mail.’ N.D.C.C. § 31-11-03(24).” It is undisputed that the mail to David Warnke was not “duly directed.” It does not follow that if the post office on occasion delivers misaddressed mail, it will do so consistently.
[¶ 29] As this Court has said, we “prefer a judgment on the merits over a default judgment when it is fair to do so.” Murdoff v. Murdoff, 517 N.W.2d 402, 403 (N.D.1994). “Decisions on the merits are of course preferable to those by default.” Bender v. Liebelt, 303 N.W.2d 316, 318 (N.D.1981).
*613B
[¶ 30] This Court has made clear that upon default, the plaintiff is entitled to no more than the relief sought in the plaintiffs complaint. “A district court is limited in its discretion to fashion ah appropriate award as part of a default judgment.” Luger v. huger, 2009 ND 84, ¶ 19, 765 N.W.2d 523. Rule 54(c), N.D.R.Civ.P., provides, in part: “A default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings.” “We have previously recognized that N.D.R.Civ.P. 54(c) protects the defaulting party because ‘it would be fundamentally unfair to give greater or different relief from that prayed for.’ ” Luger, at ¶ 19 (quoting Vande Haven v. Vande Hoven, 399 N.W.2d 855, 859 (N.D.1987)). “[A]n award of a default judgment different in kind from or exceeding the amount prayed for denies the defendant due process by failing to provide notice of the scope of the claim.” Id.
[¶ 31] Here the complaint had requested an equitable division of the debts and property. But the court awarded Joan Warnke net assets of $108,443, assuming the validity of the questionable “loans” from her mother, or $124,703 without them. The court awarded David Warnke net debt of $9,299. The court further ordered David Warnke to pay for one-half of the college education, even though it had not been requested in the complaint.
C
[¶ 32] In Dethloff v. Dethloff, 1998 ND 45, 574 N.W.2d 867, this Court made clear that even in the case of default, the district court must equitably divide the property and make findings as to why a particular division is equitable. Id. at ¶¶ 19-24. It is not acceptable to simply follow the plaintiffs proposal. Id. at ¶ 22. The court must find values and make a division under the Ruff-Fiseher guidelines. Id. at ¶¶ 22-24. And disparity is not justified by saying plaintiffs proposed property division “appears to be equitable.” Id. at ¶ 22.
[¶ 33] Here the district court simply followed Joan Warnke’s proposed property distribution, and without any explanation, labeled it “fair and equitable.”
[IT 34] Under N.D.C.C. § 14-05-24(1), the district court must make an equitable distribution of the parties’ marital property and debts. Few principles are more ubiquitous in our case law than the principle that a property division must be fair and equitable. See, e.g., Wagner v. Wagner, 2007 ND 101, ¶ 9, 733 N.W.2d 593. In a long-term marriage, we start with the premise of an equal distribution. Id. at ¶ 11. The distribution does not have to be equal to be equitable, but any substantial disparity must be explained. Id. at ¶ 10. Here there is no explanation.
D
[¶ 35] The district court ordered David Warnke to pay half of his children’s college education, even though this would occur after their majority. The evidence does not reflect that David Warnke has the means to comply with the order, nor do our laws impose that obligation absent an agreement. See Larson v. Larson, 2005 ND 67, 694 N.W.2d 13. Again, this had not been requested in the complaint.
E
[¶ 36] The only case that appears to rival this case for disparate property distribution is Bell v. Bell, 540 N.W.2d 602 (N.D.1995). In Bell, the district court awarded the few remaining assets to Kimberly Bell, and the debt to Kyle Bell. In that case, however, Kyle Bell expended almost 90 percent of the assets of the marriage in his criminal flight. Id. at 603. In this case, there is no explanation or *614apparent justification for the huge disparity-
[¶ 37] The majority, unable to meaningfully distinguish the legal requirements set out in Dethloff, seeks to rely on the stipulated judgment case of Clooten v. Clooten, 520 N.W.2d 843 (N.D.1994).
[¶ 38] The majority appears to claim that on appeal of a denial of a motion to vacate a default judgment, this Court can never look to what the district court ordered. Under the majority formulation, in default, a trial court can award anything a plaintiff suggests at the default hearing, even if it goes far beyond what was sought in the complaint.
[¶ 39] To follow the logic of the majority opinion, the district court could have denied the father any time with his children, even though the mother sought primary residential responsibility with liberal parenting time for the father. What if the judgment had terminated David Warnke’s parental rights? Would the majority contend that could not be considered on appeal? Could the court have ordered David Warnke to donate a kidney to someone if Joan Warnke had suggested it at the default hearing?
[¶ 40] Apparently, under the majority view, a party filing suit to declare an easement across a defendant’s property could be given complete (fee simple) title to the property of a defaulting defendant.
[¶ 41] Finally, the majority ignores the case of Crawford v. Crawford, 524 N.W.2d 833 (N.D.1994), decided just a few months after Clooten, declaring that courts should vacate under N.D.R.Civ.P. 60(b) “judgments that are unconscionable.”
Whether a party has agreed to the terms of a stipulation becomes irrelevant in light of the damage enforcement of an unconscionable decree would do to the duty and reputation of courts to do justice. Just as courts will not enforce an agreement that is illegal, so too courts should vacate judgments that are unconscionable. Rule 60(b)(vi), N.D.R.Civ.P., is available for just such a rare occasion and exceptional circumstance.
Crawford, at 836.
In “light of the damage enforcement of an unconscionable decree would do to the duty and reputation of courts to do justice,” the judgment in this case should be vacated.
Ill
[¶ 42] I would reverse and remand.
[¶ 43] DALE V. SANDSTROM