Court Opinion

ID: 9685400
Source: CourtListenerOpinion
Date Created: 2023-08-24 14:36:11.08429+00
Date Added: 2024-06-11T18:18:05.462726
License: Public Domain

SABERS, Justice
(dissenting).
The trial court decision vacating the $20,-000 default judgment should be affirmed because:
*8391. THE NEGLECT IN THIS CASE, ALTHOUGH OBVIOUS AND SEVERE, WAS THAT OF ATTORNEY WENDT AND NOT THAT OF THE CLIENT PRIDHAM. Pridham first learned of the default judgment against him when attempts were made to execute upon real property owned by him in South Dakota. He promptly retained present counsel. Pridham moved to set aside the default judgment pursuant to SDCL 15-6-60(b). In an affidavit in support of the motion to vacate the default judgment, he relayed to the trial court his lack of knowledge concerning the outstanding interrogatories and the scheduled trial date. He indicated that he was unaware that Attorney Wendt had been delinquent in complying with any of the trial court’s orders, and that he complied with any order known to him. The motion to vacate the default judgment was based on Pridham’s lack of negligence and knowledge of his attorney’s neglect in the proceedings. Attorney Wendt concurred in Pridham’s version of these facts. These facts remain unchallenged. Accordingly, Pridham is free from neglect and took prompt action upon discovery of his attorney’s neglect.
2. THE TRIAL COURT PROPERLY GRANTED PRIDHAM RELIEF FROM THE DEFAULT JUDGMENT. A decision on a motion to vacate a default judgment rests in the sound discretion of the trial court and will not be disturbed on appeal absent abuse of that discretion. Midcontinent Broadcasting Co. v. Ava Corp., 329 N.W.2d 378, 380 (S.D.1983). “Default judgments are not favored in the courts since their effect is to prevent a trial on the merits.” National Surety Corp. v. Shoemaker, 86 S.D. 302, 309, 195 N.W.2d 134, 138 (1972). Justice is served by a trial on the merits. Justice is not served when the system is used to punish a litigant on a technicality such as his lawyer’s neglect. Midcontinent Broadcasting, supra, citing Ackerman v. Burgard, 79 S.D. 119, 123, 109 N.W.2d 10, 12 (1961), National Surety Corp., supra, 195 N.W.2d at 138.
Pridham successfully carried his burden before the trial court in having the default judgment vacated. It is now Strub’s burden to show this court that the trial court abused its discretion in making that determination. Strub failed in that burden and the trial court did not abuse its discretion.
3.PRIDHAM HAS ESTABLISHED A MERITORIOUS DEFENSE SUFFICIENT FOR VACATING A DEFAULT JUDGMENT. For purposes of relief from a default judgment, a party may meet the meritorious defense requirement by presenting facts “either by answer or affidavit from which it could be inferred that upon a trial he would be entitled to a judgment more favorable to himself than the judgment from which he is seeking relief.” Eby v. Misar, 345 N.W.2d 381, 383 (S.D.1984); McDonald v. Egan, 43 S.D. 147, 178 N.W. 296 (1920). The applicant for relief need only make a prima facie showing that a defense exists to satisfy the meritorious defense requirement. The requirement does not contemplate two trials on the merits. National Surety, Corp., supra, 195 N.W.2d at 138-139.
Strub’s cross-claim contained allegations of fraud and misrepresentation. Pridham’s answer specifically denied those allegations of fraudulent or gross misrepresentations. In addition, Attorney Wendt, on behalf of Pridham, filed motions urging the trial court to dismiss Strub’s cross-claim. He alleged, among other things, the defense of res judicata, on the basis that the matter was previously litigated in a small claims action and Pridham reasonably could have believed that the action was settled there.
In determining whether the pleadings filed by Pridham in the action can constitute a “meritorious defense,” the court should not examine their probable success at trial. See National Surety Corp., supra, 195 N.W.2d at 139. “The underlying concern [of the meritorious defense requirement] is to determine whether there is some possibility that the outcome of the suit after a full trial will be contrary to the result achieved by the default.” (emphasis added). 10 C. Wright, A. Miller & M. Kane Federal Practice and Procedure § 2697 (1983). Should Pridham prevail at a trial with his defense that he made no misrepresentations, the outcome would be different and more favorable to Pridham than that *840provided by the default judgment. The meritorious defense requirement is fulfilled a second time because, if the matter was previously litigated in a small claims action it would be res judicata. The third reason supporting a meritorious defense is even more basic. Findings of fact and conclusions of law dated July 2, 1987, state in part:
For reasons that will appear more fully herein, the Court hereby grants default judgment in favor of Michael and Rosemarie Strub and against Phil Pridham, in the sum of ... ($20,000).
There is no proof or support in this record for the establishment of $20,000 in liquidated damages in this case. In the absence of solid proof of these liquidated damages in the amount of $20,000, the trial court was correct in vacating the $20,000 default judgment. He exercised his discretion soundly. For this court to reverse it, invades the trial court’s sound discretion and oversteps our role as a reviewing court under the abuse of discretion standard.