Court Opinion

ID: 9537628
Source: CourtListenerOpinion
Date Created: 2023-08-07 07:20:36.706515+00
Date Added: 2024-06-11T14:56:49.907997
License: Public Domain

DURHAM, Justice
(dissenting):
I dissent from the majority opinion’s af-firmance of the trial court’s ruling that the appellant had no “meritorious defenses” which would permit the setting aside of this default judgment. I agree with that portion of the opinion which concludes that the appellant has met his burden on the issues of timeliness and excusable neglect. The majority opinion correctly states that the trial court “denied defendant’s motion to set aside the default judgment on the grounds that defendant had failed to state a defense in his proposed answer to the complaint.” However, the opinion then proceeds to analyze the appellant’s defense, not on the basis of the legal merit of the contents of his Answer, but rather on the basis of the facts which would support or undermine the proposed defenses. Such an analysis should never be undertaken on a motion to vacate a default judgment or on an appeal from a ruling thereon. Once timeliness and a basis for relief under Rule 60(b) of the Utah Rules of Civil Procedure have been established, the sole issue is whether, as a matter of law, a defendant’s proposed Answer contains a defense which is entitled to be tried.
The Utah cases cited by the majority opinion bear out this view.1 In Downey State Bank v. Major-Blakeney Corporation, Utah, 545 P.2d 507 (1976), this Court said:
[A]s a general proposition, one who seeks to vacate a default judgment must proffer some defense of at least sufficient ostensible merit as would justify a trial of the issue thus raised.
Id. at 510 (emphasis added). In Mason v. Mason, Utah, 597 P.2d 1322 (1979), the proposed defense concerned a statute of limitations and raised an issue of law regarding the statute’s applicability. Because, as a matter of law, the defense was not meritorious, i.e., the statute of limitations was unavailable as a defense, this Court upheld the trial court’s ruling that “defendant had not tendered a meritorious defense to the plaintiff’s complaint.” There is no suggestion in this Court’s prior rulings on this issue that a defendant must or should be “put to his proof” on his proposed defenses before he is eligible to have a default judgment vacated. The holding of the majority opinion will require the proffer, if not the production, of a defendant’s entire case on the hearing of a motion to set aside a default judgment. Such a requirement at the very outset of a case, and prior to any discovery, places an unduly onerous burden on a defendant otherwise eligible for relief under Rule 60(b) and on trial courts which *1060may have -to conduct “mini-trials” whenever the entry of a default judgment is challenged. The major purpose of the “meritorious defense” rule is to prevent the necessity of judicial review of questions which, on the face of the pleadings, are frivolous. Where, however, the proffered defense is meritorious as a matter of law, aside from the question of whether it can be proved at trial, a defendant should be permitted to go to trial if he has shown good cause for failure to file an Answer and has requested relief promptly.
The complaint in this action alleges that Linda Coram made a written assignment of benefits whereby the respondent Department of Social Services became subrogated to recover sums it had advanced to her from third-party payments. It also alleges that the respondent is entitled to $82,522.22 by reason of the operation of the Medical Benefits Recovery Act. See U.C.A., 1953, §§ 26-19-1 to -17 (Supp.1981) (original version at U.C.A., 1953, §§ 55-15d-l to -17 (Supp.1979)). The complaint does not specifically allege that the respondent complied with the Act in perfecting its lien on the settlement in Ms. Coram’s lawsuit. In his proffered Answer, the appellant Musselman denied that he failed to comply with the requirements of the Act, denied that the respondent’s lien was valid, denied the allegation that there was no contract between him and the respondent respecting attorney’s fees, and denied that the respondent was entitled to recover the entire sum claimed. As affirmative defenses, the appellant’s proposed Answer alleged: 1) that the Recovery Act limits the respondent’s recovery to “the total amount of medical expenditures for the benefit of the beneficiary less twenty-five (25%) percent and less that portion of the cost of litigation expenses pertaining to the [respondent]”; 2) that the respondent failed to comply with the Act, “which compliance is a condition precedent to being entitled to any recovery whatsoever”; 3) that the action should be dismissed pursuant to § 55-15d-ll, and § 55-15d-12 of the Act (the statute of limitations); and 4) “that the [respondent] is not entitled to full recovery under the appropriate Sections of the Utah Code for the reason that the beneficiary, Linda Ann Cor-am, has not been fully compensed [sic] or made wholly [sic] by reason of the settlement effected in her case against the responsible health-care provider and that, therefore, the [respondent] should share in an appropriate equitable reduction of benefits under the Rules of Law pertaining to subrogations.”
The majority opinion claims that “the fact of an assignment and right of subrogation was ... clearly established .... ” To the contrary, however, the respondent’s right of subrogation, and particularly the amount of its lawful claim, is sharply disputed in the pleadings discussed above. Furthermore, the record shows that the trial court heard no evidence whatsoever respecting the applicability of the Recovery Act, the perfection of the respondent’s lien and its compliance with the Act, the statute of limitations, and the right of the state to receive reimbursement if Ms. Coram can show that she has not been “made whole” by her settlement. The defendants Coram and Musselman have not had a “day in court” or a hearing on any of these issues, and this Court is not in a position to find facts in the absence of any record. The defenses outlined above, if proved, would preclude the respondent’s recovery, or at least reduce the amount thereof. The trial court was in error in holding that those defenses were not “meritorious.” While I acknowledge that there is a strong suggestion in the record of this case that Mr. Musselman’s dealings with the respondent have been improper, it is not he who “loses” by reason of this decision. The person who will in fact suffer is Ms. Coram, whose right to retain a larger portion of her personal injury settlement will never be litigated. The trial court abused its discretion in failing to set aside the default judgment and permit the filing of an answer. I would reverse.
STEWART, J., concurs in the dissenting opinion of DURHAM, J.

. The two cases from other jurisdictions cited in footnote 8 of the majority opinion are not helpful. In DeHoney v. Hernandez, 122 Ariz. 367, 595 P.2d 159 (1979), the existence of a “meritorious defense” was conceded by the parties and therefore not discussed by the Arizona Supreme Court. In White v. Holm, 73 Wash.2d 348, 438 P.2d 581 (1968), the Supreme Court of Washington held, I believe erroneously, that a moving party must show “substantial evidence extant to support, at least prima facie, a defense to the claim asserted by the opposing party.” Id. at 352, 438 P.2d at 584.