Court Opinion

ID: 9545003
Source: CourtListenerOpinion
Date Created: 2023-08-07 17:04:29.008995+00
Date Added: 2024-06-11T15:13:51.795342
License: Public Domain

WOOD, Judge (specially concurring). The trial court set the default judgment aside under clause 6 of R.Civ.Proc. 60(b). The propriety of this action is the dispositive appellate issue. To set aside any default judgment under R.Civ.Proc. 60(b), defendant must show there is a meritorious defense and the existence of grounds for setting the judgment aside. Marberry Sales, Inc. v. Falls, 92 N.M. 578, 592 P.2d 178 (1979). Defendant’s showing of a meritorious defense was uncontradicted. See Springer Corporation v. Herrera, 85 N.M. 201, 510 P.2d 1072 (1973). Only the grounds for setting aside the judgment are in issue. Relief under clause 6 is authorized when appropriate to accomplish justice and requires a showing of exceptional circumstances. Parks v. Parks, 91 N.M. 369, 574 P.2d 588 (1978). Inasmuch as the trial court’s order will be reversed only for an abuse of discretion, Marberry Sales Inc. v. Falls, supra, the question is whether the trial court’s view of exceptional circumstances was not in conformity to law and, therefore, an abuse of discretion. Springer Corporation v. Herrera, supra. In considering the question of exceptional circumstances: 1. It is incorrect to equate the “exceptional circumstances” of clause 6 for setting aside a judgment with the “good cause” required under R.Civ.Proc. 55(c) to set aside an entry of default prior to judgment. See Franco v. Federal Bldg. Service, Inc., 98 N.M. 333, 648 P.2d 791 (1982). Clause 6 is a residual clause to cover unforeseen contingencies and exceptional situations. 7 Moore’s Federal Practice ¶ 60.27[2] (2d ed. 1982). Thus the “good cause” of the first five clauses may not be utilized for relief under clause 6. Parks v. Parks, supra. 2. However, in determining exceptional circumstances, the trial court “should keep in mind that default judgments are not favored and that causes should generally be tried upon their merits.” Marberry Sales, Inc. v. Falls, supra. Moore’s, supra, at 362, states that default judgments “must be considered against a background of general preference for disposition of cases on their substantive merits.” The following items, considered in light of the preference for trial on the merits, were a sufficient showing of exceptional circumstances: (a) The trial court’s evaluation that defendant “did all that was required of him. That is, he took it [the suit papers] to his insurance carrier, which was a reasonable thing to do.” (b) Defendant was misled into inaction when the insurance agent “said he would promptly turn it [the suit papers] over to the insurance company and not to worry about it.” The insurance company never received the suit papers from the agent and, thus, never employed counsel to defend plaintiff’s suit. (c) Plaintiff’s knowledge that defendant was insured and that insurance coverage had never been denied. Plaintiff negotiated with the insurance company pri- or to the time suit was filed. (d) The entry of a default judgment for $50,000.00 without any proof of damages. See R.Civ.Proc. 55(e); Gallegos v. Franklin, 89 N.M. 118, 547 P.2d 1160 (Ct. App.1976). (e) Plaintiff’s lack of action to collect the default judgment until the one year period for relief under clause 1 of R.Civ. Proc. 60(b) had expired. (f) Defendant’s lack of knowledge of the default judgment until the one year period for relief under clause 1 had expired, and the undisputed showing that the only bar to relief under clause 1 was the one year time limitation. The “exceptional” aspect of the above circumstances is that defendant was originally misled into inaction and that plaintiff, with knowledge of insurance coverage, avoided alerting defendant to the need to take action in connection with an erroneous damage judgment until clause 1 relief was barred. The trial court did not abuse its discretion in setting aside the default judgment; setting the default judgment aside, under clause 6, was appropriate to accomplish justice.