Court Opinion

ID: 9622987
Source: CourtListenerOpinion
Date Created: 2023-08-22 06:26:05.843221+00
Date Added: 2024-06-11T09:41:18.782598
License: Public Domain

OPINION LOPEZ, Judge. The plaintiff appeals an order vacating judgment by default for $114,800.00 which had been entered against the defendant, Albuquerque Anesthesia Services, Ltd. We affirm. The plaintiff asserts four points for reversal. These points may be discussed as one issue: whether the district court committed reversible error by vacating the default judgment under Rule 60(b) of the New Mexico Rules of Civil Procedure [§ 21-1-1(60) (b), N.M.S.A.1953 (Repl. Vol. 4, 1970)]. First of all, in order to properly explain our decision, we state the sequence of events that led to the default judgment and subsequently to this appeal. (1) The complaint was filed on October 11, 1974, against two defendants, Albuquerque Anesthesia Services, Ltd. (Albuquerque Anesthesia) and McKinley Phelps, Jr. (Phelps). The action was for defamation and sought, against both defendants, compensatory damages of $114,800.00, punitive damages of $250,000.00, plus interest and costs. Service of process was made upon a “Dr. Garcia (member)” for the defendant Albuquerque Anesthesia on October 11, 1974. Defendant Phelps was personally served, also on October 11, 1974. (2) Motion for default judgment against Albuquerque Anesthesia was filed at 4:30 p. m. on November 19, 1974. The plaintiff’s motion stated that service of process upon this defendant had been made by delivering a copy of the summons and complaint to an “officer” of the corporation. On record, the return of service mentions that service was made by delivering a copy of the summons and complaint to a “Dr. Garcia (member).” Default judgment was entered for $114,800.00 of compensatory damages against Albuquerque Anesthesia, not Phelps. The district court refused to grant punitive damages or costs. (3) The day following the entry of default judgment against Albuquerque Anesthesia, November 20, 1974, Phelps filed a motion to extend the time for answer. Order of extension was approved by plaintiff’s attorney and was duly signed and entered by the court the same day. At this point a dispute arises. In a letter from Mr. Carvajal, attorney for plaintiff, to. Mr. Paulantis, attorney for defendants, it appears that Mr. Carvajal agreed to an extension of time for answer. This letter, dated November 14, 1974, approves the extension. It stated: “[ejnclosed please find the original of your proposed [ojrder extending time for response in the captioned case.” (Emphasis added). Although both defendants were represented by the same attorney, and the motion for extension was captioned with Phelps and Albuquerque Anesthesia, the motion asked for an extension only for Phelps. The order granting extension, although captioned with both defendants, referred and applied only to Phelps. Briefs and oral argument give no reason for the defendant’s oversight in drafting the order so as to refer solely to Phelps. Plaintiff’s attorney, apparently capitalizing on this oversight, moved for default judgment five days after giving his approval for an extension. The day after the entry of default judgment, the defendant filed the motion'and order to extend which were defective because of reference only to Phelps. But they were captioned with Phelps and Albuquerque Anesthesia. It is difficult for this Court to believe that plaintiff’s attorney considered the order for extension applicable only to Phelps when he signed the order “A. M. Carvajal for plaintiff” and acknowledged approval for an extension “in the captioned case.” Defendant’s attorney clearly intended that the motion and order apply to Albuquerque Anesthesia. (4) Answer was filed on November 21, 1974, by both defendants, Phelps and Albuquerque Anesthesia, through the same attorney, Mr. Paulantis. No effort was made by the plaintiff to execute his judgment and the case proceeded through discovery. (5) After plaintiff obtained a writ of garnishment on January 23, 1976, motion to vacate the default judgment against Albuquerque Anesthesia was filed on February 6, 1976. (6) Order to set aside the default judgment was entered on March 23, 1976. This order is the subject of this appeal; it concerns Albuquerque Anesthesia, not Phelps. A hearing to set aside was held on February 23, 1976, and the record shows the following: (a) an affidavit by J. T. Paulantis, attorney for Albuquerque Anesthesia, indicating there was no notice of default on record when he filed the motion and order for extension and that he did not know of the default judgment until January 23, 1976, when the plaintiff’s attorney obtained the writ of garnishment; (b) a copy of the judgment of default does not contain verification of notice to opposing counsel; (c) a copy of the aforementioned letter from Mr. Carvajal to Mr. Paulantis dated November 14, 1974; (d) an affidavit by Deputy Sheriff Pacheco, who served the summons and complaint, indicating that he served Dr. E. R. Garcia, a member of Albuquerque Anesthesia, because no resident or managing agent, officer or director was present or available. The order of the district court reads: “The motion of Albuquerque Anesthesia Services, Ltd., for an order setting aside the default and default judgment entered herein on November 19, 1974 came on regularly to be heard February 23, 1976 with parties appearing by their respective counsel and evidence both oral and documentary having been introduced, and the motion having been argued, and submitted, and the Court being fully advised in the premises, “IT IS HEREBY ORDERED, ADJUDGED AND DECREED that the motion of Albuquerque Anesthesia Services, defendant, be, and the same hereby is granted and that the default and default judgment heretofore entered in this action be, and the same hereby is, set aside and vacated, and that the answer of Albuquerque Anesthesia Services, Ltd. filed November 21, 1974 shall remain as the answer of Albuquerque Anesthesia Services, Ltd. to the complaint without further service of same on plaintiff [sic].”  We quote the order in full to show that it did not state the law upon which the district court proceeded. But we need to consider only one theory which sustains the court’s order. The order setting aside the default judgment is final and appealable under Rule 54(b)(2) [§ 21-1-1(54) (b) (2), N.M.S.A.1953 (Repl. Vol. 4, 1970)].  A threshold issue is presented by plaintiff’s first point, that the district court had no jurisdiction to vacate the judgment. He relies on § 21-9-1, N.M.S.A.1953 (Repl. Vol. 4, 1970), which in pertinent part reads as follows: “. . . Final judgments and decrees, entered by district courts in all cases tried pursuant to the provisions of this section shall remain under the control of such courts for a period of thirty days after the entry thereof, and for such further time as may be necessary to enable the court to pass upon and dispose of any motion which may have been filed within such period, directed against such judgment . . . .” More than thirty days had elapsed after the default judgment when it was vacated. This section, however, is inapplicable because it deals with final judgments and the default judgment in this case is not final. Judgment was only for compensatory damages; the issues of punitive damages and costs were left open or pending. We conclude that the default judgment was interlocutory. Brown v. Lufkin Foundry & Machine Co., 83 N.M. 34, 487 P.2d 1104 (Ct.App.1971); N.M.R.Civ.P. 54(b)(1), supra. Also, § 21-9-1, supra, does not conflict with Rule 60(b), supra, under which it appears the lower court proceeded. See Wooley v. Wicker, 75 N.M. 241, 403 P.2d 685 (1965); Martin v. Leonard Motor-El Paso, 75 N.M. 219, 402 P.2d 954 (1965). Rules 55(c) and 60(b) are applicable. [Sections 21-1-1(55) (c), (60) (b), N.M.S. A. 1953 (Repl. Vol. 4, 1970)]; Otis Engineering Corporation v. Grace, 86 N.M. 727, 527 P.2d 322 (1974). Rule 55(c) provides that for “good cause shown, the court may set aside an entry of default and, if judgment by default has been entered, may likewise set it aside in accordance with Rule 60.” Weisberg v. Garcia, 75 N.M. 367, 404 P.2d 565 (1965). It is not evident from the court’s order whether it proceeded under Rule 60(b), but Albuquerque Anesthesia’s motion to vacate the default judgment asked the district court: “. . . to stay proceedings to enforce the judgment, pursuant to Rule 60b . , New Mexico Rules of Civil Procedure. Further, this motion is an independent action to relieve this party from the judgment as provided in Rule 60b.”  Plaintiff contends that the trial court erred in vacating the judgment under Rule 60(b) (4). We disagree. The motion for default judgment filed by plaintiff is not consistent with the return of service and the affidavit of Deputy Sheriff Pacheco that service of process was made on a member, not an officer or as otherwise provided in Rule 4(o), N.M.R.Civ.P. [§ 21-1-1 (4)(o), N.M.S.A.1953 (Repl. Vol. 4, 1970)]. It is probable the court considered oral and documentary evidence; the court could have found the judgment void although it did not make this ruling explicit. See In re Guardianship of Caffo v. Cortese, 69 N.M. 320, 366 P.2d 848 (1961). See also Chaves v. County of Valencia, 86 N.M. 205, 521 P.2d 1154 (1974). We do not comment on the sufficiency of process because the district court has ordered, and we agree, that the answer of Albuquerque Anesthesia on November 21, 1974, shall stand without further service.  Finally, the dispositive point is that the district court could set aside the default judgment under Rule 60(b)(6). Under subsection (b)(6) the district court, within a reasonable time, can grant relief or vacate for any other reason justifying relief from the operation of the judgment. Home Savings & Loan Ass’n v. Esquire Homes, Inc., 87 N.M. 1, 528 P.2d 645 (1974). This is to be applied liberally. Foundation Reserve Insurance Co. v. Martin, 79 N.M. 737, 449 P.2d 339 (Ct.App.1968). Moreover, Rule 60(b) does not limit the power of the court to entertain an independent action to relieve the party from a judgment, order or proceeding, or to set aside a judgment for fraud upon the court. The defendant’s motion was an independent action. Plaintiff contends that there are insufficient facts or evidence to support the court’s order under subsection (b)(6). It was incumbent, however, upon plaintiff to include in the record the facts and testimony to support this argument. In re Guardianship of Caffo v. Cortese, supra. He failed to do so. No request for a transcript of proceedings was made; consequently, we follow the rule of Fisher v. Terrell, 51 N.M. 427, 187 P.2d 387 (1947) : “We have a well-established rule that upon a doubtful or deficient record, every presumption is indulged in favor of the correctness and regularity of the decision of the trial court, and we indulge such presumption in support of the order entered.”  The motion to set aside or vacate a default judgment is addressed to the sound discretion of the trial court. We believe that under all the circumstances and upon the record, the district court did not abuse its discretion. There is evidence of a meritorious defense and there are no intervening equities. Furthermore, this decision is compelled by the policy of law which prefers that cases be decided on the merits. This policy looks with disfavor upon default judgments and the litigant who attempts to take advantage of the mistake, surprise, inadvertence, or neglect of an adversary. Springer Corporation v. Herrera, 85 N.M. 201, 510 P.2d 1072 (1973); Foundation Reserve Insurance Co. v. Martin, supra; Weisberg v. Garcia, supra. Judgment of the district court is affirmed. IT IS SO ORDERED. WE CONCUR: SUTIN, J., specially concurs. HERNANDEZ, J., concurs in the result only.