Opinion
No. WD67217
May 22, 2007
Appeal from Circuit Court of Miller County, Hon. David Gregory Kays.
James Edward Corbett, Jr., David Thomas Tunnell, Ann Rachelle Littell and Matthew Woods Corbett, Counsel for Appellant.
Susan Ford Robertson and Jeffrey Owen Parshall, Counsel for Respondent.
Opinion
Randall and Cindy Brungard appeal the judgment of the trial court setting aside a default judgment the Brungards received against Patti Cakes Baking Company, Inc. We reverse the judgment.
Procedural and Factual Background
On January 29, 2004, the Brungards filed a petition against "Risky's, Inc." in the Circuit Court of Miller County, Missouri. The petition alleged, inter alia, that Randall Brungard had slipped and fallen on a wooden ramp located on property owned and controlled by Risky's, Inc. Randall Brungard made claims against Risky's, Inc. based upon the injuries he sustained, and Cindy Brungard made claims based upon loss of consortium. The Brungards filed an amended petition on September 15, 2005, adding Patti Cakes Baking Company, Inc., d/b/a Risky's Pizza and Spirits and d/b/a Risky's Pizza and d/b/a Risky's, as a defendant.
James Wedig is one of the owners of and the registered agent for Patti Cakes Baking Company, Inc. On January 18, 2006, he received process on behalf of Patti Cakes Baking Company, Inc. The defendant did not file an answer or otherwise defend within thirty days following the service.
Two months later, on March 27, 2006, the Brungards filed a motion for default judgment against Patti Cakes. A hearing on the motion was held on April 13, 2006. The Brungards appeared in person and by their attorney. No one from Patti Cakes appeared on its behalf. The trial court entered a default judgment in favor of the Brungards.
On May 3, 2006, three and one-half months after service, Patti Cakes filed a motion to set aside the default judgment. On May 17, 2006, Patti Cakes filed suggestions in support of this motion along with an affidavit of James Wedig. The affidavit stated that Mr. Wedig believed he was served with a summons on or about January 18, 2006, and that he "thought" he faxed the summons to his insurance agent for delivery to his insurance carrier. The affidavit further stated that Mr. Wedig could not find the summons and was not sure what he did with it, but that he did not intentionally ignore the matter. The motion claimed that there was a meritorious defense based on the statute of limitations. In response, the Brungards conceded there was a meritorious defense and that the motion was timely filed, but took issue with Patti Cakes' claim of "good cause."
A hearing was held on June 15, 2006. Neither party put forth any evidence at the hearing. The trial court granted the motion to set aside the default judgment. The Brungards appeal.
Standard of Review
The Brungards asserted in their jurisdictional statement that because Patti Cakes did not file the supporting affidavit until May 17, the motion to set aside the default judgment was not effectively filed until after the time for filing authorized post-trial motions. The Brungards argue that the motion to set aside the default judgment was actually an independent action of the court, a separately appealable judgment. However, counsel for the Brungards nevertheless argues that the trial court ruling was an abuse of discretion rather than a misapplication of the law.
This court noted in McElroy v. Eagle Star Group, Inc., 156 S.W.3d 392 (Mo.App. 2005), that there was a great deal of confusion in the cases about whether a motion to set aside a default judgment, if filed within 30 days after the default judgment, is an authorized after-trial motion, as opposed to being an independent proceeding. Id. at 399-400. This court in McElroy decided that if the motion was filed before 30 days, the motion was an authorized after-trial motion, and, accordingly, on appeal we would review for an abuse of discretion. Id. at 400. However, if the motion were filed after the time for filing after-trial motions, it would be an independent proceeding, and our review would be governed by Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976). McElroy, 156 S.W.3d at 401. Under the Murphy standard of review, matters of law are reviewed to determine whether the trial court accurately declared and applied the law. Id.
One year later, the Southern District addressed the same issue in In re Marriage of Coonts, 190 S.W.3d 590, 600-01 (Mo.App. 2006). The Southern District, in an en banc decision, after examining the issue, held that a motion to set aside a default judgment should always be considered an independent action, regardless of whether it was filed before or after the underlying default judgment became final. Id. at 597.
In order to resolve the conflict between the districts in the interpretation of existing rules, the Missouri Supreme Court adopted a change to Rule 74.05(d), effective January 1, 2007. Rule 74.05(d) now reads:
(d) When Set Aside. Upon motion stating facts constituting a meritorious defense and for good cause shown, an interlocutory order of default or a default judgment may be set aside.
The motion shall be made within a reasonable time not to exceed one year after the entry of the default judgment.
"Good cause" includes a mistake or conduct that is not intentionally or recklessly designed to impede the judicial process.
An order setting aside an interlocutory order of default or a default judgment may be conditioned on such terms as are just, including a requirement that the party in default pay reasonable attorney's fees and expenses incurred as a result of the default by the party who requested the default.
A motion filed under this Rule 74.05(d), even if filed within 30 days after judgment, is an independent action and not an authorized after-trial motion subject to rule 78.04 or Rule 78.06.
(Emphasis added.) The change in the rule indicates that the Missouri Supreme Court agreed with the determination in Coonts and chose to clear up any remaining confusion by incorporating the effect of Coonts in the published rule. Thus, we conclude that Coonts accurately stated the applicable law, even before the published rule change. All motions to set aside a default judgment are independent proceedings, and our standard of review is governed by Murphy. Our review is not for an abuse of discretion. Therefore, we will sustain the judgment unless there was no substantial evidence to support it, it was against the weight of the evidence, or it erroneously declared or applied the law. Murphy, 536 S.W.2d at 32.
The law we must apply, however, regardless of the opinion of counsel, was clarified in Coonts and formally adopted by the Supreme Court thereafter. Coonts accurately stated the law in April 2006, at the time that the defendant was served with process.
"Good Cause" Showing
The Brungards' sole point on appeal concerns whether Patti Cakes failed to make the showing of "good cause" required by Rule 74.05(d). In order to have a default judgment set aside, the moving party must timely file a motion to set aside, must show a meritorious defense, and must show good cause for setting aside the default judgment. Rule 74.05(d); In re Marriage of Macomb, 169 S.W.3d 191, 193 (Mo.App. 2005). The Brungards did not dispute before the trial court, and do not dispute now, that Patti Cakes has a meritorious defense and filed their motion within a reasonable amount of time. Therefore, the only issue is whether or not Patti Cakes' motion showed "good cause" for granting the motion to set aside the default judgment.
According to Rule 74.05(d), good cause includes "a mistake or conduct that is not intentionally or recklessly designed to impede the judicial process." Rule 74.05(d); Krugh v. Hannah, 126 S.W.3d 391, 392 (Mo. banc 2004). Missouri courts have held that negligent conduct can amount to "good cause" as long as mistakes were made in good faith and the conduct does not rise to the level of recklessness. See Heintz Elec. Co. v. Tri-Lakes Interiors, Inc., 185 S.W.3d 787, 793-94 (Mo.App. 2006); Billingsley v. Ford Motor Co., 939 S.W.2d 493, 499 (Mo.App. 1997); Keltner v. Lawson, 931 S.W.2d 477, 480-81 (Mo.App. 1996). Therefore, we are required to distinguish between conduct that is reckless and conduct that is merely negligent in our assessment of whether the motion was properly granted. "A person is negligent if his inadvertence, incompetence, unskillfulness or failure to take precautions precludes him from adequately coping with a possible or probable future emergency." Billingsley, 939 S.W.2d at 498-99 ( quoting In re Marriage of Williams, 847 S.W.2d 896, 900 (Mo.App. 1993)). On the other hand, a person is reckless if he "makes a conscious choice of his course of action, either with knowledge of the serious danger to others involved in it or with knowledge of the facts which would disclose the danger to any reasonable man." McElroy, 156 S.W.3d at 403. One also acts recklessly if he is intentionally indifferent to the consequences of his actions. Id. at 403-04. The word "reckless" involves some element of deliberateness and risk. Heintz Elec. Co., 185 S.W.3d at 793.
The question in this case, then, is whether Patti Cakes' actions, through its agents, were reckless or merely good faith mistakes amounting only to negligence. When the facts are not disputed, the issue is purely one of law.
The only evidence presented to the trial court was an affidavit of Patti Cakes' agent, James Wedig. Mr. Wedig did not appear and testify in person. The affidavit, in its entirety, stated as follows:
COMES NOW James Wedig, of lawful age, and states the following, all based on his personal knowledge:
1. That the undersigned is the registered agent for Patti Cakes Baking Company, Inc., a Missouri Corporation.
2. That the undersigned believes that he was served with a summons in this matter on or about January 18, 2006.
3. That the undersigned thought that he faxed the same to his insurance agent for delivery to his insurance carrier.
4. That the undersigned cannot find the summons and is not sure what he did with the same but he did not intentionally ignore this matter.
5. That the undersigned was unaware that a default was being taken against Patti Cakes Baking Company, Inc. on or about April 13, 2006 and only learned about the default later at which time he immediately contacted his insurance agent for the matter to be turned over to his insurance carrier and counsel.
The trial court, based solely on the affidavit, granted relief from the judgment, without any specific findings of fact or conclusions of law.
Wedig apparently took no action in defense of this case until almost four months after he was served. No explanation is offered other than the statement that he "thought" he faxed the papers to his insurance agent. We are not told when he first "thought" that. Did he "think it" on the day he was served? Evidently he does not still "think" that he did. He acknowledges that he lost the summons and the petition. He does not know why he lost them. He does not say what he thought about the papers when he reviewed them.
The trial judge is in a better position than this court to determine the credibility of the parties. Macomb, 169 S.W.3d at 194. Here, however, there was no evidentiary hearing. The only evidence presented to the trial court was the short, vague affidavit of Mr. Wedig. In such a case, the issue is one of law. See Smith v. State, 152 S.W.3d 275, 277 (Mo. banc 2005). We engage in de novo review because we are just as capable of reading the affidavit as the trial judge was. Id. In the affidavit, Wedig did not say that he faxed the summons to his insurance agent. He said he thought he did. While Wedig states that he did not intentionally ignore the matter, such a statement is merely a present conclusion or opinion as to the state of his mind at an earlier time. It does not state any concrete facts at all, such as whether he called his insurance agent, when he called his insurance agent, and whether they agreed he would fax the papers, and so forth. Circumstances of forgetfulness do not necessarily constitute "excusable neglect." See Burris v. Terminal R.R. Ass'n, 835 S.W.2d 535, 539 (Mo.App. 1992). Wedig also, in stating his opinion, did not specify that he did not recklessly ignore the matter; therefore, he does not say — not even in offering a conclusion, much less any facts — that he did not recklessly impede the judicial process. The affidavit provides no evidence that Mr. Wedig was not reckless. Perhaps the reason he "thought" he faxed it is related directly to the fact that he was reckless. He fails to show otherwise.
If he had faxed it to the insurance company, he would have been required to present evidence that the insurance company, as his agent, was not reckless. The failures of the agent in such a case are imputed to the defendant. See Burleson v. Fleming, 58 S.W.3d 599, 606 (Mo.App. 2001) (attorney's actions imputed to client).
Wedig did not appear in person at the motion hearing. There was nothing beyond his affidavit for the court to consider as to good cause. Perhaps Wedig's attorney was not willing to subject Wedig's testimony to cross-examination. In any event, the result was a lack of factual data to support a determination of good cause. Cf. Jew v. Home Depot USA, Inc., 126 S.W.3d 394, 396-97 (Mo.App. 2004) (lack of factual assertion regarding meritorious defense).
The party moving to set aside the default judgment has the burden to prove that the motion should be granted. Hinton v. Proctor Schwartz, Inc., 99 S.W.3d 454, 458 (Mo.App. 2003). The Brungards had no duty to prove anything; the burden was all on Patti Cakes, who relied entirely on the affidavit. In this case, the short, vague affidavit is insufficient to demonstrate "good cause" for failing to respond to the summons and petition.
Conclusion
For all of the foregoing reasons, the judgment is reversed. The case is remanded to the trial court to reinstate the judgment in favor of the Brungards.