Opinion
No. A-11-063.
10-25-2011
ROGER E. DUBA AND SANDRA L. DUBA, HUSBAND AND WIFE, ET AL., APPELLANTS, v. MICHAEL BLACKETER AND SANDY BLACKETER, HUSBAND AND WIFE, APPELLEES.
Larry E. Welch, Jr., and Damien J. Wright, of Welch Law Firm, P.C., for appellants. Gary G. Thompson for appellees.
MEMORANDUM OPINION AND JUDGMENT ON APPEAL
NOTICE: THIS OPINION IS NOT DESIGNATED FOR PERMANENT PUBLICATION AND MAY NOT BE CITED EXCEPT AS PROVIDED BY NEB. CT. R. APP. P. § 2-102(E).
Appeal from the District Court for Saline County: VICKY L. JOHNSON, Judge. Reversed and remanded with directions.
Larry E. Welch, Jr., and Damien J. Wright, of Welch Law Firm, P.C., for appellants.
Gary G. Thompson for appellees.
IRWIN, MOORE, and CASSEL, Judges. IRWIN, Judge.
I. INTRODUCTION
Pursuant to this court's authority under Neb. Ct. R. App. P. § 2-111(B)(1) (rev. 2008), this case was ordered submitted without oral argument. Roger E. Duba and Sandra L. Duba, husband and wife; Douglas R. Duba and Catherine A. Duba, husband and wife; and Diane E. Duba, a single person (collectively the Dubas), appeal orders of the district court for Saline County, Nebraska, vacating a previously entered default judgment in favor of the Dubas and awarding summary judgment in favor of Michael Blacketer and Sandy Blacketer, husband and wife. The present action was brought by the Dubas pursuant to an easement/indemnity provision in a real estate contract, seeking recovery of litigation costs incurred in defending a prior suit brought by the Blacketers. The Blacketers initially failed to respond to service of the complaint and summons, a default judgment was entered, and garnishment began. The Blacketers then successfully moved to quash the garnishment, to set aside the default judgment, and to gain summary judgment. We find that the district court abused its discretion in vacating the default judgment and, accordingly, reverse, and remand with directions.
II. BACKGROUND
The events giving rise to this action concern real property that was previously leased by the Blacketers from the Dubas and, later, was purchased by the Blacketers from the Dubas. In 1998, the Blacketers began leasing a tract of land (the acreage) from the Dubas. Adjoining the acreage is a parcel of farmland that is also owned by the Dubas and that had been leased to a tenant since the mid-1980's. The tenant operated a center pivot irrigation system on the farmland, resulting in occasional spraying of water on the acreage.
In 1999, the Dubas gave the Blacketers an option to purchase the acreage. After the option was signed, various disputes arose between the parties, including multiple lawsuits. Nonetheless, in 2001, the parties negotiated a real estate purchase contract for the acreage. One term of the purchase contract was an agreement for an easement whereby the Blacketers would hold the Dubas harmless for damages caused by water being sprayed by the farmland tenant's irrigation system.
The easement ultimately recorded in conjunction with the purchase agreement was titled an "Easement and Agreement for Irrigation." The easement included the parties' recognition that the tenant had operated an irrigation system on the farmland for some time prior to the parties' purchase agreement, that operation of the irrigation system could continue, and that its continued operation would result in water being disseminated onto the acreage. The easement included the parties' agreement that operation of the irrigation system could continue in the same manner and to the same extent as it had previously been operated. The easement also included the following provision:
It is therefore agreed by and between the parties hereto that this Agreement and Easement for continued irrigation up to the property line described herein shall run with the land, be binding upon the parties hereto, their successors and assigns and that [the Blacketers] shall hold harmless from any claims, damages, costs or causes of action [the Dubas] or their successors and agents regarding any water placed from time to time upon the buildings or property of [the Blacketers] due to [the] present method of irrigation.
Subsequent to execution and recording of the purchase agreement and the easement, the Blacketers filed suit against the Dubas. A second amended complaint was filed in March 2005, in which the Blacketers alleged that the Dubas had changed the terms of the easement sometime after the Blacketers signed it and before it was recorded. The Blacketers alleged the Dubas had altered the language of the easement to remove restrictions from having operation of the irrigation system spray water or chemicals directly onto the acreage or its improvements. The Blacketers alleged that the easement should be declared void, the operation of the irrigation system should be declared a nuisance, and damages should be awarded. The Dubas defended the action brought by the Blacketers, alleged a number of counterclaims, and alleged that the suit by the Blacketers constituted a breach of contract as contrary to the easement that was part of the purchase contract.
In March 2008, the district court entered an order in the Blacketers' suit against the Dubas. The court noted that Michael Blacketer failed to appear for the final day of trial without warning and failed to testify. The court found this failure "very troubling." The court found that despite Sandy Blacketer's testimony that the Blacketers had signed some different version of the easement than the one recorded by the Dubas, the court was "convinced" that the Blacketers signed the easement that was recorded, "fully understanding its meaning and import." The court also specifically commented on "the lack of credibility of several of the witnesses" and specifically found that Sandy Blacketer "was not credible"; that Michael Blacketer "did not testify, and disappeared from the trial at about the time that he could have been called as a witness"; and that "[t]he explanation for his absence did not, no pun intended, hold water." The court also found that Roger Duba's "conduct and testimony did him no credit."
The district court ultimately concluded that the easement filed by the Dubas was valid. The Dubas' cross-claims were dismissed.
In December 2008, the Dubas filed the instant action against the Blacketers. The Dubas alleged in their complaint that the purchase contract between the Dubas and the Blacketers included an easement that amounted to an indemnity provision, whereby the Blacketers agreed to hold harmless the Dubas for any claims or damages as a result of operation of the irrigation system on the farmland, that the Blacketers brought suit against the Dubas alleging damages caused by operation of the irrigation system on the farmland, that the action was litigated through a bench trial, and that the court had ultimately found the easement to be valid. The Dubas alleged that they had incurred litigation costs in defense of the suit brought by the Blacketers and that, either because of a breach of contract or because of the terms of the easement itself, the Blacketers should be held liable for paying the litigation costs.
On December 19, 2008, a praecipe for summons was filed requesting issuance of a summons for personal service on both of the Blacketers. A summons was issued by the court for both of the Blacketers. The sheriff filed returns indicating personal service on both of the Blacketers. The Blacketers, however, did not respond or file any responsive pleading.
On February 9, 2009, the Dubas moved for default judgment. The motion for default judgment includes a certificate indicating that the motion was served on the Blacketers by U.S. mail, postage prepaid. The court entered an order setting the matter for hearing, and the Dubas filed a certificate indicating that the notice of hearing was also served on the Blacketers by U.S. mail. The Blacketers, however, did not respond or file any responsive pleading.
On March 2, 2009, the Dubas appeared for the hearing on their motion for default judgment. The Blacketers did not appear. The Dubas submitted evidence to establish that the Blacketers had been served with the complaint and summons personally, that the Blacketers had been served with the motion for default judgment and notice of hearing by mail, and that no responsive pleading had been filed by the Blacketers. The Dubas also presented evidence to demonstrate the damages incurred in defending the prior suit brought by the Blacketers. The district court found that the Blacketers were in default and granted the motion for default judgment. No appeal was taken from the default judgment.
In May 2009, the Dubas began garnishment proceedings to enforce the default judgment. When Michael Blacketer's pay began being garnished, he and Sandy Blacketer appeared and responded to the action brought by the Dubas. The Blacketers moved to quash the garnishment and to set aside the default judgment. The Blacketers alleged that they "were never properly served with notice of the action herein or advised of any answer date or requirement of the action filed against them."
On October 28, 2009, the court entered an order vacating the default judgment. In the order, the court noted that the Blacketers had claimed that the underlying judgment was not supported by Nebraska law because it amounted to a "claim for attorney fees" and that such fees are not awardable in this action. The court noted that the Blacketers had raised the issue as one of subject matter jurisdiction. The court did not make a finding of whether this was a subject matter jurisdiction matter, but, rather, concluded that "[i]f this is true, the court lacks jurisdiction over this case." The court then vacated the default judgment.
On December 14, 2009, nearly 7 months after first appearing and moving to vacate the default judgment, the Blacketers first presented an answer to the Dubas' complaint. The Blacketers' answer alleged that the Dubas' action was purely an action for recovery of attorney fees and was a frivolous action.
On December 21, 2009, the Blacketers moved for summary judgment. On March 26, 2010, the district court entered an order denying the Blacketers' motion. In so doing, the court characterized the issue to be resolved as whether the easement agreed to between the parties would encompass the Blacketers' paying litigation fees for a lawsuit brought contesting the validity of the easement, and the court concluded that "[i]t seems that it would."
On October 28, 2010, the Dubas moved for summary judgment. On January 1, 2011, the district court entered an order denying the Dubas' motion and, instead, granting summary judgment in favor of the Blacketers. In so doing, the court determined it had been incorrect in concluding that Nebraska law allowed the Dubas' recovery of attorney fees in this manner. This appeal followed.
III. ASSIGNMENTS OF ERROR
On appeal, the Dubas have assigned error to the district court's vacation of the default judgment and to the court's granting of summary judgment in favor of the Blacketers.
IV. ANALYSIS
We first address the Dubas' assertion that the district court erred in vacating the default judgment. The Dubas assert that the Blacketers failed to make a sufficient showing to vacate a properly entered default judgment. We agree, and find the court erred in vacating the properly entered default judgment.
We review the district court's decision on a motion to vacate a default judgment for an abuse of discretion. General Serv. Bureau v. Moller, 12 Neb. App. 288, 672 N.W.2d 41 (2003). An abuse of discretion occurs when the trial court's decision is based upon reasons that are untenable or unreasonable or if its action is clearly against justice or conscience, reason, and evidence. Id.
The Nebraska Supreme Court has held that when the court has entered a default judgment and the defendant has made a prompt application at the same term to set it aside, with the tender of an answer or other proof disclosing a meritorious defense, the court should on reasonable terms sustain the motion and permit the cause to be heard on its merits. State on behalf of A.E. v. Buckhalter, 273 Neb. 443, 730 N.W.2d 340 (2007). A meritorious or substantial defense or cause means one which is worthy of judicial inquiry because it raises a question of law deserving some investigation and discussion or a real controversy as to the essential facts. Id.
The Nebraska Supreme Court has also recognized that while it is the policy of the law to give a litigant an opportunity to present his contention in court and to give relief against slight and technical omissions, it is the duty of the courts to prevent an abuse of process, unnecessary delays, and dilatory and frivolous proceedings in the administration of justice. Miller v. Steichen, 268 Neb. 328, 682 N.W.2d 702 (2004); Steinberg v. Stahlnecker, 200 Neb. 466, 263 N.W.2d 861 (1978). Mere mistake or miscalculation of a party or his attorneys is not sufficient, in itself, to warrant the refusal to set aside a default judgment, when there is a good defense pleaded or proved and no change of position or substantial injustice will result from permitting a trial. Id.
We initially note that the Blacketers did not promptly appear and seek relief in this case. The record demonstrates that they were personally served with the complaint and summons in December 2008. The summons specifically informed them that they had 30 days to respond or risk a default judgment being entered against them. The Blacketers both acknowledged in their testimony that they had personally been served with the complaint.
The record also demonstrates that they were served by mail with notice of the hearing on the Dubas' motion for entry of default judgment, even though the Blacketers both denied receiving this notice. The Nebraska Supreme Court has "consistently held that a party who is served with summons and a copy of the complaint and fails to answer or make an appearance in a case is not entitled to further notice of a hearing." State on behalf of A.E. v. Buckhalter, 273 Neb. at 448, 730 N.W.2d at 346.
Nonetheless, despite the record demonstrating service of the complaint and summons in December 2008 and the hearing on the Dubas' motion for entry of default judgment in February 2009, the Blacketers did not act until May 2009, when garnishment began to actually enforce the judgment they allowed to be entered by default. More than 5 months passed from the initial service before the Blacketers elected to appear and attempt to assert legal rights in this action. This was not a timely response. Compare Miller v. Steichen, supra (motion to vacate within 3 weeks of default judgment was timely).
We next note that even when the Blacketers did appear and seek vacation of the default judgment, they did not tender an answer or other proof of a meritorious defense. Rather, they filed a motion to vacate, without an answer being proffered, and asserted in the motion only that there had not been proper service and that the judgment was voidable. At the hearing on the Blacketers' motion to vacate, the Blacketers attempted to offer into evidence the entire court file from their previous litigation with the Dubas. The court did not receive the entire file, but, rather, directed the Blacketers' counsel to "specify by additional pleading and/or letter to the court those items that [he] specifically [thought were] relevant." The transcript contains a designation of exhibits concerning the portions of the prior court record that the Blacketers' counsel felt were relevant, but there is no indication in the record that the court ever actually received those exhibits and they are not referred to by the court in any rulings presented to us.
At the hearing on the motion to vacate, the Blacketers both testified that they had received service of the complaint, that they had filed no response, and that they had later refused service of a certified letter that had contained the default judgment. They presented no testimony or evidence concerning any meritorious defense or any legitimate reason for not responding to the service of the complaint or summons. See General Serv. Bureau v. Moller, 12 Neb. App. 288, 672 N.W.2d 41 (2003) (defendant failed to tender proof of meritorious defense). It appears
that they simply chose to ignore the pending legal action. In fact, although the court vacated the default judgment in October 2009, the Blacketers still did not tender an answer to the complaint until December, nearly 1 year after first being served with the complaint and summons.
Our review of the record in this case indicates that the Blacketers were properly served with the complaint and summons, were properly served with notice of the motion for default judgment and the hearing thereon, and chose not to avail themselves of the legal process to defend the pending action. Instead, they waited until the Dubas took action to enforce the judgment through garnishment and only then did they make an untimely appearance and attempt to vacate the properly entered default judgment. When finally seeking to participate in the proceedings, they still failed to tender an answer or any proof of a meritorious defense.
The district court, in granting th