Opinion
DA 24-0176
10-22-2024
IN RE THE MARRIAGE OF: VIRGINIA E. UPCHURCH, Petitioner and Appellee, and JOHANNES C. UPCHURCH, Respondent and Appellant.
For Appellant: William Lower, Datsopoulos, MacDonald & Lind, P.C., Missoula, Montana For Appellee: Megan S. Winderl, Dustin M. Chouinard, Chouinard, P.C., Hamilton, Montana
Submitted on Briefs: September 18, 2024
APPEAL FROM: District Court of the Twenty-First Judicial District, In and For the County of Ravalli, Cause No. DR-23-157 Honorable Jennifer B. Lint, Presiding Judge
COUNSEL OF RECORD:
For Appellant: William Lower, Datsopoulos, MacDonald & Lind, P.C., Missoula, Montana
For Appellee: Megan S. Winderl, Dustin M. Chouinard, Chouinard, P.C., Hamilton, Montana
OPINION
Ingrid Gustafson, Justice.
¶1 Pursuant to Section I, Paragraph 3(c), Montana Supreme Court Internal Operating Rules, this case is decided by memorandum opinion and shall not be cited and does not serve as precedent. Its case title, cause number, and disposition shall be included in this Court's quarterly list of noncitable cases published in the Pacific Reporter and Montana Reports.
¶2 Johannes C. Upchurch (Hans) appeals from the District Court's denial of his motion to set aside default and from the March 18, 2024 Findings of Fact, Conclusions of Law, and Final Decree issued by the Twenty-first Judicial District Court, Ravalli County. We affirm.
¶3 Hans argues the District Court erred by (1) not setting aside the entry of default, (2) making clearly erroneous findings regarding the division of the marital estate, and (3) granting Virginia's motion for default judgment despite deficient service.
¶4 Virginia and Hans were married on July 5, 1975. Virginia, 72, is a retired nurse, and Hans, 68, is retired from the U.S. military. They have seven adult children. On April 17, 2023, Hans was arrested and charged with partner or family member assault (PFMA) and two counts of privacy in communication. Virginia obtained a temporary order of protection the next day, which was extended to two years after a hearing. Hans was arrested again on June 26, 2023, for filing false reports and other harassing actions. Virginia filed for dissolution of marriage on June 27, 2023, serving Hans at the detention center. Hans remained incarcerated for much of the dissolution proceedings because he was arrested multiple times for violating court orders.
¶5 On August 3, 2023, default was entered against Hans. Thereafter, Virginia filed a motion for default judgment. At a September 28, 2023 hearing, the District Court found insufficient information to enter judgment, noting that their long-term marriage likely warranted an equal division of property. The court instructed Virginia to provide verified financials ensuring her proposed division reflected a near-equal division.
Hans asserts he was not served the motion for default judgment and Virginia asserts that since he had not made an appearance personally or through counsel there was no requirement to provide him notice.
¶6 Hearing was reconvened on October 19, 2023. Hans's criminal attorney, Sarah Busch, attended and advised that although she did not represent Hans in the dissolution, she was present to advise the court that in speaking to Hans and his brother, it was her understanding that Hans was seeking counsel to represent him in the dissolution. The District Court again noted missing financial information from Virginia and allowed Hans additional time to file a motion to set aside the default. The court scheduled a new hearing and advised Ms. Busch to inform Hans of the opportunity to challenge the default and that if he did not, the court would proceed forward. The court again reconvened the hearing on the motion for default judgment on November 16, 2023. Hans appeared in person but failed to file a motion to set aside the default. Hans claimed he lacked funds to hire counsel, as Virginia had allegedly taken his money. The court granted Hans an additional two weeks, until November 30, 2023, to file the motion to set aside the default, and that failure to do so would result in dissolving the marriage in accordance with the proposal the court required Virginia to revise and substantiate. Hans eventually filed the motion on December 4, 2023.
Specifically, the District Court advised "[h]e needs to have a motion to set aside that default long before the hearing date."
¶7 Hearing on the motion to set aside was held January 30, 2024. Hans appeared with counsel and testified. During his testimony, he admitted he received the petition for dissolution around the end of June 2023 and was out of jail for a time after receiving it. He admitted that he gave his friend Greg power of attorney around July 2023 and that Greg had the ability to access his bank accounts. He agreed he could have contacted an attorney through either his brother or Greg and he was not precluded from responding to the petition in writing. Virginia testified she had not restricted Hans's access to funds and that she used inherited money to supplement her $928 monthly Social Security income. Virginia also testified about Hans's military and Social Security benefits totaling $3,600 monthly. She maintained that her amended property division proposal was fair and equitable.
¶8 The District Court denied Hans's motion, applying the three-factor test from M. R. Civ. P. 55-whether (1) the defaulting party acted with diligence, (2) there was a meritorious defense, and (3) the default judgment would cause prejudice to the defaulting party. The court found Hans had been validly served in June 2023, but failed to act diligently. Through his own voluntary actions, he neglected to retain counsel. He was out of jail for a time after being served and when incarcerated had full access to communication, his brother, and a friend to assist him in obtaining counsel.
¶9 Hans was advised on November 16, 2023, that he had until November 30, 2023, to file a motion to set aside his default and failure to do so would result in adopting Virginia's amended proposal for the division of the marital estate. He failed to file within this deadline. The District Court specifically found Hans did not proceed with diligence, and his incarceration in and of itself was not excusable neglect as he had plenty of opportunities to communicate with people. The court further found that while he may still have a meritorious defense, given the court's requirement that Virginia revise and substantiate her proposed division of the marital estate, this factor weighed very little in his favor. Finally, the court determined that if the judgment were permitted to stand, although Hans may find it injurious, the proposed distribution was equitable given the parties' relative financial standings to each other. The court asserted it had bent over backward to get Hans to file a substantive response, and the most he did was write Virginia a letter which incidentally could have been considered a violation of his order of protection.
Although the court referenced "excusable neglect" which is applicable to motions for relief under M. R. Civ. P. 60, not Rule 55, in context, it is clear the District Court was considering whether Hans's various periods of incarceration-which he asserted hindered his ability to secure counsel and make an appearance in the case-excused his default so that it was not willful.
¶10 We review a district court's decision to grant or deny a motion to set aside entry of default under Rule 55(c) under the slight abuse of discretion standard. Engelsberger v. Lake Co., 2007 MT 211, ¶ 11, 339 Mont. 22, 167 P.3d 902. As a district court's division of marital property is an equitable proceeding, we review the court's findings of fact for clear error and its conclusions of law for correctness. In re Marriage of Funk, 2012 MT 14, ¶6, 363 Mont. 352, 270 P.3d 39; Estes v. Estes, 2017 MT 67, ¶ 12, 387 Mont. 113, 391 P.3d 752. A factual finding is clearly erroneous if it is not supported by substantial evidence, the court misapprehended the effect of evidence, or a review of the record leaves this Court with a firm conviction that the district court made a mistake. In re L.H., 2007 MT 70, ¶ 13, 336 Mont. 405, 154 P.3d 622. On appeal, each case must be examined individually, with an eye to its unique circumstances, and absent clearly erroneous findings, the district court's property division must be affirmed. Estes, ¶¶ 12-13.
¶11 We may review the division of marital property to determine if there was an abuse of discretion. In re Marriage of Thorner, 2008 MT 270, ¶ 21, 345 Mont. 194, 190 P.3d 1063. The test for abuse of discretion is whether the district court acted arbitrarily without employment of conscientious judgment or exceeded the bounds of reason resulting in substantial injustice. Thorner, ¶ 21.
¶12 Hans contends the District Court abused its discretion by denying his motion to set aside the default. Under M. R. Civ. P. 55, a court may set aside an entry of default for good cause. The "good cause" standard is more lenient than the excusable neglect standard under M. R. Civ. P. 60, and we consider factors such as whether the default was willful, whether setting it aside would prejudice the petitioner, and whether the respondent has a meritorious defense. Cribb v. Matlock Communications, 236 Mont. 27, 30, 768 P.2d 337, 339 (1989); Essex Ins. Co. v. Jaycie, Inc., 2004 MT 278, ¶¶ 10, 12, 323 Mont. 231, 99 P.3d 651. The court must also balance the interests of the respondent in adjudicating his defense on the merits with interests of the public and the court in the orderly and timely administration of justice. Cribb, 236 Mont. at 30, 768 P.2d at 339; Essex, ¶ 10.
¶13 We find no error in the District Court's application of the Cribb factors. The record supports the conclusion that Hans's default was willful. Despite his incarceration, Hans had access to legal resources and failed to file a timely response, even after the court granted him extensions. In considering the willfulness of Hans's default, the court determined Hans did not use delay in a good faith effort to secure legal counsel, but to influence and badger Virginia into not following through with the dissolution which resulted in him getting himself arrested and charged with several additional criminal offenses and jailed on a pretrial basis. Further, Virginia incurred legal fees and actively prosecuted her claims for almost five months before Hans appeared, and she repeatedly warned Hans she would seek default if he did not respond. The District Court rightfully concluded Virginia would be prejudiced by further delay.
At one hearing, Hans's behavior was so inappropriate, the District Court had to admonish him not to direct his attention at Virginia.
¶14 Finally, while Hans asserted Virginia's asset valuations were inaccurate, he failed to provide evidence to support his claims. The District Court, mindful of its duty to ensure an equitable division, required Virginia to substantiate her proposals, which protected Hans's interests.
¶15 In seeking to set aside his default, Hans asserted that Virginia's valuations of the assets and debts asserted were false or inaccurate. Despite this general claim, he failed to substantiate these assertions or provide evidence countering Virginia's valuations. Throughout the pendency of the dissolution, the District Court recognized its duty to assure equitable division of the marital estate. The court diligently sought additional information and substantiation of the assets, debts, and incomes of the parties from Virginia. In response to the District Court's requirements, Virginia waived her request for attorney's fees, proposed property distribution in lieu of maintenance, and provided verified financial information as to asset valuation. The court's diligence in assuring an equitable division of the marital estate protected Hans's interests and Hans has failed to establish any loss of property rights related to Virginia's final proposed division of the marital estate which was ultimately ordered by the court.
¶16 Hans's challenge to the District Court's findings on the marital estate lacks merit. The court reviewed detailed financial information provided by Virginia, including inheritance and income records. Virginia's amended proposal addressed the division of all assets, and the court considered relevant factors under § 40-4-202, MCA, including the parties' ages, financial situations, abilities, and needs.
¶17 Review of the record on a whole supports the District Court's findings of fact. Throughout the pendency of the dissolution, the District Court repeatedly required Virginia to provide verified financial information-which included a comparable market assessment on the parties' real property and bank statements which included income deposits-to show her default division of the marital estate was equitable. Virginia's amended proposed division included a more comprehensive statement of both parties' property. Virginia testified about her inherited property and what remained of it, and submitted bank statement showing the remaining inherited funds. The court was provided information as to each parties' respective incomes, and Virginia submitted a sworn affidavit in support of default judgment which detailed the parties' work histories and abilities to work, ages, incomes and sources thereof, and other elements related to maintenance. She also detailed her position for seeking property in lieu of maintenance. The court also provided Hans opportunity to submit additional testimonial and/or documentary evidence at another hearing. In its findings, the court incorporated a redacted version of Virginia's Amended Proposed Division of Assets and Liabilities-which specifically contained information as to Virginia's diamond ring gifted to her from her mother and her inherited property. It is clear from the court's findings as a whole that it considered the parties' ages, abilities, and incomes in determining Virginia was incapable of meeting her individual needs such that she is entitled to the division of property she proposed in lieu of maintenance. The District Court's findings are not erroneous and are supported by the record.
¶18 Hans's argument that service of the motion for default judgment was deficient is also unavailing. He cites no legal authority that the service requirements in place at the time the motion was filed are tolled until the defaulting party appears at some later time. Moreover, Hans waived this issue by failing to raise it in his motion to set aside the default. Pilgeram v. GreenPoint Mortg. Funding, Inc., 2013 MT 354, ¶ 20, 373 Mont. 1, 313 P.3d 839 (collecting cases).
¶19 The District Court did not abuse its discretion in denying Hans's motion to set aside the default. We affirm.
¶20 We have determined to decide this case pursuant to Section I, Paragraph 3(c) of our Internal Operating Rules, which provides for memorandum opinions. In the opinion of the Court, the case presents a question controlled by settled law or by the clear application of applicable standards of review.
We concur: JAMES JEREMIAH SHEA, LAURIE McKINNON, BETH BAKER, JIM RICE