Crystal M. Blanchard v. Jeffrey A. Houdek ( 2015 )

IN THE COURT OF APPEALS OF IOWA
No. 14-1370
Filed November 25, 2015
CRYSTAL M. BLANCHARD,
Plaintiff-Appellant,
vs.
JEFFREY A. HOUDEK,
Defendant-Appellee.
________________________________________________________________
Appeal from the Iowa District Court for Floyd County, Christopher C. Foy,
Judge.
Crystal Blanchard appeals the order dismissing her actions against Jeffrey
Houdek. REVERSED AND REMANDED.
Judith O'Donohoe of Elwood, O'Donohoe, Braun, White, L.L.P., Charles
City, for appellant.
Richard N. Tompkins Jr., Mason City, for appellee.
Heard by McDonald, P.J., and Mahan, S.J., and Scott, S.J.*
*Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2015).
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SCOTT, Senior Judge.
Crystal Blanchard appeals the order granting Jeffrey Houdek’s motion to
dismiss her property claims on res judicata grounds. She contends the court
abused its discretion in setting aside the default judgment entered against
Houdek. She further contends the court erred in determining her claims were
precluded by a prior action seeking an adjudication of property interests that was
dismissed on the ground the court lacked subject matter jurisdiction.
I. BACKGROUND FACTS AND PROCEEDINGS.
Blanchard and Houdek are the parents of two minor children. Although
they were never married, the parties lived together for a period of approximately
eight years, during which they purchased several vehicles, a boat, a camper, and
other personal property. Houdek additionally purchased real estate in his name
alone.
In October 2009, Blanchard filed a petition in Worth County, asking the
court to determine issues of child custody and support, as well as an equitable
division of “[t]he real property and personal property acquired during the
relationship between the parties and the debts incurred during that period of
time.” Houdek disputed the court’s authority to divide the property. In the
custody order entered in December 2010, the court stated it did not have
authority to divide property accumulated by unmarried persons based upon
cohabitation and Blanchard failed to timely assert or show an alternative legal
basis for a property division, “including theories of contract, unjust enrichment,
resulting or constructive trust, or joint venture.”
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Blanchard appealed from the court’s determination it lacked authority to
divide the property. This court affirmed the district court because “the court
made a clear ruling that it did not have subject matter jurisdiction under our
constitution or statutes, and because a separate legal theory, which would
provide subject matter jurisdiction, was neither pleaded nor raised.” Blanchard v.
Houdek, No. 11-0057, 2011 WL 6664975, at *1 (Iowa Ct. App. Dec. 21, 2011).
In July 2012, Blanchard initiated the current action in Floyd County. She
filed a petition for replevin of certain personal property and a second petition that
alleged she was entitled to a one-half interest in real estate purchased by
Houdek, who was personally served the day after the petitions were filed.
On August 7, 2012, Houdek’s counsel contacted Blanchard’s counsel to
request a one-week extension of time to respond, which Blanchard’s counsel
agreed to. On September 17, 2012, Blanchard’s counsel emailed Houdek’s
counsel to inquire about the status of Houdek’s representation and the answer.
Then, on October 27, 2012, Blanchard’s counsel sent Houdek’s counsel a notice
of intent to file an application for default. The attached letter from Blanchard’s
counsel states: “You have indicated several months ago that you wanted an
extension of time to answer the lawsuits and have not done so.”
Houdek’s counsel filed an appearance in the matter on November 5, 2012.
On the same date, Houdek’s counsel faxed Blanchard’s counsel the
appearances with a note that states, “My secretary’s computer died with no
current backup. We have been scrambling. Thank you for your patience. I need
a little more.”
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On December 20, 2012, having received no answers from Houdek,
Blanchard applied for default judgments from the court. One week later, the
district court entered an order granting default and setting a hearing to determine
Blanchard’s damages for February 25, 2013.
Houdek’s counsel appeared at the February 25, 2013 hearing and filed a
motion for leave to file an answer, as well as Houdek’s answer. He also filed a
motion to set aside default, alleging Blanchard’s claim was precluded by the
court’s determination Blanchard was not entitled to damages in the case filed in
Worth County. The motion further states he “failed to raise these matters due to
excusable neglect or unavoidable casualty” due to counsel’s secretary losing the
hard drive of her computer without a backup. The court granted the motion to set
aside default.
The case was submitted to the court in January 2014. In a July 24, 2014
order, the district court determined that Blanchard was precluded from bringing
the current action because her claim could have been fully and fairly adjudicated
in the Worth County action. Blanchard appeals the order, which dismissed her
petitions on this basis. She challenges the setting aside of defaults and the
dismissal of her petitions.
II. MOTION TO SET ASIDE DEFAULT JUDGMENT.
Blanchard first contends the district court abused its discretion in setting
aside the default judgment. She argues Houdek failed to plead or prove good
cause to set it aside. We review the court’s ruling for an abuse of discretion.
See Cent. Nat’l Ins. Co. v. Ins. Co. of N. Am., 513 N.W.2d 750, 753 (Iowa 1994).
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Generally, an abuse of discretion is found only when substantial evidence
does not support the district court’s ruling. Id. “We are bound by the district
court’s findings of fact if supported by substantial evidence, and we view the
evidence in the light most favorable to the district court’s ruling.” Id. We are
more reluctant to interfere with an order granting a motion to set aside default
than we are its denial. Id. at 754.
Iowa Rule of Civil Procedure 1.977 provides: “On motion and for good
cause shown, . . . the court may set aside a default or the judgment thereon, for
mistake, inadvertence, surprise, excusable neglect or unavoidable casualty.”
Here, Houdek bore the burden of proving good cause. See id. “Good cause” is
“something more than an excuse, a plea, apology, extenuation, or some
justification for the resulting effect”; rather, it is a sound, effective, truthful reason.
Dealers Warehouse Co. v. Wahl & Assocs., 216 N.W.2d 391, 394 (Iowa 1974).
The party seeking to set aside default must show “his failure to defend was not
due to his negligence or want of ordinary care or attention, or to his carelessness
or inattention.” Id. at 394-95. Rather, the moving party “must show affirmatively
he did intend to defend and took steps to do so, but because of some
misunderstanding, accident, mistake or excusable neglect failed to do so.” Id. at
395. If the party seeking to set aside default “has ignored plain mandates in the
rules with ample opportunity to abide by them,” the default will not be vacated.
Id.The district court found it was “clear” that Houdek intended to defend the
case, citing his counsel’s contact with Blanchard’s counsel in August 2012 and
counsel’s appearance prior to the application for entry of default. It further found
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Houdek’s defense of claim preclusion was asserted in good faith and that the
defense appeared “plausible.” The court thereby concluded Houdek’s failure to
file an answer “may stem from the confusion and surprise in light of the prior
case, not willful ignorance or defiance.” The court also noted Blanchard “suffered
little prejudice” by granting the motion because subject matter jurisdiction may be
raised at any time and “[i]t is unlikely that the relationship between the Worth
County case and this case would have gone completely unnoticed.” Based on
“the special circumstances of this case,” the court set aside the default judgment,
holding it would be “remiss” to award Blanchard damages “in a case that has
already been fully adjudicated in [Houdek]’s favor.”
Blanchard argues that in its order setting aside default, the court indicates
mistake by Blanchard or the court regarding the ability to litigate the claim was
good cause for setting aside default. She asserts nothing in rule 1.977 allows a
finding of good cause for setting aside default based on mistake by the opposing
party or the court. We agree. Rule 1.977 lists the specific reasons for which a
court may set aside default. An irregularity by the court in entering default
contrary to a rule of civil procedure is not grounds for relief under the rule 1.977.
Dolezal v. Bockes, 602 N.W.2d 348, 353 (Iowa 1999). “Mistake” implies conduct
by the defaulting party that relieves that party from the default. Id. Even
assuming the result of the Worth County case precluded the current claims,
Blanchard’s error in filing the causes of action or the district court’s error in
entering default in her favor does not amount to good cause that relieves Houdek
of his obligation to answer. Therefore, the court abused its discretion in setting
aside default on this basis.
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Our inquiry does not end here. “We will uphold the district court’s ruling
even when the court has made no findings of fact or based its ruling entirely on a
different ground.” Cent. Nat’l Ins. Co., 513 N.W.2d at 753-54. We may affirm on
any proper ground that appears in the record. Langner v. Mull, 453 N.W.2d 644,
647 (Iowa 1990). Although he did not advance the argument to this court,
Houdek alleged below the default should be set aside for “excusable neglect or
unavoidable casualty” because “[his counsel]’s secretary’s computer hard drive
died without any backup in place.” No further argument was made. At oral
argument, counsel indicated he could not recall the precise amount of time it took
to recover from this loss, though he estimated it took approximately one month.
In determining whether to set aside a default judgment for excusable
neglect, the court must consider the following factors:
(1) whether the defaulting party actually intended to defend;
(2) whether the defaulting party asserted a claim or defense in good
faith; (3) whether the defaulting party willfully ignored or defied the
rules of procedure or was the default simply the result of the
mistake; and (4) whether relief is warranted should not depend on
who made the mistake.
Sheeder v. Boyette, 764 N.W.2d 778, 781 (Iowa Ct. App. 2009). In considering
the third factor, we note willful and defiant conduct “goes beyond negligent or
careless conduct.” Brandenburg v. Feterl Mfg. Co., 603 N.W.2d 580, 585 (Iowa
1999). Rather, it indicates the defaulting party showed a deliberate intention to
ignore and resist any adherence to the rules. Id. Conduct approaching gross
neglect or willful procrastination will not be excused, nor will conduct amounting
to no care or no attention. Id.8
Houdek failed to show excusable neglect. He was personally served with
notice of the property actions the day after they were filed in July 2012.
Houdek’s counsel indicated an intention to answer in August 2012 and again in
November 2012, when he filed an appearance. Still, no answer was filed, even
though Blanchard had given Houdek notice of her intent to file an application for
default. It was not until February 25, 2013, the day the damages hearing was to
be held, that Houdek filed a responsive pleading. This occurred more than two
months after default was entered and more than eight months after Blanchard
filed her petitions. This neglect or delay, which indicates a deliberate intention to
ignore the rules, is not excusable.
Because Houdek failed to show good cause, the trial court abused its
discretion in setting aside default. Accordingly, we reverse the order setting
aside default and remand for a hearing on damages. This obviates the need to
address the propriety of dismissing the petitions on claim-preclusion grounds.
REVERSED AND REMANDED.