Miller Trust v. Cox ( 2020 )

NOT DESIGNATED FOR PUBLICATION
No. 121,190
IN THE COURT OF APPEALS OF THE STATE OF KANSAS
JONATHAN BRYCE MILLER and BARBARA LOU MILLER TRUST,
Appellee,
v.
KEITH D. COX and GLORIA G. COX,
Appellants.
MEMORANDUM OPINION
Appeal from Sumner District Court; R. SCOTT MCQUIN, judge. Opinion filed August 28, 2020.
Affirmed in part, reversed in part, and remanded with directions.
Brian E. Vanorsby and Ronald L. Campbell, of Fleeson, Gooing, Coulson, & Kitch, L.L.C., of
Wichita, for appellants.
No appearance by appellee.
Before GREEN, P.J., ATCHESON and GARDNER, JJ.
PER CURIAM: Gloria Cox appeals from a judgment of the trial court denying her
motion to set aside default judgment. Gloria argues that the trial court erred (1) when it
ruled that she did not have a meritorious defense and (2) when it ruled that her failure to
timely answer plaintiff's petition for relief was inexcusable neglect. We disagree and
affirm. Gloria also argues that the trial court incorrectly determined prejudgment and
postjudgment interest to be awarded in this action. We agree and reverse. And so, we
affirm in part, reverse in part, and remand with directions.
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In January 2017, the Sumner County District Court entered a default judgment
ordering the Coxes to pay attorney fees to the plaintiff in Miller Trust v. Henning, et al.,
No. 12 CV 50 (Sumner County Dist. Ct.) (the underlying case).
The facts of the underlying case center on the sale of approximately 118.4 acres of
property located at 1550 E. 113th Avenue North in Bell Plaine, Kansas (the Property). In
June 2001, Keith and Gloria Cox sold the Property by installment contract to Gray and
Lou Cinda Miller, and the Millers' business partner, Alvin Henning. The same day,
Gloria and her husband executed a warranty deed conveying an undivided one-half
interest to the Millers and an undivided one-half interest to Henning. The Coxes' attorney
held the warranty deeds in escrow for delivery upon final payment of the installment
contract.
Immediately, the Millers began making payments on the contract. In 2004, the
Millers assigned their property interest to a trust named the Jonathan Bryce Miller and
Barbara Lou Miller Trust, dated June 23, 1983 (Miller Trust). Miller Trust continued
making the Millers' payments. Meanwhile, Henning made no payments except the initial
$18,000 balance paid at signing of the 2001 contract for deed. In March 2010, the Coxes
sent out a notice of default stating that Miller Trust and Henning were behind on
payments. The Coxes accelerated the amount due under the contract and demanded the
balance. In May 2010, Henning paid the remaining balance to the Coxes.
Once Henning paid the balance, the Coxes assigned the contract for deed to Briar
Patch Investments, LLC (Briar Patch), an entity owned by Henning and John P. Smith.
Miller Trust contested this assignment of contract by filing the quiet title action in the
underlying case. Miller Trust argued that by assigning the contract for deed to Briar
Patch, the Coxes had breached an agreement and had clouded title to the Property. Miller
Trust initially named the Coxes as defendants in the underlying case. But the Coxes
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disclaimed any interest in the property, resulting in the court dismissing them from the
suit under a stipulated journal entry in 2012.
For five years, litigation in the underlying case continued without the Coxes. After
a bench trial, the trial court entered a judgment for Miller Trust. The trial court
partitioned the Property and assessed the costs and fees of the quiet title and partition
against the Property. Miller Trust elected to take the Property at the appraised value of
$260,000. Miller Trust, therefore, needed to buy Henning's half of the property at 50% of
the appraised value minus costs chargeable in the partition. The trial court found that
those costs were $117,700.94 in attorney fees and expenses, plus $1,555 in
Commissioner's fees and expenses, for a total of $119,255.94. Then, the trial court
deducted that amount from the appraised value, that is, $260,000 - $119,255.94 =
$140,744.06. Thus, the amount Miller Trust would owe Henning to obtain his half-
interest in the Property was $70,372.03, before considering other factors.
Next, the trial court considered contributions that Miller Trust had made to the
Property, including paying property tax and removing debris that Briar Patch had dumped
on the Property. The trial court found that Miller Trust's contributions totaled $78,003.61.
As a result, the trial court granted the Property to Miller Trust and ordered Henning to
pay $7,631.58 to Miller Trust. The litigation in the underlying case ended with this
judgment, dated January 10, 2017.
On April 17, 2018, Keith Cox committed suicide. As described in declarations of
Gloria and her son, Rick Cox, Gloria "has not been the same since her husband's death."
The declarations stated that Gloria has had bouts of extreme grief with emotional
breakdowns and has had trouble concentrating and making thoughtful decisions for
herself. Also, she had become forgetful at times. Gloria also has had to deal with
additional stressors after her husband's death. For example, her great-grandson was
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diagnosed with a benign brain tumor. Two weeks later, Gloria's son told her that he had
lung cancer. Another son, age 17, had trouble coping with his father's suicide.
In July 2018, Miller Trust filed the present lawsuit, naming the Coxes as
defendants. The petition sought indemnification for breach of warranty of title. Miller
Trust argued that the Coxes had refused to defend its title and, thus, forcing Miller Trust
to pursue a quiet title action and incur attorney fees. Miller Trust served its petition and
summons on the Coxes through certified mail.
When Gloria received the petition and summons, she signed for them but did not
open the envelopes. Instead, she placed them in a file cabinet and forgot about them. And
so, Gloria neither answered the petition nor appeared in court. The trial court entered a
default judgment in favor of Miller Trust against the Coxes in the amount of
$119,255.94, plus prejudgment and postjudgment interest and costs.
In October 2018, Gloria moved to set aside the default judgment. After a hearing
on the motion, the trial court ruled that the judgment was not void as to Gloria but was
void as to Keith Cox because he had died before the proceedings began. Also, the court
ruled that Miller Trust would not be prejudiced by setting aside the default judgment.
The court also ruled that Gloria's failure to answer Miller Trust's petition was not
excusable neglect. The court further ruled that Gloria had no meritorious defenses, except
that the amount of the default judgment was incorrect because attorney fees had already
been charged against partition sale proceeds in the underlying case. Thus, the default
judgment represented a double recovery of half of the attorney fees. For this reason, the
court told counsel for Miller Trust the following: "I would be willing to deny this motion
if you'll reduce your judgment by half. That would then reflect the true amount of
attorney fees that haven't been reimbursed." Miller Trust agreed. And the trial court
4
entered judgment for Miller Trust against Gloria for $59,627.97, plus 10 percent interest
from January 10, 2017, until paid.
Gloria timely appeals the trial court's denial of her motion to set aside default
judgment.
Standard of Review
An appeal from an order denying a motion to set aside a judgment brings up for
review only the order of denial itself and not the underlying judgment. Giles v. Russell,
222 Kan. 629, Syl. ¶ 4, 567 P.2d 845 (1977). "A decision to set aside a default judgment
rests within the discretion of the district court. This decision is subject to review under an
abuse of discretion standard." First Management v. Topeka Investment Group, 47 Kan.
App. 2d 233, 239, 277 P.3d 1150 (2012). A judicial action constitutes an abuse of
discretion under the following conditions: (1) if no reasonable person would take the
view adopted by the trial court; (2) if it is based on an error of law; or (3) if it is based on
an error of fact. Wiles v. American Family Life Assurance Co., 302 Kan. 66, 74, 350 P.3d
1071 (2015).
K.S.A. 2019 Supp. 60-260(b)(1) provides relief from a final judgment, order, or
proceeding when there is a "mistake, inadvertence, surprise or excusable neglect."
Default judgments are not favored by the law but are necessary when the inaction of one
party frustrates the administration of justice. Jenkins v. Arnold, 223 Kan. 298, 299, 573
P.2d 1013 (1978); Garcia v. Bell, 303 Kan. 560, Syl. ¶ 3, 363 P.3d 399 (2015) (holding
that the law "disfavors default judgments, especially in matters involving large sums of
money"). The court may set aside a default judgment for good cause. In First
Management, this court stated the following condition for good cause:
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"A motion to set aside a default judgment will only be granted if the movant has proven
by clear and convincing evidence '(1) that the nondefaulting party will not be prejudiced
by the reopening, (2) that the defaulting party has a meritorious defense, and (3) that the
default was not the result of inexcusable neglect or a willful act.'" First Management, 47
Kan. App. 2d at 239 (quoting Montez v. Tonkawa Village Apartments, 215 Kan. 59, 64,
523 P.2d 315 [1974]).
In determining whether a plaintiff will be prejudiced by setting aside a default
judgment, the normal burdens associated with the trial process do not constitute
prejudice. A party is not prejudiced by having to establish at trial his or her entitlement to
a judgment. French v. Moore, No. 102,170, 2010 WL 481280, at *3 (Kan. App. 2010)
(citing Montez, 215 Kan. at 65). Prejudice to the nondefaulting party results under the
following conditions: (1) if it has undertaken action in reliance on the default judgment,
(2) if its ability to pursue its claim has been hindered since the entry of default, or (3) if
evidence has been destroyed. Garcia, 303 Kan. at 571; French, 2010 WL 481280, at *4.
Here, the trial court ruled that Miller Trust would not be prejudiced. This issue is
not disputed on appeal. The Montez factors remaining on appeal are whether Gloria has a
meritorious defense and whether the default was not the result of inexcusable neglect.
Gloria also argues that the trial court erred in the way it assessed prejudgment and
postjudgment interest.
Did the Trial Court Err in Ruling That Gloria Had No Meritorious Defenses?
Gloria argues that the trial court erred in denying her motion to set aside the
default judgment on the grounds that she had no meritorious defenses. First, Gloria
maintains that the trial court misapplied the legal standard for setting aside a default
judgment. Second, she contends that the default judgment was a double recovery. Third,
she argues that Miller Trust had no right to indemnification. Finally, she argues that she
has a meritorious defense based on the statute of limitations.
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K.S.A. 2019 Supp. 60-260(b) permits a trial court to set aside a final judgment for
the following reasons:
"(1) Mistake, inadvertence, surprise or excusable neglect;
....
"(4) the judgment is void;
....
"(6) any other reason that justifies relief."
In arguing that subsection (6) applies, Gloria contends that the trial court erred in
saying, "I suppose I can still set it aside under 60-260(b)(6). That's a catchall. I think
courts are reluctant to use that." Gloria asserts that the trial court's statement is at odds
with our Supreme Court's decision in Garcia, which holds that Kansas courts should
favor setting aside default judgments. 303 Kan. at 570-71.
In Garcia, George Michael Garcia retained criminal defense attorney Charles Ball
to represent him in a probation revocation proceeding. An uncaught error on the journal
entry of sentencing ultimately led to Garcia serving more time in prison than his original
sentence. Garcia sued Ball for legal malpractice. Ball was served with the petition and
received two extensions of time but failed to file a timely answer. Garcia moved for
default judgment which the trial court granted. Ball moved to set aside the default
judgment under K.S.A. 2019 Supp. 60-260(b)(1) and (b)(6). The trial court granted Ball's
motion and set aside the default judgment, ruling that Ball had asserted meritorious
defenses.
On appeal, this court held that the trial court abused its discretion because "Ball
provided no reason—let alone evidence—to support his claim of excusable neglect, and
the existence of such a reason and some evidence supporting it is a necessary prerequisite
to setting aside a judgment based on an excusable-neglect claim." 303 Kan. at 565. This
7
court declined to decide whether Ball was entitled to relief under K.S.A. 60-260(b)(6),
holding that the subsection does not apply when a party's claim for relief is covered by
(b)(1). 303 Kan. at 565.
Our Supreme Court reversed, holding that (b)(6) could apply where (b)(1) does
not. 303 Kan. at 567. The court held that the trial court was correct to set aside the default
judgment for two reasons: (1) The movant had meritorious defenses and (2) the law
disfavors default judgments. 303 Kan. at 570. And the court held: "In determining
whether to set aside a default judgment, a court should resolve any doubt in favor of the
motion so that cases may be decided on their merits." 303 Kan. at 568 (quoting Jenkins,
223 Kan. at 299).
Considering the before-mentioned statement in Garcia, we note that Gloria
correctly points out that the trial court should have been reluctant to deny her motion
rather than reluctant to grant it. She asserts that the trial court abused its discretion
because it was "guided by an erroneous legal conclusion." Bereal v. Bajaj, 52 Kan. App.
2d 574, 580, 371 P.3d 349 (2016). She also argues that reversing the trial court and
setting aside the default judgment would serve the interests of justice and equity.
But the erroneous approach of the trial court would not, by itself, be sufficient to
reverse and remand for further proceedings. Gloria still must show that she has a
meritorious defense to be entitled to relief under K.S.A. 2019 Supp. 60-260(b)(6).
Akesogenx Corp. v. Zavala, 55 Kan. App. 2d 22, 46-49, 407 P.3d 246 (2017).
Alternatively, if she could show excusable neglect, she would be eligible for relief under
K.S.A. 2019 Supp. 60-260(b)(1). Garcia, 303 Kan. at 567.
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Double Recovery
Gloria contends that she had a meritorious defense based on the default judgment
being a double recovery. She notes that Miller Trust had already recovered attorney fees
in the underlying case. The trial court here correctly determined that Miller Trust had
already received half of its fees. The trial court in the underlying case charged the
attorney fees to the partition proceeds, beginning with the Property's appraised value of
$260,000. From the total $260,000, the court subtracted the fees of $119,255.94.
Subtracting the fees from the total meant that the fees were deducted from both Miller
Trust's half and Henning's half. That is, Miller Trust's portion of the proceeds was
reduced by $59,627.97 because of attorney fees, but so was Henning's portion of the
proceeds. Simply put, they each paid half of Miller Trust's attorney fees when the
expenses were charged against the Property that both parties owned. Therefore, the
default judgment of the total $119,255.94 erroneously allowed for a double recovery.
After finding this miscalculation, the trial court did not abuse its discretion in its
manner of correcting the error. Under K.S.A. 2019 Supp. 60-260(a), the trial court could
"correct a clerical mistake or a mistake arising from oversight or omission whenever one
is found in a judgment, order or other part of the record." The court may correct a mistake
on a motion or on its own, with or without notice. "The discretion of the court should be
guided by equitable principles and the interest of the party who received the judgment, as
well as the moving party, must be considered. Needless to say, the court must diligently
protect against the protraction of litigation." In re Hargreaves' Guardianship and Estate,
201 Kan. 50, 55, 439 P.3d 373 (1968).
Therefore, Gloria is incorrect that the improper double recovery of attorney fees
constitutes a meritorious defense. The trial court corrected the judgment by accounting
for the fact that Henning had already compensated Miller Trust for half of the attorney
fees in the underlying case. The court may have inartfully described what it was doing by
9
asking Miller Trust to agree to reduce its judgment by half, but this does not end our
inquiry. When a court enters a judgment in favor of a party, that judgment is the court's
and not the party's. See Cole v. Cole, 172 Kan. 220, 223, 240 P.2d 141 (1952) (defining
judgment as "decision of the court"). Nevertheless, the court here corrected its accounting
error in the original default judgment. The court did not abuse its discretion by using its
authority under K.S.A. 2019 Supp. 60-260(a) to correct an oversight which would have
resulted in a double recovery. Thus, the amount of the judgment does not give Gloria a
meritorious defense to the judgment.
Breach of Warranty
Gloria presents another argument: that Miller Trust has no right of recovery
regardless of the amount. But the argument Gloria presents to us is different from the one
she made before the trial court. This difference is more than a simple rewording or
additional authority provided. Before the trial court, Gloria simply argued that she and
her husband never promised to indemnify Miller Trust in any document. Miller Trust
argued that the language of the warranty of title created an indemnity right.
To settle this point, the trial court reviewed the warranty of title and correctly
determined that the Coxes promised to indemnify the buyers. This court has held that
"[t]he general effect of a covenant of warranty is that the grantor agrees to compensate
the grantee for any loss which the grantee may sustain by reason of a failure of the title
which the deed purports to convey, or by reason of an encumbrance on the title." RAMA
Operating Co., Inc. v. Barker, 47 Kan. App. 2d 1020, 1026, 286 P.3d 1138 (2012).
K.S.A. 58-2203 requires that a warranty deed, in substance, provides that "the grantor
will warrant and defend the same against all lawful claims." The warranty deed here
conveys a property interest in fee simple before promising that the Coxes "will
WARRANT AND FOREVER DEFEND the [Property] . . . , against . . . all and every
person or persons whomsoever lawfully claiming" a competing property interest. The
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trial court correctly decided that the warranty deed here complied with K.S.A. 58-2203
and created a right of indemnity.
On appeal, however, the focus of Gloria's argument has shifted to whether there
was a breach of the warranty of title. She argues that Miller Trust had superior title
against other claimants, as shown by the fact that Miller Trust prevailed in its quiet title
action. And so Gloria contends that the warranty of title was never breached and that the
Coxes had "no duty to defend" the title against "an intruder, or . . . any one else, without
lawful right and superior title." Bedell v. Christy, 62 Kan. 760, 763, 64 P. 629 (1901).
Gloria cites this court's previous holding that "[i]n Kansas, there can be no breach of a
covenant of title in a warranty deed unless the third party's claim is superior to the title or
possessory rights of the grantee." RAMA Operating Co., 47 Kan. App. 2d at 1025.
In sum, Gloria's grounds for maintaining that Miller Trust has no right of recovery
have shifted substantially. Her motion to set aside the judgment failed to argue that no
breach occurred. Miller Trust had no opportunity to respond to this argument. More
importantly, the trial court had no opportunity to consider it. Issues not raised before the
trial court cannot be raised on appeal. Wolfe Electric, Inc. v. Duckworth, 293 Kan. 375,
403, 266 P.3d 516 (2011). Also, the trial court could not have abused its discretion by
failing to consider the merits of a defense that was never raised before it.
Statute of Limitations
Similarly, Gloria's argument on the statute of limitations changed between the trial
court and the appellate court. In her motion to the trial court, she relied on K.S.A. 60-
511(1), which states that an action upon any agreement, contract, or promise in writing
shall be brought within five years. Miller Trust's petition stated that it was forced to
pursue a quiet title action in 2010, when the Property was paid off in full and the Coxes
assigned the contract to Briar Patch, "thereby clouding title." Gloria argued to the trial
11
court that any claims against her accrued in 2010 because that is when the alleged breach
of contract occurred. She argued that Miller Trust's claims here, filed in 2018, would be
time barred.
On appeal, Gloria instead relies on K.S.A. 60-511(3), which says that "[a]n action
brought on a covenant of warranty contained in any deed of conveyance of land" shall be
brought within five years "after there shall have been a final decision against the title of
the covenantor in such deed." She notes that no final decision has been made against
Miller Trust's title, but rather the opposite. Miller Trust prevailed in its quiet title action.
Thus, Gloria abandons the statute of limitations defense because the five-year clock never
started ticking, since the condition precedent never occurred. Instead, she argues that the
statute of limitations further shows why she never breached the warranty of title, as
described in the preceding paragraphs. Here again, Gloria contends for the first time on
appeal that the warranty was not breached. The trial court did not abuse its discretion by
failing to address the merits of a defense that Gloria never presented to the trial court.
Under Garcia, Gloria must show the existence of a meritorious defense for the
trial court to set aside the default judgment under K.S.A. 2019 Supp. 60-260(b)(6). Gloria
presented one additional defense to the trial court by arguing that the judgment was void.
A void judgment would be a meritorious defense, and K.S.A. 2019 Supp. 60-260(b)(4)
specifically addresses void judgments.
Did the Trial Court Err by Ruling That the Judgment Was Not Void?
Gloria argues that the trial court should have ruled that the default judgment was
void as to her because it was void as to her husband. She argues that the trial court should
have set aside the default judgment under K.S.A. 2019 Supp. 60-260(b)(4). The trial
court partly agreed and partly disagreed with her argument and was correct on both
counts.
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To begin, she argues that the judgment was void as to her husband because a
person who dies before receiving service of process of the summons can never become a
party to the lawsuit. See Le v. Joslin, 41 Kan. App. 2d 280, 290, 202 P.3d 677 (2009).
Gloria’s husband died in April 2018. She received the summonses by certified mail in
July 2018. The court correctly ruled that the judgment against Gloria’s husband was void.
Gloria next argues that because the judgment is void as to one defendant, it is void
as to both. She argues that when one joint obligor defaults, judgment cannot be entered
until there is an adjudication as to the other. She relies on our Supreme Court's holding in
Reliance Insurance Companies, 214 Kan. 110.
Reliance Insurance Companies and Maryland Casualty Company (Reliance) paid
an insurance claim from a fire at Royal Cleaners Inc. Reliance then filed a subrogation
claim against the manufacturer of the clothes dryer that started the fire, Huebsch
Originators of Milwaukee, Wisconsin (Huebsch), and the company that installed the
dryers, Thompson-Hayward Chemical Company (Thompson-Hayward). Huebsch timely
answered the petition, but Thompson-Hayward did not. The trial court granted a default
judgment against Thompson-Hayward. Reliance dismissed its claims against Huebsch
and sought to recover all damages from Thompson-Hayward. 214 Kan. at 118.
Thompson-Hayward moved to set aside the default judgment which the court denied.
Our Supreme Court held that the trial court abused its discretion by not setting
aside the default judgment. And the court held as follows: "Thompson-Hayward and
Huebsch as co-defendants were charged with joint liability. [Reliance], by dismissing the
action against Huebsch prevent[ed] an adjudication of the merits. We do not believe the
necessity of default mandates such an inequity." 214 Kan. at 118. Where one of several
defendants who is alleged to be jointly and severally liable defaults, judgment should not
13
be entered against the defaulting defendant until the matter has been adjudicated with
respect to all defendants or all defendants have defaulted. 214 Kan. at 118.
But Gloria's reliance on Reliance is misplaced. No evidence established whether
Thompson-Hayward or Huebsch caused the fire. Yet Huebsch had no liability and
Thompson-Hayward was liable for the full amount of damages because Thompson-
Hayward missed the deadline to file an answer by two business days. Our Supreme Court
held that to assign liability through default in this way was "incongruous and illegal." 214
Kan. at 118. But the tort liability in Reliance is unlike the breach of warranty here. Here,
Gloria and her husband were responsible for the same act and there is no way of
assigning more or less liability to Gloria than to her husband. Further, the judgment
against Gloria's husband was dismissed as void, so there was a final adjudication with
respect to him.
Additionally, no Kansas case has held that dismissing a judgment as void against a
decedent makes the judgment void in its entirety. Gloria urges this court to adopt the
position of the Appellate Court of Illinois in State Bank of Prairie du Rocher, Ill. v.
Brown, 263 Ill. App. 312, 1931 WL 3152 (1931). In Brown, a bank sued three individuals
who were jointly liable on a note. None of them answered and one of them was deceased.
The trial court entered default judgment, causing the two living defendants to move to set
aside the judgment. The appellate court held that the trial court erred by not setting aside
the default judgment.
Brown is unpersuasive. Aside from being an intermediate court opinion from
another state from 1931, the rule set forth in Brown has not be used in any case since,
even in Illinois. Further, the holding was specific to that state. In that regard, the Brown
court held the following: "In Illinois, a joint judgment against several defendants,
whether rendered in an action upon contract, or in tort, is a unit, and cannot be separated
into parts." 263 Ill. App. at 315. Kansas courts have not adopted this rule that a judgment
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void for a decedent is void for all defendants. The judgment here was not void and the
trial court did not abuse its discretion.
Did the Trial Court Err in Ruling That Gloria's Failure to Answer Miller Trust's Petition
Was the Result of Inexcusable Neglect?
Gloria argues that the trial court should have set aside the default judgment for
excusable neglect under K.S.A. 2019 Supp. 60-260(b)(1). She argues that the trial court
abused its discretion because it failed to give any weight to the circumstances in which
she found herself in when she was sued. She points to the suicide of her husband of 65
years, the diagnosis of her son's lung cancer, the brain tumor of her great-grandson, and
the care of her 17-year-old son. She maintains that these events took a toll on her that
manifested in extreme bouts of grief, substantial weight loss, and forgetfulness. Under
these circumstances, Gloria argues that her neglect was of the same excusable kind that
prompted our Supreme Court to set aside the default judgment in Montez.
Turning to the facts in Montez, we note that Evelyn and Manuel Montez sued
Tonkawa Village Apartments (Tonkawa) after Evelyn fell on some icy steps. A deputy
sheriff served the summons and petition on the resident manager for Tonkawa. The
manager placed the papers on his desk and neither he nor anyone else ever saw them
again. He also neglected to discuss the papers with his superiors, erroneously assuming
that they had also received copies. Tonkawa filed no answer and the trial court entered a
default judgment.
Our Supreme Court determined that this was excusable neglect. While no clear
definition of excusable neglect exists, our Supreme Court has equated it with "reckless
indifference" and distinguished it from "the unintentional inadvertence or neglect
common to all who share the ordinary frailties of mankind." 215 Kan. at 65. The Montez
court explained that a litigant should not be unnecessarily penalized for the simple
15
neglect of its agent. 215 Kan. at 63-64 (citing Tolson v. Hodge, 411 F.2d 123 [4th Cir.
1969]; Henry v. Metropolitan Life Ins. Co., 3 F.R.D. 142 [W.D. Va. 1942]; Ellington v.
Milne, 14 F.R.D. 241 [E.D.N.C. 1953]; and Trueblood v. Grayson Shops of Tennessee,
Inc., 32 F.R.D. 190 [E.D. Va. 1963]). The common thread through Montez and the cases
cited in Montez is neglect by an agent unfairly affecting the principal. The Montez court
focused on a premise that a principal should not be harmed or penalized for the
negligence of an agent. This factor is not present here because Gloria received service
herself.
Our research has found no Kansas authority that is factually like this case. Gloria,
however, offers up a precedent from another jurisdiction for our consideration. In
Tradesmens National Bank & Trust Co. v. Cummings, 38 N.J. Super. 1, 118 A.2d 80
(1955), a debtor failed to file an answer after receiving a petition and summons. The
court entered a default judgment against him. The debtor moved to set aside the judgment
because of excusable neglect. In support of his motion, he testified that "he was 77 years
old and in a terribly upset physical condition due to the death of his wife and the very
serious illness of his son," who had a brain tumor. 38 N.J. Super. at 4. The trial court
ruled that the debtor’s neglect was excusable and set aside the default judgment. The
plaintiff bank appealed, and the appellate court affirmed, holding that the trial court did
not abuse its discretion in setting aside the default judgment.
The factual similarities between Cummings and the case here might persuade a
court to also set aside the judgment in this case were it not for two marked differences.
First, the Cummings court decided that the trial court had not abused its discretion by
granting the motion. Second, in Cummings, the defendant had already, in prior
bankruptcy proceedings, scheduled the plaintiff as a creditor and had been discharged,
which constituted an absolute defense. 38 N.J. Super. at 5. Thus, Cummings stands in
stark contrast to the case here because it is dissimilar in two key respects.
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Hypothetically, if Gloria had presented evidence in the form of testimony or proof
that she was severely depressed and she was unable to attend to everyday needs, her
conduct of signing for the petition and summons and placing them in a file cabinet and
forgetting about them could have shown excusable neglect. We note, however, that the
record contained two declarations from Gloria and her son, Rick, concerning Gloria’s
mental condition. But without some testimony or proof tending to confirm Gloria's
mental condition when she was served with the petition and summons, we conclude that
the declarations were insufficient to show excusable neglect and, thus, the trial court
properly ruled that Gloria had failed to show excusable neglect.
Did the Trial Court Err in Setting the Prejudgment or Postjudgment Interest?
Allowance of prejudgment interest on a liquidated claim under K.S.A. 16-201 is a
matter of judicial discretion subject to reversal only upon a showing of an abuse of
discretion. Owen Lumber Co. v. Chartrand, 283 Kan. 911, 925, 157 P.3d 1109 (2007); In
re Metcalf Associates-2000, 42 Kan. App. 2d 412, 424, 213 P.3d 751 (2009).
Gloria correctly argues that even if the judgment is allowed to stand, the trial court
erred by awarding prejudgment interest and by misstating the postjudgment interest rate.
On prejudgment interest, she argues that prejudgment interest can only be awarded on a
liquidated amount. She notes that the amount was not known to the parties until the trial
court entered its corrected judgment of $59,627.97. She stresses that if she had paid
Miller Trust when it e-mailed its first demand letter, then she would have paid Miller
Trust the wrong amount. Gloria argues that this is the opposite of a liquidated amount.
In Kansas, prejudgment interest is allowable only on liquidated claims. A claim is
liquidated when both the amount due and the date due are fixed and certain or
ascertainable by mathematical computation. Chartrand, 283 Kan. at 925. When the
amount of damages is not liquidated until the judgment is entered, then prejudgment
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interest is not appropriate. Arrowhead Construction Co. of Dodge City v. Essex Corp.,
233 Kan. 241, 251, 662 P.2d 1195 (1983) (finding that "the amount of damages was not
liquidated until the trial court found there was a contract for $1.35 per square foot and
entered judgment accordingly").
In Burrowwood Associates, Inc. v. Safelite Glass Corp., 18 Kan. App. 2d 396, 402,
853 P.2d 1175 (1993), Burrowwood Associates, Inc. (Burrowwood) contracted to provide
truck drivers to deliver Safelite Glass Corporation's (Safelite) products. Burrowwood
later sued Safelite for breach of contract for failure to pay for services rendered and
tortious interference with business relationships, claiming actual and punitive damages.
The contract contained a liquidated damages clause of $5,000 for early termination of the
contract, due upon termination. This court found that prejudgment interest was properly
awarded because this amount was liquidated, that is, a specified amount on a specified
date. But the jury awarded an additional $40,641.86. Nevertheless, this court held that
"since there was uncertainty as to the amount due until the jury made its finding, the
award of prejudgment interest on the amount of $40,641.86 was improper and should be
reversed." 18 Kan. App. 2d at 402.
Here, Gloria's warranty deed did not specify an amount of damages for failing to
"warrant and forever defend" Miller Trust's title, nor did it specify a date for payment.
The warranty deed also did not specify a method for calculating such damages, whether it
be actual attorney fees, reasonable attorney fees, sale price of the property, diminution of
property value, or other. Without a method for determining damages, the amount was not
certain or even "ascertainable by mathematical computation." Chartrand, 283 Kan. at
925. The trial court determined the principal on which interest accrued was the
unreimbursed attorney fees in the underlying case. The trial court ordered that
prejudgment interest would begin on the date that judgment was entered in the underlying
case. These terms were not specified by contract, unlike the liquidated damage amount of
$5,000 owed because of early termination of the contract in Burrowwood. The judgment
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of the court here provided both the liquidated damage amount and the date for payment,
which was error. And, thus, the trial court abused its discretion by awarding prejudgment
interest on damages that were not liquidated.
Also, Gloria correctly argues that the trial court erred in stating that the 10% per
annum interest would continue until "paid in full." She argues that the trial court mixed
together prejudgment and postjudgment interest. She further argues that the 10% rate
would only apply to prejudgment interest, but that rate would change once the court
entered judgment.
Postjudgment interest rate is governed by statute and is purely a question of law
over which this court has unlimited review. Delta Groups Engineering, Inc. v. Sprint
Spectrum, L.P., No. 100,920, 2010 WL 1882143, at *17 (Kan. App. 2010) (unpublished
opinion). For comparison, prejudgment interest is set "at the rate of ten percent per
annum, when no other rate of interest is agreed upon." K.S.A. 16-201; Farmers State
Bank v. Production Credit Association of St. Cloud, 243 Kan. 87, 103, 755 P.2d 518
(1988). But postjudgment interest changes on July 1 of each year. K.S.A. 16-204; ARY
Jewelers, LLC v. Krigel, 277 Kan. 464, 471-72, 85 P.3d 1151 (2004).
Here, the trial court's award of postjudgment interest at 10% "until paid in full"
does not align with K.S.A. 16-204(e). The trial court abused its discretion because the
postjudgment interest ordered is based on an error in law. The judgment of the court is
reversed, and the case remanded with directions to vacate prejudgment interest and
recalculate postjudgment interest.
Affirmed in part, reversed in part, and remanded with directions.
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