John Turner v. Gateway Bobcat of Missouri, Inc. , 2014 Mo. App. LEXIS 1101 ( 2014 )

In the
Missouri Court of Appeals
Western District

JOHN TURNER, 
 WD76745
Respondent, 
v.  OPINION FILED:

GATEWAY BOBCAT OF MISSOURI  SEPTEMBER 30, 2014
INC., 

Appellant. 

Appeal from the Circuit Court of Boone County, Missouri
The Honorable Larry A. Bryson, Judge
Before Division Two: Victor C. Howard P.J., James E. Welsh, Anthony Rex Gabbert JJ.
Gateway Bobcat of Missouri, Inc. appeals a judgment denying its motion to set aside a
default judgment against it. In its sole point on appeal, Gateway asserts that the trial court erred
in denying its motion to set aside the default judgment entered against it because Gateway
established good cause and the existence of meritorious defenses. We reverse and remand.
Factual Background
On January 7, 2011, John Turner filed a petition in the Circuit Court of
Boone County naming Gateway as the defendant. An initial appearance date was set for
February 7, 2011, to answer the allegations in the petition. A summons was served on Gateway‟s
registered agent on January 21, 2011. The summons was in turn sent to the president of
Gateway, Daniel Anich, via Federal Express on January 24, 2011. Anich placed the papers on
the desk of John Albers. Albers was the general manager of Gateway and was designated to
process legal papers and transmit notice to Gateway‟s insurance carrier. Albers was out of town
when the papers were placed on his desk, but was set to return on January 28, 2011.
On February 7, 2011, the circuit court entered a default judgment against Gateway, when
it failed to appear before the court.1 On February 8, 2011, Anich asked Albers about the status of
the lawsuit and that prompted Albers to find the petition and summons and deliver them to
Gateway‟s insurance carrier so counsel could be retained.
On February 23, 2011, Gateway filed a motion to set aside default judgment and to allow
it time to file an untimely answer. Attached to this motion was Gateway‟s proposed answer to
Turner‟s petition and suggestions in support of Gateway‟s motion to set aside default judgment,
including an affidavit from Albers and exhibits in support of the motion. Aside from setting
forth the factual background of the case, Albers‟s affidavit stated that the papers “must have been
inadvertently intermingled with some of the papers and I did not notice the Summons and
Petition.”
On March 18, 2011, a hearing was held before the court regarding Gateway‟s motion to
set aside default judgment. At the hearing, the issue in contention was whether Gateway had
good cause to justify the trial court granting its motion to set aside the default judgment.
Gateway presented at the hearing only Albers‟s affidavit. No live testimony was offered by
either side. At the conclusion of the hearing, the trial court granted Gateway and Turner ten days
to file a brief and supplemental brief. Gateway filed supplemental suggestions in support of the
1
Turner‟s action is governed by Chapter 517, RSMo 2000. Chapter 517 applies to civil cases, like Turner‟s
claim of conversion, that are filed in the associate division of the circuit court and demand damages not in excess of
$25,000. § 517.011.1(1). In such cases, “[a] default judgment may be entered in favor of a party . . . when the
opposing party has been duly and timely served with summons and does not appear in court on the return date or
subsequent date to which the case has been continued.” § 517.131.
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motion to set aside default judgment on March 22, 2011, to which Turner filed no response. No
action was taken by the court.
On June 2, 2013, Gateway again filed supplemental suggestions in support of its motion
to set aside the default judgment against it. On July 5, 2013 the court put out an order overruling
Gateway‟s motion to set aside default judgment. 2 On July 19, 2013, Gateway filed a motion to
amend the court‟s order to denominate the ruling as a Judgment. The trial court sustained the
motion and judgment was entered on July 29, 2013. Gateway appeals the trial court‟s judgment
denying its motion to set aside the default judgment.
Default Judgment
In its sole point on appeal, Gateway argues that the circuit court erred in denying its
motion to set aside default judgment because Gateway demonstrated both the existence of good
cause and meritorious defenses. Gateway contends that it presented evidence that its failure to
appear before the trial court was due to excusable neglect and that it demonstrated that
ownership of the skid steer and the amount of Turner‟s damages were subject to dispute. We find
that the court erred in denying Gateway‟s motion to set aside the default judgment.
When reviewing a trial court‟s decision to grant or deny a motion to set aside a default
judgment, we review for an abuse of discretion. Brungard v. Risky’s Inc., 240 S.W.3d 685, 686-
87 (Mo. banc 2007). An abuse of discretion occurs when the trial court‟s “ruling is clearly
against the logic of the circumstance then before the trial court and is so unreasonable and
arbitrary that the ruling shocks the sense of justice and indicates a lack of careful deliberate
consideration.” Peters v. Gen. Motors Corp., 200 S.W.3d 1, 23 (Mo. App. 2006).
2
The trial court‟s judgment denying Gateway‟s motion to set aside the default judgment came more than
two years after the hearing on the matter. Despite this extensive delay, the trial court record is void of any reason
for such a delay.
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The trial court has narrowed discretion to deny a motion to set aside a default judgment
and broad discretion to sustain such a motion. Brungard, 240 S.W.3d at 687 (citing Hopkins v.
Mills-Kluttz, 77 S.W.3d 624, 626 (Mo. App. 2002)). “The narrowed discretion to deny a motion
to set aside a default judgment stems from the public policy favoring the decision of cases on
their merits.” Coble v. NCI Bldg. Systems, Inc., 378 S.W.3d 443, 447 (Mo. App. 2012). Due to
this narrowed discretion, “appellate courts are more likely to reverse a judgment which fails to
set aside a default judgment than one which grants that relief.” Id. Deference towards granting a
motion to set aside a default judgment is afforded regardless of whether evidence supporting the
motion was presented through exhibits and affidavits or through live testimony. Barsto Const.,
Inc. v. Gladstone Senior Partners, L.P., 270 S.W.3d 440, 442 (Mo. App. 2008).
However, where the evidence is uncontested no deference is given to the trial court‟s
findings. White v. Dir. of Revenue, 321 S.W.3d 298, 308 (Mo. banc 2010). “Evidence is
uncontested in a court-tried civil case when the issue before the trial court involves only
stipulated facts and does not involve resolution by the trial court of contested testimony; in that
circumstance, the only question before the appellate court is whether the trial court drew the
proper legal conclusions from the facts stipulated.” Id. Here, the factual assertions made by
Albers in his affidavit were never disputed or contested. Instead, it was Turner‟s position that
because the president was served the summons there was no good cause. Furthermore, Turner
filed no answer to Gateway‟s motion, present any evidence at the hearing, or file any suggestions
in opposition after the hearing. Thus, as the factual assertions in Albers‟s affidavit were
uncontested, the only question before this Court is whether the trial court drew the proper legal
conclusion from these facts. See id.
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A motion to set aside a default judgment must “be made within a reasonable time not to
exceed one year after the entry of default judgment.” Rule 74.05(d). A motion to set aside a
default judgment must “stat[e] facts constituting a meritorious defense and good cause shown.”
Rule 74.05(d).
Both parties agree that Gateway‟s motion to set aside the default judgment was filed in a
timely matter. In his brief, Turner concedes Gateway has stated a meritorious defense, as he
stated “[t]he real issue in this case is whether or not [Gateway] sustained its burden in showing
good cause for its failure to answer the original summons.” Thus, the issue before this Court
turns on whether good cause was established.
The party moving to set aside the default judgment has the burden to show good cause.
Barsto, 270 S.W.3d at 442. „“Good Cause‟ includes a mistake or conduct that is not intentionally
or recklessly designed to impede the judicial process.” Rule 74.05(d). “Good cause should be
given a liberal interpretation and includes good faith mistakes and even negligence in failing to
file a timely answer.” Dozier v. Dozier, 222 S.W.3d 308, 313 (Mo. App. 2007). In distinguishing
between negligence and recklessness in the context of Rule 74.05:
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. To be reckless, a person 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 a
reasonable man.
Id. (quoting Mullins v. Mullins, 91 S.W.3d 667, 670 (Mo. App. 2002)). When determining
whether conduct intentionally or recklessly was designed to impede the judicial process,
reasonable doubt should be resolved in favor of good faith. Barsto, 270 S.W.3d at 442.
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Gateway provided evidence of good cause through the affidavits of Albers and Anich.
The record reflects that the summons and petition became commingled with other papers on
Albers desk while he was out of town for a few days. The day after Gateway failed to appear at
the scheduled hearing with the trial court, Anich inquired of Albers about the status of the
litigation. Albers immediately located the summons and the petition and had the documents
delivered to Gateway‟s insurance carrier so counsel could be retained.
Although Anich failed to take adequate precautions to ensure that Albers would definitely
receive the summons and petition, his conduct was merely negligent. Anich‟s conduct was
reasonably calculated to deliver the summons and petition to the appropriate Gateway personnel
to handle the matter. Furthermore, the discovery of the misplaced summons and petition and
prompt motion to set aside the default judgment were a direct result of Anich following up with
Albers about the status of the litigation. Viewing Anich‟s conduct and his mistakes as a whole,
his conduct was not intentionally or recklessly designed to impede the judicial process but was
rather negligent.
In reviewing Albers‟s conduct, his affidavit indicates that he was not aware of the
existence of the summons and petition until Anich inquired into the status of the litigation and he
actively sought to find them. Albers‟s inadvertence merely evinces a failure to take adequate
precautions to ensure no litigation paperwork had become commingled with the other paperwork
on his desk. Within a day of being notified of the existence of the summons and petition, Albers
located the documents and forwarded them on to the appropriate insurance carrier to handle the
matter for Gateway. Like Anich‟s conduct, Albers‟s conduct appears to be mere negligence.
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Turner argues, however, that because the error was one involving the President and
General Manager of Gateway that their conduct was intentionally or recklessly designed to
impede the judicial process. We disagree.
Turner derives his argument from three cases: Pyle v. FirstLine Transp. Sec., Inc., 230
S.W.3d 52 (Mo. App. 2007); Myers v. Pitney Bowes, Inc., 914 S.W.2d 835 (Mo. App. 1996); and
Gibson by Woodall v. Elley, 778 S.W.2d 851 (Mo. App. 1989). In Pyle, in our reasoning for why
good cause was shown, we placed significant weight on the fact that the summons and petition in
that case were mishandled by clerical employees as opposed to management employees. Pyle,
230 S.W.3d at 60. In Myers, we found good cause was shown because the member of
management responsible for handling litigation matters had retired and default judgment had
already been entered by the time a member of the defendant‟s management found out about the
litigation. Myers, 914 S.W.2d at 838-39. In Gibson, we determined good cause was shown
because the petition and summons became misplaced and were not discovered until after
judgment had been entered because temporary secretaries were working in the office when they
were received. Gibson, 778 S.W.2d at 853-55.
Turner states that Gateway failed to establish facts that would be in comport with the
reasoning we relied upon in Pyle, Myers, or Gibson and implies that this precludes them from
establishing good cause. Turner fails to recognize that the circumstances that existed in other
cases where good cause was shown does not create an exhaustive list of the circumstances in
which it can be established.
Turner further argues that Anich and Albers intentionally or recklessly impeded the
judicial process because as the President and General Manager they should have been aware of
the gravity of a litigation summons and the need for quick action. Turner‟s argument relies on
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our reasoning in Pyle where we stated that management level employees “should be assumed to
have a better idea of the potential gravity of a litigation summons and the need for quick action.”
Pyle, 230 S.W.3d at 60. Turner asserts that, because Anich and Albers are both management
level employees that should be presumed to understand the gravity of a litigation summons, their
failure to respond to the summons amounted to intentionally or recklessly impeding the judicial
process.
However, the reasoning in Pyle establishes that when looking at the totality of the
circumstances to determine if good cause was shown we will take into consideration whether the
conduct or mistake leading to the default judgment occurred at the hands of a non-managerial
employee or a management employee. See Pyle, 230 S.W.3d at 60 (stating “[w]hen the case
involves mishandling by lower-level, non-managerial employees, the mistake is more likely to be
negligent; whereas a mistake by upper-level management employees, or by individual
defendants, is more likely to be presumed reckless or intentional.”). While there is no doubting
that both Anich and Albers are management level employees, their actions, as previously
discussed, constituted mere negligence. Rule 74.05 requires the conduct be recklessly or
intentionally designed to impede the judicial process. As a result, because Anich‟s and Albers‟s
conduct was negligent we find that the trial court erred in denying Gateway‟s motion to set aside
default judgment. Point one is granted.
We conclude, therefore, that the circuit court erred in denying Gateway‟s motion to set
aside the default judgment because the record reflects that Anich‟s and Albers‟s conduct was
negligent and not intentional or reckless as Rule 74.05 requires. We reverse and remand to the
circuit court for further proceedings in accordance with this opinion.
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Anthony Rex Gabbert, Judge
All concur.
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