Nicholson v. LeBron ( 2016 )

IN THE NEBRASKA COURT OF APPEALS
MEMORANDUM OPINION AND JUDGMENT ON APPEAL
(Memorandum Web Opinion)
NICHOLSON V. LEBRON
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).
LYNDA NICHOLSON, APPELLEE,
V.
RENARD LANCE LEBRON, APPELLANT.
Filed January 19, 2016. No. A-14-1105.
Appeal from the District Court for Douglas County: GREGORY M. SCHATZ, Judge.
Reversed and remanded with directions.
James Walter Crampton for appellant.
James S. Silverman for appellee.
IRWIN, PIRTLE, and RIEDMANN, Judges.
PIRTLE, Judge.
I. INTRODUCTION
The district court for Douglas County denied Renard LeBron’s motion to vacate a default
judgment against him. He appeals, asserting the district court abused its discretion. We conclude
that the district court erred in denying LeBron’s motion to vacate the default judgment, and we
therefore reverse, and remand with directions.
II. BACKGROUND
On August 3, 2013, Lynda Nicholson filed a complaint against Renard LeBron alleging
two causes of action. The first cause of action alleged Nicholson loaned LeBron money, and
LeBron failed to repay the money as promised. Nicholson filed a copy of a promissory note
signed by LeBron and notarized on October 3, 2012. The note provided that LeBron promised to
repay Nicholson the principal owed on a Home Equity Line of Credit dated March 7, 2011,
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which was incurred by Nicholson on LeBron’s behalf, plus all interest accrued. The note
provided that payment would be made in monthly installments, with the remaining principal
amount paid in full by March 2016. The note also provided that if LeBron failed to make an
installment or failed to comply with the terms of the note, the loan would be considered in
default.
Nicholson alleged the amount past due and unpaid by LeBron was $174,078.34 as of
June 24, 2013. The total included the interest the parties anticipated and agreed to in the note.
Nicholson sought a judgment against LeBron for the amount unpaid, as well as late fees, attorney
fees, collection costs, and pre- and post-judgment interest.
The second cause of action alleged Nicholson loaned money to LeBron from November
19, 2010, through November 23, 2011. She alleged the amount past due and unpaid by LeBron
was $28,254.08 as of April 26, 2013. She sought repayment of the amount unpaid, as well as
pre- and post-judgment interest related to the second cause of action.
She further alleged that she presented the claims to LeBron and demanded payment of the
amounts alleged more than 90 days prior to filing the action, but he failed, refused, or neglected
to pay. She also alleged she remains the owner and holder of the account/promissory notes.
Nicholson filed a motion for special process server on August 13, 2013, and one was
appointed the same day. A copy of the service return was filed on September 3, 2013 certifying
LeBron received a copy of the summons by personal service on August 25.
On October 2, 2013 Nicholson filed a motion and affidavit for default judgment alleging
LeBron was properly served with summons but failed to appear, answer, or otherwise plead to
the complaint, and was therefore in default.
On October 29, 2013 the district court entered an order of default judgment for each of
the causes of action. The copy of the order sent to LeBron was marked “returned to sender” and
the label indicated LeBron had moved and left no forwarding address. Nicholson filed a motion
for special process server on December 16 to serve the Order in Aid of Execution. A special
process server was appointed by order of the district court on the same day with instructions for
personal service.
On December 27, 2013 LeBron filed a motion to vacate the default judgment. In the
motion which was verified by him, under oath, he alleged a “miscommunication” with his
counsel was the reason he had not filed an answer to Nicholson’s complaint, and that he had a
“good and meritorious defense” to Nicholson’s two causes of action. Specifically, LeBron
alleged he was engaged in a joint venture with Nicholson in two parcels of real estate, and the
loans and promissory notes were a part of their joint venture. He alleged the parties intended to
“flip” the two properties, and split the proceeds. He also alleged the renovation work was not
completed but that he was owed for labor costs. He further alleged that Nicholson sold one
property for below the market value it would have achieved had the work been completed. He
alleged that if he were permitted to answer, he would “pray that the Plaintiff’s Complaint be
dismissed or alternatively for a set off of the damages for sale of the Armbrust property for less
than fair market value.”
LeBron’s motion to vacate was heard on October 3, 2014. The district court’s order noted
that “Evidence was received, and the matter submitted to the Court on brief of the Plaintiff.”
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However, that evidence was not submitted to this court on appeal. The court found that LeBron
had not submitted an answer or some other proof disclosing a meritorious defense. Thus, the
court found LeBron’s motion to set aside the judgment against him must be denied.
Although the court’s order denying the motion to vacate was dated and signed by the
judge on November 4, it was file-stamped by the clerk of the district court on November 5.
III. ASSIGNMENTS OF ERROR
LeBron asserts the district court abused its discretion in denying his motion to vacate the
default judgment against him.
IV. STANDARD OF REVIEW
In reviewing a trial court’s action in vacating or refusing to vacate a default judgment, an
appellate court will uphold and affirm the trial court’s action in the absence of an abuse of
discretion. Fitzgerald v. Fitzgerald, 286 Neb. 96, 835 N.W.2d 44 (2013).
A judicial abuse of discretion exists when the reasons or rulings of a trial judge are
clearly untenable, unfairly depriving a litigant of a substantial right and denying just results in
matters submitted for disposition. Id. A much stronger showing is required to substantiate an
abuse of discretion when a judgment is vacated than when it is not. Miller v. Steichen, 268 Neb.
328, 682 N.W.2d 702 (2004).
V. ANALYSIS
1. TIMELINESS OF APPEAL
Ordinarily, in order to appeal from a judgment, decree, or final order made by the district
court, the appealing party must file a notice of appeal in the district court within 30 days.
Timmerman v. Neth, 276 Neb. 585, 755 N.W.2d 798 (2008), See Neb. Rev. Stat. § 25-1912(1)
(Cum. Supp. 2014). Nicholson argues that LeBron did not timely appeal the denial of his motion
to vacate default judgment, as the notice of appeal was filed on December 5, 2014, and the order
of the district court was dated November 4, 2014.
For purposes of determining the time for appeal, “the date stamped on the judgment,
decree, or final order shall be the date of entry.” Neb. Rev. Stat. § 25-1301(3) (Cum. Supp.
2014). In this case, although the order was dated November 4, it was file-stamped on November
5; thus, LeBron’s appeal was timely filed within 30 days of the entry of the order.
2. MOTION TO VACATE
(a) Notice
Nicholson filed her motion for default judgment after LeBron failed to timely file an
answer or other response to the complaint. Default judgment was granted in her favor. LeBron
subsequently filed a motion to vacate the judgment, which was denied. LeBron asserts the
district court erred by overruling his motion to vacate the default judgment against him.
LeBron encourages this court to consider “irregularities in the notice to the Defendant.”
He states that on August 13, 2013, an order for substitute service was granted but no service was
had upon Defendant.” However, he acknowledges that the record reflects that the complaint was
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personally served by the appointed special process server, and expresses his opinion that “this
error is harmless.” LeBron did not raise any issues regarding notice before the district court,
therefore we decline to address whether proper notice was given. See Gebhardt v. Gebhardt, 16
Neb. Ct. App. 565, 746 N.W.2d 707 (2008) (an issue not properly presented to and passed upon by
the trial court may not be raised on appeal).
(b) Meritorious Defense
LeBron asserts that his motion to vacate default judgment, filed December 27, 2013,
raised a meritorious defense by alleging that he and Nicholson were part of two joint ventures.
Generally, where a judgment has been entered by default and a prompt application has
been made at the same term to set it aside, with 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 the merits. Miller v. Steichen, supra. When determining whether to set aside
a default judgment, two competing interests must be considered: the right of a litigant to defend
the action on the merits and judicial efficiency. Carrel v. Serco Inc., 291 Neb. 61, 864 N.W.2d
236 (2015). The Nebraska Supreme Court has stated:
It is the policy of the law to give a litigant full opportunity to present his contention in
court and for this purpose to give full relief against slight and technical omissions. On the
other hand, it is the duty of the courts to prevent an abuse of process, unnecessarily
delays, and dilatory and frivolous proceedings in the administration of justice. . . . Mere
mistake or miscalculation of a party or his attorney 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 misjustice [sic] will result from
permitting a trial on the merits.
Id., citing Miller v. Steichen, supra, at 334-335, 682 N.W.2d 707-708 (citations omitted).
The record discloses that LeBron acted promptly after he became aware of the default
judgment. LeBron’s motion to vacate the orders of default judgement filed on October 29, 2013
was filed on December 27, so it was filed within the “same term” as described in Miller above.
The local rules of the district court for the Fourth Judicial District, applicable here, provide that
the term of court runs from January 1 to December 31 of the calendar year. See Rules of Dist. Ct.
of Fourth Jud. Dist. 4-1. A court has inherent power to vacate or modify its own judgments at
any time during the term at which these judgments are pronounced, and such power exists
entirely independent of any statute. Kibler v. Kibler, 287 Neb. 1027, 845 N.W.2d 585 (2014).
Accordingly, the district court had the inherent power to vacate or modify the October
default orders through December 31, 2013. Although LeBron filed his motion to vacate within
that term, no order was entered until after the term. However, this does not change the court’s
inherent power to vacate based upon the extension of time granted in Neb. Rev. Stat.
§ 25-2001(1) (Reissue 2008):
The inherent power of the district court to vacate or modify its judgments or orders
during term may also be exercised after the end of the term, upon the same grounds, upon
a motion filed within six months after the entry of the judgment or order.
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LeBron’s timely motion preserved the district court’s ability to exercise its inherent
power to vacate or modify the October 29 default orders. We now consider whether LeBron
tendered an answer or other sufficient proof disclosing a meritorious defense, which would
permit the court to sustain his motion to vacate and allow the cause to be heard on the merits.
The Nebraska Supreme Court has stated that if a transcript shows that a defendant has a
meritorious defense, an answer is “not an absolute requirement.” Urwin v. Dickerson, 185 Neb.
86, 173 N.W.2d 874 (1970). In the context of a motion to vacate a default judgment, 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. Miller v. Steichen, supra.
Although a defendant seeking to vacate a default judgment is required to present a
meritorious defense, it is not required that the defendant show he will ultimately prevail in the
action, but only that the defendant show that he has a defense which is recognized by the law and
is not frivolous. Id. See also Steinberg v. Stahlnecker, 200 Neb. 466, 263 N.W.2d 861 (1978).
In Steinberg v. Stahlnecker, supra., the Nebraska Supreme Court found a statement in an
affidavit in support of a motion to set aside a default judgment that “the Defendant possesses a
good and sufficient defense to the claim and suit of the plaintiff” was nothing more than a
cursory statement by the defendant’s attorney. The court in Steinberg v. Stahlnecker held its
inquiry was limited to whether the trial judge abused its discretion in refusing to set aside the
default judgment, and the statement was not sufficient to disclose a meritorious defense.
Although LeBron did not specifically file an “answer,” this does not necessarily defeat
his motion to vacate the default judgment. LeBron’s verified motion to vacate specifically
alleged that if LeBron was permitted to answer he would deny the allegations in paragraphs 2
through 5 of the complaint. He also stated that he would affirmatively allege that the promise to
pay was made as part of two joint ventures of the parties. He alleged that he and Nicholson were
parties to an agreement to “flip” or renovate two jointly owned properties. He stated that the
agreement was not reduced to writing, but it was agreed that LeBron would provide the labor and
knowledge to improve the properties, and that Nicholson would provide the materials. He
alleged the parties agreed to equally divide the proceeds of the Armbrust property after each
party was paid for their expenses. He further alleged that he had paid sums for labor of
approximately $50,000, and had also provided some of the labor himself. He alleged the
renovations were not completed, and the property was sold by Nicholson for $150,000 below
market value, and $200,000 below the market value it would have attained if the renovations had
been completed. LeBron’s motion was verified by him and contained a notarized statement
certifying that he had read the motion, knew the contents, and that the statements it contained
were true.
LeBron did not provide exhibits or other “proof” of the agreement, but his motion was
sworn and contained statements that raise a real controversy as to the essential facts in this case.
LeBron’s statements were more than a cursory statement that he had a meritorious defense to
Nicholson’s complaint. Thus, we find the district court abused its discretion in denying the
motion to vacate.
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VI. CONCLUSION
For the reasons set forth herein, we reverse the judgment of the district court and remand
the cause with directions to the district court to (1) vacate the default judgments entered against
LeBron on October 29, 2013, and (2) give LeBron a reasonable time in which to file an
appropriate responsive pleading.
REVERSED AND REMANDED WITH DIRECTIONS.
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