Singh v. Mortensun

Opinion by

Judge DAVIDSON.

In this appeal from the entry of a default judgment, defendant, Mark Mortensun, contends that the trial court abused its discretion by failing to set aside the initial entry of default. We reverse and remand.

On or about April 19, 1999, defendant posted pictures and allegedly slanderous statements about plaintiff, Jay Singh, on a website dedicated to Grateful Dead fans, a community of which both plaintiff and defendant were a part. The postings stated, among other things, that plaintiff was a pedophile and child molester.

After learning about the postings, plaintiff brought a suit against defendant for slander, libel, emotional distress, and negligence. Defendant was served at his home in California on May 17, 1999; the responsive pleading was due on June 16, 1999. Defendant threw the summons and complaint out of his car onto the street, where a pedestrian found them and mailed them back to plaintiff's counsel.

Because defendant failed to answer the complaint or appear in court by the required date, plaintiff sought and obtained a "default judgment" from the court on July 1, 1999. Defendant, after obtaining counsel, filed a motion to set aside the "default judgment" on July 19, 1999, which the court denied. At a subsequent damages hearing, after hearing evidence from both parties, the court entered judgment for plaintiff in the amount of $50,000 in actual damages for libel per se and $50,000 in punitive damages.

On appeal, defendant argues that the trial court abused its discretion in denying his motion to set aside the entry of default. We agree.

As a threshold matter, we note that the entry of default and the entry of a default judgment are separate and distinct. The entry of default merely establishes the defaulting party's liability. When a default has been entered, but damages have not been proven, there is no final judgment. Thus, the entry of default is simply an interlocutory order that, alone, determines no rights or remedies. See Sumer v. District Court, 889 P.2d 50 (Colo.1995); Kwik Way Stores, Inc. v. Caldwell, 709 P.2d 36 (Colo.App.1985), rev'd on other grounds, 745 P.2d 672 (Colo.1987).

Both the entry of default and a default judgment, under certain cireumstances, may be set aside. C.R.C.P. 55(c) ("For good cause shown the court may set aside an entry of default and, if a judgment by default has been entered, may likewise set it aside in accordance with Rule 60(b).").

CRCP. 60(b) sets forth a three-pronged test to determine whether to vacate a default judgment: whether the neglect that resulted in entry of judgment by default was excusable; whether the moving party has alleged a meritorious defense; and whether relief from the challenged judgment would be consistent with equitable considerations such as protection of action taken in reliance on the judgment and prevention of prejudice by reason of evidence lost or impaired by the passage of time. Craig v. Rider, 651 P.2d 397 (Colo.1982). All three factors must be considered before a court may vacate a default judgment. See Sumler v. District Court, supro; Buckmiller v. Safeway Stores, Inc., 727 P.2d 1112 (Colo.1986).

The ruling at issue here concerned the entry of default, not the entry of a default judgment. However, the factors to be considered in evaluating a request to set either aside are substantially the same. Buckmiller v. Safeway Stores, Inc., supra. Accord In re Weisbard, 25 P.3d 24 (Colo.2001); Sumler v. District Court, supra; Dunton v. Whitewater West Recreation, Lid., 942 P.2d 1348 (Colo.App.1997); Jarnagin v. Busby, Inc., 867 P.2d 68 (Colo.App.19983). See 5 S. Hyatt & S. Hess, Colorado Practice § 554 (1998); 10A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2694 (8d ed.1998)(discussing identical federal rule; the elements uniformly considered to evaluate a motion to set aside a default are the showing of an appropriate excuse or explanation, the existence of a meritorious defense, and the absence of substantial prejudice to the non-defaulting party).

In determining a motion to vacate a default judgment, the trial court's consideration of these factors is guided by the general rule that resolution of disputes on their merits is favored, and therefore the requirements should be liberally construed in favor of the moving party. See Craig v. Rider, supra.

As a practical matter, most likely because of the procedural distinctions between the entry of default and a default judgment, these requirements are even more flexibly applied and liberally interpreted when used to evaluate a motion to set aside a default. See Johnson v. Dayton Electric Manufacturing Co., 140 F.3d 781, 788 (8th Cir.1998)("Although the same factors are typically relevant in deciding whether to set aside entries of default and default judgments, most decisions hold that relief from a default judgment requires a stronger showing of excuse than relief from a mere default order."); Chrysler Credit Corp. v. Macino, 710 F.2d 363, 368 (7th Cir.1983)("Although the elements for relief under Rule 55(c) and Rule 60(b) are substantially the same, the standards are applied more stringently when considering a motion to vacate a default judgment under Rule 60(b)."); Phillips v. Weiner, 103 F.R.D. 177 (D.Me.1984); Broder v. Charles Pfizer & Co., 54 F.R.D. 583 (S.D.N.Y.1971); Cribb v. Matlock Communications, 236 Mont. 27, 768 P.2d 337 (1989)("good cause" standard should be applied more flexibly and leniently than excusable neglect standard under Rule 60(b)); Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, supra, § 2692 at 90 ("Although how these factors will be evaluated and weighed lies within the discretion of the trial court, [the] federal courts are willing to grant relief from a default entry more readily and with a lesser showing than they are in the case of a default judgment."); William H. Danne, Jr., Annotation, What Constitutes "Good Cause" Allowing Federal Court to Relieve Party of His Default Under Rule 55(c) of Federal Rules of Civil Procedure, 29 A.L.R. Fed. 7 (1976)(While elements for relief under Rule 55(c) and Rule 60(b) are substantially the same, standards are applied more stringently when considering motion to vacate default judgment under Rule 60(b).).

The trial court is given discretion in determining whether to set aside an entry of default, and such ruling will not be disturbed unless the court has abused its discretion. See Tyler v. Adams County Department of Social Services, 697 P.2d 29 (Colo.1985). In exercising its discretion, however, the court must act within the framework of the controlling legal norms,. See Buckmiller v. Safeway Stores, Inc., supra.

Here, we conclude that the trial court's order does not reflect proper consideration of defendant's motion for several reasons.

In its order, the trial court found that throwing the summons and complaint into the street out of anger did not constitute excusable neglect, but did not consider any other facts in its determination. See Craig v. Rider, supra (defining exeusable neglect as that which results from cireumstances that could cause a reasonably careful person to neglect a duty).

However, defendant's affidavit explained that, although he had thrown the summons and complaint away, he did so because he was "devastated" that he was being sued by the individual who, according to defendant, had molested his fourteen-year-old daughter. Defendant also claims he relied on a California attorney's opinion that the service of process was ineffective. Defendant averred that, once he received a copy of the lawsuit in late June, he attempted to retain an attorney in the first week of July and finally did so on July 14. Defendant's motion to vacate was filed on July 19, 1999, less than three weeks after the court's entry of default.

Furthermore, in his affidavit and motion, defendant alleged that the truth of the website postings was an absolute defense to libel and slander. In support, defendant relied on the contents of his daughter's diary confirming that plaintiff and defendant's daughter had begun a sexual relationship when the daughter was fourteen years old; plaintiff's admission to defendant and defendant's wife that such a sexual relationship existed; a letter and medical report alleging that plaintiff had sexually abused his own two-year-old daughter; the fact that plaintiff was listed on the Colorado child abuse registry; and plaintiff's questionable credibility given a prior felony conviction.

The court's order did not mention defendant's alleged meritorious defense. See Ehrlinger v. Parker, 187 Colo. 514, 327 P.2d 267 (1958)(A meritorious defense must set forth specific and sufficiently detailed facts that, if proven, would have resulted in a judgment different from the one entered.).

In addition, the court, in its order, provided no indication that it had assessed any equitable considerations.

Equitable considerations include, among other criteria: possible reliance by plaintiff on the entry of default, balancing the prejudice to plaintiff from granting defendant's motion against prejudice to defendant from denying the motion; the timing of defendant's motion, the manner in which plaintiff's case might have been damaged by lost evidence; the passage of time; and the preference for resolving cases on the merits. See Buckmiller v. Safeway Stores, Inc., supra.

Defendant's motion, made less than three weeks after the entry of default, alleged that plaintiff had not detrimentally relied on the entry of default and that no prejudice would have resulted to either party by conducting a trial. Evidence had not been lost or destroyed by the passage of time, and defendant alleged that equity required that both he and plaintiff be allowed to present evidence in court. Indeed, plaintiff conceded in oral argument that he would not suffer any prejudice from the setting aside of the default.

We conclude, in consideration of all these factors, that the trial court's denial of defendant's motion was an abuse of its discretion. Fairly viewed, defendant's motion provided a good faith explanation for his behavior, it was filed less than three weeks after entry of default, it alleged a potentially meritorious defense, and plaintiff concedes that no prejudice would result from setting the default aside.

Based on our disposition of the foregoing issues, we need not address defendant's remaining arguments.

Accordingly, the order entering default is vacated, the default judgment is reversed, and the case is remanded to the trial court with directions to permit the filing of an answer or other responsive pleading.

Judge METZGER concurs. Judge ROY specially concurs.