DeTienne v. Sandrock

07/25/2017
DA 16-0649
Case Number: DA 16-0649
IN THE SUPREME COURT OF THE STATE OF MONTANA
2017 MT 181
KEVIN DeTIENNE, individually and on behalf of
The VIBEKE DeTIENNE TRUST, AS TRUSTEE,
THE TRAIN STATION, LLC, a Montana Limited
Liability Company, and THE MONEY TRAIN,
LLC, a Montana Limited Liability Company,
Plaintiffs and Appellees,
v.
BRYAN SANDROCK, GG&ME, LLC, a Montana
Limited Liability Company, and DRAES, INC.,
a Montana Close Corporation,
Defendants and Appellants.
APPEAL FROM: District Court of the First Judicial District,
In and For the County of Lewis And Clark, Cause No. CDV-2009-1105
Honorable Kathy Seeley, Presiding Judge
COUNSEL OF RECORD:
For Appellants:
John C. Doubek, Keif Storrar, Doubek, Pyfer & Fox LLP,
Helena, Montana
Perry J. Schneider, Milodragovich, Dale & Steinbrenner, P.C.,
Missoula, Montana
For Appellees:
Stefan T. Wall, Wall, McLean & Gallagher, PLLC, Helena, Montana
Submitted on Briefs: May 24, 2017
Decided: July 25, 2017
Filed:
__________________________________________
Clerk
Justice Michael E Wheat delivered the Opinion of the Court.
¶1 This case arises from a 2007 real estate transaction in Helena, Montana. The
parties to this transaction have litigated the transaction and other related issues in
multiple courts since 2008. In the case before us, Sandrock appeals the order of the First
Judicial District Court, Lewis and Clark County, denying his motion to set aside a default
and a subsequent default judgment entered against him. In his motions to set aside,
Sandrock claims the default and default judgment were caused by his counsel’s neglectful
representation and the District Court abused its discretion in denying his motions to set
aside the default. He also appeals the District Court’s Judgment and Judicial Decree
(Decree), asserting that the Decree is replete with errors, including the court’s failure to
provide a reasonable basis for its computation of damages. We affirm in part and remand
in part.
ISSUES
¶2 A restatement of the issues on appeal is:
¶3 Did the District Court slightly abused its discretion when it denied Sandrock’s
motion to set aside a default and a default judgment?
¶4 Did the District Court err in its calculation of damages?
FACTUAL AND PROCEDURAL BACKGROUND
¶5 In January 2007, Kevin DeTienne and his mother, Vibeke DeTienne, established a
limited liability company, The Train Station. The original Articles of Organization
indicated Ms. DeTienne was the sole “member” of The Train Station. The DeTiennes
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created The Train Station to purchase real property located at 1110 West Custer Avenue,
Helena, Montana, on which to establish a casino that Kevin would operate through his
company, The Money Train. When financing was delayed the DeTiennes approached
Bryan Sandrock, a local business man and acquaintance of Kevin, for a short-term loan.
As part of the agreement to provide funding, Sandrock requested and was granted 50%
membership in The Train Station.1 In September 2007, Ms. DeTienne created a Trust
and transferred her membership in The Train Station to the Trust. Ms. DeTienne died in
December 2007 and Kevin DeTienne became the Trustee of the Trust.
¶6 In February 2008, Kevin and two of his siblings initiated probate proceedings in
the Fifteenth Judicial District Court, Sheridan County. In the Matter of the Estate of
Vibeke B. DeTienne, DP-46-2008-0005076-FT (Feb. 27, 2008) (Cause No. 08-5076).
Ultimately, Kevin was appointed personal representative of Ms. DeTienne’s estate. In
June 2008, Kevin DeTienne and Sandrock entered into a “substitution of member”
agreement putting “Vibeke DeTienne Trust, Kevin DeTienne, Trustee, in the place and
stead of Vibeke DeTienne, Member.” Also, in June 2008, after the building on 1110
West Custer was completed, The Train Station entered into a lease agreement with The
Money Train under which The Money Train was obligated to make monthly rental
payments to The Train Station for the property.
1
Kevin DeTienne alleges that at this time, Sandrock orally agreed that The Train Station
would hold the lease for a casino he was developing, The Loose Caboose. Subsequently, no
written agreement was executed and The Loose Caboose was not included as part of The Train
Station.
3
¶7 Following a dispute with Sandrock, in August 2009, Kevin began depositing his
monthly lease payment into the Trust bank account rather than to The Train Station bank
account. In November 2009, Sandrock, through original counsel, initiated eviction
proceedings against Kevin in the First Judicial District Court, Lewis and Clark County.
Sandrock v. DeTienne, DV-25-2009-0001105-RP (Nov. 30, 2009) (Judge Kathy Seeley
presiding) (Cause No. 09-1105). Sandrock claimed Kevin breached the lease agreement
the parties had entered into by failing to pay rent.
¶8 In January 2010, Judge Seeley entered a temporary restraining order and later a
preliminary injunction prohibiting DeTienne from entering the subject property pending
a decision on the merits of the case. DeTienne appealed this ruling and, in November
2010, we affirmed and returned the matter to the District Court for a ruling on the
merits. Sandrock v. DeTienne, 2010 MT 237, 358 Mont. 175, 243 P.3d 1123. This
eviction proceeding lay dormant from November 2010—when this Court entered its
Opinion— until May 2013, when Judge Seeley ordered a status report.
¶9 In February 2010, Sandrock, while asserting that he was the sole member and only
interest holder in the assets of The Train Station, transferred the real property by deed to
GG&ME, a Montana limited liability company of which he is the managing member.
GG&ME then leased the property to Drae’s Station Casino, a corporation formed on
February 1, 2010, and whose sole shareholder is Deryl Rae Sandrock, Sandrock’s
spouse.
¶10 In March 2010, Kevin DeTienne initiated a declaratory judgment action against
Sandrock, also in the First Judicial District Court, Lewis and Clark County. DeTienne v.
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Sandrock, DV-25-2010-0000262-DK (Mar. 15, 2010) (Judge Jeffrey Sherlock presiding)
(Cause No. 10-262). Kevin sought a declaratory judgment that his mother’s Trust was a
member of The Train Station and Sandrock’s transfer of the property was unlawful as it
was done without the consent of the other member, i.e. the Trust. In July 2010,
DeTienne as Trustee of his mother’s Trust moved for partial summary judgment.
Sandrock opposed the motion. Judge Sherlock conducted a hearing on summary
judgment in December 2010 and, in March 2011, the District Court ordered the case,
including the pending motion for partial summary judgment, transferred to Sheridan
County and consolidated with the probate proceeding, Cause No. 08-5076. Sandrock’s
original attorney represented him from the initiation of the declaratory judgment
proceeding until the matter was transferred to Sheridan County.
¶11 As the eviction and the declaratory judgment cases were advancing, so was the
2008 Sheridan County probate action and, in January 2011, Sandrock, by original
counsel, filed a claim against Ms. DeTienne’s estate. In April 2012, after Sandrock’s
original attorney pursued other opportunities, Sandrock retained new counsel2 to
represent him in the Sheridan County proceeding. In November 2012, the Sheridan
County District Court granted DeTienne’s motion for partial summary judgment, issuing
an express declaratory judgment that Ms. DeTienne’s Trust was a member of The Train
Station and had been since the June 2008 agreement between Kevin DeTienne and
Sandrock. In December 2014, the Sheridan County District Court transferred the
This newly-retained attorney represented Sandrock in all three proceedings until June
2
2016 when Sandrock fired him and retained current counsel.
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consolidated probate/declaratory action proceeding to Lewis and Clark County for
consolidation with Cause No. 09-1105, the eviction proceeding.
¶12 In summary, Cause No. 08-5076 was the probate proceeding filed in Sheridan
County by Kevin DeTienne and his siblings. Cause No. 09-1105 is the eviction
proceeding Sandrock filed against DeTienne in Lewis and Clark County. Cause No.
10-262 was the declaratory judgment action filed in Lewis and Clark County by
DeTienne against Sandrock. The declaratory judgment action was transferred to and
consolidated with Sheridan County probate Cause No. 08-5076 in March 2011. In
December 2014, the Sheridan County consolidated probate/declaratory judgment action
was transferred to and consolidated with the Lewis and Clark County eviction
proceeding, Cause No. 09-1105.
¶13 The appeal currently before us arose in the 2009 eviction proceeding, Cause No.
09-1105. Following the above-referenced hiatus from November 2010 until May 2013,
the District Court ordered the parties to provide a status report. At that time, Sandrock’s
new counsel provided the status report on behalf of Sandrock. A scheduling order was
issued in June 2013 and the parties began preparing for trial. In April 2014, DeTienne
served discovery requests and admissions on Sandrock. Sandrock, through counsel,
responded in May 2014. In September 2014, asserting that Sandrock’s responses were
“wholly inadequate,” DeTienne moved for sanctions or, in the alternative, for a motion to
compel. Sandrock opposed the motion.
¶14 In February 2015, while DeTienne’s motion for sanctions was pending, DeTienne
moved to realign the parties designating himself and The Train Station as plaintiffs and
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Sandrock, GG&ME, and Drae’s as defendants. Sandrock objected but on August 5,
2015, Judge Seeley granted the motion to realign and allowed DeTienne to file a second
amended complaint. The court instructed Sandrock to respond to DeTienne’s complaint
within thirty days. Sandrock failed to answer the complaint within the designated time.
¶15 On September 11, 2015, at DeTienne’s request, the clerk of the District Court
entered Sandrock’s default. DeTienne then requested a hearing to obtain a default
judgment and to establish damages. The hearing was conducted on November 30, 2015.
Minutes before the hearing was to commence, Sandrock, through counsel, filed a motion
to set aside default judgment based upon an alleged fraud upon the court committed by
DeTienne. Sandrock’s counsel also submitted his proposed answer to DeTienne’s
complaint and admitted to the court that he had given the matter inadequate attention.
As DeTienne’s expert witness was present, the District Court allowed her to testify and
informed the parties that a future damages hearing would be held in the event
Sandrock’s motion to set aside was denied. The witness, a certified public accountant
with the WIPFLI accounting firm, testified that she had prepared, on behalf of DeTienne
and The Money Train, a Lost Profits Analysis Report pertaining to The Train Station,
The Money Train, and Sandrock’s casino company, The Loose Caboose. The Report
purportedly sets forth the money Kevin would have made for The Train Station and The
Money Train had he not been wrongfully evicted in 2009. The WIPFLI Report was
admitted into evidence at the hearing and became the foundation for the court’s damages
award.
7
¶16 Following the November 2015 hearing, the court instructed the parties to brief the
issues raised in the motion to set aside default judgment. On March 1, 2016, after
reviewing the parties’ legal arguments, the District Court denied Sandrock’s motion. The
court held that under the “good cause” standard set forth in M. R. Civ. P. 55(c) (Rule
55(c)), counsel’s claim that he had not paid sufficient attention to the matter failed to
establish good cause to set aside the default. The court further held that Sandrock’s brief
did not support his argument of a “fraud” upon the court and that M. R. Civ. P. 60 (Rule
60), did not apply because a default judgment had not yet been entered against Sandrock.
¶17 In April 2016, the court conducted a damages hearing. In June 2016, Sandrock
obtained current counsel, and again moved for relief from default judgment relying upon
Rule 60(b)(1), (5) and (6)3. Sandrock claimed that the default judgment should be set
aside based upon the gross negligence of his former attorney. Sandrock attached a
lengthy affidavit to his motion and supporting brief setting forth allegations against his
former attorney and against DeTienne. In addition, he challenged the computation and
amount of damages that had been imposed.
3
Rule 60(b) provides, in relevant part:
Grounds for Relief from a Final Judgment, Order, or Proceeding. On motion and
just terms, the court may relieve a party or its legal representative from a final
judgment, order, or proceeding for the following reasons:
(1) mistake, inadvertence, surprise, or excusable neglect;
. . .
(5) the judgment has been satisfied, released, or discharged; it is based on
an earlier judgment that has been reversed or vacated; or applying it prospectively
is no longer equitable; or
(6) any other reason that justifies relief.
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¶18 The District Court observed in its August 2016 order that Sandrock, with new
counsel, was “attempting to rectify the consequences of what [he] perceive[s] to be
negligence by [his] former counsel.” The court denied the motion holding, as it had in its
March 2016 order, that no default judgment had yet been entered in this case, therefore
Rule 60(b) did not apply. In the same order, the court also struck Sandrock’s affidavit
interpreting the focus of the affidavit to be on aspects of “damages and the parties’
working relationship.” The court stated the affidavit was untimely based upon a prior
order of the court precluding further evidence on damages. It also noted that the affidavit
contained significant hearsay with no opportunity for cross-examination. While
expressly mindful of Sandrock’s new counsel and the problems with previous counsel,
the court determined that, after seven years, it was “obligated to move [the] litigation
toward a conclusion” and granting Sandrock’s motion would “put the case in a
procedural posture very near to where it began.”
¶19 On September 28, 2016, the District Court issued its Judgment and Judicial
Decree. The court ordered that: (1) Sandrock was disassociated and expelled from The
Train Station; (2) the previous transfer of the property to GG&ME via quitclaim by
Sandrock was “void and of no force and effect”; and (3) the leasehold to Drae’s was void
and the lessees had thirty days to vacate the premises. The court awarded compensatory
damages to DeTienne in the amount of $2,083,171 plus specified interest, punitive
damages of $150,000, as well as costs and attorney fees.
¶20 Sandrock, through counsel, promptly moved for relief from the judgment relying
on Rule 60(b)(1) and (6). Sandrock’s exclusive argument supporting setting aside the
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default judgment was his previous counsel’s gross negligence. Sandrock further
conducted an analysis of the damages award, identifying specific errors in the calculation
that he alleged render the damages award inaccurate and in need of recalculation and
clarification. On December 6, 2016, DeTienne filed his opposition to Sandrock’s motion
for relief and reconsideration. DeTienne filed Notice of Entry of Judgment on December
14, 2016. The court did not respond to Sandrock’s motion and after sixty days, it was
deemed denied.
¶21 Sandrock appeals the District Court’s denial of his motion to set aside default
judgment and its calculation of damages. We affirm in part and remand in part.
STANDARD OF REVIEW
¶22 We review a district court’s denial of a motion to set aside a default or a default
judgment for a slight abuse of discretion. This standard requires the reviewing court to
weigh “the conflicting concerns of respecting the trial court’s sound discretion while
recognizing the policy favoring trial on the merits.” Lords v. Newman, 212 Mont. 359,
364, 688 P.2d 290, 293 (1984). “It is clear that the issue of abuse of discretion must be
decided on a case-by-case basis.” Lords, 212 Mont. at 366, 688 P.2d at 294. See also
Paxson v. Rice, 217 Mont. 521, 525, 706 P.2d 123, 125.
¶23 When reviewing an award of damages, the standard of review is whether the
district court abused its discretion. Czajkowski v. Meyers, 2007 MT 292, ¶ 13, 339 Mont.
503, 172 P.3d 94. An abuse of discretion occurs when a district court acts arbitrarily,
without employment of conscientious judgment, or exceeds the bounds of reason. In re
E.Z.C., 2013 MT 123, ¶ 19, 370 Mont. 116, 300 P.3d 1174.
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¶24 A district court’s determination of damages is a factual finding that must be
upheld if it is supported by substantial evidence. We will not overturn a district court’s
award of damages unless it is clearly erroneous. A district court’s factual findings are
clearly erroneous if they are not supported by substantial evidence, if the court
misapprehended the effect of the evidence, or if a review of the record leaves this Court
with a definite and firm conviction that a mistake was made. When determining whether
substantial evidence supports the district court’s findings, we will review the evidence in
the light most favorable to the prevailing party. Vintage Constr., Inc. v. Feighner, 2017
MT 109, ¶ 14, 387 Mont. 354, 394 P.3d 179.
DISCUSSION
¶25 Did the District Court slightly abuse its discretion when it denied Sandrock’s
motion to set aside a default and a default judgment?
¶26 Sandrock asserts on appeal that the District Court abused its discretion in denying
his motions to set aside the default and the subsequent default judgment as these motions
illustrated his former counsel’s total neglect of his duties and abandonment of his clients.
Sandrock claims that the defaults were the result of the “utterly horrible and gross
negligence” on the part of his then-attorney, and the District Court should have set the
defaults aside based upon counsel’s actions. He further contends that the District Court
improperly struck his affidavit. However, as he fails to present a legal argument
supporting his claim, we decline to address it. M. R. App. P. 12(1)(g). Consequently, we
affirm the District Court’s decision striking Sandrock’s affidavit.
11
¶27 DeTienne counters that the District Court correctly reviewed, legally analyzed,
and denied Sandrock’s motions. DeTienne asserts that Sandrock’s sole evidence
supporting his arguments and claims against counsel were set forth in the affidavit that
the District Court struck and did not enter into the record. DeTienne further claims
Sandrock failed to sufficiently argue or demonstrate the presence of the necessary
elements for overturning a default judgment.
¶28 As noted above, Sandrock, through counsel, filed three motions with the goal of
having the default and default judgment against him set aside. As the third of these
motions is most significant, we will not address the earlier motions in great detail.
Motion 1 was filed by Sandrock’s previous attorney, and Motion 2 was filed by current
counsel seeking to recover some lost ground. We hold, however, that these previous
motions were correctly denied as Motion 1 did not satisfy the standard for relief under the
applicable rule for setting aside a default, Rule 55(c). Additionally, both motions sought
relief under the rule for setting aside a default judgment, Rule 60(b), which was not
applicable. As noted by the District Court in both orders, Rule 60 does not apply because
no default judgment had been entered prior to the dates the motions were filed. We now
address the District Court’s deemed denial of Sandrock’s Rule 60(b)(1) post-judgment
motion for relief and reconsideration of the judgment.
¶29 As stated above, Rule 60(b)(1) provides that a court may set aside a default
judgment if the defendant shows that the judgment resulted from “mistake, inadvertence,
surprise, or excusable neglect.” See also M. R. Civ. P. 55(c) (“The court may set aside an
entry of default for good cause, and it may set aside a default judgment under Rule
12
60(b).”). When reviewing a district court’s ruling on a motion to set aside a default
judgment under Rule 60(b)(1), we apply a conjunctive four-part test: (1) did the
defaulting party proceed with diligence; (2) was the defaulting party’s neglect excusable;
(3) did the defaulting party have a meritorious defense to the claim; and (4) if permitted
to stand, would the judgment affect the defaulting party injuriously. Mont. Prof’l Sports,
LLC v. Nat’l Indoor Football League, LLC, 2008 MT 98, ¶ 35, 342 Mont. 292, 180 P.3d
1142.
¶30 It is well-established that a judgment by default is not favored; rather, a trial on the
merits is preferred. Worstell v. Devine, 135 Mont. 1, 4, 335 P.2d 305, 306 (1959). This
is reflected in the applicable standard of review. We review a district court’s ruling to
grant a motion to set aside a default for manifest abuse of discretion. We review a
district court’s decision to deny a motion to set aside a default for a slight abuse of
discretion. Lords, 212 Mont. at 364, 688 P.2d at 293.
¶31 It is undisputed that Sandrock’s current counsel promptly moved for review and
reconsideration of the judgment in this case arguing that the default judgment should be
set aside. As a result, the first prong of the test is satisfied. We next consider whether
Sandrock and his former attorney’s neglect are excusable. We have decided numerous
cases involving attorney neglect, default and default judgment, and whether counsel’s
neglect was excusable, and whether counsel’s neglect should be attributed to his client.
See, e.g., First State Bank v. Larsen, 72 Mont. 400, 233 P. 60 (1925); Worstell; Lords;
Graham v. Mack, 216 Mont. 165, 699 P.2d 590 (1984); Paxson; Twenty-Seventh Street
13
v. Johnson, 220 Mont. 469, 716 P.2d 210 (1986); In re Marriage of Castor, 249 Mont.
495, 817 P.2d 665 (1991).
¶32 In First State Bank, the Bank appealed from a judgment against it and this Court
reversed and remanded for a new trial. Neither Larsen nor his counsel appeared at the
subsequent trial and the Bank obtained a default judgment. In seeking to have the
judgment set aside, Larsen accused his attorney of neglect through failure to adequately
and appropriately communicate with him. While noting counsel’s failures, the Court also
noted the multiple actions in the case taken by Larsen that constituted neglect. The Court
stated, “[t]he neglect of an attorney is attributable to, and is the neglect of, his client, and
the client can only be relieved from the consequence of the attorney’s neglect on a
showing which would excuse the client under like circumstances.” First State Bank, 72
Mont. at 405, 233 P. at 962. After noting the client’s negligence, the Court attributed the
lawyer’s neglect to his client and held the district court did not abuse its discretion in
denying the motion to set aside the judgment.
¶33 In Worstell, the Worstells sued Devine in a contract dispute. Devine was served
with the complaint on May 17, 1956, but did not deliver it to her attorney until May 21,
1956. Counsel was traveling at the time the complaint was delivered to his office and
upon his return—believing his client was served on May 21—failed to notice the actual
date of service. As a result, he miscalculated the date the answer was due, failed to file a
timely answer, and a default and default judgment was entered against Devine. Worstell,
135 Mont. at 2-3, 335 P.2d at 305-06. Counsel responded to the default judgment with a
prompt motion to set aside, an affidavit explaining the circumstances, and the proposed
14
answer and counterclaim. The district court denied the motion to set aside the default
judgment. Devine appealed. Worstell, 135 Mont. at 3, 335 P.2d at 306. Relying on an
early version of Rule 60(b)(1) and stating it “has been hesitant to impute the neglect of an
attorney to his client,” the Court held that counsel’s neglect was excusable and appeared
to be “an honest mistake.” Worstell, 135 Mont. at 5-6, 335 P.2d at 307. The Court found
significant Devine’s counsel’s prompt and diligent action in moving to set aside the
judgment and his showing of a meritorious defense. Worstell, 135 Mont. at 6, 335 P.2d
at 307.
¶34 In Lords, the Court again vacated a default and default judgment and remanded the
case to the district court for further proceedings. Lords, 212 Mont. at 369, 688 P.2d at
296. In that case, a father, mother, and daughter were named in a legal proceeding. Only
Father received service. When Daughter learned that Father had been served, she took
the complaint to an attorney she had previously consulted on an unrelated matter. Lords,
212 Mont. at 361, 688 P.2d at 291. She asked counsel to assist her Father in the matter.
Without further consultation, the attorney appeared in court, claiming to represent all
three parties. He moved to dismiss the case or change the venue. Unbeknownst to the
defendants, within days, the attorney ceased practicing law and moved out of state
leaving no forwarding address. The District Court granted the change of venue but
neither the court nor the plaintiffs could locate defendants’ counsel. Shortly thereafter,
default was entered against all three defendants. Lords, 212 Mont. at 361, 688 P.2d at
292. Defendants learned through their insurance provider—several months after the
fact—that the attorney had entered an appearance on their behalf and that a default had
15
been entered against them. Lords, 212 Mont. at 362, 688 P.2d at 292. The Court
observed:
[Counsel’s] actions do not constitute mere bungling of his duties or
ineffective representation. [Counsel] totally abandoned his clients and
disappeared from sight. To add insult to injury, before disappearing,
[counsel] made a general appearance on behalf of the clients who had
neither been served with process nor authorized him to so act.
The Court found counsel’s behavior unconscionable and good cause for setting aside the
default. Lords, 212 Mont. at 367-68, 688 P.2d at 295.
¶35 Sandrock relies heavily on Lords, arguing that his former counsel abandoned him
as well. He asserts six “major failures” on the part of his former counsel, including that
he: (1) was “essentially absent or ignored the proceedings” in the Sheridan County
District Court probate matter, Cause No. 08-5076, causing Sandrock to be sanctioned for
failing to respond to discovery orders; (2) provided inadequate responses to discovery
motions and failed to adequately participate in litigation of the case before us on appeal,
Cause No. 09-1105; (3) disregarded the District Court’s order and failed to answer
DeTienne’s Second Amended Complaint in Cause No. 09-1105; (4) failed to promptly
move to set aside the default resulting from failure to answer DeTienne’s Second
Amended Complaint; (5) ignored Sandrock’s demands; and (6) failed to prepare for the
damages hearing in Cause No. 09-1105.
¶36 The record does not support a finding that counsel abandoned Sandrock in the
Sheridan County probate proceeding. While counsel’s representation could be viewed as
inadequate and ineffective, it is a far cry from the unauthorized representation followed
by total abandonment experienced in Lords. As noted above, the record reveals that
16
counsel began representing Sandrock in the 2008 Sheridan County probate/declaratory
judgment action, Cause No. 08-5076, in April 2012. Just weeks after taking the case over
from previous counsel, counsel filed a timely five-page legal response—with appropriate
and numerous attachments—to DeTienne’s motion for partial summary judgment. He
subsequently participated in the hearing on summary judgment, and requested an
extension to respond to DeTienne’s motion for discovery sanctions. He filed a response
within the time granted by the District Court. He further moved for a hearing on the
request for sanctions and filed a notice indicating discovery delivery was substantially
complete with additional material to be submitted “expeditiously.” Subsequently, he
filed an answer brief in response to various motions filed by DeTienne just days before
the matter was transferred to Lewis and Clark County for consolidation with Cause No.
09-1105. For these reasons, we cannot find, under Lords, that his representation
constituted a total abandonment of Sandrock in the Sheridan County proceeding.
¶37 Sandrock further asserts claims of his former counsel’s inadequate participation
and preparation in the 2009 eviction proceeding, Cause No. 09-1105. However, the
record reveals that counsel actively represented Sandrock in the eviction proceeding from
May 2013 until May 2016. While counsel failed to submit a timely answer to
DeTienne’s complaint and to promptly move to have the default set aside, these actions
do not constitute excusable neglect.
¶38 As we noted in Paxson, procrastination by counsel resulting in untimely responses
“is a type of neglect which is properly attributable to a client.” Paxson, 217 Mont. at
525, 706 P.2d at 126. In Paxson, the Paxsons sued contractor Rice for breach of contract,
17
breach of the implied warranty of habitability, negligent construction, and bad faith.
Rice’s attorney filed a motion to dismiss the complaint that was subsequently denied.
Despite repeated efforts by Paxsons’ counsel to prompt opposing counsel to file an
answer to the complaint, Rice failed to file an answer. A default was issued and eight
days later, Rice’s counsel moved to have the default set aside. He asserted that he was
leaving his law firm during this time and his inattention was excusable neglect and a
mistake. Paxson, 217 Mont. at 523, 706 P.2d at 124. The district court disagreed and we
held the court did not abuse its discretion in ruling that counsel’s actions did not
constitute “excusable neglect.” Paxson, 217 Mont. at 526, 706 P.2d at 126.
¶39 Similarly, in Marriage of Castor, neither Castor, nor his counsel, appeared at a
hearing requested by Castor seeking modification of his spousal maintenance payments
to his ex-wife. While counsel received written notice of a continuation of the hearing, he
failed to note the rescheduled hearing date; consequently, neither he nor his client
attended. Castor, 249 Mont. at 498, 817 P.2d at 666. In arguing that the default should
be set aside under Rule 60(b)(1) or (6), counsel claimed it was a “human” mistake and
excusable. Castor, 249 Mont. at 499, 817 P.2d at 667. Relying in part on Paxson, this
Court held the district court did not abuse its discretion in refusing to set aside the
default. Castor, 249 Mont. at 500, 817 P.2d at 668.
¶40 We acknowledge that Sandrock’s former counsel admitted inattentiveness to the
case. It also appears he did not respond to his client’s demands as readily as Sandrock
desired. However, this does not constitute excusable neglect nor does counsel’s
inadequate preparation for a specific hearing. As Sandrock failed to establish that his
18
former counsel’s neglect was excusable, we need not address the remaining two prongs
of the test used to evaluate whether default judgment should be set aside.
¶41 Sandrock further asserts that he is entitled to relief under Rule 60(b)(6) as “the
twisted set of facts in this case meets the ‘extraordinary’ circumstances standard” set
forth in Rule 60(b)(6). We have frequently held that relief under Rule 60(b)(6) is
appropriate only upon a showing that subsections (1) through (5) of Rule 60(b) do not
apply. “It is generally held that if a party seeks relief under any other subsection of Rule
60(b), it cannot also claim relief under 60(b)(6).” Koch v. Billings Sch. Dist. No. 2, 253
Mont. 261, 265, 833 P.2d 181, 183 (1992). Here, Sandrock is erroneously attempting to
obtain relief under both subsections (1) and (6). Relief under Rule 60(b)(6) is not and
was not available to him.
¶42 For these reasons, we hold the District Court did not slightly abuse its discretion in
denying Sandrock’s motion for relief and reconsideration of the judgment and judicial
decree or any previous motions to set aside default.
¶43 Did the District Court err in its calculation of damages?
¶44 Sandrock argues that “the District Court abused its discretion in multiple ways by
erroneously including damages that should never have been awarded to DeTienne and by
failing to account for and offset certain damages against the total judgment.”
¶45 On April 13, 2016, the District Court conducted a hearing on damages at which
both DeTienne and Sandrock testified. At the close of the hearing, Sandrock requested
the opportunity to file a brief addressing legal issues associated with damages. The
District Court granted Sandrock two weeks to file a brief but cautioned Sandrock that his
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brief was not to include new evidence on amounts and figures of damages. Sandrock’s
subsequent brief addressed concerns of double recovery, as well as speculative and
punitive damages. DeTienne filed a timely response to Sandrock’s brief requesting
approximately $3.5 million in compensatory damages and $1,000,000 in punitive
damages.
¶46 Relying in part on the WIPFLI Report, the District Court found that The Train
Station lost profits in the amount to $1,673,926, and Kevin’s operating company, The
Money Train, lost profits in the amount of $529,245. The District Court reduced the total
lost profits by the $120,000 Sandrock had initially loaned to the DeTiennes, and awarded
compensatory damages for economic loss in the amount of $2,083,171. Analyzing
DeTienne’s claim for punitive damages, the court greatly reduced the amount requested
and awarded DeTienne $150,000 in punitive damages. The District Court further
evaluated DeTienne’s request for damages for conversion of personal property and lost
rental income from The Loose Caboose, an entity owned by Sandrock, but denied these
claims.
¶47 Sandrock argues on appeal that the District Court, in relying on the WIPFLI
Report, erroneously included an award to DeTienne for Loose Caboose income and that
the calculation of lost profits for The Train Station must be recalculated to remove
projected income from The Loose Caboose. Sandrock further asserts the District Court’s
calculation of lost income must be reduced by $3,140 for the erroneous inclusion of a 5%
service charge. Sandrock claims the District Court failed to account in its damages award
for the Valley Bank loan to The Train Station in the amount $629,076 for which
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Sandrock and The Trust are liable. Despite having been disassociated from The Train
Station by court order, Sandrock maintains he is still responsible for the monthly
payments on that loan. Additionally, Sandrock contends (1) prejudgment interest should
not have been awarded; (2) The Money Train damages were speculative and based upon
conjecture; (3) there was no evidence to support an award of punitive damages; and (4)
attorney fees were improperly awarded.
¶48 While DeTienne puts forth an argument that the damages were correctly
calculated and awarded, we remand the case to the District Court for an order setting
forth its calculation and determination of damages. The court references various sources
from which it derived amounts utilized in its damages award but we are unable to discern
how the District Court used these amounts to establish the amount of damages awarded.
Moreover, the District Court must assess the claims of error put forth by Sandrock to
determine their validity. The District Court may conduct another damages hearing, if
necessary, or it may recalculate and clarify its determination of damages using the current
evidence admitted into the record.
CONCLUSION
¶49 For the foregoing reasons, we affirm the District Court’s denial of Sandrock’s
motion to set aside default and default judgment. We remand the matter to the District
Court for a recalculation of damages and identification of the evidence supporting the
recalculation, or clarification and identification of supporting evidence of the District
Court’s calculation of damages included in the Judgment and Judicial Decree.
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/S/ MICHAEL E WHEAT
We Concur:
/S/ MIKE McGRATH
/S/ LAURIE McKINNON
/S/ DIRK M. SANDEFUR
/S/ JIM RICE
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