Sample Opposition to Motion to Set Aside Default Judgment in Nevada

Posted by: on Tue, Jan 05, 2016

Share this post

 

                                        No Excusable Neglect Has Been Shown

Rule 60(b) and its counterparts in various states including Nevada, has proven to be an equitable and humane discretionary rule which the courts can use to relieve oppressed parties from the burdens of judgments that were entered “unfairly, fraudulently, or mistakenly.”  As will be explained below, the Defendant’s own decision and culpability is adequate to deny a motion to set side a default judgment.  Here, there has been no showing of mistake, fraud or unfairness.

It would be an obvious “perversion of the rule and its purpose” to permit Rule 60 to be used to circumvent “other court rules” and processes.  See, 11 Federal Practice & Procedures, §2858, p. 276.  Thus, one court refused to reopen a judgment when the only neglect to which the party could point to was that he had failed to take an appeal within the time the rules allow.  The court indicated that relief will not be granted under Rule 60(b)(1) merely because a party is unhappy with the judgment.  Edwards v. Velvac, 19 F.R.D. 504, 507 (D.C. Wis. 1956).  Federal decisions are us3eful in Nevada interpreting rules of procedure.  In re Phillip A.C., 149 P.3d 5, 55 (Nev. 2006 (recognizing federal decisions involving the Federal Rules of Civil Procedure as persuasive authority on Nevada’s corresponding rules).

The party must also make a showing as to why he was or feels that he was justified in failing to avoid the mistake or the inadvertence.  See, 11 Federal Practice and Procedures, Wright and Miller §2858, p. 276.  The federal courts explained that the neglect must be unique or extraordinary in order to render the neglect excusable.  See, McDermott v. Lehman, 594 F.Supp. 1315 (D.C. Me. 1984).

In a more recent case, the attorneys’ mismanagement of the plaintiff’s case was found to not constitute excusable neglect (so as to justify relief from an order) where reopening the case would result in substantial prejudice to the defendants.  Cobos v. Adelphi University, 179 F.RD. 381, (D.C. NY. 1998).

In another case, the court held that the defendant’s organizations’ lack of financial ability to retain counsel was a willful decision since the organization took no steps to retain an attorney until ordered to do so even by the court, and then made only minimal efforts to do so.  See, United We Stand America, Inc. vs. United We Stand, America New York, Inc., 128 F.3rd 86 (CA 2nd 1997).  This is similar to the instant case where Defendant intentionally ignored the service of process for months from May 15, 2015 to September 15, 2015, until after the Plaintiff had traveled to Las Vegas to attend the prove-up hearing on the simple promissory note collection matter.  The Sixth Circuit has also held th at refusal to vacate a default judgment was proper where the defendant’s actions were “wilful and intentional” meaning it was his own voluntary action that caused the default.  See, Wifersong Ltd. v. Classic Music Vending, 976 F.2d 290 (6th Cir. 1992).

(b) No Good Excuse Has Been Shown

            In other words, there needs to be a “good excuse for the failure.”   See, 11 Federal Practices and Procedures, Wright and Miller §2858, p. 267.  For example, judgments have been set aside over misunderstandings, confusion, miscalculations or  “no actual knowledge of service of process.”  Id. at 270.  On the other hand, “relief will not be granted under Rule 60(b)(1) merely because party is unhappy with the judgment.”  Id. at 276.  The party must first be able to make an adequate showing of “why he is justified in filing to avoid mistake or inadvertence.”  Id. at 276-77.

Far more is needed to set aside a judgment than just a mere change of heart, change of mind or not knowing that one could avoid fees by filing in forma pauperis.  Parties commonly confuse the standards for setting aside defaults with those for setting aside default judgments.  This is probably due to the fact that the standard of setting aside default judgments automatically fulfills the requirements for setting aside a default.  However, the converse if not true.  In order to justify setting aside an entry of a default, a showing of good cause is required pursuant to NRCP 55(c).  However, if a default judgment has been entered in the case, then the judgment can only be set aside in accordance with NRCP 60.  The primary purpose of NRCP 60(b) is to redress any injustice that may result because of excusable neglect.  NRCP 60(b) provides five grounds for setting aside default judgments: (1) mistake, inadvertence, surprise or excusable neglect; (2) newly discovered evidence; (3) fraud; (4) the judgment is void; and (5) the judgment has been satisfied, released or discharged.  Grounds 1 and 3 must be advanced within a reasonable time not exceeding six months after entry of judgment.

The federal courts have often explained that “the standards for setting aside entry of default under Rule 55(c) are less rigorous than those for setting aside a default judgment.”  10A Wright, Miller & Kane, Federal Practice & Procedure, §2696 at 142 (3d Edition 1998 (“a default entry may be set aside for reasons that would not be enough to open a default judgment.”) See also, Jackson v. Beech, 636 F.2d 831, 835 (D.C. Cir. 1980) (“a default can be set side under Rule 55(c) for ‘good cause shown’ but default that has become final as a judgment can be set aside only under the stricter Rule 60(b) standards….”)

(c)) Good Cause is roader for Defaults than Judgments

            The “good cause shown” requirement for setting aside a default is also broad in scope and includes the mistake, inadvertence, surprise and excusable neglect which is referred to in NRCP 60(b)(1).  Intermountain Lumber & Builders Supply, Inc. v. Glens Falls Ins. Co., 83 Nev. 126, 129, 424 P.2d 884, 886 (1967) (the scope of “good cause” does not include inexcusable neglect).

In Intermountain Lumber, the Nevada Supreme Court determined that the failure of counsel’s inexperienced secretary to transcribe a Reply to a Counterclaim and counsel’s claim to be too busy with the press of business, constituted inexcusable neglect.  The court held that despite the judicial preference for deciding cases on their merits, this policy alone does not justify always setting aside defaults when there has been inexcusable neglect.  Intermountain Lumber & Builders Supply, 83 Nev. at 130, 424 P.2d at 886.

The bottom line is that “some excuse” for failure to answer or defend must be shown to set aside a judgment.  Sealed Units Parts Co. v. Alpha Gamma Chapter of Gamma Phi Beta Sorority, Inc. of Reno, 99 Nev. 641, 642, 668 P.2d 288, 289 (1983).  In Sealed Units Parts, the defendant party incorrectly believed that its co-defendant would be assuming the defaulted party’s defense.  The Nevada Supreme Court noted in Sealed Units Parts that good cause may be broader when setting aside a default under Rule 55 than it is to set aside a default judgment under NRCP 60(b).

In the instant case, the Defendant waited thirteen weeks after the default was entered by the Clerk to make any appearance, and there is strong evidence to suggest that there was an intent to delay the proceedings since the Plaintiff believes that the Defendant owns real property and continuing the hearings and setting aside the default judgment will raise the very substantial risk of any real property owned by the Defendant being sold, transferred, hidden and/or conveyed until a summary judgment can be entered.  Hence, it does not appear that the motion is being made in good faith.  Although setting aside default judgment vests the court with broad discretion, Union Petrochemical Corp. of Nevada v Scott, 96 Nev. 337, 338, 609 P.2d 323 (1980), this discretion may not be exercised in an arbitrary or cavalier manner.  Schulman v. Bongberg-Whitney Electric Inc., 98 Nev. 226, 228, 645 P.2d 434, 435 (1982).

In other words, not every motion to set aside a default judgment should be entered, particularly here where there appears to be an intent to delay the proceedings, there is no evidence that the Defendant here lacked any knowledge of the procedural requirements.  Rather, it is abundantly evident here that the Defendant intentionally decided and elected not to file a timely answer and ignored the personal service of process upon him at his own home, and only afterward did he have a change of heart when he saw the judgment and a friend told him to try and set it aside.  Under these circumstances, the court can certainly elect to deny the Motion to Set Aside the Default Judgment.  See also, Union Petrochenmical Corp. v. Scott, 96 Nev. 337, 339, 609 P.2d 323, 324 (1980), wherein the Nevada Supreme Court held that “to condone the actions of a party who has sat on his rights only to make a last minute rush to set aside judgment would be to turn NRCP 60(b) into a device for delay rather than the means for relief from an oppressive judgment that it was intended to be.”

Clearly, in this case, the Default and the Default Judgment which resulted from the Defendant’s own intentional decision, i.e., the Defendant’s own culpability in completely ignoring the personal service.  The Ninth Circuit Court of Appeals has held repeatedly as follows regarding culpable defendants: “A finding of culpability on the part of a defaulting defendant is sufficient to justify the District Court’s exercise of its discretion to deny relief from a default judgment.”  See, Brandt v. Amer. Bankers Ins. Co. of Florida, 653 F.3d 1108, 1111 (9th Cir 2011).  The court went on to explain its holding as follows:

A district court may exercise its discretion to deny relief to a defaulting defendant based solely upon a finding of the defendant’s culpability …”

 

Id. at 1112.  Here it was Kent Wyatt’s choice to ignore the service and do nothing for four months He is culpable for his non-action, there is no excusable neglect.

(d)  No Notice Required After a Default

            If a defendant has entered an appearance in the action, then the plaintiff must give the defendant notice of the plaintiff’s intention to take a default.  See, Lindblom v. Prime Hospitality Corp., 120 Nev. 372-375, 90 P.3d 1283-1285 (2005).  When the defaulting party has already appeared in the action, then the clerk may not enter the default judgment, and the defaulting party must be served with written notice of the application for judgment at least three days prior to the hearing, pursuant to NRCP 55(b)(2).  Only when there has been an appearance must the hearing be conducted with written notice to the defaulting party.  The notice must be given three days before the hearing per NRCP 55(b)(2).

In this case, however, there was no appearance, either individually or through counsel.  There was no communication, emails, telephone calls, letters, etc. provided by the Defendant to this Plaintiff before the Clerk’s entry of Default.  Hence, since there has been no appearance, no notice needed to be provided to the Defendant who had already been defaulted, of any future hearings, such as the application for Default Judgment.  The rule is clear in Nevada that a defendant, who has been properly served with the Summons and Complaint and fails to appear and defend it within the time permitted, is in default under NRCP 4(b).  Only if the defendant or his attorney has appeared in the action must the plaintiff then give three days’ written notice before seeking a default.  NRCP 55(b)(2).  Granted pre–suit interaction such as settlement negotiations involving a defendant’s counsel constitute an appearance that triggers the three day notice requirement, see Lindblom, but as indicated previously no such appearance or pre-suit settlement negotiations involving defendant’s counsel occurred in the instant case.

(e)  Conditional Set Aside Upon Payment of Plaintiff’s Fees s Alternative

            Alternatively, Defendant should be compelled to pay reasonable attorneys’ fees and court costs to the Plaintiff as a condition of having to set aside the Default and Default Judgment in this case.  Should the court be inclined to grant the requests of the defaulted Defendant in this matter, than Plaintiff should be compensated for the time and expense of having to obtain the Default and the Default Judgment in this matter which required an evidentiary prove-up hearing due to the amount in question.  Rule 60( b) of the Nevada Rules of Civil Procedure provides in pertinent part as follows:

On motion and upon such terms as are just, the court may relieve a party or a party’s legal representative from a final judgment order or proceeding. … (Emphasis added).

 

Here, the Plaintiff has exerted substantial time, effort and resources in obtaining a Default and a Default Judgment in this matter.  Now the defaulted Defendant is requesting that the court excuse his neglect at the personal cost and expense to the Plaintiff and Plaintiff’s counsel.  Thus, it would be appropriate for this court to condition any setting aside of the Default or Default Judgment upon the payment of the defaulted Defendant to Plaintiff’s counsel of the amount of attorneys’ fees and costs incurred in relation to obtaining the Default and Default Judgment in this matter.  See, Nichiro Gyogko Kaisha, Ltd. v. Norman, 606 P.2d 401, 403 (Alaska S.Ct. 1980).

In Nilsson, Robbins, Dalgarn, Berliner, Carson & Wurst v. Louisiana Hydrolec, 854 F.2d 1538 (9th Cir. 1988), the court stated as follows:

By conditioning the setting aside of a default, any prejudice suffered by the non-defaulting party as a result of the default and the subsequent reopening of the litigation can be rectified.  10 C Wright, A. Miller & M. Kane, Federal Practice and Procedure §2700, p. 538 (1983).  According to Wright, Miller & Kane, the most common type of prejudice is the additional expense caused by the delay, the hearing on the Rule 55(c) motion, and the introduction of new issues.  Courts have eased these burdens by requiring the defaulting party to provide a bond to pay costs, to pay court costs, or to cover the expenses of the appeal.  Id.   The use of imposing conditions can serve to ‘promote the positive purposes of the default procedures without subjecting either litigant to their drastic consequences.’  Id. at 539.

 

Also, in E. & J. Gallo Winery v Rallo, 430 F.Supp.2d 1064 (E. D. Cal. 2005, the court held as follows regarding conditional set aside orders:

It is appropriate for a district court to condition its order setting side default on the payment of fees and costs.  Nilsson, Robbins, Dalgarm, Berliner, Carson & Wurst v. Louisiana Hydrolec, 854 F.2d 1538, 1546-47 (9th Cir. 1988) (‘By conditioning the setting aside of a default, any prejudice suffered by the non-defaulting party as a result of the default and the subsequent reopening of the litigation can be rectified….  The use of imposing conditions can serve to promote the positive purposes of the default procedures without subjecting either litigant to their drastic consequences.’)

 

This alternative is useful to prevent a defendant from intentionally allowing a default judgment to be entered at substantial cost and expense, under the false impression he can always get the judgment set aside almost automatically as if the court is compelled, as a matter of course, to grant Rule 60 motions.  This is not and cannot become the law in this or any other jurisdiction.

III.       Conclusion

Applying the foregoing legal analysis to the case at bar, it is abundantly evident that the Defendant in this case did absolutely nothing for some thirteen weeks after he was served with the complaint to retain counsel, to file an answer, or to file an in forma pauperis petition, all of which were readily and easily available on-line in seconds.  The defendant was certainly able to easily file an answer or telephone Plaintiff (his brother) or Plaintiff’s attorney and request a continuance before the judgment was entered and before Plaintiff incurred thousands of dollars in legal fees to prepare the default application and attend the prove-up evidentiary hearing in person in court.  This type of intentional decision to not file a timely answer makes the Defendant culpable for his intentional non-actions, and is grounds to deny the Defendant’s Motion to Set Aside the Default Judgment.  Alternatively, if the court elects to set aside the judgment, it should make any such order conditional on the payment of Plaintiff’s costs and fees incurred to date.

DATED this _____ day of September, 2015.

ALBRIGHT, STODDARD, WARNICK & ALBRIGHT

 

 

By____________________________________

G. MARK ALBRIGHT, ESQ.

Nevada Bar No. 001394

801 South Rancho Drive, Suite D-4

Las Vegas, Nevada  89106

(702) 384-7111

                                                                                    Attorneys for Plaintiff

 

About the Authors: The law firm of Albright, Stoddard, Warnick & Albright is an A-V Rated Nevada-based full-service law firm having attorneys licensed in Nevada, California and Utah. Our firm’s practice includes a strong emphasis on personal injury accidents. Call us at 702-384-7111.

Note: This article, and any other information you obtain at this website, is not offered as legal advice, nor should it be relied upon as such, nor is it a solicitation for legal services. Only a licensed attorney can advise you with respect to your specific legal needs. We welcome your contacting our firm to discuss such representation. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.