Interstate Excavating, Inc. v. Agla Development Corp.

CROCKETT, Chief Justice: Defendant Agla Development Corporation seeks reversal of the denial of its motion based on Rule 60(b), U.R.C.P.,1 to set aside a default judgment for $46,101.70 for labor and materials furnished in construction of water and sewer systems in two subdivisions being developed by the defendant in Salt Lake County. Plaintiff commenced this action on May 16,1978. Defendant responded with an answer asserting defenses and a counterclaim. A pre-trial conference was held on April 16, 1979, at which defendant’s counsel Robert J. Haws requested that he be allowed to withdraw, which request the court granted. The court instructed plaintiff’s attorney to notify the defendant to obtain new counsel, and that the case was set for trial on May 7, 1979. Plaintiff’s attorney certifies that on April 16, such a notice was mailed to the defendant addressed to its business office. The record also contains a certification by defendant’s then counsel, Mr. Haws, that he mailed to the defendant a notice of the trial setting and of his withdrawal as counsel. As opposed to the foregoing stands the defendant’s denial that it ever received such notices. On the day set for trial, May 7, no one appeared on defendant’s behalf; and upon the basis of evidence presented, judgment was entered for the plaintiff and defendant’s counterclaim was dismissed. In support of its motion to set aside the default judgment, defendant avers that its former counsel, Mr. Haws, withdrew from a number of cases simultaneously; and that the notice to appoint counsel may have been misplaced with numerous papers served upon the defendant’s office by mail. And further, that it had no notice of the trial until it received the notice of the judgment dated May 14, whereupon it immediately [371] contacted present counsel, who proceeded with diligence to prepare the motion (he avers it was prepared within four days) arid filed the motion May 31,1979 (17 days after receiving the notice of judgment). It is not to be questioned that in appropriate circumstances default judgments are justified; and when they are, they are invulnerable to attack. However, they are not favored in the law, especially where a party has timely responded with challenging pleadings. When that has been done some caution should be observed to see that the party is not taken advantage of. Speaking generally about such problems, it is to be kept in mind that access to the courts for the protection of rights and the settlement of disputes is one of the most important factors in the maintenance of a peaceable and well-ordered society.2 This of course must be done in obedience to rules; and it is to be conceded that there is a possibility that the defendant was less than diligent in attending to its interest in this lawsuit. But no evidence was taken, nor did the court make any findings other than the order denying defendant’s motion. This is admittedly a perplexing case. From the standpoint of the plaintiff and its counsel, they appear to have proceeded without any impropriety, including appearing on the trial date and presenting their case. Defendant counters with the aver-ments that it received no such notice. Supportive of the defendant’s position, are the facts that the justification for its default rests upon the assertion of service of notice by ordinary mail; and that immediately upon learning of the judgment, it proceeded diligently with efforts to set it aside and contest the issues on the merits. The uniformally acknowledged policy of the law is to accord litigants the opportunity for a hearing on the merits, where that can be done without serious injustice to the other party.3 To that end, the courts are generally indulgent toward the setting aside of default judgments where there is a reasonable justification or excuse for the defendant’s failure to appear, and where timely application is made to set it aside.4 Consistent with the objective just stated, where there is doubt about whether a default should be set aside, the doubt should be resolved in favor of doing so, to the end that each party may have an opportunity to present his side of the controversy and that there be a resolution in accordance with law and justice.5 Application of the principles discussed herein to the instant situation leads us to the conclusion that the interests of justice will best be served by setting aside the default judgment and giving the parties that opportunity. In that connection, we call attention to the prefatory clause of Rule 60(b) that “upon such terms as are just” a party may be relieved from a judgment. This authorizes the trial court to impose such terms as may be just as a condition to setting aside the default. The default judgment is vacated and the case remanded for further proceedings. No costs awarded. MAUGHAN and STEWART, JJ., concur. Footnotes [1] The rule provides that: On motion and upon such terms as are just, the court may in the furtherance of justice relieve a party . from a final judgment . . for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect . . . . The motion shall be made . not more than three months after the judgment . . . was entered . . . [2] Sec. 11, Art. 1, Utah Constitution. [3] Locke v. Peterson, 3 Utah 2d 415, 285 P.2d 1111 (1955). [4] See Mayhew v. Standard Gilsonite Company, 14 Utah 2d 52, 376 P.2d 951 (1962). [5] See Cutler v. Haycock, 32 Utah 354, 90 P. 897 (1907); Locke v. Peterson, footnote 3 above.