Kenai Peninsula Borough v. English Bay Village Corp.

781 P.2d 6, 1989 Alas. LEXIS 138, 1989 WL 119763

• Court: Alaska Supreme Court
• Decided: October 13, 1989
• Docket: S-2033
• Status: Published

Opinions

OPINION

MATTHEWS, Chief Justice.

I.

On July 22, 1986, English Bay Village Corporation (English Bay) obtained a default judgment against the Kenai Peninsula Borough. This judgment enjoined the Borough from pursuing foreclosure proceedings against the corporation for nonpayment of real property taxes assessed for the 1982 and 1983 tax years and from enforcing a 1982 judgment of foreclosure against English Bay lands for non-payment of 1981 taxes.¹ After the default judgment was entered the Borough allowed the time for appeal to run without taking an appeal. On September 9, 1986, it moved to set aside the default judgment under Civil Rule 60(b)(1), (3), and (4) for mistake, neglect, misconduct, and fraud of an adverse party, and because the judgment was void for lack of personal jurisdiction. The trial court denied this motion. It found no grounds of mistake, neglect, misconduct or fraud under Rule 60(b)(1) and (3), and concluded that the Borough had waived its jurisdictional objection by making a voluntary appearance.

After the default judgment was entered, English Bay filed á motion for attorney’s fees. This was granted after the Rule 60(b) motion was denied and an award of $10,000 was made.

There are five points on appeal: (1) that the superior court erred in not dismissing this case prior to default judgment for want of prosecution; (2) that the superior court erred in issuing a default judgment; (3) that the superior court erred “in ruling that the statutory notice procedures for tax foreclosure actions did not accord due process to the property owners;” (4) that the superior court erred and abused its discretion in denying the motion to set aside the default judgment; and (5) that the superior court erred in awarding attorney’s fees.

Only the fourth and fifth points are before us. The first three points concern the entry of the default judgment and actions taken before it was entered. Any such challenge should have been taken by appeal. Thus, as in Anderson v. State, Department of Highways, 584 P.2d 537, 540 (Alaska 1978) the merits of the superi- or court’s underlying judgment are not properly before us. A Rule 60(b) motion is not a substitute for an appeal. Anderson, 584 P.2d at 540.

With respect to the Borough’s fourth point on appeal, that the default judgment should have been set aside, the excusable neglect-mistake grounds under Rule 60(b)(1) and fraud and other misconduct grounds under Rule 60(b)(3) are likewise foreclosed from consideration. Those grounds concern facts which were known to the Borough at the time the default judgment was entered. Contentions based on facts which are known to a party at a time when a direct appeal is possible must either be raised on direct appeal, see Friedman v. Wilson Freight Forwarding Co., 320 F.2d 244, 247 (3d Cir.1963), or in a Rule 60(b) motion made during the time for taking the appeal. Anderson, 584 P.2d at 540 nn. 9, 11. As void judgments are not subject to this rule, the only argument properly before us on the merits is whether the trial court erred in denying the motion to set aside the default judgment on the grounds that the judgment is void.

II.

A.

In order to understand the Borough’s contention that the judgment is void, the facts must be set forth in some detail.

English Bay filed suit against the Borough on June 27, 1984, challenging the Borough’s assessment of taxes on its lands for 1981,1982, and 1983, and seeking to set aside a judgment for tax foreclosure which the Borough had obtained. Accompanying the complaint were a summons to the Borough and a motion for preliminary injunction. English Bay contemplated that the clerk of court would serve the Borough by mail under Civil Rule 4(h) by mailing the documents by certified mail to the Borough Attorney, Thomas Boedeker. Although a receipt allegedly showing mail delivery of such documents was returned, the Borough Attorney claims that he did not receive a copy of the filed complaint. He states that he was sent an unfiled copy, without a court caption or a signature, which he assumed was a negotiating ploy.

In any case, by July 27, 1984, Boedeker knew that a complaint had been filed and that an answer was due. On that date he signed a stipulation in the foreclosure action between the Borough and English Bay which, in return for extending the redemption period in the foreclosure action, extended the time for the Borough to answer the complaint in the present case until August 30, 1984. The stipulation was filed in the foreclosure action but not in this case. No answer was ever filed.

On October 16, 1984, English Bay’s motion for preliminary injunction, to which no opposition had been filed, was granted. The order contained an endorsement indicating that a copy was mailed to counsel for the Borough, who, however, denies receiving it.

English Bay applied for an entry of default on November 13, 1984. The application was not served on the Borough nor was inquiry made as to whether the Borough’s attorney intended to proceed.² The court clerk entered a default on November 26, 1984. The clerk certified that a copy of the entry of default was sent to Borough counsel Boedeker on November 28, 1984. Boedeker claims he did not receive this.

For seventeen months after entry of default, English Bay took no action. On May 8, 1986, the clerk sent the parties a Notice and Order of Dismissal for lack of prosecution pursuant to Civil Rule 41(e). The notice states: “If good cause to the contrary is not shown within 33 days of the mailing of this notice, this action will be dismissed without further notice.... ” On June 13, 1986, English Bay filed an application for default judgment.

The Borough evidently believed the case would be dismissed on the thirty-third day, as the court’s Notice and Order of Dismissal stated. On June 16, 1986, the Borough moved to dissolve the court’s 1984 preliminary injunction at the same time it dismissed the case. This was the first time the Borough had submitted anything to the court in this lawsuit.

On June 23, 1986, the Borough filed a motion and a supporting memorandum which opposed English Bay’s application for a default judgment and sought dismissal of the case under the terms of the Notice and Order of Dismissal. The Borough did not state, or preserve, a defense of lack of proper service. English Bay opposed the Borough’s motion to dismiss. The court entered default judgment against the Borough on July 22, 1986.

At this point, the Borough allowed the thirty-day appeal period provided by Appellate Rule 204(a) to lapse. On September 9, 1986, three weeks after the appeal period lapsed, the Borough moved to set aside the default judgment pursuant to Civil Rule 60(b). The court denied the Borough’s motion on January 9, 1987, and this appeal followed.

B.

The Borough argues that the judgment is void because the court never obtained jurisdiction over the Borough by proper service. There are two defects identified which do not depend on personal credibility. First, the summons and complaint was not delivered to the “chief executive officer or chief clerk or secretary” of the Borough as required by Civil Rule 4(d)(9). Second, service by mail upon a public corporation is not allowed under Civil Rule 4(h). While we believe that a plausible case has been made by the Borough that service was defective in these respects, it is not necessary to resolve these issues because personal jurisdiction attached when the Borough appeared on June 16, 1986, without challenging the validity of service.

A court acquires personal jurisdiction over one who appears without challenging jurisdiction. Alaska Statute 09.05.010 provides: “The voluntary appearance of the defendant is equivalent to personal service of a copy of the summons and complaint upon the defendant.”³ The first such appearance, as noted, came on June 16, 1986, when the Borough made its first motion in this case. At that point, personal jurisdiction attached. The Borough is deemed to have been served then with a copy of the summons and complaint under AS 09.05.-010. For this reason, the court had personal jurisdiction over the Borough when the default judgment was entered.

III.

Our dissenting colleague has expressed the view that the default judgment is void because when the superior court entered it, the court “plainly usurped its power.” Plain usurpation occurred, according to the dissent, because there was no prior valid entry of default and no valid application for a default or default judgment. These defects existed because the Borough had not been properly served with the summons or complaint. In our view, this position is erroneous both procedurally and substantively.

The position is wrong procedurally because the Borough did not argue before the trial court or on appeal that the judgment is void under the plain usurpation of power standard. Points not raised in the court below are ordinarily considered waived and will not be considered on appeal, except where plain error has been committed. In re L.A.M., 727 P.2d 1057, 1059 (Alaska 1986). “Plain error exists where an obvious mistake has been made which creates a high likelihood that injustice has resulted.” Miller v. Sears, 636 P.2d 1183, 1189 (Alaska 1981). Plain error will not be considered unless “it is so substantial as to result in a miscarriage of justice.” In re C.L.T., 597 P.2d 518, 523 (Alaska 1979).

Further, where an issue is not briefed on appeal, it will not be considered. E.g., Wetzler v. Wetzler, 570 P.2d 741, 742 n. 2 (Alaska 1977). Exceptions to this rule are rare. We have, on very few occasions, found an unbriefed question to be “critical to a proper and just decision.” In those cases, we have directed the parties to brief the question and then decided it. E.g., Vest v. First Nat’l Bank of Fairbanks, 659 P.2d 1233, 1234 n. 2 (Alaska 1983); Matanuska-Susitna Borough v. Hammond, 726 P.2d 166, 182 (Alaska 1986).

In the present case, we have not called for briefing on the question of the application of the plain usurpation of power standard. Justice does not require such an extraordinary step in this case. Additionally, the trial court did not commit plain error amounting to a miscarriage of justice in failing to consider the default judgment to be void under the plain usurpation standard.

We take this view because it is clear that by July 27,1984, the Borough attorney, Mr. Boedeker, knew of this lawsuit and knew that he had to file an answer to it. Yet, he unaccountably took no action in this case until June 16, 1986. Since counsel has been afforded notice and an opportunity to be heard, and has given no credible excuse for inaction, we do not view this case as one involving a miscarriage of justice or as one in which justice requires the extraordinary step of a court-raised point on appeal.

Even if the plain usurpation of power standard had been argued below or briefed on appeal, it would not apply. The standard should be rarely and sparingly employed. 7 J. Moore & J. Lucas, Moore’s Federal Practice H 60.25[2], at 60-227 to -230 (2d ed. 1985) (hereinafter Moore’s Federal Practice). In order to protect the finality of judgments, care must be taken -■¡to distinguish between true instances of usurpation of power, and instances where the court has merely committed prejudicial error. Some instances of what may be regarded as true usurpation are illustrated in the following authorities: Kalb v. Feuer-stein, 308 U.S. 433, 60 S.Ct. 343, 84 L.Ed. 370 (1939) (although jurisdiction in state court was valid at the outset, court-ordered foreclosure which violated federal bankruptcy statute’s stay of state proceedings was a nullity); Pacurar v. Hernly, 611 F.2d 179 (7th Cir.1979) (district court granted motion to dismiss for lack of diversity with prejudice: the “with prejudice” aspect of the judgment was an adjudication on the merits which was precluded since there was no diversity jurisdiction); Jordon v. Gilligan, 500 F.2d 701 (6th Cir.1974) (award of attorney’s • fees against uncon-senting sovereign state void as prohibited by the 11th Amendment).

Application of the plain usurpation standard should be limited to cases which involve an arrogation of authority which the court clearly lacks. Unless the doctrine is so limited, it will become a means by which courts can declare judgments to be void merely because serious mistakes have been made.

In the present case, the mistakes identified by the dissent as justifying a declaration of voidness under the plain usurpation of power standard are issuing a default judgment (1) in the absence of a prior valid entry of default, (2) without a valid application for default, and (3) without a valid application for a default judgment. These acts do not involve usurpation of power, plain or otherwise. The following reasons support this conclusion.

First, taking a default judgment without notice, while a serious error, should not ordinarily be regarded as rendering the underlying judgment Void:

And a court has stated that where a default judgment is taken without notice, as provided in Rule 55(b)(2), “there was a failure of due process and the judgment a nullity.” This position cannot be supported. While the failure to give the required notice is generally regarded as a serious procedural irregularity that may afford the basis for reversal on appeal, or for relief under an appropriate clause of Rule 60(b) and in conjunction with other irregularities may render the judgment void, the error should not usually be treated as so serious as to render the judgment void. It should be considered in the light of surrounding circumstances and will, at times, be harmless.

7 Moore’s Federal Practice, supra p. 10, ¶ 60.25[2] at 60-237 to -238 (footnotes omitted). See also 6 Moore’s Federal Practice, supra p. 10 ¶ 55.09, at 55-49 (2d ed.1986):

While the above principles are those of general applicability, an occasional atypical case departs from them. Bass v. Hoagland, [172 F.2d 205 (5th Cir.1949), cert. denied, 338 U.S. 816, 70 S.Ct. 57, 94 L.Ed. 494 (1949) ] for example, sustained a collateral attack on a judgment where, as one of a number of procedural errors, plaintiff had failed to give the defendant 3 days’ written notice of the application for judgment as required by Rule 55(b)(2). Certainly as a general proposition such a procedural error does not justify a collateral attack upon a default judgment.

(Footnotes omitted, emphasis added.) C. Wright, A. Miller & M. Kane, Federal Practice & Procedure ¶ 2687, at 438-40 (2d ed.1983) states: “A failure to give the three days’ notice when it is required generally is considered a serious procedural error that justifies the reversal or the setting aside of the default judgment. The judgment, however, usually is not considered void or subject to collateral attack.” (Footnotes omitted, emphasis added.) Since the present default judgment was taken thirty days after the Borough filed opposition to the motion for default judgment, these authorities demonstrate, a fortiori, that the default judgment here should not be held to be void.

Second, the dissent’s conclusion that there was no valid application for a default is dubious. It is clearly correct to consider that the Borough was served with the application for default judgment because the Borough actually filed opposition to that application on June 23, 1986. An application for a default judgment made where no default has been entered has been held to imply that a default is also sought. System Indus., Inc. v. Han, 105 F.R.D. 72, 74 (E.D.Pa.1985); Fisher v. Taylor, 1 F.R.D. 448 (E.D.Tenn.1940); see also Meehan v. Snow, 652 F.2d 274, 276 (2d Cir.1981).

What remains is the alleged error of entering a default judgment without first entering a default. It is by no means clear that a default and default judgment may not be entered simultaneously or that a default judgment may not be entered immediately following a default. Several federal courts have held either that simultaneous applications are permissible or that the initial step of obtaining a default may be by-passed. Systems Indus., Inc., 105 F.R.D. at 74; Breuer Elec. Mfg. Co. v. Toronado Sys. of Am., Inc., 687 F.2d 182, 185 (7th Cir.1982). Systems Industries, Inc. addressed this issue:

No default has been entered in this case, because plaintiff has not filed any application with the clerk for entry of a default. Accordingly, I will treat plaintiff’s motion as one which requests both (1) an order directing the clerk to enter a default against the defendants, and (2) entry of a default judgment. As a practical matter, I need consider only whether a default judgment is appropriate in this case: if it is, then it follows that the lesser standard of Rule 55(a) is satisfied; if not then entry of a default by the Clerk would be a waste of effort.

System Indus., Inc., 105 F.R.D. at 74. See also Meehan, 652 F.2d at 276 (dictum), in which the Second Circuit stated:

The omission of the entry of a default was largely technical because the hearing on the appellee’s motion for the entry of a default judgment afforded the appellants the same opportunity to present mitigating circumstances that they would have had if a default had been entered and they had then moved under Rule 55(c) to set it aside.

Although the better interpretation of Civil Rule 55 seems to be that obtaining a default and a default judgment is properly a two-step process,⁴ nevertheless the first step in the process, obtaining a default, is largely a formality. 6 Moore’s Federal Practice, supra p. 10, H 55.03[2], at 55-17, ¶ 55.10[1], at 55-51 (2d ed. 1986) (“The entry of default is largely a formal matter”). Any error by the trial court in entering a default judgment without first entering a default, does not involve an arrogation of authority. Federal courts operating under similar rules would regard it either as not error at all or as a minor procedural shortcoming.

For these reasons, we conclude that the plain usurpation of power standard does not apply to the judgment in this case.

IV.

The trial court awarded English Bay $10,000 in attorney’s fees pursuant to Civil Rule 82 on February 25, 1987. The trial court found that English Bay had actually incurred fees of $19,895.

The Borough’s first challenge to this award is that the superior court erred in allowing English Bay to file an untimely supplemental memorandum five months after the initial motion for attorney’s fees was made. This contention lacks merit. The supplemental memorandum itemized fees requested for work done after the initial attorney’s fees motion was filed. This work related primarily to English Bay’s efforts in opposing the Borough’s motion for relief from the default judgment under Civil Rule 60(b). The Borough also complains that it was not given an opportunity to respond to the supplemental memorandum. This too lacks merit because the superior court granted the Borough’s motion to reconsider the award in order to entertain the supplemental opposition of the Borough. After the opposition was considered, the initial award was reaffirmed.

The Borough also complains that the award is excessive. Trial courts have broad discretion in fixing an award of attorney’s fees under Civil Rule 82. Gold Bondholders Protective Council v. Atchison, Topeka & Santa Fe Ry., 658 P.2d 776, 778 (Alaska 1983). The objective of Civil Rule 82 is to provide the prevailing party with reasonable partial compensation. Davis v. Hallett, 587 P.2d 1170, 1171-72 (Alaska 1978). The award of just over fifty percent of English Bay’s actual fees is consistent with this purpose and not an abuse of discretion.

The judgment is AFFIRMED.

1 . The judgment also permanently enjoins the Borough from assessing and levying real property taxes on lands owned by the corporation which are neither leased nor being developed. Whether this provision extends beyond the tax years 1981, 1982, and 1983 is not before us.

2 . We have held that such an inquiry should be made where counsel for the defendant has been identified:

When [a lawyer] knows the identity of a lawyer representing an opposing party, he should not take advantage of the lawyer by causing any default or dismissal to be entered without first inquiring about the opposing lawyer’s intention to proceed.

American College of Trial Lawyers Code of Trial Conduct, No. 14A, at 149 (1971-72), quoted in Demoski v. New, 737 P.2d 780, 786 (Alaska 1987); Hertz v. Berzanske, 704 P.2d 767, 772 (Alaska 1985). This failure would ordinarily justify setting aside a default judgment under Civil Rule 60(b)(3), Hertz, 704 P.2d at 772-73; City of Valdez v. Salomon, 637 P.2d 298, 299 (Alaska 1981), but it does not render the judgment void.

3 . Alaska Rule of Civil Procedure 12(h)(1) states: A defense of lack of jurisdiction over the person, improper venue, insufficiency of process, or insufficiency of service of process is waived (A) if omitted from a motion in the circumstances described in subdivision (g) [entitled "Consolidation of Defenses in Motion” ], or (B) if it is neither made by motion under this rule nor included in a responsive pleading or an amendment thereof permitted by Rule 15(a) to be made as a matter of course.

4 . Alaska Civil Rule 55(c)(2) requires counsel to . file "a memorandum of default" when applying to the court for a default judgment, thus implying a two-step process. While the Federal Rules of Civil Procedure have no similar provision, the local rules of the United States District Court for the Southern District of New York, under which Meehan was decided, do contain a similar requirement, 652 F.2d at 276 n. 4, a fact which did not change the court of appeals’ conclusion that the omission of the entry of default was largely technical.