Shelton v. Diamond International Corp.

703 P.2d 699, 108 Idaho 935, 1985 Ida. LEXIS 519
CourtIdaho Supreme Court
DecidedJuly 15, 1985
Docket15305
StatusPublished
Cited by37 cases

This text of 703 P.2d 699 (Shelton v. Diamond International Corp.) is published on Counsel Stack Legal Research, covering Idaho Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Shelton v. Diamond International Corp., 703 P.2d 699, 108 Idaho 935, 1985 Ida. LEXIS 519 (Idaho 1985).

Opinions

BAKES, Justice.

This is an appeal from an order granting relief from a default judgment on the basis of inadvertence and excusable neglect under I.R.C.P. 60(b)(1). We affirm.

Harold Shelton was killed on August 20, 1980, when the car he was driving went off a road and down a steep embankment. On August 19, 1982, one day before the statute of limitations was to expire, Shelton’s heirs filed a complaint alleging that the road was within the control of and negligently maintained by defendant Diamond International Corporation (“Diamond”). The defendant Diamond is a Delaware corporation with its principal place of business in New York City. The summons and complaint were not served upon Diamond’s registered agent in Idaho, the C.T. Corporation, until August 18, 1983, approximately [936]*936one year after the complaint was filed. Twenty-one days after service, on September 9, 1983, the plaintiffs took a default judgment against Diamond which had not filed an answer or made an appearance. The default judgment awarded Mrs. Shelton $1.8 million in damages in her individual capacity for the wrongful death of her husband.

On September 20, 1983, Diamond filed a motion to vacate the default judgment. The motion was accompanied by several affidavits of Diamond’s employees, officers, insurance carrier and attorney. The affidavits stated that from the date of service it took seven days for the summons to be transferred by C.T. Corporation, the registered agent, from its Boise office to the agent’s New York office, and then another five days to be transferred by C.T. Corporation to Diamond’s New York office. At that point, Diamond’s executive secretary’s usual course of action was to forward the summons to Diamond’s insurance manager, but he had recently resigned with no replacement hired. The executive secretary inquired within the company and was advised that the assistant treasurer was now handling all service of process; however, she was on vacation at the time so that the summons was not given to her until twelve days after arriving in Diamond’s New York office. The summons was then transferred to Diamond’s insurance broker two days later, and another five days elapsed before the insurance carrier responsible to defend the claim received the notice. On that day the insurance carrier immediately telephoned and retained Idaho counsel who filed the motion to set aside the judgment on the following day, September 20.

The affidavit of Diamond’s vice president and general counsel further stated that the corporation was acquired by merger in December, 1982, and since that time had been selling off most of its operating divisions and assets, resulting in many employees resigning without replacements being hired, with the remaining staff working under pressure and long hours. Particularly, during August and September, they were distracted from other matters because of the consummation of a sale of assets of one of its divisions. The affidavits also stated that Diamond maintained an office in Coeur d’Alene, Idaho, which had not been notified in any form of the pending complaint, although two years earlier, in August, 1981, an attorney for the Sheltons had contacted the office to ascertain Diamond’s potential liability. The office was never contacted either when the complaint was filed or before the default was taken.

Diamond also filed a proposed answer setting out the defense that the road on which the accident occurred was owned by the federal government which controlled the use of the road by parties other than Diamond, and that Diamond merely had an easement to use the road. The answer also alleged contributory negligence based upon allegations of inattentive driving, excess speed and drinking.

The trial court found that the circumstances of this case adequately showed excusable neglect and inadvertence on behalf of Diamond. The trial court noted the policy in Idaho to resolve doubtful cases by setting aside the judgment in favor of proceeding to the merits of the case, and further found that Diamond’s proposed answer presented a meritorious defense. The court then found that Diamond was attempting to diligently act on the summons even though it was not efficient in moving the summons through the various channels. The trial court further considered factors, such as the distance to New York and the 12-day delay caused by the registered agent, which factors, when combined with the other problems within the corporation, amounted to excusable neglect and inadvertence. Based upon its finding of inadvertence and excusable neglect, the trial court set aside the default judgment.

The right to relief from a default judgment is provided by I.R.C.P. 55(c) which adopts by reference the standard from I.R.C.P. 60(b)(1), which provides, “On motion and upon such terms as are just, [937]*937the court may relieve a party or his legal representative from a final judgment, order or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect____” In Newbold v. Arvidson, 105 Idaho 663, 664, 672 P.2d 231, 232 (1983), the Court stated that “[a] motion to set aside default judgment is addressed to the sound legal discretion of the trial court, whose decision will not be reversed in the absence of abuse of that discretion. Hearst v. Keller, 100 Idaho 10, 592 P.2d 66 (1979).” After reviewing the record, we conclude that the trial court did not abuse its discretion and accordingly we affirm.

In its findings and conclusions the trial court analyzed the particular circumstances presented in this case and carefully applied the legal principles set out in our previous cases concerning the trial court’s standard to evaluate motions to set aside default judgments. We find no abuse of discretion on the part of the trial court. Appellants, however, cite to us a parallel but conflicting line of Idaho cases which hold that, regardless of whether or not the trial court abused its discretion, this Court may undertake its own independent review, where the record is wholly documentary as it is here, and make its own discretionary decision as to whether the judgment should be set aside. See Hearst Corp. v. Keller, supra; Wood v. Wood, 100 Idaho 387, 597 P.2d 1077 (1979); Fisher v. Bunker Hill Co., 96 Idaho 341, 528 P.2d 903 (1974); Parsons v. Wrble, 19 Idaho 619, 115 P. 8 (1911). The Idaho Court of Appeals recently attempted to amalgamate these two seemingly inconsistent appellate standards of review, noting that with the advent of the Federal Rules of Civil Procedure, and particularly Rule 52(a), the federal courts have held that, even where matters are submitted to a trial court on wholly documentary evidence, nevertheless the “clearly erroneous” standard of review under I.R.C.P. 52(a) applies to those findings based wholly on documentary evidence. E.g., United States v. Singer Mfg. Co., 374 U.S. 174, 194-95, n. 9, 83 S.Ct. 1773, 1784, n. 9, 10 L.Ed.2d 823 (1963); 5A J. Moore, Moore’s Federal Practice para. 52.01(7) (2d ed. 1985). The Court of Appeals, in Avondale on Hayden, Inc. v. Hall,

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Bluebook (online)
703 P.2d 699, 108 Idaho 935, 1985 Ida. LEXIS 519, Counsel Stack Legal Research, https://law.counselstack.com/opinion/shelton-v-diamond-international-corp-idaho-1985.