997 N.W.2d 840
N.D.2023Background
- Olson served Velva Parks’ registered agent (Legalinc) with a summons and complaint alleging breach of a contract for deed for failure to pay a $406,414 balloon payment due Dec. 1, 2022. Service occurred Dec. 12, 2022.
- Velva Parks did not answer or appear within the 21-day period; Olson moved for default judgment Jan. 3, 2023, and the district court entered default judgment Jan. 4, 2023, terminating the contract and awarding possession to Olson.
- Velva Parks moved to vacate the default judgment under N.D.R.Civ.P. 60(b) (filed Jan. 20, 2023), submitting an affidavit from owner Scott Kramer claiming Legalinc did not notify him and attaching a photograph of electronic notifications allegedly showing no notice of the summons and complaint.
- At the hearing on the motion the parties presented oral argument only; no witnesses testified and no additional evidence from Legalinc was offered.
- The district court denied the motion, finding the photograph unreliable without supporting testimony or documentation and concluding Velva Parks failed to show mistake, inadvertence, or excusable neglect or a meritorious defense. The Supreme Court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the district court abused its discretion in denying a Rule 60(b) motion to vacate default judgment based on mistake/inadvertence/excusable neglect | Velva Parks’ failure to respond was inexcusable; default judgment proper | Velva Parks said it did not receive notice because its registered agent (Legalinc) did not notify it | No abuse of discretion; Velva Parks failed to prove excusable neglect or mistake |
| Whether the registered agent’s alleged failure to notify the principal supplies grounds for relief under Rule 60(b)(1) | Service on agent is binding; plaintiff relied on proper service | Velva Parks contends agent’s lack of notification distinguishes its neglect from excusable neglect | Court treated the absence of agent notification as insufficient without corroborating evidence; neglect of service not excusable |
| Whether Velva Parks presented a meritorious defense sufficient to warrant vacatur | Olson argued Velva Parks offered only conclusory assertions and no credible supporting facts | Velva Parks alleged defenses (e.g., agreed extension/waiver) in a proposed answer/counterclaim | No meritorious defense shown: allegations unsupported by evidence; vacatur not warranted |
Key Cases Cited
- DCI Credit Servs., Inc. v. Plemper, 966 N.W.2d 904 (discusses standard of review and movant’s burden on Rule 60(b))
- AE2S Constr., LLC v. Hellervik Oilfield Techs. LLC, 955 N.W.2d 82 (registered-agent service and failure to respond are not excusable neglect where party disregarded process)
- Bickler v. Happy House Movers, L.L.P., 915 N.W.2d 690 (courts have greater liberty to grant Rule 60(b) relief in default-judgment context but not to undo deliberate choices)
- Monster Heavy Haulers, LLC v. Goliath Energy Servs., LLC, 883 N.W.2d 917 (abuse-of-discretion standard explained)
- $33,000.00 U.S. Currency, 748 N.W.2d 420 (disregard of legal process is not excusable neglect; meritorious defenses require credible factual support)
- Kulm Credit Union v. Harter, 157 N.W.2d 700 (Rule 60(b) may provide relief for mistake or neglect of others)
- Murdoff v. Murdoff, 517 N.W.2d 402 (where timely sought and meritorious defense exists, doubts should be resolved in favor of setting aside default)