Metropolitan Water v. Sorf , 2013 UT 27 ( 2013 )

This opinion is subject to revision before final
publication in the Pacific Reporter
2013 UT 27IN THE
SUPREME COURT OF THE STATE OF UTAH
METROPOLITAN WATER DISTRICT OF SALT LAKE and SANDY,
Plaintiff and Appellee,
v.
ZDENEK SORF,
Defendant and Appellant.
No. 20110443
Filed May 10, 2013
Third District, Salt Lake
The Honorable Joseph D. Fratto, Jr.
No. 100921025
Attorneys:
Shawn E. Draney, Scott H. Martin, David F. Mull,
Salt Lake City, for appellee
Paul M. Belnap, Bradley Wm. Bowen, Jennifer R. Carrizal,
Salt Lake City, for appellant
JUSTICE PARRISH authored the opinion of the Court, in which
CHIEF JUSTICE DURRANT, ASSOCIATE CHIEF JUSTICE NEHRING,
JUSTICE DURHAM, and JUSTICE LEE joined.
JUSTICE PARRISH, opinion of the Court:
INTRODUCTION
¶1 Petitioner Zdenek Sorf appeals the denial of his motion
to set aside a default judgment. The district court entered a default
judgment against Mr. Sorf, awarding the Metropolitan Water District
of Salt Lake and Sandy (District) certain rights over Mr. Sorf’s
residential property and enjoining him from making further
improvements to his backyard. The district court denied Mr. Sorf’s
motion to set aside the default judgment, holding that Mr. Sorf had
been properly served and that he had not proffered a meritorious
defense. We hold that the district court abused its discretion when
it refused to set aside the default judgment without determining
whether Mr. Sorf knew that he had been served and was required to
METROPOLITAN WATER v. SORF
Opinion of the Court
file an answer. We also conclude that Mr. Sorf alleged a meritorious
defense. Accordingly, we vacate the district court’s denial of Mr.
Sorf’s motion to set aside the default judgment and remand the case
for further proceedings consistent with this opinion.
BACKGROUND1
¶2 This dispute arises from an aqueduct and an easement
that cross Mr. Sorf’s residential property in Sandy, Utah. The
District currently holds multiple easements on parcels of private
property in Salt Lake County for the purpose of maintaining the Salt
Lake Aqueduct (Aqueduct), a water delivery pipeline that provides
much of the county’s water. The approximately 120-foot-wide
appurtenant easement at issue in this case (Easement) runs across
Mr. Sorf’s residential lot.2 The District alleges that the terms of the
Easement provide it with certain rights over Mr. Sorf’s property.
¶3 In March 2009, Mr. Sorf began making improvements to
his backyard. Mr. Sorf removed several large trees, rocks, and
brush. Mr. Sorf also graded dirt, added a hot tub, gazebo, water
feature, cinder block wall, rock sidewalk, fence, garden boxes, a
shed, and a concrete pad. The parties communicated sporadically
regarding Mr. Sorf’s improvements from April 2009 until June 2010.3
Mr. Sorf maintains that these improvements are not directly over the
Aqueduct and that he complied with many of the District’s instruc-
tions regarding his improvements. The District contends that these
improvements constitute a risk to the Aqueduct and obstruct its
access to the Easement.
¶4 On October 28, 2010, the District filed a complaint against
Mr. Sorf. The District sought a declaratory judgment regarding its
rights under the Easement, as well as injunctive relief requiring Mr.
Sorf to remove the existing improvements and enjoining him from
making any additional improvements.
1
The parties contest many of the events surrounding this dispute.
Therefore, we recite the facts only as they are alleged.
2
The Easement originated in 1946 and has changed ownership
several times since its creation.
3
The parties provide conflicting reports regarding how often they
were in contact, how responsive Mr. Sorf was to the District’s
concerns, and precisely what the District instructed Mr. Sorf to do
with respect to his improvements.
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¶5 That same day, the District attempted to serve the
summons and complaint on Mr. Sorf at his residence through a
private process server. An adult woman answered the door and
represented herself as Mr. Sorf’s wife.4 The process server asked if
Mr. Sorf was home, and when the woman indicated he was not, the
process server attempted to hand the complaint to her, announcing
that he was serving her with process on Mr. Sorf’s behalf. When the
woman refused to accept the complaint, the process server dropped
the papers on the floor inside the front door. The woman closed the
door but then reopened it. She said that she refused to accept the
complaint, picked up the papers and threw them into the driveway.
When the process server left Mr. Sorf’s residence, the summons and
complaint remained in the driveway.
¶6 Mr. Sorf maintains that he never received a copy of the
summons and complaint left in the driveway. But shortly after the
attempt to serve the complaint at his residence, Mr. Sorf received a
letter from the District referencing an attached complaint and urging
Mr. Sorf to contact the District to discuss a possible settlement.5 Mr.
Sorf asserts that the “letter led [him] to believe that [the District]
would not file a lawsuit against [him] if [they] were able to reach an
amicable resolution to the dispute.” Despite the letter’s reference to
an attached complaint, Mr. Sorf asserts that no complaint was
attached and he never received a copy of the complaint.
¶7 After receiving the District’s letter, Mr. Sorf called
counsel for the District. During this call, both parties agree that the
District’s attorney encouraged Mr. Sorf to call the District directly in
an attempt to negotiate a settlement of the dispute. Counsel
provided Mr. Sorf with the names and phone numbers of two
District representatives. The District’s counsel maintains that he
informed Mr. Sorf during this phone call that the District would be
4
At a motion hearing before the district court, the court deter-
mined that the woman who answered the door was not Mr. Sorf’s
wife, but instead was his long-term, live-in girlfriend.
5
It appears that the letter was intended to be served with the
complaint. The record is unclear as to exactly how and when Mr.
Sorf received the letter. Mr. Sorf has indicated he received the letter
in early November. He also indicates he believes it “came in the
mail.” However, the District maintains it never sent the letter via
mail, but instead that it was attached to the complaint served on
October 28, 2010.
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Opinion of the Court
requesting a default certificate. But Mr. Sorf contends that he did
not understand the significance of a “default certificate” and that he
believed the District would refrain from pursuing legal action unless
they were unable to reach an amicable settlement.
¶8 After this conversation, Mr. Sorf claims that he attempted
to call the District to discuss settlement, but that the District
representatives did not answer or return his calls. The District
asserts that its phone records reflect no phone calls from Mr. Sorf
during December 2010 or January 2011.
¶9 In December, the District moved for default judgment
against Mr. Sorf on grounds that he had failed to answer the
complaint dated October 28, 2010. The district court granted the
motion and entered default judgment against Mr. Sorf on December
16, 2010. Mr. Sorf was personally served with notice of default
judgment on December 23, 2010. Upon receiving the notice, Mr. Sorf
obtained counsel. Mr. Sorf maintains that it was only after he
retained counsel that he first saw the District’s complaint and
understood that a default judgment had been entered against him.
Shortly thereafter, Mr. Sorf moved to set aside the default judgment
under rule 60(b) of the Utah Rules of Civil Procedure, claiming that
he had failed to file an answer due to mistake, inadvertence,
surprise, or excusable neglect.
¶10 The district court denied Mr. Sorf’s motion, reasoning
that Mr. Sorf had been properly served with the complaint and
therefore had not proven excusable neglect, mistake, or inadver-
tence. The court’s written order also concluded that Mr. Sorf had not
alleged a meritorious defense. Mr. Sorf then petitioned for leave to
file a counterclaim pursuant to rule 13(d) of the Utah Rules of Civil
Procedure. The district court also denied this motion, reasoning it
could not grant leave to file a counterclaim without reopening the
judgment. Mr. Sorf filed a timely notice of appeal. We have
jurisdiction under section 78A-3-102(3)(j) of the Utah Code.
STANDARD OF REVIEW
¶11 On appeal, we must decide two issues. First, we must
determine whether the district court correctly determined that Mr.
Sorf did not establish mistake, inadvertence, surprise, or excusable
neglect under rule 60(b)(1) of the Utah Rules of Civil Procedure.
Second, we must decide whether Mr. Sorf alleged a meritorious
defense.
¶12 With respect to the first issue, a district court has broad
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discretion in ruling on a motion to set aside an order or judgment
under rule 60(b), and “[t]hus, we review a district court’s denial of
a 60(b) motion under an abuse of discretion standard.” Menzies v.
Galetka, 2006 UT 81, ¶ 54, 150 P.3d 480. But “the court’s discretion is
not unlimited.” Lund v. Brown, 2000 UT 75, ¶ 11, 11 P.3d 277. A
district court’s “discretion should be exercised in furtherance of
justice and should incline towards granting relief in a doubtful case
to the end that the party may have a hearing” on the merits of his
case. Id. ¶ 10 (internal quotation marks omitted). For instance, “if
default is issued when a party genuinely is mistaken to a point
where, absent such mistake, default would not have occurred, the
equity side of the court . . . [should] grant relief.” Id. (alterations in
original) (internal quotation marks omitted). Based on the equitable
nature of the rule, “it is quite uniformly regarded as an abuse of
discretion to refuse to vacate a default judgment where there is
reasonable justification or excuse for the defendant’s failure to
appear, and timely application is made to set it aside.” Id. ¶ 11
(internal quotation marks omitted).
¶13 With respect to the second issue, “we review . . . the
[district] court’s determination of whether a defense is meritorious”
for correctness. Id. ¶ 12.
ANALYSIS
I. THE DISTRICT COURT ABUSED ITS DISCRETION
BY DENYING MR. SORF’S MOTION TO SET ASIDE
THE DEFAULT JUDGMENT
¶14 A movant is entitled to have a default judgment set aside
if “(1) the motion is timely; (2) there is a basis for granting relief
under one of the subsections of 60(b); and (3) the movant has alleged
a meritorious defense.” Menzies v. Galetka, 2006 UT 81, ¶ 64, 150 P.3d
480. In this case, timeliness was not at issue.6 The district court
denied Mr. Sorf’s 60(b) motion on the basis that Mr. Sorf did not
qualify for relief under 60(b) because he had been properly served
with process and did not have a meritorious defense. We conclude
that the district court abused its discretion in denying Mr. Sorf’s rule
60(b) motion for two reasons. First, the relevant inquiry was not
whether Mr. Sorf had been properly served, but rather whether Mr.
6
Indeed, the default judgment was entered on December 13,
2010, and Mr. Sorf filed his motion to set it aside on January 28, 2011,
well within the three-month period allowed under rule 60(b). See
UTAH R. CIV. P. 60(b).
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METROPOLITAN WATER v. SORF
Opinion of the Court
Sorf’s failure to respond was due to his mistake, inadvertence,
surprise, or excusable neglect. Second, we find as a matter of law
that Mr. Sorf did raise a meritorious defense.
A. Mr. Sorf May Have Had a Reasonable
Mistaken Belief Under Rule 60(b)(1)
¶15 Rule 60(b)(1) provides that a “court may in the further-
ance of justice relieve a party . . . from a final judgment, order, or
proceeding [because of] . . . mistake, inadvertence, surprise, or
excusable neglect.” UTAH R. CIV. P. 60(b)(1). Mr. Sorf argues that he
did not know that the complaint had actually been filed against him
or that he had an obligation to file a responsive pleading. And he
argues that he was surprised by the entry of the default judgment
because of the District’s representations that they were interested in
reaching an amicable resolution through settlement. He contends
that he qualified for relief under rule 60(b) and that the district court
abused its discretion in denying his motion to set aside the default
judgment. We agree that Mr. Sorf may have qualified for relief
under rule 60(b) and remand to the district court for factual findings
as to this issue.
¶16 In the hearing denying Mr. Sorf’s motion to set aside the
default judgment, the district court first stated, “[w]hat’s been
offered here as excusable neglect . . . is fairly characterized as Mr.
Sorf was not aware of the complaint.” However, the district court
then ruled that “the law is fairly clear that [when the rule for
perfecting service is complied with, that] is not excusable neglect.”
This conflated the concept of proper service of process with the
concept of mistake. Specifically, the district court conflated the
provisions of rule 60(b)(1), which refers to instances of “mistake,
inadvertence, surprise, or excusable neglect” with the provisions of
rule 60(b)(4), which refers to instances where a judgment is void for
a failure of service of process. See, e.g., UTAH R. CIV. P. 60(b)(1), (4);
Garcia v. Garcia, 712 P.2d 288, 290–91 (Utah 1986) (recognizing that
an allegation that a default judgment is void for failure of service of
process is pled under rule 60(b)(4)).
¶17 Service of process was adequate in this case because the
process server left the complaint with an adult of reasonable age and
discretion who resided at Mr. Sorf’s residence.7 But the fact that
7
Rule 4 of the Utah Rules of Civil Procedure states that personal
service may be made “[u]pon any individual . . . by delivering a
(continued...)
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service of process was proper does not end the inquiry because Mr.
Sorf could have still been mistaken about whether he had been
served or was obligated to file an answer.
¶18 As we have previously held, “if default is issued when a
party genuinely is mistaken to a point where, absent such mistake,
default would not have occurred, the equity side of the court would
grant relief.” May v. Thompson, 677 P.2d 1109, 1110 (Utah 1984) (per
curiam). This is in accordance with the intent of rule 60(b) to ensure
that parties are afforded “a full opportunity to present their evidence
and contentions as to disputed issues so [that cases] may be
disposed of on substantial rather than upon technical grounds.”
McKean v. Mountain View Mem’l Estates, Inc., 411 P.2d 129, 130 (Utah
1966).
¶19 Here, the district court refused to set aside the default
judgment based on its conclusion that Mr. Sorf had been properly
served with process. But the district court did not make any factual
findings with respect to Mr. Sorf’s claim under rule 60(b)(1) that the
default was the result of mistake, inadvertence, surprise, or excus-
able neglect, and Mr. Sorf’s claim in this regard was sufficient to
raise a factual dispute as to the reason he failed to file a timely
response to the complaint.
¶20 When the process server arrived at Mr. Sorf’s home, a
woman who represented herself as Mr. Sorf’s wife answered the
door and told the process server that Mr. Sorf was not home. The
process server announced that he was serving her on behalf of Mr.
7
(...continued)
copy of the summons and the complaint to the individual person-
ally, or by leaving a copy at the individual’s dwelling house or usual
place of abode with some person of suitable age and discretion there
residing.” UTAH R. CIV. P. 4(d)(1)(A). And “[i]f the person to be
served refuses to accept a copy of the process, service shall be
sufficient if the [process server] shall state the name of the process
and offer to deliver a copy thereof.” UTAH R. CIV. P. 4(d)(1). At the
motion hearing, the district court determined that the woman served
by the process server was a person of suitable age and discretion
residing at Mr. Sorf’s home. Therefore, the process server provided
proper service of process by explaining that he was serving the
woman who answered the door with the summons and complaint
on behalf of Mr. Sorf and by leaving a copy of the complaint and
summons.
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Opinion of the Court
Sorf and attempted to hand her the summons and complaint, but she
refused to accept the papers. When the woman refused to take the
complaint, the process server left the papers on the floor inside the
door of Mr. Sorf’s home and walked away. According to the process
server’s signed affidavit, the woman slammed the door, reopened it,
picked up the papers and threw the summons and complaint at him.
The papers landed in the driveway. Mr. Sorf was not at home when
the complaint was served, and when he arrived home the complaint
was no longer there.
¶21 Shortly after the District’s attempt to serve Mr. Sorf at his
residence, Mr. Sorf received a letter from the District dated October
28, 2010. The letter stated
Dear Mr. Sorf:
Please find enclosed a Summons and Complaint in the
above-referenced matter. While we have commenced
this lawsuit, [the District] remains willing to discuss
this matter with you in hopes of an amicable resolu-
tion.
Please contact the undersigned if you wish.
[Counsel for the District]
Mr. Sorf’s affidavit states that this “letter led [him] to believe that
[the District] would not file a lawsuit against [him] if [they] were
able to reach an amicable resolution to the dispute.” And while the
letter referenced a filed summons and complaint, Mr. Sorf asserts
that nothing was attached to the letter. Thus, while the letter asserts
that the District had commenced the lawsuit, the fact that no
complaint or summons was attached was consistent with Mr. Sorf’s
mistaken belief that, even if the District had attempted to initiate a
lawsuit, litigation could not have actually commenced since he had
not been personally served.
¶22 The letter and Mr. Sorf’s subsequent conversation with
counsel for the District suggested that the District was willing to
work out a settlement even though a complaint had been filed. After
receiving the letter, Mr. Sorf called counsel for the District. During
this phone call, the District’s attorney suggested that Mr. Sorf call the
District directly in an attempt to work out a settlement. The Dis-
trict’s attorney made this invitation even though the twenty-day
period to file an answer had already expired.8
8
The District’s attorney also asserts that he informed Mr. Sorf
(continued...)
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¶23 These claims are certainly sufficient to raise the possibil-
ity that Mr. Sorf’s failure to timely respond to the complaint was the
result of mistake, inadvertence, surprise, or excusable neglect.
Because the district court did not make any factual findings
regarding these issues, it erred. We therefore vacate the district
court’s order refusing to set aside the default judgment and remand
this matter to the district court for a factual determination on this
issue.
B. Mr. Sorf Has Alleged a Meritorious Defense
¶24 The district court also denied Mr. Sorf’s rule 60(b) motion
on the basis that “those defenses proffered by [Mr. Sorf] . . . [were]
not meritorious as a matter of law.”9 We disagree. “We have
[previously] held that relief from judgment requires a showing of a
meritorious defense to a claim.” Lund v. Brown, 2000 UT 75, ¶ 28, 11
P.3d 277. But this is a low bar, and “a party need not actually prove
its proposed defenses to meet this standard.” Id. ¶ 29. “The proffer
8
(...continued)
during this phone call that he would be seeking a “default certifi-
cate.” Even so, the attorney’s representation to Mr. Sorf that he
could still pursue settlement with the District perpetuated Mr. Sorf’s
belief that no final judgment would be entered unless he was unable
to reach an agreement with the District. Additionally, Mr. Sorf
maintains that he did not understand the significance of a “default
certificate” and believed that a court could not issue an order over
him until he had been personally served with a complaint.
9
The district court’s conclusions on this issue were inconsistent.
Initially, at the May 8, 2011 hearing, the district court noted that “I
don’t see that there’s a meritorious defense.” But during the May 12,
2011 hearing, the district court stated that, while it had previously
opined on the meritoriousness of Mr. Sorf’s defenses, it had not
concluded “that [Mr. Sorf’s proposed defenses] were frivolous
defenses, so . . . the merits of the matter have not been determined.”
Then in its final, written order, the district court concluded that Mr.
Sorf’s proposed defenses were “not meritorious as a matter of law.”
The district court appeared to apply the correct standard during the
May 12 hearing when it evaluated whether Mr. Sorf’s proposed
defenses were “frivolous on their face.” See Lund v. Brown, 2000 UT
75, ¶ 29, 11 P.3d 277. But the district court’s final, written conclusion
that Mr. Sorf’s defenses were not meritorious as a matter of law was
erroneous.
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METROPOLITAN WATER v. SORF
Opinion of the Court
of a meritorious defense under rule 60(b) is subject to a liberal
pleading standard analogous to that prescribed under rule 8, which
requires only that a party state the basis for its claims or defenses ‘in
short and plain terms.’” Judson v. Wheeler RV Las Vegas, L.L.C., 2012
UT 6, ¶ 23, 270 P.3d 456 (quoting UTAH R. CIV. P. 8). Indeed, the
purpose of the rule “is simply to prevent the necessity of treating
defenses that are frivolous on their face.” Lund, 2000 UT 75, ¶ 29.
“Thus, where a party presents a clear and specific proffer of a
defense that, if proven, would preclude total or partial recovery by
the claimant . . . , it has adequately shown a nonfrivolous and
meritorious defense for the purposes of its motion to set aside a
default judgment.” Id. Mr. Sorf’s proposed defenses meet this
standard.
¶25 In its complaint, the District alleges that the Easement’s
restrictions and regulations enable it to require Mr. Sorf to remove
his improvements and to enjoin him from making further improve-
ments to his backyard. Mr. Sorf’s proposed answer directly refutes
these claims. Specifically, Mr. Sorf contends that the District’s
regulations exceed the express language of the Easement, that the
District has at least partially abandoned the Easement, and that the
doctrine of equitable estoppel precludes the District from asserting
certain rights under the Easement. These defenses, if proven, would
preclude total or partial recovery by the District. Therefore, Mr. Sorf
has proven that he has a meritorious defense sufficient to satisfy rule
60(b).10
CONCLUSION
¶26 Mr. Sorf may have had a reasonable mistaken belief that
entitled him to relief under rule 60(b)(1) of the Utah Rules of Civil
Procedure and he proffered a meritorious defense. We therefore
vacate the district court’s denial of Mr. Sorf’s motion to set aside the
default judgment and remand for determination of whether Mr.
Sorf’s failure to respond to the complaint was the result of mistake,
inadvertence, surprise, or excusable neglect.
10
Mr. Sorf also argues the district court erred when it denied his
leave to file a counterclaim. Because we vacate the district court’s
denial of Mr. Sorf’s motion to set aside the default judgment and
remand the case for further proceedings, we do not address this
issue. In the event the default is set aside on remand, Mr. Sorf may
answer the District’s complaint and assert any potential counter-
claims.
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11