THOMS v. THOMS, S-12898 (Alaska 7-8-2009)

JENNIFER A. THOMS, Appellant v. TIGER THOMS, Appellee.

No. S-12898.Supreme Court of Alaska.
July 8, 2009.

NOTICE
Memorandum decisions of this court do not create legal precedent. See Alaska Appellate Rule 214(d). Accordingly, this memorandum decision may not be cited for any proposition of law or as an example of the proper resolution of any issue.

Appeal from the Superior Court of the State of Alaska, Third Judicial District, Anchorage, Michael Spaan, Judge. Superior Court No. 3AN-06-10933 CI.

Linda A. Webb, Hagans Ahearn Webb, Anchorage, for Appellant. David J. Schmid, Law Offices of David J. Schmid, Anchorage, for Appellee.

Before: Fabe, Chief Justice, Eastaugh, Carpeneti, Winfree, and Christen, Justices.

MEMORANDUM OPINION AND JUDGMENT[fn*][fn*] Entered pursuant to Appellate Rule 214.

MANNHEIMER, Judge.

I. INTRODUCTION

A creditor sued and obtained a default judgment against a debtor. After the first execution effort on the judgment, the judgment debtor unsuccessfully moved to set the default judgment aside. The judgment debtor appeals, but because we cannot conclude that the superior court abused its broad discretion given the facts of this case, we affirm the denial of the motion to set aside the default judgment.Page 2

II. FACTS AND PROCEEDINGS
Jennifer Thoms purchased a business from her brother-in-law, Tiger Thoms, in January 2000. As a part of the transaction Jennifer executed a January 1, 2000, promissory note agreeing to pay Tiger $123,000 (plus interest) in monthly $3,000 installments beginning in March 2000, with the entire balance due December 1, 2003.

Jennifer made payments from March 2000 until January 2001. At a family gathering after the note matured in December 2003, Jennifer apologized to Tiger for her past behavior toward him, including her failure to pay the note. Tiger responded “It’s water under the bridge.” Jennifer later claimed she believed this to be a forgiveness of her debt, but admitted Tiger said nothing more explicit about his intent. Tiger acknowledged the comment, but contended it referred to Jennifer’s general behavior toward him and was not intended to forgive the debt.

Tiger produced a June 3, 2005, letter to Jennifer in which he had recited the original purchase price, subtracted payments Jennifer made, added interest and a lease deposit, and set forth the “total amount of this bill.” Although Jennifer testified she did not remember receiving the letter, she admitted she had no reason to doubt Tiger had delivered it to her.

Tiger’s attorney sent Jennifer a certified letter dated July 20, 2006, informing her that the note had matured in December 2003 and demanding payment in full. He also warned that failure to pay the amount due would result in the filing of a lawsuit. Jennifer remembered receiving this letter in July 2006, and she understood at that time that she would be involved in litigation if she did not pay the amount due.

A complaint was filed on August 23, 2006. A process server certified that after a man at Jennifer’s residence refused to accept service on September 5, 2006, she placed the service documents on a vehicle registered to Jennifer and located in Jennifer’sPage 3
driveway. Jennifer acknowledged she had recognized the documents as a summons and complaint and knew she had been sued.

Personal service of the summons and complaint was made on Jennifer on December 3, 2006. Jennifer admitted that the service package included a “blank application for entry of default which was not completed, nor signed by the clerk,” but stated she had no other notice that Tiger intended to seek an entry of default.

On February 20, 2007, Tiger requested entry of default against Jennifer “for failure to plead in or otherwise defend [the] action.” Default was entered on February 23. A default judgment was entered on March 1 in the amount of $139,610 including principal, interest, and attorney’s fees.

On April 16, 2007, Jennifer’s bank accounts were levied. On April 24, Jennifer filed a motion to set aside the default judgment, asserting that she did not know about the entry of default or the default judgment until her bank notified her of the levies against her accounts. In support of her motion Jennifer filed an affidavit stating that: (1) she had been served on December 3, 2006; (2) when she was served, she was undergoing radiation therapy for the treatment of breast cancer and was “unable to do anything other than go to [her] doctor and radiation therapy appointments”; (3) her treatment was not completed until “late December”; (4) Tiger had told her in December 2003 that the promissory note was “water under the bridge,” which Jennifer understood to mean that her obligation was released; (5) Tiger misrepresented the value of the business he sold her; and (6) she had offered settlement in August 2006, but Tiger had refused to settle. Jennifer argued that these facts warranted setting aside the default and default judgment under Alaska Rules of Civil Procedure 55 and 60.

The superior court denied Jennifer’s motion to set aside the default judgment, as well as Jennifer’s subsequent motion for reconsideration. Jennifer appeals.Page 4

III. DISCUSSION The Superior Court Did Not Abuse Its Discretion by Refusing To SetAside the Default Judgment.
A. Applicable rules

A default judgment may be set aside upon showings of both a ground under Civil Rule 60(b)[fn1] and a meritorious defense.[fn2] The superior court determinedPage 5
that Jennifer had not demonstrated a Rule 60(b) ground and thus did not reach the question of a meritorious defense. Jennifer argues that it was error for the trial court to deny relief under Rule 60(b)(1), (5), and (6). She also argues that she demonstrated a meritorious defense.[fn3]
Denial of relief under Rule 60(b) is generally reviewed for abuse of discretion.[fn4]
B. Rule 60(b)(1): excusable neglect

Although “[g]enuine and severe medical disability generally suffices as excusable neglect,”[fn5] we cannot say that the superior court abused its discretion in concluding that Jennifer’s neglect in this case was not fairly attributable to her medicalPage 6
problems.[fn6]

Jennifer compares this case to Gregor v. Hodges, [fn7] in which we set aside a default judgment because of excusable neglect by “a woman of over 60 years of age, [who] was bedridden with a broken ankle and pneumonia, was under the influence of pain medication prescribed by her doctor, and did not expect a lawsuit nor understand that the papers were important.”[fn8] Jennifer was diagnosed with “aggressive breast cancer” and produced documents showing that she underwent chemotherapy from July to August 2006 and radiation treatment from August to October 2006. At her deposition on August 8, 2007, she testified that her last medical appointment was an office visit on November 2, 2006. She held a prescription for painkillers from July to October 2006 and another prescription for antidepressants that expired in January 2007.

We do not hesitate to agree with the superior court that Jennifer’s medical problem was “certainly genuine and severe.” But unlike the woman in Gregor, Jennifer’s cancer treatments ended more than a month before she received actual personal service in December 2006. Although her treatment for depression continued after her cancer treatments, Jennifer has not alleged any facts showing that her depression inhibited her from timely responding to Tiger’s application for entry of default.

Also unlike the woman in Gregor, Jennifer had reason to expect the lawsuit. Jennifer testified that no later than July 20, 2006, she knew she would be involved in litigation if she did not pay the promissory note; she attempted to settle the dispute in August 2006, and by September 2006 she knew she had been sued. Jennifer wasPage 7
personally served on December 3, 2006, but she still failed to take any action regarding this case for four more months.

Under these circumstances we cannot find it was error for the superior court to deny Jennifer’s claim of excusable neglect.

C. Rule 60(b)(5): judgment has been released or discharged

“Consideration is required for modification, amendment, or rescission of a contract.”[fn9] While negotiable instruments can be discharged by the holder without consideration, such an action requires “an intentional voluntary act, such as surrender of the instrument to the party, destruction, mutilation, or cancellation of the instrument.”[fn10]

Jennifer asserts that her debt to Tiger was released in December 2003 when he said, “It’s water under the bridge.” Tiger disputes her interpretation of that statement. Jennifer neither contends that she offered any consideration for the alleged forgiveness of the debt, nor that Tiger explicitly or directly stated that he was forgiving the debt.

The trial court found that “the judgment has not been satisfied, released or discharged as the alleged debt has not been paid. Also, no prior underlying judgments have been reversed or vacated.” Based on the totality of the record, including the ambiguous “water under the bridge” comment that Jennifer claims was sufficient to discharge the debt and the alternate explanation Tiger offered, the trial court did not abuse its discretion in deciding that Rule 60(b)(5) did not apply.[fn11]Page 8
D. Rule 60(b)(6): any other reason justifying relief from operation ofthe judgment

Jennifer claims that Rule 60(b)(6) provides her with grounds for relief, but other than a paragraph generally describing the grounds for relief listed in Rule 60(b), her opening brief fails to mention Rule 60(b)(6). “We do not consider arguments that are inadequately briefed.”[fn12] When a “point is `not given more than cursory statement in the argument portion of the brief,'” it “will be treated as abandoned.”[fn13] Any argument that it was error for the trial court to deny relief under Rule 60(b)(6) was waived by Jennifer’s failure to adequately raise it in the opening brief.

E. Meritorious defenses

Because we conclude that the superior court did not abuse its discretion in finding no grounds for relief under Rule 60(b), we need not address whether Jennifer demonstrated a meritorious defense to Tiger’s lawsuit.

V. CONCLUSION
We AFFIRM the superior court’s denial of Jennifer’s motion to set aside the default judgment.

[fn1] Civil Rule 60(b) provides in part:

[t]he court may relieve a party . . . from a final judgment . . . for the following reasons:

(1) mistake, inadvertence, surprise or excusable neglect;

(2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b);

(3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party;

(4) the judgment is void;

(5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or

(6) any other reason justifying relief from the operation of the judgment.

[fn2] Cleary Diving Serv., Inc. v. Thomas, Head Greisen, 688 P.2d 940,943 (Alaska 1984) (stating that “in order to prevail on a 60(b) motion, a movant must generally show the existence of a meritorious claim as well as one of the grounds stated in the rule”).

An entry of default alone, without a default judgment, may be set aside upon a showing of “good cause.” Alaska R. Civ. P. 55(e). We have noted that “`[g]ood cause’ is a question of equity left to the discretion of the trial court upon showing of a meritorious defense.” Hicks v.Pleasants, 158 P.3d 817, 820 n. 5 (Alaska 2007). We also have noted that the “good cause” standard for Rule 55(e) is more lenient than the more specific requirements of Rule 60(b). Disciplinary Matter InvolvingBeconovich, 884 P.2d 1080, 1083 (Alaska 1994); Jennifer cites to Rule 55(e) and makes many arguments that might be directed to “good cause” under that Rule to set aside an entry of default. However Rule 60(b) applies here because of the default judgment, so her arguments are misdirected.

[fn3] Jennifer also argues that it was error for the trial court not to consider that Tiger did not notify her of his intent to seek an entry of default or a default judgment. Although under certain circumstances a litigant is obligated to notify the opposing party of an impending application for default, Tiger had no duty to do so here because Jennifer did not take any action indicating an intent to defend against his claims. See Brown v. Lange, 21 P.3d 822, 828 (Alaska 2001); Hertz v.Berzanske, 704 P.2d 767, 772-73 (Alaska 1985), superseded by statute onother grounds, ch. 139, § 1, SLA 1986, as recognized in McConkey v. Hart,930 P.2d 402, 407 n. 4 (Alaska 1996); City of Valdez v. Salomon,637 P.2d 298 (Alaska 1981); Cook v. Aurora Motors, Inc., 503 P.2d 1046 (Alaska 1972).

[fn4] Princiotta v. Mun. of Anchorage, 785 P.2d 559, 562 (Alaska 1990).

[fn5] Rapoport v. Tesoro Alaska Petrol. Co., 790 P.2d 1374, 1377 (Alaska 1990).

[fn6] Id. (noting abuse of discretion standard of review for motions under Rule 60(b)(1)).

[fn7] 612 P.2d 1008 (Alaska 1980).

[fn8] Id. at 1010.

[fn9] Holiday Inns of Am., Inc. v. Peck, 520 P.2d 87, 95 n. 19 (Alaska 1974) (citing N. Commercial Co. v. United Airmotive, 101 F. Supp. 169,170 (D. Alaska 1951); Carothers v. Carothers, 488 P.2d 1185, 1188 (Or. 1971)).

[fn10] AS 45.03.604.

[fn11] Princiotta, 785 P.2d at 562-63 (applying abuse of discretion standard of review to motion under first clause of Rule 60(b)(5)).

[fn12] Casciola v. F.S. Air Serv., Inc., 120 P.3d 1059, 1062 (Alaska 2005) (citing Lewis v. State, 469 P.2d 689, 692 n. 2 (Alaska 1970)).

[fn13] Id. (quoting Lewis, 469 P.2d at 692 n. 2; Great Divide Ins. Co. v.Carpenter ex rel. Reed, 79 P.3d 599, 608 n. 10 (Alaska 2003)).