Dci Credit Servs., Inc. v. Plemper

966 N.W.2d 904

DCI CREDIT SERVICES, INC., Plaintiff and Appellant

v.Nicholas PLEMPER, Defendant and Appellee

No. 20210183

Supreme Court of North Dakota.

FILED NOVEMBER 26, 2021

Elise A. Fischer (argued) and Theresa L. Kellington (on brief), Bismarck, ND, for plaintiff and appellant.

Ariston E. Johnson, Watford City, ND, for defendant and appellee.

VandeWalle, Justice.

[¶1] DCI Credit Services, Inc. ("DCI") appealed from a district court's order denying its request to vacate the order granting summary judgment under N.D.R.Civ.P. 60(b) and awarding costs and attorney's fees to Nicholas Plemper. DCI also appealed from a district court judgment dismissing the complaint with prejudice and awarding Plemper costs and attorney's fees in the amount of $1,625.00. DCI argues the court erred in denying its motion to vacate because its late attorney kept his illness a secret. DCI also argues the court abused its discretion in awarding costs and attorney's fees to Plemper. We affirm in part the district court's order denying DCI's motion to vacate the order. We reverse in part the court's order awarding costs and attorney's fees and reverse in part the judgment awarding costs and attorney's fees to Plemper in the amount of $1,625.00.

I

[¶2] DCI commenced this action in May 2020. DCI alleged Plemper owed $4,321.00 to Bakken Property Management for goods and/or services and that the claim had been assigned to DCI for good consideration. In September 2020, the district court granted DCI's motion for default judgment. The court entered its findings of fact, conclusions of law and order for judgment and judgment by default in the amount of $4,397.50.

[¶3] In October 2020, the district court granted Plemper's motion for relief from judgment. DCI did not file a response to Plemper's motion. In November 2020, Plemper moved for summary judgment. Plemper also requested the court find DCI's claim frivolous under N.D.C.C. § 28-26-01(2). There were settlement negotiations among the parties between the time of filing the motion for summary judgment and the court's order. The parties exchanged emails agreeing that the matter should be dismissed but disagreed on whether costs should be awarded. In December 2020, without a response from DCI, the court granted Plemper's motion for summary judgment and directed the clerk to enter judgment dismissing the complaint with prejudice and awarding Plemper his actual and statutory costs and disbursements, including reasonable attorney's fees.

[¶4] Daniel Oster, attorney for DCI, was seriously ill for about six months before he passed away on January 11, 2021. In February 2021, DCI filed a motion to vacate the order granting Plemper's motion for summary judgment. In its brief in support of its motion, DCI requested relief under N.D.R.Civ.P. 60(b) but did not state which subsection applied. Rather, DCI made the request on the following grounds: (1) Oster was not in good health during the time of the filing of the motion for summary judgment and (2) there was ongoing settlement negotiations. Plemper filed a brief in opposition to the motion to vacate and requested the district court amend the existing judgment to add the attorney's fees incurred in responding to the motion. The court denied DCI's motion reasoning it failed to meet its burden and directed the clerk to enter judgment of dismissal and enter an award in favor of Plemper of actual and statutory costs and disbursements, including reasonable attorney's fees.

II

[¶5] DCI argues the district court erred in denying its request for relief because Oster kept his illness a secret which provides good reason under N.D.R.Civ.P. 60(b)(2) to vacate the judgment and Oster's illness caused its failure to respond which constitutes excusable neglect under N.D.R.Civ.P. 60(b)(1). Additionally, DCI argues that "[a]n attorney falling as ill as Mr. Oster while keeping it a secret from his friends, family, and co-workers are what make this instance extraordinary" under N.D.R.Civ.P. 60(b)(6).

[¶6] Rule 60(b), N.D.R.Civ.P., reads in part, "[o]n motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b); ... or (6) any other reason that justifies relief."

[¶7] In general, the standard of review for motions under N.D.R.Civ.P. 60(b) is abuse of discretion. Davis v. Davis , 2021 ND 24, ¶ 5, 955 N.W.2d 117. On appeal, a party seeking to disturb the finality of judgment under Rule 60(b) bears a heavy burden, which this Court has previously recognized:

An abuse of discretion by the trial court is never assumed and must be affirmatively established. An abuse of discretion is defined as an unreasonable, arbitrary, or unconscionable attitude on the part of the trial court. A movant for relief under Rule 60(b) has a burden of establishing sufficient grounds for disturbing the finality of the judgment. The moving party must also show more than that the lower court made a "poor" decision, but that it positively abused the discretion it has in administering the rule. We will not overturn that court's decision merely because it is not the one we may have made if we were deciding the motion.

US Bank Nat. Ass'n v. Arnold , 2001 ND 130, ¶ 23, 631 N.W.2d 150 (quoting First Nat'l Bank of Crosby v. Bjorgen, 389 N.W.2d 789, 794-95 (N.D. 1986) ).

[¶8] DCI's brief in support of its motion did not specify which subsection of N.D.R.Civ.P. 60(b) applied, rather DCI argued the request was being made based on: (1) Oster was not in good health during the time of the filing of the motion for summary judgment and (2) there were ongoing settlement negotiations for which DCI believed a resolution had been reached. Here, the district court held DCI failed to meet the burden entitling it to Rule 60 relief because it did not identify the specific grounds by which the court should grant relief. Hatch v. Hatch , 484 N.W.2d 283, 286 (N.D. 1992) ("A mere recitation of the grounds set forth to Rule 60(b), N.D.R.Civ.P., without specific details underlying such assertions, is not sufficient to afford relief." (quoting Fleck v. Fleck , 337 N.W.2d 786, 790 (N.D. 1983) )).

[¶9] Additionally, the district court reasoned that "[e]ven analyzing this case under ground 6, ‘any other reason that justifies relief,’ the Plaintiff's motion would still fail." The court pointed to an email where DCI conceded that the matter should be dismissed. The court noted that "[t]o vacate the summary judgment at this point would drive up the costs of litigating this matter to both parties and would be futile."

[¶10] The district court's decision was the product of a rational mental process and was not arbitrary, unconscionable, or unreasonable. The court did not abuse its discretion in denying DCI's motion to vacate the order under N.D.R.Civ.P. 60(b).

III

[¶11] DCI argues the district court abused its discretion in awarding costs and attorney's fees. We agree.

[¶12] "Generally, this Court applies the ‘American Rule,’ which requires parties to bear their own attorney's fees unless the fees are expressly authorized by statute." Lizakowski v. Lizakowski , 2017 ND 91, ¶ 25, 893 N.W.2d 508 (quoting Walstad v. Walstad , 2013 ND 176, ¶ 30, 837 N.W.2d 911 ).

[¶13] Section 28-26-01(2), N.D.C.C., provides:

In civil actions the court shall, upon a finding that a claim for relief was frivolous, award reasonable actual and statutory costs, including reasonable attorney's fees to the prevailing party. Such costs must be awarded regardless of the good faith of the attorney or party making the claim for relief if there is such a complete absence of actual facts or law that a reasonable person could not have thought a court would render judgment in that person's favor, providing the prevailing party has in responsive pleading alleged the frivolous nature of the claim. This subsection does not require the award of costs or fees against an attorney or party advancing a claim unwarranted under existing law, if it is supported by a good-faith argument for an extension, modification, or reversal of the existing law.

[¶14] Under N.D.C.C. § 28-26-01(2), a district court has discretion to determine whether a claim is frivolous and the amount and reasonableness of an award of attorney's fees. CHS Inc. v. Riemers , 2018 ND 101,...