Gestner v. Gestner

554 P.3d 558

2024 COA 55

Bruce Allen GESTNER and Mary Jean Gestner, Plaintiffs-Appellees,

v.Bruce Michael GESTNER, Defendant-Appellant.

Court of Appeals No. 23CA1498

Colorado Court of Appeals, Div. IV.

Announced May 16, 2024

City and County of Denver District Court No. 23CV30861, Honorable Mark T. Bailey, Judge

Belzer Law, Aaron B. Belzer, Ashlee N. Hoffmann, Boulder, Colorado, for Plaintiffs-Appellees

James E. Freemyer P.C., James E. Free-myer, Robert K. Reimann, Denver, Colorado, for Defendant-Appellant

JUDGMENT AFFIRMED

Opinion by JUDGE SCHOCK

¶ 1 When the district court enters default judgment against a party who fails to answer or otherwise respond to the complaint, the normal process for challenging the default judgment is through a motion to set aside the default judgment in the district court and then, if necessary, an appeal of the ruling on that motion. But no Colorado case has decided whether this standard procedure is required. In other words, can a party simply appeal the default judgment itself in lieu of first challenging it in the district court;?

¶ 2 We hold that although we have jurisdiction over a direct appeal of a default judgment, the normal rules of preservation apply. As a practical matter, this means that the appellant’s failure to appear in the district court before default judgment was entered will generally preclude consideration of the merits of such an appeal because the appellant’s arguments will ordinarily be unpreserved.

¶ 3 That is the scenario in this case. Defendant, Bruce Michael Gestner, appeals the default judgment in favor of plaintiffs, Bruce Allen Gestner and Mary Jean Gestner. But he did not appear or present any arguments in the district court before the default judgment was entered. Thus, because none of the arguments raised on appeal were preserved for review, we affirm the judgment.

I. Background

¶ 4 Bruce Allen, Mary Jean, and Bruce Michael are the owners in joint tenancy of a single-family residence (the property), which has been Bruce Michael’s home for most of the last thirty-plus years.¹ Bruce Allen² and Mary Jean are Bruce Michael’s parents.

¶ 5 The property was purchased in 1989 in the name of Bruce Allen and Rebecca Gestner, Bruce Michael’s then wife. In 2005, as a result of Rebecca and Bruce Michael’s divorce, Rebecca sold her interest in the property to Bruce Allen, making him the sole owner. Later that year, Bruce Allen added Mary Jean to the title as a joint tenant. In 2009, as part of their estate planning, Bruce Allen and Mary Jean added Bruce Michael to the title as a third joint tenant.

¶ 6 In March 2023, with the parties’ relationship having deteriorated, Bruce Allen and Mary Jean filed a lawsuit to partition the property, naming Bruce Michael as the defendant. Alleging that the property could not be partitioned in kind without manifest prejudice to the rights of the parties, they sought an order directing the sale of the property and distribution of the net proceeds under sections 38-28-107 and 38-28-108, C.R.S. 2023.

¶ 7 Bruce Michael was served with the complaint on April 6, 2023. Despite communicating with plaintiffs’ counsel and participating in mediation, Bruce Michael did not answer or otherwise respond to the complaint. Nor did he appear in the case at all. On May 15, 2023, the clerk entered his default under C.R.C.P. 55(a).

¶ 8 Two weeks later, plaintiffs filed a motion for default judgment, seeking an order that the property be listed for sale with a real estate agent of their choosing and that each joint tenant receive one-third of the proceeds of the sale. They again asserted that, as a single-family residence, the property could not be partitioned in kind without manifest prejudice. They also requested that Bruce Michael be required to cooperate with the real estate agent and that he be restrained from damaging or devaluing the property. Bruce Michael did not respond to the motion for default judgment.

¶ 9 On July 12, 2023, the district court entered default judgment as requested by plaintiffs in their motion. The default judgment ordered that (1) each joint tenant is apportioned a one-third interest in the property; (2) plaintiffs shall hire a real estate agent to sell the property; (3) Bruce Michael shall cooperate with the real estate agent and allow access to the property; (4) Bruce Michael shall not do anything to damage or devalue the property; and (5) each joint tenant shall receive one-third of the net proceeds of the sale.

¶ 10 Shortly after the entry of default judgment, plaintiffs filed a forthwith motion for possession of the property, including the right to evict Bruce Michael. The district court granted that motion.

¶ 11 Apparently prompted by that order, counsel for Bruce Michael entered an appearance on August 4, 2023, and filed a motion to reconsider the order granting plaintiffs possession of the property. In the motion to reconsider, Bruce Michael argued that the default judgment was erroneous because it did not include a specific finding that a partition in kind would result in manifest prejudice.

¶ 12 A week later, Bruce Michael filed an answer and counterclaim, along with a motion for relief from the default judgment under C.R.C.P. 60(b)(2). But before the district court had ruled on either the motion to reconsider or the motion for relief from judgment, Bruce Michael filed his notice of appeal of the default judgment. As a result, the district court concluded that it lacked jurisdiction to rule on the pending motions, and it took no action on them.

II. Appealability of Default Judgment

[1] ¶ 13 As noted, the typical course for challenging a default judgment based on a failure to respond to the complaint³ is to move to set aside the default judgment in the district court, and then, if the motion is denied, to appeal that denial. See C.R.C.P. 55(c); C.R.C.P. 60(b); McMichael v. Encompass PAHS Rehab. Hosp., LLC, 2023 CO 2, ¶ 10, 522 P.3d 713; Sebastian v. Douglas County, 2016 CO 13, ¶¶ 2, 18, 366 P.3d 601.

¶ 14 But Bruce Michael opted for a different approach. Although he filed a motion to set aside the default judgment under C.R.C.P. 60(b), he did not await a ruling on that motion, Instead, he appealed the default judgment itself. He then did not seek an order from this court remanding the case to the district court to resolve the Rule 60(b) motion, as he could have done. See Molitor v. Anderson, 795 P.2d 266, 270 (Colo. 1990). Thus, we must address a question not yet resolved in Colorado: Is a default judgment directly appealable in the absence of a motion to set aside the default judgment (and a ruling on that motion) in the district court?

¶ 15 Other jurisdictions are split on this question under similar federal and state rules. 12 James W. Moore et al., Moore’s Federal Practice § 60.03[6] & n. 22.1 (3d ed. 2024) (noting circuit split); Stelly v. Duriso, 982 F.3d 403, 406-07, 407 n.4 (5th Cir. 2020). Some courts hold categorically that a default judgment is not directly appealable. See, e.g., Consorzio Del Prosciutto Di Parma v. Domain Name Clearing Co., 346 F.3d 1193, 1195 (9th Cir. 2003); Aloia v. Gore, 252 Ariz. 548, 553, 506 P.3d 34, 39 (Ariz. Ct. App. 2022); Golmon v. Latham, 183 N.C.App. 150, 643 S.E.2d 625, 626 (2007) (citing cases). Others hold that it is. See, e.g., Stelly, 982 F.3d at 407; Pecarsky v. Galaxiworld.com Ltd., 249 F.3d 167, 170-71 (2d Cir. 2001). Still others allow for only limited review. See, e.g., Robertson v. Rosner, 641 S.W.3d 436, 443 (Mo. Ct. App. 2022) (limiting direct appeal from default judgment to challenges to subject matter jurisdiction); Wisan v. City of Hildale, 2014 UT 20, ¶ 19, 330 P.3d 76 (noting "very limited" circumstances warranting direct appeal from default judgment).

[2, 3] ¶ 16 We conclude that we have jurisdiction over a direct appeal from a default judgment. A default judgment is a final judgment. See State Farm Mut. Auto. Ins. Co. v. Brekke, 105 P.3d 177, 185 (Colo. 2004) ("As a general rule, a default judgment has the same effect as [a] final judgment after a formal trial."); Sumler v. Dist. Ct., 889 P.2d 50, 55 (Colo. 1995) (holding that default judgment was a final judgment "because it left the court with nothing to do but execute upon the judgment"). And as a final judgment, it falls squarely within the scope of our appellate jurisdiction. See § 13-4-102(1), C.R.S. 2023 (providing that the court of appeals "shall have initial jurisdiction over appeals from final judgments"); C.A.R. 1(a)(1) ("An appeal to the appellate court may be taken from … a final judgment of any district … court in all actions.").

[4] ¶ 17 But jurisdiction aside, there are two significant obstacles to appellate review of a default judgment against a party who did not appear in the district court. First, the record will rarely be sufficiently developed to permit an adequate review of any disputed factual issues. See Winesett v. Winesett, 287 S.C. 332, 338 S.E.2d 340, 341 (1985); Restatement (Second) of Judgments § 78 cmt. e (Am. L. Inst. 1982) ("[A]ppeal is an effective remedy only if the matter in question has been made part of the record …. "). One way for a party to develop that record is through a motion to set aside the default judgment in the district court. See Stelly, 982 F.3d at 407; Restatement (Second) of Judgments § 78 cmt. e. The lack of such a motion precludes the party from raising any issues on appeal that require further factual development. See Stelly, 982 F.3d at 407.

[5] ¶ 18 Second, even when the issues raised on appeal are purely legal and require no development of the record, those issues necessarily will not have been raised in the district court. In civil cases, issues not raised in or decided by the district court generally trill not be addressed for the first time on appeal. Melat, Pressman & Higbie, L.L.P. v. Hannon L. Firm, L.L.C., 2012 CO 61, ¶ 18, 287 P.3d 842; see also Pinnacol Assurance v. Laughlin, 2023 COA 9, ¶ 22, 528 P.3d 912 (noting that review of...