PREFERRED TOOLING, L.L.C., Plaintiff-Appellee, vs. ROY AHERN, Defendant-Appellant.
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IN THE COURT OF APPEALS OF IOWA
No. 8-091 / 07-1215
Filed March 14, 2008
PREFERRED TOOLING, L.L.C.,
Plaintiff-Appellee,
vs.
ROY AHERN,
Defendant-Appellant.
________________________________________________________________
Appeal from the Iowa District Court for Butler County, John S. Mackey,
Judge.
Defendant appeals the district court’s decision refusing to set aside a
default judgment against him. REVERSED AND REMANDED.
Thomas A. Lawler of Lawler & Swanson, P.L.C., Parkersburg, for
appellant.
G.A. Cady III of Hobson, Cady & Cady, Hampton, for appellee.
Considered by Eisenhauer, P.J., and Baker, J., and Brown, S.J.*
*Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2007).
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BROWN, S.J.
I.
Background Facts & Proceedings
On August 23, 2006, Preferred Tooling, L.L.C., filed suit against Roy
Ahern seeking payment under a contract for the production of certain goods.
Preferred Tooling is an Iowa corporation, while Ahern is a resident of Wisconsin.
Preferred Tooling filed notice with the Iowa Secretary of State. Notice of the suit
was mailed to Ahern on September 7 by certified mail.
Ahern did not respond to the suit, and on November 16, 2006, Preferred
Tooling filed notice in district court that it intended to take a default judgment. An
affidavit was filed stating this notice had been mailed to Ahern on November 10.
On December 18, the district court entered an order finding Ahern in default and
entering judgment against him for $23,450.
On February 7, 2007, Ahern filed a motion seeking to set aside the default
judgment. He claimed he never received original notice. Ahern stated that he
first knew about the suit on December 11, 2006, when he received notice of
Preferred Tooling’s intent to take a default judgment.
He stated he then
contacted his attorney, who drafted a letter requesting a copy of the complaint.
Before a response was received, however, the district court had entered a default
judgment for Preferred Tooling.
At a hearing Ahern testified he owns a business which manufactures and
sells floating boat docks. He stated he had been traveling to attend boat shows
to promote his products. The district court entered an order on April 23, 2007,
which determined the default judgment was the result of inadvertence and
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excusable neglect.
The court entered an order setting aside the default
judgment.
On May 2, 2007, Preferred Tooling filed a second application for default
judgment. A hearing on the application was held on May 15. 1
At that time
defendant’s counsel had filed an appearance, but no answer had yet been filed.
The court entered a ruling on May 30, finding “defendant has had more than
ample time to file his answer herein and has failed to do so.” The court granted
the application for a default judgment and entered judgment against Ahern for
$23,450.
In the meantime, on May 25, 2007, Ahern filed an answer and a
counterclaim alleging breach of contract and raising claims under the Uniform
Commercial Code. Ahern also filed a motion for new trial, claiming Preferred
Tooling had not properly complied with the provisions of Iowa Rule of Civil
Procedure 1.972 in seeking a default judgment. He claimed neither he nor his
attorneys had received notice as required by rule 1.972(2). The district court
denied the motion for new trial. Ahern appealed the decision of the district court
granting a default judgment to Preferred Tooling.
II.
Standard of Review
We review the district court’s decision for the correction of errors at law.
Iowa R. App. P. 6.4; Central Nat’l Ins. Co. v. Ins. Co. of N. Am., 513 N.W.2d 750,
753 (Iowa 1994).
1
Generally, doubts are resolved in favor of setting aside a
This hearing was not recorded. According to the appellate briefs, no evidence was
taken at the hearing. The matter was submitted based on the record and statements of
counsel.
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default judgment. Wilson v. Liberty Mut. Group, 666 N.W.2d 163, 166 (Iowa
2003). This is because trial on the merits is favored over a default judgment. Id.
III.
Merits
Ahern contends Preferred Tooling failed to follow the provisions of Iowa
Rule of Civil Procedure 1.972(2), and thus was not entitled to a default judgment.
Rule 1.972(2) provides:
Requests for entry of default under rule 1.972(1) shall be by
written application to the clerk of the court in which the matter is
pending. No default shall be entered unless the application
contains a certification that written notice of intention to file the
written application for default was given after the default occurred
and at least ten days prior to the filing of the written application for
default. A copy of the notice shall be attached to the written
application for default.
Notice to a party must be “sent by ordinary mail to the last-known address of the
party claimed to be in default.” Iowa R. Civ. P. 1.972(3)(a). When a party is
represented by counsel, notice must be sent by the same method to the attorney.
Iowa R. Civ. P. 1.972(3)(b).
In the present case, Preferred Tooling filed an application for default
judgment on May 2, 2007. The application does not contain a certification that
written notice of the intention to file the application for default was sent to Ahern
or his attorneys.
Furthermore, no copy of the notice was attached to the
application for default. The application contains only a certification of service
which states Ahern’s attorneys were sent a copy of the application for default
judgment on May 1, 2007.
A party seeking a default judgment must follow the requirements of rule
1.972(2) “by giving the required ten-day written notice before seeking the default
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and by filing with the application for default the required certification that notice
was given.” Dolezal v. Bockes Bros. Farms, Inc., 602 N.W.2d 348, 352 (Iowa
1999). Rule 1.972(2) requires a party to send written notice of the intention to file
an application for default judgment on the opposing party.
See Baltzley v.
Sullins, 641 N.W.2d 791, 792 (Iowa 2002). The rule gives a party a ten-day
period of time to respond to the notice and avoid default. Id. at 793.
Where a party fails to follow the notice and certification requirements of
rule 1.972(2), the district court is “without authority to enter the order of default
and the subsequent default judgment against the defendants.”
Dolezal, 602
N.W.2d at 352. A defendant’s failure to file an answer does not change the
applicability of rule 1.972(2). Id. at 353. Furthermore, a party is not required to
file a motion to set aside the default judgment under rule 1.977 because that rule
is not the appropriate method of correcting an irregularity under rule 1.972(2). Id.
Preferred Tooling claims Ahern failed to preserve error because he did not
resist the entry of default judgment on the grounds now raised at the time the
default judgment was entered.
Ahern did raise these issues, however, in a
motion for new trial. The district court was aware of the issues and ruled on
them. We conclude Ahern sufficiently preserved error on the issues raised on
appeal. See Meier v. Senecaut, 641 N.W.2d 532, 540 (Iowa 2002) (noting the
record must show the district court was aware of the claim or issue and decided
it).
Preferred Tooling also claims Ahern waived the issues raised on appeal
because the right to certification is a procedural right which may be waived.
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Preferred Tooling points out that Ahern’s counsel was at the hearing on the
motion for default judgment, and that he received notice of the hearing. It points
out Ahern has not given a reason for failing to respond after the first deferred
judgment was set aside.
The supreme court rejected a similar argument in
Dolezal, 602 N.W.2d at 352, stating, “The rule makes no distinction between
excusable neglect and an intention not to defend.” We conclude that the fact
Ahern’s counsel appeared at the default hearing, after receiving the court’s order
setting the date of the hearing, did not waive Ahern’s claims that Preferred
Tooling failed to follow the procedural prerequisites for a default judgment. See
rule 1.972(2) (“No default shall be entered unless the application contains a
certification . . . .”) (emphasis added).
We conclude the district court erred in granting Preferred Tooling a default
judgment because plaintiff did not meet the requirements of rule 1.972(2). There
is no evidence to show Preferred Tooling sent Ahern or his attorneys written
notice of its intent to seek a default judgment ten days (or ever) before filing the
application for default judgment with the district court. Thus, the district court
was without authority to enter a default judgment in the case.
We reverse the decision of the district court and remand for further
proceedings.
REVERSED AND REMANDED.
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