A motion to set aside a default must establish a meritorious defense “with particularity.”

LaFrance Architect v. Point Five Development South Burlington, LLC , 2013 VT 115 (20-Dec-2013)

REIBER, C.J. Defendant appeals the trial court’s refusal to vacate a default judgment against defendant. In light of its conclusion that an internal law office failure like that claimed here did not amount to excusable neglect, the trial court declined to exercise its discretion to consider defendant’s claimed defenses. We hold that the trial court improperly declined to consider the strength of defendant’s proffered defenses to the underlying action in reviewing defendant’s motion to vacate the default judgment, but that defendant’s Rule 60(b) motion did not establish a prima facie case with sufficient particularity to support a meritorious defense. We therefore affirm the trial court.

A trial court should consider the following factors when conducting the Rule 60(b) analysis: whether the failure to answer was the result of mistake or inadvertence, whether the neglect was excusable under the circumstances, and whether the defendant has demonstrated any good or meritorious defense to the plaintiff’s claims.” With respect to the “excusable neglect” factor, courts should be particularly circumspect “when the initial fault, at least, appears to be that of a defendant’s attorney. Concerning the “meritorious defenses” factor, the trial court should give substantial weight to a meritorious defense when determining whether to vacate a default judgment.

One of the “meritorious defenses” defendant raised is a counterclaim based on alleged deficiencies in the services provided by plaintiff. Given that compulsory counterclaims are conclusively adjudicated by a default judgment, we conclude that a counterclaim arising from the same transaction as the underlying complaint, can constitute a “meritorious defense.” Defendant’s counterclaim satisfies the requirements of notice pleading under Rule 8(a), but is not detailed enough to satisfy the more exacting standards of a motion to set aside a judgment under Rule 60(b). We conclude that defendant’s Rule 60(b) motion did not plead a prima facie case of a meritorious defense arising from plaintiff’s allegedly deficient performance with sufficient particularity to warrant remand for the trial court’s consideration.

Defendant also points to the mandatory mediation and arbitration clauses in the contract between the parties as a defense to the trial court’s judgment. Given defendant’s delay in asserting its arbitration rights, however, we hold that defendant’s conduct amounted to an implicit waiver and thus does not constitute a meritorious defense for purposes of Rule 60(b).

Therefore, it is unnecessary to remand the case to the trial court, since defendant has no meritorious defenses and cannot prevail under Rule 60(b) as a matter of law.

ROBINSON, J., concurring in part, dissenting in part. I respectfully dissent from that part of the majority’s opinion relating to the question of whether we should remand this case to the trial court for consideration of the requisite factors, including the prejudice to plaintiff of setting aside the default judgment, the nature of defendant’s neglect, and the strength of defendant’s defense based on the mandatory mediation and arbitration clauses in the contract between the parties.

How cited