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State v. Eight Ball Trucking, Inc.

Supreme Court of North Dakota

April 11, 2019

State of North Dakota, by and through Workforce Safety and Insurance, Plaintiff and Appellee
v.
Eight Ball Trucking, Inc., David T. Horrocks, and Laurie J. Horrocks, Defendants and Appellants

          Appeal from the District Court of Burleigh County, South Central Judicial District, the Honorable Gail Hagerty, Judge.

          Mitchell D. Armstrong (argued) and Sarah E. Wall (on brief), Special Assistant Attorneys General, Bismarck, ND, for plaintiff and appellee.

          Aaron W. Owens, Provo, UT, for defendants and appellants.

          OPINION

          VANDEWALLE, CHIEF JUSTICE.

         [¶1] Eight Ball Trucking, Inc., and David and Laurie Horrocks (collectively "defendants") appealed from an order entered after the district court denied their motion under N.D.R.Civ.P. 60(b) for relief from a summary judgment. We conclude the court did not abuse its discretion in denying the motion, and we affirm the order.

         I

         [¶2] The Horrocks are officers of Eight Ball, a Utah trucking company doing business in North Dakota during the relevant time period. A dispute arose over Eight Ball's allocation of employees between North Dakota and Utah and Eight Ball's obligation to procure North Dakota workers compensation insurance for its North Dakota employees. In late March and early April 2016, Workforce Safety & Insurance ("WSI") commenced an action against the defendants by serving them with a summons and complaint to enjoin them from employing individuals in North Dakota and to collect $802, 689.84 in unpaid workers compensation insurance premiums, penalties, and interest. See N.D.R.Civ.P. 3 ("A civil action is commenced by the service of a summons."). WSI's complaint alleged that the defendants were Utah employers engaged in employment in North Dakota without proper workers compensation insurance and were liable for unpaid premiums, penalties, and interest and estimated premiums, penalties, and interest for the time period from October 10, 2009 through February 29, 2016. The complaint alleged that WSI had issued an August 28, 2015 notice of an administrative decision finding the Horrocks personally liable for unpaid premiums and penalties owed by Eight Ball, that the Horrocks did not request reconsideration nor appeal from that decision, and that the administrative decision was res judicata.

         [¶3] In an April 21, 2016 email to WSI, Laurie Horrocks indicated she was responding to WSI's summons and submitted documentation she claimed established Eight Ball's gross wages for the requested time periods. An internal WSI claim note stated that WSI received a telephone call from Laurie Horrocks on May 27, 2016, requesting an update on her response to the summons and complaint. The internal claim note said Laurie Horrocks was informed the submitted documentation did not support an adjustment to Eight Ball's outstanding premium balance. A June 29, 2016 letter from WSI to the Horrocks informed them that WSI had finished its review of the documentation sent on April 21, 2016, and determined the information did not warrant a premium adjustment. WSI's letter to the Horrocks stated it was denying the request for an adjustment and requested payment of $802, 362.52. In an October 10, 2016 letter to the Horrocks, WSI sent an Alternative Dispute Resolution Statement indicating ADR was not appropriate because there was no dispute regarding the amount of premium owed and multiple attempts to collect the premium had failed.

         [¶4] According to WSI, the Horrocks did not respond to the October 2016 letter, and on November 10, 2016, WSI filed the pending lawsuit in district court and moved for summary judgment. WSI served the motion by mail on the Horrocks. According to the Horrocks, they did not respond to the summary judgment motion because they thought they had submitted necessary documentation to WSI to resolve the issue. On December 15, 2016, the district court granted WSI's motion for summary judgment, awarding WSI $812, 702.79 in premiums, penalties, and costs and disbursements and enjoining Eight Ball from engaging in employment in North Dakota. The court concluded the defendants were prevented by administrative res judicata from relitigating issues or defenses that could have been raised during the administrative process. On December 19, 2016, WSI sent the Horrocks a letter, informing them the judgment had been entered against them on December 15, 2016, and requesting payment. The defendants did not appeal from the summary judgment.

         [¶5] On December 15, 2017, the defendants filed a motion under N.D.R.Civ.P. 60(b)(1) to set aside the summary judgment on the grounds of mistake, inadvertence, surprise or excusable neglect. The district court denied the motion, determining the defendants' disregard and neglect of the legal process was not excusable neglect and failed to establish extraordinary circumstances necessary to set aside the judgment under N.D.R.Civ.P. 60(b). The court said the 2016 summary judgment was a decision on the merits and the defendants' claims about a meritorious defense were inapplicable. The court nevertheless explained that the defendants' conclusory allegations failed to provide specific facts to establish a legal basis for allowing consideration of their alleged defenses.

         II

         [¶6] The defendants argue the district court erred in considering the summary judgment as a judgment on the merits and in applying a stricter standard to set aside the judgment rather than applying the more lenient standard for setting aside a default judgment. They assert the summary judgment was not a judgment after a full trial on the merits because there were factual disputes about the allocation of Eight Ball's wages to North Dakota employees and to Utah employees. They contend the court erred in granting WSI's "unsupported" and "premature" motion for summary judgment. They argue the unopposed motion for summary judgment and resulting summary judgment should have been vacated for mistake, inadvertence, surprise or excusable neglect under N.D.R.Civ.P. 60(b)(1), or for any other reason justifying relief under N.D.R.Civ.P. 60(b)(6).

         [¶7] In Carroll v. Carroll, 2017 ND 73, ¶ 8, 892 N.W.2d 173 (citations omitted), we described our standard of review of a district court's decision on a motion to vacate a judgment:

Under N.D.R.Civ.P. 60(b), a motion to vacate a judgment "lies with the 'sound discretion of the trial court, and its decision whether to vacate the judgment will not be disturbed on appeal unless the court has abused its discretion.'" We have explained that under Rule 60(b) "[w]e do not determine whether the court was substantively correct in entering the judgment from which relief is sought, but determine only whether the court abused its discretion in ruling that sufficient grounds for disturbing the finality of the judgment were not established." A district court may grant relief under N.D.R.Civ.P. 60(b) for "(1) mistake, inadvertence, surprise, or excusable neglect; . . . (3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party; . . . or (6) any other reason that justifies relief." "Rule 60(b) attempts to strike a proper balance between the ...

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