Epstein v. Epstein, 114 Nev. Adv. Op. 152 (1998). In December, 1994, Wife filed a Complaint for divorce. In an attempt to amicably resolve the matter, Wife's attorney, Hambsch, granted Husband an open extension of time to answer. Settlement negotiations did not bear fruit and in March, 1995, Hambsch notified Husband in writing that if he did not answer, judgment by default would be pursued on April 10, 1995. On April 4, 1995, Hambsch sent Husband a Marital Settlement Agreement. On May 10, 1995, Hambsch confirmed in writing his telephone conversation with Husband wherein Husband stated the settlement terms were not acceptable and that he intended to retain counsel. Husband was notified for the second time that default would be entered against him if he did not file an Answer within twenty days. The next day, Husband retained counsel (Willick).
On June 7, 1995, Hambsch wrote to Willick complaining of his lack of attention and advised Willick that Husband's default would be taken if Willick did not communicate with him. On July 24, 1995, Hambsch put Willick on notice that default would be taken unless he received a good faith response to the settlement offer by August 4, 1995.
On August 4, 1995, Willick sent Hambsch a letter with various objections to the settlement proposal. On August 14, 1995, Hambsch replied to Willick's objections and demanded the filing of an Answer unless Wife's settlement position was accepted in toto.
On September 15, 1995, five months after first threatening to do so, Wife made good on her promise and filed a praecipe for default, one day after she served it on Husband (although Willick claimed not to have received it until September 19, 1995). On September 27, 1995, the court issued its default decree of divorce, which was filed on October 3, 1995.
On December 1, 1995, nearly one year after being served process, Husband filed an Answer and Counterclaim. Husband also moved to have the default decree set aside pursuant to NRCP 60(b), claiming lack of proper notice, Wife's fraud, or Husband's inadvertence. On March 13, 1996, the district court denied Husband's motion, finding he had adequate notice for judgment by default, that Wife had not acted fraudulently and that Husband's neglect in allowing the entry of default was not excusable. Husband appealed.
The Nevada Supreme Court reversed the trial court's refusal to set aside the default decree, holding that Wife's praecipe for default was not notice of her intent to seek a default judgment under NRCP 55(b)(2).
How could the praecipe for default, which was served more than ten days before entry of the default decree, not be adequate notice to Husband that Wife planned to have default judgment entered against him? Hambsch may not have followed correct procedure in a very technical sense, but what about Willick's inattention which forced the default in the first place? NRCP 55(b)2 requires that if a party has appeared in an action, he/she must be given three days written notice of the other's intent to apply for judgment by default. If no appearance has been made, no notice is required. It is a two-step analysis: (1) Has the party against whom default is sought appeared in the action?; (2) If so, was proper notice of intent to default given?
"A course of negotiations between parties is sufficient to constitute an appearance." Id. at p. 4, citing Franklin v. Barsas Realty, 95 Nev. 559, 598 P.2d 1147 (1979). The several months in which Husband, Wife and their lawyers conducted negotiations was sufficient proof that Husband had appeared in the action, even though his lawyer had never formally entered an appearance. Thus, the threshold prerequisite, appearance, was satisfied.
Addressing the second step of the analysis, the Supreme Court found that Wife's praecipe for default, although served more than ten days before entry of default judgment, was not adequate notice of her intent to seek default under NRCP 55(b)(2), because a praecipe for default is nothing more than a document requesting that the court clerk enter a default pursuant to NRCP 55(a). By serving the praecipe on Husband, Wife merely put him on notice that she was in a position to seek a default judgment, not that she would seek one at any particular time. "Therefore, we conclude that [Wife's] praecipe for default did not provide sufficient notice of her intent to seek a default judgment. As such, the district court's judgment of default was invalid." Id. at p. 5.
If filing and serving a praecipe of default ten days before you get a default judgment does not sufficiently notify the other party that you are serious, what will? Must you purchase a billboard on the Las Vegas strip and hire a skywriter to spell it out over the city?
The answer is simple; follow the rules! All Hambsch had to do was send Willick written notice simply saying: "File your answer by X date, because if you don't, I'm going to apply for default judgment against your client on X + 1 date. [Allowing, of course, three days (plus mailing).]
At first glance, one wonders why the Supreme Court bothered with a case that is essentially a personality dispute between lawyers. Likely, because the Supreme Court saw it as an opportunity to resolve a conflict in Nevada case law created by prior, inconsistent opinions.
Under Nevada law prior to 1990, a default judgment could not be set aside until the moving party first established that he/she had a meritorious defense. In 1988, the United States Supreme Court held that it is improper to require a party to establish a meritorious defense as a pre-condition to setting aside a default decree. Accordingly, in Price v. Dunn, 106 Nev. 100, 787 P.2d 785 (1990), the Nevada Supreme Court abolished that condition in Nevada. However, forgetting to check its old opinions (what is stare decisis anyway?), the Nevada Supreme Court later entered two rulings reinstating the pre-condition of meritorious defense. [See, Lesley v. Lesley, 113 Nev. 727, 941 P.2d 451 (1997) and Bauwens v. Evans, 109 Nev. 537, 853 P.2d 121 (1993)]. Recognizing its inconsistency, the Nevada Supreme Court used the Epstein case to overrule the pre-condition (without specifically overruling the prior cases) and affirmed that "a party need not show a meritorious defense in order to have a court set aside a default judgment." Id. at p. 5.