EPSTEIN VS. EPSTEIN (DIVORCE)

Key holdings

Practitioner summary

The court reversed the denial of an NRCP 60(b) motion to set aside a default divorce decree on notice grounds and resolved a conflict in its default-judgment precedent. First, the threshold question was whether the defaulted party had 'appeared,' triggering the NRCP 55(b)(2) requirement of written notice of the application for default judgment at least three days before the hearing. The court held that a course of negotiations between parties constitutes an appearance, Franklin v. Bartsas Realty, 95 Nev. 559, 564, 598 P.2d 1147, 1150 (1979), and that Edwin - through months of settlement negotiations - had appeared, notwithstanding the district court's finding that his counsel had not formally 'entered an appearance.' Second, the court held that service of a praecipe for default (a request that the clerk enter a default under NRCP 55(a)) does not provide the 'specific and particular notice' of intent to seek a default judgment required by NRCP 55(b)(2). Serving the praecipe merely put Edwin on notice that Ursula was positioned to seek a default judgment in the future, not that she would seek one at a particular time. The default judgment was therefore invalid, and the court did not reach whether denial of the set-aside motion was otherwise an abuse of discretion. Third, the court overruled the meritorious-defense requirement. Although pre-1990 decisions required a movant to show a meritorious defense (e.g., Sealed Unit Parts v. Alpha Gamma Ch., 99 Nev. 641, 643, 668 P.2d 288, 289 (1983)), Price v. Dunn, 106 Nev. 100, 104, 787 P.2d 785, 788 (1990), had set that requirement aside based on Peralta v. Heights Medical Center, 485 U.S. 80 (1988). Because subsequent decisions had inconsistently continued to require a meritorious defense (e.g., Lesley v. Lesley, 113 Nev. 727, 732, 941 P.2d 451, 454 (1997); Bauwens v. Evans, 109 Nev. 537, 539, 853 P.2d 121, 122 (1993)), the court expressly overruled that requirement, reaffirming Price: a party need not show a meritorious defense to have a default judgment set aside.

In plain language

Ursula Epstein filed for divorce from Edwin Epstein in December 1994. Her lawyer initially granted Edwin an open-ended extension to answer while the two sides tried to settle. Over the next several months the lawyers exchanged letters and a proposed settlement, and Edwin retained counsel, but negotiations broke down and Edwin never filed a formal answer. Ursula served and filed a 'praecipe for default' (a request that the clerk enter a default) on September 14-15, 1995, and the clerk entered Edwin's default. Two weeks later the court signed a default divorce decree. Edwin's counsel later filed an answer and a motion to set aside the decree under NRCP 60(b), arguing the default judgment was not properly noticed and was procured by fraud or through Edwin's excusable neglect. The district court denied the motion, finding Edwin had adequate notice, no fraud occurred, and his neglect was not excusable. Edwin appealed. The Nevada Supreme Court reversed. It first held that Edwin had 'appeared' in the case, because a course of settlement negotiations counts as an appearance - which meant Ursula was required to give him written notice of her application for a default judgment. The court then held that merely serving the praecipe for default did not satisfy that requirement: a praecipe only tells the other side that a default could be sought, not that a default judgment will be sought at a particular time. Because Edwin did not receive proper notice of the application for default judgment, the default judgment was invalid. The court also used the case to clean up a conflict in its own precedent, formally overruling the requirement (most recently stated in Lesley v. Lesley) that a party seeking to set aside a default judgment must show a 'meritorious defense.' Going forward, no meritorious defense is required to set aside a default judgment. The court reversed and remanded.