Laura A. Cramer (Billado)
v.
James E. Billado, III
On
Appeal from Superior Court, Franklin Unit, Civil Division
Thomas Z. Carlson, J.
Daniel
S. Triggs, Milton, for Plaintiff-Appellee.
Karen
R. Shingler, Burlington, for Defendant-Appellant.
PRESENT: Reiber, C.J., Dooley, Skoglund, Robinson and Eaton,
JJ.
ROBINSON, J.
¶
1. Defendant James Billado appeals the trial court's
denial of his motion to set aside a default judgment of
foreclosure on the grounds that the trial court erred in
allowing service of the foreclosure complaint by tack order
and in declining to set aside the default foreclosure
judgment in light of his defenses. Plaintiff Laura Cramer
argues that defendant's appeal was untimely and we thus
need not consider the merits of his appeal. We conclude that
the trial court's orders were within its discretion and
accordingly affirm.
¶
2. The events leading to this appeal are rooted in the
parties' 2007 divorce. In September 2005, the parties
entered into a final stipulation that provided, among other
things, that defendant was to pay plaintiff $50, 000 on or
before November 15, 2005, to buy out her interest in
defendant's business. Before the court entered a divorce
judgment, defendant sought to set aside his uncounseled
stipulation on the ground that, since signing the
stipulation, he learned that while acting as bookkeeper,
plaintiff had been stealing money from the business. After an
evidentiary hearing, the trial court rejected his claim,
concluding that plaintiff had not engaged in any deception.
The court found that the parties treated the various business
accounts as personal accounts, withdrawing funds at will to
pay for vacations, credit card debt, and other personal
expenses. Defendant left the bookkeeping to plaintiff, and
turned a blind eye to poor bookkeeping practices since both
he and plaintiff received the financial benefit. Given this
record, the trial court declined to set aside the
parties' stipulation. In a February 2007 final judgment
of divorce, the court incorporated the stipulation and
ordered defendant to pay plaintiff $50, 000. This Court
considered defendant's arguments and affirmed the final
order on appeal. See Billado v. Billado, No.
2007-099, 2007 WL 5313617, at *3 (Vt. Nov. 1, 2007) (unpub.
mem.),
https://www.vermontjudiciary.org/sites/default/files/documents/eo07-099.pdf.
¶
3. Plaintiff recorded a certified copy of the judgment in the
Bakersfield, Vermont land records to perfect her judgment
lien on defendant's property. On May 11, 2015, plaintiff
filed this foreclosure action alleging that defendant had
failed to pay on the 2007 judgment.
¶
4. On June 18, 2015, pursuant to Vermont Rule of Civil
Procedure 4(d)(1), plaintiff sought alternative service
through a tack order, which would allow the sheriff to leave
a copy of the summons and complaint at defendant's home.
The accompanying affidavit of diligent search from a deputy
sheriff stated that he tried to serve the papers in person at
defendant's residence on May 23, a Saturday, but got no
answer. He noted that there were no vehicles present at
defendant's home at that time. The affidavit reflected
that on May 27, a Wednesday, he spoke with defendant by
telephone and defendant promised to collect the paperwork in
St. Albans. And the affidavit also reflected that on Sunday
morning, June 7, the deputy sheriff again went to
defendant's residence and got no answer.
¶
5. By order dated July 2, the trial court granted plaintiffs
motion for alternative service, finding that plaintiff had
shown that, despite due diligence, personal service of
process in this matter could not be made on defendant, that
plaintiffs proposed method of service was reasonable and
appropriate, and that the method of service proposed by
plaintiff was preferable to an order that service be made by
publication. The court ordered that service of the summons
and complaint for foreclosure, and other process, notices,
and orders, could be made "by securely affixing a copy
of such process on the main entrance of [defendant's
home], reasonably protected from weather." The deputy
sheriff effected service by tack order on July 18.[*]
¶
6. Defendant did not answer the foreclosure complaint, and on
January 14, 2016, plaintiff filed a motion for default
judgment of foreclosure and the issuance of a clerk's
accounting. The trial court awarded plaintiff default
judgment, and on February 8, 2016, issued a judgment and
decree of foreclosure by judicial sale. Considering accrued
interest on the 2007 debt, attorney's fees, and recording
fees, the court calculated an outstanding judgment of $112,
527.23.
¶
7. Several days later, through counsel, defendant filed a
verified motion to set aside the default judgment. He said
that the judgment of foreclosure was the first document he
had ever received in the foreclosure action, that he did not
see any prior pleadings "tacked" to the premises,
and that personally serving him pursuant to the rule should
have been easy since he has a high personal profile in the
community, has lived in the same location for years, and owns
a localbusiness. Following an evidentiary hearing focused
primarily on the deputy sheriff's initial efforts to
serve defendant, as well as on service of the pleadings
pursuant to the tack order, defendant filed a supplemental
memorandum laying out his underlying defenses to the
foreclosure as an alternative basis to support his motion to
set aside the default judgment. Defendant argued that he was
entitled to a set-off against plaintiff's judgment
because she had improperly diverted funds from his business
prior to their divorce.
¶
8. Based on the parties' pleadings and the evidence
presented at the evidentiary hearing, the trial court found
that the deputy sheriff had attempted to serve defendant at
his home on two weekends, and also reached defendant between
those efforts to try to make arrangements for service of the
summons and complaint. The court credited the deputy
sheriff's testimony, including his recollection that
defendant agreed to come to the courthouse during the day to
accept service but then failed to do so, and his observation
that defendant understood that plaintiff was taking legal
action to pursue her outstanding claims against him. The
court also credited the deputy sheriff's testimony that
in executing the tack order he secured the pleadings to
defendant's door in a weatherproof bag. The court
concluded that the service by tack order was lawful and
sufficient.
¶
9. In addition, the court concluded that defendant had not
pled sufficient grounds under Vermont Rule of Civil Procedure
60(b) to set aside the default judgment on the merits. The
court determined that defendant had not presented any
meritorious defenses to the judgment. It reasoned that the
allegations supporting defendant's claim for a set-off
against the amount he owes plaintiff under the final order
had already been litigated. In 2007, the family court
thoroughly litigated very similar if not identical
allegations against plaintiff in connection with
defendant's effort to set aside the parties'
stipulation. Moreover, the court rejected defendant's
argument that the court should revisit the previously
litigated allegations because defendant had new evidence to
support them. Defendant's new evidence consisted of the
findings of an accountant who reviewed the 2003-2005 business
books in 2013 and found what he believed to be payroll tax
diversions while plaintiff was managing the books. Those
problems did not come to light until 2008, when the IRS
contacted defendant about unmet payroll tax obligations. The
court noted that defendant made no effort to reopen the
divorce or otherwise seek a remedy against plaintiff in 2008,
when the ...