Appeal from the United States District Court for the Central District of Illinois, Danville Division. No. 78-0061-D -- Harold A. Baker, Judge .
Before Swygert, Senior Circuit Judge, Cudahy, Circuit Judge, and East,*fn* District Judge.
Defendants-appellants Chrysler, Banning, and Waller appeal from the denial of their post-trial motions to set aside a default judgment entered against them after they failed to appear at trial in a diversity action.
The defendants are owners of taverns in Illinois. According to the amended complaint, the defendants or their employees negligently sold alcoholic beverages to an intoxicated person, one Patricia Hedden, on December 23, 1977. Hedden then drove her car to Indiana where, allegedly as a result of her intoxication, she drove off the road. Plaintiff's decedent Laura Rogers, who was a passenger in the car, was killed in the accident.
After the cause was commenced, the defendants moved to dismiss on the grounds that the amended complaint failed to state a cause of action. The District Court denied the motion because it was unaccompanied by a supporting brief as required by a local court rule.
Thereafter, the proceedings were stayed to permit resolution of a declaratory judgment action in state court concerning the defendants' insurance coverage. Defendants' attorney, John Lynaugh, failed to appear for several status calls, and the District Court revoked the stay of the proceedings on December 6, 1979.
On April 24, 1980, the District Court held a status call which Lynaugh attended. After some discussion concerning possible trial dates and the likelihood of a prior trial lasting longer than anticipated, the cause was set for trial on August 25, 1980.
Neither the defendants nor their attorney appeared on the morning of trial. No attempt was made to contact them. After waiting thirty-two minutes, the court found the defendants in default. A jury was immediately empaneled to hear the damages issue and returned an award of $175,000. The court entered the judgment against the defendants the same day.
On September 3, 1980, the defendants filed a post-trial motion for relief from the judgment pursuant to Fed.R.Civ.P. 60(b)(1)*fn1 alleging that the judgment was the result of mistake, inadvertence, or excusable neglect. Attorney Lynaugh attached an affidavit in support of the motion which stated, in part, that it was his understanding that the case was set for trial after August 25, 1980, and that he thought he would be notified of the specific date and time of trial. Lynaugh also stated that his absence at the earlier status calls was occasioned not by disregard for the orderly procedure of the case but by a mistaken belief that attendance at status calls was not required while the stay of the proceedings was in effect. His failure to appear at a status call after he was disabused of this misconception was blamed on illness.
David Lewis, an attorney representing defendants Chrysler and Banning in the state declaratory judgment action, also submitted an affidavit stating that he was present at the status call and that he understood the order of the court to be that the trial would be on some date after August 24, 1980, at the convenience of the court.
In an affidavit accompanying an amendment to the Rule 60(b)(1) motion, Lynaugh averred that the defendants had meritorious defenses in that they had not known or had reason to know that Hedden was intoxicated and that the deceased had been contributorily negligent.
The District Court denied the motion. In reaching its conclusion, the court reviewed the history of the case, noting that no declaratory judgment had been forthcoming, that Lynaugh had failed to appear at four status calls, and that the date of trial had been set in open court. The court concluded that defendants' default had not been the result of "excusable neglect" within the meaning of Rule 60(b)(1), and that the ...