Opinion
WD 84229
12-14-2021
Daniel YEE, Personal Representative of the Estate of Thic Lem Toy, Respondent, v. Sammy CHOI, Seto Choi, and Wing Choi, Appellants.
Tiffannie M. Kennedy, Kansas City; Richard L. Rollings, Jr., Camdenton, for appellant. James M. Conway, Richard J. Blanck, Booneville, for respondent.
Tiffannie M. Kennedy, Kansas City; Richard L. Rollings, Jr., Camdenton, for appellant.
James M. Conway, Richard J. Blanck, Booneville, for respondent.
Before Division Three: Lisa White Hardwick, Presiding Judge, Gary D. Witt and Edward R. Ardini, Jr., Judges
Lisa White Hardwick, Judge Sammy Choi, Seto Choi, and Wing Choi (collectively, "Appellants") appeal the circuit court's judgment denying their motion to set aside the default judgment entered against them on a petition filed by Daniel Yee, personal representative of the Estate of Thic Lem Toy ("the Estate"). In the default judgment, the court granted Yee's request to distribute assets of an investment club. Appellants contend the circuit court erred in finding that they failed to demonstrate good cause to set aside the default judgment. For reasons explained herein, we affirm.
FACTUAL AND PROCEDURAL HISTORY
Over 20 years ago, Harry Toy established the New Century Investment Club ("the Club"). The eight original members of the Club were Harry Toy; Harry Toy's brother, Thic Lem Toy, and Thic Lem Toy's spouse, Lui Gam Lau; Thic Lem Toy's son, Billy Choi, and Billy Choi's spouse, Nancy Choi; Thic Lem Toy's son, Sammy Choi, and Sammy Choi's spouse, Seto Choi; and Thic Lem Toy's son, Wing Choi. The Club's investments are held in an account at TD Ameritrade. Harry Toy died shortly after the Club was established. Lui Gam Lau died in June 2005, Billy Choi died in March 2011, and Thic Lem Toy died in April 2016. No money has ever been paid out of the Club to anyone.
On June 21, 2018, Yee filed a three-count petition naming as defendants the four surviving members of the Club, Nancy Choi, Sammy Choi, Seto Choi, and Wing Choi, along with Thic Lem Toy's five grandchildren, Betty Choi, Judy Choi, Tony Choi, Simon Choi, and Sherman Choi. In Count I, Yee asked for an accounting. He alleged that the Club was a partnership investment but no partnership agreement was ever prepared and no written documents exist with respect to its creation. Yee alleged that each of the eight members of the Club held a 12.5% interest in the Club when the Club was established. He then set forth how he believed the four deceased members’ interests in the Club passed to each of their heirs pursuant to their will or intestate succession, if they had no will. Yee asked the court to direct the partnership members of the Club to give an accounting to the Estate and to determine the interest of each partner in the Club. In Count II, Yee asked that the court declare the Club dissolved.
In Count III, Yee asked that the court wind up the affairs of the Club. As an alternative to this request, Yee proposed that, because several members of the partnership desired to continue the partnership, it would be reasonable to distribute the assets in the TD Ameritrade account in kind to the heirs of Thic Lem Toy to the extent of his interest and to distribute the assets in kind to any other members of the partnership who desired to have their shares distributed. For those members who did not desire to have their shares distributed, Yee requested that they be allowed to leave their interest in the Club and to continue the Club as a partnership.
Nancy Choi, Judy Choi, Betty Choi, and Tony Choi all entered their appearances in the case and waived service of process. A special process server, Brent Burmeister, was appointed to serve Yee's petition on Appellants. He served Sammy Choi, Seto Choi, and their children, Simon Choi, and Sherman Choi, at their residence on March 13, 2019, by leaving the summonses and copies of the petition with Sherman Choi, who was over the age of 15 years old. The summonses advised them:
You are summoned to appear before this court and to file your pleading to this petition, copy of which is attached, and to serve a copy of your pleading upon the attorney for the Plaintiff/Petitioner
at the above address all within 30 days after service of this summons upon you, exclusive of the day of service. If you fail to file your pleading, judgment by default will be taken against you for the relief demanded in this action.
Burmeister attempted to serve Wing Choi at his residence several times between May and July 2019. Even though Burmeister could see that someone was home, no one ever answered the door. During one of Burmeister's attempts to serve Wing Choi, a man drove up to the residence and motioned for Burmeister to come to the car. When Burmeister told the man that he was "an officer with the courts" who serves process and was trying to find Wing Choi, the man told Burmeister, "Do not beat on that door again," before speeding away. Yee next attempted service on Wing Choi by certified mail, but the mail notice was returned unclaimed. The court then ordered that Wing Choi be served by publication. The publication notice, which was published four times between March 12, 2020, and April 2, 2020, advised Wing Choi:
You are further notified that, unless you file an answer or other pleading or shall otherwise appear and defend against the aforesaid petition on the 1ST DAY OF MAY, 2020 at 9:30 AM at the JACKSON COUNTY COURTHOUSE, 415 E. 12TH STREET, 9TH FLOOR, KANSAS CITY, MO 64106, judgment by default will be rendered against you.
None of the Appellants filed an answer or took any action in the litigation.
On June 8, 2020, Yee signed a stipulation with Nancy Choi, Tony Choi, Betty Choi, and Judy Choi. The parties agreed that, as of June 30, 2018, the value of the Club's TD Ameritrade account was $1,797,321.24. The parties agreed that the Estate should receive a distribution of 21.88% of the TD Ameritrade account and that Nancy Choi should receive a distribution of 30.21% of the account.
On June 12, 2020, the court held an evidentiary hearing on Yee's petition. On June 23, 2020, the court entered its judgment. In its judgment, the court found that Appellants were served, filed no responsive pleading, and were in default. The court granted judgment by default as to Appellants and judgment by stipulation as to the non-defaulting defendants, Nancy Choi, Tony Choi, Betty Choi, and Judy Choi, and as to the petitioner, Yee.
The court also granted judgment by default against Simon Choi and Sherman Choi. They did not ask to set aside the default judgment and do not appeal.
The court noted that, pursuant to the stipulation, the parties agreed to seek relief under the provisions of Count III's alternative proposal to distribute the assets of the Club to the parties of the partnership, and Yee agreed to dismiss without prejudice Count I, his request for an accounting, and Count II, his request to dissolve the Club. Based on the parties’ stipulation, the allegations in the petition, and the evidence presented at trial, the court determined the percentage of ownership interest of each of Club's members and the deceased members’ heirs. The court ordered that 21.87% of the TD Ameritrade account be distributed to the Estate, 30.20% of the account be distributed to Nancy Choi, and the rest of the account remain in the name of the Club.
Over two months later, on September 3, 2020, Appellants filed a motion to set aside the default judgment pursuant to Rule 74.05(d). In their motion, Appellants argued that there was good cause for setting aside the default judgment. Specifically, they asserted that "Nancy Choi and Daniel Yee have fraudulently convinced this Court to have shares of the family membership distributed both to them and to the Estate." Appellants alleged that Yee misrepresented the nature of the Club as a Missouri partnership, "has offered no legal evidence or documentation to support his position, and the only Defendants who have consented to the distributions directly stand to benefit from such." In a footnote, Appellants stated that service was obtained on Sammy Choi and Seto Choi while they were awaiting a decision from this court in a separate discovery of assets proceeding involving the Estate. Appellants alleged that, because "the two cases are related, and neither speaks English as their primary language, they were unaware that the cases would proceed independent of each other and that an Answer was required."
Appellants attached affidavits to their sur-reply to their motion to set aside the default judgment. In their affidavits, Sammy Choi and Seto Choi averred that, when they "received a copy of the paperwork from the Sheriff in this case," they believed that Yee and Nancy Choi "made up the story, and that it may be a scam." They alleged that TD Ameritrade had told Sammy Choi that only the four surviving members of the Club, Sammy Choi, Seto Choi, Wing Choi, and Nancy Choi, could do business for the Club and that the four deceased members "lost their standing in the [C]lub once they were deceased." Therefore, Sammy Choi and Seto Choi did not believe Yee "could do anything with" the Club. They noted that, after Billy Choi died in 2011 and Thic Lem Toy died in 2016, Nancy Choi and Daniel Yee asked TD Ameritrade to make a distribution from the Club's account, but TD Ameritrade denied their request.
In his affidavit, Wing Choi averred that English is his second language and that he did not receive a copy of the "paperwork" from the court. He alleged that Yee and the Estate attorneys "made up the story." Wing Choi alleged that, based on what TD Ameritrade told Sammy Choi, he did not believe that Yee "could do anything with" the Club. All three Appellants averred that they were "not familiar with the American Court system and did not understand that [they] needed to file a response, or the consequences if [they] did not file a response." Additionally, all three Appellants alleged that they did not intentionally mean to delay the matter by not responding to the documents sooner.
An evidentiary hearing was held. Sammy Choi testified that, after the process server served the petition by giving a copy of it to his college-aged son, he did not think the lawsuit was real because it "[s]eemed to be not like a lawsuit." Sammy Choi testified that he did not understand that he needed to file a response to this petition "[b]ecause this whole thing is kind of like a scam. Nothing to believe [sic] is true."
Sammy Choi testified that he hired counsel in this case only after TD Ameritrade told him that he needed to do so because of the entry of the default judgment. Before the default judgment was entered, he did not respond to the petition because he did not believe that Yee, on behalf of the Estate, or Nancy Choi could "get" anything out of the Club's TD Ameritrade account. Based on what TD Ameritrade told him, he believed that the interest his father, Thic Lem Toy, held in the Club was extinguished on his death and did not pass on to the Estate. Sammy Choi testified that he believed Yee had "ma[d]e up phony documents."
Sammy Choi admitted that he had been served with papers before in the Estate's discovery of assets action in February 2017 and that he understood, with respect to that lawsuit, that he needed to hire an attorney to represent him. He also acknowledged that, before he was served in this lawsuit concerning the Club, he had received letters discussing the Club and this potential lawsuit from Yee's counsel in March and May 2018. In fact, Sammy Choi acknowledged that he had "received plenty of correspondence that explained to [him] what was going to happen before it happened."
Yee's counsel originally sent the letters to Daniel Wheeler, the counsel who represented Sammy Choi in the discovery of assets action. Wheeler forwarded the letters to Sammy and Seto Choi, who did not retain him to represent them in this case.
In the March 2018 letter, Yee's counsel included a memorandum explaining what he believed were the interests of the Club members and his proposal for distributing interests to living members and the deceased members’ heirs. In that letter, Yee's counsel stated that he intended to file a petition to wind up the Club if the parties could not reach an agreement. The second letter, sent to Appellants in May 2018, contained a copy of the petition that Yee eventually filed and had served on Appellants. In the second letter, Yee's counsel specifically advised Appellants that he was planning to file the petition, asked Appellants to sign an entry of appearance, informed them that if they did not execute and return the entry of appearance that they would be served by the sheriff, and suggested that they seek legal advice.
Sammy Choi testified that he and the other Appellants "ignored [the letters]. Because we cannot respond to them. Every time you respond to them, they say you need a lawyer. When you get the lawyer, it costs you money and time," and it is "stressful to deal with them." He continued, "Every time you meet somebody, they say you need a lawyer. Same thing we tried to ask them about my father's estate.... Every time they ask you, you need a lawyer to represent you."
Following Sammy Choi's testimony, Seto Choi testified that her testimony would be "[a]ll the same" as her husband's testimony. Appellants’ counsel represented that Wing Choi would testify "substantially the same way" as Sammy Choi testified.
After the hearing, the court entered its judgment denying Appellants’ motion to set aside the default judgment. In its judgment, the court found that the summons served on Appellants advised them that if they failed to file a responsive pleading, judgment by default would be taken against them; that Appellants took no action to preserve their rights in this litigation before the default judgment was entered; and that Sammy Choi and Seto Choi had been served with another lawsuit related to the Estate, i.e. , the discovery of assets action, before being served with this one and had retained counsel to represent their interests in that suit. The court further found that Appellants had not stated sufficient facts to show that their failure to answer or otherwise participate in this litigation was due to a good faith mistake or negligence. The court found that, instead, Appellants’ failure to participate in the litigation was "due to their beliefs that the allegations in the Petition were ‘made up’ and as such, they chose to ignore the pending litigation." The court concluded that, under Missouri law, Appellants did not establish good cause to set aside the default judgment and denied their motion. Appellants appeal.
STANDARD OF REVIEW
We review the circuit court's denial of a Rule 74.05(d) motion to set aside a default judgment for an abuse of discretion. Vogel v. Schoenberg , 620 S.W.3d 106, 111 (Mo. App. 2021). An abuse of discretion occurs when the "ruling is clearly against the logic of the circumstances then before the trial court and is so unreasonable and arbitrary that the ruling shocks the sense of justice and indicates a lack of careful consideration." Id. (citation omitted). Because public policy favors resolving cases on the merits, we accord more deference the circuit court's decision to set aside a default judgment and "are more likely to reverse a judgment denying a motion to set aside a default judgment than one granting relief." Id. We defer to the circuit court's credibility determinations and the weight it gives the evidence. Hanlon v. Legends Hosp., LLC , 568 S.W.3d 528, 532 (Mo. App. 2019).
ANALYSIS
In their two points on appeal, Appellants contend the circuit court abused its discretion in denying their motion to set aside the default judgment. They assert that they presented sufficient evidence of good cause to set aside the judgment because their failure to file answers was due to negligence, which resulted from their unfamiliarity with the legal system and their mistaken belief concerning the validity of the summons and petition.
In Point I, Appellants argue that the court abused its discretion in denying the motion to set aside the default judgment against Sammy Choi and Seto Choi, and in Point II, they assert that the court abused its discretion in denying the motion to set aside the default judgment against Wing Choi. Because their arguments are substantially similar, we will address the points together.
Rule 74.05(d) provides that a default judgment may be set aside "[u]pon motion stating facts constituting a meritorious defense and for good cause shown," as long as the motion to set aside is filed "within a reasonable time not to exceed one year after the entry of the default judgment." As the party seeking to set aside the default judgment, Appellants had the burden to prove both a meritorious defense and good cause. Vogel , 620 S.W.3d at 111. "The failure to prove either element requires denial of a motion to set aside a default judgment." Id.
The circuit court found that Appellants failed to prove good cause. Rule 74.05(d) states that "good cause" "includes a mistake or conduct that is not intentionally or recklessly designed to impede the judicial process." We "liberally interpret" the phrase "good cause" "to include good-faith mistakes, and even negligence, in failing to timely answer in order to prevent a manifest injustice or to avoid a threatened one." Vogel , 620 S.W.3d at 111 (citations and internal quotation marks omitted). Negligence "occurs if a party's inadvertence, incompetence, unskillfulness or failure to take precautions precludes him from adequately coping with a possible or probable future emergency." Id. at 112 (citations and internal quotation marks omitted).
Recklessness, however, does not constitute good cause for setting aside a default judgment. Id. at 111. Recklessness "includes making a conscious choice of a course of action, either with knowledge of the serious danger to others involved in it or with knowledge of the facts which would disclose the danger to a reasonable [person]." Id. at 111-12 (citations and internal quotation marks omitted). Recklessness includes "[i]ntentional indifference, meaning that an individual does not care about the consequences of his or her actions"; essentially, it "involves a deliberate choice to risk the possibility of a default judgment." Id. at 112 (citations and internal quotation marks omitted).
Appellants contend that they did not understand that they had to file an answer or take any action in the lawsuit because they are unfamiliar with the legal system, English is not their primary language, and the pendency of the Estate's discovery of assets suit on appeal at the time they were served in this case caused them to think that they did not need to file an answer. In its judgment, the circuit court found that the summons that was served on all three Appellants specifically advised them they had to respond to the petition within 30 days and that, if they failed to file a responsive pleading, "judgment by default will be taken against you for the relief demanded in this action." The court also found that Sammy Choi and Seto Choi had been served before in the Estate's prior discovery of assets action and had retained counsel to represent them in that case. Implicit in these findings is that the court did not find credible Appellants’ contention that they were unfamiliar with the legal system and did not understand, for whatever reason, that they had to respond to this lawsuit or risk default. We defer to the circuit court's credibility determinations, both explicit and implicit. See Am. Eagle Waste Indus., LLC v. St. Louis Cty., Mo. , 463 S.W.3d 11, 27 (Mo. App. 2015) (citing In re Marriage of Mapes , 848 S.W.2d 634, 638 (Mo. App. 1993), for the proposition that the court's judgment "can reveal the court's implicit credibility determinations" to which appellate courts must defer).
Appellants next contend that their failure to respond to the petition or take any action in the case until after the default judgment was entered was because they mistakenly believed that the summons and petition were "not real," "phony," and a "scam." They argue that the manner in which they were served led to this belief. All three Appellants were properly served, however. Sammy Choi and Seto Choi make much of the fact that their summons and petition were left with their college-aged son when they were not home, but that is an acceptable method of service under Rule 54.13(b)(1). Likewise, although Wing Choi complains about "the lack of personal service on him," the record indicates that the reason he was not personally served was because he purposely evaded both personal service and service by mail, leaving service by publication as the only way to obtain service on him.
The address at which Yee attempted personal service and service by mail on Wing Choi is the same address listed for Wing Choi in the notice of appeal.
Sammy Choi and Seto Choi also assert that Burmeister allegedly did not tell their son when he served him that they needed to hire an attorney. Sammy Choi testified that, when he was served process in the Estate's discovery of assets suit, the process server told him that he needed to get an attorney, but that in this case, Burmeister "just left a copy" of the papers with his son and "didn't leave any instructions." Burmeister testified that, for the past 30 years that he has been a process server, he "always explain[s]" what the papers are and tells the person he is serving "that this is something they need to talk to their attorney about." A reasonable inference from Burmeister's testimony is that he told Sherman Choi the same thing when he served him the summonses and petition in this case.
Rule 54.13 does not require process servers to tell the people they are serving that they should obtain the advice of counsel.
Appellants further contend that they mistakenly believed that the summons and petition were a scam because TD Ameritrade had denied Nancy Choi's and Yee's request for distributions in the past, and TD Ameritrade had told Sammy Choi that a member's interest in the Club was extinguished upon the member's death. Appellants, therefore, did not think that the Estate or Nancy Choi could "get" anything out of the TD Ameritrade account.
Appellants’ disagreement with the legal basis for Yee's petition based on TD Ameritrade's past actions or what TD Ameritrade told Sammy Choi does not explain why Appellants believed that the Jackson County Circuit Court summons and the court-filed petition were a scam and could be ignored. Appellants had received letters from Yee's counsel in March and May 2018 notifying them about this dispute, the Estate's position, and the fact that the Estate planned to file a petition in the circuit court to resolve the dispute if the parties could not reach an agreement. Appellants had even received a copy of the same petition that was later served on them. Sammy Choi's testimony was that he chose to ignore the letters from Yee's counsel advising him of the dispute and the potential for a lawsuit because he did not want to spend the time or money to hire a lawyer. A reasonable inference from Sammy Choi's testimony is that, because Appellants did not want to incur the expense of hiring counsel and did not agree with the legal basis for Yee's petition, Appellants simply chose to also ignore the summons and petition.
As the circuit court indicated to the parties during the trial, Appellants’ reluctance to hire counsel to represent them in this case did not excuse them of their duty to respond to the summons and petition. Appellants’ conscious decision to ignore the summons and petition was made with "knowledge of the facts which would disclose the danger to a reasonable [person]." Vogel , 620 S.W.3d at 111-12 (citations and internal quotation marks omitted). Instead of contacting Yee's counsel or the circuit court to inquire about the validity of the summons and petition or filing a responsive pleading disputing the merits of the claims in the petition, Appellants made the "deliberate choice to risk the possibility of a default judgment" by ignoring the summons and petition altogether until after the default judgment was entered. Id. at 112 (internal quotation marks and citations omitted). "Their conduct consisted of a conscious choice to ignore the litigation and, as such, amounted to reckless behavior." Dozier v. Dozier , 222 S.W.3d 308, 314 (Mo. App. 2007) (citation omitted).
Appellants’ conscious choice to ignore the summons and petition is what distinguishes this case from Turner v. Gateway Bobcat of Missouri, Inc. , 450 S.W.3d 444 (Mo. App. 2014), Saturn of Tiffany Springs v. McDaris , 331 S.W.3d 704 (Mo. App. 2011), and J.E. Scheidegger Co. v. Manon , 149 S.W.3d 499 (Mo. App. 2004), cases Appellants cite to argue that good cause exists here. In Turner , good cause existed where the defendant's failure to respond was due to the fact that the summons and petition were inadvertently commingled with other papers and misplaced. 450 S.W.3d at 448-49. In Saturn of Tiffany Springs , good cause existed where the parties had two other lawsuits pending regarding the same subject matter, the parties were in frequent contact discussing an agreement to consolidate all three lawsuits and, despite knowing that defendant was represented by counsel, plaintiff chose not to provide defendant's counsel notice of the motion for default judgment. 331 S.W.3d at 710. In J.E. Scheidegger Co ., good cause existed where defendants took action in their defense by moving to dismiss the lawsuit within the 30-day period before default, answering discovery requests, moving for summary judgment, and appearing on the day of trial ready to proceed. 149 S.W.3d at 504-05. Unlike in those cases, Appellants here were aware of the summons and petition and deliberately chose to take no action whatsoever until after the default judgment was entered. The record supports the circuit court's determination that Appellants did not state sufficient facts to show that their failure to answer or otherwise respond was due to a good faith mistake or negligence. Therefore, the court did not abuse its discretion in finding that Appellants failed to demonstrate good cause for setting aside the default judgment. Points I and II are denied.
In their briefs on appeal, Appellants state several other reasons why they purportedly believed the summons and petition were a scam, including: (1) "Yee failed to obtain the account involved in the Discovery Action"; (2) "Yee failed to obtain the contingency fee he sought in the Discovery Action"; (3) there were "large unexplained delay[s]" between the time the letters were sent to Wheeler, the petition for accounting was filed, Appellants were served, and the default judgment was entered; and (4) Seto's name was misspelled as "Zeto" on the letters from Yee's counsel and on the summons and petition. Appellants did not assert any of these reasons in their affidavits or in Sammy Choi's trial testimony, and they argue them to support their claim of good cause for the first time on appeal. "We will not convict a trial court of error on an issue that it had no chance to decide." Holmes v. Kansas City Pub. Sch. Dist. , 571 S.W.3d 602, 613 (Mo. App. 2018) (citation omitted).
CONCLUSION
The judgment is affirmed.
All Concur.