Whenever a defendant fails to attend a court hearing after being served, a court may issue a default judgment, favoring the plaintiff. It is the duty of those who have been served to defend their case and appear in court. As the digital age becomes more prevalent, serving someone in person is becoming less common. But still, from time to time, mistakes and wrongdoings occur with service.

The defense can use Missouri Rule 74.04 and Rule 74.05 to file a motion to set aside default judgment. Hazelcrest I & II Condominium Association v. 7520 Hazel Crest LLC, 2025 ED 112810, concerns a dispute regarding a property assessment where 7250 Hazel Crest LLC (“Hazel Crest”) attempted to use the aforementioned rules to argue that it was not served with process as a defense to a default judgment.

Background

Hazel Crest gained title to a property subject to a Declaration for Hazelcrest I & II Condominium. Under the Declaration, Hazelcrest I & II Condominium Association (“the Association”) is authorized to collect assessments against the properties. Hazel Crest failed to pay $1,400 in assessments. In 2023, the Association filed a suit asserting that Hazel Crest committed a breach of contract for the unpaid assessments, as well as unjust enrichment and judicial foreclosure. The Association served Hazel Crest through its registered agent on September 9, 2023. In October, Hazel Crest failed to appear for a hearing, leading the circuit court to enter a default judgment in favor of the Association.

In November, the court granted the Association its writ for real estate levy, and the Association proceeded to sell the property to satisfy the default judgment with the proceeds. The St. Louis County Sheriff scheduled a sale in early February 2024, and the property was sold in April for $38,000. On May 6, 2024, Hazel Crest filed a Motion to Set Aside Default Judgment Pursuant to Rule 74.06. Hazel Crest claimed that it only learned of the sale of its property and of the Association’s pending lawsuit a day after the property was sold, as the registered agent failed to notify Hazel Crest of the lawsuit after service occurred. On June 10, 2024, the circuit court granted Hazel Crest’s motion to set aside the default judgment. The Association appealed the circuit court’s ruling.

The issues before the Court of Appeals were whether the circuit court erred in setting aside the default judgment because (a) Hazel Crest failed to present evidence as required by Rule 74.05(d); (b) Hazel Crest failed to present evidence in a timely manner as required by rule 74.05(d) and 74.06(c); (c) Hazel crest failed to provide a meritorious defense to all the claims raised; and (d) Hazel Crest failed to present sufficient evidence in support of relief as required by rule 74.06.  The Court of Appeals only addressed the first issue of whether Hazel Crest failed to present evidence as required by Rule 74.05(d).

Missouri Rule 74.05 concerns the entry of a default judgment. Section (d) states that a default judgment may be set aside “upon motion stating facts constituting a meritorious defense and for good cause shown, an interlocutory order of default or a default judgment may be set aside.” Good Cause pursuant to the rule includes a mistake or conduct that is not intentionally or recklessly designed to impede the judicial process. The Motion has to be filed within a reasonable period of time, not to exceed one year after the entry of the default judgment. Per Xtra Lease LLC v. Pigeon Freight Services, Inc., 662 S.W. 3d 309, 313 (Mo. App. E.D. 2023), and the defendant has the burden to plead and prove the necessary facts to set aside the default judgment. Further, failure to “establish either the ’good cause’ or ‘meritorious defense’ elements of a motion pursuant to Rule 74.05(d) is fatal”. Hanlon v. Legends Hosp., LLC, 568 S.W.3d 528, 532 (Mo. E.D. 2019).  The Court

The Court determined that “good cause” under Rule 74.05(d) included whether a “mistake or conduct that is not intentional or recklessly designed to impede the judicial process” given the totality of the circumstances. Liora Tech, Inc. v. United Med Network, Inc., 662 S.W. 3d 334, 337 (Mo. App. E.D. 2023). Further, quoting the Missouri Supreme Court, the Court stated “[g]ood cause should be given a liberal interpretation and includes good faith mistakes and even negligence in failing to file a timely answer.” In Re Marriage of Callahan, 277 S.W. 643, 645 (Mo. Banc 2009).

Furthermore, the Court determined that “recklessness” under Rule 74.05(d) includes making a conscious choice with the knowledge of the serious danger to others involved or with knowledge of facts that would disclose danger to a reasonable person. See, Vogel v. Schoenberg, 620 S.W.3d 106, 111 (Mo. App. W.D. 2021).

At the hearing, Hazel Crest provided no reasoning behind why or how the registered agent neglected to inform it. On appeal, Hazel Crest admitted that service was proper but that the registered agent failed to inform them of the lawsuit.

The Court pointed out that Wetzel v. Root Insurance Company, 792 S.W.3d 469 (Mo. App. W.D. 2024), identified a number of cases finding “good cause” where the party had failed to meet its burden. The Wetzel Court noted that “notice to an agent is notice to the principal.” Wetzel at 477.

In this case, there was no good-faith mistake or recklessness. Hazel Crest failed to provide any reason for neglect on behalf of the registered agent, e.g., failed to provide the agent’s role in the process, what the agent did regarding the summons, and why the summons was not forwarded by the agent to it. Hazel Crest had the burden to provide necessary facts to set aside the default judgment, which it failed to do. Thus, the Court found that the circuit court abused its discretion in finding good cause to set aside the default judgment.

About the Author

Sanjay focuses his practice on various general defense litigation matters. Sanjay has effectively litigated cases in Missouri as well as in various federal and appellate courts. He is an experienced attorney with over 20 years of legal experience in litigation, appeals, licensing, commercial transactions, due diligence, client counseling, patentability, freedom to operate, cross-border transactions, M&A, and technology commercialization. Click here to read Sanjay’s full attorney bio.