Full Opinion

IN THE COURT OF APPEALS OF THE STATE OF IDAHO Docket No. 53401 ALBERT E. WOLSKE, ) ) Opinion Filed: November 13, 2026 Plaintiff-Counterclaimant- ) Respondent, ) Melanie Gagnepain, Clerk ) v. ) ) WRIGHT DIESEL, L.L.C., ) ) Defendant-Counterdefendant- ) Appellant. ) ) Appeal from the District Court of the Third Judicial District, State of Idaho, Gem County. Hon. Brent L. Whiting, District Judge. Amended default judgment, vacated and case remanded. Collins Law, PLLC; Brindee Collins, Boise, for appellant. Elam & Burke, P.A.; Joshua D. Johnson, Boise, for respondent. ________________________________________________ FLEMING, Judge Wright Diesel, LLC appeals from the district court’s amended default judgment. For the reasons set forth below, we vacate the amended judgment and remand the case for further proceedings. I. FACTUAL AND PROCEDURAL BACKGROUND In 2020, Albert E. Wolske hired Wright Diesel, an automotive repair shop, to perform certain repairs on Wolske’s vehicle. Wolske delivered his vehicle, along with an engine to be installed in the vehicle, to Wright Diesel. However, Wolske became dissatisfied with the work performed and the timeliness of the repairs. On September 25, 2023, Wolske filed a complaint against Wright Diesel asserting claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment. At the time the complaint was filed, Wolske 1 asserted he had not been provided with information on the status of the repairs and that the vehicle and engine had not been returned to him. The complaint was served on Wright Diesel on September 30, 2023. An answer was due to be served within twenty-one days pursuant to Idaho Rule of Civil Procedure 12(a)(1)(A). On October 24, 2023, Wright Diesel filed a notice of appearance. On December 19, 2023, Wolske filed a three-day notice of intent to take default for Wright Diesel’s failure to file a responsive pleading. Wolske then filed his application for entry of default on January 10, 2024, in which he sought a default judgment in the amount of $51,799.74. The following day, Wright Diesel filed its answer and countercomplaint denying the allegations in Wolske’s complaint and asserting a counterclaim for collection on an open account with a balance owed by Wolske for repairs that had been completed. On January 31, 2024, the district court entered an order of default against Wright Diesel, finding that the time allowed to appear in the action had elapsed without any response by Wright Diesel. However, the district court did not enter a default judgment at that time and instead scheduled an evidentiary hearing on damages. On March 8, 2024, three days before the evidentiary hearing, Wright Diesel filed a motion to set aside the entry of default pursuant to I.R.C.P. 55(c) and scheduled a hearing on the motion for April 1, 2024. Wright Diesel argued it was improper to enter the order of default after an answer and counterclaim had been filed. At the evidentiary hearing held on March 11, 2024, the district court acknowledged Wright Diesel’s recently filed motion to set aside the notice of default and noted that it had not yet ruled on the motion, but would move forward with the evidentiary hearing and “hold off” on making its decision on the default judgment until after argument was heard on the motion. The district court then proceeded with the evidentiary hearing, at which Wolske testified. A hearing on Wright Diesel’s motion to set aside the entry of default was held on April 1, 2024; the district court denied the motion based on its finding that no good cause was shown for the late filing. However, the district court did not strike Wright Diesel’s answer and counterclaim. The district court subsequently entered a default judgment for $27,473.16 on August 15, 2024. The district court awarded less than the requested amount of damages, reasoning that there was insufficient evidence presented to support the requested amount and that Wolske lacked credibility regarding the value of the vehicle and the parts added to the engine. 2 Wright Diesel filed an appeal on September 26, 2024, which was conditionally dismissed due to the lack of a final judgment on all claims as the district court had not resolved Wright Diesel’s counterclaim. On August 29, 2025, Wright Diesel filed a motion for relief from the default judgment and requested that the district court enter an amended judgment which could be properly appealed. An amended default judgment was entered on September 18, 2025, in which the district court dismissed, with prejudice, Wright Diesel’s counterclaim. Wright Diesel appeals. II. ANALYSIS A. Motion to Set Aside Entry of Default Wright Diesel argues that the district court erred in denying its I.R.C.P. 55(c) motion to set aside the entry of default.1 A trial court’s refusal to set aside entry of default is reviewed under an abuse of discretion standard. Dorion v. Keane, 153 Idaho 371, 373, 283 P.3d 118, 120 (Ct. App. 2012). When a trial court’s discretionary decision is reviewed on appeal, the appellate court conducts a multi-tiered inquiry to determine whether the trial court correctly perceived the issue as one of discretion; acted within the boundaries of such discretion and consistently with any legal standards applicable to the specific choices before it; and reached its decision by an exercise of reason. Sun Valley Shopping Ctr., Inc. v. Idaho Power Co., 119 Idaho 87, 94, 803 P.2d 993, 1000 (1991). The trial court’s decision will not be overturned on appeal absent clear abuse of that discretion. Clear Springs Trout Co. v. Anthony, 123 Idaho 141, 143, 845 P.2d 559, 561 (1992). Where the trial court makes factual findings that are not clearly erroneous; applies correct criteria pursuant to the applicable legal standards to those facts; and makes a logical conclusion, while keeping in mind the policy favoring relief in doubtful cases and resolution on the merits, the court will be deemed to have acted within its discretion. Dorion, 153 Idaho at 373-74, 283 P.3d at 120-21. The legal standard for a motion to set aside entry of default under I.R.C.P. 55(c) is for 1 Wolske argues that Idaho Rule of Civil Procedure 60(b), which governs when a court may set aside a final judgment, applies to Wright Diesel’s appeal and requires a higher standard of cause for a court to grant relief. Wolske also contends that Wright Diesel’s motion for relief was untimely under I.R.C.P. 60(b). However, Wright Diesel moved to set aside the entry of default pursuant to I.R.C.P. 55(c), prior to entry of the default judgment. Therefore, the I.R.C.P. 55(c) standard of good cause governs, rather than the more rigorous I.R.C.P. 60(b) standard. See Pinkham v. Plate, 174 Idaho 178, 185-86, 552 P.3d 605, 612-13 (2024), overruled on other grounds by Doe I v. Doe (2024-23), 175 Idaho 412, 427-28, 556 P.3d 409, 424-25 (2025); Dorion v. Keane, 153 Idaho 371, 373, 283 P.3d 118, 120 (Ct. App. 2012). 3 good cause shown. The primary considerations for determining whether good cause has been shown are whether the default was willful, whether setting aside the default would prejudice the opponent, and whether a meritorious defense has been presented. Dorion, 153 Idaho at 374, 283 P.3d at 121. The meritorious defense requirement for setting aside an entry of default recognizes that it would be an idle exercise and a waste of judicial resources for a court to set aside the entry of default if there is no genuine justiciable controversy. Id. A party may satisfy the meritorious defense requirement by pleading facts which, if established, would constitute a defense to the action. Id. The party moving to set aside a default is not required to present evidence in order to have the default set aside. Id. The meritorious defense requirement is a pleading requirement, not a burden of proof. Id. However, factual details must be pled with particularity. Id. Where no meritorious defense is shown in support of a motion to set aside a default, a court does not abuse its discretion in denying the motion. Bach v. Miller, 148 Idaho 549, 553, 224 P.3d 1138, 1142 (2010). Idaho Rule of Civil Procedure 12(a)(1)(A) provides that “a defendant must serve an answer within 21 days after being served with the summons and complaint.” It is undisputed that Wright Diesel failed to file a timely responsive pleading or request an extension to do so. Wright Diesel filed its answer and counterclaim one month after Wolske’s three-day notice of intent to take default was filed, and just one day after Wolske applied for entry of default. Wright Diesel argues that the district court erred by entering default because an answer and countercomplaint was filed prior to the district court’s order granting default. Wright Diesel contends that I.R.C.P. 55(a)(1) and 55(a)(2)(A), when read together, require that two conditions must be met before a court may enter a default against a party: (1) that the time allowed for a party to plead or otherwise defend has passed; and (2) that the party has failed to plead or otherwise defend against a suit. Wright Diesel contends the rules allow for a defendant to file a responsive pleading any time prior to the entry of default, and that the filing of a responsive pleading, even if untimely, prohibits the entry of default. In support of its argument, Wright Diesel cites Kerney v. Hatfield, 30 Idaho 90, 162 P. 1077 (1917). Wright Diesel, purportedly quoting Kerney, claims that Kerney states, “a default for failure to plead cannot be entered where the pleading, though out of time, is on file at the time the 4 default is sought to be entered.” However, no such quote exists in that case. In Kerney, the Idaho Supreme Court stated: It is said in 23 Cyc. p. 750: When an answer or other pleading of a defendant, raising an issue of law or fact, is properly on file in the case, no judgment by default can be entered against him; to authorize a default, the answer or other pleading must be disposed of by a motion, demurrer, or in some other manner. Kerney, 30 Idaho at 91-92, 162 P. at 1078-79. The Court concluded it was error for the district court to enter the default order while an answer was on file. Id. at 92, 162 P. at 1079. Wolske argues that Kerney is distinguishable on the facts because the appellant in Kerney filed her answer prior to the respondent seeking default. Kerney, 30 Idaho at 91, 162 P. at 1078. Additionally, the respondent sought a default on the day of the trial, without giving prior notice to the appellant. Id. Wolske notes that Kerney was published before the effective date of the current Idaho Rules of Civil Procedure. Wolske also argues that if a litigant can cure its default position by simply filing an answer after it has been notified and an application for default has been filed, then the timeliness requirements set forth in the Idaho Rules of Civil Procedure would become meaningless. We agree. We reject Wright Diesel’s argument that the mere filing of an answer cures a default and that in all cases where an answer is filed, it is improper for a trial court to enter default. We agree with Wolske that Kerney is distinguishable for the reasons Wolske sets forth. Here, Wright Diesel did not file a responsive pleading until one month after Wolske gave notice of his intent to seek default and one day after Wolske applied for the entry of default. Although we conclude Kearney is inapplicable here, that conclusion does not demonstrate that the district court properly entered default against Wright Diesel. As noted, the legal standard for a motion to set aside entry of default under I.R.C.P. 55(c) is for good cause shown, and the primary considerations for determining whether good cause has been shown are whether the default was willful, whether setting aside the default would prejudice the opponent, and whether a meritorious defense has been presented. Dorion, 153 Idaho at 374, 283 P.3d at 121. At the hearing on the motion to set aside the entry of default, Wright Diesel argued there was a lack of prejudice to Wolske if the motion were granted and the delay of eighty-one days in filing its responsive pleading was a “relatively short time frame for a dispute that’s been going on for nearly four years.” Wright Diesel also argued that “the answer on record before the entry of default demonstrates that we have a meritorious defense.” In support of the motion, counsel for 5 Wright Diesel stated that she was a solo practitioner and was having staffing problems. She acknowledged that any delay in filing Wright Diesel’s answer was her responsibility and requested that the district court allow the case to proceed on its merits. When the district court denied Wright Diesel’s motion to set aside the entry of default, it reasoned that Wright Diesel’s answer was filed eighty-one days after it was due and several weeks after Wolske filed his notice of intent to take default. The district court erroneously stated that Wright Diesel had failed to file its notice of appearance until after the three-day notice and that “counsel didn’t even appear until January 10th.” The record reflects that a notice of appearance was filed on October 24, 2023. The district court further noted that Wright Diesel filed its answer and counterclaim after the motion for entry of default. Importantly, the district court acknowledged that Wright Diesel’s answer and the allegations made therein “satisfied the meritorious defense aspect” of whether to set aside the entry of default. The district court, however, concluded that the untimeliness of Wright Diesel’s responsive pleading was dispositive of whether good cause existed to set aside the default and stated that: [Wright Diesel’s counsel] indicated there were some issues with scheduling and staff, but I believe [Wolske’s] correct. That doesn’t count as good cause, and so while there may be something here, the fact that the defendant waited without any known reason in answering this complaint fails to satisfy the requirement of showing of good cause, and so I’m going to have to deny the motion to set aside the default and the Court can proceed with entering a judgment. Given the circumstances here, we conclude that the district court abused its discretion when denying Wright Diesel’s motion to set aside the entry of default. The district court made clearly erroneous factual findings and did not apply the correct criteria to the applicable legal standard. The district court’s factual finding regarding the notice of appearance was clearly erroneous, and the court considered this erroneous finding when making its decision to deny the motion to set aside the entry of default. This is evidenced by the district court’s statement that Wright Diesel’s “counsel didn’t even appear until January 10th,” after Wolske filed his notice of intent to take default. Furthermore, the district court’s recognition of Wright Diesel’s meritorious defense severely undermines the decision to resolve the case by default rather than on the merits. The district court abused its discretion by treating the untimeliness of Wright Diesel’s answer as dispositive of whether the subsequently entered default should be set aside. Furthermore, although the district court found that a meritorious defense had been presented, the court did not properly 6 reach its lack of good cause finding because it failed to fully analyze the other primary considerations of willfulness and prejudice as required. Although Wright Diesel’s reasons for the untimely filing of its responsive pleading does not justify setting aside the default, the collective circumstances nevertheless demonstrate good cause. Wright Diesel had appeared and filed an answer before default was entered, and then promptly filed a motion to set aside the default once it was entered. Furthermore, a meritorious defense was recognized by the district court. Given how long this dispute has lasted between the parties, setting aside the default does not significantly prejudice Wolske. Finally, we consider Idaho’s policy that judgments by default are not favored and that a trial court should grant relief in doubtful cases and decide the case on the merits. We conclude the district court erred by refusing to set aside the entry of default. The circumstances in this case weigh in favor of setting aside the default. Accordingly, we vacate the default judgment and remand the case for further proceedings consistent with this opinion. B. Attorney Fees Both parties seek attorney fees pursuant to Idaho Code § 12-120(3), which allows recovery of attorney fees by the prevailing party in any commercial transaction. The parties do not dispute that this case involves a commercial transaction. Wright Diesel is the prevailing party on appeal, however, “it remains to be seen [who] will be the prevailing party in the action, and, therefore, entitled to attorney fees under I.C. § 12-120(3).” Mackay v. Four Rivers Packing Co., 145 Idaho 408, 415, 179 P.3d 1064, 1071 (2008). Therefore, we decline to award attorney fees. The district court, upon final resolution of the case, may consider fees incurred on appeal when it makes a determination as to the prevailing party. Id. IV. CONCLUSION The district court abused its discretion when it denied Wright Diesel’s motion to set aside the entry of default. We vacate the default judgment and remand the case for further proceedings consistent with this opinion. Costs on appeal are awarded to Wright Diesel. Wolske’s request for costs on appeal and attorney fees pursuant to I.C. § 12-121 is denied. Chief Judge TRIBE and Judge LORELLO, CONCUR. 7