HARRY MENKE v. JAI GANESH LAXMI LLC LIBERTY LODGE (2026)

Jai Ganesh Laxmi, LLC, d/b/a Liberty Lodge (“Appellant”) appeals from a judgment of the Circuit Court of Taney County, Missouri (“trial court”), denying Appellant's Motion to Set Aside Default Judgment (“the Motion”) after the trial court entered a default judgment against Appellant on August 29, 2024. Because the trial court did not abuse its discretion when it found that Appellant could not demonstrate the requisite “good cause” for setting aside a default judgment under Rule 74.05(d),¹ we affirm the trial court's judgment.

Factual Background and Procedural History

JAI Ganesh Laxmi, LLC, Appellant here and the defendant in the underlying lawsuit, was doing business as Liberty Lodge, a hotel where the alleged incident at issue in this case occurred. Mihir Patel (“M. Patel”) testified that his wife, Kirtalben Patel (“K. Patel”), was “the 100% owner” of Appellant, but that he “handle[d] everything” at the property.

Harry Menke (“Respondent”) was staying at Liberty Lodge in September of 2022, when his dog was attacked by two other dogs staying there. In trying to separate the three dogs, the larger of the two other dogs attacked Respondent and caused him to sustain significant injuries to his wrist, which necessitated two surgeries and still causes Respondent problems to this day. Respondent alleged that Appellant had notice of the larger dog's violent propensities, as Respondent alleged that he been told by the hotel manager that a violent dog staying on Appellant's property “had snapped at other guests[.]”

On or around December 13, 2022, counsel for Respondent mailed a preservation letter to Appellant with instructions to provide the letter to Appellant's insurance carrier. From on or around September 12, 2023, through on or around March 14, 2024, Appellant's insurance carrier, Accelerant Specialty Insurance Company (“Insurer”),² engaged in correspondence with Respondent's counsel, regarding Respondent's personal injury claim against Appellant.

On or around March 18, 2024, Insurer notified Appellant by email and by certified mail that it had received a demand letter from Respondent's attorney for $475,000.00. The letter stated that Insurer would not participate in defending Respondent's claim, but also stated that the letter was not intended to deny Insurer's duty to defend Appellant in any lawsuit which may arise out of the claim. The specific verbiage of that part of the letter is as follows:

As the Sub-Limited Animal Liability is $1,000 and the No-Fault Med Pay is $5,000, [Insurer] will not participate in the defense of this claim. If you feel the cited exclusions, endorsements, or conditions do not apply to you or to this claim, or if for any other reason you feel there is coverage for this claim or suit, please notify us immediately. This letter is not intended to deny [Insurer's] duty to defend any lawsuit which may arise out of this claim. If you should receive a lawsuit in this matter, please forward us a copy immediately so that we may review it for potential coverage.

The letter also told Appellant to “please advise us in writing immediately” if it believed Insurer's determination to be in error. There was both a telephone number and an email address listed in the letter where Appellant could contact Insurer if it had any questions or wished to discuss the claim.

Respondent filed his lawsuit against Appellant on May 17, 2024. Respondent attempted to serve Appellant's listed registered agent, K. Patel, at 3033 Shepherd of the Hills Expressway, Branson, MO 65616 (“the Branson address”), which was the registered agent and address of Appellant on file with the Missouri Secretary of State. However, when the Taney County Sheriff's Office attempted service at this Branson address, Liberty Lodge had been sold and was under new ownership as a Days Inn. Respondent then accomplished service upon Appellant via service through the Missouri Secretary of State in accordance with Rule 54.15. The Secretary of State accomplished service via certified mail on “K. Patel” at the Branson address on August 9, 2024. On August 12, 2024, the Secretary of State executed an affidavit stating that it had received a certified mail return receipt with the name “K. Patel” as the signatory.

During his deposition, M. Patel acknowledged that a “representative” of Appellant received Respondent's lawsuit and contacted legal counsel,³ who advised M. Patel to contact Insurer. M. Patel claims that he then contacted Insurer, who told him, “not to worry about it.” After he still did not hear anything from Insurer, M. Patel used legal counsel to contact the Insurer again and advise them again of Respondent's pending lawsuit.

Having received no answer to his lawsuit, on or around August 20, 2024, Respondent filed a Motion for Entry of Default Judgment. He mailed a copy of the motion to the Branson address where “K. Patel” had signed for the summons and petition that were served by the Secretary of State on August 9, 2024.

On August 29, 2024, the trial court granted the motion and entered default judgment for Respondent and against Appellant in the amount of one million dollars for compensatory damages, $194.85 in costs, and post judgment interest. Appellant did not appear at the hearing, nor did counsel appear on its behalf.

On March 3, 2025, approximately six months after the trial court entered the default judgment, Appellant filed the Motion on the basis that Appellant had reasonably relied on Insurer's representations wherein Insurer stated not to worry about the lawsuit that resulted in default judgment being entered against it. The trial court denied Appellant's Motion after an evidentiary hearing. Appellant appeals.

Standard of Review

Our review of a trial court's decision on a motion to set aside a default judgment is abuse of discretion. Wilderman v. Drawbond, 267 S.W.3d 772, 775 (Mo. App. S.D. 2008).

We consider only whether, under the totality of the circumstances, there was a sufficient factual basis for the circuit court's determination. [T Westfall Plaza WCR MO, LLC v. SJB Restaurant Grp., LLC, 689 S.W.3d 216, 219 (Mo. App. E.D. 2024)].

Although our decisions often state that a trial court has broader discretion to grant a motion to set aside a default judgment than to deny it because of the distaste our system holds for default judgments, ultimately, the decision is left to the sound discretion of the trial court and should be overturned only if that discretion is abused.

McCroskey v. Singh, 683 S.W.3d 690, 697 (Mo. App. S.D. 2023) (citation omitted). If reasonable persons can differ as to the propriety of the circuit court's action, then we cannot say that the circuit court abused its discretion. Coble v. NCI Bldg. Sys., 378 S.W.3d 443, 451 (Mo. App. W.D. 2012). Further, while the law favors a trial on the merits, “such a generalization must be carefully applied to the facts of each case in the interest of justice; for, the law defends with equal vigor the integrity of the legal process and procedural rules and, thus, does not sanction the disregard thereof.” Solomon [v. St. Louis Cir. Att'y], 640 S.W.3d [462,] 477 [(Mo. App. E.D. 2022)] (citation omitted).

Wetzel v. Root Ins. Co., 702 S.W.3d 469, 475 (Mo. App. W.D. 2024).

Analysis

Point 1

In its first point on appeal, Appellant claims the trial court erred in denying the Motion because Appellant had good cause for failing to respond to Respondent's petition in that “good cause” under Rule 74.05 “includes conduct that is not intentionally or recklessly designed to impede the judicial process[.]” We disagree.

Governing Law

Rule 74.05(d) is the applicable rule for setting aside default judgments, and it provides as follows: “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’ includes a mistake or conduct that is not intentionally or recklessly designed to impede the judicial process.” The motion to set aside must also be filed within a reasonable time not to exceed one year of the default judgment. Id.

An appellant is not entitled to have a default judgment entered against him set aside if he acted recklessly, and “[r]ecklessness involves a deliberate choice to risk the possibility of a default judgment.” Wilderman, 267 S.W.3d at 775. Said another way, “[r]eckless conduct involves ‘a conscious choice of [a] course of action’ when the actor knew or reasonably should have known of a serious danger.” Steele v. Johnson Controls, Inc., 688 S.W.3d 192, 197 (Mo. banc 2024) (quoting In re Marriage of Callahan, 277 S.W.3d 643, 645 (Mo. banc 2009)).

Our courts have distinguished between negligence and recklessness in the context of Rule 74.05(d) as follows:

A person is negligent, if his inadvertence, incompetence, unskillfulness or failure to take precautions precludes him from adequately coping with a possible or probable future emergency. To be reckless, a person makes a conscious choice of his 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 man.

Callahan, 277 S.W.3d at 645 (quoting Dozier v. Dozier, 222 S.W.3d 308, 313 (Mo. App. W.D. 2007)).

Furthermore,

“[A] motion to set aside a default judgment is not a self-proving motion.” Agnello v. Walker, 306 S.W.3d 666, 673 (Mo. App. W.D. 2010). “The motion must be verified or supported by affidavits or sworn testimony produced at the hearing on the motion.” Bryant v. Wahl, 502 S.W.3d 9, 13 (Mo. App. W.D. 2016) (quoting Snelling v. Reliance Auto, Inc., 144 S.W.3d 915, 918 (Mo. App. E.D. 2004)). “The movant in a motion to set aside default judgment bears the evidentiary burden of proving entitlement to the relief requested.” Agnello, 306 S.W.3d at 673.

Singh, 683 S.W.3d at 698.

Respondent agrees that Appellant has made a showing of a meritorious defense. Furthermore, there is no dispute that Appellant filed the Motion within one year of the judgment being entered. Thus, whether Appellant has shown good cause is the only issue in this case.

Appellant argues that it was its “reasonable reliance upon [Insurer's] representations to not worry about the lawsuit that resulted in a default [j]udgment against it.” Contrary to Appellant's argument, the facts could reasonably support the trial court's finding that Appellant acted recklessly and failed to demonstrate good cause for setting aside the judgment. The record supports the finding that Appellant, despite having notice of Respondent's potential lawsuit as early as December of 2022, and despite having notice as early as March 18, 2024, that Insurer may not be defending that lawsuit, chose to ignore the litigation.

M. Patel testified in his deposition that he received a letter on Appellant's behalf via email on March 18, 2024, stating that it would not defend Appellant in the lawsuit. M. Patel also testified that he was aware the attorney he contacted about the lawsuit would not represent Appellant due to a conflict of interest. Thus, by Appellant's own admissions, it knew by March 18, 2024, that neither the attorney it had consulted nor Insurer would represent it in this lawsuit.

While Appellant claims that the March 18, 2024 letter used “contradictory phrasing” about whether Insurer would represent Appellant in the suit, it nonetheless took no action to clarify whether Insurer in fact would – or would not – represent it. The March 18th letter listed an email address and phone number for Appellant to use if it had any questions about the claim or Insurer's representation. It does not appear from the record that Appellant contacted Insurer for any clarification after receiving this letter. Furthermore, Appellant's statements that it thought Insurer was representing it conflict with M. Patel's deposition testimony where he stated that he understood the letter meant Insurer would not, and the trial court was not required to credit those contradictory statements. See Wetzel, 702 S.W.3d at 478 (quoting Coble, 378 S.W.3d at 449) (internal quotations omitted) (“[I]n deciding whether good cause has been established, a trial court is free to disbelieve statements made by a moving party in its affidavits.”).

Appellant acknowledged in the Motion that it was served with the lawsuit through the Secretary of State. The summons clearly warned Appellant that a judgment by default may be taken against Appellant if Appellant failed to appear. While Appellant claims Insurer told it “not to worry about it[,]” even if the trial court credited this statement, it could still have found that Appellant acted recklessly in relying on such a vague statement.

The facts of this case resemble those of Vogel v. Schoenberg, 620 S.W.3d 106 (Mo. App. W.D. 2021), where the appellate court upheld the trial court's finding that Schoenberg failed to establish good cause for setting aside the default judgment entered against him. Id. at 109. Schoenberg was personally served with a summons and petition against him yet failed to appear or participate in the lawsuit for over one year. Id. at 109-110. In moving to set aside the default judgment that was eventually entered against him, Schoenberg argued that he had relied on representations from a co-defendant in the lawsuit and former business partner that he would handle the allegations for Schoenberg and that Schoenberg did not need to do anything further to defend the lawsuit. Id. at 110. Schoenberg argued that he was unfamiliar with the legal process and did not understand the ramifications of failing to answer and defend himself in the pending lawsuit. Id. In reviewing the trial court's refusal to set aside the default judgment entered against Schoenberg, the appellate court reasoned as follows:

The trial court acted within its discretion by concluding that it was not merely negligent, and was instead reckless or indifferent, for Schoenberg: to receive a summons containing this warning; to understand the implications of the warning sufficiently to call a former business partner and fellow defendant in order to address the summons; to then elect to rely on the former business partner to protects his interests in the lawsuit notwithstanding the warning in the summons; and to undertake no subsequent follow up to ensure his interests had in fact been protected. Schoenberg did not make a mistake, or act inadvertently. He made a deliberate and reckless choice. See Wilderman, 267 S.W.3d at 775 (“Recklessness involves a deliberate choice to risk the possibility of a default judgment.”).

Id. at 113-14. See also Gering v. Walcott, 975 S.W.2d 496, 499 (Mo. App. W.D. 1998) (trial court acted within its discretion in entering default judgment where respondents ignored the lawsuit, did not seek an alternative solution, and did not represent but where he alleged financial hardship prevented him from hiring an attorney and responding to the petition).

Similarly here, the trial court could reasonably conclude that Appellant failed to demonstrate good cause because its explanations for failing to appear and defend in the lawsuit amounted to nothing more than unreasonable reliance on Insurer, who had stated that it was not going to defend Appellant in the lawsuit. Appellant acknowledged that it has known about this matter since December of 2022, including knowing that a lawsuit had been filed as of August of 2024, and yet took no affirmative steps to secure representation other than contact Insurer on a few occasions.

While M. Patel tried to frame the problem as confusion rather than inaction, he testified in his deposition that he “handle[d] everything [․] as far as managing the property” for Appellant. A mistake by upper-level management “is more likely to be presumed reckless or intentional” than excusable. First Cmty. Bank v. Hubbell Power Sys., Inc., 298 S.W.3d 534, 541 (Mo. App. S.D. 2009) (quoting Pyle v. Firstline Transp. Sec., Inc., 230 S.W.3d 52, 60 (Mo. App. W.D. 2007)). Our appellate courts have determined that a conscious choice to ignore litigation amounts to reckless behavior. Dozier, 222 S.W.3d at 314. On this record, the trial court did not abuse its discretion in finding that Appellant's conduct was reckless rather than negligent.

Because we determine here that the trial court did not abuse its discretion in finding that Appellant failed to prove good cause under Appellant's first point, we need not address its second point. See Steele, 688 S.W.3d at 197 (stating that a moving party must prove both good cause and a meritorious defense to set aside a default judgment pursuant to Rule 74.05(d)).

The judgment of the trial court is affirmed.

FOOTNOTES

1.   All rule references are to Missouri Court Rules (2026).

2.   Appellant and Respondent corresponded via North American Risk Services, Inc. (“NARS”), the third-party administrator for Insurer. For ease of reference, we refer to Insurer herein.

3.   There is no dispute that Appellant knew that this legal counsel was not going to represent Appellant's interests in the lawsuit due to a conflict.

JENNIFER R. GROWCOCK, J. – OPINION AUTHOR

JACK A. L. GOODMAN, J. – CONCURS BRYAN E. NICKELL, J. – CONCURS