ST PAUL NEWMAN CENTER v. SWARTZ INC (2026)

[¶1] Philip J. Swartz (“Philip”) and P.J. Swartz, Inc. (“Swartz”), appeal from an order denying their motion to vacate a default judgment. The district court's written order applied a legal standard imposing additional requirements that its cited authorities do not support. Because we cannot say these errors did not affect the district court's decision, we reverse the order and remand for further proceedings.

I

[¶2] St. Paul's Newman Center and Swartz entered a written agreement under which Swartz, through its president, Philip, agreed to refurbish and install a pipe organ for the Newman Center's church. Swartz delivered an unfinished, inoperable organ console in August 2024. The Newman Center sued Swartz and Philip individually, pleading breach of contract or, alternatively, unjust enrichment, and sought to pierce Swartz's corporate veil to hold Philip personally liable. Both Philip and Swartz were served, and neither answered.

[¶3] The Newman Center moved for a default judgment. The district court signed the Newman Center's proposed memorandum decision, findings, and order. In the order, the court found that “there is no actual separation” between Philip and Swartz and that “the corporate veil had been pierced.” The court also found that “Defendants have fraudulently stolen $204,640.00” and that the Newman Center suffered an additional $120,000 in damages from “Defendant's deceitful acts.” The court entered judgment against Philip and Swartz for $324,640.

[¶4] Philip and Swartz retained counsel and moved to vacate the default judgment under N.D.R.Civ.P. 60(b)(1), relying on a declaration from Swartz's vice president, Nicholas Schroeder, that Philip had been suffering a cognitive decline since 2022 sufficient to excuse his failure to respond. At the hearing on the motion, Philip and Swartz disclaimed any challenge to service and confirmed the incapacity argument rested on Schroeder's declaration. The district court separately took up Philip and Swartz's concern that the Newman Center's brief opposing the motion to vacate contained inaccurate case citations. Counsel for the Newman Center conceded the brief had not been cite-checked.

[¶5] The district court ruled from the bench, applying the excusable-neglect standard. It found the evidence insufficient to establish incapacity, Philip continued business engagement after the alleged onset of his mental decline, and Philip was not incompetent. The court explicitly stated that bad faith did not enter into its decision.

[¶6] The district court then signed the Newman Center's proposed order, adopting it verbatim. The written order denied the motion to vacate the default judgment, concluding that Philip and Swartz had not shown excusable neglect or a meritorious defense and that vacating the judgment would substantially prejudice the Newman Center. Philip and Swartz appeal.

II

[¶7] Philip and Swartz argue the district court abused its discretion by denying their N.D.R.Civ.P. 60(b) motion to vacate the default judgment. They contend that the written order applied an incorrect, heightened standard and that the default judgment's veil-piercing, entered without analysis of the required factors, presents a meritorious defense.

[¶8] A district court's decision on a motion to vacate a judgment under N.D.R.Civ.P. 60(b) will not be reversed on appeal unless the court abused its discretion. US Bank Nat'l Ass'n v. Arnold, 2001 ND 130, ¶ 21, 631 N.W.2d 150. A court abuses its discretion when it acts in an arbitrary, unreasonable, or unconscionable manner, or when it misinterprets or misapplies the law. Id. “[A] Rule 60(b) motion is not a substitute for appeal and should not be used to relieve a party from free, calculated and deliberate choices he or she has made.” Bickler v. Happy House Movers, L.L.P., 2018 ND 177, ¶ 12, 915 N.W.2d 690 (quoting Key Energy Servs., LLC v. Ewing Constr. Co., Inc., 2018 ND 121, ¶ 13, 911 N.W.2d 319). Here, the default judgment was never appealed and is not under review.

A

[¶9] “When there is a discrepancy between a district court's oral and written orders, the written order controls and supersedes the ruling made from the bench.” City of Fargo v. White, 2013 ND 200, ¶ 3, 839 N.W.2d 829 (citing Wetzel v. Schlenvogt, 2005 ND 190, ¶ 26, 705 N.W.2d 836). “[A] trial court's written findings of fact prevail when a discrepancy exists between those findings and the court's prior memorandum opinion or oral ruling.” Fenske v. Fenske, 542 N.W.2d 98, 102 (N.D. 1996) (quoting Fed. Land Bank of St. Paul v. Lillehaugen, 404 N.W.2d 452, 454 (N.D. 1987)). We may look to a court's oral findings on appeal to clarify its written findings, but only if the oral findings do not conflict with the written findings. Interest of Voisine, 2018 ND 181, ¶ 11, 915 N.W.2d 647 (citing Holtz v. Holtz, 1999 ND 105, ¶ 28, 595 N.W.2d 1). An omission in the written order does not itself create a conflict with an oral ruling that addressed the same point. Interest of B.H., 2018 ND 178, ¶ 5, 915 N.W.2d 668.

[¶10] Here, both the district court's oral ruling and written order deny relief because the record contains insufficient evidence that Philip was incapacitated when he was served or when he defaulted. The written order controls, and it heightens the legal standard by creating additional requirements. The written order states that a movant must show excusable neglect “through a reasonable justification, considering factors such as diligence after discovery of the default, prejudice to Plaintiff, and good faith,” and must supply “specific facts establishing a prima facie meritorious defense,” citing Gepner v. Fujicolor Processing, Inc., 2001 ND 207, ¶ 7, 637 N.W.2d 681, and Key Energy Servs., 2018 ND 121, ¶ 13, 911 N.W.2d 319. The court did not mention diligence, prejudice, or good faith in its oral ruling, and stated that “any issues as termed in bad faith” were “not entering into [its] decision.”

[¶11] The cases cited in the written order do not support the stated legal standard. Paragraph 7 of Gepner recites the facts of an unrelated workers’ compensation coverage dispute; paragraph 14 sets out the standard governing motions to vacate default judgments, but not the additional requirements it is cited for in the written order. Gepner, 2001 ND 207, ¶¶ 7, 14, 637 N.W.2d 681. Instead, Gepner describes three considerations: liberal construction, a preference for deciding cases on the merits, and resolving doubt in favor of vacating when relief is timely sought and a meritorious defense is shown. Id. ¶ 14. The court's citation to Key Energy Services fares no better. The cited portion states the moving party bears the burden of establishing sufficient grounds for disturbing the finality of a judgment, relief is available “only in exceptional circumstances,” and the applicable standard is “mistake, inadvertence, surprise, or excusable neglect.” Key Energy Servs., 2018 ND 121, ¶ 13, 911 N.W.2d 319. Neither Gepner nor Key Energy mentions diligence, prejudice, or good faith.

B

[¶12] “[W]e will not set aside a correct result merely because the district court's reasoning is incorrect if the result is the same under the correct law and reasoning.” Investors Title Ins. Co. v. Herzig, 2010 ND 169, ¶ 40, 788 N.W.2d 312. A movant's evidence of a medical or cognitive condition must be connected to the movant's actual inability to respond to litigation; a bare assertion of a diagnosis is not enough. See Arnold, 2001 ND 130, ¶¶ 25–28, 631 N.W.2d 150 (approving the district court's distinction of Thompson v. Goetz, 455 N.W.2d 580, 586–87 (N.D. 1990), and affirming the denial of relief where the movant offered only a personal affidavit unconnected to how his condition affected his ability to respond to the complaint).

[¶13] Here, Schroeder's declaration and an October 2025 power of attorney are the only evidence of Philip's incapacity. Philip executed the power of attorney after the default judgment, and the district court noted that executing it required legal capacity. Philip also continued to serve as Swartz's registered agent and engaged in business communications after the alleged onset of his decline. The Newman Center argues the oral ruling shows the same result would follow under the correct standard. We agree that the record contains evidence that could support that result if the correct standard were applied.

[¶14] The additional requirements in the district court's written order are not surplusage. The written order controls: it treats diligence, prejudice, and good faith as part of the inquiry into whether the movant has established excusable neglect. The oral ruling cannot supply a different rationale that conflicts with what is stated in the written order. Voisine, 2018 ND 181, ¶ 11, 915 N.W.2d 647. Where a district court's denial of Rule 60(b)(1) relief rests on a standard inconsistent with our case law, rather than on a rigorous analysis of the facts under the correct standard, reversal is the proper remedy. Beaudoin v. South Texas Blood & Tissue Ctr., 2005 ND 120, ¶¶ 38, 40, 699 N.W.2d 421 (reversing because the district court's denial rested on the erroneous premise that only errors caused by a third party qualify for relief). On this record and relying on the written order, we cannot determine whether the court would have reached the same result applying the correct standard.

C

[¶15] We have long discouraged a district court's wholesale or verbatim adoption of one party's proposed findings and conclusions, and we encourage a court to prepare its own. Interest of M.B., 2006 ND 19, ¶ 11, 709 N.W.2d 11; Shively v. Shively, 2026 ND 105, ¶ 19, 36 N.W.3d 555. When a court adopts a party's analysis, the order becomes the court's own, complete with “any errors in law or fact advocated by” the drafting party. Guardianship of P.T., 2014 ND 223, ¶ 12, 857 N.W.2d 367. Verbatim adoption of a party's proposed findings is not, by itself, a reason to reverse. M.B., ¶ 11. But we will uphold adopted findings only if they “adequately explain the rationale for the court's decision and are not clearly erroneous.” Kershaw v. Finnson, 2022 ND 165, ¶ 18, 980 N.W.2d 40.

[¶16] The district court adopted the order under review verbatim from the Newman Center's proposed order, which the court requested at the same hearing at which it had raised concerns about the accuracy of the Newman Center's citations. Most of the written order's pinpoint citations lead to paragraphs that do not address the proposition for which they are cited. Beyond citing an erroneous legal standard, the written order cites six cases to support the propositions that Schroeder's “vague, conclusory, and uncorroborated assertions” are insufficient and proper service on Philip and Swartz undermines reasonable justification for neglect such that Philip and Swartz have not met their burden for relief. None of these six pinpoint citations directly supports the proposition for which it is cited.

[¶17] A court adopting a party's proposed order need not research every proposition anew, but the court must ensure that its orders reflect its own reasoned decision. When the court already has reason to question that party's citations, signing an order without first validating it falls short of the rigorous analysis Rule 60(b) requires. Cf. Beaudoin, 2005 ND 120, ¶ 40, 699 N.W.2d 421. A district judge has several practical ways to check a proposed order's citations, ranging from personally reviewing each citation in electronic or print sources, delegating that to a staff attorney, law clerk, or other staff, or one of the automated commercial services the Court subscribes to, including the service described by Newman Center's counsel at the hearing. Because an adopted order becomes the court's own, P.T., 2014 ND 223, ¶ 12, 857 N.W.2d 367, so do its citations and reasoning. As the district court described: “Regardless of who prepares the brief, I think it's fair to state that the attorney filing it is responsible for assuring that those citations are correct in order to alleviate waste of time for both the Court and opposing party.” District court judges who sign and file orders must hold themselves to that same standard.

III

[¶18] The district court's oral ruling found that Philip's evidence of incapacity did not establish excusable neglect. But the written order controls, and it imposed additional, erroneous requirements on the movants. The movants had shown that a majority of case citations in the Newman Center's earlier brief were imaginary, and the Newman Center's counsel had conceded the brief was not cite-checked. Despite this, the court signed the Newman Center's proposed order verbatim, and by doing so, adopted its errors. We conclude the court abused its discretion, we reverse the order denying the motion to vacate, and we remand for the district court to make findings and a decision under N.D.R.Civ.P. 60(b)(1) consistent with this opinion.

Tufte, Justice.

[¶19] Jerod E. Tufte, Acting C.J. Jon J. Jensen Douglas A. Bahr Mark A. Friese Douglas L. Mattson, S.J.[¶20] The Honorable Douglas L. Mattson, Surrogate Judge, sitting in place of Fair McEvers, C.J., disqualified.