Applied Underwriters v. Oceanside Laundry
300 Neb. 333
| Neb. | 2018Background
- AUCRA (Iowa corp.) sued Oceanside Laundry, LLC (California LLC doing business as Campus Laundry) in Douglas County, Nebraska, for breach of a reinsurance participation agreement (RPA).
- AUCRA attempted service by certified mail then personal service in California; process server's return claimed service on a "person in charge" but Oceanside did not file a responsive pleading.
- AUCRA moved for default judgment; at the hearing Oceanside's counsel appeared, contested service and the amount claimed, and the court received AUCRA's contract and affidavits.
- The district court entered default judgment on May 4, 2017; Oceanside moved on May 22 to vacate or reconsider, asserting lack of personal jurisdiction, improper venue, and that the RPA was void under California law.
- The district court denied the motion to vacate on May 30, 2017; Oceanside appealed. The Nebraska Supreme Court reversed, concluding Oceanside made a prompt motion and presented a meritorious defense (voidness of the RPA) and remanded with directions to vacate the default judgment and allow a responsive pleading.
Issues
| Issue | Plaintiff's Argument (AUCRA) | Defendant's Argument (Oceanside) | Held |
|---|---|---|---|
| Validity of default judgment / whether it should be set aside | Default judgment proper because Oceanside was served and failed to respond | Motion to set aside was timely; Oceanside tendered meritorious defenses (lack of personal jurisdiction; RPA void under California law) | Court reversed: default judgment must be vacated; Oceanside promptly moved and showed a meritorious defense |
| Waiver of service/personal jurisdiction by appearing at hearing | Oceanside's appearance and participation waived service and jurisdiction defenses | Appearance was to contest service; Oceanside preserved challenge to amenability to Nebraska process (personal jurisdiction) | Appearance waived defective-service arguments generally, but did not waive objection that Oceasnide is not amenable to Nebraska process |
| Timeliness/nature of Oceanside's postjudgment motion | AUCRA: motion was effectively untimely motion to alter/amend | Oceanside: motion was an invocation of court's inherent power to vacate during term and was timely (filed within same term) | Motion was timely as a request to vacate during the court's term; appeal timeliness rules not controlling here |
| Existence of meritorious defense sufficient to reopen default | AUCRA: Oceanside did not tender an answer or sufficient proof of defense | Oceanside: presented evidence the RPA was declared void by California Insurance Department and lacked Nebraska ties | Court: evidence raised a question worthy of judicial inquiry; meritorious defense shown and default should be set aside |
Key Cases Cited
- Miller v. Steichen, 268 Neb. 328 (acknowledging policy favoring hearing claims on merits when defaults are promptly attacked)
- Carrel v. Serco Inc., 291 Neb. 61 (balancing right to defend on merits and judicial efficiency in default-judgment contexts)
- Burns v. Burns, 293 Neb. 633 (voluntary appearance equates to service; waiver principles)
- Friedman v. Friedman, 290 Neb. 973 (participation may amount to general appearance and waiver)
- In re Petition of SID No. 1, 270 Neb. 856 (distinguishing defects in service from amenability to process)
- Doty v. West Gate Bank, 292 Neb. 787 (appellate courts need not reach unnecessary issues)
- County of Douglas v. Nebraska Tax Equal. & Rev. Comm., 296 Neb. 501 (motions for reconsideration as invocation of inherent power to vacate)
- Steinberg v. Stahlnecker, 200 Neb. 466 (meritorious defense standard for setting aside defaults)