409 P.3d 742
Haw.2018Background
- On June 1, 2006, Marvin Quemado Jr. and Bryan Higa robbed the Dela Cruzes; Marvin and Higa later pled guilty in federal court. Petitioners (Florencio and Anastacia Dela Cruz and their daughter) sued Irene Quemado (Marvin’s mother) for negligence, alleging she exposed Marvin to their jewelry and that his criminal history made the robbery foreseeable.
- Irene litigated for years; defaults were entered against Marvin and Higa for failing to plead, and those defaults later resulted in judgments.
- Irene and her attorney failed to appear at a court-ordered settlement conference in February 2013; the circuit court entered default against Irene under RCCH Rule 12.1(a)(6) and awarded plaintiffs modest attorney’s fees.
- Irene moved to reconsider and to set aside the entry of default; the circuit court denied relief. Plaintiffs then moved for default judgment; the court held an HRCP 55(b)(2) proof hearing, denied the motion on the merits, but sua sponte dismissed plaintiffs’ claims against Irene with prejudice and entered final judgment for Irene.
- The ICA affirmed denial of default judgment on the merits, holding Marvin’s conduct was not foreseeable and Irene owed no duty. The Hawai‘i Supreme Court granted certiorari focusing on (1) propriety of entry of default, (2) denial of motion to set aside default, and (3) whether the circuit court erred in dismissing claims and entering judgment after the HRCP 55(b)(2) hearing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether entry of default under RCCH Rule 12.1(a)(6) was proper | Default was proper because Irene and counsel failed to appear at settlement conference and repeatedly delayed; sanctions appropriate | Entry of default was unduly harsh because counsel did not receive notice and failures were inadvertent; lesser sanctions available | Court: Entry of default was an abuse of discretion; record lacks evidence Irene knew of conference and default was premature |
| Whether the court abused discretion in denying motion to set aside the entry of default | Reopening would prejudice plaintiffs and defendants lacked meritorious defense | Irene showed inadvertence (attorney semi-retired, mail/address change) and a meritorious defense; monetary sanctions could suffice | Court: Denial to set aside was an abuse of discretion; Wisenbaker precedent requires careful evaluation and lesser sanctions; default should have been set aside |
| Whether HRCP 55(b)(2) proof hearing may be used to enter judgment for the defaulting party | Plaintiffs contend evidence at hearing supported liability and court properly assessed prima facie case | Irene contends hearing is for liability proof for defaulting party only and she should not be deprived of rights; if plaintiffs fail proof, matter should proceed rather than result in judgment for defendant | Court: Proof hearing was appropriate but court erred by dismissing claims with prejudice and entering final judgment for Irene; if plaintiff fails prima facie showing, the correct course is to deny default judgment and allow case to proceed (set aside default), not enter judgment against plaintiff |
| Whether the circuit court properly barred defendant from participating at proof hearing after default | Plaintiffs proceeded under default and excluded Irene from contesting liability at the hearing | Irene argued she should be allowed at least to contest liability and present defenses if default was improperly entered | Court: Trial court should not have barred Irene from participation where default was erroneous; more generally default limits ability to contest damages but not procedural rights when default is set aside |
Key Cases Cited
- Rearden Family Trust v. Wisenbaker, [citation="101 Hawai'i 237, 65 P.3d 1029"] (Haw. 2003) (defaults are disfavored; trial courts should consider lesser sanctions and give parties opportunity to explain failures before entering default)
- BDM, Inc. v. Sageco, Inc., 57 Haw. 73, 549 P.2d 1147 (Haw. 1976) (standards for setting aside default entries)
- Hupp v. Accessory Distributors, Inc., 1 Haw. App. 174, 616 P.2d 233 (Haw. App. 1980) (HRCP 55(b)(2) proof hearing may be required and nondefaulting party must meet a prima facie standard)
- In re Villegas, 132 B.R. 742 (B.A.P. 9th Cir. 1991) (after a Rule 55(b)(2) hearing, a trial court may refuse default judgment but may not enter judgment for the defaulting party; doing so converts the hearing into an unfair trial on the merits)