Sewell v. Xpress Lube, 321 P.3d 1080

Background

Sewell fell into a service pit at Xpress Lube (a sole proprietorship of Bruce Anderson) and negotiated with Anderson’s insurer, Travelers, for ~8 months without resolving the claim. Sewell then sued naming only “Xpress Lube, a Utah business entity.”
Process server left the summons and complaint with employee Brian Deuel at the business; Deuel placed the papers on Anderson’s desk. Anderson later delivered them to his insurance agent who attempted to fax them to Travelers but misdialed and Travelers never received the complaint.
Sewell moved for default judgment; the district court entered default and awarded $600,000 in damages without an evidentiary hearing. Anderson first learned of the default when the judgment arrived by mail on December 8, 2011.
Xpress Lube (Anderson) moved promptly to set aside the default judgment, alleging improper service, excusable mistake (agent fax error), and proffered meritorious defenses; the district court denied relief and the judgment was entered against Xpress Lube.
The Utah Supreme Court retained the case and reversed, vacating the default judgment on three independent grounds: lack of proper service (jurisdictional defect), abuse of discretion in denying relief under Utah R. Civ. P. 60(b)(1), and failure to hold a required damages hearing for unliquidated damages under Utah R. Civ. P. 55(b)(2).

Issues

Issue	Plaintiff's Argument (Sewell)	Defendant's Argument (Xpress Lube/Anderson)	Held
Was service sufficient to confer jurisdiction?	Service on the employee sufficed because the employee was effectively “in charge.”	Service on a sole proprietorship requires personal service on the individual owner (Anderson); serving an employee did not comply with rule 4.	Held: Service was insufficient; sole proprietor must be served; judgment void for lack of jurisdiction.
Should the default be set aside under Rule 60(b)(1) for mistake/inadvertence/excusable neglect?	Pre-litigation negotiations with Travelers put Defendant on notice; default was not excusable.	Anderson promptly delivered papers to his agent and the failure was the agent’s fax error; motion was timely and defenses meritorious.	Held: Abuse of discretion to deny relief; timely motion, excusable neglect shown, and meritorious defenses proffered—vacate under Rule 60(b)(1).
Were the alleged defenses meritorious for purposes of Rule 60?	N/A (focused on proc. and notice).	Asserted negligence/comparative fault, medical causation issues, and infirmity of lost-wage claim given age/unemployment.	Held: Proffered defenses were sufficiently specific and nonfrivolous to be meritorious.
Was an evidentiary hearing required before awarding $600,000 in damages on default?	Argued damages were sufficiently pled and court could award requested sums without hearing.	Damages were unliquidated (medical, pain and suffering, lost future wages) and required an evidentiary hearing under Rule 55(b)(2).	Held: Court erred by awarding unliquidated damages without a hearing; vacated for lack of required hearing.

Key Cases Cited

Judson v. Wheeler RV Las Vegas, L.L.C., 270 P.3d 456 (interpretation of Rule 60(b)(4) and when judgments are void for lack of jurisdiction)
Lund v. Brown, 11 P.3d 277 (default-judgment vacation standard and discretion to set aside defaults)
Helgesen v. Inyangumia, 636 P.2d 1079 (principle favoring relief to allow hearing in doubtful cases)
Cadlerock Joint Venture II, LP v. Envelope Packaging of Utah, Inc., 251 P.3d 837 (Rule 55(b)(2) requires hearing for unliquidated damages)
Murdock v. Blake, 484 P.2d 164 (actual notice does not substitute for proper service of process)
Amica Mut. Ins. Co. v. Schettler, 768 P.2d 950 (default establishes liability but plaintiff must prove unliquidated damages by competent evidence)
Canyon Country Store v. Bracey, 781 P.2d 414 (personal injury damages are typically unliquidated and need proof)
Salazar v. Chavez, 282 P.3d 1033 (complaint allegations alone insufficient to support specific damage award without evidence)