Plаintiff appeals the trial court’s order setting aside a default judgment in plaintiff’s favor. The trial court relieved defendant from default under ORCP 71 on the ground that the default had resulted from defendant’s excusable neglect. For the reasons set forth below, we affirm.
In reviewing a trial court’s decision to grant relief from default, we are bound by the court’s factual findings if they are supported by any evidence in the record. Terlyuk v. Krasnogorov,
Plaintiff filed her complaint in late May 2010. On June 11, plaintiff’s summons and complaint was served on defendant’s registered agent, CT Corporation Systems. The summons notified defendant that it was required to appear in the case within 30 days. A few days later, Smith received courtesy copies of the summons and complaint from plaintiff’s lawyer. At around the same time, CT Corporation sent defendant copies of the summons and complaint with which it had been served.
On June 16, 2010, another of defendant’s employees, Rachel Pederson, e-mailed Smith copies of the documents that defendant had received from CT Corporation, stating that she thought Smith might already have heard from Heise, but explaining that she wanted to make sure that “we get counsel assigned and an answer filed.” Smith responded, indicating that Zurich NA would “get this assigned to counsеl & file the answer.”
At that point, Smith understood that defendant had been served with a complaint and that the claim needed to be assigned to an attorney because defendant had “a limited amount of time to file an answer.” Accordingly, Smith notified her supervisor, Todd Spivey — still on June 16 — that she had received the summons and complaint. Spivey is a team manager for Zurich NA whose responsibilities include overseeing claims and supervising claims adjusters. That same day, Spivey sent an e-mail to Zurich NA administrative employee June Sheppard directing her to transfer the case from Smith, who did not handle litigated claims, to Dean Ohara, who did. Spivey’s e-mail “was also sent to Dean Ohara and included as an attachment a copy of the lawsuit that had been served.” In the e-mail, Spivey directed Ohara to “see Znotes” (apparently a kind of internal notation system). There, Spivey directed Ohara to handle the case and reminded him “to call the plaintiff’s counsel to discuss [the] case” and learn his theory of liability. Sheppard also enterеd a Znote; hers indicated that the case had been reassigned to Ohara because of a “change in complexity,” meaning it had shifted from nonlitigated to litigated status.
Spivey explained at his deposition that he supervised eight claims representatives, about five of whom handled litigated claims. Spivey assigned claims to those representatives depending on their experience and aptitude, generally assigning litigated claims to the more experienced representatives. Ohara wаs one of those experienced claims representatives; he testified at his own deposition that he has handled litigated claims for over 20 years and first handled a litigated claim in Oregon 15 or 20 years ago. Ohara often has referred litigated claims to attorneys so they can represent Zurich NA’s insureds. His normal practice, after having a litigated claim assigned to him, is to review the file and the summons and complaint to determine whether to refer it out to defense counsel.
Spivey expects the claims representatives who handle litigated claims to be aware of the amount of time they have “to get an attorney on a case” so the defendant can make a timely appearance. He explained that, once he had assigned the claim to Ohara, Ohara would have known that he was the only claims representative responsible for handling that claim. It then was Ohara’s responsibility to find out when a responsive pleading was due, to re-analyze potential coverage, and to refer the case to defense counsel for a responsive pleading to be filed. In a declaration, Spivey asserted that Ohara was familiar with the procedures that Zurich NA has in place “to prevent and avoid occurrences of default judgments being entered against Zurich NA’s insureds”:
“Specifically, when Zurich NA is notified that a lawsuit has been served on an insured, the Zurich NA claims adjuster assigned to the claim is to refer the lawsuit to qualified defense counsel within five (5)business days of receipt of the suit so that defense counsel may enter an appearance or otherwise protect against a default judgment being entered against the insured. All Zurich NA claims adjusters, including Dean Ohara, are instructed on this procedure.”
Despite his experience and despite the case having been transferred to him, Ohara did not refer the case to defense counsel. On July 13, 2010, plaintiff moved for an order of default, as defendant had not yet filed an answer, made any other appearance in the case, or informed plaintiff that it intended to do so. The trial court judge signed an order of default on July 20 and the court entered a default judgment against defendant on July 22. On September 22, 2010, plaintiff’s attorney informed Zurich NA that he had filed and taken a default judgment. That day, Zurich NA retained counsel to represent defendant in the litigation. On September 30, defendant filed its motion for relief from default under ORCP 71 B, arguing that the default was a result of excusable neglect.
In a declaration supporting defendant’s motion for relief from default, Ohаra stated that he had received the June 16 e-mail from Spivey notifying him that he had been assigned plaintiff’s lawsuit and attaching a copy of it. He also stated that, “[f]or some unknown reason that [he could not] explain, [he] failed to refer the lawsuit to qualified defense counsel within five (5) days of receipt, as set forth in Zurich NA’s procedures.” At his later deposition, Ohara said that he could not recall having seen the e-mail from Spivey and had no recollection of having been assigned plaintiff’s claim. Ohara explained that he had reviewed some of the related documents after the default judgment was taken and had found that he had not made any entries in plaintiff’s claim file. “Based upon [his] review and recollection,” Ohara testified at deposition that he had not reviewed the Znotes on plaintiff’s claim as Spivey had instructed him to. He acknowledged that, if he in fact received the e-mail from Spivey, he would have known that the file was his responsibility and that it was up to him to refer the matter to qualified defense сounsel to enter an appearance or “otherwise protect the lawsuit from default.”
As noted, the trial court granted defendant’s motion for relief from default. The court set forth its reasoning in a letter opinion, explaining why it determined that the default was a result of excusable neglect:
“Zurich NA had policies and procedures established to avoid default judgments and to protect its insured’s interest. These policies and procedures were followed by Zurich until the complaint was given to Mr. Oharа to handle Plaintiff’s complaint. Clearly Mr. Ohara failed to take proper action, which resulted in the default judgment being entered against the Defendant. Although Mr. Ohara apparently has not offered any excuse for his failure to handle the complaint properly, this does not mean that the Court must find that Zurich NA handled this matter with ‘inexcusable neglect’ as argued by Plaintiff. In every case in which an insurance company fails to handle a complaint properly resulting in a default judgment, there has been some mistakе or neglect on the part of the insurance company.
* *
“To summarize this matter very simply, the Plaintiff obtained a default judgment because a subordinate employee of Zurich NA failed to act properly when given the Plaintiff’s complaint. This was a mistake by the employee and with regard to Zurich NA was excusable neglect under the circumstances.”
On appeal, plaintiff challenges the order granting defendant’s motion to set aside the default judgment. Plaintiff’s primary argument is that the trial court erred by concluding that the default was the result of excusable neglect. She contends that Ohara “failed to act” in a way that cannot constitute excusable neglect because he was an experienced claims representative who bore responsibility for ensuring that plaintiff’s complaint was referred to an attorney to defend. Plaintiff points out that Ohara “was not laboring under a misapprehension of fact,” but “knew exactly what he had to do to protect his insured from a default,” simply did not do it, and could offer no explanation for his failure. Plaintiff contends that, given those circumstances, this case is governed by
In response, defendant largely defends the trial court’s analysis, asserting “that motiоns to set aside default judgments should be granted liberally.” Defendant also argues that “Reitz v. Coca-Cola,
Our analysis begins with ORCP 71, which describes circumstances in which trial courts may grant relief from judgments and orders. The pertinent part of that rule provides:
“On motion and upon such terms as are just, the court may relieve a party * * * from a judgment for the following reasons: (a) mistake, inadvertence, surprise, or excusable neglect[.\ * * * The motion shall be made within a reasonable time, and for reasons (a), (b), and (c) not more than one year after receipt of notice by the moving party of the judgment.”
ORCP 71 B(1) (emphasis added). We review the trial court’s ultimate, decision — whether to grant relief under ORCP 71 B(1) — for abuse of discretion. Saldivar v. Roberts,
Several important principles may be derived from our “excusable neglect” decisions, three of which are particularly relevant to this case. The first reflects the policy underlying ORCP 71 B, which is “to allow defaulted parties to have their day in court, when it can be done ‘without doing violence to the regular disposition of litigation.’” Mary Ebel Johnson, P.C. v. Elmore,
The second pertinent principle builds on the first. Generally speaking, neglect that leads to a default will be deemed “excusable” when a defendant, or a person acting on the defendant’s behalf, took reasonable initial steps to ensure that an appropriate response would be filed to a complaint, even though the process later broke dоwn. For example, in Terlyuk, the defendant’s insurance adjuster mistakenly believed that the copy of the summons and complaint it had received from the plaintiffs were only courtesy copies of documents that had been filed but not yet served (in reality, the defendant had been served).
That principle applies even when one person acting for the defendant takes reasonable steps to get the response process underway, but another person later fails to perform his or her associated duties, as we explained in Wood v. James W. Fowler Co.,
A third principle may be thought of as the converse of the second: when a defendant did not take any reasonable steps to respond to a complaint, wе have held, the defendant’s neglect was inexcusable. That principle guided our decision in Saldivar, in which the defendants were personally served with the summons and complaint but did not timely file a response.
Moreover, because a party seeking relief from default under ORCP 71 B(1)(a) must show that its default was the result of mistake, inadvertence, surprise, or excusable neglect, the party’s inability to establish thаt the person initially responsible for responding to a complaint or other filing took any reasonable steps to respond normally will defeat its motion for relief. See Stull v. Ash Creek Estates, LLC,
In arguing to the contrary, plaintiff relies heavily on Burke, in which the Supreme Court affirmed the trial сourt’s denial of the defendant’s motion to set aside a default judgment. In that case, the defendant’s insurance adjuster had negotiated with the plaintiff’s lawyer to obtain an extension of time in which to respond to the plaintiff’s complaint.
Plaintiff argues that Burke controls here because, like the insurance adjuster in Burke, Ohara failed to refer the complaint to a lawyer to defend. Defendant counters that, in this case, “there is no evidence that any of Zurich NA’s insurance claims representatives *** ‘venture[d] into the legal arena ***.’” We agree with defendant. Burke applies only where a default results from an insurance agent having taken on responsibilities normally performed by defense counsel. That circumstance does not exist here. For the same reason, we reject plaintiff’s argument that Burke establishes a “higher standard” for insurance agents. Burke was based on the defendant’s agent having taken actions normally performed by attorneys, so any higher standard the court' may have set in that case would not apply to insurance agents generally.
That argument overlooks the initial steps that defendant, its registered agent, and other employees of its insurеr took to ensure that defendant would timely respond to plaintiff’s complaint. The cases in which we have held that inaction (or lack of evidence that a.ction was taken) fails to excuse a default generally have involved cases in which no person acting for the defendant took reasonable steps to ensure that an appropriate response would be filed on the defendant’s behalf. See Saldivar,
Our reason for distinguishing this case from those cited above is that here, several people who were acting on defendant’s behalf, and who had responsibility for ensuring that defendant responded to the complaint, took reasonable steps to make that happen, in accordance with established procedures. The fact that Ohara, an “otherwise responsible subordinate employee” of the insurer later failed in his duties does not render defendant’s failure to appear inexcusable for purposes of ORCP 71 B(1)(a). As we explained in Wood, when we consider whether a default was the result of excusable neglect, we focus on the conduct of the primarily responsible person or persons — in Wood, the registered agent — and not on the conduct of that person’s subordinate employees.
Affirmed.
Notes
Plaintiff’s reliance on Alliance Corp. v. HBE Corp.,
We reject the additional arguments that plaintiff makes on appeal without discussion.