Norton v. BrownNorton v. Brown
Lоyal Brown appeals the trial court’s denial of his motion to reconsider its decision not to vacate a default judgment for over $77,000 in favor of Jeffrey Norton, the plaintiff in a personal injury action. Mr. Brown contends the trial court made several incorrect rulings, whiсh in effect denied his constitutional right to due process of law. Further, he claims the trial court abused its discretion when it refused to vacate the default judgment based on excusable mistake and confusion and/or because the monetary judgment was excessive. We reverse and remand for trial.
On August 11, 1995, Mr. Brown and Mr. Norton were involved in a motor vehicle accident in Yakima County, Washington. The parties agree the accident occurred when Mr. Brown’s vehicle struck Mr. Norton’s vehicle after Mr. Brown fell asleep at the wheel. Mr. Norton was injurеd when his vehicle left the roadway and flipped over on its side. The parties dispute the extent and cause and/or exacerbation of Mr. Norton’s injuries.
Allstate Insurance Company insured Mr. Brown at the time of the accident. He timely informed Allstate about the acсident and at some point Allstate began settlement negotiations with Mr. Norton’s legal counsel regarding his claim for personal injuries resulting from the accident.
When the parties did not reach an agreed settlement, Mr. Norton’s counsel prepared a summons and cоmplaint for personal injuries. On April 17, 1997, counsel for Mr. Norton sent a courtesy copy of the pleadings to Brett Follett, the Allstate adjuster handling Mr. Brown’s claim, with a letter informing him that the papers were “out for service” on Mr. Brown. The pleadings were filed the next day in Yakima County Superior Court and Mr. Brown was served on April 21. Mr. Brown did not ever notify Allstate about the summons and complaint because he thought his insurer was already handling the claim on his behalf.
When no notice of appearance or answer from Mr. Brown was received within the 20 days allowed by law, counsel for Mr. Norton requested and was granted an order of default on May 16. Following a hearing on the default action, the court entered a default judgment against Mr. Brown on June 17, 1997, in the amount of $77,294.11 plus interest.
Counsel for Mr. Norton chose not to inform Mr. Brown that a default judgment had just been entered. In fact, although Mr. Brown tried at various times over the next 10 months to contact Mr. Norton regarding the personal injury lawsuit, no two-way communication was established until Mr. Brown filed a motion to compel in April 1998. It was at the hearing on the motion to compel that Mr. Brown’s counsel finally learned that a default judgment had bеen entered against his client 10 months prior.
Mr. Brown filed his answer and a motion to vacate the default judgment on June 8, 1998. A hearing was held July 6 at which both parties were represented by counsel. The motion to vacate was denied. At a later presentment hearing the court concluded that Mr. Brown presented evidence of a possible defense as to the extent and existence of Mr. Norton’s damages. Additionally, the court found that Mr. Brown presented a prima facie argument that the judgment amount was arguably excessive. Ultimately, thе court found that Mr. Brown’s failure to appear and defend the action was not the result of excusable neglect.
Mr. Brown filed a timely motion for reconsideration asking the court to find that there was excusable mistake and confusion between Mr. Brown and Allstate as tо what Mr. Brown was to do with the summons and complaint after he had been served. Additionally, Mr. Brown asked the court to vacate the default judgment based on its award of excessive damages.
The motion for reconsideration was heard in August 1998 with both parties being represented by counsel. In denying the motion, the court found that Mr. Brown did not understand the necessity of an affirmative response by him to Mr. Norton’s summons and complaint. The court stated that “confusion occurred as to what [Mr. Brown’s] responsibilities may be, although certainly we must agree that the summons is written to dispel any reasonable doubt about what one is to do.” However, the court also found that there was no excusable neglect in failing to answer the complaint such that the court would set aside the default judgment. In its oral opinion the court stated:
[T]he insurаnce company, albeit an unnamed party in this matter, but nonetheless a responsive party and one who has a contractual obligation as to their insured, was involved and had received specific notice that settlement negotiations between Mr. Nelson [plaintiff’s counsel] and Mr. Brett Follett, of Allstate Insurance Company in Spokane, were unable to come to an early agreement about settling this case.
Based on the fact that Allstate had direct notice that service of a summons and complaint on Mr. Brown was forthcoming, the court specifically found that once Allstate knew of the lawsuit, it had an affirmative duty to make a timely inquiry of Mr. Brown; particularly to warn him of the possibility of service. Further, the court found that Allstate had to respond or take some other investigative аction to determine whether there had been filing and/or service and that Allstate failed to do so. For these reasons, the court denied the motion for reconsideration.
Mr. Norton claims that, pursuant to RAP 2.5(a)(3), several of Mr. Brown’s due process arguments may not be сonsidered by this court because they are being raised for the first time on appeal. Mr. Brown replies that a party may present issues of manifest error affecting a constitutional right for the first time on appeal. State v. Santos,
Constitutional issues may be raised for the first time on appeal although, as a preliminary matter, they will be closely scrutinized for errors that are manifest and truly of constitutional magnitude. State v. WWJ Corp.,
As a policy matter, our Supreme Cоurt has stated that default judgments are not favored because “ ‘[i]t is the policy of the law that controversies be determined on the merits ....’” Id. at 581 (quoting Dlouhy v. Dlouhy,
“[T]he overriding reason should be whether or not justice is being done. Justice will not be done if hurried defaults are allowed any more than if continuing delays are permitted. . . . What is just and proper must be determined by the facts of each case, not by a hard and fast rule applicable to all situations regardless of the outcome.”
Id. at 582 (quoting Widucus v. Southwestern Elec. Coop.,
When deciding a motion to vácate a default judgment, the court must consider two primary and two secondary factors that must be shown by the moving party. White v. Holm,
The trial court did find that Mr. Brown presented a prima facie defense that the damage award was excessive. However, it did not find that the failure of Mr. Brown to appear was caused by mistake, inadvertence or excusable neglect. The court made no finding regarding Mr. Brown’s diligence in seeking relief or whether or not Mr. Norton would be prejudiced if the judgment were vacated. This was an abuse of discretion.
A genuine misunderstanding between an insured and his insurer as to who is responsible for answering the summons and complaint will constitute a mistake for purposes of vacating a default judgment. Berger v. Dishman Dodge, Inc.,
Berger is factually similar to this case because Mr. Brown was under the impression that his interests were bеing protected by his insurer through settlement negotiations. His insurer did not warn Mr. Brown that a lawsuit was being commenced or that he should expect service of a summons and complaint and that the paperwork should be immediately forwarded to the insurer. The court concluded that Mr. Brown was confused about what to do with the summons and complaint. This was a mistake on the part of the insurer and excusable neglect on the part of Mr. Brown.
Mr. Norton attempts to distinguish Berger by pointing out that although the dealership’s insurer sent the file to the wrong attorney at least it made an attempt to protect the interests of its insured. He contends
Technically, it was not Allstate that requested the court reconsider its denial of Mr. Brown’s motion to vacate the default judgment. It was Mr. Brown’s rеquest. As mentioned above, a review of the transcript of the court’s oral decision on reconsideration makes it clear that the court focused more on the insurance company’s failure to contact Mr. Brown than it did on any excusable neglect on Mr. Brown’s part. Because the case law does not support the trial court’s conclusion, this was an abuse of discretion.
In Calhoun v. Merritt,
The Calhoun facts are very similar to the facts of this case. The court found Mr. Brown had made a prima facie showing that the damages were excessive. As noted above, the failure of the insurer to contact Mr. Brown was a mistake that supports the vacation of a default judgment. The court admitted Mr. Brown was confused about what to do with the summons and complaint. Counsel for Mr. Brown moved immediately to vacate the default judgment once he learned of its existence. Finally, there is nothing in the record that shows that Mr. Norton would be prejudiced by having to present his case at trial. He has known of Mr. Brown’s intent to defend the lawsuit from the beginning of the negotiation process.
Finally, a default judgment is normally viewed as proper оnly when the adversary process has been halted because of an essentially unresponsive party. Gage v. Boeing Co.,
Reversed and remanded for trial. Mr. Nоrton requests an award of fees and expenses incurred before the trial court and on appeal in connection with the litigation concerning the default judgment. In the alternative, he requests that we instruct the trial court on remand to determine what sanctions should be imposed upon Mr. Brown as terms for vacating the default judgment. Mr. Norton’s requests are denied.
Sweeney and Brown, JJ., concur.