Capital One Bank (Usa), N.A. v. Wallace
| Decision Date | 13 May 2014 |
| Docket Number | No. 31216-0-III,31216-0-III |
| Court | Washington Court of Appeals |
| Parties | CAPITAL ONE BANK (USA), N.A., Respondent, v. CHARMON WALLACE, Appellant. |
SIDDOWAY, C. J. — Charmon Wallace appeals the trial court's refusal to set aside a default judgment entered in a collection action by Capital One Bank (USA), N.A. We find no error or abuse of discretion and affirm.
Capital One commenced this action to recover $4,439.74 in unpaid credit card debt in May 2010 by personally serving Charmon Wallace with copies of the summons and complaint.
Six months later, and not having seen any answer or appearance from Ms. Wallace, the bank filed its summons and complaint in Spokane County Superior Court and moved for an order of default and judgment. Its motion was supported by the affidavit of one of its litigation support representatives, who testified to her familiaritywith its business books and records and recounted information about Ms. Wallace's account, breach in payment, and balance owed. The bank did not serve Ms. Wallace with notice of its motion.
The trial court granted the motion and on November 16, 2010 entered the bank's proposed judgment for $5,247.70, which included costs and prejudgment interest. The bank claims that its lawyer mailed a copy of the judgment to Ms. Wallace.
In aid of collection, the bank moved for and obtained an order requiring Ms. Wallace to appear in March 2011 to be examined as to her assets. The order was served; Ms. Wallace appeared; and in the course of that supplemental proceeding she and the bank's lawyer discussed a possible settlement, which the bank approved thereafter. The only written memorialization of the settlement is an April 6, 2011 letter from the lawyer to Ms. Wallace referencing the title and cause number of the collection action and "confirm[ing] that my client is willing to settle the above referenced matter" for $3,500, to be paid in a lump sum or in $250 a month installments commencing May 1, 2011. Clerk's Papers (CP) at 172. The bank did not treat the executory settlement understanding as satisfying its judgment, and its lawyer's letter to Ms. Wallace stated that "[f]ailure to adhere to the terms of this settlement agreement may result in other collection activity." Id.
Ms. Wallace made four $250 payments in May, June, July, and August 2011. She failed to make the payment due in September 2011 and the bank reportedly sent apayment reminder letter to which Ms. Wallace did not reply. She made only a partial payment of $100 in October 2011. She made one further payment, of $1,000, in February 2012.
When no more payments were forthcoming, the bank applied for and in April 2012 obtained a writ of garnishment against Ms. Wallace's bank account for the $3,940.82 remaining owed on the judgment. In proceedings taking place in May and June, the trial court resolved a dispute over an exemption claimed by Ms. Wallace (who was now represented by counsel) culminating in a reduced garnishment order, a release of some garnished funds to Capital One, and a judgment and order that Ms. Wallace pay a remaining nonexempt amount of $2,639.56.
It was not until July 2012, more than a year and a half after entry of the default judgment, that Ms. Wallace filed a motion for an order vacating the default. In support of the motion, Ms. Wallace submitted to the court for the first time an unsigned letter which she testified was a duplicate of a letter she had signed and sent to the bank's lawyers in June 2010, shortly after being served with the summons and complaint. The letter stated:
CP at 129 (errors in original).
In accordance with CR 60(e), Ms. Wallace obtained an ex parte order to show cause that required the bank "to appear before the court on the 17th day of August" to show cause why the judgment should not be vacated. CP at 158-59. Lawyers for the bank later objected that because Ms. Wallace did not provide them with courtesy copies of the motion and supporting materials she served on the bank's registered agent, they did not learn of the August 17 hearing until August 13. They filed materials in opposition to the motion on August 14, which included affidavits denying that its lawyers had ever received Ms. Wallace's ostensible June 30, 2010 letter. Ms. Wallace filed a reply on August 15, and the bank filed a surreply on August 16.
The hearing proceeded as scheduled. The court refused to consider the surreply and summarily denied a motion by Ms, Wallace to strike the bank's opposition materials as late-filed. After hearing argument of counsel, the court denied Ms. Wallace's request for relief from the default judgment. In written orders later presented to and entered by the court, it found that Ms. Wallace "was not entitled to notice of entry of the Judgment," and that she "was on notice that the Judgment had been entered for more than one year before bringing this Motion as evidenced by the parties' agreement and [her] partial performance of said agreement." CP at 247-48.
Ms. Wallace appeals.
The rules for superior court ordinarily require a defendant in a civil action to serve her answer within 20 days of being served with a summons and complaint. CR 4(a)(2), 12(a)(1). They provide that if a notice of appearance is made, it shall be in writing, signed by the defendant or his lawyer, and served upon the person whose name is signed on the summons. CR 4(a)(3). When a defendant has failed to appear, plead, or otherwise defend as provided by the rales, a plaintiff may move for default. CR 55(a)(1).
In order to obtain a judgment by default, CR 55(a)(3) requires the plaintiff to serve "[a]ny party who has appeared in the action for any purpose" with a written notice of the motion for default at least five days before the hearing on the motion. It explicitly provides that "[a]ny party who has not appeared before [a] motion for default and supporting affidavit are filed is not entitled to a notice of the motion" except in the case of actions in which default is sought more than one year after commencement, as provided by CR 55(f)(2)(A). CR 55(a)(3). RCW 4.28.210 more generally provides that a defendant who has appeared—and only a defendant who has appeared—is entitled to notice of all subsequent proceedings.1
Once default has been entered, the civil rules provide that "[f]or good cause shown and upon such terms as the court deems just, the court may set aside an entry of default and, if a judgment by default has been entered, may likewise set it aside in accordance with rule 60(b)." CR 55(c)(1). CR 60(b) authorizes the superior court to relieve a party from a final judgment or order for a number of reasons provided by the rule. Any such motion must be made within a reasonable time and, depending upon the basis for requesting relief, may be required to be brought within a year after the judgment or order was entered. CR 60(b).
A defendant may have a default judgment set aside on any of the grounds provided by CR 60(b). A common basis for seeking relief from a default judgment is that the defendant did appear, was entitled to notice of a default judgment hearing, and yet did not receive it. A party that has appeared in an action but is not served with notice of a motion for default is entitled to have a default judgment set aside "as a matter of right," and the court "has no discretion to exercise on the question of whether the judgment should be set aside." Tiffin v. Hendricks, 44 Wn.2d 837, 847, 271 P.2d 683 (1954). Relief from adefault judgment is also available where a defendant seeking to set aside a default judgment demonstrates substantial compliance with the requirements for an appearance. Morin v. Burris, 160 Wn.2d 745, 749, 755, 161 P.3d 956 (2007).
A second common basis for seeking relief is mistake, inadvertence, surprise, or excusable neglect under CR 60(b)(1). The showing required to support exercise of the court's discretion for those reasons is well settled, consisting of four factors identified almost a half a century ago in White v. Holm, 73 Wn.2d 348, 352,438 P.2d 581 (1968) (citing Hull v. Fining, 17 Wash. 352, 49 P. 537 (1897)):
These factors are: (1) That there is substantial evidence extant to support, at least prima facie, a defense to the claim asserted by the opposing party; (2) that the moving party's failure to timely appear in the action, and answer the opponent's claim, was occasioned by mistake, inadvertence, surprise or excusable neglect; (3) that the moving party acted with due diligence after notice of entry of the default judgment; and (4) that no substantial hardship will result to the opposing party.
If the defaulting party "demonstrate[s] a strong or virtually conclusive defense to the opponent's claim, scant time will be spent inquiring into the reasons which occasioned entry of the default," so long as the motion is timely and the failure to appear was not willful. Id. If only a prima facie defense is shown, the remaining factors will be more heavily scrutinized. Id. at 352-53.
Additional rationales supporting relief are if the plaintiff has done something that...
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