Evans v. Firl

Decision Date31 January 2023
Docket Number38364-4-III
Citation523 P.3d 869
Parties Madison EVANS, individually, and as parent and guardian of R.A.C., a minor child, Respondents, v. Zachary M. FIRL, and Jane Doe Firl, husband and wife, individually and the marital community composed thereof, Appellants.
CourtWashington Court of Appeals

OPINION PUBLISHED IN PART

Siddoway, C.J.

¶1 Zachary Firl appeals the denial of his motion to vacate an $834,567.54 default judgment entered against him for a personal injury claim he had tendered to his homeowner's insurer. He claims he was never served with process, that his insurer and lawyer had appeared but were not given required notice, and that equitable grounds supported vacating the $800,000.00 awarded as noneconomic damages.

¶2 The only evidence presented in support of the sizeable noneconomic damage award was evidence that R.A.C.1 incurred $26,067.79 in medical expenses after being bitten by Mr. Firl's dog, that the toddler was a candidate for scar revision surgery at a cost of $8,500.00 to $10,000.00, and skeletal hearsay information about six settlements allegedly negotiated by R.A.C.’s lawyers for other clients with dog bite injuries. No hearing was held.

¶3 One of the ways Washington law permits a defaulting party to demonstrate a prima facie defense to a large noneconomic damage award is by showing that the trial court was presented with legally insufficient evidence to support the award. The plaintiffs’ evidence was insufficient here. In the published portion of this opinion, we hold that applying equitable principles and CR 55(b)(2), the clear deficiency in that evidence overcomes even marginal demonstrations of excusable neglect and diligence. In the unpublished portion of the opinion, we affirm the trial court's rejection of Mr. Firl's arguments that he overcame the plaintiffs’ proof of service and that he had appeared and was entitled to notice before default.

¶4 We affirm the judgment as to liability, the $34,567.54 awarded as special damages, and the $701.95 awarded as statutory costs. We reverse the award of noneconomic damages and remand for a trial on that element of the plaintiffs’ damages.

FACTS AND PROCEDURAL BACKGROUND

¶5 On a January 2019 play date at a home owned by Zachary Firl, Madison Evans's then two-year-old son, R.A.C., was bit in the face by Mr. Firl's dog. The injuries and a resulting infection allegedly required five days of in-patient hospitalization.

¶6 When Mr. Firl was contacted months later by a lawyer representing Ms. Evans and her son, Mr. Firl referred the lawyer to his homeowner's insurer, Allstate Insurance Company, where Mr. Firl had dealt with adjuster Craig Peters. In July 2019, R.A.C.’s lawyers wrote to Allstate's claims department, informing it of their representation and that they would compile a settlement letter with supporting documentation when R.A.C. attained maximum medical improvement. Mr. Peters promptly responded, requesting, among other information and documentation, medical records, the identification of all medical care providers, and a signed medical authorization.

¶7 Over the next six months, Mr. Peters followed up twice requesting information on R.A.C.’s injuries and treatment, receiving no response until a settlement demand letter was provided on January 15, 2020. The letter made a total demand of $335,718.54—materially more than Mr. Firl's $250,000.00 insurance limits. Mr. Peters made a counteroffer of $66,731.49 three weeks later, proposing to pay $18,231.49 toward medical specials, $8,500.00 for future surgery, and $40,000.00 in noneconomic damages.

¶8 Mr. Peters claims to have followed up by letter or phone call to R.A.C.’s lawyers monthly thereafter through June 2020, largely without response, but contends he spoke with a case manager at the law firm on May 12, 2020. The case manager allegedly said she would try to reach the client and get back to him. Instead, in late June 2020, R.A.C.’s lawyers prepared a summons and complaint on behalf of R.A.C. and his mother that were allegedly served on Mr. Firl at 3:28 p.m. on July 25, 2020. They filed the summons and complaint in August 2020 and obtained an order of default on September 28, 2020.

¶9 Mr. Peters, having no knowledge of the lawsuit, claims he sent a follow-up letter to the law firm on November 2, 2020, and left a phone message on January 6, 2021, again requesting contact. His contacts went unanswered.

¶10 On January 20, 2021, R.A.C.’s and his mother's lawyers filed a motion for default judgment, seeking $784,567.54 in damages for R.A.C. and $50,000.00 for his mother. They noted it for hearing on the afternoon of January 27, 2021.

¶11 The plaintiffs’ lawyers’ first acknowledgment of Mr. Peters's post-May 2020 contacts was received by him on February 1, 2021, when he received a letter from attorney Maridith Ramsey dated January 28, 2021. Ms. Ramsay's letter stated that "[a]s indicated at the time of the initial offer in this case, my client is not willing to negotiate with the carrier due to the insistence that it take improper reductions and avail itself to the benefit of collateral source payments. ... As a result, we opted to initiate litigation ... I do not have the authority to proceed with further settlement discussions at this time." Clerk's Papers (CP) at 82. The letter attached a "courtesy copy" of the summons and complaint. Id. The letter did not disclose, and the attachment did not reveal, that Mr. Firl had already been served or that an order of default, and possibly a judgment, had already been entered.

¶12 Court records indicate that R.A.C.’s and Ms. Evans's lawyers failed to appear for the January 27 hearing, which was struck. Nevertheless, on February 1, 2021, and apparently without conducting a hearing, the trial court entered the plaintiffs’ proposed findings, conclusions, and judgment, awarding the $834,567.54 in total damages and $701.95 in costs they had requested.

¶13 Having learned on February 1 that a lawsuit had been filed, Mr. Peters called Mr. Firl on February 3, 2021, to see if he had received a copy of the complaint. Mr. Firl stated he had not. He agreed to notify Mr. Peters if and when he was served. Mr. Peters then arranged for Allstate to retain an attorney to represent Mr. Firl.

¶14 Several weeks after defense counsel was retained, he discovered the default judgment entered on February 1. According to the defense lawyer, he made the discovery on March 26, 2021, and immediately wrote, faxed and attempted to phone Ms. Ramsey to inform her the default had been taken improperly. The only response he received was a notice of unavailability filed on April 19, 2021, stating that the firm and its lawyers would be unavailable from April 28, 2021 through May 7, 2021.

¶15 Defense counsel filed a motion for relief from the judgment on June 23, 2021. Mr. Firl's lead argument was that he had never been served, and that under CR 60(b)(5) the judgment was void. Alternatively, he sought relief on equitable grounds under CR 60(b)(1). He argued that R.A.C.’s lawyers’ failures to respond to Mr. Peters's contacts were deceptive, particularly Ms. Ramsey's failure to disclose in her January 28, 2021 letter that Mr. Firl had already been served and that an order of default, and possibly judgment, had already been entered. He argued that the damages attributable to the claim were "much closer to [Allstate's] $66,731.49 offer than the $834,567.54 judgment entered," and no substantial hardship would result if the judgment were vacated, "since the reasonable amount of damages will be either agreed upon or determined by a jury." CP at 58. Even if the judgment's finding of liability was not set aside, Mr. Firl argued that the money judgment should be, relying on this court's 1999 decision in Shepard Ambulance, Inc. v. Helsell , Fetterman, Martin, Todd & Hokanson , 95 Wash. App. 231, 241-42, 974 P.2d 1275.

¶16 Mr. Firl's motion was supported by declarations from his lawyer, Mr. Firl and Mr. Peters. Mr. Firl testified that he had never been served and the description of the person served on the return of service did not fit him, as he was 23 years old at the time of the alleged service, not 27. The return of service had described the person served as "Age: 27, Sex: M, Race/Skin Color: WHITE, Height: 5’9, Weight 180, Hair: BROWN, Glasses: N." CP at 9. Mr. Firl testified that the description of the person served "appears to match a former renter ... who was 27 years old at the time" and who he believed moved out of the residence "in late summer of 2020." CP at 64. Defense counsel argued in Mr. Firl's briefing that "a temporary renter ... would not be a person of ‘suitable discretion’ sufficient for RCW 4.28.080(16)." CP at 57.

¶17 Mr. Peters's and defense counsel's declarations addressed their actions taken on Mr. Firl's behalf and their belated discovery of the lawsuit, order of default, and default judgment. Mr. Peters testified to the $335,718.54 settlement demand he had received from plaintiffscounsel and testified that after reviewing the information provided to him, he had offered $66,731.49, which he believed to be a reasonable amount of damages.

¶18 Mr. Firl appeared and testified at the hearing on the motion to vacate the default judgment. He testified that his birth date was July 9, 1996, making him 24 on the day of alleged service rather than 23. He denied being served. He testified that in July 2020, there were five others of about his age living with him in his home, and that visitors and friends were "always ......

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