Gates v. Homesite Ins. Co.
| Docket Number | 84448-2-I |
| Decision Date | 18 September 2023 |
| Parties | JASON GATES and AMANDA GATES, husband and wife, Appellants, v. HOMESITE INSURANCE COMPANY, a foreign insurance company, Respondent. |
| Court | Washington Court of Appeals |
Order Filed Date: 10/30/2023
Nonparty Shangri-La LLC filed a motion to publish the opinion filed on September 18, 2023 in this case. Appellants Jason and Amanda Gates filed an answer to the motion. A majority of the panel has determined that the motion should be granted. Now therefore, it is hereby
ORDERED that the motion to publish the opinion is granted.
Jason and Amanda Gates obtained default judgments against Homesite Insurance Company after Homesite failed to appear or respond to their lawsuit for breach of contract and violation of the Insurance Fair Conduct Act (IFCA), RCW 48.30.010 to .015 More than a year later, Homesite moved to vacate the judgments. The court granted the motion under CR 60(b)(5) and dismissed the Gates' claims at summary judgment. The Gates appeal. Because Homesite was not entitled to relief from the default judgments under CR 60(b)(1), (4), (5), or (11), we reverse, vacate the orders of dismissal, and remand for the trial court to reinstate the default judgments.
In 2018, the Gates bought a home in Maple Valley. They closed on the property on April 4 and moved in immediately. The Gates insured the home through Homesite. Homesite issued the Gates a policy effective April 4, 2018 to April 4, 2019.
Shortly after moving in, the Gates learned that the previous occupants used drugs in the home. They "promptly" arranged for sampling to determine whether the home contained harmful residues. The sampling showed methamphetamine residue that exceeded Washington State clean-up guidelines.
The Gates made a claim to Homesite for loss of personal property and structural damage, but Homesite denied the claim. In a letter dated April 23, 2018, Homesite told the Gates that their policy did not cover "discharge or release of pollutants or chemicals" or "loss prior to the policy period."
The Gates hired an attorney to pursue the claim. On May 8, 2018 their attorney e-mailed Homesite a letter, acknowledging that "[we] understand that the activities resulting [in] the methamphetamine contamination occurred before the Homesite policy took effect, and that damage to the structure is therefore not covered." But the attorney explained that the Gates were still seeking coverage for their personal property losses, "which occurred when the family moved their possessions into the home and exposed them to the chemical residue during the policy period."
Ultimately Homesite paid the Gates for their damaged personal property. It mailed them a check for $11,552.62 on September 17, 2018. But Homesite maintained its denial of coverage for the Gates' structural damage.
On January 28, 2019, the Gates sued Homesite. They alleged breach of contract and violation of the IFCA, seeking compensation for their structural damage, attorney fees, and costs. The Gates served the Office of the Insurance Commissioner (OIC) with a summons and complaint.[1] But they did not give Homesite 20 days' notice of their lawsuit as required under the IFCA.[2] The OIC accepted service on January 29, 2019. It forwarded the summons and complaint to Homesite the next day. But the Homesite employee who received the summons did not inform others in the company about the lawsuit. Homesite did not appear or respond to the complaint.
In March 2019, the Gates obtained an order of default and default judgment for their remediation costs, totaling $87,913.92 plus interest. Because the Gates alleged Homesite unreasonably denied their claim, the court doubled the award.[3] The court also awarded $260.39 in costs, for a total judgment of $176,088.03. On August 5, 2019, the Gates obtained a supplemental judgment for attorney fees and costs for $16,935.28 plus interest. Homesite did not pay the judgments.
One year later on August 5, 2020, the Gates contacted Homesite. They sought to collect on the judgments, which had been accruing interest, for a total payoff amount of $224,989.04. Homesite then filed a notice of appearance with the trial court, and on December 28, 2020, moved to set aside the judgments. The court scheduled a hearing on Homesite's motion for January 11, 2021 without oral argument.[4] Homesite argued that the court should set aside the default judgments for good cause under CR 55(c)(1) and vacate them for mistake, inadvertence, or excusable neglect under CR 60(b)(1). The Gates responded that Homesite was not entitled to relief under CR 60(b)(1) because Homesite moved to vacate more than a year after the court entered the judgments. Although not raised by Homesite, the Gates also argued extraordinary circumstances did not warrant relief under CR 60(b)(11). In reply, Homesite argued that the court also had grounds to vacate the judgments for misrepresentation and misconduct under CR 60(b)(4) and that CR 60(b)(11) applied.
On February 11, 2021, the court granted Homesite's motion and vacated the default judgments under CR 60(b)(5). It concluded that the judgments were void because the Gates filed and pursued their claims without giving Homesite the 20-day notice required under the IFCA. The court then "weighed the equities" and awarded the Gates their attorney fees and costs incurred in litigating their motions for default and default judgment and Homesite's motion to vacate.
The Gates moved for reconsideration, which the court denied. The Gates then appealed, seeking discretionary review from this court. A commissioner of this court denied review, concluding that the Gates failed to show review was warranted under RAP 2.3(b).
In April 2022, Homesite moved for partial summary judgment on the Gates' IFCA claims. The Gates cross moved for summary judgment as to Homesite's liability. The court granted summary judgment for Homesite and denied it for the Gates. Homesite then moved for partial summary judgment on the Gates' breach of contract claim, which the court granted. The court dismissed the Gates' lawsuit with prejudice.
The Gates appeal.
The Gates argue the trial court improperly vacated the default judgments because Homesite failed to show it was entitled to relief under CR 60(b). The Gates also seek attorney fees.
When interpreting court rules, we apply principles of statutory construction. Plein v. USAA Cas. Ins. Co., 195 Wn. 2d 677, 685, 463 P.3d 728 (2020). WESCO Distrib., Inc. v. M.A. Mortenson Co., Wn.App. 712, 715, 946 P.2d 413 (1997).
Under CR 55(c), "[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 60(b) provides that "[o]n motion and upon such terms as are just, the court may relieve a party . . . from a final judgment, order, or proceeding" for these reasons:
The party seeking relief under CR 60(b) bears the burden of showing relief is warranted. Fowler v. Johnson, 167 Wn. App, 596, 605, 273 P.3d 1042 (2012).
The trial court granted Homesite's motion to vacate under CR 60(b)(5). It concluded that "the default finding and default judgment previously entered in this matter are properly vacated pursuant to CR 60(b)(5)" because "[i]t is undisputed that [the Gates] filed and pursued their claims in this matter without first presenting the requisite notice under RCW 48.30.015(8)."[6] The Gates argue the trial court erred by setting aside the default judgments under CR 60(b)(5) because notice under RCW 48.30.015(8)(a) is not a jurisdictional requirement. We agree.
CR (60)(b)(5) provides relief from a final judgment on a showing that "[t]he judgment is void." A judgment is void if the issuing court lacks personal jurisdiction or subject matter jurisdiction over the claim. Rabbage v. Lorella, 5 Wn.App. 2d 289, 297, 426 P.3d 768 (2018). Courts have a nondiscretionary duty to vacate a void judgment and can vacate such a judgment at any time. Id. at 300; Allstate Ins. Co. v. Khani, 75 Wn.App. 317, 323, 877 P.2d 724 (1994). We review a trial court's ruling under CR 60(b)(5) de novo. Ahten v. Barnes, 158 Wn.App. 343, 350, 242 P.3d 35 (2010).[7]
Generally, a trial court has personal jurisdiction over a party-defendant that receives lawful service of a summons and complaint. See Mid-City Materials, Inc. v. Heater Beaters Custom Fireplaces, 36 Wn.App. 480, 483-84, 674 P.2d 1271 (1984). And there are very few limitations on the subject matter jurisdiction of superior courts in Washington. Outsource Servs. Mgmt. LLC v. Nooksack Bus. Corp., 181 Wn.2d 272, 276, 333 P.3d 380 (2014). Under our constitution, superior courts "have original jurisdiction in all cases and of all proceedings in which jurisdiction shall not have been by law vested exclusively in some other court." WASH. CONST. art IV, § 6.
The Gates properly served Homesite by serving the OIC with a summons and a copy of their complaint. See RCW 48.05.200(1); Prest v. Am. Bankers Life Assur. Co. 79 Wn.App. 93, 99-100, 900 P.2d 595 (1995). As a result, the trial court had personal jurisdiction over...
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