Hastings v. Espinosa

• Decision Date: 30 August 1983
• Docket Number: No. 2-68482,2-68482
• Citation: 340 N.W.2d 603
• Parties: Cheryl J. HASTINGS, Administrator of the Estate of Crete Bryson Hastings, Deceased, and Alfred S. Cerruti, Administrator of the Estate of Kenneth Allen Cerruti, Deceased, Plaintiffs-Appellants, v. Donald ESPINOSA, Folley Bros., Inc., et al., Defendants-Appellees.
• Court: Iowa Court of Appeals

Page 603

340 N.W.2d 603

Cheryl J. HASTINGS, Administrator of the Estate of Crete Bryson Hastings, Deceased, and Alfred S. Cerruti, Administrator of the Estate of Kenneth Allen Cerruti, Deceased, Plaintiffs-Appellants, v. Donald ESPINOSA, Folley Bros., Inc., et al., Defendants-Appellees.

No. 2-68482.

Court of Appeals of Iowa.

Aug. 30, 1983.

Michael J. Galligan and William A. Wickett of James & Galligan, P.C., Des Moines, for plaintiffs-appellants.

Dorothy L. Kelley of Jones, Hoffmann & Davison, Des Moines, for defendants-appellees Combustion Engineering, Chamberlain, Hersh, Howk & Ballou.

Considered by OXBERGER, C.J., and DONIELSON, SNELL, SCHLEGEL and HAYDEN, JJ.

SCHLEGEL, Judge.

The plaintiff appeals from the district court's ruling sustaining defendant's motions to set aside default judgments pursuant to Iowa Rule of Civil Procedure 236 and to vacate default judgments pursuant to Iowa Rule of Civil Procedure 252. The appeal from the Iowa Rule of Civil Procedure 252 order was taken as a matter of right and the appeal from the Iowa Rule of Civil Procedure 236 order was granted by the Supreme Court pursuant to Iowa Rule of Appellate Procedure 2. The plaintiffs assert that there was insufficient evidence to support the trial court's determination that the defendants Howk and Ballou were prevented from defending as a result of unavoidable casualty or misfortune and that the defendants Chamberlain and Hersh did not show good cause for their failure to timely appear and answer the petition. We affirm.

The plaintiffs' decedents were killed at a construction site near Chillicothe, Iowa, on January 4, 1979. On January 2, 1981, the plaintiffs filed a petition seeking damages resulting from the deaths of the decedents, asserting that the deaths resulted from the negligence of multiple defendants, including Danny Howk, an employee of Combustion Engineering, Inc., and the gross negligence of the decedents' employer, Combustion Engineering, Inc., and of Austin Ballou, Richard Chamberlain, Frank Jackson George Harriman and Len Hersh, employees of Combustion Engineering. Defendant Howk was served with an original notice on January 7, 1981. Defendant Ballou was served with an original notice on January 12, 1981. On March 3, 1981, defendant Chamberlain was served with the original notice and on March 4, 1981, defendant Hersh was served. All of these defendants contacted Combustion Engineering and were informed that their defense would be handled by the company.

An answer was filed on behalf of defendant Espinosa and all corporate defendants including Combustion Engineering by Combustion's wrap-around insurer, Aetna Insurance Company, on January 23, 1981. On January 26, 1981, a supervisor in the regional claims office of CNA Insurance Company, insurer for Combustion Engineering, was notified of a suit against Combustion Engineering and several of its employees. Combustion Engineering indicated that it wanted its employees protected. The supervisor called Brian Van Den Bosch, a CNA claims adjuster, to inform him of the lawsuit and to tell him to obtain a written extension of time to answer for Combustion Engineering and its employees. On January 27, 1981, Van Den Bosch called plaintiffs' attorney, David Phipps. Van Den Bosch claimed that he asked for and obtained an extension of time to answer for Combustion Engineering and its employees. Van Den Bosch indicated that CNA had a coverage question with respect to the employees of Combustion Engineering. He also asserted that Phipps indicated that it was not necessary to have an indefinite extension because Phipps thought that an attorney for Aetna Insurance Company had answered for everyone. Phipps allegedly agreed to call Van Den Bosch if the file needed to be moved. Phipps claimed that Van Den Bosch never asked for an extension for the individual employees. Neither sent a letter to the other to confirm the agreement.

Ed McAllister, a claims representative for Aetna, sent a letter to the director of insurance for Combustion Engineering on February 13, 1981, advising that Aetna had no coverage on Combustion Engineering's employees and suggesting that CNA or Combustion Engineering defend for them. On March 5, 1981, Van Den Bosch prepared an internal report for the CNA home office which stated that defendant Howk was an employee of a subcontractor and that defendants Ballou, Chamberlain and Hersh were employees of Combustion Engineering. It also stated that Aetna was defending all defendants. Apparently Van Den Bosch had not conducted an investigation to determine the employment status of Howk.

Motions for default were filed against defendants Howk and Ballou on March 11, 1981, on the basis of their failure to appear and answer. On March 16, 1981, default judgments were entered against defendants Howk and Ballou in the amount of $1,250,000. In reaching these amounts, the district court reviewed the contents of plaintiffs' attorney's file.

At a meeting with McAllister on March 15, 1981, Van Den Bosch discovered that Aetna had not appeared for any of the employees for Combustion Engineering. He indicated that he was surprised by this disclosure but believed his agreement with Phipps allowed the employees an indefinite period of time to answer. Motions for default were filed against defendants Chamberlain and Hersch on March 27, 1981. On March 31, 1981, default judgments were entered against defendants Chamberlain and Hersh in the amount of $1,250,000. The proof of damages was similar to the proof provided prior to the entry of default judgments against Howk and Ballou.

In a letter dated April 8, 1981, Van Den Bosch advised the CNA home office about the meeting with McAllister and advised CNA to answer for the named Combustion Engineering employees. He indicated that there was an unlimited extension of time to answer. CNA instructed Van Den Bosch on May 4, 1981, to forward the file to a law firm for the defense of Ballou, Chamberlain, Jackson, Harriman and Hersh. Van Den Bosch instructed counsel to defend for these individuals, but did not instruct counsel to defend for Danny Howk.

On May 26, 1981, counsel retained by CNA to defend the employees of Combustion Engineering indicated that default judgments had been entered against Ballou, Chamberlain and Hersh. Van Den Bosch subsequently called the plaintiff's attorney who told him that Van Den Bosch never mentioned the employees in asking for an extension. According to Van Den Bosch, he indicated that the plaintiffs' attorney was incorrect and that the whole coverage question concerned the employees. The plaintiffs' attorney indicated that Van Den Bosch admitted during the conversation that he may not have mentioned the employees during the earlier conversation. Van Den Bosch denied making this statement.

Chamberlain and Hersh filed a motion to set aside the default judgment on May 29, 1981, asserting in part that the entries of default resulted from conduct of plaintiffs' counsel which misled the defendants into believing that the time to move and plead had been extended and that the entries of the default were the result of misunderstanding, accident or mistake concerning the communications between plaintiff's attorney and the defendants' insurers. On the same date defendant Ballou filed a petition to vacate judgment and for injunction asserting that the judgment against him had been obtained by fraud. The motion to set aside default judgment and the petition to vacate judgment were amended to assert that the default judgments were improperly entered since they did not state that any evidence was presented on the question of damages which provided the basis for the judgment amounts and that the plaintiffs were not entitled to an entry of a judgment without proof concerning damages.

Van Den Bosch was originally informed that Howk was an employee of Combustion Engineering on October 8, 1981. On November 25, 1981, Howk filed a petition to vacate judgment and for injunction, asserting that the judgment against him had been obtained by fraud and as a result of unavoidable casualty. He also claimed that the default judgment was improperly entered because the plaintiffs were not entitled to a default judgment without proof concerning damages and that the judgment did not state that any such proof was presented to the court concerning the amount of damages which provided the basis for the judgment amount. Defendant Ballou amended his petition to allege that the default judgment was the result of unavoidable casualty.

In an order filed on April 8, 1982, the trial court sustained the motion to set aside the default judgments against Chamberlain and Hersh and the petitions to vacate the judgments against Howk and Ballou. The trial court found that Van Den Bosch obtained from plaintiffs' attorney an extension of time "within which Combustion Engineering, Inc. and its employees might appear and defend the action brought against them by the plaintiffs." The trial court determined that the extension was for an indefinite period of time and that the plaintiffs' attorney "without further notice proceeded to take the default judgment." The trial court did not find that the plaintiffs' attorney committed any fraud but stated that Van Den Bosch and his company "were justified in relying upon the agreement for an extension of time and could under all circumstances reasonably conclude that the extension applied to Combustion Engineering and all its involved employees." The trial court indicated that there was a complicated insurance coverage question and that the plaintiffs would not be prejudiced by the ruling.

Motions to vacate default judgments pursuant to Iowa Rule of Civil Procedure 252 and to set aside default judgments pursuant to Iowa Rule of Civil Procedure 236 are triable at law. Williamson v. Casey, 220 N.W.2d 638, 639 (Iowa 1974) (a proceeding under rule 236 is at law); Jacobson v. Leap, 249 Iowa 1036, 1041, 88 N.W.2d...