Kaye v. Lowe's HIW, Inc.

• Decision Date: 01 November 2010
• Docket Number: No. 63714-2-I.,63714-2-I.
• Citation: 242 P.3d 27,158 Wash.App. 320
• Court: Washington Court of Appeals
• Parties: Deborah L. KAYE, Appellant, v. LOWE'S HIW, INC., City Of Seattle, and Jacques P. Cote, Defendants, and Christopher L. Templeton, and Templeton Construction Services, Inc., Respondents.

242 P.3d 27

158 Wash.App. 320

Deborah L. KAYE, Appellant,

v. LOWE'S HIW, INC., City Of Seattle, and Jacques P. Cote, Defendants,andChristopher L. Templeton, and Templeton Construction Services, Inc., Respondents.

No. 63714-2-I.

Court of Appeals of Washington, Division 1.

Nov. 1, 2010.

Catherine C. Clark, Melody Staubitz, The Law Office of Catherine C. Clark PLLC, Jeffery Michael Campiche, Campiche Blue & Le, PLLC, Seattle, WA, for Appellant.

Jacques P. Cote, Seattle, WA, pro se.

Christopher L. Templeton, Templeton Construction Services, Seattle, WA, pro se.

DWYER, C.J.

¶ 1 Where the facts alleged by a nondefaulting party are insufficient to support a claim, the trial court does not err by declining to enter a default judgment. Because the plaintiff herein failed to set forth facts sufficient to support her claims of negligent entrustment and respondeat superior liability, the trial court properly denied her request for entry of a default judgment on those claims. Accordingly, we affirm.

I

¶ 2 In May 2006,¹ a pickup truck driven by Jacques Cote struck pedestrian Deborah Kaye in a Lowe's parking lot,resulting in serious injuries to Kaye. Jan Van Ysslestyne, referred to by Kaye as her domestic partner, witnessed the collision. Seeking to recover for her injuries, Kaye filed suit against Lowe's HIW, Inc., the City of Seattle, Cote, Christopher Templeton, and Templeton Construction Services (TCS).²

¶ 3 Kaye's complaint asserts that Templeton and TCS are liable for her injuries resulting from Cote's negligence pursuant to theories of negligent entrustment and respondeat superior liability. The complaint alleges that Templeton and TCS were negligent in entrusting the vehicle to Cote. It further alleges that-"[a]t all times relevant hereto"-Cote was an agent of Templeton and TCS who was "acting within the scope of authority of the agency" and for the benefit of Templeton and TCS.

¶ 4 Despite proper service of process, Cote did not appear or answer Kaye's complaint. Templeton and TCS retained counsel and timely filed an answer. Templeton and TCS then moved for summary judgment-a motion they later withdrew. Subsequently, counsel for Templeton and TCS withdrew their representation. Templeton and TCS did not retain new counsel and ceased responding to motions or participating in the litigation.

¶ 5 Anticipating that Cote, Templeton, and TCS would fail to appear at the scheduled trial, Kaye filed a motion for default, noted for the trial date. Cote, Templeton, and TCS did indeed fail to appear for trial. On the trial date, the trial court granted Kaye's motion for an order of default and then heard testimony from Kaye and Van Ysslestyne regarding damages. The trial court admitted into evidence exhibits prepared by Kaye in support of her proposed findings of fact.³

[242 P.3d 30, 158 Wash.App. 325]

¶ 6 Two days after entering the order of default against Cote, Templeton, and TCS, the trial court entered a judgment accompanied by findings of fact and conclusions of law in which Cote alone was found liable for Kaye's damages. The trial court found that there was no evidence that Templeton knew or believed that Cote was an incompetent driver at the time of the collision. It also found that there was insufficient evidence to establish that Templeton should have been on notice that Cote was a dangerous driver. The trial court further found that there was no direct evidence that Cote worked for Templeton on the day of the collision. Accordingly, the trial court did not enter a default judgment against Templeton or TCS.

¶ 7 Kaye appeals.⁴

II

¶ 8 Whether the trial court erred by not entering a default judgment against Templeton and TCS is governed by the provisions of Civil Rule (CR) 55. We review de novo the interpretation of a court rule. Nevers v. Fireside, Inc., 133 Wash.2d 804, 809, 947 P.2d 721 (1997). Court rules are interpreted as though they were drafted by the legislature; thus, we "construe them in accord with their purpose." Nevers, 133 Wash.2d at 809, 947 P.2d 721.

III

¶ 9 Kaye contends that the trial court lacked the authority to evaluate Templeton's and TCS's liability subsequent to entering an order of default against them. She asserts that, once the order of default was entered, Templeton and TCS had admitted liability as a matter of law and, therefore, the trial court was required to enter a default judgment against them. We disagree.

¶ 10 Civil Rule 55 allows a party to bring a motion for default when the "party against whom a judgment for affirmative relief is sought has failed to appear, plead, or otherwise defend as provided by these rules." CR 55(a) (1). Once an order of default is entered, "[t]he defaulting party will be deemed to have admitted all the allegations of the plaintiff's complaint as to liability." 4 Karl B. Tegland, Washington Practice: Rules Practice CR 55 author's cmts. at 334 (5th ed.2006).⁵

¶ 11 However, the plaintiff is not automatically entitled to a default judgment simply because the defendant in default has effectively admitted the plaintiff's allegations. "[A] default is not 'an absolute confession by the defendant of his liability and of the plaintiff's right to recover,' but is instead merely 'an admission of the facts cited in the Complaint, which by themselves may or may not be sufficient to establish a defendant's liability.' " Capitol Records v. Rita Carmichael, 508 F.Supp.2d 1079, 1083 (S.D.Ala.2007) (quoting Pitts ex rel. Pitts v. Seneca Sports, Inc., 321 F.Supp.2d 1353, 1357 (S.D.Ga.2004)). Moreover, the defaulting party admits only factual allegations, not conclusions of law. Kelley v. Carr, 567 F.Supp. 831, 840 (W.D.Mich.1983). Thus, "even after default it remains for the court to consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit mere conclusions of law." Kelley, 567 F.Supp. at 840 (quoting 10 Wright, Miller & Kane, Federal Practice and Procedure: Civil § 2688 pp. 447-448).

¶ 12 Furthermore, the trial court is not deprived of its authority to exercise discretion simply because the defendant in default is precluded from contesting liability. "Whether or not a default will be granted in any given case, is within the court's discretion and dependent upon the circumstances."Graham v. Yakima Stock Brokers, Inc., 192 Wash. 121, 126, 72 P.2d 1041 (1937).

¶ 13 Civil Rule 55(b)-which delineates the procedures for obtaining a default judgment-contemplates such discretion.⁶ The precatory language in the opening clause of CR 55(b) states that "judgment after default may be entered as follows." (Emphasis added.) The rule then provides different procedures for obtaining a default judgment, dependent upon how damages are pleaded in the complaint. Where the complaint pleads "a sum certain or ... a sum which can by computation be made certain," the trial court "shall enter judgment for that amount." CR 55(b)(1). If, on the other hand, the amount of damages is uncertain, the trial court has the discretion to hold hearings "to enable the court to enter judgment or to carry it into effect." CR 55(b)(2). Regardless of how damages are pleaded, however, the opening clause of CR 55(b) provides for judicial discretion in entering a default judgment.

¶ 14 Indeed, interpreting CR 55(b) such that the trial court is denied this discretion would mandate absurd results. If, as Kaye contends, a trial court is obligated to enter a default judgment by virtue of the entry of an order of default, that court would be required to enter judgmenteven where it lacked subject matter jurisdiction or where the party seeking judgment had failed to plead a legally cognizable cause of action. We will not assume that our Supreme Court intended to mandate such absurd results. ⁷See State v. J.P., 149 Wash.2d 444, 450, 69 P.3d 318 (2003) ( "[I]n construing a statute, 'a reading that results in absurd results must be avoided because it will not be presumed that the legislature intended absurd results.' " (quoting State v. Delgado, 148 Wash.2d 723, 733, 63 P.3d 792 (2003))).⁸

¶ 15 This interpretation of our default judgment rule is consistent with federal case law interpreting Federal Rule of Civil Procedure (FRCP) 55(b), ⁹ a rule similar to Washington's

[158 Wash.App. 329, 242 P.3d 32]

CR 55(b). Federal courts have explicitly held that entry of a default judgment is both improper where the trial court lacks jurisdiction and where the party seeking default fails to properly state a claim upon which relief can be granted. See, e.g., Elektra Entm't Group, Inc. v. Carter, 618 F.Supp.2d 89, 92-93 (D.Me.2009) (assessing personal jurisdiction, subject matter jurisdiction, and sufficiency of the complaint to establish liability prior to entering a default judgment); Capitol Records, 508 F.Supp.2d at 1083 (" 'a default judgment cannot stand on a complaint that fails to state a claim' " (quoting Chudasama v. Mazda Motor Corp., 123 F.3d 1353, 1370 n. 41 (11th Cir.1997))). Furthermore, federal courts consider numerous factors in exercising their discretion to enter a default judgment, including the sufficiency of the complaint. Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir.1986). Because reading Washington's CR 55(b) to mandate entry of default judgments in all circumstances would produce occasional absurd results, Washington trial courts must have discretion pursuant to CR 55(b) similar to that exercised by the federal courts pursuant to FRCP 55(b).

¶ 16 Reading CR 55(b) as providing judicial discretion in determining whether to enter a default judgment is also consistent with prior Washington case law. In one such case, the appellate court affirmed the trial court's vacation of a default judgment where the plaintiff failed to set forth facts sufficient to support her claim. Caouette v. Martinez, 71 Wash.App. 69, 78, 856 P.2d 725 (1993). As in this case, the claim at issue in Caouette was negligent entrustment of a vehicle. To establish a negligent entrustment claim, ...