Morin v. Burris

• Decision Date: 28 June 2007
• Docket Number: No. 77784-5.,No. 77867-1.,No. 77291-6.,77291-6.,77784-5.,77867-1.
• Citation: 160 Wn.2d 745,161 P.3d 956
• Court: Washington Supreme Court
• Parties: Sherri MORIN and Eugene Morin, wife and husband, Petitioners, v. Bonnie BURRIS and John Doe BURRIS, wife and husband, and the marital community composed thereof; Jeffrey Barth and Jane Doe Barth, husband and wife, and the marital community composed thereof, Respondents. Desiree C. Gutz and Sharon J. Gutz, Petitioners, v. Stanley B. Johnson and Jane Doe Johnson, husband and wife, and the marital community composed thereof, Respondents. Matia Investment Fund, Inc., a Washington corporation d/b/a Norpoint Communities, Petitioner, v. City of Tacoma, a municipal corporation, Respondent.

161 P.3d 956

160 Wn.2d 745

Sherri MORIN and Eugene Morin, wife and husband, Petitioners, v. Bonnie BURRIS and John Doe BURRIS, wife and husband, and the marital community composed thereof; Jeffrey Barth and Jane Doe Barth, husband and wife, and the marital community composed thereof, Respondents.

Desiree C. Gutz and Sharon J. Gutz, Petitioners, v. Stanley B. Johnson and Jane Doe Johnson, husband and wife, and the marital community composed thereof, Respondents.

Matia Investment Fund, Inc., a Washington corporation d/b/a Norpoint Communities, Petitioner, v. City of Tacoma, a municipal corporation, Respondent.

No. 77291-6.

No. 77784-5.

No. 77867-1.

Supreme Court of Washington, En Banc.

Argued May 18, 2006.

Decided June 28, 2007.

Joseph P. Wilson, Stephen Henry Good Jr., Attorney at Law, Everett, WA, Thomas F Gallagher, Law Offices of Watson & Gallagher, Milton, WA, for Petitioner.

Jeffrey Twersky, Attorney at Law, Everett, WA, Anne Louise Spangler, Tacoma City Attorneys Office, Leagl Department, Tacoma, WA, Thomas Lee Schwanz, Snook Schwanz, Kirkland, WA, Marilee C. Erickson, Reed McClure, Katina Collier Thornock, Cozen O'Connor, Seattle, WA, for Respondents.

Bryan Patrick Harnetiaux, Attorney at Law, Spokane, WA, for Amicus Curiae on behalf of Washington State Trial Lawyers Association.

CHAMBERS, J.

¶ 1 In all three cases before us, the plaintiffs properly initiated lawsuits against the defendants. In all three cases before us, the defendants failed to file answers or otherwise formally appear. In two of these cases, plaintiffs successfully moved for default judgment. And in each of the cases, the Court of Appeals decided that the default judgments should be set aside.

¶ 2 This court has long favored resolution of cases on their merits over default judgments. Thus, we will liberally set aside default judgments pursuant to CR 55(c) and CR 60 and for equitable reasons in the interests of fairness and justice. Similarly, if default judgment is rendered against a party who was entitled to, but did not receive, notice, the judgment will be set aside. Tiffin v. Hendricks, 44 Wash.2d 837, 847, 271 P.2d 683 (1954). We have also held that the doctrine of substantial compliance applies to the notice requirement of CR 4 when enforcing or setting aside judgments under CR 55 and CR 60. Substantial compliance with the appearance requirement may be satisfied informally. Cf. State ex rel. Trickel v. Superior Court, 52 Wash. 13, 100 P. 155 (1909).

¶ 3 However, whether or not a party has substantially complied with the rules must be decided against the fact that litigation is a formal process. Those who are served with a summons must do more than show intent to defend; they must in some way appear and acknowledge the jurisdiction of the court after they are served and litigation commences. We disagree with our learned colleagues below that pre litigation communication alone is sufficient to satisfy a party's duty to appear and defend against a court case. Although substantial compliance with the appearance requirement can be accomplished informally, we do not adopt the doctrine of informal appearance as it has been formulated below. See, e.g., Batterman v. Red Lion Hotels, Inc., 106 Wash.App. 54, 21 P.3d 1174 (2001).

¶ 4 We hold that merely showing intent to defend before a case is filed is not enough to qualify as an appearance in court. Accordingly, we remand Morin v. Burris, noted at 126 Wash.App. 1057, 2005 WL 827231, 2005 Wash.App. LEXIS 598 (2005), and Matia Inv. Fund, Inc. v. City of Tacoma, 129 Wash.App. 541, 119 P.3d 391 (2005), to the trial court for reentry of default judgment. However, we agree with the Court of Appeals in Gutz v. Johnson, 128 Wash.App. 901, 117 P.3d 390 (2005), that the respondent may have acted diligently and the failure to appear may have been reasonably excused by the conduct of Stanley Johnson's counsel. Accordingly, we vacate that default judgment and remand for further proceedings consistent with this opinion.

FACTS AND PROCEDURAL HISTORY

¶ 5 Morin. On November 23, 1998, Jeffrey Barth, driving a car owned by his mother, Bonnie Burris, rear-ended a car Sherri Morin was driving. Morin and her insurance provider contacted Barth's insurer, Farmers Insurance, in an attempt to recover damages. On December 16, 1998, Morin was contacted by Farmers' claim representative, Keith Haupt. At that time, Morin was given a check covering the property damage to her car. Morin also told Haupt she was seeing a doctor as a result of the accident and said she would keep in touch.

¶ 6 Morin and Haupt briefly spoke again in July 1999 and then again in November 1999, when Morin refused a settlement offer and retained Stephen H. Good, Jr., as her counsel. Good and Haupt had unsuccessful settlement discussions in June 2001. There was no further contact between the parties that year.

¶ 7 On November 2, 2001, Good filed a complaint on Morin's behalf. Burris was personally served on December 4, 2001. After several unsuccessful attempts and with permission of the court, Barth was served by publication on February 28, 2002. The defendants did not respond in any way following service. On May 24, 2002, Morin obtained a default order and on December 3, 2002, she received a default judgment against Burris and Barth. Approximately one year later, Good sent Haupt a letter demanding payment of the default judgment. On February 4, 2004, respondents Barth and Burris filed a motion to vacate the default judgment, arguing that they had informally appeared in the action and thus were entitled to notice of the plaintiffs' intention to seek an order of default. The trial court agreed and vacated the default judgment. Morin appealed. The Court of Appeals, Division One, concluded that in light of the prelitigation contact between Farmers and Morin, including the payment for property damage, the trial court had not abused its discretion in setting aside default judgment on the ground of an informal appearance.

¶ 8 Gutz. In October 2000, Sharon Gutz, accompanied by her minor daughter, Desiree Gutz, was driving her car when it collided with a car Stanley Johnson was driving. Soon after the accident, the Gutzes filed a damages claim with Johnson's insurer, Allstate Insurance Company (Allstate). Correspondence and settlement negotiations between Allstate and the Gutzes ensued for the next two-and-a-half years. On October 2, 2003, the Gutzes filed suit against Johnson and his marital community. The Johnsons were served on October 16, 2003. It appears that Johnson promptly left a voice mail message with his Allstate claims representative about the complaint and that he assumed Allstate would take care of the suit.

¶ 9 The Allstate claims representative denied receiving Johnson's message, but on October 27, 2003, she called the Gutzes' counsel with an offer to settle Sharon's claim. She asserts she inquired whether the case would be litigated. However, the Gutzes' counsel denied that the settlement conversation included any discussion about litigation. On November 6, 2003, the Gutzes moved for and obtained a default order against the Johnsons without notice to Allstate or to the Johnsons. On November 12, 2003, the Allstate claims representative again called and spoke with a paralegal who reported that the action had been filed but did not mention the default order. Allstate subsequently received a copy of the lawsuit sometime in November. On December 2, 2003, Allstate learned of the default order.

¶ 10 The Johnsons filed a motion to set aside the default order on February 19, 2004, arguing they had informally appeared through their insurance company. The trial court denied the motion. On March 24, 2004, the Gutzes, again without notice to the Johnsons, obtained a default judgment totaling approximately $155,000. The Johnsons moved to set aside the default judgment and order, reasserting their informal appearance argument and, alternatively, arguing that CR 60(b) warranted vacation of the default judgment. The trial court denied the motion, and the Johnsons appealed. The Court of Appeals vacated the default order and judgment and remanded for a trial on the merits on two independent grounds. The Court of Appeals concluded there was substantial evidence that the Johnsons had informally appeared in the lawsuit through their agent, Allstate, entitling them to notice before the default order was entered. Alternatively, the Court of Appeals concluded the trial court abused its discretion by refusing to vacate the default judgment against the Johnsons under CR 60(b) and White v. Holm, 73 Wash.2d 348, 351-52, 438 P.2d 581 (1968).

¶ 11 Matia. Matia Investment Fund, Inc., submitted a bid to buy a parcel of property owned by the city of Tacoma (City). The selection committee recommended Matia's bid to the public utility board for approval. The board authorized Matia's purchase, and Matia entered into a purchase and sale agreement with the City. The agreement was conditioned upon final approval by the city council. When the property purchase came before the council, the council invalidated the entire bidding and selection process.

¶ 12 Subsequently, Matia filed a damages claim totaling $108,758.95 with the City, apparently the amount of money Matia had incurred in preparing its bid. The City denied Matia's claim. After the claims period had ended, Matia served a summons and complaint on the city clerk's office, which for some reason was not forwarded to the city attorney. Consequently, the City failed to answer the suit or formally appear. Without informing the City, Matia obtained both an order of default and a default judgment against the City.

¶ 13 More than a year later, Matia attempted to collect the judgment. Almost immediately, the City filed a motion to vacate the default judgment, which the trial court summarily granted. Matia appealed, and the Court of Appeals, Division Two, affirmed the trial court's vacation of the default...