Sellers v. Longview Orthopedic Assocs., PLLC

• Citation: 11 Wash.App.2d 515,455 P.3d 166
• Decision Date: 24 December 2019
• Docket Number: No. 52327-2-II,52327-2-II
• Court: Court of Appeals of Washington
• Parties: James L. SELLERS, Guardian ad Litem of Nathan Toney, a minor, Appellant, v. LONGVIEW ORTHOPEDIC ASSOCIATES, PLLC, Respondent.

11 Wash.App.2d 515

455 P.3d 166

James L. SELLERS, Guardian ad Litem of Nathan Toney, a minor, Appellant,

v.LONGVIEW ORTHOPEDIC ASSOCIATES, PLLC, Respondent.

No. 52327-2-II

Court of Appeals of Washington, Division 2.

Filed December 24, 2019

Matthew J. Andersen, Walstead Mertsching PS, Po Box 1549, Longview, WA, 98632-7934, for Appellant.

Rhianna Marie Fronapfel, Bennett Bigelow & Leedom, P.S., 601 Union St. Ste. 1500, Seattle, WA, 98101-1363, Howard Mark Goodfriend, Ian Christopher Cairns, Smith Goodfriend PS, 1619 8th Ave. N, Seattle, WA, 98109-3007, for Respondent.

PUBLISHED OPINION

Maxa, C.J ¶1 James Sellers appeals the trial court’s order setting aside a default order entered against Longview Orthopedic Associates, PLLC (LOA).

¶2 Sellers, as guardian ad litem for a minor child, filed a lawsuit against LOA to recover damages for alleged medical negligence in the treatment of the child. LOA forwarded the complaint to its insurer, who informed LOA that an attorney would be assigned to defend LOA. But the insurer-retained attorney failed to file a notice of appearance or an answer, and Sellers obtained an order of default against LOA. After LOA promptly filed a motion to set aside the default order, the trial court found that the failure to appear or answer resulted from defense counsel’s inexcusable neglect but that LOA was blameless. As result, the court found "good cause" to set aside the default order under CR 55(c)(1).

¶3 We hold that (1) when the trial court found that the insurer-retained defense attorney’s neglect in failing to answer was inexcusable but the defendant was blameless, the trial court had discretion whether or not to find good cause to vacate the default order; and (2) the trial court did not abuse its discretion under the facts of this case. Accordingly, we affirm the trial court’s order setting aside the default order under CR 55(c)(1) and remand for further proceedings.

FACTS

¶4 On December 14, 2017, Sellers filed a lawsuit against LOA to recover damages for alleged medical negligence involving a minor child. LOA was served with the summons and complaint on December 21. LOA forwarded the summons and complaint to its insurer, which retained attorney Amy Forbis to represent LOA and informed LOA that defense counsel had been assigned. However, Forbis failed to file a notice of appearance on behalf of LOA or an answer to the complaint.

¶5 Sellers filed a motion for default on January 16, 2018 based on LOA’s failure to file an answer within 20 days after service of the summons and complaint. The trial court entered an order of default on the same day.

¶6 On January 21, Forbis discovered that no notice of appearance had been filed and that the trial court had entered a default order. The next day, she filed on behalf of LOA a motion under CR 55(c)(1) to set aside the trial court’s default order. Forbis argued that LOA’s failure to appear was due to her mistake. In her supporting declaration, Forbis stated that her law firm’s usual practice was to file a notice of appearance upon receipt of a case assignment. She attributed her failure to file a notice of appearance to a clerical error and her focus on preparing for an upcoming trial. In a supplemental declaration, Forbis emphasized that "[LOA] is blameless for this error, over which they had no control." Clerk’s Papers (CP) at 68-69.

¶7 The trial court granted LOA’s motion to set aside the default order. The court found that LOA failed to appear or answer within 20 days due to the inexcusable neglect of defense counsel. But the court also found that these "failures to answer or appear were in no way related to the conduct of [LOA], and/or its insurer, who were both blameless in this regard." CP at 193. In addition, the court found that Forbis diligently moved to have the default order set aside. Finally, the court found that Sellers would not be prejudiced by setting aside of the default order. However, the court awarded Sellers attorney fees and costs incurred in obtaining the default order and resisting LOA’s efforts to have the order set aside.

¶8 In granting Forbis’s motion to set aside the default order, the trial court certified under RAP 2.3(b)(4) that its order involved a controlling question of law appropriate for immediate review: whether this court’s decision in VanderStoep v. Guthrie , 200 Wash. App. 507, 402 P.3d 883 (2017), review denied , 189 Wash.2d 1041, 409 P.3d 1065 (2018), should be extended to cases where a default order is entered against a blameless defendant because of the inexcusable neglect of that party’s counsel. A commissioner of this court granted discretionary review.

ANALYSIS

A. LEGAL PRINCIPLES

1. Setting Aside Default Order

¶9 The general rule is that a defendant must file an answer within 20 days after service of the summons and complaint. CR 12(a)(1). Under CR 55(a)(1), a plaintiff can move for default if the defendant fails to answer or otherwise defend within 20 days. Defendants are entitled to notice of the motion only if they have appeared in the action. CR 55(a)(3). Once a default order has been entered, a plaintiff can obtain a default judgment under certain circumstances. CR 55(b).

¶10 CR 55(c)(1) provides that a trial court may set aside a default order "[f]or good cause shown and upon such terms as the court deems just." CR 55(c)(1) also states that a court may set aside a default judgment in accordance with CR 60(b), which addresses the vacation of judgments. These are different standards. In re Estate of Stevens , 94 Wash. App. 20, 30, 971 P.2d 58 (1999).

¶11 The analysis for setting aside a default judgment , first articulated in White v. Holm , 73 Wash.2d 348, 352, 438 P.2d 581 (1968), is well settled:

A party moving to vacate a default judgment must be prepared to show (1) that there is substantial evidence supporting a prima facie defense; (2) that the failure to timely appear and answer was due to mistake, inadvertence, surprise, or excusable neglect; (3) that the defendant acted with due diligence after notice of the default judgment; and (4) that the plaintiff will not suffer a substantial hardship if the default judgment is vacated.

Little v. King , 160 Wash.2d 696, 703-04, 161 P.3d 345 (2007) ; see also VanderStoep , 200 Wash. App. at 517, 402 P.3d 883.

¶12 The test for setting aside a default order is less clear. The general rule is that "[t]o establish good cause under CR 55, a party may demonstrate excusable neglect and due diligence." Estate of Stevens , 94 Wash. App. at 30, 971 P.2d 58. These two factors mirror the second and third factors in the default judgment test.¹ But unlike for a default judgment, a showing of a meritorious defense is not required to set aside a default order. Id.

¶13 In addressing whether to set aside a default judgment, this court in VanderStoep identified three guiding principles: (1) default judgments are disfavored because the preference is to resolve cases on the merits, (2) deciding whether to set aside a default judgment is a matter of equity and the "primary concern is whether justice is being done," and (3) "[w]hat is just and equitable must be determined based on the specific facts of each case." 200 Wash. App. at 517-18, 402 P.3d 883. We believe that these same general principles apply when evaluating a motion to set aside a default order.

2. Standard of Review

¶14 Whether to set aside a default order is within the trial court’s discretion, and therefore we review the trial court’s decision for an abuse of discretion. Estate of Stevens , 94 Wash. App. at 29, 971 P.2d 58. "The decision to vacate an order of default is addressed to the sound discretion of the trial judge, and we will not reverse that decision absent a showing that the trial judge abused her discretion." Brooks v. Univ. City, Inc. , 154 Wash. App. 474, 479, 225 P.3d 489 (2010).

¶15 While acknowledging this general rule, Sellers argues that some of the issues in this case are questions of law that must be reviewed de novo. We agree that to the extent this case requires an interpretation of the meaning of "good cause" in CR 55(c)(1), our review is de novo. The interpretation of a court rule is a matter of law that we review de novo. Dan’s Trucking, Inc. v. Kerr Contractors, Inc. , 183 Wash. App. 133, 139, 332 P.3d 1154 (2014).

¶16 However, whether a party’s conduct amounts to excusable neglect and whether the party acted with due diligence in moving to set aside the default are reviewed for abuse of discretion. See Brooks , 154 Wash. App. at 479-80, 225 P.3d 489 (affirming the trial court’s refusal to set aside a default order because the trial court had tenable reasons to conclude that the defendant failed to show excusable neglect); Seek Systems, Inc. v. Lincoln Moving/Global Van Lines, Inc. , 63 Wash. App. 266, 271-72, 818 P.2d 618 (1991) (stating that it was within the trial court’s discretion to conclude that the defendant’s neglect was not excusable and that the defendant failed to exercise due diligence). "The trial court has broad discretion over the issue of excusable neglect." VanderStoep , 200 Wash. App. at 526, 402 P.3d 883.

¶17 In addition, we confirm the general rule that we review for an abuse of discretion the trial court’s ultimate determination regarding the existence of good cause to set aside a default order. Brooks , 154 Wash. App. at 479, 225 P.3d 489 ; Estate of Stevens , 94 Wash. App. at 29, 971 P.2d 58. And we are less likely to find an abuse of discretion when a trial court sets aside a default order than when a trial court denies a motion to set aside a default order. See VanderStoep , 200 Wash. App. at 518, 402 P.3d 883 (applying this principle to judicial review of a default judgment rather than a default order).

3. VanderStoep Holding

¶18 In VanderStoep , the plaintiffs filed a lawsuit against the defendants relating to a car accident. 200 Wash. App. at 513, 402 P.3d 883. Upon being served with the complaint, the defendants notified their insurer and followed up...