Morin v. Burris

¶31 (concurring in part/dissenting in part) — I agree with the majority in its ultimate conclusion that the respondents in Morin and Matia failed to appear, and thus we should reverse the Court of Appeals in those cases. Morin v. Burris, noted at 126 Wn. App. 1057 (2005); Matia Inv. Fund, Inc. v. City of Tacoma, 129 Wn. App. 541, 119 P.3d 391 (2005). However, I disagree with the majority’s reasoning. By rejecting the informal appearance doctrine, the majority substantially changes the law upon which all three divisions of our Court of Appeals have relied. Additionally, I would affirm the Court of Appeals’ ruling in Gutz v. Johnson, 128 Wn. App. 901, 117 P.3d 390 (2005), rather than remanding the case to the trial court to consider the CR 60 issue.

Bridge, J.

¶32 As the majority recognizes, default judgments are disfavored. Griggs v. Averbeck Realty, Inc., 92 Wn.2d 576, 581, 599 P.2d 1289 (1979). This is so because of our longstanding preference that controversies be determined on the merits rather than by default. Id. (citing Dlouhy v. Dlouhy, 55 Wn.2d 718, 721, 349 P.2d 1073 (1960)). “A proceeding to vacate a default judgment is equitable in character and relief is to be afforded in accordance with equitable principles.” Id. Equity favors substance over form. To that end, when a trial court hears a motion to *761vacate, it must make its determination on a case-by-case basis.

“Justice will not be done if hurried defaults are allowed any more than if continuing delays are permitted. But justice might, at times, require a default or a delay. What is just and proper must be determined by the facts of each case, not by a hard and fast rule applicable to all situations regardless of the outcome.”

Id. at 582 (quoting Widicus v. Sw. Elec. Coop., Inc., 26 Ill. App. 2d 102, 109, 167 N.E.2d 799 (1960)). Thus, principles of equity inform our consideration of what acts may constitute an appearance.

¶33 An entry of default is governed by CR 55(a)(3), which provides that “[a]ny party who has appeared in the action for any purpose shall be served with a written notice of motion for default and the supporting affidavit at least 5 days before the hearing on the motion.” (Emphasis added.) If a party has not appeared in an action, then that party is not entitled to notice of the motion for default order or judgment. CR 55(a)(3). Conversely, where a party has appeared, failure to give notice of any motion for default requires that any resulting order or judgment be set aside as a matter of law. Shreve v. Chamberlin, 66 Wn. App. 728, 731-32, 832 P.2d 1355 (1992); see Tiffin v. Hendricks, 44 Wn.2d 837, 847, 271 P.2d 683 (1954).

¶34 Formal appearances are governed by RCW 4.28.210, but we have recognized that the statutory methods of appearance are not exhaustive and that there are other, informal ways in which a party may appear. Dlouhy, 55 Wn.2d at 721. Our Court of Appeals has held that a party informally appears when it manifests an intent to defend. “Whether a party has ‘appeared’ informally is generally a ‘question “of intention, as evidenced by acts or conduct, such as the indication of a purpose to defend or a request for affirmative action from the court, constituting a submission to the court’s jurisdiction.” ’ ” Smith v. Arnold, 127 Wn. App. 98, 104, 110 P.3d 257 (2005) (emphasis added) (quoting *762Gage v. Boeing Co., 55 Wn. App. 157, 161, 776 P.2d 991 (1989) (quoting Annotation, What Amounts to “Appearance” under Statute or Rule Requiring Notice, to Party Who Has “Appeared,” of Intention To Take Default Judgment, 73 A.L.R.3d 1250, 1254 (1976))). An essentially unresponsive party cannot be said to have appeared. Gage, 55 Wn. App. at 160-61 (quoting H.F. Livermore Corp. v. Aktiengesellschaft Gebruder Loepfe, 139 U.S. App. D.C. 256, 432 F.2d 689, 691 (1970)). A party is unresponsive when it allows the plaintiff to reasonably harbor illusions about whether the opposing party intends to defend a matter. Smith, 127 Wn. App. at 104.

¶35 The majority nevertheless concludes that the “manifested intent” test adopted by our Court of Appeals is an incorrect reading of this court’s early case law concerning informal appearance. Majority at 756-57. Instead, it sets forth a “substantial compliance” test. Id. at 755. In order to determine whether a party informally appeared, the majority asks whether a party’s actions substantially comply with the statutory appearance “requirements.” Id.; RCW 4.28.210. Yet we have found that this statute does not set forth an exhaustive list of the ways in which one may appear. Dlouhy, 55 Wn.2d at 721 (“ [I]t is settled law that the statutory methods of appearance are not exclusive.”). It is problematic to ask that parties who seek to informally appear substantially comply with a statute that does not offer fixed boundaries as to what constitutes an appearance. The majority’s test is unworkable.

¶36 While I would endorse an equitable consideration of informal appearance based on a party’s manifested intent to defend, I agree with the majority that parties must acknowledge the dispute as existing in court. The plain language of CR 55 indicates that a party must appear in the action at hand in order to receive notice of a default. CR 55(a)(3). Under the rule’s express language, a party cannot appear, informally or otherwise, in an action that has not yet commenced. Therefore, regardless of a party’s manifested intent to defend before a lawsuit is filed, I would hold *763that a party must exhibit that same intent after an action is commenced in order to assert that it informally appeared. See Dlouhy, 55 Wn.2d at 724 (explaining that a “party’s acts must have some direct purpose in the cause to constitute an appearance; the acts cannot be wholly collateral” (emphasis added)).

¶37 In application, the equitable considerations underlying a review of default proceedings suggest that a case-by-case review is appropriate. Griggs, 92 Wn.2d at 582. “Abuse of discretion is less likely to be found if the default judgment is set aside.” Id. Atrial court abuses its discretion when its decision is manifestly unreasonable, or based on untenable grounds, or exercised for untenable reasons. Mayer v. Sto Indus., Inc., 156 Wn.2d 677, 684, 132 P.3d 115 (2006).

A discretionary decision rests on “untenable grounds” or is based on “untenable reasons” if the trial court relies on unsupported facts or applies the wrong legal standard; the court’s decision is “manifestly unreasonable” if “the court, despite applying the correct legal standard to the supported facts, adopts a view ‘that no reasonable person would take.’ ”

Id. (quoting State v. Rohrich, 149 Wn.2d 647, 654, 71 P.3d 638 (2003) (quoting State v. Lewis, 115 Wn.2d 294, 298-99, 797 P.2d 1141 (1990))).

¶38 Here, I would find that because the courts below did not consider that the plain language of CR 55 requires a party to informally appear after an action is filed, each applied an incomplete test for informal appearance, and their decisions are therefore in error. Respondents Burris, Barth, and the city of Tacoma did not have contact with their opposing parties after their respective lawsuits were filed against them. Under the plain language of CR 55, they cannot have informally appeared. Accordingly, I agree that we should reverse the Court of Appeals in Morin and Matia Investment Fund.

¶39 In the case of Gutz, I, like the majority, would not consider whether the Johnsons informally appeared, look*764ing instead to whether they were entitled to have the default judgment set aside under CR 60. However, rather than remanding the case, I would affirm the Court of Appeals’ vacation of the default judgment under CR 60(b). See Gutz, 128 Wn. App. at 916-21. A court may vacate a default order or judgment if the defaulting party can show that its failure to appear was the result of, among other things, mistake or excusable neglect. CR 60(b)(1). Under CR 60(b)(1), the party moving to vacate a default judgment must show the following: (1) there is substantial evidence to support at least a prima facie defense to the claim plaintiffs assert; (2) the failure to timely appear and answer was due to mistake, inadvertence, surprise, or excusable neglect; (3) the defendant acted with due diligence after notice of the default judgment; and (4) the plaintiffs will not suffer substantial hardship if the default judgment is vacated. White v. Holm, 73 Wn.2d 348, 352, 438 P.2d 581 (1968).

¶40 The majority finds that because the trial judge did not reach the CR 60 issue, we should remand the case to the trial court for further consideration. Yet the Gutzes do not dispute the Court of Appeals’ conclusion that the Johnsons carried their burden of proof under CR 60(b)(1). Instead, the Gutzes appear to argue that the Court of Appeals erroneously concluded that the trial court abused its discretion when it failed to consider the Johnsons’ CR 60(b)(1) motions. The majority agrees with the Court of Appeals that the trial court should have considered this issue, but rather than deciding it here, holds that we should remand to that court. However, I believe that the Johnsons adequately carry their burden under this test. Suppl. Br. of Resp’t Johnson at 12-20. In particular, I am persuaded that the Johnsons’ failure to appear was the result of mistake or excusable neglect arising from a reasonable miscommunication with their insurer. See White, 73 Wn.2d at 354-55 (suggesting that an insured defendant may reasonably rely on his insurance agent to defend an action, including by providing counsel). Accordingly, I agree with the Court of Appeals that the trial court abused its discretion when it *765refused to vacate the judgment against the Johnsons under CR 60(b) and that the case should be remanded for a trial on the merits.

Conclusion

¶41 I would hold that a party in Washington may informally appear such that notice to that party is required before a default order or judgment is sought against it. Informal appearance is a matter of intent, but such intent must be manifested after an action is commenced. Because there was no contact between the parties after their respective actions were commenced, the respondents in Morin and Matia Investment Fund did not informally appear. I therefore agree with the majority that we should reverse the Court of Appeals’ decisions in those cases. In the case of Gutz, I do not believe it is necessary to determine whether respondents Johnson informally appeared because I would conclude that the trial court abused its discretion when it failed to grant the Johnsons’ CR 60(b)(1) motion to vacate the judgment against them. Therefore, I would affirm the Court of Appeals and remand Gutz for a trial on the merits.

Alexander, C.J., and Madsen, J., concur with Bridge, J.

Motions for reconsideration denied October 3, 2007.