Default Judgment: Breakdown of Internal Office Procedure

Default Judgment: Breakdown of Internal Office Procedure

Under Washington State laws regarding setting aside a default judgment, is a breakdown of internal office procedure considered excusable neglect? Here's my 
point of view (NOTE: please read our DISCLAIMER before proceeding).


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DEFAULT JUDGMENT POLICY (WA): A BALANCED APPROACH

“Although ‘[d]efault judgments are generally disfavored in Washington based on an overriding policy which prefers that parties resolve disputes on the merits, we also value an organized, responsive, and responsible judicial system where litigants acknowledge the jurisdiction of the court to decide their cases and comply with court rules.’” Rosander v. Nightrunners Transport, Ltd., 147 Wn.App. 392, 403, 196 P.3d 711 (Div. II 2008) (quoting Little v. King, 160 Wn.2d 696, 703, 161, P.3d 345 (2007)) (court affirmed trial court’s denial of defendant’s motion to vacate default order and judgment) (emphasis added). 

“As our Supreme Court recently noted: [L]itigation is inherently formal. All parties are burdened by formal time limits and procedures.” Id. (internal quotation makrs omitted) (alteration in original) (quoting Morin v. Burris, 160 Wn.2d 745, 161 P.3d 956 (2007)). Ultimately, the decision on a motion to vacate an order of default or a default judgment is within the sound discretion of the trial court. Estate of Stevens, 94 Wn. App. 20, 971 P.2d 58 (Div. II 1999).

RULE CR 55(c)(1): SETTING ASIDE DEFAULT

“The relevant rule is CR 55(c)(1) which states as follows:

(c) Setting Aside Default.

(1) Generally. For good cause shown and upon such terms as the court deems just, the court may set aside an entry of default and, if a judgment by default has been entered, may likewise set it aside in accordance with rule 60(b).

CR 55(c)(1) (emphasis added). 

RULE CR 60(b): RELIEF FROM JUDGMENT OR ORDER

The rule for CR 60(b) is as follows:

...

(b) Mistakes; Inadvertence; Excusable Neglect; Newly Discovered Evidence; Fraud;
etc. On motion and upon such terms as are just, the court may relieve a party or the party’s legal
representative from a final judgment, order, or proceeding for the following reasons:

(1) Mistakes, inadvertence, surprise, excusable neglect or irregularity in obtaining a
judgment or order;
...

CR 60 (emphasis added).

For purposes of this article, the threshold issue is whether a breakdown of internal office procedure is considered excusable neglect for purposes of setting aside a default? 

EXCUSABLE NEGLECT

“The trial court has broad discretion over the issue of excusable neglect and may make credibility determinations and weigh facts in order to resolve it.” Rosander v. Nightrunners Transport, Ltd., 147 Wn.App. 392, 406, 196 P.3d 711 (Div. II 2008) (citing Johnson v. Cash Store, 116 Wn.App. 833, 847-49, 68 P.3d 1099 (2003) (“upholding trial court’s holding that neglect was inexcusable based on credibility determination and weight of evidence”), review denied, 150 Wn.2d 1020, 81 P.3d 120 (2003)). “Courts determine excusable neglect on a case-by-case basis.” Id. (citing Gutz v. Johnson, 128 Wn.App. 901, 918-19, 117 P.3d 390 (2005)). 

EXAMPLE: ROSANDER v. NIGHTRUNNERS TRANSPORT, LTD.

In Rosander, a defendant-employee caused a car accident, and the American plaintiff-victim sued both that employee and his Canadian employer. Id. at 406-07. The defendants failed to appear, and the court entered a default order and judgment for plaintiff. Id. The employer moved to vacate the default and the trial court denied the motion; the employer appealed. Id.

On appeal, the Rosander court addressed, inter alia, excusable neglect: the employer first argued that it received untimely notice; second, that there was miscommunication regarding whether plaintiff would pursue a default order; and third, that the employer neglected the case, because its claim handler was on medical leave. Id. 

BREAK-DOWN OF INTERNAL OFFICE PROCEDURE: INEXCUSABLE NEGLECT

The court evaluated the employer’s first excuse by deferring to the credibility determination of the trial court wherein it was determined that the employer’s reasoning was inexcusable due to contradictory evidence. Id. 

Next, the court determined that the employer’s second reason was inexcusable, because it “had every opportunity to associate with American counsel and that its decision to handle the claim pro se … caused this problem.” Id. 

Third, the court both noted that the record provided little support for the argument that its claim handler was on medical leave and ruled, “[j]udicial decisions have repeatedly held that, if a company’s failure to respond to a properly served summons and complaint was due to a break-down of internal office procedure, the failure was not excusable.” Id. Accordingly, the appellate court held that the trial court did not abuse its discretion when it held that the employers neglect was not excusable. Id.

CONCLUSION

It appears that under Washington State laws regarding setting aside a default judgment, a breakdown of internal office procedure is not considered excusable neglect.


-LEARN MORE-

If you would like to learn more, then consider contacting an experienced Washington State Employment Attorney as soon as possible to discuss your case. Please note: the information contained in this article is not offered as legal advice and will not form an attorney-client relationship with either this author or Williams Law Group, PS; please see our DISCLAIMER.

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