Batterman v. Red Lion Hotels, Inc.

21 P.3d 1174
Court of Appeals of Washington·Decided April 30, 2001·No. 46112-5-I·Published·Cited by 21 cases

Opinion

21 P.3d 1174 (2001)

Pamela R. BATTERMAN, Appellant,
v.
RED LION HOTELS, INC., Respondent.

No. 46112-5-I.

Court of Appeals of Washington, Division 1.

April 30, 2001.
Reconsideration Denied June 20, 2001.

*1175 Diego P. Gavilanes, Everett, for Appellant.

Randall C. Johnson, Jr., Badgley-Mullins Law Group, Seattle, for Respondent.

BECKER, A.C.J.

Appellant Pamela Batterman, a personal injury plaintiff, obtained a default judgment against defendant Red Lion Hotels when Red Lion did not file an appearance or answer in response to her complaint. Batterman appeals from an order vacating the default judgment. We affirm. At the time Batterman served her complaint, she had ongoing communications with Red Lion's agent about her intention to submit a settlement demand and records supporting her *1176 damage claim. The trial court was within its discretion to conclude these communications constituted an informal appearance sufficient to require Batterman to notify Red Lion of her motion for an order of default.

In the Spring of 1996, Pamela Batterman was attending a conference at the Red Lion Hotel in Sea-Tac, Washington. A ballroom ceiling tile came loose and fell, striking her on the head. Carl Warren & Company handled Batterman's personal injury claim on behalf of Red Lion. A claims administrator for Carl Warren, Chessa Gill, was assigned to the claim in the Spring of 1998.

In November of 1998, Gill received a letter from a legal assistant informing Gill that his law firm was still representing Batterman and that he would be handling her claim. His letter stated that he was in the process of collecting documentation for the purpose of submitting a settlement demand "as soon as possible." In February, Gill contacted the law firm to ask for the promised records and to remind counsel that the statute of limitations deadline was approaching.

On May 3, 1999, just before the expiration of the statute of limitations, Batterman filed suit. Gill wrote to Batterman's attorney on May 6, 1999, noting that the statute of limitations had expired and asking if Batterman had protected her claim. In response, the legal assistant sent Gill a courtesy copy of the complaint. His letter also informed Gill that she should expect to receive Batterman's settlement demand package "in the next three weeks" and stated: "we would like to settle this claim without the necessity of further litigation."

Batterman formally served Red Lion by delivering a summons and complaint to Red Lion's registered agent, CT Corporation, on May 13, 1999. Over the next few months, Gill contacted Batterman's attorney several times, by telephone and letter, to request the settlement demand package. When she called on September 22, the legal assistant promised to have the medical records out within one week.

Meanwhile, Batterman's attorney, who was still in the process of preparing a settlement demand letter, realized that Red Lion had not formally appeared in the action or answered the complaint. Batterman moved for and obtained an order of default on September 22, 1999. She did not notify Red Lion or Gill either formally or informally that she was seeking an order of default. Nor did she inform the court of her numerous contacts with Red Lion's agent.

The parent company of Red Lion notified Gill on October 22, 1999, that service of process had been accomplished. The record contains no explanation for the delay of approximately five months between service of process on Red Lion's registered agent in May and Gill's receipt of notice of that event in October. In November, still unaware of the order of default, Gill retained counsel to defend Red Lion.

Upon reviewing the file in the courthouse just before Thanksgiving, counsel for Red Lion discovered the order of default. The following week, the law firm representing Red Lion was closed for several days due to the turmoil surrounding the Seattle meeting of the World Trade Organization. Counsel filed a notice of appearance on Thursday, December 2.

As it happened, Batterman had gone to court the day before, December 1, 1999, where she obtained a default judgment against Red Lion for approximately $270,000 in damages. Attached to the motion for default judgment were some 40 pages of documents pertaining to Batterman's damages.

Red Lion moved to set aside the order of default and then, having learned that a default judgment had been entered, moved to set that aside also. On January 12, 2000, the trial court granted Red Lion's motions to set aside the order of default and vacate the judgment. In its order, the court acknowledged Red Lion's negligence in failing to respond to the complaint. The court nevertheless concluded that because Red Lion had contacted the plaintiff's attorney and was involved in a course of discussions regarding settlement, there was an "informal appearance sufficient to entitle defendant to notice of a motion for default." Batterman appeals.

*1177 The decision to set aside an order of default or judgment by default rests within the discretion of the trial court. Civil Rule 55(c)(1) (entry of default); Northwest Administrators, Inc. v. Roundy, 42 Wash. App. 771, 774, 713 P.2d 1127 (1986) (default judgment). This court will not disturb the trial court's decision unless it was manifestly unreasonable, based on untenable grounds or untenable reasons. Hwang v. McMahill, 103 Wash.App. 945, 949-50, 15 P.3d 172 (2000). An order denying a motion to set aside default is more readily found to be an abuse of discretion than an order granting the motion and permitting trial on the merits to ensue. White v. Holm, 73 Wash.2d 348, 351-352, 438 P.2d 581 (1968).

Civil Rule 55 provides that a court cannot enter a default judgment against a party who has "appeared in the action" without notice to that party. CR 55(a)(3); Rohr v. Baker, 53 Wash.2d 6, 7-8, 329 P.2d 848 (1958); In re Marriage of Daley, 77 Wash. App. 29, 31, 888 P.2d 1194 (1994); Shreve v. Chamberlin, 66 Wash.App. 728, 731, 832 P.2d 1355 (1992), review denied, 120 Wash.2d 1029, 847 P.2d 481 (1993). If a court does so, it acts without authority, and the defaulted party is entitled as a matter of right to have the judgment set aside. Shreve, 66 Wash. App. at 731, 832 P.2d 1355; Tiffin v. Hendricks, 44 Wash.2d 837, 847, 271 P.2d 683 (1954). Thus, if Red Lion appeared in this action, then Red Lion was entitled as a matter of right to have the order of default set aside and the default judgment vacated. The question presented in this appeal, however, is whether the trial court erred in its determination that Red Lion had "appeared in the action." We will review this ruling for abuse of discretion.

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Batterman v. Red Lion Hotels, Inc., 21 P.3d 1174 (Wash. Ct. App. 2001).

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