United States: To Err Is Human - To Vacate Divine

Maureen was injured by an uninsured driver. She made a UIM claim. It went to arbitration. The UIM carrier, State Farm, paid the award and Maureen released her personal injury claim.

Maureen sued the UIM carrier for bad faith failure to settle. She served the Insurance Commissioner with a 40- day summons. On the 41st day, she got an order of default, on the 43rd day she moved for a default judgment, and on the 48th day, she obtained a default judgment.

Nine days later State Farm moved to vacate. It showed that it had timely received the complaint from the Commissioner, but an administrative assistant had faxed the complaint to a wrong number. Its counsel had appeared on the 48th day. Its affidavit set forth facts sufficient to support finding that it had not acted in bad faith.

The trial court granted the CR  60( b) motion to vacate. Maureen appealed. The Court of Appeals affirmed.

1. The granting of a motion to vacate a default judgment requires consideration of four factors:
1. That there is substantial evidence extant to support, at least prima facie, a defense to the claim asserted by the opposing party;
2. that the moving party's failure to timely appear in the action, and answer the opponent's claim, was occasioned by mistake, inadvertence, surprise, or excusable neglect;
3. that the moving party acted with due diligence after notice of entry of the default judgment; and
4. that no substantial hardship will result to the opposing party.
2. A trial court does not act as trier of fact when considering a CR  60 motion.
3. A trial court must take the evidence and reasonable inferences in the light most favorable to the CR  60 movant when deciding whether the movant has presented "substantial evidence" of a "prima facie" defense.
4. CR  60 requires a movant to demonstrate substantial evidence supporting, at least prima facie, a defense to the claim asserted by the opposing party.
5. State Farm presented evidence which, if later believed by a trier of fact, would be a defense. The trial court was required to rule that State Farm had come forward with "facts constituting a defense" or, "substantial evidence" of a "prima facie" defense.
6. It is apparent that State Farm's failure to answer resulted from a mistake. State Farm acted with due diligence when it discovered the mistake.
7. The prospect of trial cannot constitute "substantial hardship." Otherwise, a judgment would never be set aside, for that always generates the prospect of trial.

A stunningly accurate review of a misunderstood area. In recent years, some superior court judges thought they could act as a trier of fact on a CR  60( b) motion. In addition, many of them did not understand that a mistake was a reason to grant, not deny, the motion.

Pfaff v. State Farm Mut. Auto. Ins. Co., 103 Wn. App. 829, 14 P. 3d 837 (2000).