Questions to the case below: a.) who was the plaintiff? b.) who were the defenda
ID: 394825 • Letter: Q
Question
Questions to the case below:
a.) who was the plaintiff?
b.) who were the defendants?
c.) what is the proper citation to the opinion?
d.) what court issued the opinion?
e.) identify and describe three law-related "lessons" relevant to business that theis case imparts
1 of 1 DOCUMENT
LINDA K.
ADAMS,
Plaintiff-Appellant, v.
PARA-CHEM
SOUTHERN, INC., a
foreign corporation, Defendant-Appellee.
Docket No. 18,663
COURT OF APPEALS OF NEW MEXICO
126 N.M. 189; 1998-NMCA-161; 967 P.2d 864; 1998 N.M. App. LEXIS 144; 37 N.M.
St. B. Bull. 48
October 20, 1998, Filed
SUBSEQUENT HISTORY:
As Corrected November 29, 1998. Released for Publication November 5, 1998.
PRIOR HISTORY:
APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY. Robert L. Thompson,
District Judge.
DISPOSITION:
Reversed and remanded with instructions to reinstate the judgment effective the date of its original
entry. Plaintiff awarded her costs on appeal.
CASE SUMMARY:
PROCEDURAL POSTURE:
Plaintiff injured party challenged an order of the District Court of Bernalillo (New
Mexico), which vacated a default judgment against defendant insured after it sought relief pursuant to N.M. R. Civ. P.
1-060(B)(1). The injured party brought a products liability claim against the insured as the manufacturer of a carpet
adhesive that allegedly caused her to suffer serious health problems.
OVERVIEW:
The court held that the conduct of a defendant's insurer in failing to respond timely to a complaint
should be imputed to defendant. Thus, the court concluded that the insurer's conduct should be considered along with
defendant's acts in determining whether there had been excusable neglect warranting relief from the default. The court
found that the insurer, and thus the insured, failed to react to the complaint for over two years, and that neither the
insured nor the insurer had explained the insurer's failures to respond to the complaint. The court found that in the
absence of any explanation for the insurer's conduct, there was no excuse shown and no legal ground for vacating the
default. In addition, the court found that the insured failed to demonstrate excusable neglect based on its own conduct,
because the insured failed to inquire about the state of the case for at least 22 months. The court held that 22 months
was an unreasonable length of time and that the insured had failed to demonstrate personal diligence as a matter of law.
The court reversed and held that there was no basis for vacating the default judgment.
OUTCOME:
The court reversed the order of the trial court and remanded with instructions to reinstate the judgment
for the injured party effective the date of its original entry.
CORE TERMS:
insurer, default judgment, insured, excusable neglect, default, inquire, neglect, notice, vacating,
forwarded, lawsuit, case law, own conduct, final judgment, summary judgment, diligence, handling, imputed, carrier,
general rule, failed to demonstrate, insurer's conduct, entry of default, period of time, inexcusable neglect, weight of
Page 1
authority, attorney's failure, exceptional circumstance, gross negligence, en banc
LexisNexis(R) Headnotes
Civil Procedure > Pretrial Judgments > Default > Relief From Default
Civil Procedure > Judgments > Relief From Judgment > Excusable Neglect & Mistakes > General Overview
[HN1] Under N.M. R. Civ. P. 1-060(B)(1), defendant has the burden of demonstrating that its failure to timely respond
to the complaint was the result of mistake, inadvertence, surprise or excusable neglect.
Civil Procedure > Pretrial Judgments > Default > Relief From Default
Civil Procedure > Judgments > Relief From Judgment > Excusable Neglect & Mistakes > General Overview
Insurance Law > General Liability Insurance > Obligations > Defense
[HN2] The conduct of defendant's insurer in failing to respond timely to a complaint should be imputed to defendant.
Thus, the insurer's conduct should be considered along with defendant's acts in determining whether there has been
excusable neglect warranting relief from the default.
Civil Procedure > Pretrial Judgments > Default > Relief From Default
Civil Procedure > Judgments > Relief From Judgment > Excusable Neglect & Mistakes > Excusable Neglect
Civil Procedure > Judgments > Relief From Judgment > Excusable Neglect & Mistakes > Mistake
[HN3] In order to merit relief from default judgment, the conduct of the party and its litigation agents--attorneys and
insurers--must be explained and must meet the standard of mistake or excusable neglect.
Civil Procedure > Pretrial Judgments > Default > Relief From Default
Civil Procedure > Judgments > Relief From Judgment > Excusable Neglect & Mistakes > General Overview
Insurance Law > Claims & Contracts > Good Faith & Fair Dealing > Duty to Defend
[HN4] A subsidiary issue in determining excusable neglect is whether inexcusable neglect by the party's attorney or
insurer is to be attributed to the party. The effect of attributing such neglect to the party himself is to impose judgment
liability on him despite his effort to place responsibility for defending the suit in proper hands. The effect of not
attributing the neglect to the party is to excuse the attorney of what amounts to professional negligence or to excuse the
insurer of neglect in its duty to defend the insured. If the party obtaining the judgment was on notice of facts indicating
the neglect by the attorney or insurer, that is a factor weighing in favor of relief. In the absence of such indication,
however, the consequences of the neglect ordinarily should be charged to the defaulting party--who contracted with the
attorney or insurer and who then may have an action for negligence against one of them--rather than the party who
obtained the judgment.
Civil Procedure > Pretrial Judgments > Default > Default Judgments
Civil Procedure > Pretrial Judgments > Default > Relief From Default
Civil Procedure > Appeals > Standards of Review > Abuse of Discretion
[HN5] The court normally reviews a trial court's decision to deny or grant relief from default judgment for abuse of
discretion. However, the abuse-of-discretion standard does not preclude an appellate court from correcting errors
premised on the trial court's misapprehension of the law. If the question requires a reviewing court to consider legal
concepts in the mix of fact and law and to exercise judgment about the values that animate legal principles, then the
concerns of judicial administration will favor the appellate court, and the question should be classified as one of law and
reviewed de novo.
Civil Procedure > Pretrial Judgments > Default > Relief From Default
[HN6] Default judgments are not favored, and generally, cases should be decided upon their merits. In considering a
motion for relief from a default judgment, the court should resolve all doubts in favor of a trial on the merits.
Civil Procedure > Pretrial Judgments > Default > Relief From Default
[HN7] N.M. R. Civ. P. 1-060(B)(1) requires a defaulted defendant to show both applicable grounds for vacating the
Page 2
126 N.M. 189, *; 1998-NMCA-161, **;
967 P.2d 864, ***; 1998 N.M. App. LEXIS 144
judgment--for example, excusable neglect--and a meritorious defense.
Civil Procedure > Pretrial Judgments > Default > Relief From Default
Civil Procedure > Judgments > Relief From Judgment > Extraordinary Circumstances
Insurance Law > General Liability Insurance > Obligations > Defense
[HN8] If an insurer's conduct is grossly negligent, then defendant insured is required to show that it was personally
diligent in pursuing its defense and that it was hindered by the insurer's conduct. Defendant cannot assert a justifiable
belief that his interests were being protected, if he fails to inquire concerning possible problems of which he should
have been aware under the circumstances.
Civil Procedure > Pretrial Judgments > Default > Default Judgments
[HN9] If defendant never files any documents with the trial court prior to entry of default, then plaintiff has no duty to
provide any notice to defendant before seeking default.
COUNSEL:
STEVEN L. TUCKER, TUCKER LAW FIRM, P.C., Santa Fe, NM, LEOF T. STRAND, ATTORNEY
AT LAW, P.C., Albuquerque, NM for Appellant.
WAYNE C. WOLF, WAYNE C. WOLF, LAW OFFICES, Albuquerque, NM.
RODERICK A. DORR, Albuquerque, NM for Appellee.
JUDGES:
MICHAEL D. BUSTAMANTE, Judge. WE CONCUR: RUDY S. APODACA, Judge, LYNN PICKARD,
Judge.
OPINION BY:
MICHAEL D. BUSTAMANTE
OPINION
[***865] [*190]
OPINION
BUSTAMANTE, Judge.
[**1]
This is a personal injury action in which default judgment for a substantial sum was entered against Para-Chem
Southern, Inc. (Defendant). Linda K. Adams (Plaintiff) appeals from an order vacating the default judgment. Plaintiff
asserts that the trial court erred when it failed or refused to consider the conduct of the Defendant's insurer in deciding
whether the standard for relief under Rule 1-060(B)(1) NMRA 1998 had been met. Plaintiff also argues that the trial
court erred in finding that the Defendant's own conduct met the standard of Rule 1-060(B)(1). We reverse and remand
for reinstatement of the judgment.
PROCEEDINGS
[**2]
Plaintiff filed her complaint on March 28, 1994, against Defendant and Graff Flooring Contractor, Inc. (Graff).
The complaint stated a products liability claim against Defendant as the manufacturer of a carpet adhesive which
allegedly caused Plaintiff to suffer serious health problems. Graff was alleged to have installed the carpet using the
defective adhesive. Defendant was served through its agent at its offices in South Carolina on August 30, 1994.
Defendant does not argue that service was in any way inadequate or improper. Defendant did not enter an appearance,
file an answer, or otherwise respond to the complaint until December 4, 1996, when it filed its Motion to Vacate Default
Judgment and Motion to Stay Execution of Judgment.
[**3]
Plaintiff filed her application for default judgment on May 18, 1995, and the trial court entered a default
judgment the same day. The form of order entered on May 18 did not provide for the amount of the judgment. The final
form of judgment, including the amount, was entered on September 3, 1996.
Page 3
126 N.M. 189, *; 1998-NMCA-161, **;
967 P.2d 864, ***; 1998 N.M. App. LEXIS 144
[**4]
Graff was dismissed from the suit on March 21, 1996, after entry of default against Defendant, but prior to entry
of the final judgment. The record does not reveal the reason for Graff's dismissal. Graff's initial pleading requesting
dismissal, which it filed on October 24, 1995, was entitled "Motion to Enforce Agreement" and generally asserted an
oral agreement to dismiss between the parties. This motion was never heard. Graff's dismissal was eventually
accomplished by an unopposed motion and order.
[**5]
In its motion to vacate default judgment, Defendant blamed its failure to defend on its insurer. According to the
affidavit of Roger Wilson (the person through whom Defendant was served in 1994), Defendant forwarded the claim to
its insurance broker on September 1, 1994. Defendant's insurance broker in turn forwarded the claim to The Home
Insurance Company (Home), Defendant's liability insurance carrier, on the same day. The claim was initially sent to
Home's claim office in Denver, Colorado. Thereafter the claim was transferred to Home's San Francisco office, "within
thirty (30) days after receiving the claim." It was then transferred to Home's New York office "on or before January 22,
1995 for handling." Apparently, the New York office lost the claim file and the "claim and lawsuit was [sic] re-faxed to
the Home's New York claim office on January 22, 1995."
[**6]
Thus, Home did not enter an appearance, file an answer, contact Plaintiff's counsel, or otherwise respond or react
to the claim on behalf of its insured for a period in excess of two years. Defendant did not submit an affidavit from
anyone internal to Home explaining Home's conduct or failure to act.
[**7]
Defendant itself did not receive any communication from Home after January 22, 1995, until it received a denial
of coverage letter dated November 4, 1996. Wilson's affidavit acknowledges that Defendant did not inquire of its
insurer concerning the status of the case in the interim. Assuming it was Defendant who re-faxed the claim to Home on
January 22, 1995, Defendant thus failed to inquire as to the status of the claim for a period of at least twenty-two
months. Wilson's affidavit explains Defendant's failure to inquire as follows:
8. It has been my experience in my five (5) years as Vice President and Chief Financial Officer of Para-Chem Southern, Inc., that
once a claim or lawsuit is forwarded
[***866] [*191]
to our insurance carrier, the carrier will commence a prompt investigation
or will promptly retain defense counsel to file a timely answer on behalf of our company and will otherwise protect our company's
interests. Moreover, it is not at all unusual for our insurance company not to contact us regarding the status of a pending claim or
suit for months or even a year or more during the pendency of a claim or suit while the matter is being handled. Therefore, I was
not alarmed at not hearing anything from The Home after notice was given.
ANALYSIS
[**8]
In district court, Defendant sought relief from the default judgment pursuant to Rule 1-060(B)(1), though it also
relied on cases decided under Rule 1-060(B)(6). [HN1] Under Rule 1-060(B)(1), Defendant has the burden of
demonstrating that its failure to timely respond to the complaint was the result of "mistake, inadvertence, surprise or
excusable neglect." Plaintiff argued below and argues here that the conduct of both Defendant and its insurer must be
taken into account in deciding whether the standard has been met. In short, Plaintiff argues that the "admittedly
inexcusable conduct" of Home should be imputed to Defendant. Defendant counters that New Mexico law does not,
and should not, impute an insurer's negligence to its defendant insureds. In support of its position, Defendant relies on a
trio of cases:
Wakely v. Tyler
, 78 N.M. 168, 429 P.2d 366 (1967);
Weisberg v. Garcia
, 75 N.M. 367, 404 P.2d 565
(1965); and
Dyer v. Pacheco
, 98 N.M. 670, 651 P.2d 1314 (Ct. App. 1982).
[**9]
Believing Plaintiff's position represents the better rule, supported by the weight of authority, we hold that [HN2]
the conduct of a defendant's insurer in failing to respond timely to a complaint should be imputed to the defendant.
Thus, the insurer's conduct should be considered along with the defendant's acts in determining whether there has been
excusable neglect warranting relief from the default. In so holding, we acknowledge that we are arguably fashioning a
new rule in New Mexico. However, we believe the rule we state here is amply supported, if not compelled, by more
recent case law than
Wakely
,
Weisberg
, and
Dyer
. We will first examine the development of the supporting New
Mexico case law and will then examine the development of the issues in other jurisdictions.
[**10]
The parties argue earnestly and at length over similarities and distinctions between the factual and procedural
Page 4
126 N.M. 189, *190; 1998-NMCA-161, **4;
967 P.2d 864, ***865; 1998 N.M. App. LEXIS 144
posture of this case and that of
Wakely
,
Weisberg
, and
Dyer
. Perhaps the most telling of the differences is that
Dyer
was
decided under a predecessor to Rule 1-060(B)(6).
See Dyer
, 98 N.M. at 673, 651 P.2d at 1317. We could therefore hold
that the district court erred to the extent it relied on a standard applicable to Rule 1-060(B)(6), rather than Rule
1-060(B)(1). However, we do not believe the distinctions drawn by the parties are determinative or crucial to our
decision. We prefer to base our decision on a more fundamental ground. As such, for purposes of the argument, we will
accept Defendant's characterization of the holdings in these cases.
[**11]
Wakely
and
Weisberg
can be read expansively to stand for the proposition that the reasons for an insurance
company's delay in responding to the complaint are irrelevant for Rule 1-060(B)(1) purposes because the insured is the
real party in interest.
See Weisberg
, 75 N.M. at 370, 404 P.2d at 566. In addition,
Dyer
can be interpreted to indicate
obliquely that a defendant will not be held responsible for its insurer's failures. This interpretation flows from language
in
Dyer
apparently absolving insureds of any responsibility to inquire as to the status of this case once it is submitted to
the insurance company for handling.
See
98 N.M. at 674, 651 P.2d at 1318.
[**12]
More recent New Mexico case law casts doubt on the continuing vitality of these propositions. For example, in
Padilla v. Estate of Griego
, 113 N.M. 660, 664, 830 P.2d 1348, 1352 (Ct. App. 1992), summary judgment was entered
against a defendant at least in part because of defense counsel's "extreme" negligence in failing to respond in any way to
a motion for summary judgment. Defendants filed a motion for relief from the summary judgment pursuant to Rules
1-060(B)(1) and 1-060(B)(6), asserting that
[***867] [*192]
they should not be bound for the failures of this
attorneys. We rejected this contention as "contrary to settled law."
Id
at 665, 830 P.2d at 1353.
Padilla
relied in part on
agency theory, noting that clients should be bound by their attorney representative's actions in the same way they would
be bound by the conduct of others acting for them.
See id.
;
cf. Marinchek v. Paige
, 108 N.M. 349, 352, 772 P.2d 879,
882 (1989) (counsel's actual notice of risk of default was charged to the defendant). We also noted, however, that the
clients had not provided the trial court any details about their efforts to "keep apprised of the course of the litigation."
Padilla
, 113 N.M. at 665, 830 P.2d at 1353. Thus, we said that the clients in
Padilla
had not given any "reason to
consider a limitation on the general rule binding a party to the conduct of its attorney."
Id Padilla
represents a retreat
from the exculpatory approach evident in the language of
Dyer
, though admittedly it did not involve an insurer.
[**13]
Padilla
was followed by our Supreme Court's decision in
Resolution Trust Corp. v. Ferri
, 120 N.M. 320, 901
P.2d 738 (1995). In
Ferri
, a default judgment had been entered against the defendant. Nineteen months after entry of the
judgment, the defendant filed a motion under Rule 1-060(B)(6) to set the judgment aside, asserting as her grounds a
mistake of law by the trial court and her attorney's failure to act. The trial court denied the motion. Affirming, our
Supreme Court cited
Padilla
with approval and agreed that parties "are deemed bound by the acts and failures to their
lawyers."
Ferri
, 120 N.M. at 325, 901 P.2d at 743.
[**14]
In addition, the Supreme Court noted that generally a claim of attorney negligence should be treated as a claim
of excusable neglect under Rule 1-060(B)(1), not as an exceptional circumstance under Rule 1-060(B)(6). The Supreme
Court did acknowledge, though, that if the "attorney's failure rises to the level of
gross negligence
, the trial court may
find exceptional circumstances warranting reopening a default judgment under [Rule] 1-060(B)(6)."
Ferri
, 120 N.M. at
325, 901 P.2d at 743. To gain the benefit of this exception, however, the client "must demonstrate that he or she was
diligent in pursing all claims but was thwarted in those efforts by the gross negligence of the attorney." 120 N.M. at
326, 901 P.2d at 744.
[**15]
Together,
Padilla
and
Ferri
establish that: (1) a party will generally be bound by his or her attorney's actions;
and (2) to escape the consequences of his or her attorney's gross acts and failures, the client must demonstrate personal
diligence which was thwarted by the attorney. The question this case poses is whether the rule should be different for
the conduct of the insurance company chosen by the insured to respond to litigation. Apart from relying on its
triumvirate of cases, Defendant offers no reasoned distinction. We see no basis in this context for distinguishing
between the negligence of counsel and the negligence of an insurer. We agree with the observation by the Missouri
appellate court when faced with the same issue:
Page 5
126 N.M. 189, *191; 1998-NMCA-161, **10;
967 P.2d 864, ***866; 1998 N.M. App. LEXIS 144
Reason and logic render impossible the acceptance of any real distinction between the inexcusable neglect of a lawyer . . . and the
inexcusable neglect of a claims manager and attorney for the defendant's insurer. Both occupy a contractual relationship with the
client, the prime purpose of which is to handle the litigation within the framework of judicial proceedings. But even of more
significant force is that by undertaking such responsibilities they also assume an obligation to third parties interested in the matter
and to the courts administering and judicially determining the controversy.
Ward v. Cook United, Inc.
, 521 S.W.2d 461, 473 (Mo. Ct. App. 1975).
Accord Truhe v. Grimes
, 318 Ark. 117, 884
S.W.2d 255, 257 (Ark. 1994);
Griffey v. Rajan
, 33 Ohio St. 3d 75, 514 N.E.2d 1122, 1125 (Ohio 1987) (both quoting
Ward
with approval).
[**16]
The weight of authority from other jurisdictions is in accord with our holding. The majority of the cases
addressing this question make clear that [HN3] in order to merit relief from default judgment, the conduct of the party
and its litigation agents--attorneys and insurers--must be explained and must meet the standard of mistake or excusable
neglect.
See Henline, Inc. v. Martin
, 169 Ind. App. 260, 348 N.E.2d 416, 420-21 (Ind.
[***868] [*193]
Ct. App.
1976) ("Considering the role of defendants' insurance company as the entity in charge of defendants' defense, it would
not be unreasonable for the trial court to analogize the status of the company's claims adjuster with that of an attorney
acting on defendants' behalf so as to apply the 'general rule . . . that the negligence of the attorney is the negligence of
the client[.]'" (quoting
Moe v. Koe
, 165 Ind. App. 98, 330 N.E.2d 761, 765 (Ind. Ct. App. 1975));
St. Arnold v. Star
Expansion Indus.
, 268 Ore. 640, 521 P.2d 526, 533 (Or. 1974) (in banc) (adopting principle that insurer, by retaining
control of suit brought against its insured, became agent of the insured);
Stevens v. Gulf Oil Corp.
, 108 R.I. 209, 274
A.2d 163, 164 (R.I. 1971) (insurer should be treated as agent of insured for purposes of considering excusable neglect to
file answer);
Memorial Hosp. Sys. v. Fisher Ins. Agency, Inc.
, 835 S.W.2d 645, 652 (Tex. Ct. App. 1992) ("When a
party relies on an agent or representative to file an answer, the party must establish that the failure to answer was not
intentional or the result of conscious indifference of either the party or the agent.");
see also Spica v. Garczynski
, 78
F.R.D. 134 (E.D. Pa. 1978);
Rhodes W. v. Clarke
, 14 Ariz. App. 62, 480 P.2d 677 (Ariz. Ct. App. 1971);
see generally
J. P. Ludington, Annotation,
Failure of Liability Insurer, After Notification, to Defend Suit Against Insured, as
Warranting Opening Default Against Insured on Ground of Inadvertence or Excusable Neglect
, 87 A.L.R.2d 870 (1963
& Supp. 1991), and the cases cited therein.
[**17]
Imputation of the insurer's conduct to its insured is also supported by the Restatement (Second) of Judgments §
67 (1982). As noted in comment c to § 67,
Neglect of attorney or insurer.
[HN4] A subsidiary issue in determining excusable neglect is whether inexcusable neglect by the
party's attorney or insurer is to be attributed to the party. The effect of attributing such neglect to the party himself is to impose
judgment liability on him despite his effort to place responsibility for defending the suit in proper hands. The effect of not
attributing the neglect to the party is to excuse the attorney of what amounts to professional negligence or to excuse the insurer of
neglect in its duty to defend the insured. If the party obtaining the judgment was on notice of facts indicating the neglect by the
attorney or insurer, that is a factor weighing in favor of relief. In the absence of such indication, however, the consequences of the
neglect ordinarily should be charged to the defaulting party--who contracted with the attorney or insurer and who then may have an
action for negligence against one of them--rather than the party who obtained the judgment.
[**18]
There is authority to the contrary.
See, e.g.
,
Hinz v. Northland Milk & Ice Cream Co.
, 237 Minn. 28, 53 N.W.2d
454, 456 (Minn. 1952);
Abrams v. Barnes
, 16 A.D.2d 936, 229 N.Y.S.2d 657 (N.Y. App. Div. 1962) (mem.);
King v.
Montz
, 219 N.W.2d 836 (N.D. 1974). However, these cases are of relatively older vintage, and they appear inconsistent
with recent New Mexico cases. In addition,
Abrams
failed to analyze the issue in any meaningful way. Finally, at least
Hinz
involved a marginal factual scenario which merited relief regardless of who was at fault in failing to timely
respond. In
Hinz
, the complaint was filed and served in mid-December 1951, and was forwarded to the defendant
insurer within a few days thereafter. The insurer mislaid the papers and did not forward them to its attorneys for
answering until December 29, when the defendant was already in default. The trial court entered default on January 2,
1952. Defendant immediately challenged the default. The trial court refused to grant any relief, and the Minnesota
Supreme Court understandably reversed (as would we). The Court noted that in this circumstance the negligence of the
insurer should not be imputed to the defendant because the defendant had acted promptly and diligently and no
Page 6
126 N.M. 189, *192; 1998-NMCA-161, **15;
967 P.2d 864, ***867; 1998 N.M. App. LEXIS 144
substantial prejudice would result to the plaintiff by granting relief.
Hinz
, 53 N.W.2d at 455-56. The Court's imputation
discussion was not necessary to its ruling. In any event the facts in
Hinz
are clearly not the facts we face here.
[**19]
Turning to the facts in this case, and considering Defendant's and Home's conduct, we conclude that the trial
court erred in vacating the default judgment.
[***869]
[HN5]
[*194]
We normally review a trial court's decision to
deny or grant relief from default judgment for abuse of discretion.
See Nichols v. Nichols
, 98 N.M. 322, 326, 648 P.2d
780, 784 (1982). "However, the abuse-of-discretion standard does not preclude an appellate court from correcting errors
premised on the trial court's misapprehension of the law[.]"
State v. Barnett
, 1998 NMCA 105, P13, 125 N.M. 739, 965
P.2d 323, 1998 N.M. App. LEXIS 88 [No. 18,542, filed July 1, 1998]. The record does not reveal the trial court's
rationale for its ruling. To the extent if failed or refused to take into account Home's conduct, it erred. Rather than
remand for reconsideration, however, we will conduct our own independent review because there are no factual issues
requiring resolution.
See State v. Attaway
, 117 N.M. 141, 144-45, 870 P.2d 103, 106-07 (1994) ("If . . . the question
requires [a reviewing court] to consider legal concepts in the mix of fact and law and to exercise judgment about the
values that animate legal principles, then the concerns of judicial administration will favor the appellate court, and the
question should be classified as one of law and reviewed de novo." (quoting
United States v. McConney
, 728 F.2d 1195,
1202 (9th Cir. 1984) (en banc)).
[**20]
In conducting our review, of course, we adhere to the oft-repeated maxim that [HN6] default judgments are not
favored, and the corollary notion that "generally, cases should be decided upon their merits."
Rodriguez v. Conant
, 105
N.M. 746, 749, 737 P.2d 527, 530 (1987). We are, thus, mindful of our Supreme Court's admonition that in considering
a motion for relief from a default judgment we should resolve all doubts in favor of a trial on the merits.
See id.
[**21]
[HN7] Rule 1-060(B)(1) requires a defaulted defendant to show both applicable grounds for vacating the
judgment--for example, excusable neglect--and a meritorious defense.
See Rodriguez
, 105 N.M. at 749, 737 P.2d at 530.
The undisputed fact is that Home--and thus Defendant--failed to react to the complaint for over two years. Defendant
contends that this lengthy period of time should not be held against it because the delay was actually caused by
Plaintiff's leisurely pace in obtaining the default, proving damages, and obtaining the final judgment. Once Defendant
got notice of the final judgment, it acted rather quickly to set it aside. However, we do not believe that it is a plaintiff's
burden to expedite the case for the benefit of a defendant. The fact remains that there was a long period of time during
which neither Defendant nor its insurer did anything to respond to the case.
[**22]
We have already noted that neither Defendant nor Home has explained Home's failures to respond to the
complaint. Defendant did not even attempt to provide an explanation for Home's conduct, much less try to make a
showing of
excusable
neglect for it. In the absence of any explanation for Home's conduct, there was "no excuse shown
and no legal ground for vacating the default."
Richas v. Superior Ct.
, 133 Ariz. 512, 652 P.2d 1035, 1038 (Ariz. 1982)
(en banc) (insurer liable for payment of judgment and in charge of defense must establish an excusable neglect for its
own conduct and its failure to do so is attributable to insured). Thus, Home's conduct provides no support for the trial
court's decision, and in fact detracts from it.
[**23]
In addition, Defendant failed to demonstrate excusable neglect based on its own conduct. Defendant failed to
inquire about the state of the case for at least twenty-two months. [HN8] Assuming that Home's conduct should be
characterized as grossly negligent, and applying the Supreme Court approach in
Ferri
, Defendant would be required to
show that it was personally diligent in pursuing its defense and that it was hindered by Home's conduct. Defendant does
not assert it was prevented from inquiring. It simply relied entirely on its insurer. We hold that twenty-two months is an
unreasonable length of time and that Defendant has failed to demonstrate personal diligence as a matter of law. "A
defendant cannot assert a justifiable belief that his interests were being protected, if he fails to inquire concerning
possible problems of which he should have been aware under the circumstances."
Fox v. Volkswagon of Am., Inc.
, 328
Pa. Super. 338, 476 A.2d 1360, 1361 (Pa. Super. Ct. 1984),
aff'd
, 507 Pa. 429, 490 A.2d 438 (Pa. 1985);
see also
,
Memorial Hosp. Sys.
, 835 S.W.2d at 652 ("It is reasonable to assume that when a prudent person
[***870] [*195]
is
served with a petition concerning a lawsuit and is relying on his agent to represent his interest, he is going to make sure
that his agent is using due diligence in handling the lawsuit.").
Page 7
126 N.M. 189, *193; 1998-NMCA-161, **18;
967 P.2d 864, ***868; 1998 N.M. App. LEXIS 144
[**24]
We deal with two final matters summarily. Plaintiff argues that her dismissal of Graff with prejudice constitutes
an intervening equity preventing vacatur of the default. Because of our resolution of the primary issue, we do not need
to address this problem. Finally, Defendant complains that under Rule 1-055 NMRA 1998 it was improper for Plaintiff
to seek and enter default without first giving notice to Defendant. This contention is fully answered by our Supreme
Court's decision in
Merrill v. Tabachin, Inc.
, 107 N.M. 802, 803, 765 P.2d 1170, 1171 (1988). [HN9] Defendant never
filed any documents with the court prior to entry of default. Thus, under
Merrill
, Plaintiff had no duty to provide any
notice to Defendant before seeking default.
CONCLUSION
[**25] Combining the failure to act of Home and the failure to inquire by Defendant, and taking into
consideration the utter failure of the Defendant to provide an explanation for Home's conduct, we hold that there
was no basis for vacating the default judgment. We thus reverse and remand with instructions to reinstate the
judgment effective the date of its original entry. Plaintiff is awarded her costs on appeal.
[**26] IT IS SO ORDERED.
MICHAEL D. BUSTAMANTE, Judge
WE CONCUR:
RUDY S. APODACA, Judge
LYNN PICKARD, Judge
Page 8
126 N.M. 189, *195; 1998-NMCA-161, **24;
967 P.2d 864, ***870; 1998 N.M. App. LEXIS 144
Explanation / Answer
a) Who are the plaintiffs? - Linda K Adams
b) Who are the defendants?
Parachem Southern, Inc.
c) Linda K Adams Vs. Para Chem Southern 18663, Court of Appeals of New Mexico, October 20, 1998
d) Court of Appeals of New Mexico
e)
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