Rosander v. Nightrunners Transport, Ltd.

196 P.3d 711

147 Wn. App. 392

Juanita ROSANDER and David Rosander, wife and husband, Respondents, v. NIGHTRUNNERS TRANSPORT, LTD., foreign business entity situated in Killam, Alberta, Canada, Appellant Nicholas R. McKay, an individual, Defendant.

No. 36847-1-II.

Court of Appeals of Washington, Division 2.

November 12, 2008.

Mark Preston Scheer, Jonathan Dirk Holt, Scheer & Zehnder LLP, Seattle, WA, for Appellant.

William Delmar Robison, Gideon D. Caron, Caron Colven Robison & Shafton LLP, Vancouver, WA, for Respondents.

QUINN-BRINTNALL, J.

¶ 1 Nightrunners Transport Ltd. appeals the trial court's denial of its motion to vacate a default order and judgment. It argues that (1) the judgment violated CR 55 and the due process clause because Nightrunners appeared but did not receive notice of the default hearing until after it was held and (2) the trial court abused its discretion when it held that Nightrunners did not present a prima facie defense or prove excusable neglect and when it affirmed a $925,794.54 damages award. We affirm.

FACTS¹

¶ 2 Juanita Rosander drove down two-lane Highway 14 and stopped to make a left turn. Behind her, Nicholas McKay was driving a truck for Nightrunners. McKay tried to stop. He soon realized that a coffee cup had rolled under the brake pedal, preventing him from braking. He pushed the cup out of the way, began braking, and swerved between oncoming traffic and Rosander's car, attempting to avoid colliding with Rosander. Rosander also tried to avoid the collision by swerving to the right, but McKay's truck hit the side of her car. Rosander suffered extensive and permanent injuries, requiring, among other things, that she involuntarily retire from coaching gymnastics at a public school and discontinue active duty with the United States Army.

¶ 3 Rosander sued McKay and Nightrunners and served each with a summons and complaint.² The defendants did not file a formal notice of appearance or any other documents in the superior court. Nightrunners' insurance company, ING Insurance Company of Canada, negotiated with Rosander for quite some time and, thus, contends that it appeared informally.

¶ 4 Rosander moved for default judgment and the matter was set on the July 12 superior court calendar. On the morning of July 12, an ING representative called Rosander's counsel. Rosander's counsel told ING that a default hearing was scheduled that day and ING explained that the case's claim manager was suffering from medical problems and could not work on the case. Rosander's counsel responded that it would continue the default hearing for two weeks, but ING must appear at court and should retain Washington counsel.

¶ 5 Rosander's counsel renoted the default hearing for July 26 and served ING with a notice of the hearing at its Canadian office, where the company was managing the claim. ING did not file any documents with the court or appear at the hearing. On July 26, 2007, the trial court entered a default order and judgment for Rosander. Nightrunners moved to vacate the default; the trial court denied the motion. Nightrunners timely appealed.³

ANALYSIS

Notice

¶ 6 Nightrunners argues that the trial court lacked authority to enter a default judgment against it because it did not receive the notice that CR 55(a)(3) requires and because it was denied the constitutional due process right to notice. We disagree.

¶ 7 A trial court has no authority to enter a default judgment against a party who has appeared but did not receive proper notice.⁴ CR 55(a)(3); Shreve v. Chamberlin, 66 Wash.App. 728, 731, 832 P.2d 1355 (1992), review denied, 120 Wash.2d 1029, 847 P.2d 481 (1993). As a result, a party who did not receive required notice is entitled as a matter of right to have a default judgment set aside. Tiffin v. Hendricks, 44 Wash.2d 837, 847, 271 P.2d 683 (1954); see also Ware v. Phillips, 77 Wash.2d 879, 884-85, 468 P.2d 444 (1970) (holding a lack of notice voids a judgment on due process grounds). We review de novo questions of law, including questions of adequacy of notice, constitutional law, and whether, on undisputed facts, appearance has been established as a matter of law. Dep't of Ecology v. Campbell & Gwinn, LLC, 146 Wash.2d 1, 9, 43 P.3d 4 (2002).

A. No Appearance

¶ 8 Here, the trial court held that Nightrunners had appeared because its insurance company, ING, negotiated with Rosander for two years. Although Rosander did not appeal this ruling, this issue is dispositive and we may affirm a trial court's decision on any ground the record adequately supports. LaMon v. Butler, 112 Wash.2d 193, 200-01, 770 P.2d 1027, cert. denied, 493 U.S. 814, 110 S.Ct. 61, 107 L.Ed.2d 29 (1989).

¶ 9 Under Washington law, Nightrunners did not appear. Shortly before the trial court ruled on Nightrunners' appearance, our Supreme Court rejected the theory that a party can appear for purposes of the CR 55 notice requirement simply through prelitigation communications with the opposing party. In Morin v. Burris, 160 Wash.2d 745, 749-50, 161 P.3d 956 (2007), the court ruled that, for purposes of satisfying CR 55's notice requirement, a party need not appear formally by, for instance, filing an answer, but it must appear in court in some way. To hold otherwise, the court noted, would

permit any party to a dispute, or any claims representative to a potential dispute, to simply write a letter expressing intent to contest litigation, then ignore the summons and complaint or other formal process and wait for the notice of default judgment before deciding whether a defense is worth pursuing.

Morin, 160 Wash.2d at 757, 161 P.3d 956. Here, the undisputed facts demonstrate that ING made no court appearance at any time. Instead, it merely communicated with Rosander about the lawsuit. This is not an appearance. Accordingly, Nightrunners was not entitled to any notice before the default judgment or order.

B. Adequacy of Notice

¶ 10 Although Morin is dispositive, we further note that Nightrunners' challenge to the adequacy of the notice it received lacks merit. Had Nightrunners appeared, Rosander's notice of default would be adequate.

¶ 11 "Any 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." CR 55(a)(3). It is undisputed that Rosander mailed an amended citation that states, "The following matter will be brought on for hearing [on July 26, 2007 at 1:30 pm]: Motion for Default." 1 Clerk's Papers (CP) at 11. The certificate of service states that it was mailed to Nightrunners on July 16, 2007.

¶ 12 CR 5(b)(2)(A) explains that service by mail

shall be deemed complete upon the third day following the day upon which they are placed in the mail, unless the third day falls on a Saturday, Sunday or legal holiday, in which event service shall be deemed complete on the first day other than a Saturday, Sunday or legal holiday, following the third day.

July 16, 2007, the date the notice was mailed, was a Monday and there were no legal holidays that week. Thus, under this court rule, the service was "deemed complete" on July 19. CR 5(b)(2)(A). July 19 was seven days before the July 26 default hearing and, therefore, the mailing satisfied the five-day notice requirement. CR 55(a)(3).

¶ 13 Nightrunners initially argues that it did not receive the notice until after the default hearing. But actual receipt is legally insignificant under the court rule's notice requirement. See CR 5(b)(2)(A).

¶ 14 Nightrunners also asserts that CR 5(b)(2)(A) should not apply to foreign parties who did not retain American legal counsel because it takes longer to send mail to foreign countries. However practical Nightrunners' suggestion may be, we have no power to amend a court rule simply because a party thinks the rule is unfair. CR 5 plainly applies to foreign and domestic parties and Nightrunners does not argue otherwise. Moreover, the court rules encourage foreign parties to retain or associate with Washington counsel, a prudent choice, and, in appropriate circumstances, the rules allow vacation of judgments if a party failed to attend a hearing or trial due to excusable neglect. CR 60(b)(1). Applying CR 5(b)(2)(A) is not unfair or inappropriate.

¶ 15 Finally, Nightrunners argues that the untimely receipt of notice violated its right to due process. We disagree. Due process requires "`notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.'" Olympic Forest Prods., Inc. v. Chaussee Corp., 82 Wash.2d 418, 422, 511 P.2d 1002 (1973) (quoting Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 94 L.Ed. 865 (1950)). Unless a challenged prohibition involves First Amendment rights, which Nightrunners' does not, we must evaluate its constitutionality as applied to the facts of the case. City of Seattle v. Webster, 115 Wash.2d 635, 640 n. 2, 802 P.2d 1333 (1990) (citing Maynard v. Cartwright, 486 U.S. 356, 361, 108 S.Ct. 1853, 100 L.Ed.2d 372 (1988)), cert. denied, 500 U.S. 908, 111 S.Ct. 1690 (1991).

¶ 16 In arguing a violation of its due process rights, Nightrunners again focuses solely on its contention that it did not receive Rosander's notice until after the hearing; but, as noted above, actual receipt is not legally significant. See Olympic Forest Prods., Inc., 82 Wash.2d at 422, 511 P.2d 1002. Sending certified mail from Vancouver, Washington, to Edmonton, Alberta, 10 days before the hearing is "`reasonably calculated, under all the circumstances'" to apprise Nightrunners that a default hearing would take place. Olympic Forest Prods., Inc., 82 Wash.2d at 422, 511 P.2d 1002 (quoting Mullane, 339 U.S. at 314, 70 S.Ct. 652).

¶ 17 We disagree with Nightrunners that its status as a foreign business entity entitles it to special notice and explanation....