A Lesson on Default Judgments

We have this happen at least a couple of times a year:  an out-of-state company calls us, tells us they were sued, they turned the summons and complaint over to (a) an insurer;  or (b) their local counsel;  or (c) to a clerk or a secretary or somebody in office, and now they have received a notice of entry of default.

The common perception seems to be that we can get a default set aside just for the asking.  But that ain't so.  The standard for setting aside a default appears in Code of Civil Procedure section 473, which essentially allows a court to set aside the default for mistake, inadvertence or excusable neglect.  There are hundreds of appellate cases on this subject, and they are all over the map. 

Here's the latest one:        Fasuyi v. Permatex (October 15, 2008) ___ Cal.App.4th ___ (A117760).  And the holding and language are very helpful for somebody trying to get the default set aside: 

So, what do we have? We have a legal department at ITW which initially assisted Fasuyi’s counsel in effecting service. Once that service was accomplished, the legal department immediately did what any good department would, forwarding the summons and complaint to its insurance broker for appropriate handling. The broker also did what any good broker should, and immediately forwarded the complaint on to the appropriate insurers, received back the requested confirmation, and believed that the matter would be tended to.  Sadly, it was not.

That is the record here. No lack of cooperation from the defense side. Indeed, the converse. No deception. No duplicitousness. No stonewalling. No evasion. And no disregard of any warning. In fact, no warning.

It will be recalled that Fasuyi’s counsel had  been in contact with ITW’s legal department, which, not incidentally, had helped counsel effect service by identifying the location of CT Corporation. Notwithstanding that, Fasuyi’s counsel took the default without so much as a reminder, let alone a warning, about any responsive pleading.

You may not be surprised to learn that the Court of Appeal was not too nice to plaintiff's counsel, made some observations about the ethics of taking the default, and reversed the trial court for refusing to set aside the default.

Still, probably better not to allow the default in the first place . . . .