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APPLIED UNDERWRITERS v. OCEANSIDE LAUNDRY

Cite as 300 Neb. 333

Applied Underwriters Captive Risk Assurance

Company, Inc., an Iowa corporation, appellee, 

v. Oceanside Laundry, LLC, doing business

as Campus Laundry, appellant.

___ N.W.2d ___

Filed June 22, 2018. No. S-17-576.

1. Motions to Vacate: Appeal and Error. The decision to vacate an order 

is within the discretion of the court; such a decision will be reversed 

only if it is shown that the district court abused its discretion.

2. Judges: Words and Phrases. A judicial abuse of discretion exists when 

the reasons or rulings of a trial judge are clearly untenable, unfairly 

depriving a litigant of a substantial right and denying just results in matters submitted for disposition.

3. Service of Process: Waiver. A general appearance waives any defects 

in the process or notice, the steps preliminary to its issuance, or in the 

service or return thereof.

4. Jurisdiction: Pleadings: Parties. A party will be deemed to have 

appeared generally if, by motion or other form of application to the 

court, he or she seeks to bring its powers into action on any matter other 

than the question of jurisdiction over that party.

5. Default Judgments. When determining whether to set aside a default 

judgment, two competing interests must be considered: the right of a 

litigant to defend the action on the merits and judicial efficiency.

6. Default Judgments: Proof: Time. Where a judgment has been entered 

by default and a prompt application has been made at the same term 

to set it aside, with the tender of an answer or other proof disclosing a 

meritorious defense, the court should on reasonable terms sustain the 

motion and permit the cause to be heard on the merits.

7. Default Judgments: Motions to Vacate: Words and Phrases. In the 

context of a motion to vacate a default judgment, a meritorious or substantial defense or cause means one which is worthy of judicial inquiry 

Nebraska Supreme Court Online Library

www.nebraska.gov/apps-courts-epub/

06/29/2018 12:10 AM CDT
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because it raises a question of law deserving some investigation and 

discussion or a real controversy as to the essential facts.

8. Default Judgments: Motions to Vacate. Although a defendant seeking 

to vacate a default judgment is required to present a meritorious defense, 

it is not required that the defendant show he will ultimately prevail in 

the action, but only that the defendant show that he has a defense which 

is recognized by the law and is not frivolous.

Appeal from the District Court for Douglas County: J. 

Michael Coffey, Judge. Reversed and remanded with 

directions.

Kristopher J. Covi, of McGrath, North, Mullin & Kratz, 

P.C., L.L.O., for appellant.

Jeffrey A. Silver for appellee.

Heavican, C.J., Miller-Lerman, Cassel, Stacy, and Funke, 

JJ., and Vaughan, District Judge.

Vaughan, District Judge.

INTRODUCTION

This appeal involves a default judgment against Oceanside 

Laundry, LLC, doing business as Campus Laundry (Oceanside). 

Applied Underwriters Captive Risk Assurance Company, Inc. 

(AUCRA), filed a breach of contract action against Oceanside. 

When Oceanside did not file a responsive pleading, the district court for Douglas County granted AUCRA’s motion 

for default judgment. The district court subsequently denied 

Oceanside’s motion for reconsideration or, in the alternative, to set aside the default judgment on the basis of several 

defenses. Oceanside now appeals the district court’s orders. 

Because we conclude that Oceanside made prompt application 

to set aside the default judgment and demonstrated at least 

one meritorious defense in support of its motion, we reverse, 

and remand with directions to vacate the default judgment and 

allow Oceanside a reasonable time in which to file an appropriate responsive pleading.
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BACKGROUND

Oceanside, a California-based limited liability company 

doing business as Campus Laundry, entered a reinsurance 

participation agreement (RPA) with AUCRA, an Iowa corporation with its principal place of business in Douglas County, 

Nebraska. On December 12, 2016, AUCRA brought a breach 

of contract action against Oceanside in the district court for 

Douglas County.

Initially, AUCRA unsuccessfully attempted to serve process 

on Oceanside via certified mail, using a California address for 

Campus Laundry. AUCRA next filed a praecipe that requested 

personal service at the same address by an authorized process server in California. According to the proof of service, 

on January 25, 2017, a civil process server personally served 

“‘John Doe’ (Caucasian male, 30’s, 5′9′′, 200 lbs., Brown eyes, 

Brown hair) Person in Charge.”

Oceanside did not file a responsive pleading.

On March 23, 2017, AUCRA filed a motion for default judgment and sent notice of the hearing to the same address it used 

to serve Oceanside the summons.

At the hearing on the motion for default judgment, counsel 

for Oceanside made an appearance and opposed the motion, 

alleging improper service of process. The district court received 

Oceanside’s affidavit evidence that AUCRA did not serve a 

summons on any person authorized by the company to receive 

service of process on its behalf.

In support of AUCRA’s motion for default judgment, it 

offered an exhibit consisting of a copy of the RPA, a series of 

statements for Oceanside’s account with AUCRA, and an affidavit designating the most recent balance as the amount due 

and owing. The RPA provides that it shall be governed exclusively by the laws of Nebraska and that any matter shall be 

resolved exclusively by the courts of Nebraska. Additionally, 

the RPA states that AUCRA may apply to a court of competent 

jurisdiction for relief in the event of breach.
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Oceanside’s counsel objected to AUCRA’s exhibit on relevance grounds and argued that the balance cited by AUCRA 

as the amount due and owing may not be accurate because 

the balances fluctuate over time. The district court received 

AUCRA’s exhibit over Oceanside’s objection. Oceanside’s 

counsel then reiterated the position that the district court 

should overrule the motion for default judgment based on 

insufficient service.

On May 4, 2017, the district court found that Oceanside 

was duly served pursuant to Neb. Rev. Stat. §§ 25-540 and 

25-513.01 (Reissue 2016) and failed to file a responsive pleading. Accordingly, the district court entered a default judgment 

against Oceanside for moneys owed under the contract.

On May 22, 2017, Oceanside filed a motion to reconsider 

or, in the alternative, to set aside the default judgment and 

allow Oceanside to file a responsive pleading. In support of 

the motion to set aside, Oceanside alleged as defenses lack of 

personal jurisdiction and improper venue. Oceanside also challenged the amount due and owing, asserting that such amount 

was unliquidated and based on terms found to be illegal and 

void by another court of law.

At a hearing on Oceanside’s motions, Oceanside focused 

on the motion to set aside the default judgment. The district 

court received the affidavit of the chief executive officer of 

Oceanside, doing business as Campus Laundry. He stated that 

Campus Laundry had no connections to the State of Nebraska. 

Instead, he stated that the RPA was purchased through a 

California broker; that the RPA provided coverage for employees in California; that all payments were drawn from Campus 

Laundry’s accounts in California; that all witnesses, documents, and other sources of proof were located in California; 

and that the same dispute was being litigated in California. 

Additionally, Oceanside presented the analysis and order of 

the California Department of Insurance determining that the 

RPA violates the California Insurance Code and the California 

Code of Regulations and is void and unenforceable. In arguing 
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against Oceanside’s motion to set aside, AUCRA’s counsel 

pointed out that Oceanside had not offered any reason why 

it failed to provide a responsive pleading to the complaint. 

Oceanside’s counsel responded that Oceanside did not file a 

responsive pleading because it did not want to waive the right 

to challenge service of process.

On May 30, 2017, the district court overruled Oceanside’s 

motion to reconsider or, in the alternative, to set aside the 

default judgment, without explanation.

On June 2, 2017, Oceanside filed its notice to appeal the 

district court’s May 4 and 30 orders.

ASSIGNMENTS OF ERROR

Oceanside assigns, rephrased, that the district court erred 

in (1) granting AUCRA’s motion for default judgment against 

Oceanside and (2) denying Oceanside’s motion to set aside 

the default judgment after Oceanside showed meritorious 

defenses.

STANDARD OF REVIEW

[1,2] The decision to vacate an order is within the discretion of the court; such a decision will be reversed only if it is 

shown that the district court abused its discretion.1 A judicial 

abuse of discretion exists when the reasons or rulings of a trial 

judge are clearly untenable, unfairly depriving a litigant of a 

substantial right and denying just results in matters submitted 

for disposition.2

ANALYSIS

On appeal, Oceanside disputes both the default judgment 

and the district court’s denial of Oceanside’s motion to set 

aside such default judgment. For the reasons stated below, we 

1 Miller v. Steichen, 268 Neb. 328, 682 N.W.2d 702 (2004). See Carrel v. 

Serco Inc., 291 Neb. 61, 864 N.W.2d 236 (2015).

2 Hartley v. Metropolitan Util. Dist., 294 Neb. 870, 885 N.W.2d 675 (2016).
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determine that the district court abused its discretion in denying Oceanside’s motion to set aside. Because we conclude that 

the default judgment should be set aside, we need not consider 

whether the district court correctly entered the default judgment in the first place.3

We begin our analysis of the motion to set aside by noting, 

as asserted by Oceanside, that the record in this case raises 

questions about the validity of service of process and personal 

jurisdiction. While we do not reach the issue of service of 

process, we conclude that Oceanside has not waived every 

objection to personal jurisdiction.

[3,4] Under Neb. Rev. Stat. § 25-516.01(1) (Reissue 2016), 

the voluntary appearance of a party is the equivalent of service 

of process. Section 25-516.01(2) goes on to state that participation in the proceedings on any issue other than the defenses of 

lack of jurisdiction over the person, insufficiency of process, 

or insufficiency of services of process, waives all such issues 

except as to the objection that the party is not amenable to 

process issued by a court of this state.4 Thus, a general appearance waives any defects in the process or notice, the steps preliminary to its issuance, or in the service or return thereof.5

 A 

party will be deemed to have appeared generally if, by motion 

or other form of application to the court, he or she seeks to 

bring its powers into action on any matter other than the question of jurisdiction over that party.6

Here, counsel for Oceanside appeared at the hearing on 

the motion for default judgment and opposed it, alleging 

3 See Doty v. West Gate Bank, 292 Neb. 787, 874 N.W.2d 839 (2016) 

(appellate court is not obligated to engage in analysis that is not necessary 

to adjudicate case and controversy before it).

4 See Burns v. Burns, 293 Neb. 633, 879 N.W.2d 375 (2016). See, also, 

Friedman v. Friedman, 290 Neb. 973, 863 N.W.2d 153 (2015).

5 Burns v. Burns, supra note 4. See, also, Friedman v. Friedman, supra

note 4.

6 Burns v. Burns, supra note 4.
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improper service of process. In objecting to evidence offered 

by AUCRA, Oceanside’s counsel contested the balance cited 

by AUCRA as the amount due and owing. Oceanside’s departure from the issue of service of process resulted in a general 

appearance, and Oceanside has therefore waived that issue.7

However, we reach a different conclusion concerning personal jurisdiction. As noted above, § 25-516.01(2) provides, 

among other things, that participation in the proceedings on 

any issue other than the defense of lack of jurisdiction over 

the person waives that defense, “except the objection that 

the party is not amenable to process issued by a court of this 

state.” Consequently, a party may waive objections to personal 

jurisdiction based on defective service of process while retaining objections to personal jurisdiction based on amenability to 

service of process by a court of this state.8

Oceanside’s motion to set aside as well as evidence at the 

resulting hearing alleged that the district court lacked personal 

jurisdiction because Oceanside has no business ties to the State 

of Nebraska, and Oceanside’s appellate brief contains similar 

contentions. Oceanside, therefore, has argued that it is not amenable to process issued by a court of this state. For purposes 

of personal jurisdiction, the voluntary appearance of a party is 

the equivalent of service of process.9 Thus, through its general 

appearance at the hearing on the motion for default judgment, 

Oceanside subjected itself to the jurisdiction of the district 

court.10 But Oceanside’s general appearance did not waive the 

issue of personal jurisdiction insofar as it relates to Oceanside’s 

amenability to process issued by a Nebraska court.11

7 See Friedman v. Friedman, supra note 4 (party who contested service of 

process and amount of garnishment entered general appearance).

8 See In re Petition of SID No. 1, 270 Neb. 856, 708 N.W.2d 809 (2006). 

See, also, § 25-516.01(2).

9 § 25-516.01(1); Burns v. Burns, supra note 4.

10 See id. See, also, Miller v. Steichen, supra note 1.

11 See Burns v. Burns, supra note 4.
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Having determined that Oceanside prospectively subjected 

itself to the jurisdiction of the district court, our analysis 

shifts to whether the district court erred in not setting aside 

the default judgment on one of two alternate grounds: (1) that 

Oceanside had demonstrated the existence of a meritorious 

defense or (2) that the default judgment was void when it was 

entered, because Oceanside was not amenable to process issued 

by a court of this state and the district court therefore lacked 

personal jurisdiction.12

[5,6] When determining whether to set aside a default judgment, two competing interests must be considered: the right 

of a litigant to defend the action on the merits and judicial efficiency.13

Where a judgment has been entered by default and a 

prompt application has been made at the same term to 

set it aside, with the tender of an answer or other proof 

disclosing a meritorious defense, the court should on reasonable terms sustain the motion and permit the cause to 

be heard on the merits.14

This court has also recognized that while it is the policy of the 

law to give a litigant an opportunity to present his contention 

in court and to give relief against slight and technical omissions, it is the duty of the courts to prevent an abuse of process, unnecessary delays, and dilatory and frivolous proceedings 

in the administration of justice.15

At the hearing on AUCRA’s motion for default judgment, 

Oceanside’s counsel explained that no responsive pleading had 

been filed on behalf of Oceanside to avoid waiving the issue of 

improper service of process. The record shows that Oceanside 

12 See Miller v. Steichen, supra note 1.

13 Carrel v. Serco Inc., supra note 1.

14 Steinberg v. Stahlnecker, 200 Neb. 466, 467, 263 N.W.2d 861, 862 (1978). 

See, also, Miller v. Steichen, supra note 1.

15 Miller v. Steichen, supra note 1; Steinberg v. Stahlnecker, supra note 14.
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next made a prompt application to set aside the default judgment 

that followed. Under Neb. Rev. Stat. § 25-2001(1) (Reissue 

2016), the district court has the inherent power to vacate or 

modify its judgments or orders during term. The district court 

for Douglas County has a term coextensive with the calendar 

year.16 The district court entered the default judgment on May 

4, 2017. On May 22, Oceanside filed its motion to reconsider 

or, in the alternative, to set aside the default judgment and 

allow Oceanside to file a responsive pleading. Thus, Oceanside 

invoked the district court’s inherent power to vacate the default 

judgment by filing its motion to set it aside within term.

AUCRA argues that Oceanside’s motion to set aside the 

default judgment was effectively a motion to alter or amend 

that was untimely filed more than 10 days after the entry of 

judgment. While it is true that a motion to alter or amend must 

be filed no later than 10 days after the entry of judgment,17 this 

argument is misplaced. We have explained that a motion for 

reconsideration is nothing more than an invitation to the court 

to consider exercising its inherent power to vacate or modify 

its own judgment.18 In some contexts, a motion for reconsideration may also be treated as a motion to alter or amend a judgment for purposes of terminating the 30-day appeal period.

19

The rule upon which AUCRA relies pertains to terminating the 

appeal period, but timeliness of the appeal is not at issue in 

this case.

[7,8] Given that Oceanside has made a prompt application 

to set aside the default judgment, we turn to whether it tendered proof disclosing a meritorious defense. In the context 

16 See Rules of Dist. Ct. of Fourth Jud. Dist. 4-1(C) (rev. 1995).

17 See Neb. Rev. Stat. § 25-1329 (Reissue 2016).

18 County of Douglas v. Nebraska Tax Equal. & Rev. Comm., 296 Neb. 501, 

894 N.W.2d 308 (2017).

19 Id. See, also, Neb. Rev. Stat. § 25-1912(3) (Reissue 2016); State v. 

Bellamy, 264 Neb. 784, 652 N.W.2d 86 (2002).
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of a motion to vacate a default judgment, a meritorious or 

substantial defense or cause means one which is worthy of 

judicial inquiry because it raises a question of law deserving 

some investigation and discussion or a real controversy as to 

the essential facts.20 Although a defendant seeking to vacate a 

default judgment is required to present a meritorious defense, it 

is not required that the defendant show he will ultimately prevail in the action, but only that the defendant show that he has 

a defense which is recognized by the law and is not frivolous.21

We note that such meritorious defense need not be tendered 

exclusively as a proposed answer, as AUCRA asserts, but may 

also be in the form of “other proof.”22

In its motion to set aside the default judgment, Oceanside 

alleged, in part, that AUCRA’s claim for amounts owed was 

based on the terms of the RPA, which had been deemed illegal 

and void by the commissioner of the California Department of 

Insurance. At the hearing on Oceanside’s motion, Oceanside 

presented evidence that it lacked ties to the State of Nebraska 

but had significant ties to the State of California. Oceanside 

further presented evidence that the California Department of 

Insurance had determined that the RPA violates the California 

Insurance Code and the California Code of Regulations and 

is void and unenforceable. Taken as a whole, this evidence 

begs the question whether the RPA is void for the purposes of 

this litigation. And resolving the issue requires further judicial 

inquiry. Accordingly, we conclude that Oceanside tendered 

proof disclosing a meritorious defense.

In light of the meritorious defense promptly alleged by 

Oceanside, we conclude that allowing the default judgment to 

stand would unfairly deprive Oceanside of a substantial right 

20 Miller v. Steichen, supra note 1; Carrel v. Serco Inc., supra note 1.

21 Id.

22 Steinberg v. Stahlnecker, supra note 14, 200 Neb. at 467, 263 N.W.2d at 

862. See, also, Miller v. Steichen, supra note 1.
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and produce an unjust result. Therefore, we determine that 

the district court abused its discretion in denying Oceanside’s 

motion to vacate the default judgment.

While we conclude that Oceanside made a showing sufficient to warrant setting aside the default judgment in order 

to resolve the parties’ dispute on the merits, we express no 

opinion as to whether Oceanside will ultimately prevail. We 

further note that while we have resolved this appeal based on a 

single meritorious defense, such defense is but one in an array 

of defenses available to Oceanside on remand, as is a lack of 

personal jurisdiction based on Oceanside’s amenability to service by a court of this state.

CONCLUSION

For the foregoing reasons, we conclude that the district court 

erred in overruling Oceanside’s motion to vacate the default 

judgment, and we reverse, and remand with directions to the 

district court to (1) vacate the default judgment entered against 

Oceanside on May 4, 2017, and (2) give Oceanside a reasonable time in which to file an appropriate responsive pleading.

Reversed and remanded with directions.

Papik, J., not participating.