Opinion ID: 2599837
Heading Depth: 1
Heading Rank: 8

Heading: Failure to Comply with CR 55(b)(2)

Text: ¶ 68 The defendants also argued that the default judgment should be set aside because it was unsupported by findings of fact and conclusions of law, contrary to CR 55(b)(2). Rather than deferring to the trial court's exercise of discretion, the majority reviews the record de novo and concludes that the failure to enter formal findings was a minor omission because the record contains sufficient evidence to support the damages award. Majority at ___, 161 P.3d at 351. The majority analyzes the issue as though we were reviewing the entry of the default judgment, not the decision to vacate it. The appropriate question is not whether the record is sufficient to allow appellate review, but whether, confronted with a procedurally defective default judgment, the trial court abused its discretion in setting it aside. ¶ 69 The absence of required findings here was a tenable ground for the trial court's decision to vacate the default judgment. ¶ 70 CR 55(b)(2) provides that [i]f, in order to enable the court to enter judgment or to carry it into effect, it is necessary to take an account or to determine the amount of damages or to establish the truth of any averment by evidence or to make an investigation of any other matter, the court may conduct such hearings as are deemed necessary or, when required by statute, shall have such matters resolved by a jury. Findings of fact and conclusions of law are required under this subsection. (Emphasis added.) The rules also provide that when findings and conclusions are required, the court shall find the facts specially and state separately its conclusions of law. CR 52(a)(1). And, CR 52(d) provides that a judgment entered where findings are required, without findings of fact having been made, is subject to a motion to vacate. Further, the rules direct that [a]fter vacation, the judgment shall not be reentered until findings are entered pursuant to this rule. Id. Plainly, the trial court's decision to vacate was proper under the governing rules. ¶ 71 In addition, the trial court could have reasonably concluded that the lack of findings and conclusions was an irregularity in obtaining a judgment, for purposes of CR 60(b)(1). `An irregularity is defined to be the want of adherence to some prescribed rule or mode of proceeding; and it consists either in omitting to do something that is necessary for the due and orderly conducting of a suit, or doing it in an unseasonable time or improper manner.' Port of Port Angeles v. CMC Real Estate Corp., 114 Wash.2d 670, 674, 790 P.2d 145 (1990) (internal quotation marks omitted) (quoting In re Ellern, 23 Wash.2d 219, 222, 160 P.2d 639 (1945)); see also Madera v. J.R. Simplot, Co., 104 Wash. App. 93, 15 P.3d 649 (2001) (describing irregularities under CR 60(b)(1) as concerning departures from prescribed rules or regulations); Kennewick Irrigation Dist. v. 51 Parcels of Real Property, 70 Wash.App. 368, 853 P.2d 488 (failure to comply with CR 55(b)(3), requiring court to examine plaintiff under oath before entering judgment when defendant is served by publication or mail), review denied, 122 Wash.2d 1027, 866 P.2d 40 (1993); Trautman, supra, 35 Wash. L.Rev. at 514 (noting that defects in the judgment itself may constitute an irregularity). ¶ 72 For example, in Hays v. Peavey, 54 Wash. 78, 81, 102 P. 889 (1909), the trial court granted a motion to vacate a judgment where the statute (Bal.Code § 4878; Pierce's Code § 336) directed that a summons by publication contain a brief statement of the object of the action, but such a statement was not contained. This court affirmed, holding that the trial court did not abuse its discretion in vacating the judgment based on the irregularity, which the court observed may have caused confusion. ¶ 73 We have observed that the entry of findings of fact and conclusions of law is an important safeguard for defendants, which assures that the trial court does not act as a passive bystander in entering a default judgment, but plays an active role in assessing the appropriate award of damages when the amount is uncertain. Lenzi v. Redland Ins. Co., 140 Wash.2d 267, 281, 996 P.2d 603 (2000). ¶ 74 The majority states that the appropriate remedy for failure to comply with CR 55(b)(2) is remand for entry of findings, not vacation of the default judgment. The cases relied upon by the majority do not support this assertion. In the cases relied upon by the majority, findings of fact were not required and the issue on review was whether the trial court abused its discretion by entering the default judgment, not by setting it aside. In Frame v. S-H, Inc., 967 F.2d 194 (5th Cir.1992), the court held that the lack of findings in support of a discovery sanction did not require vacation of a default judgment in view of the voluminous evidence in the record detailing the defendant's egregious and repeated discovery abuses, together with a transcript detailing the court's reasons for the sanction. And in Ackra Direct Marketing Corp. v. Fingerhut Corp., 86 F.3d 852 (8th Cir.1996), the court held that a trial court did not abuse its discretion in entering a default judgment, notwithstanding the lack of a written explanation of its reasons. The court expressly noted that it was not reviewing the trial court's decision on a motion to vacate the default judgment. Fingerhut Corp., 86 F.3d at 856. ¶ 75 I agree that it may be appropriate to sustain a trial court's entry of a default judgment in the absence of required findings when the record contains sufficient evidence to support a damages award. However, it does not follow that a trial court abuses its discretion by setting aside a default judgment for failure to comply with CR 55(b)(2), particularly in light of CR 52(d). ¶ 76 In this case, the default judgment lacks any findings that indicate the trial court played an active role in assessing the damages award. The court awarded the exact amount requested by the plaintiff in her supporting memorandum, including a $650,000 award for general damages. CP at 56-57. In the absence of such findings, there was no assurance that the earlier court had independently assessed the evidence before entering the default judgment, a factor that the trial court could properly weigh in favor of allowing a trial on the merits. ¶ 77 Where there are no findings as required under CR 52(d), the record is void, tantamount to an invitation to read the evidence, consider it de novo, and second guess the trial court. State v. Kingman, 77 Wash.2d 551, 552, 463 P.2d 638 (1970) (declining the invitation). Given the lack of either a written opinion or transcript of the proceeding, the trial court was entitled to treat the absence of required findings as an irregularity that warranted vacation of the default judgment, particularly in view of the size of the default judgment, and evidence suggesting both the low-impact nature of the collisions and the existence of the plaintiff's preexisting injuries. The trial court was not required to search the court record to determine whether substantial evidence supported the damages award. Rather, the trial court was required to weigh the equities and determine whether to set aside the default judgment. The absence of required findings weighed in favor of setting aside the judgment because it raised a substantial doubt as to whether the court independently evaluated the evidence in support of the damages award, as contemplated by CR 55(b)(2). ¶ 78 The majority states if the entry of findings of fact is necessary for appellate review, the appropriate remedy is to remand but not vacate the default judgment. While such a remedy may be appropriate if our review was of the trial court's entry of the default judgment, it has no relevance in the context of reviewing the decision to vacate the default judgment. In deciding whether to vacate the default judgment, the trial court was not reviewing the original trial court's decision to enter the default judgment, and its task was not to correct the trial court's errors or remand for clarification. ¶ 79 Moreover, the majority fails to recognize that even if we were reviewing the entry of the default judgment and were to remand to the trial court for the entry of findings, the outcome could differ. This is apparent in one of the cases cited by the majority. In Foxtrap, Inc. v. Foxtrap, Inc., 217 U.S.App. D.C. 130, 671 F.2d 636, 639 n. 1, 642 (1982), the district court vacated a default judgment after concluding that the district court's one laconic finding that the appropriate monetary remedy was $75,000 failed to satisfy the requirement that a district court enter findings and conclusions in support of default damages. [4] The court instructed the trial court on relevant factors it should consider in reevaluating its decision on remand. ¶ 80 A judgment is not final until the required findings and conclusions are entered. Ferree v. Doric Co., 62 Wash.2d 561, 567, 383 P.2d 900 (1963). Findings and conclusions are always subject to revision until they are actually signed and entered. DGHI Enters. v. Pac. Cities, Inc., 137 Wash.2d 933, 977 P.2d 1231 (1999). Moreover, a trial court has broad discretion in determining the appropriate damages award under CR 55(b)(2). The court has discretion to hold a hearing, bench trial, or even a jury trial. 4 Karl B. Tegland, Washington Practice: Rules Practice CR 55, at 339 (5th ed.2006). In this case, the trial court elected to enter a damages award based on the affidavits alone. This, too, was within its discretion. See Miller v. Patterson, 45 Wash.App. 450, 457, 725 P.2d 1016 (1986) (noting permissive language in CR 55(b)(2) that the court may conduct such hearings as are deemed necessary). However, upon remand, the trial court would have discretion to change its findings, and could reopen the hearing for additional evidence. Turpen v. Johnson, 26 Wash.2d 716, 175 P.2d 495 (1946); see 4 Tegland, supra, CR 52, at 265; see also Paine-Gallucci, 35 Wash.2d at 321, 212 P.2d 805 (recognizing that a trial court has discretion to permit a defaulting party to participate in a damages hearing). Given that King is now represented by counsel and St. Paul has joined the litigation, it is possible, if not likely, that upon remand a court would allow the defendants to challenge the evidence in support of the damages award, resulting in a different outcome.