Court Opinion

ID: 9590528
Source: CourtListenerOpinion
Date Created: 2023-08-21 23:55:48.491348+00
Date Added: 2024-06-11T09:33:52.012074
License: Public Domain

SHEPARD, Justice.
This is an appeal by a surety, from an order of the Industrial Commission denying a motion to vacate a default judgment entered against the employer, who failed to appear at an Industrial Commission hearing.1 We reverse and remand.
The record indicates the following particulars relating to claimant Nelson and the circumstances preceding the default and entry of an award in the instant case. Claimant Nelson’s physical problems date back to at least February 1977, when he injured his left knee during his employment with another Idaho employer. As to that injury, he negotiated a lump sum settlement with the then employer-surety, which settlement was approved by the Industrial Commission on June 4, 1980. Thereafter, Nelson was working as a heavy equipment operator for the employer herein, Pumnea, in Idaho, Washington, and Montana. On October 30, 1980, he again injured his left knee, while working in Montana. Pumnea had workmen’s compensation coverage in all three states. Claimant Nelson filed a claim for compensation in Montana, and the Montana State Compensation Fund paid him benefits from October 31, 1980 through April 1, 1982, at which point the Montana fund determined that the damage attributed to the October 1980 accident had healed and that fund therefore discontinued compensation.
Despite the situs of the injury being in a foreign state, under the provisions for extraterritorial coverage, I.C. §§ 72-217 and -218, claimant applied for a hearing before the Idaho Industrial Commission, claiming benefits relating to the October 1980 injury. On April 20, 1982, a copy of that application for hearing was served upon surety’s local agent, who claims to have received it on April 23, 1982. In an affidavit made part of surety’s application to set aside the default, an adjuster for the surety stated she was at the time somewhat confused, since the application related to a relatively old injury in another jurisdiction and the insurance carrier was named as “State Compensation Insurance Fund, Helena, Montana.” Nevertheless, she telephoned claimant’s attorney, who informed her that the claim was being transferred to Idaho and that the surety should file a response to the application. After unsuccessfully attempting to contact her claims manager, the adjuster set the application aside, intending to make further inquiry. During the following week, surety’s local agent moved its offices to a different location, the adjuster was out of town on business, and the document was temporarily misplaced or forgotten. On May 26, the *50adjuster discovered that the application for hearing had not been acted upon and immediately contacted surety’s attorneys and the insured employer. According to the adjuster’s affidavit, the employer explained to her that he had not filed an employer’s report of accident with the Industrial Commission in Idaho, since he knew that claimant was receiving benefits in Montana. The adjuster then contacted the Montana Industrial Commission and obtained its files on claimant’s case.
Under the rules of the Idaho Industrial Commission a defendant has 20 days from the date of service of the application for hearing to file an answer with the Industrial Commission. When no answer was filed on the due date, the commission, on May 17, 1982, entered a default order against the employer. Thereafter, on September 29, 1982, the commission entered an order and award in favor of claimant.
On June 3, 1982, 18 days after the default was entered, surety’s attorney filed a motion for an order setting aside the default and submitted in support of said motion an affidavit by the adjuster explaining the circumstances surrounding the non-filing of an answer to claimant’s application for hearing, together with extensive information, from the files of the Montana Compensation Insurance Fund and the Idaho Industrial Commission, which disclosed the history of claimant’s knee injuries.
On July 26, 1982, the Idaho Industrial Commission entered its order denying surety’s motion to set aside the default and noted, “It is fundamental that in order to set aside a default, the party moving to set the default aside must show mistake, inadvertence, surprise, or excusable neglect and must set forth facts establishing a meritorious defense,” citing Fisher v. Bunker Hill Co., 96 Idaho 341, 528 P.2d 903 (1974). The commission gave the following reason for refusing to set aside the default judgment:
“The Commission concludes that the foregoing facts do not establish mistake, inadvertence, surprise or excusable neglect on the part of the insurance adjustor. It is apparent that the adjustor treated the Application for Hearing as though it was a claim for compensation and proceeded with an investigation. It was not treated as though it was an Application for Hearing, which required an Answer to be prepared and filed by the attorney for the employer or surety. It was not handled in a manner which would be expected of a reasonable and prudent person.”
We have consistently held that the factual findings of the Industrial Commission will not be overturned on appeal unless they are unsupported by substantial and competent evidence. Green v. Columbia Foods, Inc., 104 Idaho 204, 657 P.2d 1072 (1983); Case of Graham, 103 Idaho 824, 654 P.2d 1377 (1982). Further, the Industrial Commission will be the arbiter of conflicting evidence. Case of Graham, supra; Callantine v. Blue Ribbon Linen Supply, 103 Idaho 734, 653 P.2d 455 (1982); Bradshaw v. Bench Sewer Dist., 90 Idaho 557, 414 P.2d 661 (1966). In the instant case, however, the record before us is devoid of any evidence upon which we might sustain the commission’s finding as to the reason for the surety’s inaction on Nelson’s application for hearing. Because that holding of the commission is unsupported as a matter of law, it is hereby reversed. See Bush v. Bonners Ferry School Dist. No. 101, 102 Idaho 620, 636 P.2d 175 (1981); Idaho Const, art. 5, § 9; I.C. § 72-732(4).
We now turn to the record to determine whether it discloses that in the instant case there were excusable neglect and meritorious defenses. See I.R.C.P. 60(b)(1).
The law abhors a default judgment, and hence we are inclined to give the benefit of any doubt to the party against whom default has been entered, in accordance with our long-standing policy favoring a decision on the merits of the case over disposition upon a procedural technicality. Garren v. Saccomanno, 86 Idaho 268, 385 P.2d 396 (1963); Davis v. Rathbun, 79 Idaho 482, 321 P.2d 609 (1958); Orange Transportation Co. v. Taylor, 71 Idaho 275, 230 P.2d 689 (1951). We note that we have for *51our review all of the evidence which the commission itself had before it, i.e., a written record, but no testimony. Here, contrary to the usual situation, the agent of the surety had neither a file nor any notification from the employer of a compensable accident. The accident situs was not within Idaho and the therein named “insurance carrier” was unusual. Hence, the agent for the surety had in its possession a single document which, during the course of a move of the office from one location to another, could lead even a reasonable and prudent person into an oversight. Hamilton v. Edell, 67 F.R.D. 18 (E.D.Pa.1975); Mead v. Citizen’s Automobile Inter-Insurance Exchange, 78 Idaho 63, 297 P.2d 1042 (1956). There is no demonstration of any prejudice to the claimant by the 18-day delay in receiving the response of the surety to the application for hearing, see Johnson v. Noland, 78 Idaho 642, 308 P.2d 588 (1957); Dellwo v. Petersen, 34 Idaho 697, 203 P. 472 (1921), and we are appreciative of the candor of claimant’s counsel in this regard during oral argument. In the instant case, we hold that the surety has demonstrated excusable neglect.
Any meritorious defense on the part of the surety is essentially that none of the current damage can be causally connected to the October 1980 accident. In the motion to set aside the default, it was alleged that claimant injured his knee by an accident in February 1977; that an injury occurred in October 1980 from which arose the instant claim; that claimant was treated for damage to the same knee following an automobile accident in May 1981; that the same knee was injured in August of 1981; and that he dropped a stove on the same knee in February 1982, again necessitating treatment. Which of those incidents caused any or all of the damage to claimant's knee, and whether, as asserted by the claimant, the post-October 1980 injuries were caused because of his already weak knees, are questions needful for determination. If, as the surety asserts, none of the current damage is causally connected to the October 1980 accident, a defense to liability exists. Green v. Columbia Foods, 104 Idaho 204, 657 P.2d 1072 (1983); Callantine v. Blue Ribbon Linen Supply, 103 Idaho 734, 653 P.2d 455 (1982); Dean v. Dravo Corporation, 95 Idaho 558, 511 P.2d 1334 (1973). Hence, for purposes of the motion to vacate the default, we hold the surety has established meritorious defenses, which it should be entitled to litigate.
The surety also appeals from the commission’s computation of benefits. That issue would only be necessary to our decision if we were affirming the order refusing to set aside the default. Nevertheless, we note that the commission appears to have based its calculation of the award solely upon claimant’s oral testimony, which was seriously contradicted by documentary evidence relating to time slips and by the claimant’s own accounting on his Montana compensation application of his earnings for the previous four pay periods. Therefore, upon remand, the commission is instructed not to give any res judicata effect to its previous calculation of claimant’s award.
If the commission on remand makes an award of compensation to claimant, it is instructed to so award benefits nunc pro tunc as of September 29, 1982.
Reversed and remanded for additional proceedings in accordance herewith. No costs allowed.
DONALDSON, C.J., and McFADDEN, J. Pro Tem., concur.
BAKES, J., concurs in the result.

. "I.C. § 72-307 provides: "... [T]he jurisdiction of the employer shall, for the purpose of this law, be the jurisdiction of the surety, and that the surety shall in all things be bound by and subject to the orders, findings, decisions, or awards of the commission rendered against the employer for the payment of compensation.”