Court Opinion

ID: 9608283
Source: CourtListenerOpinion
Date Created: 2023-08-22 03:08:46.995281+00
Date Added: 2024-06-11T09:00:56.857882
License: Public Domain

McKINNON, Justice (dissenting).  I respectfully dissent and join in Chief Justice Baca’s dissent. In addition I offer the following comments.  Mid-Continent was bound by the default judgment because of its contract with Burge and because the only defenses it had were derivative of those available to Sanchez. The crucial flaw in the majority’s analysis is its failure to recognize that Mid-Continent did practically nothing in the Taos County action {Burge I) to protect its derivative defenses when Burge sued Sanchez. This failure resulted in a default judgment which was never directly attacked but which determined that Sanchez’s conduct was “the sole and proximate cause” oí the accident, this crucial fact not being noted or commented on by the majority. In the Bernalillo County action (Burge II) the trial court correctly granted partial summary judgment to Burge on the issue of fault — the sole proximate cause of the accident — indicating that Mid-Continent was “stuck” because of its inaction, not that Mid-Continent was liable “once the default judgment was entered,” as claimed by the majority.  the majority holds that Mid-Continent was denied “procedural due process” when the Burge II court granted Burge’s motion for partial summary judgment. It asserts that Mid-Continent was denied its “day in court” and therefore, an opportunity to litigate the comparative fault issue. I strongly disagree because overlooked by the majority is the fact that Mid-Continent timely intervened but failed or refused to move that the default judgment be set aside. In none of the cases cited by the majority was it held that denial of due process occurs when an insurance company intervenes but fails, as here, to move to set aside a default judgment. Indeed, the intervention was timely as in Cooper, supra, even though it occurred after judgment had been entered. Clearly, Mid-Continent was given more than adequate notice and an opportunity to protect its interests by intervening and moving to set aside the default judgment. There was no denial of procedural due process.  As early as 1990 Mid-Continent knew Burge was demanding uninsured coverage on his substantial claim against Sanchez, and as part of its investigation confirmed his uninsured status. Shortly after Burge I was filed, Burge furnished Mid-Continent with a copy of the complaint, this being more than a month before the motion for default judgment was mailed to Mid-Continent. On July 10,1992, Mid-Continent was sent notification of the default judgment and a hearing date for damages only on August 24. On July 15, Mid-Continent sought intervention, but at no time did it ever move that the default judgment be set aside, although its counsel later admitted that he could have done so. Further, Mid-Continent never requested a hearing on its motion to intervene and never made a motion to stay or consolidate the proceedings in Burge II. Obviously, and directly contrary to the majority’s claim, Mid-Continent did not do everything it could to intervene and not be bound by the default judgment. Finally, the complaint-in-intervention was dismissed on January 24, 1993, over two months after entry of judgment awarding damages to Burge in accordance with the hearing held on August 24, 1992.  Without referring to any language in the order of dismissal or to any other support in the Burge I record, the majority asserts that the dismissal was for the purpose of “allowing all of Mid-Continent’s issues to be heard in the Burge II suit.” Except for a few pleadings and other papers filed in the Burge I court, neither the record nor the transcript of proceedings was before the Burge II court or this Court. Thus, the majority is necessarily speculating about what the court in Burge I intended when it dismissed the complaint-in-intervention. This is especially important because the majority fails to address the crucial language of the default judgment and only discusses the language of the second judgment in isolation. However, the two judgments can be interpreted harmoniously without much effort.  The crucial language of the default judgment states: The averments of the complaint are hereby deemed to be findings of fact; and the Court specifically finds that the negligent acts of the Defendants are the sole and proximate cause of the motorcycle-motor vehicle collision which is the subject matter of the litigation and the sole proximate cause of the injuries and damages suffered by Plaintiff as a result of the subject collision____ Plaintiff shall obtain an award of damages against Defendants MICHAEL L. SANCHEZ and DELORES SANCHEZ after further hearing on the issue of damages and the presentation of evidence by Plaintiff. (Emphasis added.) This language is not ambiguous or otherwise mysterious. The Burge I court necessarily determined that Sanchez was 100% at fault since his conduct was the “sole and proximate cause” of the accident and it set a hearing to determine the amount of damages suffered based on evidence presented by Burge.1 In the face of this language, Mid-Continent did absolutely nothing to set aside the default judgment.  Over a month after entry of the default judgment, the hearing on damages was held. The printed language of the order awarded damages to Burge in the amount of $350,000 but the court noted in handwriting the following: “This judgment has no binding effect upon the plaintiff in intervention, Mid-Continent Casualty Company.” The Burge II court presumably read the two judgments harmoniously to mean that fault had been determined by the default judgment but Mid-Continent had not had its day in court to contest the amount of the damages. This approach was imminently reasonable, especially since no action had been taken by Mid-. Continent to set aside the default judgment.  As noted above, any defenses of Mid-Continent were derivative of those available to Sanchez since it stood “in the shoes of the uninsured motorist with regard to the question whether [the uninsured motorist] was negligent and with regard to his defenses such as contributory negligence.” Hendren v. Allstate Ins. Co., 100 N.M. 506, 510, 672 P.2d 1137, 1141 (Ct.App.1983) (quoting Craft v. Economy Fire & Cos. Co., 572 F.2d 565 (7th Cir.1978)). Consequently, Mid-Continent was in privity with Sanchez and the legal effect of the default judgment was to bar a subsequent suit on issues that could have been determined in the first action. See First State Bank v. Muzio, 100 N.M. 98, 666 P.2d 777 (1983) (holding that parties and their privies are barred from raising defenses in subsequent actions after default judgment is entered). The affirmative defense of contributory negligence had to be raised by Sanchez in his answer to the complaint, see Rule 1-008(C) NMRA 1996, or by Mid-Continent when it either sought intervention or thereafter. But more importantly, Mid-Continent was required to move that the default judgment (a judgment that determined that Sanchez was 100% at fault) be set aside. Having failed to do so, Mid-Continent became bound under the judgment to pay according to its contract.  Mid-Continent, having failed to effectively intervene and set aside the default judgment, should be barred from further litigation of its derivative defenses. Thus, I would affirm the trial court.  . I believe the majority errs in using this case to overrule Passino v. Cascade Steel Fabricators, Inc., 105 N.M. 457, 734 P.2d 235 (Ct.App.1986), which prohibited a defaulting defendant from litigating comparative fault at a damages-only hearing. Here, there was no fault to apportion since Sanchez's conduct was already found to be the sole and proximate cause of the accident and the injuries. Under these facts, application of the holding in Passino that "[bjy defaulting, defendant waived its right to the application of comparative negligence and the apportionment of damages,” id. at 459, 734 P.2d at 237, would be correct.