Court Opinion

ID: 2798689
Source: CourtListenerOpinion
Date Created: 2015-05-05 18:12:47.244508+00
Date Added: 2024-06-11T11:29:28.748346
License: Public Domain

FILED
                                                                                   COURT OF APPEALS
                                                                                        DIVISION If

                                                                                  2015 MAY - 5 AM 9: 28

                                                                                  STATE OF ,WASHINGTON
                                                                                  By

         IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

                                                  DIVISION II

    In re the Marriage of                                                        No. 46298 -2 -II

    TIMOTHY M. PUTMAN,

                                      Appellant,

    and

    DEANNE M. PUTMAN,                                                      UNPUBLISHED OPINION

                                      Respondent.

            JOHANSON, C. J. —         Tim Putman appeals the trial court' s order vacating a default

dissolution decree      and related orders.      He argues that the trial court abused its discretion when it

granted      Deanne Putman'   s   CR 60( b) motion based         on excusable neglect.     We hold that the trial

court did not abuse its discretion when it concluded that Deanne' submitted substantial evidence

of a prima facie defense, her failure to appear in the action was excusable, she acted with due

diligence to vacate the default order, and Tim will suffer no substantial hardship. We affirm.

                                                          FACTS

            In April 2013, Tim filed a dissolution of marriage petition. Deanne accepted service of the

petition but did not appear, answer, or hire an attorney.

1
    To    avoid confusion, we refer   to the   parties   by their first names for clarity and intend no disrespect.
No. 46298 -2 -II

         Tim and Deanne met once in the early stages of the dissolution to discuss a property

settlement    but did    not reach an agreement.             In July 2013, Tim' s attorney sent Deanne a formal,

initial settlement proposal. In part, Tim proposed that Deanne keep several insurance brokerages

and other businesses that they owned together and that she pay Tim $700, 000 for his interest in

the businesses. Deanne rejected the agreement because the $700, 000 proposed settlement amount

was too high.

         In November 2013, Tim filed an amended dissolution petition and served Deanne with a

copy on November 14. The amended petition was identical to Tim' s initial proposal except that it

requested a new property division: it required Deanne to pay Tim $500, 000 for his interest in their

businesses.

          On November 27, the trial court granted Tim' s motion for a default judgment, which

occurred without notice to Deanne. Tim also noted the final dissolution orders for presentation on

December 11 without notice to Deanne.

          Meanwhile, on December 1, Deanne sent Tim a series of text messages stating, among

other things, that she did not agree with the property settlement proposal in the amended petition

and   that "` it is   apparent   I   need [ an   attorney]   as we will not come   to terms without   one. "'   Clerk' s

Papers ( CP) at 147. During this text message exchange, Tim did not tell Deanne about the default

judgment or the hearing set for December 11.

          On December 11, Tim testified about his marriage, the court' s jurisdiction, and the property

division he proposed in the amended petition.2 The trial court entered the default orders and

2 The amounts in the proposed property division were sums certain. CR 55( b).

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divided the property as proposed in the amended petition. Copies of the default orders were mailed

to Deanne on December 12.

          In January 2014, Deanne moved to vacate the default orders under CR 55( c) and CR 60(b),

arguing     several   grounds,     including     mistake,   surprise,    inadvertence,       or   excusable   neglect.   In

support of her motion, Deanne submitted a declaration and copies of her December 1 text message

conversation with       Tim.     She declared that she and Tim had " on -going discussions about how to

manage [    their]   complex     financial    circumstances."      CP   at   38.   Their financial circumstances were

complicated because she and Tim owned several insurance agencies and other businesses together,

had an interest in a building with two mortgages on it, and one of their insurance businesses owed

 100, 000 to the Internal Revenue Service ( IRS).                 Deanne also stated that during their discussions

about the property settlement, Tim "threw out a number [ valuing their business] that had no basis

in reality because it     was more       than twice   what   Allstate had told       us   the business   was worth."     CP

at 39. Tim then used that number in the amended petition and, ultimately, the default orders.

          Deanne declared that their finances could be problematic during a dissolution because, as

an   insurance    agent, she must        follow " very   strict rules about        money" and the default orders are

 totally silent with regard to both the value of [their] assets and the extent of [their] liabilities."

CP   at   38.   Moreover, Deanne opined that the default orders do not provide a " rational plan" to

separate their business affairs. CP at 38. Deanne stated that she and Tim " continued to talk about

reaching an agreement" and that she never communicated with Tim' s attorney because she and

Tim   were able      to talk   about   the   issues themselves. CP      at   39. She also declared that she told Tim

that she did not agree with the property distribution in the amended petition on December 1, after

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No. 46298 -2 -II

the default judgment but before the default orders were entered, and that Tim never told her about

his plans to seek a default judgment.

          Tim    argued   that Deanne had        not      shown     good   cause   to   vacate   the default   orders.   In

opposition to Deanne' s motion, Tim provided a copy of the initial property settlement proposal,

records   of most of      his attorney'   s attempts       to   correspond with     Deanne,      and a   declaration.    He

declared that although they are both officers in the insurance brokerages and other businesses, he

was not involved in operations and that if Deanne was unhappy with the fact that the default orders

did not assign a value to their assets, she should have appeared.

          The trial court concluded that what is fair and equitable is a defense in a family law case

and that excusable neglect, Deanne' s diligence in filing her motion to vacate, and the fact that Tim

would suffer no hardship apart from litigating the case on its merits justified vacating the default

orders and granted Deanne' s motion under CR 60( b)( 1). 3 The trial court also found, in relevant

part,   that Tim   and   Deanne had been talking "[ t]hroughout this process" about their case, that Tim

did   not give   Deanne    notice of   his   plans   to   seek a    default judgment, that "[ ilt is clear Ms. Putman

was not    in   agreement with   the   proposal      that had been made in the ...         amended petition,"     and that

Deanne told Tim, after the default judgment was entered but before the December 11 hearing, that

she planned to hire an attorney because she disagreed with the settlement proposal in the amended

petition. CP at 146 -47.

          Tim appeals the trial court' s order vacating the default orders.

3 Because Tim assigns error to only finding of fact 1. 16, the remainder of the trial court' s findings
are verities on appeal. Humphrey Indus., Ltd. v. Clay St. Assocs., LLC, 176 Wn.2d 662, 675, 295
P. 3d 231 ( 2013).

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                                                             ANALYSIS

                        I. VACATION OF DEFAULT ORDERS NOT AN ABUSE OF DISCRETION

                                      A. STANDARD OF REVIEW AND RULES OF LAW

          We review a trial court' s decision to vacate a default judgment under CR 60( b) for an abuse

of   discretion. Little        v.   King,   160 Wn.2d 696, 702, 161 P. 3d 345 ( 2007).                A trial court abuses its

discretion when its decision is based on untenable grounds or made for untenable reasons. Morin

v.   Burris, 160 Wn.2d 745, 753, 161 P. 3d 956 ( 2007).                  We find an abuse of discretion less " readily"

after the trial court grants a CR 60( b) motion to vacate a default judgment than we would after the

trial   court   denies    a   CR 60( b)     motion,   thus   denying the parties   a   trial on the   merits.    White v. Holm,

73 Wn.2d 348, 351 -52, 438 P. 2d 581 ( 1968).

          As a policy matter, we prefer to resolve disputes on their merits and do not favor default

judgments. Little, 160 Wn.2d at 703. However, we must balance this policy against an interest in

an " organized, responsive, and responsible                   judicial   system where     litigants ... ' comply with court

rules."    Little, 160 Wn.2d           at   703.   Our fundamental consideration when reviewing a trial court' s

decision to          set aside a    default judgment is "`       whether or not    justice is     being done. '      Little, 160

Wn.2d      at    703 ( internal      quotation marks omitted) (          quoting Griggs      v.   Averbeck      Realty,   Inc., 92

Wn.2d 576, 582, 599 P. 2d 1289 ( 1979)).

                                                       B. THE WHITE TEST

           When deciding whether to grant a CR 60( b) motion to vacate a default judgment, the trial

court must consider four factors from White:

                1)   That there is substantial evidence extant to support, at least prima facie, a
           defense to the               by the opposing party; ( 2) that the moving party' s
                                    claim asserted

           failure to timely appear in the action, and answer the opponent' s claim, was
           occasioned by mistake, inadvertence, surprise or excusable neglect; ( 3) that the

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No. 46298 -2 -II

          moving party acted with due diligence after notice of entry of the default judgment;
          and (4) that no substantial hardship will result to the opposing party."

TMT Bear Creek          Shopping    Ctr., Inc.   v.   Petco Animal Supplies, Inc.,   140 Wn. App. 191, 201, 165

P. 3d 1271 ( 2007) ( quoting        White, 73 Wn.2d at 352).

1.   SUBSTANTIAL EVIDENCE SUPPORTS A PRIMA FACIE DEFENSE

          Tim argues that Deanne failed to identify any defense and that she provided no evidence

to   support a    defense.   Deanne argues that because the statute governing dissolution proceedings

requires courts to focus on ensuring a " just and equitable" distribution of community property, her

claim that the default dissolution decree did not fairly distribute their community property is

substantial evidence of a prima facie defense. We agree with Deanne.4

          When determining whether substantial evidence supports a prima facie defense, the trial

court must make all reasonable inferences from the evidence in Deanne' s favor as the party moving

to   set aside   the   default   orders.   Ha   v.    Signal Elec., Inc.,   182 Wn. App. 436, 449, 332 P. 3d 991

 2014),   review    denied, 182 Wn.2d 1006 ( 2015). Deanne must allege facts and the trial court need

determine only whether she can demonstrate any set of circumstances that would entitle her to

relief.   Ha, 182 Wn.        App.   at   449.   Substantial evidence is the quantum of evidence sufficient to

persuade a rational, fair -minded person of an assertion' s truth. In re Marriage ofKim, 179 Wn.

App. 232, 244, 317 P. 3d 555, review denied, 180 Wn.2d 1012 ( 2014).

          Deanne' s declaration describes why the property distribution was not fair or equitable. She

stated that she and Tim had " on -going discussions about how to manage [ their] complex financial

4 Tim also argues that the trial court' s finding of fact 1. 16 was not supported by substantial
evidence.        This finding states that there are assets and debts that the dissolution decree did not
distribute.      Even assuming Tim' s argument is correct, the trial court' s remaining findings of fact
support its decision to grant Deanne' s CR 60( b) motion.
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No. 46298 -2 -II

circumstances."         CP     at   38.    Deanne explained that she and Tim are officers in an insurance

brokerage, that they have an interest in a commercial property with two mortgages on it that the

insurance brokerage had             guaranteed, and          that the brokerage            owes     approximately $ 100, 000 to the

IRS.    Deanne also stated that during their discussions about the property settlement, Tim " threw

out a number [ valuing their business] that had no basis in reality because it was more than twice

what    Allstate had told [ them] the business                 was worth."            CP    at   39. Tim used that number in the

amended dissolution petition and that number ultimately appeared in the default orders. Because

of the strict rules that, as an insurance agent, Deanne must follow, she thought that the property

settlement in the amended petition did not establish a " rational plan" to unwind their financial

affairs. CP at 38.

          Based    on   these facts, the trial         court concluded          that "[    t]here is always a defense in a family

law    case; what    is fair   and equitable          is the issue."       CP   at   148. This conclusion is reasonable based

on   the trial   court' s   findings      of   fact   and   Deanne'    s   declaration.          Finding of fact 1. 7 references the

text   message exchange             between Tim          and   Deanne       where       she      told him, "`   I am ready to get an

attorney now to make it happen. I have not wanted that but it is apparent I need to as we will not

come    to terms    without one. "'        CP at 147. Finding of fact 1. 8 states that Deanne did not agree with

Tim' s final settlement proposal.

          Deanne' s declaration provides an explanation of the complexity of their financial situation

and Allstate' s valuation of their businesses as support for her argument that the dissolution orders

were not    fair   and equitable.         Making all reasonable inferences in Deanne' s favor, as we must, we

hold that the trial court did not abuse its discretion when it concluded that these facts provide

substantial evidence of a prima facie defense.

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No. 46298 -2 -I1

2. EXCUSABLE NEGLECT

            Tim argues that excusable neglect typically applies only where the defendant' s failure to

appear was a result of her attorney' s or agent' s inaction or failures and that excusable neglect is

not appropriate where, as here, the litigation " grinds to a halt" because of the defendant' s own

inaction or intransigence. Br. of Appellant at 14. We disagree and hold that the trial court did not

abuse its discretion when it found that because of Tim and Deanne' s ongoing discussions about

their dissolution, Deanne' s failure to respond was excusable neglect.

            Courts determine whether excusable neglect applies on a case -by -case basis. Rosander v.

Nightrunners Transp., Ltd., 147 Wn. App. 392, 406, 196 P.3d 711 ( 2008).

            Deanne declared that after Tim filed the initial dissolution petition, they had " on -going

discussions about how to manage [ their] complex financial circumstances" and that even after she

received the amended dissolution petition and new settlement proposal, she and Tim " continued

to talk to       each other" and   that Tim       never   told her that he   was   seeking   a   default judgment. CP at

38 -39. Deanne' s declaration, including their text message conversation, demonstrate that Deanne

did not agree with the proposed settlement and that because of her disagreement, she intended to

hire   an   attorney because      they   would " not come      to terms   without one."       CP at 48.

            Deanne' s declaration provides substantial support for the court' s findings of fact and the

findings     of    fact in turn   support   its   conclusions of    law. The trial court based its conclusion that

Deanne'      s   failure to   respond was excusable neglect on            findings   of   fact 1. 1, 1. 8,   and   1. 9.   These

findings establish that ( 1) Tim and Deanne communicated about the case throughout the eight

months between the dates that Tim filed the initial dissolution petition and the court entered the

default dissolution decree, ( 2) Deanne did not agree with Tim' s proposed settlement in the

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No. 46298 -2 -II

amended petition, and (3) before the default orders were entered, Deanne told Tim that she planned

to hire an attorney because she disagreed with his proposal.

           Tim argues that under Norton v. Brown, 99 Wn. App. 118, 992 P.2d 1019, 3 P. 3d 207

 1999),    review   denied, 142 Wn.2d 1004 ( 2000),          and other cases, excusable neglect applies only in

a situation where a defendant' s attorney, insurer, or other agent is the cause of her failure to

respond to an action and not where, as here, the defendant herself "willfully refused to appear or

participate."    Br.   of   Appellant   at    15.   However, this argument is unpersuasive for three reasons:

 1) Tim' s reliance on Norton is misplaced, (2) excusable neglect is applied on a case -by -case basis,

and ( 3) Tim cites no authority for the proposition that excusable neglect does not apply here.

           In Norton, the trial court entered a default judgment against Brown, a man at fault in a car

accident.    99 Wn.    App.    at   120 -21. Brown did not respond to the summons and complaint because

his insurance company was handling the claim. Norton, 99 Wn. App. at 120. Division Three of

this court held that Brown' s failure to respond was excusable neglect because he was " under the

impression that his interests          were   being   protected   by   his insurer."   Norton, 99 Wn. App. at 124.

Division Three concluded that default judgments are usually only appropriate when litigation is

 halted because        of an   essentially      unresponsive     party" and that Brown was not unresponsive

because his insurance company had negotiated with Norton for over a year. Norton, 99 Wn. App.

at 126. Contrary to Tim' s assertion, the Norton court did not hold that excusable neglect is properly

applied only when a third party caused the true party to fail to respond.

           Norton actually supports the trial court' s conclusion here because like Brown, Deanne was

not   an    unresponsive      party.    In an unchallenged finding of fact, the trial court found that

  t] hroughout this     process      Ms. Putman had been          talking   to Mr. Putman   about   the   case."   CP at

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No. 46298 -2 -II

146. Under Norton' s reasoning, Deanne' s failure to file an answer or otherwise formally respond

to the petition was excusable because she was not unresponsive and believed, reasonably, that Tim

would have informed her if he planned to seek a default judgment. Therefore, Tim' s reliance on

Norton is misplaced.

        Additionally, excusable neglect is determined on a fact -specific, case -by -case basis.

Rosander, 147 Wn.          App.   at   406. In this case, the trial court found that the parties communicated

regularly about the dissolution proceedings and that Deanne made clear her opposition to the

property settlement and her plans to hire an attorney.

        Finally, Tim provides no authority, and we are aware of none, to support his argument that

excusable neglect does not apply in a situation. where there were recent communications between

the actual parties about the pending proceedings and only applies where the party' s failure to

formally   appear was        due to her    agent' s or   attorney'   s mistake.   Where authority is   not cited "`   in

support of a proposition, the court is not required to search out authorities, but may assume that

counsel, after   diligent    search,    has found   none.'"   Dep' t ofEcology v. Wahkiakum County, 184 Wn.

App.   372, 377    n. 3,   337 P. 3d 364 ( 2014) ( quoting     DeHeer v. Seattle Post -Intelligencer, 60 Wn.2d

122, 126, 372 P. 2d 193 ( 1962).

        We hold that the trial court did not abuse its discretion because substantial evidence

supports the trial court' s findings and in turn the findings support its conclusion that Deanne' s

failure to formally respond was excusable.

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No. 46298 -2 -II

3. DEANNE ACTED WITH DUE DILIGENCE IN MOVING TO VACATE THE DEFAULT ORDERS

           It is uncontested that the trial court did not err when it concluded that " Ms. Putman acted

with     due diligence because this [ CR 60( b)]         motion was      filed promptly."       CP   at   148.   Therefore,

we address this factor no further.

4. No SUBSTANTIAL HARDSHIP TO TIM

           Tim argues, for the first time on appeal, that the trial court' s decision to grant Deanne' s CR

60( b)   motion   is   a substantial   hardship   for three   reasons:   it ( 1)   prevents   him from remarrying, ( 2)

has undesirable tax implications, and (3) requires him to incur further legal expenses. We disagree.

           The prospect of having a trial of the case on its merits, without more, is not a substantial

hardship.      Gutz    v.   Johnson, 128 Wn.      App.   901, 920, 117 P. 3d 390 ( 2005) (           citing Pfaff v. State

Farm Mut. Auto. Ins. Co.,, 103 Wn.          App. 829,     836, 14 P. 3d 837 ( 2000), review denied, 143 Wn.2d

1021 ( 2001)),    aff'd, Morin, 160 Wn.2d 745.

           Although Tim identifies three substantial hardships that he claims would result if the trial

court granted Deanne' s CR 60(b) motion, he did not raise any of those hardships below and the

trial court concluded that the only potential hardship was future litigation. Therefore, because the

prospect of further litigation is insufficient to establish a substantial hardship and Tim did not argue

any other hardship to the trial court, we hold that the trial court did not err when it concluded that

Tim would suffer no substantial hardship.

           In sum, the trial court properly entered findings of fact that support its conclusions of law

addressing     each of      the White factors.    Accordingly, the trial court did not abuse its discretion in

granting Deanne' s motion to vacate the default orders.

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                                                   II. ATTORNEY FEES

        Tim argues that he is entitled to attorney fees on appeal under RCW 26. 09. 140 and because

of Deanne' s "   intransigence."        Br. of Appellant at 22. We disagree.

        RCW 26. 09. 140          provides   that we may " from time to time"                and "   after considering the

financial    resources   of   both   parties ...     order a party to pay for the cost to the other party of

maintaining the     appeal and attorneys'          fees in   addition     to statutory    costs."   Where an applicable

statute mandates the consideration of financial need in awarding attorney fees, the parties must

submit financial affidavits no later than 10 days prior to the hearing. RAP 18. 1( c).

        Here, neither Tim nor Deanne filed a financial affidavit. We, therefore, cannot determine

their financial    resources,    their financial    need, or    their ability to pay.        Thus, attorney fees under

RCW 26. 09. 140 are not appropriate.

        In   support of    his   argument about      Deanne'       s"   intransigence,"    Tim cites In re Marriage of

Greenlee, 65 Wn.      App.    703, 708, 829 P. 2d 1120,        review      denied, 120 Wn.2d 1002 ( 1992), arguing

that her " willful intent to drag her feet" caused him to incur additional fees to defend against her

motion to vacate the default orders. Br. of Appellant at 22. Again we disagree.

        Trial courts may order a party to pay attorney fees based on " intransigence" and have done

so where the party drags her feet or obstructs, files frivolous or unnecessary motions, or increases

the legal   costs one    party   must   incur   by making    trial " unduly difficult."       Greenlee, 65 Wn. App. at

708 ( citing Eide v. Eide, 1 Wn. App. 440, 445 -46, 462 P. 2d 562 ( 1969)).

        Here, in unchallenged findings of fact, the trial court found that Deanne and Tim had

communicated about their dissolution throughout the process and because they could not come to

an agreement on a        property    settlement,    Deanne    planned      to hire   an   attorney. The record does not

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No. 46298 -2 -II

support Tim' s argument that Deanne willfully dragged her feet, obstructed, or unduly delayed the

dissolution   process.   Therefore, Tim is not entitled to attorney fees on appeal based on Deanne' s

alleged intransigence.

        Accordingly, we affirm the trial court' s decision to vacate the default orders and we deny

Tim' s request for attorney fees on appeal.

        A majority of the panel having determined that this opinion will not be printed in the

Washington Appellate Reports, but will be filed for public record in accordance with RCW 2. 06. 040,

it is so ordered.

 We concur:

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