No. 46333-1-I.The Court of Appeals of Washington, Division One.
Filed: January 29, 2001. DO NOT CITE. SEE RAP 10.4(h). UNPUBLISHED OPINION.
Appeal from Superior Court of King County, No. 99-2-18315-1, Hon. Donald Haley, February 23, 2000, Judgment or order under review.
Counsel for Appellant(s), Keith R. Baldwin, Allison Davis Baldwin, Ste. 1927 IBM Bldg., 1200 5th Ave., Seattle, WA 98101-3132.
Counsel for Respondent(s), Kristi S. Anderson, Garvey Schubert Bauer, 1191 2nd Ave., Seattle, WA 98101.
PER CURIAM.
Richard and Diane Foreman, doing business as Terrace Heights Apartments (collectively `Foreman’), filed a complaint against GK Industrial Refuse Systems, Incorporated and GK Equipment Company (collectively `GK’), seeking damages for GK’s alleged breach of express warranty, breach of implied warranty, and negligent misrepresentation regarding a trash compactor system that GK sold to Foreman. GK failed to answer the complaint, and the trial court entered a default judgment, awarding damages to Foreman. The trial court denied GK’s motion to vacate this judgment and GK appeals. Because GK failed to establish a prima facie defense to Foreman’s claims, and because GK did not satisfy its burden of demonstrating that its failure to timely answer Foreman’s claims was occasioned by mistake, inadvertence, surprise, or excusable neglect, we affirm the trial court’s order.
STATEMENT OF FACTS
In the fall of 1997, GK, a refuse and recycling equipment specialist, analyzed the refuse disposal at Terrace Heights Apartments, a complex owned by Foreman. According to Foreman, GK completed a report analyzing Terrace Heights’ refuse disposal in which GK represented that Foreman would save $1,147 each month on Terrace Heights’ disposal fees with a CRAM-A-LOT SC-T2 High Performance Self-Contained Trash Compactor.[1] In November 1997, Foreman purchased this compactor from GK for $49,248.31 and installed it on January 7, 1998. In early 1999, C. Anthony Davis (GK’s staff attorney) and Foreman’s attorney had several discussions about Foreman’s dissatisfaction with the compactor, namely Foreman’s claim that he had experienced no savings on Terrace Heights’ disposal fees.
On August 3, 1999, Foreman filed a complaint against GK in King County Superior Court, seeking monetary losses and damages for GK’s alleged breach of express warranty, breach of implied warranty, and negligent misrepresentation. On the day this complaint was filed, a woman from Foreman’s attorney’s office called GK and asked GK’s controller, Vickie Forbes, if Davis would be willing to accept service of process via the mail. Forbes told the woman that Davis was on vacation and so the woman left a message for Davis. On August 5, 1999, while Davis was still on vacation, Robert Cysewski, a GK employee, accepted service of process of the summons and complaint. Cysewski placed the documents on Davis’s chair.
When Davis returned from vacation in early August, he received the documents and spoke to Cysewski about the case. Davis also received Forbes’s message and attempted to contact Foreman’s attorney, albeit unsuccessfully. Because Davis `was at all times under the impression that the copies of the summons and complaint in this action were sent by [Foreman’s attorney]’s office by mail[,]’ he did not answer the complaint or make an appearance in the case. On August 30, 1999, the trial court entered a default judgment, awarding approximately $63,000 to Foreman.
On January 12, 2000, the trial court issued a writ of garnishment and on January 18, 2000, Foreman garnished GK’s bank account. Davis contends that he first learned about the default judgment from the bank. On January 14, 2000, Davis was served with the amended default judgment and the writ of garnishment notices. And on January 28, 2000, GK moved to vacate that judgment on the basis that its failure to appear was `an act of honest mistake or inadvertence’ based on Davis’s erroneous belief that Foreman’s complaint had not been properly served. Further, GK asserted that it had a meritorious defense to Foreman’s complaint. The trial court denied GK’s motion and it appeals.
DISCUSSION
GK contends that the trial court abused its discretion by denying its motion to vacate the default judgment. `Proceedings to vacate default judgments are equitable in character, and relief should be granted or denied in accordance with equitable principles.’ Shepard Ambulance, Inc. v. Helsell, Fetterman, Martin, Todd Hokanson, 95 Wn. App. 231, 238, 974 P.2d 1275 (1999) (footnote omitted), review denied, 140 Wn.2d 1007
(2000); accord Lenzi v. Redland Ins. Co., 140 Wn.2d 267, 278-79 n. 8, 996 P.2d 603 (2000). Although the law favors the finality of judgments, there is also a strong preference for resolving cases on their merits. In re Marriage of Brown, 98 Wn.2d 46, 49, 653 P.2d 602 (1982); Lane v. Brown Haley, 81 Wn. App. 102, 106, 912 P.2d 1040 (1996). `Resolution of a motion to vacate a default judgment is addressed to the sound discretion of the trial court.’ Hwang v. McMahill, No. 45107-3-I, 2000 WL 1873088, at *2 (Wash.Ct.App. Dec. 26, 2000) (footnote omitted).
The party moving to vacate a default judgment has the burden of demonstrating two primary and two secondary factors:
(1) That there is substantial evidence extant to support, at least prima facie, a defense to the claim asserted by the opposing party; (2) that the moving party’s 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 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.
White v. Holm, 73 Wn.2d 348, 352, 438 P.2d 581 (1968), quoted in Hwang, 2000 WL 1873088, at *2; see also CR 55(c)(1); CR 60(b); CR 60(e)(1). `A court hearing a motion to vacate decides whether the affidavits presented set forth substantial evidence to support a defense to the claim.’ Shepard Ambulance, 95 Wn. App. at 239 (footnote omitted); see also CR 60(e)(1).
These affidavits `must set out the facts constituting a defense and cannot merely state allegations and conclusions.’ Shepard Ambulance, 95 Wn. App. at 239 (footnote omitted). `This court will not relieve a defendant from a judgment taken against him [or her] . . . due to his [or her] inattention or neglect in a case . . . where there has been no more than a prima facie showing of a defense on the merits.’ Commercial Courier Serv., Inc. v. Miller, 13 Wn. App. 98, 106, 533 P.2d 852
(1975).
The record in this case contains declarations from GK’s employees averring that GK has a meritorious defense to Foreman’s claims. These declarations state that the representations of cost savings on which Foreman relied were made by GK’s competitor, not GK, and that `the amount of damages claimed are grossly overstated.’ These declarations, which contain no supporting facts, merely state GK’s allegations and conclusions. Indeed, the record does not contain substantial evidence to support these statements.
Therefore, we conclude that GK failed to demonstrate a prima facie defense to Foreman’s claims. GK maintains that its failure to appear in this case was the result of its erroneous assumption that Foreman’s complaint arrived in the mail and was not properly served. It argues that its inaction constitutes excusable neglect for two reasons. First, Davis, who was on vacation, was not aware that GK’s vice president accepted service of process. Second, Davis expected Foreman’s complaint to arrive via mail based on the phone message from Foreman’s attorney’s office inquiring whether GK would be willing to accept service of process via the mail. This court has held that a company’s failure to respond to a complaint because a person other than the general counsel accepted service of process and then that person misplaced the complaint constitutes inexcusable neglect. Prest v. American Bankers Life Assurance Co., 79 Wn. App. 93, 100, 900 P.2d 595 (1995). In this case, GK does not dispute that it was properly served and that Davis, its staff attorney, had actual notice of Foreman’s complaint. Moreover, it was not reasonable for Davis to fail to inquire about how the complaint arrived on his chair based solely on the unanswered phone message regarding service of process by mail. Under these facts, it cannot be said that GK’s failure to answer Foreman’s claims was excusable. Indeed, the reason for GK’s decision not to answer Foreman’s complaint was its inattention or neglect. In light of GK’s failure to demonstrate a defense to Foreman’s claims, GK is not entitled to relief from the default judgment. See Commercial Courier, 13 Wn. App. at 106.
In this case, GK failed to establish a prima facie defense to Foreman’s claims. Further, GK did not satisfy its burden of demonstrating that its failure to timely answer Foreman’s claims was occasioned by mistake, inadvertence, surprise, or excusable neglect. Thus, we conclude that the trial court did not abuse its discretion when it denied GK’s motion to vacate the default judgment. Accordingly, we affirm.