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Powers v. Cornelius

January 13, 1997

ED POWERS, RESPONDENT,
v.
STANLEY P. CORNELIUS, APPELLANT.



Appeal from Superior Court of Whatcom County. Docket No: 94-2-01648-9. Date filed: 01/03/95. Judge signing: Hon. Michael F. Moynihan.

PER CURIAM -- Stanley Cornelius appeals the trial court's denial of his motion to vacate the default judgment entered against him. We hold that the court abused its discretion in failing to set aside the judgment because Cornelius was out of the country when Powers served him by publication and he made a prima facie showing of a valid defense.

Accordingly, we reverse and remand.

FACTS

Stanley Cornelius borrowed $15,050.00 from a Bellingham bank. Ed Powers agreed to co-sign the promissory note as Guarantor. Powers understood that Cornelius would make timely payments on the note or reimburse him for any payments the bank required him to make if Cornelius defaulted. Cornelius defaulted, and the bank required Powers to pay the note in full. Powers expended $16,026.60 for principal and interest.

After unsuccessfully attempting to make payment arrangements with Cornelius, Powers brought suit for violation of the reimbursement agreement. The court allowed Powers to serve the summons and complaint by publication because Powers alleged that Cornelius had fled the state with the intention of defrauding creditors and avoiding service. Cornelius failed to appear, and the court entered a default judgment against him.

Within a year, Cornelius moved the trial court to vacate the default judgment. He stated that he was out of the country on business at the time the notice was published and asserted two defenses to Powers's claim for reimbursement: (1) that Powers had forgiven the debt and (2) that he was entitled to an offset from this debt for other obligations he incurred on Powers's behalf. The trial court denied the motion to vacate without explanation.

Discussion

Because the law favors the determination of controversies on their merits, default judgments are disfavored. Griggs v. Averbeck Realty, 92 Wash. 2d 576, 581, 599 P.2d 1289 (1979). Although a motion to vacate is within the trial court's discretion, an appellate court may more readily find an abuse of discretion when the court's determination results in the denial of a trial on the merits. White v. Holm, 73 Wash. 2d 348, 351-52, 438 P.2d 581 (1968).

Service by publication is also disfavored and Washington courts have recognized that it is not an effective means of notifying a party of a pending lawsuit. See Caouette v. Martinez, 71 Wash. App. 69, 75, 856 P.2d 725 (1993). Because of this problem, parties served by publication have additional rights for setting aside resulting default judgments. Chaney v. Chaney, 56 Wash. 145, 151, 105 P. 229 (1909). By statute, persons served by publication may defend the lawsuit on the merits if they show "sufficient cause" within a year of the entry of the default judgment. RCW 4.28.200; CR 60(b)(7).

The trial court's primary duty in determining whether to vacate a default judgment is deciding whether the moving party has a defense on the merits. Suburban Janitorial Serv. v. Clarke American, 72 Wash. App. 302, 305, 863 P.2d 1377 (1993) (quoting Yeck v. Department of Labor and Indus., 27 Wash. 2d 92, 97, 176 P.2d 359 (1947)), review denied, 124 Wash. 2d 1006, 877 P.2d 1288 (1994). A prima facie defense, however tenuous, is sufficient to support a motion to vacate a default judgment. C. Rhyne & Assocs. v. Swanson, 41 Wash. App. 323, 328, 704 P.2d 164 (1985). Here, Cornelius asserted two defenses. He stated that Powers had forgiven the debt and that he was entitled to an offset against this debt for other obligations he incurred on Powers's behalf. If proven, either of these factual scenarios would be a valid defense.

Powers contends that the assertions are not sufficient to make a prima facie claim because they are Conclusionary and because Cornelius did not sufficiently explain the circumstances surrounding the claims. Powers is correct that the affidavit supporting a motion to vacate must set forth facts which constitute a defense. CR 60(e)(1). But in the cases that Powers cites, the moving parties made assertions without any factual basis whatsoever. For example, in Strunz v. Hood, the defendant's affidavit stated that his lawyer told him that he had a "good and meritorious defense" without stating what the defense was. 44 Wash. 99, 107, 87 P. 45 (1906). In Commercial Courier Services v. Miller, the defendant generally denied the trial court's findings. 13 Wash. App. 98, 104, 533 P.2d 852 (1975). In Caouette, the appellate court determined that the plaintiff had stated no facts which would support the plaintiff's allegation of negligent entrustment of a motor vehicle. 71 Wash. App. at 78-79. Here, however, Cornelius set forth facts that, if proven, would constitute valid defenses.

While it would be helpful if the facts were more specific, giving information such as when and how Powers forgave the debt or describing the other obligations he incurred on Powers's behalf, such particularity is not required to make a prima facie case.

The second step in evaluating a motion to vacate a default judgment is examining the reason for the party's failure to timely appear and defend. Suburban Janitorial, 72 Wash. App. at 306. Here, Cornelius was out of the country on business when the service by publication was made. Given that service by publication is disfavored, the fact that he was out of the country when constructively served, in combination with his prima facie showing of a meritorious defense, is sufficient cause ...


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