Oral Argument January 27, 2015.
Appeal from Spokane Superior Court. Docket No: 11-2-05197-2. Judge signing: Honorable Tari S Eitzen. Judgment or order under review. Date filed: 01/24/2014.
Keith P. Scully and Charlotte C. Kuhn (of Newman Du Wors LLP ), for appellants.
Michael G. Atkins (of Atkins Intellectual Property PLLC ); and David J. Corbett (of David Corbett PLLC ), for respondent.
Authored by George B. Fearing. Concurring: Robert E. Lawrence-Berrey, Laurel H. Siddoway.
[186 Wn.App. 669] George B. Fearing,
[¶1] We address today a recurring issue: whether a defendant " appeared" in a lawsuit such that the plaintiff needed to afford him notice before entering a default judgment. We do not applaud the conduct of defendant's counsel in this appeal, and we encourage practitioners to protect their clients by always timely entering a formal notice of appearance with the court and opposing counsel. Nonetheless, we hold that Lawrence Kovac's California attorney made a sufficient " appearance" for purposes of CR 55. We reverse the trial court's refusal to vacate a default judgment in favor of plaintiff Servatron Inc. against defendants Lawrence Kovac and his wife.
[¶2] The facts underlying the lawsuit and entailing the substantive dispute between the parties bear little relevance to the issue on appeal. On December 23, 2011, Servatron sued Intelligent Wireless Products Inc. (IWP), Cyfre LLC, and Lawrence and Jane Doe Kovac, alleging (1) breach of contract, (2) breach of implied covenant of good faith and fair dealing, (3) unjust enrichment, and (4) tortious interference. Jane Doe Kovac is a fictitious name for the wife of Lawrence Kovac. Servatron alleged that IWP failed to pay for orders of cell phone amplifiers that it placed with Servatron. Servatron also alleged that IWP, Cyfre, and the Kovacs interfered with Servatron's attempts to resell goods in its possession that IWP ordered but for which IWP did not pay. Among other relief requested, Servatron sought the piercing of IWP's corporate veil to hold Cyfre and the Kovacs, both IWP shareholders, personally [186 Wn.App. 670] liable for IWP's breach and tortious interference. Lawrence Kovac was chief executive officer of IWP until it was administratively dissolved on November 22, 2009.
[¶3] Servatron personally served IWP, Cyfre, and the Kovacs in California during January and February 2012. Lawrence Kovac hired California attorney Faraz Mobassernia, on Wilshire Boulevard in Santa Monica, to investigate and represent him and his wife in Servatron's suit.
[¶4] In April 2012, Faraz Mobassernia contacted Servatron's attorney, Michael Atkins, and told him he represented IWP, Cyfre, and the Kovacs. On April 5, 2012, Mobassernia wrote to Atkins:
Please contact my office to discuss the parameters of this matter. I emailed the court in Washington and I have to get a response from them regarding the filing of this complaint. I do not see a case number on the face of the summons or complaint. Please call me at your earliest convenience.
Clerk's Papers (CP) at 146. Atkins responded the same day:
Here's the case number: 11-2-05197-2.
I will check with my client about your request for 30 more days to investigate before answering.
CP at 146.
[¶5] The parties held a phone conference to settle the case, after which Atkins sent a settlement proposal to Mobassernia on April 30. After receiving no response, Atkins wrote Mobassernia on June 4, 2012, stating:
We need your clients' acceptance of our basic settlement terms by Friday [June 8, 2012] or Servatron is going to move forward with the default process and/or litigation.
CP at 181. Mobassernia requested an additional week to respond due to Lawrence Kovac's mother's imminent death. Servatron agreed. On June 5, Atkins wrote to Mobassernia:
In light of Lawrence's mother's situation, we'll agree to extend the deadline as you requested until 6/15. However, we [186 Wn.App. 671] need the defendants to accept our settlement terms by then or we'll go into litigation mode--including moving for default. We're not willing to drag things out any longer than that.
CP at 154. On June 6, 2012, Michael Atkins wrote Faraz Mobassernia: " Here's the scheduling order in case we move back to the litigation track." CP at 154.
[¶6] On June 15, 2012, Faraz Mobassernia sent Michael Atkins an " agreement for IP [intellectual property] rights" and stated he would call shortly. CP at 180. On June 21, Mobassernia wrote again to Atkins:
Please call me to discuss developments on this case. Tried calling both your phone numbers, computer operator comes on the phone asking for your 10 digit number.
CP at 179. Atkins replied that he was in China and stated:
If your clients agree to the settlement terms in my last substantive email, we can work toward settling. Based on your last substantive message to me, your clients reject many of those terms. Therefore, I don't know that further talks would be productive. If something has changed, please describe what has ...