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All-American Homes11/6/2000
Horan Company appeals an order denying its motion to vacate a default judgment. Because Horan has failed to establish a prima facie defense to the claim asserted by All-American, we affirm the trial court order.
In August 1990, George and Mavis Stears loaned Horan Company the sum of $108,313.89. Horan signed a promissory note for the amount borrowed with interest at 20% per annum. The next day, the Stears assigned the promissory note to All-American Homes. A week later, All-American loaned Horan $14,087.60. Horan signed another promissory note with interest at 12% per annum.
After Horan became delinquent on payments, All-American filed a complaint for monies owed under both promissory notes. All-American personally served Horan's agent with the complaint on July 31, 1998. Horan did not answer the complaint, nor did it file a notice of appearance. All-American requested and received an order of default on August 21, 1998. The trial court entered judgment for a total sum, including interest and principal, of $314,795.27.
On July 30, 1999, nearly a year after receiving service of All-American's complaint, Horan filed a motion to vacate the default judgment. In support of the motion, Horan submitted a five-page declaration from Harry Horan, the president of Horan Company. Mr. Horan acknowledged that All-American served him with the complaint in late July or early August of 1998. Upon receiving the complaint, Mr. Horan contacted the attorney who handled all of the company's legal affairs. The attorney informed Mr. Horan that he was going on vacation and that he could not timely file the answer. The attorney referred Mr. Horan to another attorney. Mr. Horan contacted the recommended attorney. According to Mr. Horan, the attorney stated that he did not feel comfortable handling Horan's case because his practice was primarily personal injury . Mr. Horan stated that he knew that the court had entered a judgment against the company and that the corporate bank account had been garnished. Mr. Horan explained that the garnishment took all of the funds that were available to the company, and that it was not until many months later when Horan could afford legal representation. To prove that the company had a defense, Mr. Horan stated: 'I believe that the corporation does have a defense to the complaint and that they are offsetting claims which equal or exceed the amount of what is being sought.'
The trial court denied Horan's motion to vacate the default judgment. Horan appeals, arguing that the court abused its discretion by refusing to find that its failure to appear was the result of mistake, inadvertence, or excusable neglect within the meaning of CR 55(c) and 60(b)(1).
It is well settled that there is a strong policy disfavoring default judgments because the law favors determination of controversies on their merits. Griggs v. Averbeck Realty, Inc., 92 Wn.2d 576, 581, 599 P.2d 1289 (1979). However, this policy must be balanced against the 'necessity of having a responsive and responsible system which mandates compliance with judicial summons.' Shepard Ambulance, Inc. v. Helsell, Fetterman, Martin, Todd & Hokanson, 95 Wn. App. 231, 237-38, 974 P.2d 1275 (1999), review denied, 140 Wn.2d 1007 (2000). The burden is on the moving party to demonstrate that (1) there is substantial evidence to support, at least prima facie, a defense to the claim asserted by the opposing party; (2) the moving party's failure to timely appear in the action was occasioned by mistake, inadvertence, surprise or excusable neglect; (3) the moving party acted with due diligence after notice of entry of the default judgment; and (4) no substantial hardship will result to the o
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