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Brandenburg v. Feterl Mfg. Co.

12/22/1999

Appeal from the Iowa District Court for Emmet County, Joseph J. Straub, Judge.


Defendant manufacturer appeals from district court ruling denying its motion to set aside default and default judgment.


The defendant in this personal injury action appeals from a district court ruling denying the defendant's motion to set aside a default and default judgment entered in favor of the plaintiffs. We conclude there was not substantial evidence to support the district court finding that the defendant willfully ignored and defied the rules of procedure in failing to defend in a timely manner. We therefore hold the district court abused its discretion in concluding there was no excusable neglect constituting good cause to set aside the default and default judgment. We therefore reverse and remand with directions and for further proceedings consistent with this opinion.


I. Background Facts and Proceedings.


On February 2, 1996, Stephen Brandenburg was killed while using a grain auger allegedly manufactured by Feterl Manufacturing Company. Feterl is a South Dakota corporation and is a subsidiary of Core Industries, Inc., a Michigan corporation. Helen and Gary Brown allegedly owned the auger, which Stephen was apparently using in the course of doing work for them on their farm.


Several days after the accident, Ronald Feterl (a former Feterl employee) read a newspaper article about the accident. He sent a copy of the article to Don Jensen, a Feterl sales representative. Jensen immediately forwarded the newspaper article to Darrell Streff, president of Feterl.


After receiving the article on February 6, Streff immediately contacted Tony Krull. Krull is the manager of insurance and employee benefits at Core. Streff did not know any details surrounding Stephen's death other than that Stephen had been killed while using an auger allegedly made by Feterl. However, Streff did fax Krull a copy of the newspaper article and a handwritten note regarding the auger.


Krull faxed this information to Jim Warzyniec, an account executive for Willis Corroon. Willis Corroon is a global insurance brokerage firm. Core is a client of the firm, and Warzyniec handles Core's accounts with Willis Corroon. Krull's fax requested Warzyniec to notify Core's primary and excess liability carriers of the accident, even though Feterl had not itself been formally notified of it.


Willis Corroon contacted Travelers, Core's primary liability carrier, about the accident. On February 27 Travelers sent a letter to Krull, advising him that Travelers had been notified of the accident and requesting that Krull contact Travelers if a lawsuit was filed. Later, Krull advised Warzyniec of Travelers' acknowledgment.


In December 1996 the claims administration for Willis Corroon was moved to Willis Corroon Administrative Services (WCAS), a third-party claims administrator that handles claims for Willis Corroon. Both entities are in the same building. Steve Smith is the claims manager for WCAS.


On April 27, 1997, the plaintiffs filed this lawsuit against Feterl, alleging that the defendant had negligently caused Stephen's death. The plaintiffs also alleged that the Browns' negligence was a proximate cause of his death. The plaintiffs are Sheila Kristin Brandenburg as executor of Stephen's estate and individually; Matthew Brandenburg and Mark Brandenburg (Stephen's adult children); and Sheila Kristin Brandenburg as mother and next friend of Seana Brandenburg, Alexander Brandenburg, and Joseph Brandenburg, minors. The petition asked for damages for the estate as well as loss of consortium for Sheila and for the five children.


On April

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