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Smith v. Arnold4/19/2005
Beverly and Marvin Arnold appeal the superior court's order denying their motion to vacate an order of default in the personal injury suit against them. The Arnolds did not receive notice of the motion for an entry of default because they had not filed a notice of appearance. Nevertheless, they maintain that they were entitled to notice because they had 'informally' appeared in the lawsuit through their out-of- court contacts with the plaintiff. Alternatively, the Arnolds argue that the default order should have been vacated under CR 55 because their failure to appear was the result of excusable neglect and they exercised due diligence in seeking to have the order set aside. We affirm.
FACTS
On October 3, 1997, while in Oregon, Beverly Arnold was involved in a single-car accident. At that time, the Arnolds were insured by Allstate Insurance Company. After the accident, Allstate settled lawsuits brought by three of the passengers in Beverly Arnold's vehicle. Caleb Smith, the Arnolds' grandson, and a fourth passenger in the vehicle, did not file a lawsuit.
Allstate sent letters to Smith after the accident indicating that he was likely covered under the Arnolds' personal injury protection (PIP) coverage. These letters informed Smith of the claims adjuster responsible for handling any PIP claim. In 2000 and 2001, Allstate received Smith's medical bills and demands for payment pursuant to the PIP coverage. In June 2001, Allstate wrote Smith explaining that a new claims adjuster had been assigned to the PIP claim. The letter also asked about the timeliness of Smith's treatment and submission of bills.
On May 20, 2002, Smith sent a settlement demand letter to Allstate in which he alleged that the accident was due to Beverly Arnold's negligence. In June 2002, Allstate called Smith to 'discuss the claim' and the Oregon statute of limitations, which Allstate concluded would expire in October of that year. Clerk's Papers (CP) at 28. In August 2002, Allstate sent Smith a settlement offer. Smith did not respond to the offer.
On October 1, 2002, Smith sued the Arnolds for negligence. Although they were properly served three days later, the Arnolds did not notify Allstate of the suit because Beverly Arnold was ill and the suit 'was quite low on {their} list of priorities at the time.' CP at 23. According to the Arnolds, they were not aware that they needed to forward the summons and complaint to their insurance company.
On November 20, 2002, Allstate received a copy of the summons and complaint from Smith's counsel. But, the claims adjuster for the case was on vacation from November 23 to December 2 and did not review the documents until December 10. At that time, the claims adjuster contacted Smith's counsel, leaving a message inquiring about the case and whether a default order had been obtained. The parties dispute whether Smith's attorney responded to the message. After leaving the message, the claims adjuster also contacted Allstate's counsel and informed him that a notice of appearance should be filed.
No further communications between the parties occurred, and Smith obtained an order of default on December 20, 2002. Allstate's counsel filed a notice of appearance seven days later. On January 26, 2003, the Arnolds sent a letter to Smith requesting that the default order be set aside. That request was rejected.
On March 25, 2003, the Arnolds filed a motion to vacate the default order. They maintained that they had informally appeared in the lawsuit and that they were therefore entitled to notice of the motion for an entry of default. The superior court denied the motion, concluding that Allstate had not shown a
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