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Gonzalez v. Nguyen

Supreme Court of Arizona

April 12, 2018

Pablo Gonzalez, et al., Plaintiffs/Appellants,
Quoc Nguyen, et al., Defendants/Appellees.

          Appeal from the Superior Court in Maricopa County The Honorable Brian S. Rees, Commissioner No. CV2014-052846

         Memorandum Decision of the Court of Appeals, Division One 1 CA-CV 16-0141 Filed March 21, 2017 VACATED

          William G. Caravetta, III, Kevin K. Broerman, Justin M. Ackerman (argued), Jones, Skelton & Hochuli, P.L.C., Phoenix, Attorneys for Quoc Nguyen, et al.

          Susan M. Freeman, (argued), Justin J. Henderson, Lewis Roca Rothgerber Christie LLP, Phoenix; and Gregg Clarke Gibbons, Gregg Clarke Gibbons, P.C., Scottsdale, Attorneys for Pablo Gonzalez, et al.

          JUSTICE BOLICK authored the opinion of the Court, in which CHIEF JUSTICE BALES, VICE CHIEF JUSTICE PELANDER, and JUSTICES BRUTINEL, TIMMER, GOULD, and LOPEZ joined.



         ¶1 We consider here whether a defendant must submit additional evidence outside the existing record to establish a "meritorious defense" in a motion to set aside a default judgment under Arizona Rule of Civil Procedure 60(c) (now 60(b)).[1] We hold that a defendant may rely on the existing record and that a trial court has broad discretion to determine whether a matter should be decided on the merits.


         ¶2 On April 9, 2012, Quoc Nguyen was driving a van owned by his employer, Dysart Hotel, and rear-ended a truck driven by Pablo Gonzalez. The police report indicated the crash occurred at ten miles per hour and "no injury" occurred. However, Gonzalez contended the accident was more severe, causing extensive injuries requiring surgery and physical rehabilitation and forcing him to retire from the Maricopa County Sheriffs Office.

         ¶3 Dysart Hotel notified its insurance claims administrator, Precision Risk Management, about the accident. A claims adjuster (Bill Sim) instructed Gonzalez's attorneys to direct communications to him. Gonzalez filed this negligence action against Nguyen and Dysart Hotel (collectively "Dysart") seeking compensatory damages. Gonzalez later sent Sim a detailed demand letter seeking $716, 242.50, including $600, 000 for pain and suffering, and offering to settle for $695, 000.

         ¶4 Despite repeated inquiries by Gonzalez's lawyers, Dysart did not file a responsive pleading to the complaint. On February 20, 2015, Gonzalez applied for an entry of default, again served Dysart, and also sent copies to Sim and Companion Commercial Insurance ("Companion"), Dysart's insurer. After a hearing on June 23, 2015, at which Gonzalez presented evidence and Defendants failed to appear, the trial court entered a default judgment in the amount of $667, 279.56.

         ¶5 On August 11, 2015, Defendants filed a Rule 60(c) motion to vacate the judgment's damage award, and Companion moved to intervene. At oral argument on the motions, Dysart's attorney told the court Dysart would admit liability and only contest damages if the motion was granted. The trial court denied Companion's intervention motion because no coverage issues existed, but it granted the motion to vacate the default judgment. The court observed that although it seemed unfair for the insurance company "to have handled the claim in such a casual or indifferent manner . . . and then plead the injustice after the fact, " it acknowledged it had "doubts about the fairness of the amount of the judgment, " which seemed "too large." The proper course "in such a 'tie, '" the court concluded, "is to allow the case to be decided on the merits."

         ¶6 The court of appeals reversed and reinstated the default damages judgment. Gonzalez v. Nguyen, 1 CA-CV 16-0141, 2017 WL 1057307 (Ariz. App. Mar. 21, 2017) (mem. decision). The court noted that the only support for the motion to vacate was an affidavit from Companion's claims manager attesting to an oversight or error in responding to the application for entry of default but offering no substantive defense. Id. at *3 ¶ 18. Citing Rule 60(c)(6), Dysart argued that it wanted to examine whether the amount of damages was reasonable. Id. ¶ 19. The court of appeals concluded, as had the trial court, that Defendants had shown no excusable neglect, id. at *5 ¶ 23; see Ariz. R. Civ. P. 60(c)(1), but overturned the trial court's decision vacating the judgment because Dysart had not presented a "meritorious defense" to support the motion. Gonzalez, 1 CA-CV 16-0141, at *4 ¶ 22.

         ¶7 We granted review to consider the important and recurrent issue of the standards for relief from a default judgment under Rule 60(c)(6). We have jurisdiction under article 6, section ...

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