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