Appellate panel hears dispute over vacating default judgment in VP v. Greystar

An appellate panel heard arguments in VP v. Greystar over whether the trial court erred in denying a motion to vacate a default judgment. Michael Pazner, counsel for the appellants, told the court the case "involves serious claims relating to allegations of terrible abuse, but they are claims that deserve to be heard on the merits" and urged that a short period of default should not dispose of the parties'rights.

A panelist asked a pointed question about post-service responsibilities, asking, "Is it your position that when somebody is insured, that when the defendant is served with a lawsuit, they have no responsibility to respond?" Pazner said no, explaining his clients had notified their insurer, provided complaints and reasonably expected a defense where coverage was at least conceivable. Responding counsel for VP countered that under an abuse-of-discretion standard the trial court's decision should be affirmed, arguing the defendant provided only a terse declaration and did not produce the insurance policy or show adequate follow-up with the insurer.

The panel debated whether reliance that excuses a short default must be induced by explicit insurer statements or may rest on a policyholder's conduct and the insurer's legal duty to defend. The judges also questioned which procedural rule governs appellate review of a vacatur denial after final judgment'CR 55's "good cause" standard or CR 60(b). Counsel for the appellee said Greystar withheld communications in reconsideration that undermined its case; Pazner replied that assignments of error were preserved and that the trial court misapplied the CR 55 standard.

The panel recessed after roughly an hour of argument; the court did not announce a decision from the bench during the session.