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Champlin v. Bank of America, N.A. - 1/31/2013

Arizona Court of Appeals Division Two Holds That Rule 55(a) Requires Notice To Defaulting Party Be Sent Contemporaneously With The Filing Of An Entry Of Default.

Allstate Property and Casualty Insurance Company filed a complaint against Bank of America on November 17, 2011.  The appellees claimed an interest in the insurance funds and filed a timely answer.  Bank of America, however, did not file an answer or otherwise appear within twenty days after service.  

Allstate filed an application and affidavit for entry of default against the bank on February 2, 2012.  The affidavit avowed that a copy of the application had been sent via first class mail to the bank’s statutory agent on February 1.  Allstate subsequently filed a motion for default judgment. 

On March 7, 2012, the bank filed a motion to set aside the entry of default.  The bank submitted evidence that the application for entry of default had been mailed thirteen days after it had been filed and not on February 1 as Allstate had stated in its affidavit.  Allstate did not oppose the motion to set aside.  The trial court nonetheless entered a default judgment. 

The Court of Appeals reversed.  Under Arizona Rule of Civil Procedure 55(a)(1)(i), when the whereabouts of an unrepresented defaulting party are known, “a copy of  the application for entry of default shall be mailed to the party claimed to be in default.”

Ariz. R. Civ. P. 55(a)(1)(i).  The clerk’s entry of default does not take effect until ten

days after the application is filed.  Ariz. R. Civ. P. 55(a)(2).  The Court of Appeals held that Rule 55(a) requires notice contemporaneous with the filing of an entry of default.  An entry of default is ineffective and must be set aside if adequate notice is not provided to the defaulting party.  Ruiz v. Lopez, 225 Ariz. 217, ¶ 21, 236 P.3d 444, 450 (App. 2010).  Because the factual record before it was murky, however, the Court found that a factual issue might exist on remand as to when the application for default was first mailed.  Regarding this factual dispute, the Court noted that an attorney’s duty of candor to a tribunal in this circumstance requires counsel to fully disclose knowledge about when the application for default was mailed.  A non-opposition notice, such as that filed by Allstate’s counsel, is insufficient to discharge the duty. 

Judge Eckerstrom authored the opinion; Judges Howard and Brammer concurred.

Posted by: Grace Rebling

Posted On: 2/15/2013