Neeme Systems v. Spectrum Aeronautical (CA1 3/24/11)

Rule 55 requires that notice of default be given to the attorney of a represented party. This plaintiff tried to base a $750,000 default judgment on not doing that, with predictable results.

Spectrum (in Utah) and Neeme (in Arizona) had a falling-out over a contract. Spectrum sued Neeme in Utah; Neeme sued Spectrum in Arizona. Spectrum didn’t appear in Arizona and Neeme took default judgment. Neeme sent copies of the application for default to Spectrum itself but not to Spectrum’s lawyer in Utah. On Spectrum’s motion, the trial court set the default aside. Neeme appealed. The Court of Appeals affirms.

Neeme argued that the Utah attorney wasn’t going to appear in the Arizona case. But the rule says “attorney,” not “attorney who is going to appear in the case.” The court emphasizes the facts that Neeme knew of the the Utah lawyer and that he represented Spectrum in the same dispute out of which Neeme’s case arose. And it limits its holding to that set of facts, declining to rule on various scenarios that Neeme apparently proposed – whether, for example, the rule means all of multiple lawyers, or in-house counsel, or lawyers working on matters unrelated to the subject of the dispute.

Neeme also argued that Spectrum had unclean hands because Neeme had announced that it would sue Spectrum on a particular day and Spectrum filed its suit the day before. Spectrum thereby, you see, “force[d] Neeme to litigate in a foreign forum.”  We don’t know whether the increasing ability of lawyers to make outrageous and even simple-minded arguments with a straight face arises out of an increase in attitude or an increase in ignorance, or both. In any event, the court treats the argument with at least as much respect as it deserves, making some comments about the meaning and effect of equitable defenses and also that the unclean hands have to arise out of the same transaction.

(link to opinion)