This opinion clarifies something about how to take default and then decides to throw a lawyer under the bus.

When a house burned Allstate interpleaded the claim payment because various parties disputed who should get it.  The other parties answered but the bank didn’t; Allstate took default. The bank eventually appeared and moved to set it aside, presenting evidence that its copy of the application for default wasn’t sent to it until weeks after Allstate’s default application said it was and after default had been entered. Allstate didn’t object. The other parties did; though they didn’t successfully dispute the bank’s claim of delayed notice they argued that the bank had ten days after receiving that delayed notice to answer and hadn’t done so. The trial court denied the motion; the bank appealed.

The Court of Appeals reverses. The trial court “erred as a matter of law by concluding that a delay in mailing the notice would not necessarily invalidate the entry of default and preclude a default judgment.” In other words, delayed notice invalidates the default. Rule 55 says that default will be effective ten days from the filing of the application. And at one point it characterizes its provisions as requiring “notice prior to the entry of default.” Therefore, “the notice must be provided either before, or simultaneously with” the filing of the application. “A delayed notice . . . does not comply with the terms of Rule 55(a).” The argument that delayed notice simply delays the ten-day grace period is “logical” but not consistent with the rule. If the notice is delayed then the application must be re-filed.

(We say that Rule 55 “at one point characterizes’” itself as requiring notice before entry because that part – 55(a)(5) of the present version – is a summary reference to other provisions that don’t specifically say that, though they may certainly mean it. That kink in the rule was, as usual, not caught in its recent revision. But that revision was for bureaucratic convenience – adopting the Maricopa County practice of not requiring the clerk to do anything on default – so it is of course entirely understandable that no thought whatever was given to mere legal issues.)

The court says that when the bank brought up the discrepancy about the notice date Allstate’s counsel, as part of her duty of candor, should have told the court what she knew about that rather than “simply” not object to the motion. The court – deliberately, it seems – suggests that not objecting was an admission that something was wrong with the default application when a moment’s thought would show that Allstate wouldn’t, for reasons both practical and legal, contest the motion in any event. As for counsel’s duty, we wonder whether a party argued that or whether it was just the court’s churlish idea. What is a lawyer supposed to know about when some piece of paper actually went out of the office? Was she supposed to make an investigation to support one side or the other on a motion her client clearly didn’t care about and wasn’t involved in?  The court admits that the parties didn’t start arguing about the date on her default affidavit until appeal – so how did she have a duty to give testimony on a non-issue that wasn’t before the court?  And if the parties framing the issues wanted more information from Allstate, what stopped them from getting it?

(link to opinion)