California Court Allows Insurer to Repair Default California Superior Court, June 13, 2019

CALIFORNIA – A San Francisco Superior Court allowed Century Indemnity Company (Century) to vacate a default and default judgment against its potential former insured, James A. Nelson, Co., Inc. (Nelson). The plaintiff, the wife of a decedent whose death was attributed to alleged exposure to asbestos-containing products, brought several lawsuits for wrongful death in or around 2012. About a year after bringing suit against Nelson Co., the plaintiff requested and received an entry of default. The following year, in January 2014, she received a default judgment for approximately $2.7 million.

Three years later, having discovered potential coverage, counsel for the plaintiff informed Century of the suits against Nelson, including the default judgment. Century then endeavored to repair the default. The plaintiff opposed Century, arguing that it had not made the required showing of:

  1. A meritorious case
  2. A satisfactory excuse for not presenting a defense to the original action
  3. Diligence in seeking to set aside the default once the mistake was discovered.

Following the recent California Court of Appeals decision in Mechling v. Asbestos Defendants, 29 Cal.App.5th 1241 (2019), the court held that Century had made a sufficient showing of extrinsic mistake to allow the default and default judgment to be set aside.

The mere fact that the default judgment was unchallenged proved to be sufficient to demonstrate a meritorious case.  Century was not named as a defendant in the original action in 2012 and had no information at that time to suggest it had issued a policy to Nelson, Century had a satisfactory excuse for not defending the original action. The gap of two months between receiving notice of potential coverage from the plaintiff’s counsel and filing the motion to set aside the default was sufficiently small to qualify as diligence in seeking to set aside the default. As a result, the default was repaired as to Century, but remained in place against Nelson.

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