Default Judgments Set Aside After Insurer Discovers Policies California Court of Appeal, January 9, 2019

CALIFORNIA — Beginning in 2009, several asbestos plaintiffs filed claims against the Associated Insulation of California (the Associated). The Associated ceased operating in 1974 and did not respond to the plaintiffs’ complaints. Two of the plaintiffs notified the Associated’s alleged insurer, Fireman’s Fund, of the lawsuits. However, Fireman’s Fund could not locate any policies issued to the Associated and therefore declined to defend or indemnify Associated. The plaintiffs then sought and obtained default judgments in various amounts.The plaintiffs served notice of entry of default judgments on Associated, but not on Fireman’s Fund.

After the default judgments had been entered, Fireman’s Fund located insurance policies appearing to provide coverage for Associated. It then retained counsel and later moved to set aside the default judgments on equitable grounds. Fireman’s Fund argued that it never had its day in court. Further, Fireman’s Fund contended that lack of notice and its belief that it did not insure the Associated were satisfactory excuses for not defending the action, and that it had acted diligently in moving to set aside the default judgments after learning of the lawsuits and hiring counsel.

The plaintiffs responded by arguing that Fireman’s Fund could not claim lack of notice because it had actual notice of two of the lawsuits. The plaintiffs also contended that Fireman’s Fund failed to attach proposed pleadings in intervention to its motion to set aside the default judgments, thereby failing to show evidence that it could make a meritorious case if the default judgments were set aside.

The court sided with Fireman’s Fund. According to the court, only a minimal showing is necessary to prove that the moving party could put on a meritorious case. The moving party need not guarantee success; it merely must show facts showing it is entitled to a fair adversary hearing. Additionally, Fireman’s Fund’s initial belief that it had not issued insurance policies to Associated was deemed a satisfactory excuse for not presenting a defense to the lawsuits.

Only the Westlaw citation is currently available at 2019 WL 141409.

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