From the desk of Jeff Eberhard: In this case, the Oregon Supreme Court held that a default judgment awarding damages where the underlying complaint did not state the specific amount of money sought violates ORCP 67. Such a defect may, but does not automatically, void the default judgment.
Claims Pointer: Pleading damages with specificity can assist a plaintiff in obtaining relief, especially when the plaintiff obtains a default judgment against the defendant. If a plaintiff fails to allege specific damages, any judgment will, by definition, be in excess of the prayer for relief. In such instances, ORCP 67 requires that the party against whom the judgment is to be entered be given a chance to be heard. If the judgment is entered without giving the defendant that opportunity, important due process issues are triggered, which can lead to the judgment being voided. Plaintiffs can avoid this problem by pleading the requested monetary relief in the complaint.
PGE v. Ebasco Services, Inc., in the Supreme Court of the State of Oregon, S060584 (July 25, 2013).
Portland General Electric (“PGE”) settled a personal injury lawsuit filed by a former employee who had been exposed to asbestos. PGE then sued a number of its own insurers, alleging that it had tendered the personal injury claim to its insurers and that they had breached their contractual duty to indemnify PGE for the settlement. Lexington Insurance Company (“Lexington”) was one such insurer, which provided a policy limit of $5 million. In its complaint PGE failed to specify the amount of monetary loss or damages that had resulted from Lexington’s alleged breach of its duty to indemnify PGE. The lawsuit only stated that Lexington was required to reimburse PGE regarding the underlying settlement and that the settlement had been “reasonable.” Lexington failed to appear in the lawsuit and PGE moved for a default judgment against Lexington for the limits of the policy and its fees. The trial court granted the motion and Lexington appealed.
The Court of Appeals held that the default judgment was void because PGE failed to specify the amount of damages in its complaint and, under ORCP 67 C, a trial court may not enter a default judgment where the complaint does not specify the amount of damages. Lexington appealed to the Oregon Supreme Court.
On appeal to the Supreme Court, PGE argued (1) that there was no due process violation because its complaint had adequately informed Lexington of the nature of the claim and the amounts potentially at issue; and (2) in any event, the default judgment should not be voided because the judgment did not differ from the relief sought in the complaint. Lexington argued that due process required PGE to give notice in its complaint of the amount of relief sought. Without that information, Lexington argued, it could not make an informed decision on whether to incur the expense of defending the lawsuit.
The Supreme Court found that the trial court’s entering of the judgment violated ORCP 67 C, which prohibits any judgment in excess of the initial prayer, unless the party against whom the judgment is to be entered is given the opportunity to be heard. The Court held that because PGE’s complaint contained no specific prayer for damages, any default judgment in its favor would be in excess. Accordingly, because Lexington never made an appearance—and therefore, was not given an opportunity to be heard—the default judgment was void.
The Court went on to state that due process requires reasonable notice to a defendant, before a default judgment may be entered against it, but strict requirements with procedural rules, such as ORCP 67, is not required. Therefore a procedural defect may, but does not necessarily require, that the judgment be voided.
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