Schooley v. Pena – 5/17/2022

June 6, 2022

Arizona Court of Appeals Division One holds that Rule 55(a) applies to garnishment proceedings.

A man sued another man for personal injuries and negligent infliction of emotional distress arising from the latter’s discharge of a firearm while driving a car.  After the shooter’s insurance company denied coverage twice, the victim obtained a writ of garnishment and served it on the insurance company through the Arizona Department of Insurance, without naming or notifying the insurance company’s attorney, who was known to the victim. 

When the insurance company failed to respond to the garnishment within ten days, the victim obtained an order to show cause and again served it on the insurance company through the Arizona Department of Insurance, again without notifying the insurance company’s counsel.  The superior court granted the victim a default judgment when the insurance company failed to attend the show-cause hearing.

The insurance company moved to set aside the default judgment because the plaintiff had not complied with Rule 55’s requirement to provide notice to the company’s counsel and because the company’s failure to respond constituted excusable neglect under Rule 60(b)(1).  The superior court did not rule on the Rule 55 question, doubting that the Rule applied in garnishment proceedings, but it granted relief under Rule 60(b)(1) and set aside the default judgment. 

The court of appeals held that the superior court had acted within its discretion in setting aside the default judgment, but it based its decision on the plaintiff’s failure to comply with Rule 55(a), which requires a party applying for a default judgment to name the defaulting party’s attorney, if known, and to mail a copy of the application to that attorney. 

Garnishment proceedings are governed by specific statutory procedures not applicable in other civil actions.  A.R.S. § 12-1583, which outlines the process for obtaining a default judgment against a garnishee, does not address whether civil procedure rules must also be followed.  Nevertheless, Arizona courts have held that Rule 55(b) applies when a party seeks a default judgment against a garnishee that has already appeared.  Harmonizing the rules of civil procedure and the statutes governing garnishment, the court held that Rule 55(a) applies in garnishment proceedings when the garnishee has not yet appeared or defended.  The court explained that its holding furthers the purposes of Rule 55(a) and A.R.S. § 12-1583 because both serve to provide a party in default with a second chance to defend before a default judgment is imposed.  Requiring a garnishor to provide Rule 55(a) notice also aligns with the principle that civil actions should be resolved on their merits whenever possible.

Judge Brown authored the opinion, in which Judges Howe and Furuya joined.