Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS:Modesto Tony Lara alleged that he was injured after ingesting broken glass while drinking a bottle of Arizona Tea. After settlement negotiations failed to resolve the dispute, Lara sued Hornell Brewing Co. for negligence, products liability and breach of warranty. Hornell failed to answer, and Lara obtained a default judgment for $50,000. After receiving notice of the default judgment, Hornell filed a motion for new trial requesting that the default judgment be set aside. Hornell explained in affidavits and its motion that it never received notice of Lara’s suit. Hornell’s process for receipt of service involves many steps. After its registered agent accepts service of documents, the documents must pass through two more sets of hands at different corporate entities before finally reaching Hornell’s general counsel. Hornell’s evidence showed that the process somehow broke down after the second step. The hearing on the motion for a new trial focused on whether Hornell’s failure to answer was intentional or the result of conscious indifference and whether a new trial would cause delay or injure Lara. The trial court judge disapproved of Hornell’s method of receiving service, as she explained in the new trial hearing: “I do agree to a certain extent with plaintiff. I believe that the defendants have deliberately set up a process for receiving service that is so complicated, so cumbersome, so convoluted that it is designed to allow them to claim that they never got something because it didn’t go properly through the four or five steps that it had to go through, and in addition to that, none of their agents keep any records and they seem to be proud of it because they put in their affidavits that they don’t keep any records of all this stuff. I presume that that is designed to make it so that nobody can prove that they ever got anything.” The trial judge concluded that even though this conduct amounted to gross negligence and she suspected that Hornell deliberately failed to answer, she stopped short of actually finding that the failure to answer was intentional or the result of conscious indifference. The trial judge concluded that Hornell was nevertheless not entitled to a new trial based on prejudice to Lara, because Hornell would not pay Lara’s expenses in obtaining the default judgment. HOLDING:Affirmed. On appeal, Hornell argued that the trial court erred in refusing to grant a new trial based solely on its refusal to pay Lara’s expenses in obtaining the default judgment. Lara put on evidence that he incurred approximately $2,000 in expenses to obtain the default judgment, but Hornell refused to pay, arguing that Lara could have avoided the expense of a default judgment by personally inquiring whether Hornell intended to answer. Despite implementing a complicated system for receiving service that the trial court found Hornell designed deliberately to make service more difficult, Hornell refused to pay for the expenses this system caused Lara and instead attempted to impose a duty on Lara to remind it to answer. In these circumstances, the court could not say the trial court abused it discretion in taking these factors into consideration and determining that Hornell was not entitled to a new trial, because it refused to pay Lara’s expenses in this case. In its appellate brief, Hornell finally offered to pay Lara’s “reasonable attorney’s fees and costs incurred in taking the default judgment.” But Lara pointed out that he had to incur significant additional expenses in defending the default judgment, and Hornell did not offer to reimburse those. The court stated that “although some courts consider offers to pay default judgment expenses made for the first time on appeal . . . the better practice is to assess whether the trial court abused its discretion based on the information available to the trial court at the time of the ruling.” Therefore, the court concluded that Hornell’s belated offer to pay Lara’s trial level expenses did not entitle it to a new trial. OPINION:Yates, J.; Yates and Guzman, JJ. DISSENT:Fowler, J. “I respectfully dissent. Because the defendant offered in the trial court to go to trial within two months of the motion for new trial hearing, and because the defendant also offered on appeal to pay Lara’s reasonable attorney’s fees and costs incurred in obtaining the default judgment, I would vacate the judgment and remand to the trial court.”

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 3 articles* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.