Shangri-La LLC v. Eagle West Ins. Co., 2024 WL 3936953 (Wash. Ct. App. 2024), arose out of an insurance claim for damage to an apartment building’s roof. The building’s owner, Shangri-La, submitted a claim to its insurance company, Eagle West. Eagle West denied the claim, and Shangri-La sued. When Eagle West failed to respond to the lawsuit, Shangri-La secured a default judgment for the cost of repairing the roof; treble damages under the Washington Insurance Fair Conduct Act (on grounds Eagle West had “unreasonably” denied the claim); and attorney fees.
Eagle West later filed a motion to vacate the judgment, arguing it had informally “appeared” in the lawsuit because its adjuster had written to Shangri-La’s attorneys about Shangri-La’s insurance claim, entitling Eagle West to notice before entry of the default judgment. The trial court granted the motion, and Shangri-La appealed.
The Court of Appeals reversed, reasoning that because the adjuster’s letter did not mention Shangri-La’s lawsuit—as opposed to its insurance claim—the letter did not “substantially comply” with the requirement that a defendant “appear” in a lawsuit before being entitled to notice of default proceedings: “[The adjuster’s] letter did not show an intent to defend against a lawsuit in court, but acknowledged no more than that Shangri-La’s counsel had indicated they represented Shangri-La. Because [the] letter does not substantially comply with the appearance requirement, Eagle West was not entitled to notice of default.” Shangri-La, 2024 WL 3936953, at *6. The Court of Appeals therefore remanded the case to the trial court for reinstatement of Shangri-La’s $8,099,065 judgment.
