Four plaintiffs alleging asbestosis claims filed suit against Associated Insulation among other defendants.  Associated went out of business in 1974 and did not respond to the complaints.  Its default was entered and default judgments were also entered against it.  One to three years later, Fireman’s Fund discovered that it might have issued insurance policies covering Associated during the period plaintiffs claimed that it had exposed them to asbestos.  Fireman’s Fund successfully moved to vacate the default judgments against Associated on the ground of extrinsic mistake.  This decision affirms the orders vacating the default judgments.  To qualify for equitable relief based on extrinsic mistake, the defendant must demonstrate:  (1) “a meritorious case”; (2) “a satisfactory excuse for not presenting a defense to the original action”; and (3) “diligence in seeking to set aside the default once the fraud [or mistake] had been discovered.”  Fireman’s Fund satisfied the first requirement by showing that the multi-million dollar default judgments were entered without showing the nature and extent of plaintiffs’ injuries or that Associated had caused them.  It was not necessary for Fireman’s Fund to file a proposed answer to assert that defense might have made a difference under these circumstances.  Fireman’s Fund met the second requirement by showing that it wasn’t served with the summons and complaint in any of the cases, and when notified of them had sent the plaintiffs letters saying that after a thorough search it did not think it had coverage, but invited plaintiffs to submit any evidence of coverage that they might have.  Fireman’s Fund met the third requirement by hiring counsel and moving to vacate judgment within 5 months after it finally located evidence that it had issued policies to Associated.

California Court of Appeal, First District, Division 5 (Jones, P.J.); December 11, 2018; 29 Cal. App. 5th 1241