Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County Los Angeles County Super. Ct. No. BC 348140Gregory W. Alarcon, Judge.
Jones & Associates and Mary K. Jones for Plaintiff and Appellant.
David J. Morris for Defendants and Respondents.
FLIER, J.
On April 3, 2007, a default judgment for $54,396 was entered against respondents Gerardo Reyes and Nancy Hanover Reyes. Respondents’ motion to set aside the judgment, filed on May 10, 2007, was granted and appellant Lauryn S. Burnett, dba M3 Construction Services, appeals from that order. We affirm.
Cents are omitted.
PROCEDURAL HISTORY
Appellant filed her action against respondents on February 28, 2006. The complaint alleged that appellant, a contractor, and respondents entered into a contract under which appellant was to make improvements on a residence owned by respondents. The complaint alleged that appellant had performed all the work that she was required to do under the contract but that respondents failed to pay her. The complaint sought an award of $47,077.
The record contains a proof of service by personal service on respondent Nancy Reyes as of April 3, 2006. An amended proof of service of summons shows service on respondent Gerardo Reyes as of April 30, 2006. A request for entry of default as to respondent Nancy Reyes was filed on May 15, 2006, and the default was entered on the same day. A default as to respondent Gerardo Reyes was entered on June 5, 2006.
On April 3, 2007, the trial court entered judgment for $54,396. This sum was composed of the $47,077 sought by the complaint and interest ($5,829), costs ($378) and attorney fees ($1,112).
Respondents filed their motion to vacate and set aside the judgment on May 10, 2007. The motion was supported in principal part by a three-page declaration made by respondent Nancy Reyes, which respondent Gerardo Reyes supported with his declaration. Nancy and Gerardo Reyes both testified in the evidentiary hearing on respondents’ motion to set aside the judgment, which was held on June 19, 2007. Attorney Gerald A. Ge rash, who referred respondents to Attorney Andrew M. Zanger, also testified in the evidentiary hearing.
The trial court granted the motion to vacate on June 29, 2007.
FACTS
Nancy Reyes is a middle school teacher and Gerardo Reyes is a third grade teacher. Neither one of them has ever been involved in a construction project prior to the instant one and, prior to appellant’s action, neither one of them has ever been sued.
1. Nancy Reyes
We state the facts as they appear in Nancy Reyes’s declaration and in her testimony given in the evidentiary hearing.
Respondents own a home on Genesee Avenue in Los Angeles. In May 2004 they signed a contract for the installation of a “modular unit” that would extend their home by 15 1/2 by 37 feet. The manufacturer of the unit recommended appellant to do the installation. Respondents signed a contract with appellant in January 2005 and agreed to pay her $24,702. Subsequently, respondents and appellant entered into an additional agreement to remodel the kitchen and for other improvements. The written estimate for this work was $39,804. Over time, respondents have paid appellant $61,335.
Appellant performed some of the work but, in the end, abandoned the project and was also demanding additional payments. By December 2005, the relationship between appellant and respondents had broken down.
Respondents thought they needed a lawyer since appellant was demanding payment of sums they did not think they owed. An acquaintance of respondents, retired Attorney Gerash, referred them to Attorney Zanger.
Respondents met with Zanger on December 13, 2005, and followed up that meeting with a letter the next day in which they spelled out their concerns and questions; the letter is contained in the record. Zanger reassured them that they had a good case and that he would negotiate the matter without respondents having to go to trial. In the ensuing months, they periodically called Zanger who assured them that he was in negotiations with appellant and that matters would be resolved. Nancy Reyes testified that she and Zanger spoke about a dozen times on the telephone.
Respondents met with Zanger in his home. He gave them a card with a Wilshire address, which they assumed was his office. It turned out that this address was a mailbox. Zanger had no secretary.
When Nancy Reyes was served on April 3, 2006, she called Zanger who told her to fax the paper to him “and not to worry.” When Gerardo Reyes was served on April 30, 2006, respondents again called Zanger who told them to fax the papers and that “[h]e’s taking care of it.”
Respondents wrote Zanger several letters, i.e., on January 17, 2006, March 30, 2006, October 4, 2006, and January 3, 2007. In the January 3, 2007 letter they inquired how much it would cost them to settle with appellant, what Zanger’s fee would be and what the status of their case was. They never received an answer from Zanger to the letter of January 3, 2007, but respondents assumed that he was still representing them.
When asked in the evidentiary hearing whether respondents were aware of the fact that they had been sued, Nancy Reyes responded: “We were not aware of what the process was that he was going through and the process that ultimately we were going through.”
Nancy Reyes concluded her declaration by stating: “We only learned that Mr. Zanger was not in negotiations on our behalf when we were notified that a judgment had been entered against us on April 3, 2007. At that point we realized something was seriously wrong and immediately sought other counsel.”
2. Gerardo Reyes
Gerardo Reyes testified at the evidentiary hearing that appellant’s counsel, Attorney Mary K. Jones, who continues to represent appellant in this appeal, called him in February 2006. Gerardo Reyes referred Jones to Zanger. He gave Jones Zanger’s telephone and fax number and told her that Zanger would handle the case for respondents. Gerardo Reyes testified that respondents believed that Zanger “was dealing with Ms. Jones and there was negotiation going on.” It was Jones who served both Gerardo and Nancy Reyes in April 2006.
Respondents did not sign a retainer agreement with Zanger and never paid him a fee. Gerardo Reyes explained how this came about: “The second time we met with him [Zanger] I asked him about fees. We wanted to formalize the relationship with him. And he said that he would charge us when the case got going, when he had some, you know, some substantial part of the work already done. I thought he was just being casual due to the relationship with my wife’s mom that he was being friendly and casual about it. [¶] But later on I wanted to just make sure that he understood we were expecting to pay him and it was not just work for free. And so I sent him a letter later on [January 3, 2007,] asking [him] to state his honorarium.”
The relationship was between Nancy Reyes’s mother and Attorney Ge rash, who referred respondents to Zanger. See part 3, post.
Respondents’ counsel asked Gerardo Reyes the following question during the evidentiary hearing: “At all times from December, 2005, to April of 2007, did you believe that Mr. Zanger was representing your interests in this case?” The response was: “Of course. If we hadn’t, we would have looked for somebody like you earlier. You can sure of -- we felt we didn’t know enough to represent ourselves. So we never intended to represent ourselves. We were always under the impression that Mr. Zanger was our attorney. And then when the default came about, when I contacted you, it was because we, of course, we couldn’t believe he wasn’t representing us anymore because he let us down. And that’s when I contacted you.”
3. Gerald Ge rash
Ge rash testified that he has known Zanger on a casual basis since 1985. Ger ash's connection with respondents was that Nancy Reyes’s mother was his best friend whom he has known for over 30 years.
When respondents asked Ge rash to refer them to a lawyer, he suggested Zanger. Ge rash thought Zanger to be knowledgeable in a number of areas and he was impressed with Zanger’s knowledge of the law; he thought that Zanger was extremely intelligent. Zanger told Ge rash that he handled cases like respondents all the time.
Ge rash and Zanger apparently lived in the same building in Santa Monica. Ge rash testified that he would casually run across Zanger in the garage or the hallway. He asked Zanger “a dozen times” about how respondents’ case was going. He asked Zanger whether he was going to file an answer -- Ge rash was quite concerned over respondents who were almost like relatives to him -- and Zanger said that he didn’t need to file an answer because he was dealing with a lawyer, it was “just a $10,000 case” and he, Zanger, was “in negotiations.” When asked whether Ge rash believed that Zanger was representing respondents, Ge rash answered: “Absolutely.”
DISCUSSION
1. Respondents’ Motion Was for Equitable Relief
Although respondents based their motion on Code of Civil Procedure section 473, the time to make a motion for relief under this provision expired six months after the entries of the default against Nancy Reyes (May 15, 2006) and Gerardo Reyes (June 5, 2006). The rule is that where the judgment is by default, the time to make a motion under Code of Civil Procedure section 473 begins to run upon the entry of the default by the clerk. (8 Wit kin, Cal. Procedure (4th ed. 1997) Attack on Judgment in Trial Court, § 179(b), pp. 685-686 [citing authorities].)
The trial court recognized this and entertained respondents’ motion as one seeking equitable relief from the judgment. We agree with this determination and note that, even though equitable relief from a judgment is an independent proceeding, it may be made by motion. (Olivera v. Grace (1942) 19 Cal.2d 570, 576; see generally 8 Wit kin, Cal. Procedure, supra, Attack on Judgment in Trial Court, § 219, pp. 722-723.)
An equitable proceeding to set aside a judgment has three elements. First, the judgment must have been obtained or entered through fraud, mistake or accident. Second, the party seeking the relief must have a meritorious action or defense. Third, the action or motion to set aside the judgment must be brought with due diligence. (Olivera v. Grace, supra, 19 Cal.2d at p. 575.) “In some cases . . . it is the excusable neglect of the plaintiff to appear and present his claim or defense. If neglect results in an unjust judgment, without a fair adversary hearing, the basis for equitable relief is present, and is often called ‘extrinsic mistake.’ [Citations.]” (8 Witkin, Cal. Procedure, supra, Attack on Judgment In Trial Court, § 231, p. 741, original italics.)
“‘It was a settled doctrine of the equitable jurisdiction-and is still the subsisting doctrine except where it has been modified or abrogated by statute . . . that where the legal judgment was obtained or entered through fraud, mistake, or accident, or where the defendant in the action, having a valid legal defense on the merits, was prevented in any manner from maintaining it by fraud, mistake, or accident, and there had been no negligence, laches, or other fault on his part, or on the part of his agents, then a court of equity will interfere at his suit, and restrain proceedings on the judgment which cannot be conscientiously enforced. . . . The ground for the exercise of this jurisdiction is that there has been no fair adversary trial at law.’ (5 Pomeroy, Equity Jurisprudence (Equitable Remedies [2d ed.]), pp. 4671, 4672.)” (Olivera v. Grace, supra, 19 Cal.2d at p. 575.)
In proceedings of this nature, questions of fact are to be resolved by the trial court. (40A Cal.Jur.3d (2006) Judgments, § 302, p. 449, citing Hawley v. State Assurance Co. (1915) 28 Cal.App. 41, 44.)
2. Positive Misconduct by Counsel That Deprives the Client of a Trial Is Grounds to Vacate a Judgment
Orange Empire Nat. Bank v. Kirk (1968) 259 Cal.App.2d 347 (Orange Empire) is much like the case before us.
In Orange Empire,a bank filed a cross-complaint against Lowell O. Kirk, M.D., for $50,000 on a guaranty that the bank claimed Dr. Kirk signed. Dr. Kirk, who throughout denied that he signed the guaranty, gave the complaint and summons to his lawyer, James Monroe, shortly after he was served on July 21, 1965. There now followed a series of events that duplicate what happened in this case. In response to Dr. Kirk’s inquiries about the case, Attorney Monroe assured Dr. Kirk that he was taking care of the case. As in this case, this was not true and a default was entered against Dr. Kirk in early October 1965. In December 1965, Monroe, unlike Zanger, took some action and wrote the bank’s counsel requesting that the default be set aside; this was the first and only action Monroe took in the case. This request was refused.
In early 1966, Dr. Kirk received a call from a lawyer who stated that he represented the principal in the main action and asked Dr. Kirk whether he had any defense to the action. Dr. Kirk called Monroe who assured Dr. Kirk that was taking care of the lawsuit and that he, Monroe, would take care of the trial. The trial commenced on March 3, 1966; but neither Dr. Kirk nor Monroe appeared at the trial. It ended with a judgment of $50,000 against Dr. Kirk. (Orange Empire, supra,259 Cal.App.2d at pp. 350-351.)
Following the judgment, the bank called Dr. Kirk and requested payment. Dr. Kirk immediately called Monroe but could not speak to him; Monroe was reportedly out of town. Between the entry of judgment and July 1, 1966, when Dr. Kirk finally retained new counsel, Monroe did nothing, even though telephone calls and requests for action from Dr. Kirk abounded, with the exception that Monroe falsely represented that he would get the default vacated. But as before, Monroe did nothing to vacate the judgment. (Orange Empire, supra, 259 Cal.App.2d at pp. 351-352.)
The court in Orange Empire stated the general principles that apply to this case as well:
“Although the law ordinarily charges the client with the inexcusable neglect of his attorney, and gives him redress against his counsel [citation], there are exceptional cases in which the client who is relatively free from personal neglect will be relieved from a default or dismissal attributable to the inaction or procrastination of his counsel. [Citations.] This is particularly true where the attorney’s failure to represent the client amounts to positive misconduct. (Daley v. County of Butte [(1964)] 227 Cal.App.2d 380, 391.) An attorney’s authority to bind his client does not permit him to impair or destroy the client’s cause of action or defense. (Daley v. County of Butte, supra.)” (Orange Empire, supra, 259 Cal.App.2d at p. 353.)
The appellate court concluded that Monroe’s “dereliction of the professional obligations owed Dr. Kirk constituted actual misconduct.” (Orange Empire, supra, 259 Cal.App.2d at p. 354.) The court reversed the trial court’s order that had denied Dr. Kirk’s motion to vacate the judgment and reversed the default judgment. Parenthetically, the proceeding in Orange Empire was in equity for the same reason as in this case, i.e., because over six months had elapsed from the clerk’s entry of the default before the motion to vacate was filed. (Id. at pp. 352-353.)
There is no question that Zanger’s dereliction of his responsibilities toward respondents constituted actual misconduct.
Appellant contends that there is nothing to support respondents’ claim that they actually retained Zanger. Appellant points to the fact that there is no mail from Zanger to respondents, only from respondents to Zanger, and that it is conceded that there was no retainer agreement. In sum, appellant contends that it has not been shown that Zanger was in fact respondents’ lawyer.
The trial court resolved this factual issue adversely to appellant. The trial court noted that respondents thought they had a reliable lawyer because they had been referred to Zanger by a family friend, Attorney Ge rash, whom they trusted. The trial court’s minute order goes on to state: “After listening to both [respondents] at the hearing and judging their credibility, this evidence is sufficient to convince the court that [respondents] reasonably believed in Mr. Zanger to protect their legal interests.”
Questions of credibility are for the trial court. (See 40A Cal.Jur.3d, supra, Judgments, § 302, p. 449, citing Hawley v. State Assurance Co., supra, 28 Cal.App. 41, 44.) If respondents are to be believed, it is very clear that Zanger held himself out to be their attorney, promising multiple times to take care of their case with appellant. Just as in Orange Empire, the repeated misrepresentation that the lawyer will look after the case weigh heavily in the balance. Such misrepresentations disarm the client and give the client a false sense of security. Indeed, lies of this sort go to the essence of the lawyer-client relationship and turn it into a disaster for the client.
It is also true that there is corroboration of respondents’ testimony. There are four rather extensive letters from respondents to Zanger in the record, all of which are obviously written on the assumption that Zanger was their lawyer. There is also the testimony of Gerald Ge rash who confirmed that Zanger repeatedly held himself out to be respondents’ attorney. Another probative item that corroborates respondents’ testimony is contained in the declaration of appellant’s counsel wherein she states that, after having been given Zanger’s telephone number by Gerardo Reyes, she called Zanger and eventually spoke with him. Zanger asked for copies of the relevant documents, such as the contract between appellant and respondents, and suggested mediation. Although this was the only contact that appellant’s counsel had with Zanger, it confirms that Zanger did in fact hold himself out to be respondents’ attorney.
The lack of a retainer agreement was explained by Gerardo Reyes; he thought that Zanger was being casual because the referral was made through a family friend. In any event, the letter of January 3, 2007, inquires about Zanger’s fees. There is also the added circumstance that respondents do not appear to have been familiar with the ways of lawyers, which includes a lack of familiarity with retainer agreements.
In sum, there is substantial evidence that supports the finding that Zanger at all material times held himself out to respondents to be their attorney. This had real consequences in this case. Respondents relied on Zanger and that reliance cost them whatever defense they had against appellant’s action. But, as the court pointed out in Orange Empire, a lawyer’s authority to bind his client does not permit him to impair or destroy the client’s defense. (Orange Empire, supra, 259 Cal.App.2d at p. 353.) That is what happened in this case. Zanger’s positive misconduct resulted in respondents’ failure to appear and present their defense, which is an extrinsic mistake that is grounds to vacate the judgment.
3. The Remaining Requirements for Equitable Relief Are Satisfied
The remaining requirements for equitable relief is a showing that respondents have a meritorious defense and that they acted with due diligence in seeking relief.
The trial court found, based on Nancy Reyes’s declaration, that respondents have a meritorious defense. According to this declaration, respondents concede that they owe $4,037, but (1) they deny owing the sum awarded by the default judgment and (2) they state they have already paid appellant $61,335. The declaration also avers that appellant abandoned the project and did not complete the work that she had undertaken to do. On their face, these averments make out a meritorious defense. We note that these averments were not contradicted in the opposition to the motion to vacate. Thus, respondents have made out the elements of a prima facie defense.
Judgment was entered on April 3, 2007, and respondents filed their motion to vacate on May 10, 2007. Respondents acted with due diligence once they understood from the fact of the judgment that Zanger had abandoned them. It is true that respondents were served with notices of the entry of default on May 15, 2006, and June 5, 2006. But as shown by respondents’ correspondence addressed to Zanger (page 4, ante), throughout 2006 respondents thought that Zanger was taking care of their case. They could justifiably assume that Zanger was taking care of this matter as well.
4. The Appeal Is Not Frivolous
During oral argument, appellant’s counsel contended that the appeal is frivolous and requested that we impose sanctions.
Under the applicable standard (In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650), this appeal is not frivolous. While there is no merit to the argument that respondents could not rely on Zanger as their attorney, there is some color able basis for the argument that respondents should have consulted new counsel earlier than they actually did. While we emphatically state that respondents were entitled to rely on Zanger as their attorney until they received notice of the default judgment, a reasonable attorney could have concluded that there was some merit to the contention that respondents should have acted sooner than they did.
We note that the rules require that a request for sanctions is to be made by a written motion. (Cal. Rules of Court, rule 8.276.) Despite the procedural defect in respondents’ request for sanctions, we deny that request on its merits.
DISPOSITION
The order vacating the judgment entered on April 3, 2007, is affirmed. Respondents are to recover their costs on appeal.
We concur: COOPER, P. J. RUBIN, J.