Opinion
B228330
01-04-2012
GHANSHYAM DAS POKAL, Cross-Complainant and Respondent, v. GRETZEL HUNT, Cross-Defendant and Appellant.
Lieber Williams & Labin and Stanley P. Lieber for Cross-Defendant and Appellant. Huron Law Group and Jeffrey Huron, Phu Nguyen and Cory Lynn Webster for Cross-Complainant and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. LC085053)
APPEAL from an order denying relief from a default judgment of the Superior Court of Los Angeles County, Richard Adler, Judge. Affirmed.
Lieber Williams & Labin and Stanley P. Lieber for Cross-Defendant and Appellant.
Huron Law Group and Jeffrey Huron, Phu Nguyen and Cory Lynn Webster for Cross-Complainant and Respondent.
INTRODUCTION
Cross-defendant and appellant Gretzel Hunt appeals from an order denying a statutory motion for relief from the default judgment entered against her and in favor of cross-complainant and respondent Ghanshyam Das Pokal. Pokal cross-complained against Hunt for declaratory relief, indemnity, and damages on various theories after Dean Isaacson, plaintiff, sued defendants Pokal and Hunt for allegedly defaulting on a loan. Hunt claims the trial court abused its discretion by denying her above statutory motion. We affirm the order denying the motion.
FACTUAL and PROCEDURAL SUMMARY
1. Summary of Proceedings from Isaacson's Complaint to the Default Judgment on Pokal's Cross-Complaint.
The record reflects the following. On April 8, 2009, Dean Isaacson, plaintiff, filed a complaint against Hunt and Pokal, defendants, alleging causes of action arising from the alleged default by defendants on a $600,000 loan which Isaacson had made to them. Isaacson alleged he made the loan to enable the defendants to discharge the obligations of the defendants under a settlement agreement the two had entered into with a third party. The complaint alleged the settlement agreement resolved a dispute concerning certain real property and enabled defendants to keep it.
The superior file in this case has been transmitted to this court (Cal. Rules of Court, rule 8.155).
On May 12, 2009, Pokal filed a cross-complaint against Hunt. The cross-complaint alleged, inter alia, causes of action for declaratory relief, indemnity, contribution, quiet title, and damages under various theories. The cross-complaint alleged the value of the subject real property was in excess of $2.8 million. On November 5, 2009, Pokal served the cross-complaint on Hunt by substituted service at her home.
On March 15, 2010, Pokal mailed to Hunt a request for entry of default on the cross-complaint. On March 22, 2010, default was entered against Hunt on said cross- complaint. On April 28, 2010, the court entered a default judgment in favor of Pokal and against Hunt on all causes of action in the cross-complaint and, inter alia, awarded Pokal $684,038.82 in damages and $39,059.32 in attorneys' fees and costs.
2. Hunt's Motion to Set Aside the Default Judgment on Pokal's Cross-Complaint.
a. Hunt's Motion and Subsequent Related Pleadings.
On June 1, 2010, Hunt filed a motion to set aside the default judgment pursuant to Code of Civil Procedure section 473, subdivision (b). Hunt sought relief from the default, and default judgment, based upon excusable neglect in not filing a timely answer to the cross-complaint.
Hunt's supporting declaration reflected the following. Isaacson loaned $600,000 to Hunt as previously indicated in exchange for a trust deed on the real property. The real property should have been sold and the proceeds disbursed to reimburse Isaacson and permit disbursements to the defendants. Hunt stated, "6. After being sued in this case by [Pokal], I talked with [Isaacson] and he told be [sic] that I did not have to do anything and that he would take care of it. I believed that all I had to do was wait until an accounting was done and that the property would be sold and I would get my portion as outlined above. [¶] 7. Also, during this time, my mother became very ill and passed away. Further, I was dealing with IRS problems as well. As a result, I was under a lot of stress. [¶] 8. I did not realize that there were any issues that had to be litigated and I relied on Mr. Isaacson's assurances that everything would be resolved. I later spoke with Lisa Steinberg [sic], the attorney for . . . Isaacson and I realized that [Pokal] [sic] was making untrue allegations and that I needed to get an attorney. [¶] 9. I then contacted Stanley P. Lieber and retained him to represent me. It took me a couple of weeks to gather all of the documentation, but I finally did and forwarded what information I had to Mr. Lieber during the week of [May 10, 2010]."
Lieber's supporting declaration reflected the following. Hunt retained Lieber in early April 2010 to represent Hunt on the cross-complaint. Lieber obtained the cross-complaint and other documents from Lisa Weinberg, Isaacson's attorney. After unsuccessful efforts, Lieber eventually contacted Ronald Gallant, Pokal's then counsel, a few days later. Lieber and Gallant discussed stipulating to setting aside the default to the cross-complaint but reached no stipulation because they disagreed on the amount Hunt would pay for Pokal's attorneys' fees as a stipulation condition. The negotiations ended just prior to the default prove-up hearing. Lieber subsequently asked Hunt for information supporting her claim she would be owed substantial sums from the proceeds of a sale of the property. Lieber did not believe Pokal would be prejudiced by any delay.
On June 22, 2010, Pokal filed an opposition to Hunt's motion. On June 28, 2010, Hunt filed a reply. In the unsworn reply, Lieber indicated it was reasonable for Hunt to rely on Isaacson's representation that he would "take care of the matter" in light of the facts (1) Isaacson was a friend of Hunt's mother and had loaned Hunt $600,000 in connection with the property, (2) Hunt was legally unsophisticated and was uncounseled during this time, and (3) Hunt believed there was no litigable issue and an accounting would reflect how much she would receive.
On July 1, 2010, Pokal's then counsel, Jeffrey Huron, filed a supporting declaration to the opposition to Hunt's motion. The declaration reflects that on June 2, 2010, Huron delivered to Lieber a letter asking for details concerning the representations in the declarations of Hunt and Lieber, and asking why Lieber was not seeking to set aside the default entered by Isaacson against Hunt. As of June 30, 2010, Huron had not received from Hunt or Lieber a response to Huron's letter.
On July 16, 2009, default was entered on Isaacson's complaint against Hunt.
On July 6, 2010, the court ordered that Isaacson be deposed no later than July 9, 2010. On July 14, 2010, Lieber filed a supplemental declaration in support of Hunt's motion. The declaration reflected that on July 9, 2010, Isaacson was deposed. The declaration stated, inter alia, "Isaacson did not support [Hunt's] declaration that he had told her not to worry about the case and that he would handle it. His testimony was that he told her to get an attorney. [¶] . . . [¶] Isaacson has no incentive to help Hunt or to corroborate her version of events. If relief is granted to Hunt, pursuant to her motion, the trial in this matter will have to be continued which would delay Isaacson from obtaining the money he is owed."
On July 14, 2010, Hunt filed a supplemental declaration in support of her motion. The declaration stated, inter alia, "1. During the period of time after I was served with the cross-complaint in this matter and before talking with [Isaacson's] attorney, I could not concentrate on this case or anything else for that matter. . . . [¶] 2. Further, during this period of time, I suffered a $3,000,000 loss in a real estate scam."
On July 16, 2010, Pokal filed an opposition to the supplemental declarations of Hunt and Lieber. Huron's supporting declaration reflected as follows. Huron deposed Isaacson on July 9, 2010. During his testimony, Isaacson denied representing to Hunt that she did not need to worry about defending the lawsuit or that he would take care of it and, instead, advised her to obtain a lawyer and went to great lengths to help her find and retain Lieber, who had represented Isaacson in other matters. Attached to Huron's declaration was documentation that Lieber had in fact represented Isaacson in separate civil actions commenced in 2001 and 2002, respectively.
On March 30, 2011, we granted Pokal's motion to augment the record with Isaacson's deposition.
Pokal's supporting declaration reflected that (1) in reliance on the default judgment and grant deed executed to him by Hunt in this case, he entered into stipulated judgments for $205,707.26 for payment of taxes on the property and related costs and attorneys' fees, and (2) Pokal had paid $51,426.81 of that amount as of July 13, 2010. Pokal's opposition indicated that, in light of these facts, Pokal would be prejudiced if Hunt's motion were granted.
On July 20, 2010, the court took Hunt's motion under submission. On that date, Pokal filed a supplemental opposition to Hunt's motion and a request for judicial notice. In the supplemental opposition, Pokal indicated that default had been entered against Hunt in September 2009, October 2009, and June 2010, in three actions, respectively, which were unrelated to this case. The request for judicial notice asked that the trial court in the present case take judicial notice of, inter alia, those entries of defaults.
b. The Trial Court's Ruling on Hunt's Motion.
On September 22, 2010, the court issued an order granting Pokal's above-mentioned request for judicial notice and denying Hunt's motion to set aside the default judgment. The order indicates, inter alia, the following. Hunt could not reasonably rely on Isaacson's alleged assurances that she did not have to do anything regarding the cross-complaint. Isaacson was the plaintiff, not the cross-complainant, and had no power to excuse Hunt's obligation to respond to the cross-complaint. At the hearing on Hunt's motion, Lieber conceded this. Hunt could not reasonably rely on Isaacson, a nonattorney who was suing her, to represent Hunt's interests as to Pokal's cross-complaint.
The evidence submitted by Hunt in her declaration supporting her motion was deliberately vague as to exactly what Hunt understood Isaacson to mean by his alleged statement that "he would take care of it." Hunt could not reasonably have relied on Isaacson's vague representation that he would "take care of it," and Hunt's supplemental declaration filed July 14, 2010, did not indicate Isaacson represented she did not have to file an answer. At oral argument on Hunt's motion, Lieber could not define what "take care of it" meant.
The facts (1) Hunt was uncounseled at the time of Isaacson's alleged assurances and, therefore, Hunt allegedly did not know Pokal could enter a default on the cross-complaint and (2) Hunt was allegedly naïve, did not support relief. As for Hunt's alleged stress from her mother's illness and IRS problems, the fact Hunt was busy and forgot about the lawsuit was inexcusable neglect.
Hunt was not disputing she had been served with the cross-complaint, she had failed to answer it, and she had been aware of the entry of default. It appeared Hunt made a conscious decision not to respond to the cross-complaint because she could not afford to do so. Isaacson testified at his deposition that Hunt told him that she only had $5,000 and could not afford an attorney.
Hunt had defaulted in other cases, and this suggested her default on Pokal's cross-complaint was not the first time she had shirked her legal obligation to respond to a lawsuit filed against her. The court took judicial notice of the previously mentioned defaults entered against Hunt in September 2009, October 2009, and June 2010. The court then stated, "Thus, there was no inadvertence or mistake, as Hunt has been sued, and has failed to respond, before." Lieber's assertion in his June 28, 2010, reply that Hunt was legally unsophisticated was belied by the facts she had been involved in substantial financial transactions and held a real estate license.
The trial court noted Hunt claimed she had lost $3,000,000 in a real estate scam, she had paid over $600,000 to acquire property, and she had signed a $1.5 million trust deed.
ISSUE
Hunt claims the trial court abused its discretion by denying her Code of Civil Procedure section 473, subdivision (b) motion for relief from the default judgment on Pokal's cross-complaint.
DISCUSSION
The Trial Court Properly Denied Hunt's Motion for Relief from the Default Judgment.
Hunt claims the trial court abused its discretion by denying her Code of Civil Procedure section 473, subdivision (b) motion for relief from the default judgment on Pokal's cross-complaint. We disagree.
A court has power within six months after a judgment to grant relief therefrom on the grounds of "mistake, inadvertence, surprise, or excusable neglect." (Code Civ. Proc., § 473, subd. (b).) The task of determining whether to grant such relief is committed in the first instance to the trial court's discretion. It is the trial court's responsibility to consider and weigh all the evidence and argument and make a reasoned choice. (Gardner v. Superior Court (1986) 182 Cal.App.3d 335, 338-339.) Moreover, as mentioned, Hunt made her motion based upon alleged excusable neglect in not filing a timely answer. In examining mistake or neglect, the court inquires whether a reasonably prudent person under the same or similar circumstances might have made the same error. (Bettencourt v. Los Rios Community College Dist. (1986) 42 Cal.3d 270, 275, fn. 5, 276.) A trial court's order denying relief under Code of Civil Procedure section 473, subdivision (b) is reviewed on appeal for abuse of discretion. (Brown v. Williams (2000) 78 Cal.App.4th 182, 186.)
This is not a case in which the statutory motion was "accompanied by an attorney's sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect" within the meaning of Code of Civil Procedure section 473, subdivision (b).
Hunt makes several arguments in support of her claim. First, Hunt argues in essence that the trial court failed to weigh the fact that Isaacson would expedite his recovery on his complaint if a default judgment was entered against Hunt on the cross-complaint; therefore, Isaacson was an interested party who had every incentive to lull Hunt into inaction by his assurances that she did not need to take action on the cross-complaint. Hunt maintains that, based on those assurances, Hunt assumed she only needed to present an accounting of what all parties were due.
When a default is entered because the defendant has relied upon a codefendant or other interested party to defend, the question is whether the defendant was reasonably justified under the circumstances in the defendant's reliance or whether the defendant's neglect to attend to the matter was inexcusable. (Cruz v. Fagor America, Inc. (2007) 146 Cal.App.4th 488, 507.)
The trial court was aware (1) Isaacson was the plaintiff, (2) a default judgment against Hunt on the cross-complaint would facilitate Isaacson's recovery on his complaint, and (3) Hunt was alleging Isaacson had made assurances. The alleged fact Hunt is arguing that the trial court failed to weigh--that Isaacson was an interested party who had incentive to lull Hunt into action by alleged assurances--goes to the issue of Isaacson's alleged motive in making the alleged assurances. However, Hunt has failed to demonstrate the trial court did not consider and weigh this alleged fact.
Moreover, the trial court essentially concluded that where Isaacson, a nonattorney plaintiff suing Hunt, made vague and conclusory alleged assurances that Hunt did not need to take action on a cross-complaint filed against her by a codefendant in the same action, Hunt was not reasonably justified in relying on those assurances and could not reasonably have relied on them to conclude she simply needed to present an accounting. The alleged fact of Isaacson's supposed motive in giving the alleged assurances under the above circumstances did not render reasonable Hunt's otherwise unreasonable reliance.
Hunt argues ordering relief from the default judgment would not prejudice Pokal. Hunt fails to address the evidence before the trial court that Pokal relied on the default judgment to settle amounts due for taxes and related attorneys' fees and costs. Hunt argues the trial court considered the facts pertaining to her mother's illness and Hunt's IRS problems, but failed to weigh those facts with the alleged fact of Isaacson's assurances that Hunt did not need to take action on the cross-complaint. However, all of these facts were before the trial court.
Hunt makes various arguments that the trial court abused its discretion by considering inadmissible evidence. First, Hunt argues the trial court improperly took judicial notice of the defaults entered against Hunt in September 2009, October 2009, and June 2010, because this was, under Evidence Code section 1101, subdivision (a), inadmissible propensity evidence that she shirked legal obligations and/or failed to answer complaints. However, Hunt waived the issue by failing to oppose Pokal's request that the court take judicial notice of these matters. (Cf. Younan v. Caruso (1996) 51 Cal.App.4th 401, 406, fn. 3 (Younan).)
At oral argument before this court, Lieber indicated he had not expressly objected in the trial court to the trial court's taking of judicial notice of the prior defaults entered against Hunt. However, he represented here that he had argued in the trial court that said taking of judicial notice was improper and the trial court should not consider the defaults entered. He argued here that this court should therefore treat his argument below as an objection. The hearing on Hunt's motion occurred on July 20, 2010. During the hearing, Lieber objected, on relevance grounds only, to the trial court's taking of judicial notice of Hunt's default judgment on Isaacson's complaint and her default judgment on Pokal's cross-complaint. However, Lieber never objected during that hearing to the trial court's taking of judicial notice of the prior default judgments entered against Hunt in September 2009, October 2009, or June 2010. Nor did Lieber argue during that hearing that the taking of judicial notice of those default judgments was improper or that the trial court should not consider those defaults entered.
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Moreover, even assuming that the issue was not waived and that otherwise properly judicially noticed matters may not, under Evidence Code section 1101, subdivision (a), be offered as proof of character to prove conduct, Hunt fails to discuss the fact that after taking judicial notice of the defaults, the court stated, "Thus, there was no inadvertence or mistake, as Hunt has been sued, and has failed to respond, before." Evidence Code section 1101, subdivision (b) provides "Nothing in this section prohibits the admission of evidence that a person committed . . . [an] . . . act when relevant to prove some fact (such as . . . absence of mistake or accident, . . .) other than his or her disposition to commit such an act." The entries of default were therefore admissible notwithstanding Evidence Code section 1101, subdivision (a).
Second, Hunt argues the trial court erred by taking judicial notice that Hunt was a real estate agent because proof she was a real estate agent was irrelevant to impeach her assertion that she was legally unsophisticated. Hunt waived the issue by failing to oppose the taking of judicial notice on the ground now urged. (Cf. Younan, supra, 51 Cal.App.4th at p. 406, fn. 3.) Moreover, the trial court's decision to consider the fact that Hunt held a real estate license as that fact related to the issue of her legal sophistication or lack thereof was reasonable. Further, the trial court did not rely on Hunt's real estate license alone to discount her claim she was legally unsophisticated, but also relied on the fact she had been involved in substantial financial transactions. None of Hunt's remaining arguments are meritorious.
Finally, the trial court did not, in the analysis which was part of the trial court's September 22, 2010, order denying Hunt's motion, expressly decide whether Isaacson in fact made to Hunt the alleged assurances that she did not have to do anything and he would take care of it. However, we must draw all reasonable inferences in favor of the order denying relief (Estate of Carter (2003) 111 Cal.App.4th 1139, 1154) and must assume in support of the order that the trial court resolved any factual conflicts in favor of Pokal. (Cf. Turley v. Turley (1967) 254 Cal.App.2d 169, 172.)
Isaacson, during his deposition, flatly denied giving any such assurances and testified Hunt told him that she only had $5,000 and could not afford an attorney. Hunt's purported memory of Isaacson's alleged assurances was undercut by her own statement in her July 14, 2010, declaration that before she talked with Isaacson's attorney, Hunt could not concentrate on anything. We therefore assume the trial court, resolving the factual conflict as to whether Isaacson gave the assurances, concluded he gave no such assurances. The trial court did not abuse its discretion by denying Hunt's motion to set aside the default judgment against her on Pokal's cross-complaint.
DISPOSITION
The order denying the motion of cross-defendant and appellant Gretzel Hunt pursuant to Code of Civil Procedure section 473, subdivision (b) to set aside the default judgment entered in favor of cross-complainant and respondent Ghanshyam Das Pokal, and against Hunt, is affirmed. Costs on appeal are awarded to Cross-Complainant and Respondent Ghanshyam Das Pokal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
KITCHING, J. We concur:
CROSKEY, Acting P. J.
ALDRICH, J.