Opinion
B190549
4-24-2007
EDUARDO SANDOVAL, et al., Plaintiffs and Appellants, v. UNIVERSAL CITY STUDIOS, et al., Defendants and Respondents.
Giuseppe Loche for Plaintiffs and Appellants. Paul K. Schrieffer, Michael Goodman and Wayne H. Hammack for Defendants and Respondents.
NOT TO BE PUBLISHED
Appellants, five plaintiffs in a personal injury action, appeal from an order granting respondents relief under Code of Civil Procedure section 473, subdivision (b) (hereafter section 473(b)) after judgment had been entered in appellants favor based on their acceptance of respondents section 998 settlement offers. In this appeal appellants claim the trial court erred in granting respondents relief because the court: (1) lacked jurisdiction to consider the section 473 motion; and (2) erred in finding the mistakes in the 998 offers were excusable and in determining respondents were diligent in seeking relief. As we shall explain, the trial court had authority to consider the section 473 motion. In addition, the court did not abuse its discretion in finding that the section 998 offers contained errors which resulted from respondents counsels excusable neglect and therefore properly granted the motion for relief. Consequently, we affirm.
All statutory references are to the Code of Civil Procedure unless otherwise indicated.
FACTS AND PROCEDURAL HISTORY
The facts underlying this appeal have not changed since the first appeal in this matter (case No. B177469). Consequently we adopt the facts relevant to this appeal as articulated in our opinion in case No. B177469.
During the course of the litigation, the parties engaged in settlement discussions. Thereafter, respondents counsel prepared separate section 998 settlement offers for each of the five plaintiffs. Respondents counsel, Kimberly Rivera, claimed the section 998 offers contained "inadvertent typographical errors." Specifically, Rivera asserted she intended the offers to expressly state they included the plaintiffs costs, but instead the offers stated they included the defendants costs. In her declaration, Rivera stated that she mistakenly transposed the words "plaintiffs" for "defendants."
Despite respondents counsel reissuing a number of the offers several times to address other matters, the alleged errors concerning costs were not caught or corrected. After issuing the 998 offers and amending them at least once, Rivera went on maternity leave and another lawyer from her firm, Michael Goodman, took over the matter during Riveras absence. Goodman reissued several of the offers after they had expired. These new offers also contained the same errors as to costs as included in the original offers. According to Goodman, he simply copied over the original offers changing only the dollar amount; he declared that he did not notice the error in the costs provision. Ultimately all of the appellants accepted the offers and all of the offers accepted contained the claimed errors.
On the day the matter was set for trial, February 9, 2004, counsel for both parties appeared and advised the court appellants had accepted respondents section 998 offers. At a hearing on March 9, 2004, both counsel again appeared and appellants counsel presented the court with a proposed judgment in favor of plaintiffs. The proposed judgment disclosed the terms of the 998 offers, including the purported erroneous term that the settlement offers included defendants costs. The judgment also contained provisions granting each plaintiff "costs of the suit and interest as provided by law." After both counsel reviewed the court file and assured the court that it contained the fully executed section 998 offers, the court signed appellants proposed judgment.
Appellants counsel claimed he personally served a copy of the judgment on Goodman at the March 9, 2004, hearing. Goodman, however, stated he did not recall reviewing it, and denied receiving a copy of the judgment before or during the hearing. Goodman claimed that had he seen a copy of the proposed judgment before it was executed by the court, he would have objected to the award of costs and interest to plaintiffs. The transcript of the March 9, 2004, hearing indicated the contents of the judgment were not discussed during the hearing.
Respondents counsel claims they were unaware of the errors in the section 998 offers in the judgment until they received appellants memorandum of costs.
On May 10, 2004, respondents filed a motion pursuant to section 473, subdivision (b) for relief from the judgment or for leave to file amended section 998 offers and a motion to tax costs. Respondents asserted the judgment resulted from inadvertence, mistake and excusable neglect of counsel in that the accepted 998 offers contained inadvertent errors concerning costs. Respondents also complained that the judgment included awards for costs and interest not included in the section 998 offers. Respondents counsel also attached affidavits attesting to counsels fault in the matter. Respondents argued they were entitled to relief under either the discretionary or mandatory provisions of section 473, subdivision (b). Simultaneous with filing the motion to vacate, respondents also filed a motion to tax and/or strike costs.
Appellants opposed the motions. Specifically with respect to the 473, subdivision (b) motion, appellants argued that respondents were not entitled to relief under either provision of section 473, subdivision (b) and that any error in the section 998 offers was an "intrinsic" mistake for which section 473, subdivision (b) relief is unavailable. Appellants also asserted that respondents were not diligent in seeking relief.
On June, 11, 2004, at the hearing on the section 473, subdivision (b) motion, the court indicated its view that section 473 was "absolute," and once an attorney admitted fault the judgment cannot be "held against the client." The transcript from the hearing did not reveal whether the court viewed the alleged mistake as excusable or inexcusable. The court concluded that because counsel had admitted fault, respondents were absolutely entitled to relief under section 473, subdivision (b). In granting relief, the court also found respondents motion to vacate or strike costs to be moot and took it off calendar.
Appellants appealed the order. On appeal in case No. B177469, appellants asserted various trial court errors, including that respondents were not entitled to relief under section 473, subdivision (b). Appellants contended the alleged errors in the section 998 offers were "intrinsic" and thus could not be grounds to set aside a judgment pursuant to the discretionary provision of section 473. Appellants also argued the mandatory provision of section 473 did not apply because respondents did not seek to set aside a dismissal or default judgment. Finally, appellants also asked this court to review the aspect of the courts order in which it took the motion to tax costs "off-calendar," concluding the motion was "moot"; appellants asked this court to rule that the motion to tax costs was not timely filed.
In our opinion in case No. B177469 we concluded respondents motion to vacate the judgment fell only within the discretionary, rather than the mandatory provisions of section 473, subdivision (b), and that in granting relief the trial court had relied exclusively on the mandatory provisions. We found the trial court had failed to exercise the discretion conferred upon it. Thus this court reversed the order vacating the judgment and remanded the matter to the trial court to consider respondents motion in light of the discretionary provision of section 473, subdivision (b).
We further observed that the courts rulings on the motion to tax costs (i.e., that the motion was moot and taken off calendar) were expressly dependent on the disposition of the motion to vacate the judgment. Thus, we held the reversal of the trial courts order vacating the judgment effectively served to reverse the courts rulings on the motion to tax costs. Accordingly, we denied respondents motion to dismiss the appeal of the ruling on the motion to tax costs.
On remand the matter was resubmitted to the trial court. The lower court considered the motion to vacate in light of this courts opinion in the appeal, and granted relief under the discretionary provisions of section 473, subdivision (b). In so ruling the court found that respondents motion established their entitlement because they made an "erroneous offer to settle" under section 998. The trial court cited evidence in the declarations of Rivera and Goodman who handled the settlement offers, and credited the claims of Rivera that she inadvertently transposed the parties when she prepared the original offers, thus making the offers "erroneous." The court also found that there was evidence of excusable neglect. The court found that when Rivera left for maternity leave, Goodman simply "cut and paste" the original erroneous offer to create the new offers. The court concluded that this evidence established a "reasonable excuse for failing to notice the error." The court also found that respondents counsel did not realize the error until appellants served the memorandum of costs, and thereafter diligently worked to correct the error. The court summarized its view: "Defendants have shown a reasonable excuse for the neglect because of the combination of typographical or transposing error and a change of attorneys." The court later supplemented its order to add an express finding that the motion to tax costs was moot and therefore taken off calendar.
Appellants timely appeal.
DISCUSSION
In this court appellants assert the trial court erred in granting respondents relief under section 473, subdivision (b) because the court: (1) lacked jurisdiction to consider the motion; (2) erred in finding the mistakes in the 998 offers were excusable; (3) failed to consider appellants argument that respondents mistake was intrinsic and thus not subject to relief under section 473; (4) erred in concluding respondents were diligent in seeking relief; and (5) violated the public policy, favoring voluntary settlements, which underlies section 998 when the court vacated the judgment. Finally, appellants ask this court to review the courts order concerning the motion to tax costs, asserting that it should have been rejected on the basis that it was not timely filed. As we shall explain, none of appellants contentions have merit.
I. The Trial Courts Order Granting Relief under Section 473, subdivision (b).
A. Standard of Review
An order granting relief under the discretionary provision of section 473 is subject to the abuse of discretion standard of review. (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 981.) Consequently, the trial courts determination will not be disturbed on appeal absent a clear showing of abuse. (Carroll v. Abbott Laboratories, Inc. (1982) 32 Cal.3d 892, 898.) A trial courts discretion, however, is not unlimited and must be "`"`exercised in conformity with the spirit of the law and in a manner to subserve and not to impede or defeat the ends of substantial justice." [Citations.] [¶] Section 473 is often applied liberally where the party in default moves promptly to seek relief, and the party opposing the motion will not suffer prejudice if relief is granted. [Citations.] In such situations "very slight evidence will be required to justify a court in setting aside the default." [Citations.]" (McCormick v. Board of Supervisors (1988) 198 Cal.App.3d 352, 359-360, quoting Elston v. City of Turlock (1985) 38 Cal.3d 227, 233.) "In a matter in which an issue is tried on affidavits, the rule on appeal is that those affidavits favoring the contentions of the prevailing party establish not only the facts stated therein but also all facts which reasonably may be inferred therefrom. [Citation.] When there is a substantial conflict in the facts presented by affidavits, the determination of the controverted facts by the trial court will not be disturbed on appeal. [Citation.]" (Baratti v. Baratti (1952) 109 Cal.App.2d 917, 922.) "More importantly, the discretion to be exercised is that of the trial court, not that of the reviewing court. [¶] Thus, even if the reviewing court might have ruled otherwise in the first instance, the trial courts order will yet not be reversed unless, as a matter of law, it is not supported by the record." (Martin v. Johnson (1979) 88 Cal.App.3d 595, 604.) With this standard of review in mind, we turn to appellants contentions on appeal.
B. Jurisdiction to Consider the Motion for Relief
Appellants complain the trial court lacked "jurisdiction" to consider the motion to vacate the judgment because respondents failed to comply with the requirement in section 473, subdivision (b) that "[a]pplication for this relief shall be accompanied by a copy of the answer or other pleading proposed to be filed therein, otherwise the application shall not be granted . . . ." (the "accompanied by" requirement). (§ 473, subd. (b).) Appellants assert respondents never filed a copy of any document which they proposed to take the place of the erroneous section 998 offers, and thus the trial court should have rejected their application for relief out of hand.
We observe appellants did not raise this contention in the trial court, nor did they assert it in connection with the prior appeal.
We do not agree. While it appears based on the record before this court that respondents did not submit proposed amended 998 offers in connection with their section 473, subdivision (b) motion, we are not convinced that their failure to do so deprived the trial court of jurisdiction to consider the motion.
Preliminarily we observe the "accompanied by" requirement, expressly applies to "answers" and "pleadings." Here respondents have not sought relief to file an answer. So the issue is whether the section 998 offers constitute "pleadings." The term "pleadings" generally refers to formal allegations filed by the parties containing their claims, defenses or legal arguments. Answers, complaints, replies, motions and petitions filed with the court all constitute classic examples of "pleadings." In contrast, section 998 offers are settlement proposals exchanged between the parties prior to trial or arbitration. "Accepted" section 998 offers (along with proof of the acceptance) are in the non-arbitration context, filed with the court to facilitate the entry of judgment (see § 998, subd. (b)(1).) Nonetheless, in our view, section 998 documents have more in common with basic contract documents which would otherwise not be filed in the court as would traditional court pleadings. Nonetheless, even were we to find that a section 998 offer qualified as an "other pleadings" as that term is used in section 473, subdivision (b) we would conclude that the court properly entertained the motion in this matter.
In the arbitration context, the accepted 998 offer (and proof of acceptance) are submitted to the arbitrator. (§ 998, subd. (b)(1).)
First, respondents motion to vacate the judgment did not specifically "propose" that new 998 offers be filed. Instead the section 473 motion sought relief from the judgment based on erroneous section 998 offers. Consequently, there were no "other pleadings" to be filed. Indeed, we have found no case law examples, nor have appellants cited any, where a trial court reviewing a section 473 motion for relief based on an erroneous section 998 offer required the party seeking relief to submit a corrected section 998 offer as a prerequisite to considering the motion for relief.
Second, the underlying objectives of the "accompanied by" requirement were satisfied by the evidence submitted in connection with the motion. In County of Stanislaus v. Johnson (1996) 43 Cal.App.4th 832 the court analyzed the "accompanied by" requirement in subdivision (b) and concluded that purposes of the requirement were to "screen out those applications for relief that do not assert a potentially meritorious defense"; and to demonstrate "the relief is not sought simply to delay the proceedings." (Id. at pp. 837-838.) Here the contentions in the motion and the evidence respondents submitted in support not only fully apprised appellants and the court of the claimed errors in the section 998 offers, they also provided sufficient information for the court to determine the merits.
In view of these considerations, we conclude the trial court had authority to consider respondents section 473, subdivision (b) motion.
C. The Courts Finding that the Errors in the Section 998 Offers Were Excusable
The discretionary relief provision of section 473, subdivision (b) provides in pertinent part: "The court may, upon any terms as may be just, relieve a party or his or her legal representative from a judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect." (§ 473, subd. (b); italics added.)
"A party who seeks relief under section 473 on the basis of mistake or inadvertence of counsel must demonstrate that such mistake, inadvertence, or general neglect was excusable because the negligence of the attorney is imputed to his client and may not be offered by the latter as a basis for relief." (Generale Bank Nederland v. Eyes of the Beholder Ltd. (1998) 61 Cal.App.4th 1384, 1399; italics added.) In determining whether the attorneys mistake or inadvertence was excusable, "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, 276; italics added.) In other words, the discretionary relief provision of section 473 only permits relief from attorney error "`fairly imputable to the client, i.e., mistakes anyone could have made. (Garcia [v. Hejmadi (1997)] 58 Cal.App.4th [674,] 682.) `Conduct falling below the professional standard of care, such as failure to timely object or to properly advance an argument, is not therefore excusable. To hold otherwise would be to eliminate the express statutory requirement of excusability and effectively eviscerate the concept of attorney malpractice. (Ibid.)" (Zamora v. Clayborn Contracting Group, Inc. (2002) 28 Cal.4th 249, 258.)
In Zamora, the plaintiffs attorneys legal assistant typed the word "against" instead of the phrase "in favor of" in a section 998 offer to compromise. Thus, the document "mistakenly offer[ed] to settle the matter for a judgment against the [plaintiff] in the amount of $149,999." (Zamora v. Clayborn, supra, 28 Cal.4th at p. 252.) The Supreme Court concluded that the trial court reasonably found that the mistake was excusable. (Id. at p. 259.) "The erroneous substitution of the word `against for the phrase `in favor of is a clerical or ministerial mistake that could have been made by anybody. While counsels failure to review the document before sending it out was imprudent, we cannot say that his imprudence rendered the mistake inexcusable under the circumstances. Indeed, appellate courts have routinely affirmed orders vacating judgments based on analogous mistakes made by an attorney or his or her staff." (Ibid.) Here, we conclude the trial court did not abuse its discretion in granting the motion for relief under section 473. Evidence presented in the trial court demonstrated that respondents counsel transposed the words "defendants" for "plaintiffs" in the costs provision in the original section 998 offers and that the error was a clerical or ministerial mistake that could have been made by anyone. Here, as in Zamora, we cannot say that counsels imprudence in failing to catch the error despite re-issuing the offers several times made the mistake inexcusable. Respondents counsels declarations establish that the original attorney working on the case was replaced for a time and that the second lawyer made only slight changes to the later round of offers.
Furthermore, we cannot agree with appellants claim that the trial court ignored evidence supporting their position. All of the relevant circumstances were presented to the court by both sides in their papers and there is no indication that on remand the court ignored any of the evidence. Instead the evidence presented gave rise to two contradictory inferences, namely, that respondents were always aware the offers allowed plaintiffs to seek costs and simply had a case of "buyers remorse" after the offers were accepted; or that respondents counsel made a typographical error in the section 998 offers and did not realize the error until after they received a copy of the judgment. The trial court, in the exercise of its discretion to consider and resolve conflicts in the evidence, adopted the second inference. Given that inference adopted is not implausible or unreasonable in light of the record, we will not second guess it.
Similarly we do not agree that the court failed to consider appellants argument that the mistake was an intrinsic error not subject to relief under section 473. This argument was raised in appellants briefs before the lower court and asserted at the hearing when the matter was originally argued. Consequently there is no indication the court was unaware of the contention when it considered the motion. While the intrinsic error argument was not specifically addressed in the courts order, the courts conclusion that the errors were the result of excusable neglect served to implicitly reject appellants intrinsic error theory.
In any event, in our view the evidence presented would not have supported a conclusion that the errors were "intrinsic." Courts have repeatedly held that intrinsic mistakes are professional errors in section 998 offers that cannot be set aside under section 473. In Pazderka v. Caballeros Dimas Alang, Inc. (1998) 62 Cal.App .4th 658, the court reversed the vacation of a judgment taken pursuant to a section 998 offer where the defendants counsel mistakenly failed to include any provision for attorneys fees and costs in the offer. The court reasoned "[This] is not the type of mistake `ordinarily made by a person with no special training or skill." (Id. at p. 671; see also Premium Commercial Services Corp. v. National Bank of California (1999) 72 Cal.App.4th 1493; Garcia v. Hejmadi (1997) 58 Cal.App.4th 674.) The complete omission of a fees provision amounted to an intrinsic mistake, bringing the public policy underlying section 998 directly into play. "[T]he clear purpose of section 998 . . . is to encourage the settlement of lawsuits prior to trial . . . by penalizing the party who fails to accept a reasonable offer from the other party." (Burch v. Childrens Hospital of Orange County (2003) 109 Cal.App.4th 537, 544.) "If courts could set aside compromise agreements on the grounds of mistake, section 998 judgments would spawn separate, time-consuming litigation. It bears repeating: Section 473, subdivision (b), was not intended to permit attorneys `to escape the consequences of their professional shortcomings [citation] or to insulate them from malpractice claims." (Pazderka v. Caballeros Dimas Alang, Inc., supra, 62 Cal.App.4th at p. 672.) In contrast to that in Pazderka, respondents offers were not silent on the issue of costs or fees; instead as (erroneously) written the offers stated that they included defendants or Universals costs. The reference to the fees and costs takes this case outside the province of intrinsic mistake.
In light of all of the circumstances, we conclude that the trial court did not abuse its discretion in concluding the offers contained excusable mistakes.
D. Diligence.
Appellants assert the fact that respondents did not catch the alleged errors until many months after they were made and the judgment was entered established they did not act with proper diligence, and thus their request for relief should have been denied. The trial court, however, concluded that respondents did not realize the error until they received the memorandum of costs.
The trial court did not err. Appellants claim that respondents either knew or should have known about the errors well prior to the entry of judgment. Preliminarily they claim any error should have been caught when the offers were amended by respondents counsel or when the offers were re-issued. However, respondents presented uncontroverted evidence that none of the amendments (or the reissuing of offers) involved substantive changes to the costs provision and thus, counsel was not alerted to the errors.
Respondents also presented evidence, by way of counsels declarations, that they were unaware of the errors until the costs memorandum was served. Respondents lawyer, Goodman, declared that they did not receive a copy of the proposed judgment (which would have made them aware of the errors) prior to or during the hearing at which the judgment was entered. The transcript from the hearing supports the contentions that neither the contents of the offers, nor the proposed judgment were discussed at the hearing. In addition, counsels declarations and declarations from employees at their law firm also attest that counsel did not receive a copy of the judgment after it was entered. While appellants claimed to have served respondents counsel with both the proposed judgment and actual judgment, appellants did not present any evidence to impeach the claims of lack of actual notice. "Upon presentation of . . . detailed, credible and unimpeached evidence of no actual notice-the presumption of such notice . . . cease[s] to exist. [Citation.] The only remaining effect of the `Proof of Service declaration was to enable the trial court to draw any `inference that may be appropriate." (Bonzer v. City of Huntington Park (1993) 20 Cal.App.4th 1474, 1481; italics in original.) Thus, we conclude the trial court did not err in finding respondents diligently sought relief once they were actually aware of the error in the offers.
E. Public Policy
Finally, we do not agree with appellants argument that granting relief from the judgment contravenes the public policy favoring settlements engendered in section 998. As the Supreme Court in Zamora observed: "[a]lthough the law favors settlements [citation], it only favors authorized settlements. `An attorney does not, without specific authorization, possess the power or authority to bind his client to a compromise settlement of pending litigation. [Citation.] Where, as here, an attorney makes a clerical mistake that results in a settlement on terms clearly not authorized by his client, the public policy favoring settlements has no force." (Zamora v. Clayborn Contracting Group, Inc., supra, 28 Cal.4th at p. 260, italics added by quoting court.)
In view of all of the foregoing, the trial court did not abuse its discretion in granting relief under section 473.
II. The Trial Courts Order Taking the Motion to Tax Costs "Off Calendar."
The trial court ordered the respondents motion to tax costs to be taken off-calendar because the motion was rendered moot by the order granting relief under section 473. Before this court, appellants request we determine whether the motion to tax costs was timely filed in the trial court, while respondents assert the courts order "taking the motion off-calendar" is not an appealable order or judgment.
Contrary to any suggestion in the respondents brief, respondents did not (in this appeal) file a motion to dismiss the appeal of the order concerning the motion to tax costs.
In view of our conclusion here, that the trial court properly granted respondents motion for relief from the judgment, we need not reach any of the arguments with respect to the order to tax costs. The entire matter with respect to the motion to tax costs is moot.
DISPOSITION
The order is affirmed. Respondents are entitled to costs on appeal.
We concur:
JOHNSON, Acting P.J.
ZELON, J.