Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. BC394598. John P. Shook, Judge.
Michael S. Traylor for Defendants and Appellants.
Wolf, Rifkin, Shapiro, Schulman & Rabkin and Jeffrey I. Abrams for Plaintiffs and Respondents.
MALLANO, P. J.
Plaintiffs obtained a default judgment against defendants for over $160,000 after the trial court denied a series of motions by defendants to set aside the clerk’s entry of default and defendants’ motion to quash service of process. On appeal from the default judgment, defendants seek review of the foregoing rulings. We conclude that the trial court properly denied the motion to quash, but we reverse the default judgment because the trial court erred in denying relief from the entry of default under the mandatory relief provision of Code of Civil Procedure section 473, subdivision (b) (section 473(b)).
BACKGROUND
In July 2008, plaintiffs Jay Shapiro and Sunrise Media Group, Inc., filed a complaint for breach of contract and fraud against defendants, Delaware corporations Professional Interactive Entertainment, Inc. (PIE), Global Gaming League, Inc. (League), Global Gaming Management, Inc. (Management), and Brett W. Hawkins and Ted Owen. Hawkins and Owen are alleged to be officers, shareholders or directors of PIE. The complaint alleged that on January 1, 2008, plaintiffs and PIE entered into a written agreement whereby plaintiffs agreed to provide financial consulting services to PIE and the other defendants in exchange for which defendants agreed to pay plaintiffs $14,000 per month for 12 months. Although plaintiffs rendered services to defendants through May 2008, defendants failed to pay the compensation due under the contract beginning in May 2008. Plaintiffs sought damages in excess of $112,000, attorney fees, and costs.
According to the proofs of service, Hawkins was personally served on August 4, 2008, at an address on Culver Boulevard in Los Angeles, which is the address for both PIE and defendants’ attorney, Michael Traylor. At the same time and location, the three Delaware corporations were served by delivering the summons and complaint to Hawkins, alleged to be each corporation’s “agent authorized to accept service of process, ” and Owen was served by substituted service when the summons and complaint were left with Hawkins and copies were mailed to Owen at the Culver Boulevard address. Owen’s default was entered by the clerk on September 16, 2008; the defaults of Hawkins and the corporations were entered on September 11, 2008. Copies of the requests for entry of default were mailed to the defendants (except for Owen) at an address on Cloverfield Boulevard in Santa Monica. According to Traylor, the Santa Monica address is a former address; defendants moved their offices in May 2008 to the Culver Boulevard address. The registered agent for service of process in California on PIE and League is an individual at an address on Seventh Street in Santa Monica. Management does not operate in California and its registered agent for service of process is in Dover, Delaware.
On September 22, 2008, Hawkins, Owen, and PIE filed a notice of demurrer. On September 26, 2008, Traylor, on behalf of all defendants, filed a case management statement. On October 17, 2008, defendants filed an “ex parte application to set aside default and file answer.” The application made the unsupported assertion that service on the defendants was improper, but the point was unsupported by any authority and no request was made to quash service of process. The trial court denied the application without prejudice.
In early December 2008, plaintiffs’ attorney filed a motion to be relieved as their counsel, and the motion was granted on December 29, 2008. Meanwhile, on December 17, 2008, defendants filed a motion to set aside default and file an answer based on the grounds of improper service of process and on “attorney fault” under section 473(b). The motion, scheduled for a hearing on January 16, 2009, was supported by Traylor’s December 15, 2008 declaration wherein he stated that he was the general counsel and attorney of record for PIE and the other named defendants; he was in trial in San Diego on August 1, 2008, and then left for a vacation, returning to his office on August 18, 2008, when he was inundated by numerous matters and personal obligations. Sometime in late August, he received plaintiffs’ summons and complaint by mail, the documents having been forwarded from “our prior address” on Cloverfield Avenue in Santa Monica. Mail forwarded from Santa Monica took from eight to ten days to be redirected to their current address. Upon discovering the instant lawsuit, Traylor prepared a notice of demurrer and an answer, both of which he served and “submitted to the court.” Traylor spoke with Shapiro and Shapiro’s attorney. Traylor further stated that “[w]ithout regard to the questionable personal service of the Summons and Complaint, the foregoing have certainly caused any default to be taken as a result of surprise, inadvertence and/or excusable neglect.” Traylor claimed that “[d]efendants have a legitimate defense to this matter....”
Section 473(b) provides in pertinent part: “Notwithstanding any other requirements of this section, the court shall, whenever an application for relief is made no more than six months after entry of judgment, is in proper form, and is accompanied by an attorney’s sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect, vacate any (1) resulting default entered by the clerk against his or her client, and which will result in entry of a default judgment, or (2) resulting default judgment or dismissal entered against his or her client, unless the court finds that the default or dismissal was not in fact caused by the attorney’s mistake, inadvertence, surprise, or neglect. The court shall, whenever relief is granted based on an attorney’s affidavit of fault, direct the attorney to pay reasonable compensatory legal fees and costs to opposing counsel or parties.”
On January 9, 2009, plaintiffs filed a notice of non-opposition to defendants’ motion to set aside the default based upon the attorney’s declaration of fault. Plaintiffs did not object to defendants’ request to file an answer, but requested reasonable attorney fees and costs under section 473(b). Notwithstanding plaintiffs’ non-opposition, the motion was argued and denied without prejudice on January 16, 2009. According to plaintiffs, the motion was denied without prejudice “based in part on the insufficiency of Mr. Traylor’s Attorney Affidavit of Fault, in which Mr. Traylor failed to accept personal responsibility for the failure of Defendants to respond to the Complaint on a timely basis.” According to Traylor, the motion was denied without prejudice because the court requested a more detailed declaration from him.
On February 17, 2009, defendants filed another motion to set aside their defaults on the same two grounds raised in the previous motion. Traylor’s February 11, 2009 declaration contained similar information as his December 2008 declaration, with the following additional information: Traylor diligently inquired within PIE, including its registered agent Thierry Tchokonte; neither Tchokonte nor any of the corporate officers were personally served with the summons and complaint; and Traylor’s search of the files revealed that only a mailed copy of the summons and complaint was received in the office. Traylor asserted that the summons and complaint were neither properly nor personally served, but “it is possible that more expedient action on my part would have resulted in the responsive pleadings being filed and served prior to Plaintiff’s request to enter default. In such event, it was a result of my workload and having been out of the country when the pleadings were served by mail that resulted in the default being entered. To this extent, the default was taken by mistake, surprise and excusable neglect. However, ultimately, the improper service of the Summons and Complaint is fatal to Plaintiff’s opposition....” Traylor also declared that when he discovered the existence of the lawsuit, he prepared a notice of demurrer and an answer, “both of which have been served and submitted to the Court.”
Plaintiffs filed opposition to the motion, asserting that defendants indeed were properly served and that Traylor’s declaration was still insufficient because he failed to acknowledge error and accept responsibility for the failure to file a timely response to the complaint. Plaintiffs also argued that Traylor’s neglect was not excusable and that no explanation was provided for the six-week delay between the end of August and mid-October 2008, when he first attempted to set aside defendants’ defaults with an ex parte application.
On March 17, 2009, the court denied defendants’ motion with prejudice. Traylor appeared at the March 17 hearing by “courtcall, ” with the permission of the court clerk because he was appearing in another matter at another courthouse. After his other matter was concluded, Traylor called the court clerk, who told him that defendants’ motion was denied.
Three days later, on March 20, 2009, defendants filed another motion seeking (1) to quash service of the summons and complaint on all defendants for improper service, (2) to relieve defendants of default under section 473(b), and (3) to reconsider the previous motion to set aside defendants’ defaults. The motion was supported by the declarations of Traylor and Hawkins. Hawkins declared that he is not the registered agent for service of process for PIE, League, or Management; he did not accept personal service and had not been personally served on behalf of himself, Owen, or any of the foregoing corporate entities. But Hawkins acknowledged receiving mail which was forwarded from their prior Santa Monica address in August and September 2008, and after that time he had received mail regarding this case at the company’s Los Angeles address.
Traylor’s March 18, 2009 declaration explained that the registered agent for service of process on PIE and League in California was Owen, with an address on Seventh Street in Santa Monica; the name and address of their registered agent was readily available on the Web site for the California Secretary of State and the information pertaining to the registered agent has not changed in the last two years. There is no registered agent for Management in California, as the corporation does not operate in California; its registered agent for service of process is located at an address in Dover, Delaware, which information is readily available on the Web site for the Delaware Department of Corporations and the information has not changed in the last two years. Traylor further explained that Tchokonte is a registered agent for another corporate entity not named in plaintiffs’ complaint. Neither Owen nor Tchokonte was personally served with the summons and complaint in this matter.
According to Traylor, “there is no indication that anything other than a mailed copy of the summons and complaint was ever received in the offices. The mailed documents were not mailed to the current address [on Culver Boulevard in Los Angeles]. All such documents were mailed to the former [Santa Monica address] and later forwarded to the current address.” In late August 2008 when Traylor returned from a vacation he saw that a summons and complaint had been mailed to the Santa Monica address, but “I did not place any urgency on filing a responsive pleading as proper service had not been effectuated.” Traylor also admitted that “it was as a result of excusable neglect, inadvertence (due to my workload) and mistake (the assumption that no default would be sought in the face of improper service) that I did not file a responsive pleading earlier.”
Plaintiffs opposed the motions to quash and reconsider on numerous grounds but did not provide any declaration to contest the information set out in defendants’ declarations. After a hearing on April 13, 2009, the court denied all defendants’ motions with prejudice. Plaintiffs’ request for sanctions was denied. A default prove-up was scheduled for April 29, 2009.
After a default prove-up, the court rendered a judgment in favor of plaintiffs and against all defendants for $161,933.66. Defendants filed a timely notice of appeal from the judgment, purposely declining to designate any reporter’s transcripts on appeal. We interpret appellants’ briefs to challenge the rulings denying their motions to set aside their defaults and the ruling denying their motion to quash service of process.
DISCUSSION
A. Motion to Quash
We conclude that the trial court properly denied the defendants’ motion to quash because the record shows that the defendants made a general appearance in the action before they sought to quash service of process, thus curing any defects in service. In October 2008, defendants filed their ex parte application requesting the court to set aside their defaults on the basis of section 473(b). That application was not joined with any request to quash service of process.
Code of Civil Procedure section 418.10 (motion to quash service of summons) provides in pertinent part: “(d)... [N]o motion under this section, or under Section 473 or 473.5 when joined with a motion under this section, or application to the court or stipulation of the parties for an extension of the time to plead, shall be deemed a general appearance by the defendant.”
“A general appearance occurs when the defendant takes part in the action or in some manner recognizes the authority of the court to proceed. [Citations.] If the defendant confines its participation in the action to objecting to lack of jurisdiction over the person, there is no general appearance.” (Dial 800 v. Fesbinder (2004) 118 Cal.App.4th 32, 52.) Thus, “‘“a general appearance operates as a consent to jurisdiction of the person, dispensing with the requirement of service of process, and curing defects in service.”’” (Ibid.) “[A] party who seeks relief on any basis other than a motion to quash for lack of personal jurisdiction will be deemed to have made a general appearance and waived all objections to defects in service, process, or personal jurisdiction.” (Ibid.)
Although defendants could have filed a combined application to set aside their defaults with a motion to quash under Code of Civil Procedure section 418.10 (see ante, fn. 2), and they would not have made a general appearance thereby, defendants did not do so. Rather, they sought to quash service of process for the first time on March 20, 2009, after they had made general appearances on three previous requests for relief under section 473(b). Because defendants had already made a general appearance in the action, the trial court properly denied defendant’s March 20, 2009 motion to quash service of process.
B. Motion to Set Aside Defaults
An order denying a motion to vacate a default is not independently appealable but may be reviewed on appeal from the subsequently entered default judgment. (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 981.) Because the law favors disposing of cases on their merits, any doubts in applying Code of Civil Procedure section 473 must be resolved in favor of the party seeking relief and orders denying such relief are scrutinized more carefully than an order permitting trial on the merits. (Id. at p. 980.)
“Mandatory relief [under section 473(b)] is available ‘whenever an application for relief is made no more than six months after entry of judgment, is in proper form, and is accompanied by an attorney’s sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect....’ (§ 473, subd. (b).) ‘[I]f the prerequisites for the application of the mandatory provision of [section 473(b)] exist, the trial court does not have discretion to refuse relief.’ (Leader v. Health Industries of America, Inc. (2001) 89 Cal.App.4th 603, 612....) Thus, to the extent that the applicability of the mandatory relief provision does not turn on disputed facts, but rather, presents a pure question of law, it is subject to de novo review. (Ibid.) Where the facts are in dispute as to whether or not the prerequisites of the mandatory relief provision of [section 473(b)] have been met, we review the record to determine whether substantial evidence supports the trial court’s findings. [Citation.]” (Carmel, Ltd. v. Tavoussi (2009) 175 Cal.App.4th 393, 399 (Carmel).)
The “attorney fault” language was added to section 473 in 1988. (Carmel, supra, 175 Cal.App.4th at p. 399.) The purpose of the amendments was threefold: to relieve the innocent client of the consequences of the attorney’s fault; to place the burden on the attorney; and to discourage additional litigation in the form of malpractice actions by the client. (Id. at p. 400.) Thus, the mandatory provision of section 473(b) protects only the innocent client and provides no relief for the client who participates in conduct leading to the default. (Ibid.) But where there is no evidence showing that the clients were aware of the attorney’s decision to delay filing an answer, or that they suggested or agreed that he should do so, the clients do not share responsibility for the delay. (Id. at p. 401.) The mandatory relief provision is an exception to the general rule that the client is chargeable with the negligence of his or her attorney. (Prieto v. Loyola Marymount University (2005) 132 Cal.App.4th 290, 296, fn. 6.)
Accordingly, relief is mandatory under section 473(b) when a declaration complying with section 473(b) is filed, even if the attorney’s neglect was inexcusable. (Carmel, supra, 175 Cal.App.4th at p. 401.) And a declaration or affidavit is sufficient under this provision if the attorney provides facts showing that he or she was at fault, notwithstanding the attorney’s contrary belief or attempt to deflect fault from himself or herself. (Ibid.) One court has characterized the mandatory relief provision of section 473(b) as the “attorney-falls-on-sword” provision. (In re Marriage of Heggie (2002) 99 Cal.App.4th 28, 33, fn. 5.)
Plaintiffs maintain that the absence of a reporter’s transcript is “fatal to an appeal based entirely upon alleged abuse of discretion by the trial court, ” and we should thus refuse to consider the merits of the appeal. We disagree.
Plaintiffs place a great deal of reliance on Wagner v. Wagner (2008) 162 Cal.App.4th 249 (Wagner). In Wagner, the Court of Appeal refused to review the merits of a ruling denying a motion by a trustee of a decedent’s living trust to set aside an order settling the trust under the discretionary relief provision of section 473(b) (requiring a showing of mistake, inadvertence, surprise, or excusable neglect) because the appellant failed “to provide us with a transcript of the hearing on the motion or a copy of the court’s minute order denying the motion. All that has been provided is a copy of the notice of ruling prepared by [appellant’s] counsel following the hearing. The absence of a record concerning what actually occurred at the hearing precludes a determination that the court abused its discretion.” (Wagner, supra, 162 Cal.App.4th at p. 259.)
The appellate decision in Wagner does not specify whether the motion for relief was written or oral, and if written, the nature of the evidence supporting the motion. The opinion does not indicate whether there was any opposition to the motion but provides only the following factual background on the motion: “[Appellant’s] counsel then moved under [section 473(b)] for an order setting aside the order settling the Trust. The probate court denied the motion on February 28, 2007.” (Wagner, supra, 162 Cal.App.4th at p. 254.)
Wagner is factually distinguishable from the instant case. Here, there is no question as to the evidentiary support for the motions (that is, Traylor’s declarations), plaintiffs did not submit any evidence creating a conflict with respect to Traylor’s declarations, and the parties agree as to the basis for the trial court’s denial of defendants’ motions - the purported insufficiency of the attorney declaration of fault. Accordingly, we conclude that our record, which contains all the evidence submitted in support of and in opposition to the motions, is adequate for meaningful review on the merits.
The instant case is also distinguishable from a host of cases cited by plaintiffs involving either records which do not show that a point was raised in the trial court and thus preserved for appeal or records which fail to show the rationale or basis for the trial court’s ruling. (Maria P. v. Riles (1987) 43 Cal.3d 1281, 1295–1296 [without statement of decision or settled statement of proceeding, appellant was unable to show the trial court erred in failing to apply lodestar adjustment method in awarding attorney fees]; Boeken v. Philip Morris, Inc. (2005) 127 Cal.App.4th 1640, 1671–1672 [contention that trial court erred in failing to give instruction rejected because no record that party requested instruction and that trial court refused it]; Interinsurance Exchange v. Collins (1994) 30 Cal.App.4th 1445, 1448 [monetary sanction order not reviewable because record did not reveal basis for order]; Rossiter v. Benoit (1979) 88 Cal.App.3d 706, 712 [appellant’s failure to object in trial court to exhibits attached to demurrer waived point on appeal that demurrer improperly went beyond face of complaint]; Wetsel v. Garibaldi (1958) 159 Cal.App.2d 4, 10 [on appeal from order confirming arbitration award, where there is no transcript of oral proceedings in trial court, we presume court, on proper facts, determined factual issue adversely to appellant].)
The following cases are inapposite because they present situations where the appellate record did not include part or all of the evidence, documents, or arguments before the trial court and therefore the record was incomplete or insufficient to evaluate the sufficiency of the evidence, whether any error occurred, or whether an error was prejudicial: Ballard v. Uribe (1986) 41 Cal.3d 564; Vo v. Las Virgenes Municipal Water Dist. (2000) 79 Cal.App.4th 440; Estate of Fain (1999) 75 Cal.App.4th 973; Hodges v. Mark (1996) 49 Cal.App.4th 651; Null v. City of Los Angeles (1988) 206 Cal.App.3d 1528; Sui v. Landi (1985) 163 Cal.App.3d 383; Calhoun v. Hildebrandt (1964) 230 Cal.App.2d 70; Ehman v. Moore (1963) 221 Cal.App.2d 460.
In re Kathy P. (1979) 25 Cal.3d 91 is inapposite because it involved the rule that in criminal appeals the waiver of the right to court-appointed counsel may not be inferred from a silent record and held that rule inapplicable in juvenile traffic infraction cases.
Walker v. Superior Court (1991) 53 Cal.3d 257 actually supports the defendants’ position herein. In Walker, our Supreme Court upheld the judgment of the Court of Appeal granting writ relief on the ground of the trial court’s abuse of discretion in transferring cases to the municipal court because only one inference regarding the amount of the damage award could be drawn from the facts of the cases. The Supreme Court rejected a factual argument made by respondent to uphold the trial judges’ reasoning because the record did not include a transcript of the trial court hearings. Thus, Walker stands for the proposition that appellate courts can properly conclude the trial court abused its discretion in the absence of a transcript of the hearing.
Of no avail to plaintiffs is Buckhart v. San Francisco Residential Rent etc. Bd. (1988) 197 Cal.App.3d 1032, in which the superior court granted a petition for writ of administrative mandate without a complete administrative record; the Court of Appeal declined to declare a waiver or to presume that the parties consented to the trial court’s action; rather, the appellate court determined that it would best serve the ends of justice to reverse the judgment and direct the superior court to remand to the agency to prepare a complete record for the use of the superior court. (Id. at p. 1036.)
Turning to the merits, we conclude that Traylor’s February 11, 2009 declaration is sufficient to accept fault for the failure of his clients to file a timely response to the complaint, notwithstanding his opinion that service was improper. There is no evidence that the clients participated in any conduct which led to the defaults. Traylor admits that he returned to his office and learned of this lawsuit in late August 2008, but he did not file his notice of demurrer until after the defaults were entered in September 2008. The evidence is thus undisputed that the entry of defendants’ defaults was caused by Traylor’s failure to act in a timely manner. Traylor’s declaration establishes the element of attorney fault sufficient for relief under the mandatory relief provision of section 473(b).
But an additional requirement for relief based on attorney fault is that the defendants’ proposed answer must accompany the motion. (Carmel, supra, 175 Cal.App.4th at p. 402.) Plaintiffs did not oppose defendants’ motions on the ground that they were not accompanied by defendants’ proposed answer to the complaint, and they do not raise this issue on appeal. Nevertheless, it would have been error for the trial court to deny relief on March 17, 2009, based on the absence of the proposed answer because the evidence was undisputed that Traylor “submitted” defendants’ proposed answer to the court and served it on plaintiffs by December 2008, albeit shortly after their defaults were entered by the clerk.
Under similar circumstances, the court in Carmel held that defendants’ proffer of a proposed answer at the hearing was sufficient to constitute substantial compliance with the requirement. In reversing a default judgment, the court in Carmel reasoned as follows: “We do not know whether defendants’ counsel inadvertently failed to accompany the motion with their proposed answer, or whether the proposed answer simply did not find its way into the court’s file. But we perceive no reason why the court could not have reviewed the proposed answer proffered at the hearing and ordered it filed. Carmel did not assert the absence of a proposed answer as a basis for opposing the motion and would have suffered no prejudice if the court allowed defendants to file the answer at the hearing. [¶]... [W]e conclude defendants’ proffer of their proposed answer at the hearing on their motion in the present case substantially complied with the requirements of the mandatory relief provision of [section 473(b)]. Accordingly, the default judgment must be reversed and the default vacated, allowing defendants to file their answer.” (Carmel, supra, 175 Cal.App.4th at p. 403.)
Because the trial court erred in denying defendants’ motion to set aside their defaults on March 17, 2009, the default judgment must be reversed on this ground.
DISPOSITION
The default judgment is reversed and the cause is remanded to the trial court with directions that the trial court grant defendants’ motion to set aside their defaults filed on February 17, 2009, and afford defendants a reasonable time to file their answers to the complaint. The trial court shall also direct Michael Traylor to pay reasonable compensatory legal fees and costs to opposing counsel or parties in connection with the defendants’ motions for relief from default in the trial court through March 17, 2009. In the interests of justice, the parties are to bear their own costs on appeal.
We concur: ROTHSCHILD, J. JOHNSON, J.