Opinion
A146876
05-02-2018
ALAN BATT, Plaintiff and Appellant, v. RUE-ELL ENTERPRISES, INC., Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Alameda County Super. Ct. No. RG14740818)
Plaintiff Alan Bart (Plaintiff) appeals the trial court's order denying his motion to vacate a dismissal based on his attorney's mistake, inadvertence, surprise, or neglect (Code Civ. Proc., § 473, subd. (b) (hereafter, § 473(b)). We reverse.
All undesignated section references are to the Code of Civil Procedure.
BACKGROUND
In September 2014, Plaintiff filed a complaint for breach of contract against Rue-Ell Enterprises, Inc. (Defendant). Defendant filed a demurrer in December. Plaintiff did not file an opposition or an amended complaint prior to the April 1, 2015 demurrer hearing. The trial court granted the demurrer without leave to amend, with the following reasoning: "The Court construes counsel's failure to file an opposition as an acknowledgement that Defendant's Demurrer has merit. [Citation.] In addition, the Court declines to allow Plaintiff to file a First Amended Complaint because he has not requested permission to amend, nor has he demonstrated how he can overcome Defendant's asserted defenses by amendment." The court dismissed Plaintiff's complaint with prejudice and entered a judgment of dismissal.
The underlying facts are not relevant to this appeal.
Defendant filed a motion for attorney fees. Plaintiff did not file an opposition, but Plaintiff's counsel appeared at the May 2015 hearing on the fees motion. The court awarded fees to Defendant.
In August 2015, Plaintiff filed a motion to vacate the dismissal pursuant to section 473(b). The motion was accompanied by a declaration from Plaintiff's attorney, Peter Bonis, averring as follows. Bonis is a solo practitioner who does all his own secretarial work. In February 2015 he decided to switch calendaring software systems because his then-current system was "an unqualified disaster," causing him to miss multiple hearings. However, due to "technical complications" by the system provider, the new calendaring system was not installed until the last week in March. Bonis's billing records reflect that he spent 22.7 hours researching issues related to the demurrer in the second week of March, and that he drafted an amended complaint. Bonis believed he had mailed the amended complaint to the court for filing—although he normally uses a fax-filing service, he used mail this time in an effort to keep costs down—but he conceded he might have failed to mail the complaint. "For whatever reason, the complaint was not filed." Bonis failed to check the court's website because he believed the amended complaint had been filed and the demurrer mooted. The declaration concluded: "This entire fiasco was due to my error alone, and my client should not be prejudiced because of my unwitting mistakes."
Defendant's opposition argued Bonis "describes a bizarre set of circumstances---some of which strain credibility," and urged the court to conclude "that the trifling with the process is all part of a litigation strategy . . . ." Defendant's counsel filed a declaration averring that Plaintiff failed to timely and adequately respond to discovery, prompting Defendant to file motions to compel. Plaintiff did not file written oppositions to the motions. The motions had been set for hearing on April 9 but were dropped after the demurrer was sustained. Defendant's counsel also declared that when Bonis appeared at the attorney fees hearing, he asked the court to continue the hearing "to July 1, the day he said he had reserved for a motion under [section 473(b)]. . . . Nothing happened on July 1."
At the hearing on Plaintiff's section 473(b) motion, Bonis represented that he had prepared a supplemental declaration, which he orally recounted. He stated he mailed the amended complaint instead of fax-filing it because "[t]he client isn't paying me and I didn't have any money." He stated that he did substantial legal research on the demurrer "because I thought the issue was interesting. I liked doing legal research." Regarding the failure to oppose Defendant's discovery motions, Bonis said "the amount of additional discovery sought, I couldn't really object to it and . . . there wasn't a great deal of it," so "I'm not going to waste your time. I'm just going to give him the discovery." With respect to his representation that he had reserved July 1 for the section 473(b) hearing, Bonis stated he subsequently realized that date would not leave enough time to finish and serve the motion. Bonis emphasized, "The normal remedy I would anticipate, you would order me to pay the fees, not to cut the client out, because whatever happened, it seems the policy is the client doesn't suffer when the attorney screws up."
The supplemental declaration is not part of the record on appeal. Bonis said he did not "know if the Court is going to file it or otherwise"; the record does not reveal whether Bonis ever attempted to file it.
The court denied the motion, finding Bonis's declaration not credible to establish that the dismissal was caused by his mistake, inadvertence, surprise, or neglect, for the following reasons: "[Bonis] initially states that even though he lost track of the April 1, 2015 hearing due to a change in his office's calendaring software in February 2015, he nevertheless spent 22.7 hours conducting legal research in order to oppose the Demurrer. In paragraph 6, [Bonis] states that the problems with the calendaring system were apparently resolved by late March 2015. [Bonis], however, still did not appear at the April 1, 2015 hearing or file oppositions to the two discovery motions set on April 9, 2015. [Bonis] then explains that despite conducting three full days of legal research, he then decided to simply file a First Amended Complaint instead of an opposition. In paragraph 16, [Bonis] says that he did not check the Tentative Ruling because he believed that the First Amended Complaint had been filed. [Bonis] says that he always uses a filing service to do his court filings, but he decided in this case to send the First Amended Complaint to the Court by regular mail. [Bonis] acknowledges that there is no evidence that the First Amended Complaint was actually mailed. [Bonis] also fails to explain why he decided to deliver the important First Amended Complaint to the Court by regular mail in order to save his client money, when he had just recently performed 22.7 hours of legal research only to decide to file a First Amended Complaint instead. Based on the matters in the record, the Court believes that [Bonis] intentionally failed to oppose the Demurrer because he knew that Defendant's legal argument had merit. [Bonis], for example, did not take any prompt action after Defendant served the Notice of Entry of Judgment on his office on April 10, 2015. The Court believes that [Bonis] filed the Motion to Set Aside as a result of Defendant's recent efforts to enforce the Judgment against Plaintiff."
DISCUSSION
Defendant argues Plaintiff's opening brief on appeal fails to conform to the California Rules of Court. All undesignated rules references are to the California Rules of Court. We exercise our discretion to disregard any noncompliance. (Rule 8.204(e)(2)(C).)
Section 473(b) provides, in relevant part, "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." "If the statutory conditions are satisfied, the court must grant relief; the statute is mandatory in this regard." (Solv-All v. Superior Court (2005) 131 Cal.App.4th 1003, 1008 (Solv-All).)
Section 473(b) also authorizes discretionary relief for excusable error. (Solv-All, supra, 131 Cal.App.4th at p. 1007.)
"The meaning of section [473(b)] is a question of statutory interpretation we review de novo. [Citation.] Whether section [473(b)'s] requirements have been satisfied in any given case is a question we review for substantial evidence where the evidence is disputed and de novo where it is undisputed." (Martin Potts and Associates, Inc. v. Corsair, LLC (2016) 244 Cal.App.4th 432, 437 (Martin Potts).)
I. Causation
"The court's determination of whether the default was caused by the attorney's mistake, inadvertence, surprise, or neglect is in part a credibility determination. [Citation.] "Credibility is an issue for the fact finder . . . ; we do not reweigh evidence or reassess the credibility of witnesses. [Citation.] . . . When . . . "the evidence gives rise to conflicting reasonable inferences, one of which supports the findings of the trial court, the trial court's finding is conclusive on appeal . . . ." ' " (Cowan v. Krayzman (2011) 196 Cal.App.4th 907, 915 (Cowan).)
The trial court's stated reasons for rejecting Bonis's credibility give us some pause. For example, the trial court criticizes Bonis for failing to appear at the demurrer hearing or oppose the motions to compel when his calendaring software problems were resolved by late March, but Bonis said he thought the amended complaint mooted the demurrer hearing and he decided to provide the discovery instead of oppose the motions to compel. The court appears to question why Bonis would file an amended complaint instead of opposing the demurrer after conducting three days of research, but we fail to see why a lawyer whose extensive research revealed that filing an amended complaint would better serve their client would nonetheless oppose the demurrer. However, we defer to the trial court's credibility determination, and to the resulting findings that Bonis "intentionally failed to oppose the Demurrer because he knew that Defendant's legal argument had merit" and only filed the section 473(b) motion "as a result of Defendant's recent efforts to enforce the Judgment against Plaintiff."
Nonetheless, these findings do not support a reasonable inference that the dismissal was not caused by Bonis's mistake, inadvertence, surprise, or neglect. As Plaintiff argues, if Bonis failed to oppose the demurrer or file an amended complaint because he believed Plaintiff's case lacked merit, as the trial court found, there is no conceivable reason why Bonis would not file a voluntary dismissal to avoid exposing his client to contractual attorney fees liability. (See Civ. Code, § 1717, subd. (b)(2) ["Where an action has been voluntarily dismissed . . . , there shall be no prevailing party for purposes of this section [providing for attorney fees in contract actions]."]; Mitchell Land and Improvement Co. v. Ristorante Ferrantelli, Inc. (2007) 158 Cal.App.4th 479, 485 ["[Civil Code section] 1717, subdivision (b)(2), 'overrid[es] or nullif[ies] conflicting contractual provisions, such as provisions expressly allowing recovery of attorney fees in the event of voluntary dismissal or defining "prevailing party" as including parties in whose favor a dismissal has been entered.' "].) Indeed, the court found Bonis sought section 473(b) relief to avoid Defendant's efforts to enforce the attorney fee award. If Bonis intended to abandon the case but avoid exposing Plaintiff to attorney fees liability, he would have filed a voluntary dismissal. His failure to do so—and the resulting judgment of dismissal—can only be attributed to Bonis's mistake, inadvertence, or neglect. The trial court's findings thus do not give rise to a reasonable inference that the judgment of dismissal was not caused by Bonis's mistake, inadvertence, or neglect. (See Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627, 1633 ["While substantial evidence may consist of inferences, such inferences must be 'a product of logic and reason' and 'must rest on the evidence' [citation]; inferences that are the result of mere speculation or conjecture cannot support a finding."]; cf. Cowan, supra, 196 Cal.App.4th at p. 916 [trial court's finding that "attorney conduct did not cause the default" supported by evidence which "suggested that [the party], rather than his attorney, was the cause of the default."].)
In fact, as Plaintiff argues, an attorney affidavit need not even disclose the reasons for the mistake, inadvertence, surprise, or neglect, as long as causation is established. (Martin Potts, supra, 244 Cal.App.4th at p. 436.) "[S]ection [473(b)'s] mandatory relief provision has three purposes: (1) 'to relieve the innocent client of the consequences of the attorney's fault' [citations]; (2) 'to place the burden on counsel' [citation]; and (3) 'to discourage additional litigation in the form of malpractice actions by the defaulted client against the errant attorney' [citation]. [¶] These purposes are advanced as long as mandatory relief is confined to situations in which the attorney, rather than the client, is the cause of the default, default judgment, or dismissal. [Citations.] In other words, the purpose of the mandatory relief provision under section [473(b)] is achieved by focusing on who is to blame, not why." (Martin Potts, at p. 439.) Solv-All, supra, considered these underlying purposes in concluding the statute encompassed deliberate attorney conduct of which the client was not aware: "From the client's point of view, it doesn't matter a whit whether the default was due to gross carelessness or bad strategy; either way, the client is the one stuck with the judgment resulting from the attorney's error. In both cases, it is the attorney's 'neglect' to carry out his duty to his client that causes the problem. In both cases, the client should be entitled to relief if the attorney admits that the inaction was his responsibility." (Solv-All, supra, 131 Cal.App.4th at p. 1010.) Here, the trial court made no finding that Plaintiff agreed with or was aware of Bonis's decision not to respond to the demurrer or file an amended complaint, and there is no such evidence in the record. Under Martin Potts and Solv-All, it is sufficient that Bonis—not Plaintiff—was the undisputed cause of the dismissal, regardless of the reason why Bonis failed to act.
Jerry's Shell v. Equilon Enterprises, LLC (2005) 134 Cal.App.4th 1058 (Jerry's Shell), cited by Defendant, is distinguishable. In that case, the plaintiffs' attorney "regularly failed to respond to discovery when it was due"; "ignored" opposing counsel's requests to meet and confer; failed to respond to motions to compel; and defied an order compelling responses, "leading to a second go round of each of these wearying steps." (Id. at p. 1073.) When the defendant sought—and ultimately obtained—terminating sanctions, "appellants' counsel's obvious plan was to claim attorney fault and revive the claims through a section 473(b) motion for relief." (Id. at p. 1074, fn. omitted.) The Court of Appeal affirmed the trial court's order denying relief. (Ibid.) Unlike Jerry's Shell, there is no evidence that Bonis's strategy included a plan to seek section 473(b) relief to escape the consequences of deliberate delay. The trial court did not so find; to the contrary, the court found Bonis determined Plaintiff's claims lacked merit, in which case delay is of no benefit. (See Metropolitan Service Corp. v. Casa de Palms, Ltd. (1995) 31 Cal.App.4th 1481, 1488 ["On the face of it, allowing a default to be taken against defendants is not a rational device by which to hinder and delay the plaintiff. If plaintiff [in arguing that the default was not caused by counsel's neglect] means that defendants deliberately defaulted, with a premeditated plan to have the default set aside later, the hearing in the trial court does not suggest the court believed defendants acted in such a diabolical way."].)
Defendant also argues Bonis failed to unequivocally admit fault because, according to his declaration, he either failed to mail the amended complaint or he did mail it and it was lost or misfiled. In the latter scenario, Defendant argues, the failure to file was not Bonis's fault. But Bonis's declaration also provides that he did not check the court docket and he thus failed to ensure the amended complaint was filed—a clear omission which indisputably was his fault. And Bonis stated unequivocally: "This entire fiasco was due to my error alone, and my client should not be prejudiced because of my unwitting mistakes."
In sum, Bonis's declaration stated unequivocally that he acted alone in failing to ensure that an opposition to the demurrer or an amended complaint was filed. The trial court did not find Plaintiff had any involvement in or awareness of this decision. Under Martin Potts and Solv-All, this is sufficient to establish that the dismissal was caused by counsel's mistake, inadvertence, surprise, or neglect. To the extent Bonis's reasons for failing to act are relevant, the trial court's finding that Bonis acted intentionally after concluding Plaintiff's case lacked merit does not change our conclusion because Bonis failed to file a voluntary dismissal, which would have avoided Plaintiff's liability for attorney fees, a goal the trial court found prompted Bonis to file the instant motion. The only reasonable inference, therefore, is the judgment of dismissal was caused by Bonis's mistake, inadvertence, surprise, or neglect.
II. Proposed Pleading
Defendant argues, as an alternative ground for affirming the trial court's order, that Plaintiff's proposed pleading was inadequate. We disagree.
Section 473(b) provides an application for relief pursuant to its provisions "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 plain object of the provision [requiring a copy of the answer or other pleading] was simply to require the delinquent party seeking leave to contest on the merits, to show his good faith and readiness to at once file his answer in the event leave is granted by producing a copy of the proposed answer for the inspection of his adversary and the court.' " (Austin v. Los Angeles Unified School Dist. (2016) 244 Cal.App.4th 918, 933.)
Plaintiff filed a proposed amended complaint with his section 473(b) motion, asserting different causes of action than were asserted in his original complaint. Defendant argues the proposed pleading was insufficient because it fails to state a "viable" cause of action. Section 473(b) expressly provides: "No affidavit or declaration of merits shall be required of the moving party." This language was enacted in 1981 to abrogate a judicially-imposed requirement that movants prove the result " 'would have been different had the mistake not occurred.' " (Shapiro v. Clark (2008) 164 Cal.App.4th 1128, 1144.) Following the addition of this language, Defendant's "legal premise—that appellant must affirmatively demonstrate a 'meritorious [complaint]'—is incorrect." (Ibid.)
We express no opinion on the merits of the proposed amended complaint which, while argued in both parties' briefs on appeal, are not before us.
III. Dismissal
As a final alternative ground to affirm, Defendant argues a dismissal following the failure to oppose a demurrer is not a "dismissal" for purposes of the attorney fault provisions of section 473(b). We again disagree.
"[T]he reason the Legislature added the word ' "dismissal" ' to the mandatory provision of the statute 'was the State Bar's conclusion " 'that it is illogical and arbitrary to allow mandatory relief for defendants when a default judgment has been entered against them due to defense counsel's mistakes and to not provide comparable relief to plaintiffs whose cases are dismissed for the same reason.' " ' [Citation.] . . . 'By inserting the word "dismissal" into the mandatory provision of the statute, the Legislature now required the courts to vacate any "resulting default" or "resulting default judgment or dismissal" when the other requirements of the mandatory provision were met.' " (Gee v. Greyhound Lines, Inc. (2016) 6 Cal.App.5th 477, 490-491 (Gee).)
Defendant relies on English v. IKON Business Solutions, Inc. (2001) 94 Cal.App.4th 130 (English), which found that a defense judgment following the grant of an unopposed summary judgment motion is not a "default judgment or dismissal" for purposes of section 473(b). (English, at p. 149.) However, as explained in a subsequent decision by the same court, English expressly limited its holding to summary judgments and, "[i]n discussing English, a leading treatise has noted section [473(b)], does not provide relief from summary judgment motions because dismissals based on summary judgment are based on a determination of the merits and the plaintiff has had his or her day in court." (Gee, supra, 6 Cal.App.5th at p. 490; see § 437c, subd. (c) ["The motion for summary judgment shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."].)
In contrast, the trial court's order sustaining the demurrer contained no description or analysis of the arguments asserted in the demurrer, but relied expressly on construing Plaintiff's failure to oppose as a concession of the demurrer's merit. "[T]he word 'dismissal' was added precisely to address cases like the instant case, where the dismissal is the functional equivalent of a default for a plaintiff." (Gee, supra, 6 Cal.App.5th at p. 491 [dismissal resulting from attorney's failure to pay change of venue fees is the functional equivalent of default judgment]; see also Younessi v. Woolf (2016) 244 Cal.App.4th 1137, 1148-1149 [dismissal following attorney's failure to oppose demurer, file amended complaint after order sustaining demurrer with leave to amend, or oppose ex parte application for entry of dismissal "was the procedural equivalent of a default judgment"]; Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2017) ¶ 5:299.10 ["The distinction is whether [section] 473(b) relief is sought based on conduct or matters preceding the motion or on failure to oppose the motion. In the latter case, relief is mandatory; in the former, it is not."].)
Defendant cites rule 3.1320(f) for the proposition that the trial court "necessarily" considered the demurrer's merits. This rule provides that, when one party fails to appear at a demurrer hearing, the demurrer "must be disposed of on the merits" unless there is good cause to continue the hearing. (Rule 3.1320(f).) This does not preclude the trial court from construing any failure to oppose as a concession, as the trial court did in this case. --------
DISPOSITION
The order denying Plaintiff's section 473(b) motion is reversed and the trial court is directed to enter a new order granting the motion. Plaintiff is awarded his costs on appeal.
/s/_________
SIMONS, Acting P.J. We concur. /s/_________
NEEDHAM, J. /s/_________
BRUINIERS, J.