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Comeau v. Reese

California Court of Appeals, Fourth District, First Division
Jul 18, 2008
No. D050948 (Cal. Ct. App. Jul. 18, 2008)

Opinion


ELIZABETH E. COMEAU, Plaintiff and Appellant, v. KARI REESE, Defendant and Respondent. D050948 California Court of Appeal, Fourth District, First Division July 18, 2008

NOT TO BE PUBLISHED

APPEAL from an order of the Superior Court of San Diego County No. GIC868475, Yuri Hoffman, Judge.

NARES, Acting P. J.

Elizabeth E. Comeau, an attorney, sued Kari Reese to recover attorney fees Reese allegedly owes her as a result of legal representation Comeau provided to Reese in two legal matters. Reese did not answer Comeau's complaint and a clerk's default and default judgment were entered against her. The court granted Reese's motion to set aside the default under Code of Civil Procedure section 473.5, finding the evidence supporting her motion indicated she did not receive notice of the action in time to defend, her lack of notice was not the result of her avoidance of service of the summons and complaint or of inexcusable neglect, and the court did not have to determine whether she could show a meritorious defense.

All further statutory references are to the Code of Civil Procedure.

Comeau appeals the order granting Reese's motion to set aside the default and default judgment, contending (1) the court was required under section 473.5 to make a factual determination that Reese's lack of notice of the action was not the product of her avoidance of service or inexcusable neglect; (2) the court's failure to weigh the evidence or exercise its discretion in making a discretionary ruling overcomes the presumption of correctness on the order and warrants a reversal on appeal; (3) the court's failure to consider facts relating to Reese's knowledge of the dispute was prejudicial error; and (4) Comeau acted promptly and thoroughly in asserting her rights and was prejudiced by the court's failure to hold Reese to her burden as the moving party.

In her opening brief, Comeau also contended (5) the court was required under section 473.5 to make a factual determination that Reese had shown facts constituting a meritorious defense; and (6) the court's failure to consider the lack of facts showing a meritorious defense was prejudicial error that is punishing her with further delay and waste of time and resources. In her reply brief, however, Comeau abandons these contentions, stating she "concedes that the holding in Peralta v. Heights Medical Center, Inc. (1988) 485 U.S. 80, 85-87 negates the prior California case law requiring presentation of a meritorious defense as a necessary component to a motion to set aside a default. The trial court[']s ruling as it pertained to the issue of a meritorious defense was correct . . . ."

We conclude the court carefully considered the conflicting evidence and did not abuse its discretion in determining Reese was entitled to relief under section 473.5. Accordingly, we affirm the order.

BACKGROUND

On December 14, 2006, Timothy J. Wing, a registered process server, filed with the court a proof of service of summons attesting that he personally served Reese with copies of the summons and Comeau's complaint in this matter at 4:01 p.m. on November 23, 2006, which was Thanksgiving Day, at Reese's home in Lakeside. On December 27 of that year, Comeau requested and obtained entry of default and default judgment against Reese.

A. Reese's Motion To Set Aside the Default and Default Judgment

In late March 2007, Reese filed her motion to set aside the default and default judgment under section 473.5, asserting she had not been personally served with the summons on November 23, 2006, and she did not have actual notice of the action in time to defend against the default entered against her.

Reese also brought her motion under section 473, subdivision (d), which shall not be further discussed as it is not at issue in this appeal.

Reese submitted several declarations in support of her motion. In her own declaration, she stated she resided with Bryan Simpson and their two children, Ashley and Allen, on a 22-acre fenced parcel of land. She stated that at no time on November 23, 2006, or at any other time, was she personally served with a summons and copy of the complaint in this case. She asserted she first had notice of this action on December 29, 2006, when she received in the mail a copy of Comeau's request for entry of default. She also stated she had a meritorious defense to Comeau's complaint as indicated by her proposed answer to Comeau's unverified complaint, a copy of which she attached to her motion.

In his declaration, Simpson stated that he, Reese and their children were invited to have Thanksgiving dinner with their friend Joe Martino, and his girlfriend Dawn Lopez, at Martino's house. Simpson asserted Reese and the children left the house at about 8:00 a.m., but he was sick and stayed home. Reese, Ashley, Lopez, and Simpson's friend Jacob Price returned to Reese's home at around 2:45 p.m. to pick up some paintball gear, and Simpson visited briefly with Price before they left to go back to Martino's house. Simpson stated he was not contacted by any person who identified himself as a process server, and he did not see anyone trying to serve any court papers on the property that day.

Martino indicated in his declaration that Reese and her children arrived at his house at his invitation at around 8:30 a.m. on November 23, 2006, to spend Thanksgiving with him. Reese and Martino's girlfriend, Lopez, visited and prepared meals from about 8:30 a.m. to about 2:00 p.m. Martino stated that he, Reese, Ashley, Price and Lopez left at around 2:30 p.m. to go to Reese's house to pick up paintball gear, and they returned at around 3:00 p.m. and played paintball for a couple of hours before dinner. Reese and her children went home at around 8:45 p.m.

In his declaration, Price stated that at around 2:30 p.m. on November 23, 2006, Reese, Ashley, Lopez and he left Martino's house and drove to Reese's house to see Simpson and get paintball gear. During the time he was at Reese's house, he did not see anyone identifying himself as a process server approach Reese, and he did not see anyone attempt to give any papers to her. After Price visited briefly with Simpson, Price and the others left the residence at around 2:45 p.m., arrived back at Martino's house at around 3:00 p.m., and played paintball for a couple of hours before dinner. Reese helped Lopez in cleaning up after dinner, and Price left at around 8:45 p.m.

William A. Smelko, an attorney, also submitted a declaration in support of Reese's motion, indicating Reese retained him on the eve of the Reese v. Morrison Drilling, Inc. (Super. Ct. San Diego County, 2005, No. GIC845250) trial (hereafter the damaged well case) to substitute into the case in the place of Comeau. He ultimately received a favorable verdict for Reese, and he conducted posttrial settlement negotiations. Smelko stated that Comeau's attorney, Philip L. Gagnon, served him with a contractual lien for attorney fees claiming Comeau had rendered over 300 hours of legal services to Reese at the hourly rate of $250 for a total lien amount of $75,000. Smelko also indicated that although Reese disputed the entire amount of the lien and refused to authorize Smelko to distribute any of the settlement proceeds to Comeau, to finalize the settlement Reese and Comeau agreed that Smelko would hold $75,000 in a special trust account and distribute the balance to Reese and others pending resolution of the fee dispute between Reese and Comeau.

B. Comeau's Opposition to the Motion

In her opposition to Reese's motion, Comeau maintained that, even assuming the truth of the assertions in Reese's motion, the issues of service and notice were moot because Reese was twice served with process─first by substituted service on November 14, 2006, which was perfected by the mailing of the summons and complaint two days later on November 16, and then by personal service on November 23 of that year─but Reese chose to ignore both services; and Reese's knowledge of the action thus precluded relief from the default and default judgment.

Comeau submitted several declarations in support of her opposition. In her own declaration, Comeau discussed the two legal matters─a bankruptcy matter (Gladstone v. Reese (Bankr. S.D.Cal. 2005, No. 01-08174-H7), hereafter the bankruptcy case) and an action for damages (the damaged well case)─that are the subject of her action for fees against Reese. When Reese obtained a jury verdict awarding her damages in the damaged well case, Comeau prepared an invoice reflecting the time she had spent defending Reese in the bankruptcy case and prosecuting the damaged well case.

In his declaration, Wing stated he personally served the summons and complaint on Reese on November 23, 2006. He asserted that as he was waiting outside Reese's security gate, he saw her through a pair of binoculars and yelled out to her, "Kari Reese, you're served, I got you!" Wing stated he then placed the papers against the fence. He also stated that Reese responded by saying, "Fuck you, you asshole, no you didn't! You didn't serve me."

Comeau's attorney, Gagnon, indicated in his declaration that he engaged in discussions with Smelko as far back as February 2006 regarding Comeau's attorney fee lien in the damaged well case. Gagnon stated Smelko confirmed he would maintain the sum of $75,000 in his trust fund pending resolution of the fee dispute between Reese and Comeau. In March 2006 Smelko proposed a "walk-away" settlement under which Reese would not file a legal malpractice claim against Comeau if Comeau would agree to accept no compensation for the work she performed for Reese. In May 2006 his office served on Reese a notice of client's right to arbitration, and on June 30, 2006, he filed Comeau's complaint seeking damages from Reese. Gagnon hired Wing to effect service of process on Reese.

C. Reese's Reply

In her written reply to Comeau's opposition, Reese argued that she had meritorious defenses to the action, Wing's use of binoculars and his act of leaving copies of the summons and complaint by the fence at Reese's home did not effect personal service on her, and substituted service of process on Kelly Caston did not result in Reese having actual notice of the action.

Reese submitted several declarations in support of her reply. In her own declaration, Reese stated the call box on her electric gate had not worked since the fires in 2003. Responding to a declaration by Greg Cole that was lodged with the court in which he indicated he served the summons and complaint on a person named Kelly Caston at Reese's residence, Reese stated she had never known a person by the name of Kelly Caston, and no person by that name had ever lived at her residence as a co-tenant or as a member of her household. She stated she had experienced problems with the vandalizing or theft of her mail, and she did not receive copies of the summons and complaint allegedly mailed to her home. She indicated again she was not at home at 4:01 p.m. on November 23, 2006, when Wing claimed he used his binoculars and saw her at her residence; she did not hear Wing or any other process server call out, "Kari Reese, you're served, I got you!"; and she did not say to Wing or any other process server, "Fuck you, you asshole, no you didn't! You didn't serve me."

In his reply declaration, Simpson stated he has never known a person by the name of Kelly Caston, and no person by that name had ever lived as a co-tenant or as a member of the household at the residence he shared with Reese. He stated he did not usually receive mail at his residence "because everyone's mail has been stolen and tampered with so I usually receive my mail at a Post Office box."

D. Court's Ruling

In its tentative ruling, the court granted Reese's motion. Stating that California law favors trial on the merits, the court made the following findings: "[Reese] has filed a Declaration with her moving papers which states she did not receive actual notice of this lawsuit. [Reese] also filed a Declaration with her reply papers which responds to the evidence submitted in [Comeau's] Opposition and which essentially states that [Reese's] lack of actual notice was not caused by her avoidance of service or inexcusable neglect. Despite the submission of these Declarations, it is difficult to determine, on the evidence presented, whether [Reese] received actual notice of this action. The evidence presented by [Reese] . . . directly contradicts that presented by [Comeau] . . . . The obvious conclusion is that one or more of the Declarants is not telling the truth. [¶] The evidence submitted by [Reese] is, however, in all material aspects, competent and admissible, and indicates that [Reese] was not at her residence on the date and time that process server Wing avers he personally served her with the Summons and Complaint, and that [Reese] did not receive and was unaware of the other notices left at her residence and attempts made to serve her. . . . Therefore, given the liberal policy in favor of setting aside defaults where the evidence demonstrates the defendant did not receive actual notice of the case, the Court hereby GRANTS the motion pursuant to [section] 473.5, sets aside the Default and Default Judgment, and allows [Reese] to file the Answer attached to the moving papers . . . . [¶] The Court need not determine whether [Reese] can show a meritorious defense to [Comeau's] claims because [Reese's] Motion is based on [section] 473.5 and not on the Court's inherent power to set aside a judgment. The 'meritorious defense' requirement applies only to a Court's decision to set aside a judgment under its inherent, equitable power on the grounds of 'extrinsic fraud or mistake' [citations], which grounds are not at issue here."

Following oral argument on the motion and the court's tentative ruling, the court confirmed that ruling, stating that "in light of the declarations and the very liberal policies to favor trials on merits, the court is going to adopt its tentative ruling. That will be the order of the Court." This appeal followed.

DISCUSSION

Comeau contends the court abused its discretion in granting Reese's motion to set aside the default and default judgment because (1) the court was required under section 473.5 to make a factual determination that Reese's lack of notice of the action was not the product of her avoidance of service or inexcusable neglect; (2) the court failed to weigh the evidence or exercise its discretion in making a discretionary ruling, and such failure overcomes the presumption of correctness on the order and warrants a reversal on appeal; (3) the court prejudicially erred by failing to consider facts relating to Reese's knowledge of the attorney fee dispute; and (4) Comeau acted promptly and thoroughly in asserting her rights and was prejudiced by the court's failure to hold Reese to her burden as the moving party. These contentions are unavailing.

A. Applicable Legal Principles

"It is the policy of the law to favor, wherever possible, a hearing on the merits, and appellate courts are much more disposed to affirm an order where the result is to compel a trial upon the merits than they are when the judgment by default is allowed to stand . . . ." (Weitz v. Yankosky (1966) 63 Cal.2d 849, 854.)

Section 473.5, subdivision (a) provides: "When service of a summons has not resulted in actual notice to a party in time to defend the action and a default or default judgment has been entered against him or her in the action, he or she may serve and file a notice of motion to set aside the default or default judgment and for leave to defend the action. The notice of motion shall be served and filed within a reasonable time, but in no event exceeding the earlier of: (i) two years after entry of a default judgment against him or her; or (ii) 180 days after service on him or her of a written notice that the default or default judgment has been entered."

Subdivision (c) of section 473.5 provides that if the court finds the motion was made in a timely manner within the period permitted by subdivision (a), and the moving defendant's lack of actual notice in time to defend the action was "not caused by his or her avoidance of service or inexcusable neglect, it may set aside the default or default judgment on whatever terms as may be just and allow the party to defend the action."

A motion to set aside a default and default judgment is addressed to the sound discretion of the trial court, and, in the absence of a clear showing of abuse of discretion the trial court's order granting the motion will not be disturbed on appeal. (Weitz v. Yankosky, supra, 63 Cal.2d at p. 854; Lint v. Chisholm (1981) 121 Cal.App.3d 615, 619-620.) "The appropriate test for abuse of discretion is whether the trial court exceeded the bounds of reason. When two or more inferences can reasonably be deduced from the facts, the reviewing court has no authority to substitute its decision for that of the trial court." (Shamblin v. Brattain (1988) 44 Cal.3d 474, 478-479.)

"A judgment or order of a lower court is presumed to be correct on appeal, and all intendments and presumptions are indulged in favor of its correctness." (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133.) "The burden of demonstrating error rests on the appellant." (Winograd v. American Broadcasting Co. (1998) 68 Cal.App.4th 624, 632.)

B. Analysis

Comeau's contention that the order should be reversed because the court was required under section 473.5 to make a factual determination that Reese's lack of notice of the action was not the product of her avoidance of service or inexcusable neglect is unavailing. The court did make such a finding. Specifically, the court's minute order includes a finding that Reese "filed a Declaration with her reply papers which responds to the evidence submitted in [Comeau's] Opposition and which essentially states that [Reese's] lack of actual notice was not caused by her avoidance of service or inexcusable neglect."

Comeau also maintains that Reese "offered no facts in her declaration . . . showing her lack of knowledge of the litigation was not the product of her avoidance of service or inexcusable neglect . . . ." However, Reese's reply declaration did contain such facts. Challenging Wing's declaration indicating that he personally served Reese at her home on November 23, 2006, Reese indicated that (1) she was not at home at 4:01 p.m. on November 23, 2006, when Wing claimed he used his binoculars and saw her at her residence; (2) she did not hear Wing or any other process server call out, "Kari Reese, you're served, I got you!"; and (3) she did not say to Wing or any other process server, "Fuck you, you asshole, no you didn't! You didn't serve me." Responding to a declaration by Greg Cole indicating he effected substituted service of process by serving the summons and complaint on a person named Kelly Caston at Reese's residence, Reese stated she had never known a person by that name, and no person by that name had ever lived at her residence as a co-tenant or as a member of her household. Reese also stated she had experienced problems with the vandalizing or theft of her mail, and she did not receive copies of the summons and complaint allegedly mailed to her home.

Comeau's contention that the court failed to weigh the evidence or exercise its discretion in making a discretionary ruling is also unavailing. The reporter's transcript of the hearing on the motion shows that in confirming its tentative ruling granting Reese's motion for relief under section 473.5, the court stated it had "reviewed the material" submitted by the parties. In its minute order, the court listed all of the declarations submitted by the parties and found it was "difficult to determine, on the evidence presented, whether [Reese] received actual notice of this action" because Reese's evidence "directly contradicts" that presented by Comeau, and "[t]he obvious conclusion is that one or more of the Declarants is not telling the truth." The court further found, however, that the evidence submitted by Reese was "in all material aspects, competent and admissible, and indicates that [Reese] was not at her residence on the date and time that process server Wing avers he personally served her with the Summons and Complaint, and that [Reese] did not receive and was unaware of the other notices left at her residence and attempts made to serve her." The record thus shows the court carefully weighed the evidence and exercised its discretion in making its discretionary ruling on the motion.

Comeau also unavailingly contends the court prejudicially erred by failing to consider facts relating to Reese's knowledge of the attorney fee dispute. She complains that a "proper weighing of the evidence" would have shown that Reese was engaged in a "bald attempt at settlement extortion," and "[t]he fact [Reese] claimed legal malpractice, prepared a draft complaint, and then sat on it for over a year is an implied admission that there was no merit to the claims." Comeau points out that $75,000 in proceeds from the settlement of the damaged well case was held in trust pursuant to her attorney fees lien and Reese was served by mail with a notice of her right to arbitrate the fee dispute, and she then argues that Reese took no action to "get her money" and, "[a]mazingly, only the mailed copy of the summons and complaint didn't get to her." In effect, Comeau is asking this court to reweigh the evidence and substitute its decision for that of the trial court. This we cannot and will not do. (Shamblin v. Brattain, supra, 44 Cal.3d at pp. 478-479.) The facts Comeau claims the court did not consider were presented in the declarations supporting her opposition to Reese's motion, and we have concluded the record shows the court carefully considered all of the evidence presented by the parties. Comeau's contention that the court failed to hold Reese to her burden as the moving party is not supported by the record.

In sum, we conclude the court carefully considered the conflicting evidence in support of and in opposition to the motion and did not abuse its discretion in determining Reese was entitled to relief under section 473.5. Accordingly, we affirm the order.

DISPOSITION

The order is affirmed. Reese shall recover her costs on appeal.

WE CONCUR: HALLER, J., O'ROURKE, J.


Summaries of

Comeau v. Reese

California Court of Appeals, Fourth District, First Division
Jul 18, 2008
No. D050948 (Cal. Ct. App. Jul. 18, 2008)
Case details for

Comeau v. Reese

Case Details

Full title:ELIZABETH E. COMEAU, Plaintiff and Appellant, v. KARI REESE, Defendant and…

Court:California Court of Appeals, Fourth District, First Division

Date published: Jul 18, 2008

Citations

No. D050948 (Cal. Ct. App. Jul. 18, 2008)