Opinion
B223101
10-07-2011
CREDITORS ADJUSTMENT BUREAU, INC., Plaintiff and Appellant, v. LELAND W. VANDEVORT et al., Defendants and Respondents.
Law Offices of Kenneth J. Freed, Kenneth J. Freed and David E. Weeks for Plaintiff and Appellant. Hill Farrer & Burrill and Daniel J. McCarthy for Defendants and Respondents Melissa R. Hanlin, Melissa Hanlin, Trustee of the Melissa Hanlin Family Trust and Always There Nursing Care, Inc. No appearance for Defendant and Respondent Leland W. Vandevort.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. SC083553)
APPEAL from an order of the Superior Court of Los Angeles County, Norman P. Tarle, Judge. Affirmed.
Law Offices of Kenneth J. Freed, Kenneth J. Freed and David E. Weeks for Plaintiff and Appellant.
Hill Farrer & Burrill and Daniel J. McCarthy for Defendants and Respondents Melissa R. Hanlin, Melissa Hanlin, Trustee of the Melissa Hanlin Family Trust and Always There Nursing Care, Inc.
No appearance for Defendant and Respondent Leland W. Vandevort.
Creditor's Adjustment Bureau (CAB) appeals from the denial of its motion for relief from judgment under Code of Civil Procedure section 473, subdivision (b) (hereafter section 473(b)). We conclude that the trial date was not void in violation of the automatic bankruptcy stay, the mandatory relief provision of section 473(b) does not apply, and the trial court did not abuse its discretion in concluding that CAB failed to demonstrate grounds for relief under the discretionary provision.
FACTUAL AND PROCEDURAL SUMMARY
This action arises from an underlying action brought by Leland W. Vandevort against Robert E. McKee, Inc. (McKee) and its surety for breach of contract, enforcement of a payment bond, enforcement of a stop notice and declaratory relief. (Los Angeles Conty Super. Ct. Case No. EC015545). In the underlying action, a judgment for $730,193.15, including fees and costs, was awarded to McKee against Vandevort in 2002. McKee assigned its rights against Vandevort to CAB in June 2004.
CAB commenced this action in November 2004 alleging that Vandevort had fraudulently transferred his interest in real property known as the Linda Flora property to his wife, defendant Melissa Hanlin, by quitclaim in 1999, and that he did so to thwart satisfaction of the judgment obtained in the underlying action. CAB alleged that Hanlin in turn quitclaimed the property to Melissa Hanlin, trustee of the Melissa Hanlin Trust, in October 1999. The Linda Flora property allegedly was quitclaimed again in June 2000 by Ms. Hanlin, acting as trustee for the Melissa Hanlin Trust, to Always There Nursing Care, Inc. (Always There), a Nevada corporation wholly owned and operated by Ms. Hanlin. The property was allegedly transferred again in September 2004 when Always There quitclaimed it back to Ms. Hanlin. The complaint alleged that these transfers were made without adequate consideration and for the fraudulent purpose of preventing satisfaction of the judgment in the underlying action. Vandevort and Always There were named defendants in this state court action, as was Hanlin, individually, and as trustee of the Melissa Hanlin Trust. CAB sought a judgment voiding the challenged transfers, an injunction against further transfers, compensatory and punitive damages, costs of suit and attorney fees.
Before any defendant filed an answer, Vandevort filed for Chapter 7 bankruptcy in Wyoming. Notices of that filing and the automatic stay were filed in this action in January 2005. Shortly after that, counsel for CAB filed a "Notice of Automatic Stay" acknowledging the automatic stay based on Vandevort's bankruptcy petition and stating: "Pursuant to the foregoing, all actions of Plaintiff Assignee are stayed in this case, pending the outcome of the bankruptcy proceeding." The bankruptcy was transferred to the United States Bankruptcy Court, Central District of California in May 2005.
In January 2007, the bankruptcy trustee on the Vandevort bankruptcy filed an adversary proceeding in bankruptcy against Hanlin, Always There Nursing Care, Inc., Always There Nursing Care & Associates, LLC, and ATNC Limited Partnership. It sought to determine the priority of property interests and to recover preferential or fraudulent transfers of property, including the Linda Flora property. In 2008 the bankruptcy trustee's motion to intervene in this action was denied without prejudice, pending an order from the bankruptcy court giving her relief from the automatic stay.
The bankruptcy trustee then moved for an order determining that the automatic stay was inapplicable, or alternatively, for relief from the stay. Ms. Hanlin and Always There (collectively Hanlin) also moved for relief from the stay in order to seek dismissal of the state court action on standing grounds. On January 6, 2009, the bankruptcy court held a joint hearing on the applications for relief from the stay. The court rejected the standing argument made by Hanlin, ruling that CAB had not lost standing to pursue the state court action, but was barred by the stay from pursuing the action. It also ruled that the bankruptcy trustee had the right to intervene in the state action and to prosecute it on behalf of the bankruptcy estate. The written order was entered on January 21, 2009, granting relief from the stay to the bankruptcy trustee, but striking out proposed language that would have indicated the automatic stay did not apply to an action in intervention by the bankruptcy trustee. The order denying the Hanlin motion for relief from the stay was entered February 13, 2009. These orders were ultimately affirmed by the Ninth Circuit Appellate Panel in an unpublished opinion. As we discuss, this order had significant impact on the state action.
These orders by the bankruptcy court are not in the record on appeal but are found in the decision of the Ninth Circuit Bankruptcy Appellate Panel affirming the bankruptcy court's orders denying Hanlin relief from the stay and granting the trustee relief to intervene in the state action. (In re Vandevort (9th Cir. Appellate Panel 2009) 2009 WL 7809927.) We take judicial notice of that decision.
See footnote 1 above.
On March 10, 2009, the trial court granted the bankruptcy trustee's motion to intervene in the state court action. Counsel for the bankruptcy trustee and for Hanlin appeared at that hearing, but no appearance was made on behalf of CAB. In argument before the trial court, counsel who appeared disagreed about the scope of the January 21, 2009 order by the bankruptcy court granting the bankruptcy trustee relief from the stay. The bankruptcy trustee took the position that the stay was terminated for all purposes. Counsel for Hanlin objected, contending that interpretation was inconsistent with the bankruptcy court order denying his clients relief from the stay to pursue a motion to dismiss the state action. The trial court was not certain about the extent of relief from the stay granted by the bankruptcy court, and suggested that defense counsel seek clarification through a petition for writ of mandate. The court adopted its tentative decision, which is not in the record on appeal. The notice of ruling prepared by counsel for the bankruptcy trustee stated that the court granted the bankruptcy trustee's motion to intervene.
Once the court ruled the bankruptcy trustee was allowed to intervene, the discussion turned to the status of the case. Counsel for Hanlin said: "Your Honor, in adopting the tentative, you had indicated that you would consider setting a trial date and final status conference. It may be that the trustee removes this, and if she does, we'll be asking that it be remanded. I wondered whether you would want to set a trial date now or wait to see what happens?" The court indicated it was inclined to set a trial date "far out" in time to allow the parties time to file any necessary motions or take needed action. The court acknowledged that no answers had been filed by defendants. It stated: "[I]t might avoid a further appearance if necessary and then the issues of removal or motions can be decided by the parties without having to come back in and determine whether they really believe this is at issue." Counsel for the bankruptcy trustee and Hanlin agreed to this proposal. A final status conference was set for January 4, 2010 with trial to be held on the following day, January 5.
The court then raised the possibility of mediation. Counsel for Hanlin stated that a full-day mediation before a bankruptcy judge had been unsuccessful because CAB did not participate. He expressed hope that mediation in the state case with CAB, the bankruptcy trustee and defendants could resolve the matter. He indicated that most of the discovery in the state matter already had been done in the bankruptcy court. The bankruptcy trustee indicated a preference to attempt another mediation before the same bankruptcy judge before whom the prior mediation had been held. The trial court then set August 31, 2009 as the cutoff date for mediation. The court said: "All I'll tell you is that if I get to January 4th and I see no mediation, I will be miffed, and I'm going to take the trial off calendar until I can get an M.S.C. date and then put it back on calendar."
The notice of ruling by the bankruptcy trustee of the state court's March 10, 2009 ruling states: "Trial is scheduled to commence January 5, 2010 at 9:30 a.m. A Final Status Conference will be held January 4, 2010 at 8:30 a.m. A non-appearance mediation deadline was set for August 31, 2009." It is undisputed that no mediation took place following this order.
The bankruptcy trustee filed a complaint in intervention in the state action in March 2009 and removed the action to bankruptcy court on the same month. The bankruptcy court remanded the action to state court in June 2009, and in August 2009, the bankruptcy trustee requested dismissal of her complaint in intervention without prejudice.
In October 2009, Hanlin sought relief from the automatic stay in the bankruptcy court in order to proceed with the state action. The bankruptcy court granted the request on October 27, 2009 and its order was entered November 19, 2009. This order is not in the record on appeal, but a declaration by counsel for Hanlin in opposition to CAB's request for relief under section 473 states: "At the time, however, the court did not grant relief from the automatic stay to CAB to proceed with the action because it had not filed its own motion for relief from automatic stay. The Court warned the bankruptcy trustee's counsel at the October 27 hearing that it would consider a motion to compel abandonment of the trustee's fraudulent conveyance claim, if nothing was done by the trustee to re-intervene in the State Court action."
On December 10, 2009, the bankruptcy trustee and CAB filed a stipulation for relief from the automatic stay in the bankruptcy action, agreeing that CAB would be relieved from the bankruptcy stay in order to prosecute the state court fraudulent transfer action against all three defendants. That stipulation also is not in the record before us, but we have a limited opposition filed by Hanlin arguing that a noticed hearing was required before the stipulation could be approved, and that the state action should be tried before the bankruptcy adversary proceeding.
We have the bankruptcy court's form order granting relief from the stay which was filed and entered December 28, 2009. Paragraph 4 of the form states "As to Movant, its successors, transferees and assigns ('Movant'), the stay of 11 U.S.C. § 362(a) is: [¶] a. Terminated as to Debtor(s) and Debtor's(s') estate." The court did not check an alternative box under paragraph 4 which would have indicated that the stay had been modified or conditioned. Paragraph 5 stated that movant may proceed in the non-bankruptcy forum to final judgment in accordance with applicable non-bankruptcy law. The court checked a box under paragraph 7 stating that additional provisions were attached. The attached page states: "Pursuant to stipulation between Creditors Adjustment Bureau (CAB) and Helen Ryan Frazer, Chapter 7 Trustee (Trustee): [¶] 1. The automatic stay is terminated so as to permit CAB to continue prosecution of Los Angeles Superior Court Case No. SC083553 entitled Creditors Adjustment Bureau, Inc. v. Leland W. Vandevort, etc., et al. [¶] 2. Trustee shall move to intervene in said State Court action. [¶] All recoveries derived from the prosecution of the State Court action, to which CAB is entitled, shall be paid over to Trustee and be administered as property of the estate in the above-entitled bankruptcy case."
The proposed order terminating the bankruptcy stay pursuant to the stipulation was served on the bankruptcy judge and all the parties by an employee of the bankruptcy trustee on December 10, 2009. Service on the parties was by U.S. mail. The order signed by the court which was entered on December 28, 2009, was served on counsel for CAB and the other interested parties by mail on December 30, 2009.
The record also includes an e-mail by the bankruptcy court to counsel for Hanlin dated Monday, December 28, 2009 at 11:32 a.m. stating the electronic notice of the order terminating the bankruptcy stay was sent to a number of the parties. CAB is not listed as one of the parties to whom electronic notification was sent.
An answer by Always There was filed January 4, 2010 and served by mail that day on counsel for CAB. Counsel for CAB failed to appear for the January 4, 2010 final status conference. At the status conference the court asked counsel for Hanlin about the status of the case. Counsel responded with a summary of the bankruptcy trustee's actions in intervening, removing the matter, and dismissing her complaint in intervention. Counsel requested dismissal of the action because there had been no action by the bankruptcy trustee, who had not appeared for the status conference. The court said since the matter was set that day for a status conference rather than trial, it could not dismiss the action. It indicated that CAB would be given an opportunity to go forward with the trial the following day. Since no jury fees had been posted, the case was set for court trial. The court informed counsel that if CAB failed to appear and prosecute its case, the matter would be dismissed.
At oral argument we directed counsel for CAB to augment the record on appeal with the reporter's transcript of the January 4, 2010 status conference. The transcript was filed and we have reviewed it.
We do not have the reporter's transcript for the trial on January 5, 2010. The record reflects that no appearance was made on behalf of CAB. Counsel for Hanlin submitted a judgment for defendants to the court on January 5, 2010. It stated that counsel for Hanlin was present at trial, as was Vandevort, who represented himself. The proposed judgment provided that CAB take nothing against any of the defendants and that the notice of lis pendens was expunged. Spaces were provided to fill in costs awards to Hanlin, the Hanlin Trust, Always There and Vandevort. The judgment was mailed to counsel for CAB on January 5, 2010.
On January 11, 2010, CAB notified counsel for the bankruptcy trustee and Hanlin of its intent to appear ex parte for relief from judgment pursuant to section 473(b), and for leave to file a first amended complaint, with a request for immediate stay of the judgment. CAB's ex parte application was filed January 12, 2010. Counsel for CAB argued that the January 5, 2010 trial date was only for the bankruptcy trustee's complaint in intervention, not the CAB complaint, that he did not receive notice the bankruptcy stay had been lifted until after trial was completed, and that defendants and their counsel acted in bad faith in not notifying him of their intent to proceed to trial.
The motion was supported by declarations by Kenneth J. Freed, counsel for CAB, and by counsel for the bankruptcy trustee, Russell H. Rapoport. Freed declared: "I apologize to the Court for failing to appear at the Status Conference on January 4, 2010 and Trial on January 5, 2010 due to my mistaken belief that these dates were no longer viable for the reasons set forth in the moving papers. The trial was set solely in conjunction with the trustee's Complaint In Intervention, which was dismissed on August 6, 2009. I believed that the trial was taken off calendar upon the filing of the trustee's dismissal since Plaintiff was stayed from prosecuting its complaint pursuant to the provisions of 11 U.S.C. Section 362. It was not until January 5, 2010 that I learned that an order was entered terminating the stay in the bankruptcy case, and to my surprise that an answer was filed to the complaint in this action and the trial went forward in my absence. My client had no notice of these events. It is my fault that Plaintiff failed to appear at trial."
Freed acknowledged that the stay was lifted by the bankruptcy court order of December 28, 2009, but said "Plaintiff did not receive notice thereof until January 5, 2010, hours after commencement of trial. Plaintiff believed that it was still subject to the stay and that prosecuting the trial would have violated the stay." He said neither defendants nor their counsel gave any indication of intention to appear at trial. Despite a request for jury trial, counsel for Hanlin did not post fees, and did not serve trial briefs, witness lists, or exhibit lists. Freed stated he did not receive Always There's answer until January 6, 2010 and was not aware that counsel for Hanlin appeared at the January 4, 2010 status conference intending to go to trial.
In addition, Freed cited the court's comment at the March 10, 2009 hearing that the trial date would be taken off calendar if no mediation was held as a basis for his belief that the January 5, 2010 trial date had been vacated. Freed stated that defendants had refused to stipulate to vacate the judgment. He had conducted no discovery, nor had he availed himself of alternative dispute resolution processes.
Rapoport's declaration explained issues regarding his client's choices about proceeding with the bankruptcy adversary action rather than intervening in the state court action. He stated that the stipulation his client entered into with CAB for relief from the stay was filed and served on December 10, 2009. He understood the court's order of March 10, 2009 setting status conference and trial dates to apply only to litigation of the complaint in intervention. Upon his client's dismissal of the complaint in intervention, Rapoport believed "apparently mistakenly," that the trial date would have been vacated. It never occurred to him that counsel for Hanlin would file an answer, appear for trial, or that the trial would proceed when CAB was unaware the stay had been lifted and that defendants would proceed on the January 5 trial date.
Hanlin opposed CAB's ex parte application for mandatory relief from the state court judgment pursuant to section 473(b) and for leave to file a first amended complaint. The court took the matter under submission and it later ruled that there was no exigency justifying ex parte relief. The motion was denied on the merits.
The court acknowledged a split of authority as to whether the mandatory relief provision of section 473(b) applies outside the context of default, default judgment, or dismissal. It cited cases holding that a failure to appear for trial or arbitration is akin to a default and therefore mandatory relief is appropriate. But it found more recent cases holding that mandatory relief was not applicable where there was no appearance for trial or a failure to oppose a motion. It cited Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2006) paragraph 5:300.6-5:300.9. (See Vandermoon v. Sanwong (2006) 142 Cal.App.4th 315; Huh v. Wang (2007) 158 Cal.App.4th 1406.) The trial court was persuaded by the more recent cases giving a restrictive reading to the mandatory relief provision of section 473(b) and denied relief on that basis.
Turning to the discretionary relief provision of section 473(b) which applies to any judgment or order, the trial court ruled that where the motion is based on attorney error, the error must be excusable. Excusable neglect is defined as an error that a reasonably prudent person might have made under the same or similar circumstances. The court found that Freed's explanation for his failure to appear at trial "was not the result of 'excusable neglect.'" The court pointed out that Freed did not deny knowledge and notice of the trial date and did not explain what actions were taken to track the trial date, recalendar the trial, "or otherwise stay abreast of developments in this action (or the bankruptcy action)."
The trial court was not persuaded by Freed's attempt to blame opposing counsel for failing to notify him that he should appear for trial. It found: "It is unclear how Freed's reliance on opposing counsel in his representation of his client amounts to excusable neglect." The court also rejected Freed's reliance on comments made when the trial date was originally set that trial would be taken off calendar if the parties had not submitted to mediation. The court concluded: "In the end, the motion is based on Freed's statement that he mistakenly believed the trial date was 'no longer viable' because it was set when the trustee filed a complaint in intervention. . . . Freed offers no justification for this mistaken belief, or explanation for why he didn't simply call the court to confirm his assumption that the trial would not go forward as scheduled."
CAB filed a notice of intention to move for new trial on the ground of irregularity in the proceedings, abuse of discretion by the trial court, improper order, and accident or surprise, citing section 657, subdivisions (1) and (2). On February 3, 2010, judgment was entered in favor of defendants with CAB taking nothing as to Hanlin, individually and as trustee of the Melissa Hanlin Family Trust, Always There and Vandevort. CAB's motion for new trial was denied April 7, 2010. This timely appeal followed.
CAB filed but later abandoned a second appeal in this matter, from the court's order denying its motion for new trial on April 7, 2010.
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DISCUSSION
I
CAB argues the March 10, 2009 order setting the January 5, 2010 trial date was void because it was issued in violation of the automatic bankruptcy stay.
"Upon the filing of a bankruptcy proceeding, federal bankruptcy law imposes an automatic stay on all state and federal proceedings outside the bankruptcy court against the debtor and the debtor's property. (11 U.S.C. § 362(a)(1) & (2); In re Schwartz (9th Cir.1992) 954 F.2d 569, 570-572.) . . . 'The automatic stay is self-executing and is effective upon filing the bankruptcy petition. (See 11 U.S.C. § 362(a).)' (In re Marriage of Sprague & Spiegel-Sprague (2003) 105 Cal.App.4th 215, 219.) Section 362(a)(3) of title 11 of the United State Code provides for an automatic stay of 'any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate.'" (Shaoxing County Huayue Import & Export v. Bhaumik (2011) 191 Cal.App.4th 1189, 1196.)
In Matter of Roach (9th Cir. 1981) 660 F.2d 1316 (Roach),the Ninth Circuit held that publication of a notice of postponement of foreclosure sale did not violate the automatic bankruptcy stay. It explained: "The purpose of the automatic stay is to give the debtor a breathing spell from his creditors, to stop all collection efforts, harassment and foreclosure actions. [Citations.] The automatic stay also prevents piecemeal diminution of the debtor's estate. [Citation.] The automatic stay does not necessarily prevent all activity outside the bankruptcy forum. [Citation.] [¶] Here, the Bank merely maintained the status quo, and did not harass, interfere or gain any advantage. This is consistent with the purpose of the automatic stay provision. [Citation.]" (Id. at pp. 1318-1319, italics added; followed in Hicks v. E.T. Legg & Associates (2001) 89 Cal.App.4th 496, 512-513 [publication of third notice of foreclosure sale one day after the automatic bankruptcy stay issued did not violate the underlying policy of the stay.].)
Here, the order setting a trial date did not change the status quo of the case while the bankruptcy stay was in effect and thus did not violate the purpose of the bankruptcy stay as in Roach, supra, 660 F.2d 1316. As the trial date approached and no relief from the stay had been granted by the bankruptcy court, counsel for CAB should have checked with the trial court to confirm whether or not the case was on calendar for a status conference on January 4 and trial on January 5, or at least have checked with other counsel.
In addition, California courts have found that a subsequent order terminating a bankruptcy stay may validate an order made while the stay was in effect. (Raczynski v. Judge (1986) 186 Cal.App.3d 504, 510 [default judgment based on order striking defendant's answer and entering default made while bankruptcy stay in effect is valid because judgment was entered after dismissal of bankruptcy petition and termination of the stay]; see also Valencia v. Rodriguez (2001) 87 Cal.App.4th 1222, 1227-1228 [settlement entered into while stay was in effect, but where no enforcement efforts were made during pendency of stay, validated by dismissal of the bankruptcy petition.].)
We conclude that the trial date, although originally set when the stay applied, was not void.
II
CAB sought relief from the adverse judgment under both the mandatory and discretionary provisions of section 473, subdivision (b). The mandatory relief provision provides: "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." (§ 473 subd. (b).) "Under this provision, a party will be relieved if a default judgment or dismissal is the result of its attorney's mistake, inadvertence, surprise, or neglect, without regard to whether the neglect is excusable. [Citation.]" (Henderson v. Pacific Gas & Electric Co. (2010) 187 Cal.App.4th 215, 225 (Henderson).) The trial court does not have discretion to refuse relief if the prerequisites for mandatory relief are met. (Id. at p. 226.)
The discretionary provision of section 473, subdivision (b) provides: "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."
A. Mandatory Relief
"'By its express terms, the mandatory relief provision applies only to defaults, default judgments, and dismissals.'" (Henderson, supra, 187 Cal.App.4th at p. 226, quoting Huh v. Wang (2007) 158 Cal.App.4th 1406, 1415.) The Henderson court, asked to apply the provision to a summary judgment, noted that some courts had construed the mandatory provision of section 473 to reach circumstances deemed to be the procedural equivalent of defaults, default judgments, and dismissals, including cases in which a party and their attorney failed to appear for trial. (Henderson, supra, 187 Cal.App.4th at p. 226.) It explained: "'The rationale of these cases is that, where there is no hearing on the merits, an attorney's neglect should not prevent the party from having his or her day in court.' [Citation.]" (Ibid.)But other courts have rejected this approach as "'"ultimately misguided quests to salvage cases lost by inept attorneys," which "have applied the mandatory provision far beyond the limited confines the Legislature intended."' [Citations.]" (Ibid.)
The court in Henderson reviewed English v. IKON Business Solutions, Inc. (2001) 94 Cal.App.4th 130, 148 (English)and its progeny, which hold that mandatory relief under section 473 may not be extended beyond the statutorily specified circumstances of default, default judgment or dismissal. (Henderson, supra, 187 Cal.App.4th at pp. 226228.) The court concluded "English's reasoning is more persuasive and true to the statutory language and legislative intent of section 473(b). We agree that the summary judgment entered here is neither a 'default,' a 'default judgment,' nor a 'dismissal' within the meaning of section 473(b)." (Id. at p. 228.)
We followed the non-expansive reading of the mandatory provision of section 473 in Hossain v. Hossain (2007) 157 Cal.App.4th 454 (Hossain).In that case, former business partners settled a dispute, but one partner failed to file timely opposition to the other's motion to enforce the settlement agreement and was also late in filing his own motion to enforce settlement. We adopted the English court's interpretation of the terms default and default judgment as used in section 473: "'the mandatory provision of section 473(b) applies to a "default" entered by the clerk (or the court) when a defendant fails to answer a complaint, not to every "omission" or "failure" in the course of an action that might be characterized as a "default" under the more general meaning of the word.' [Citation.]" (Id. at p. 458.) Similarly, a "'"default judgment" within the meaning of section 473(b) is a judgment entered after the defendant has failed to answer the complaint and the defendant's default has been entered. [Citations.]'" (Id. at pp. 458-459.)
Based on our reasoning in Hossain, we conclude that the mandatory provision of section 473 did not apply here because judgment was entered following a trial at which CAB did not appear and there was neither a default nor a default judgment within the meaning of section 473, subdivision (b). (See Zamora v. Clayborn Contracting Group, Inc. (2002) 28 Cal.4th 249, 257 (Zamora)[in the mandatory provision of section 473, "the Legislature created a narrow exception to the discretionary relief provision for default judgments and dismissals."].)
B. Discretionary Provision of Section 473(b)
"'A ruling on a motion for discretionary relief under section 473 shall not be disturbed on appeal absent a clear showing of abuse.' [Citation.]" (Zamora, supra, 28 Cal.4th at p. 257.) Since the law favors disposition of matters on the merits, any doubts in applying section 473 must be resolved in favor of the party seeking relief from default. (Henderson, supra, 187 Cal.App.4th at p. 230.)
"'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.' [Citation.] In determining whether the attorney's 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.' [Citation.] '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.' [Citation.]" (Zamora., supra, 28 Cal.4th at p. 258.)
"The terms mistake, inadvertence, surprise, and excusable neglect warranting relief under section 473(b) are defined as follows: 'Mistake is not a ground for relief under section 473, subdivision (b), when "the court finds that the 'mistake' is simply the result of professional incompetence, general ignorance of the law, or unjustifiable negligence in discovering the law . . . ." [Citation.] Further, "[t]he term 'surprise,' as used in section 473, refers to '"some condition or situation in which a party . . . is unexpectedly placed to his injury, without any default or negligence of his own, which ordinary prudence could not have guarded against."'" [Citation.]" [Citation.] Finally, as for inadvertence or neglect, "[t]o warrant relief under section 473 a litigant's neglect must have been such as might have been the act of a reasonably prudent person under the same circumstances. The inadvertence contemplated by the statute does not mean mere inadvertence in the abstract. If it is wholly inexcusable it does not justify relief.'" [Citation.]" (Henderson, supra, 187 Cal.App.4th at pp. 229-230.)
In Generale Bank Nederland v. Eyes of the Beholder Ltd. (1998) 61 Cal.App.4th 1384, witnesses for the bank were excluded because they were not identified in its trial brief as ordered and the bank failed to otherwise provide a foundation for documentary evidence to establish a security interest. The court entered a judgment denying the bank's claim. The bank unsuccessfully moved to set aside the judgment under section 473 under both the mandatory and discretionary provisions. The Court of Appeal concluded that mandatory relief under section 473 did not apply. (Id. at p. 1397.) It also held the trial court did not abuse its discretion in denying relief under the discretionary provision of section 473. It cited authority holding that an attorney's failure to make an argument or to make a skillful presentation of a client's case, will not usually warrant relief under section 473 because it is not a mistake a reasonably prudent person would make within the meaning of section 473. (Id. at pp. 1400-1401.) The court reasoned: "Counsel's failure to discharge routine professional duties is not excusable, nor is counsel's failure to properly prepare for the hearing the conduct of a reasonably prudent person. Even if counsel's failings are characterized as mistakes of law, no relief under section 473 is warranted as 'ignorance of the law coupled with negligence in ascertaining it will certainly sustain a finding denying relief.' [Citation.] Accordingly, appellants fail to meet their burden of establishing the trial court abused its discretion under section 473." (Id. at p. 1402.)
Here, Freed failed to discharge routine professional duties by failing to track the trial date with the superior court as the case moved from state court to bankruptcy court and back, particularly in light of the intervention of the bankruptcy trustee and her later dismissal of her complaint in intervention. Instead of keeping abreast of developments in the case, he repeatedly made erroneous assumptions that the trial date had been vacated without confirming that belief with either the court or opposing counsel. Freed never appeared at any hearing in this case, instead sending "appearance" counsel in his place. Had he appeared in person, perhaps he could have clarified the status of the matter. And, most importantly, Freed does not explain why he was unaware of the December 20, 2010 request by CAB and the bankruptcy trustee, for relief from the bankruptcy stay. He can hardly claim he did not know of the stipulation to seek relief from the stay entered into by his own client. Nor does he explain why, in light of this application, he did not check with the trial court as the final status conference and trial dates approached.
At the January 4 status conference, counsel for Hanlin did not inform the trial court that the bankruptcy court had just lifted the stay as to CAB and the bankruptcy trustee and had ordered the bankruptcy trustee to reintervene in the state action. The better practice would have been to do so. But given the deferential standard of review, this omission on the part of opposition counsel is not a basis to relieve counsel for CAB from his continued failure to perform his professional duties.
On this record we find no abuse of the trial court's discretion in denying CAB relief under section 473.
DISPOSITION
The order denying relief under section 473 is affirmed. The parties are to bear their own costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
EPSTEIN, P. J. We concur:
MANELLA, J.
SUZUKAWA, J.