Opinion
NOT TO BE PUBLISHED
Appeal from an order of the Superior Court of Orange County, Super. Ct. No. 01CC10469, Robert H. Gallivan, Judge.
Law Offices of Randall S. Waier and Randall S. Waier; Cassing Law Offices and Max Craig Cassing, for Defendant and Appellant.
Law Office of Gregory Grantham and Gregory Grantham for Plaintiffs and Respondents.
OPINION
BEDSWORTH, J.
Gregory Grantham and John Saba sued Craig Brown, along with several other individuals and numerous entities, alleging causes of action arising out of a partnership dispute. The court entered the defaults of many of the defendants, including Brown, as a sanction for their failure to cooperate in discovery, and after a hearing to prove up damages, a default judgment was entered in September of 2002.
Some of the defendants, including Brown, moved to vacate the default judgment, arguing the defaults had been caused by the misconduct of their then-attorney. Ultimately, the court denied the motion to vacate on April 8, 2003.
On May 8, 2003, Brown and other defendants filed notices of appeal stating they were challenging “the ruling . . . on defendants’ motion to set aside default judgments entered April 8, 3003, and the default judgments entered on September 6, 2002.” During the lengthy period this case has been pending on appeal (due in part to a stay imposed in a bankruptcy case) we have dismissed the appeals of all appellants other than Brown. He alone continues to seek a reversal of the default judgment or of the court’s order denying the motion to vacate it.
We conclude the notice of appeal, filed eight months after entry of the default judgment, was not timely as a means of attacking that judgment; we consequently do not address Brown’s arguments challenging its propriety. Although the notice was timely as a means of challenging the court’s denial of the motion to vacate, we discern no error in that decision. The court’s ruling was based solely on its determination the evidence adduced at the hearing did not support defendants’ contention their failure to comply with discovery had been the fault of their attorney. We certainly could not say that conclusion was wrong. The order is affirmed.
FACTS
Grantham and Saba sued Mervyn Phelan Sr., Mervyn Phelan Jr. (the Phelans) and Brown, along with various business entities, alleging that the Phelans and Brown had engaged in wrongful conduct in breach of fiduciary duties owed to Grantham and Saba in connection with a partnership known as Broadway Acacia, which they owned jointly with Grantham and Saba, including the diversion of partnership assets and opportunities into other business entities owned solely by themselves. Grantham and Saba sought damages, injunctive relief, and the dissolution of Broadway Acacia.
There was a fourth individual defendant named, Michael Austin, but his involvement in the alleged scheme is unclear, and no judgment was entered against him.
Several of the defendant entities defaulted by not filing responsive pleadings, and others were either dismissed or declared bankruptcy. Still others, including the Phelans, Brown, Senior Care Industries, Inc., Broadway Acacia, LLC and Broadway Acacia, a general partnership, had their answers stricken after the court issued terminating sanctions resulting from a pattern of discovery abuse.
On September 6, 2002, a default judgment was entered, in favor of Grantham and Saba, suing individually and derivatively on behalf of Broadway Acacia LLC, and against the Phelans, Brown, Senior Care Industries, Inc., Flamingo 55 Associates, L.P., Senior Care Flamingo Management, Inc., Senior Care San Jacinto Management, Inc., Senior Care Advisors, Inc., Flamingo 55 Townhomes, Inc., and San Jacinto Partners, L.P.
On December 27, 2002, various defendants against whom the default judgment had been entered, including the Phelans, Brown, Broadway Acacia, a general partnership, Broadway Acacia LLC, Senior Care Industries, Inc. moved to set aside their defaults and default judgment. Other defendants against whom the default judgment had been entered, including Flamingo 55 Associates, L.P., Senior Care Flamingo Management, Inc., Senior Care San Jacinto Management, Inc., Senior Care Advisors, Inc., Flamingo 55 Townhomes, Inc., and San Jacinto Partners, L.P., did not move to set aside their defaults or the judgment.
Interestingly, however, still other defendants against whom the default judgment had not been entered, were also including as moving parties in the effort to set it aside. Those defendants include Evergreen Manor II, LLC, Flamingo 55, Inc., a Nevada Corporation, East-West Developers, Inc., Mervyn Phelan, Jr., trustee of the Aliso Circle Irrevocable Inter Vivos Trust dated May 15, 1998, Craig Brown as trustee of the Vista De Catalina Irrevocable Trust, and Michael Austin.
The motion sought to have the defaults set aside on the sole ground that defendants’ failure to comply with discovery obligations had been caused by the misconduct of their then-attorney, Richard Mata–an argument which applied only to the defaults entered as a result of the terminating discovery sanctions. Although the motion was originally scheduled to be heard on January 30, 2003, it was later continued to February 20, 2003, for an evidentiary hearing to explore the differing claims regarding Mata’s alleged culpability. Mata was subpoenaed to testify, and the hearing consumed four days.
The evidentiary hearing concluded on March 28, 2003, and the court denied the motion to set aside the defaults on April 8, 2003. In its order, the court explained: “attorney [Mata] did not abandon his clients and defendants were not otherwise free from negligence in allowing the defaults to be entered. Attorney [Mata] may have mishandled some routine discovery matters–but he did not ‘obliterate the existence of the attorney-client relationship.’ Carroll v. Abbott Laboratories, Inc. ([1982)] 32 Cal.3d 892. The Court finds attorney [Mata’s] relationship with defendants at the relevant times leading up to defendants’[] defaults establishes (1) [Mata] was in House counsel and maintained offices at defendants’[] business facility and utilized a common secretary who worked for defendants; (2) Had almost daily contact with defendants over approximately one year prior to his termination; (3) Primarily worked on defendants[] matters; (4) Met with Mervyn Phelan, Sr. several times per week wherein Mr. Phelan kept notes of pending litigation and [Mata’s] activities. The evidence demonstrates the failure of defendants to comply with discovery orders was orchestrated by defendants[’] intentional and willful tactics engaged in to delay, resist and otherwise abuse the discovery process by refusing to produce the requested discovery.”
On May 8, 2003, certain defendants appealed from both the September 6, 2002 judgment and the April 8, 2003 ruling quoted above, denying their motion to set aside the judgment. The appellants were: the Phelans, Brown, Broadway Acacia, Broadway Acacia, LLC, and Senior Care Industries, Inc., each of whom was a party to the default judgment; plus Evergreen Manor, II, LLC, Flamingo 55, Inc., a Nevada Corporation, and East-West Developers, Inc., who were parties to the motion to set aside the judgment, but not parties to the judgment itself.
On November 15, 2004, a notice of settlement was filed between plaintiffs Grantham and Saba, on the one hand, and the Phelans, Broadway-Acacia, Broadway-Acacia, LLC, and Senior Care Industries, Inc., aka U.S. West Homes, Inc., aka Investco Corporation (Senior Care/Investco), on the other.
On July 12, 2005, this court dismissed the appeal of East-West Developers. On July 29, 2005, we dismissed the appeals of Flamingo 55, Inc., and Evergreen Manor II, LLC.
Also, on July 29, 2005, this court dismissed the appeals of the Phelans, Broadway Acacia LLC and Broadway Acacia, in accordance with those parties’ previously filed settlement agreement. However, we did not dismiss the appeal of Senior Care Industries/Investco, because of factual disputes regarding whether its entry into the settlement agreement had been properly authorized. Thereafter, we stayed proceedings in this case while various persons and entities battled–in the bankruptcy court and elsewhere–over who was entitled to exert legal control over Senior Care/Investco, and whether its request to abandon its appeal herein should be granted. Finally, on November 8, 2007, after the bankruptcy proceeding involving Senior Care/Investco had been dismissed and this appeal could once again proceed, we finally entered the order granting the requested dismissal.
In light of the orders dismissing the appeals of all appellants other than Brown, the motions to dismiss filed by Grantham and Saba on October 27, 2003, and May 10, 2004, are moot.
Consequently, Brown is the only appellant remaining in this case.
I
Brown’s appeal attacks both the original default judgment entered against him, and the court’s subsequent order denying the motion to vacate that judgment under Code of Civil Procedure section 473.
“While a denial of a motion to set aside a previous judgment is generally not an appeal able order, in cases where the law makes express provision for a motion to vacate such as under . . . section 473, an order denying such a motion is regarded as a special order made after final judgment and is appeal able under section 904.1, subdivision (b) [see now § 904.1, subd. (a)(2)].” (Cochran v. Linn (1984) 159 Cal.App.3d 245, 249; see also Leader v. Health Industries of America, Inc. (2001) 89 Cal.App.4th 603, 611, and SJP Limited Partnership v. City of Los Angeles (2006) 136 Cal.App.4th 511, 516, fn.3.)
However, while Brown’s notice of appeal, filed on May 8, 2003, came only about a month after the court’s denial of the motion for reconsideration, that date was nearly eight months after the judgment itself was originally entered on Sept 26, 2002. So the first question we must address is whether the appeal was timely as a means of attacking that original entry of judgment. We conclude it was not.
The deadline for filing a notice of appeal from a judgment is extended when a motion to set aside the judgment pursuant to section 473 has been filed within the initial appeal period. (In re Marriage of Eben-King & King (2000) 80 Cal.App.4th 92, 108.) At the time the appeal was filed in this case, that extension was governed by (former) California Rules of Court, rule 3(b), which provided: “If, within the time prescribed by rule 2 to appeal from the judgment, any party serves and files a valid notice of intention to move–or a valid motion–to vacate the judgment, the time to appeal from the judgment is extended for all parties until the earliest of: [¶] (1) 30 days after the superior court clerk mails, or a party serves, an order denying the motion or a notice of entry of that order; [¶] (2) 90 days after the first notice of intention to move–or motion–is filed; or [¶] (3) 180 days after entry of judgment.”
The rule formerly contained in California Rules of Court, rule 3, is now found in California Rules of Court, rule 8.108.
Under that rule, even assuming no earlier deadline comes into play, the latest point at which an appeal challenging the default judgment can be filed is 180 days after entry of that judgment. Brown did not file within that period. As a consequence, his appeal is not effective as a means of challenging the propriety of the default judgment at the time it was entered, and we cannot consider those arguments.
II
The only issue properly before us is the propriety of the court’s order denying the motion to vacate the judgment pursuant to section 473. In that motion, Brown and other defendants argued that the defaults entered against them in this case had been caused by the misconduct of their former attorney, Mata. According to these defendants, Mata had not kept them sufficiently informed of discovery requests, had not properly utilized the information they had given him to prepare proper discovery responses, had not prepared oppositions to motions for discovery sanctions, had not appeared at noticed hearings, and had not kept them informed of the outcome of discovery motions. Brown and the other defendants characterized Mata’s conduct as “abject neglect and deceit in his representation of the defendants. . . .”
Somewhat confusingly, however, Brown and the other defendants also contended that Mata himself was not entirely responsible for the problem. Instead, they claimed that “[s]ome of the blame for the terminating sanctions however also lays with the plaintiffs” because they used an outdated address when they served discovery motions and other documents on Mata. The court was also faulted for sending a minute order to Mata at an improper address.
Additionally, Brown and the other defendants acknowledged that long past the point at which they contend Mata had abandoned them, he was still actively communicating with plaintiffs regarding the litigation–albeit allegedly without any mention of the discovery problems or the pending issue of terminating sanctions against some of the defendants. They suggested this meant he was “oblivious” to the threat of discovery sanctions.
Brown and the other defendants based their motion on the provision of section 473 which requires that the court “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).)
Although these defendants acknowledged they actually had no affidavit from Mata attesting to his neglect, they asserted that the other declarations they offered, when viewed in conjuction with the court record, were “adequate proof . . . tantamount to such a sworn affidavit.”
Plaintiffs Grantham and Saba opposed the motion to vacate. They noted that the mandatory relief provision contained in section 473, subdivision (b) was simply not applicable in the absence of a qualifying declaration from Mata–without regard to the alleged strength of other evidence.
Grantham and Saba also disputed much of the factual basis for defendants’ motion to vacate. They explained that while Mata may have notified the court of a change of address, he did not serve any such notice on them, thus they could not be held responsible for serving their motions and other documents to Mata at an outdated address. Moreover, they pointed out that Mata subsequently acknowledged receiving all the motions at issue, and that he actually participated in the discovery process to a substantially greater degree than acknowledged by defendants. Indeed, they claimed that Mata was, in essence, a full-time “in-house” counsel for defendants; that he maintained his office on the premises of defendant Senior Care, and that he had communicated with defendants constantly about this and other litigation at all relevant times. Among other things, Grantham and Saba noted Mata had appeared in court for the July 31, 2002 hearing regarding terminating sanctions–accompanied by defendants Mervyn Phelan, Jr., and Brown–and had argued those motions on the merits. They questioned how Phelan, Jr., and Brown could have been aware of that hearing if Mata had not kept them informed.
Finally, Grantham and Saba argued that Mata’s long course of alleged neglect, even if true, could not be construed as a mere mistake, inadvertence or “excusable neglect,” and thus would not qualify defendants for relief under the discretionary provision of section 473.
In light of the sharply contrasting descriptions of Mata’s involvement in the case, the court scheduled an evidentiary hearing to consider the issue, and Mata was subpoenaed to testify.
The hearing commenced on February 20, 2003, with Mata explaining he was hired to work in the capacity of “general counsel” by Mervyn Phelan, Sr., in about August of 2001. He was given an office on the premises of Senior Care, which he acknowledged to be Phelan’s “headquarters.” Phelan, Sr., Phelan, Jr., and Brown also maintained offices there, in close proximity to Mata’s, and they all shared a secretary. As general counsel, Mata worked on various litigation matters involving the Phelans, Brown, and their related entities, including this case. From approximately September of 2001 through September of 2002, Mata discussed legal matters with the Phelans and Brown on “a daily basis.”
Beginning in or around December of 2001, Mata began representing defendants in this case. He acknowledged attendance at hearings relating to discovery, and explained that he encouraged his clients to turn over all pertinent information in their possession. He also acknowledged participating in a meeting with the Phelans in June of 2002, where they discussed strategies to delay the litigation, including the possibility of filing a bankruptcy action involving Broadway Acacia, LLC.
Mata testified that he kept his clients aware of their discovery obligations, and of the pendency of motions relating to that discovery. He was not sure when he originally became aware of the motions for terminating sanctions, but he agreed that he knew of them prior to the dates they were ultimately heard in court. Indeed, he filed a written opposition to the motions, in which he argued that the bankruptcy filing by Broadway Acacia, LLC compelled a stay of the pending sanction motions.
Mata explained that he was kept very busy working on matters for defendants in July of 2002. On July 25, he sent a letter to Grantham in this case, stating that defendants would “not be responding to your discovery requests unless and until such time as relief from the automatic stay is granted, if it is.” On July 31, 2002, Mata appeared in court, accompanied by Brown and Mervyn Phelan, Jr., and argued that in light of the bankruptcy filing for Broadway Acacia, LLC, the discovery dispute must be stayed. At that point, Mata had not focused on the specifics of the motions, because he was relying on the bankruptcy stay to delay them.
However, when the bankruptcy court granted a motion for relief from the stay in early August of 2002, Mata filed a “flurry of discovery . . . and answers and a significant number of pleadings” in this case. Then, in late August of 2002, defendants elected to remove him as their counsel.
According to Mata, between June 1, 2002 and September of 2002, he did some amount of work for defendants on every business day. He communicated with defendants on a daily, or near-daily, basis. He denied abandoning his clients in this case.
Based upon that evidence, the trial court concluded Brown and the other defendants were not entitled to relief from default under section 473. In its ruling, the trial court correctly noted the defendants did not qualify for relief under the mandatory provision, because their application had not included an affidavit from Mata, attesting to his fault–in fact, Mata had affirmatively denied fault in the matter. The court also rejected defendants’ contention relief was warranted because, despite his protestations, Mata had effectively “abandoned” them in this litigation, by (1) causing them to be unaware of either their discovery obligations or the pendency of dispositive motions; and (2) failing to oppose those motions.
III
We begin with the proposition that “[a] motion for relief under . . . section 473 is addressed to the sound discretion of the trial court . . . .” (Carroll v. Abbott Laboratories, Inc. (1982) 32 Cal.3d 892, 897-898.) Moreover, we are required, as always to construe the evidence in the light most favorable to the court’s decision, “resolving all evidentiary conflicts and drawing all reasonable inferences in favor of the decision of the trial court. [Citation.] We may not substitute our view of the correct findings for those of the trial court; rather, we must accept any reasonable interpretation of the evidence which supports the trial court’s decision.” (DiMartino v. City of Orinda (2000) 80 Cal.App.4th 329, 336.) Applying those standards, we can discern no error in the court’s decision.
The concept of attorney abandonment is an exception to the general rule that “‘the negligence of the attorney is imputed to his client and may not be offered by the latter as a basis for relief.’” (Zamora v. Clayborn Contracting Group, Inc. (2002) 28 Cal.4th 249, 258, quoting Generale Bank Nederland v. Eyes of the Beholder Ltd. (1998) 61 Cal.App.4th 1384, 1399.) The exception applies only in “‘those instances where the attorney’s neglect is of that extreme degree amounting to positive misconduct, and the person seeking relief is relatively free from negligence. [Citations omitted.] The exception is premised upon the concept the attorney’s conduct, in effect, obliterates the existence of the attorney-client relationship, and for this reason his negligence should not be imputed to the client.’ . . . (Buckert v. Briggs [(1971) 15 Cal.App.3d 296,] 301; see also, Orange Empire Nat. Bank v. Kirk [(1968) 259 Cal.App.2d 234,] 353; Daley v. County of Butte (1964) 227 Cal.App.2d 380, 391.)” (Carroll v. Abbott Laboratories, Inc., supra, 32 Cal.3d at p. 898, italics omitted.) What the attorney abandonment cases “have in common is a total failure on the part of counsel to represent the client: each attorney had de facto substituted himself out of the case.” (Id. at p. 900, italics added.)
In this case, as the trial court correctly deduced, there was some evidence that Mata “may have mishandled some routine discovery matters.” However, there was also substantial evidence that Mata had remained actively involved in the litigation–and continued to communicate regularly with defendants about it–until they fired him.
Moreover, the evidence demonstrated Mata actually did file written oppositions to the motions for terminating sanctions. Of course, those oppositions avoided any discussion of the motions’ merits, relying instead on a strategically filed bankruptcy involving one of the defendants as a means of staying the process, but they were successful in achieving that purpose.
Indeed, there was substantial evidence suggesting that defendants’ primary litigation strategy was one of delay, rather than compliance. Assuming that to be correct (as we must in this context) we note that Mata’s alleged “failures” to keep pace with discovery actually furthered that strategy. Mata could not be said to have “abandoned” his clients if he was doing exactly the nothing that they wanted him to do, i.e., delay the case. Of course, a fundamental aspect of such delaying strategies is that they cannot succeed forever; consequently, it would not seem to be Mata’s fault that this one did not.
In light of the evidence in this case, we conclude the trial court did not err in concluding Mata never “abandoned” defendants in this case. While his efforts may not have been perfect, he persisted in them until defendants terminated the relationship. Moreover, the evidence was sufficient to support the court’s additional conclusion that defendants’ failure to comply with discovery was an “orchestrated” and “intentional” tactic designed to “delay, resist and otherwise abuse the discovery process” in this case. Given those findings, the court certainly did not abuse its discretion in denying the motion to vacate the judgment.
WE CONCUR:RYLAARSDAM, ACTING P. J., MOORE, J.
All further statutory references are to the Code of Civil Procedure.