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Kalbak v. Chavez

Court of Appeals of California, Second District, Division Six.
Nov 4, 2003
2d Civil No. B161988 (Cal. Ct. App. Nov. 4, 2003)

Opinion

2d Civil No. B161988.

11-4-2003

SAKO KALBAK, Plaintiff and Respondent, v. ARMIDIA CHAVEZ, Defendant and Appellant.

Horvitz & Levy, Barry R. Levy, Karen M. Bray; and Timothy J. Hogan for Defendant and Appellant. Ball & Yorke, Allen R. Ball and Esther R. Sorkin for Plaintiff and Respondent.


Defendant Armidia Chavez appeals a default judgment after the trial court denied her motion for relief from default. We conclude that the trial court erred by not setting aside the default for Chavez. The default was the result of a mistake by a claims agent of her insurance carrier who believed the case would settle and that Kalbak would not request a default. We reverse.

FACTS

Plaintiff Sako Kalbak sued Chavez for personal injuries he sustained in an automobile accident involving Chavez. A. Jones, a process server, filed a declaration of service stating he served the summons, complaint and a statement of damages on Chavez on April 24, 2002. The statement of damages listed $ 101,396 for current and future medical expenses, $22,550 for property damage, $36,000 for loss of earnings and $800,000 for general damages.

On April 18, 2002, Allen Ball, Kalbaks attorney, sent a letter to Platinum Claims Services, Inc. (Platinum), the claims agent for Millennium Insurance Company (Millenium), Chavezs insurer. Ball stated, "No extensions of time in which to answer or respond to the suit will be considered or granted. If a timely response is not entered on behalf of . . . Chavez, a Default will be taken."

On April 30, Kalbaks attorney served Chavez with an offer to compromise under Code of Civil Procedure section 998 (998 offer). It stated, "Kalbak . . . hereby offers to allow a judgment to be taken against . . . Chavez, for the sum of Fifteen Thousand Dollars . . . ."

On May 8, Darian Rush, a non-attorney claims representative for Platinum wrote Ball stating, "We received your 998 [offer] and suit. Before we answer the suit, we want to see if we settle the case." On May 31, Kalbak filed a request to enter a default against Chavez, and the Clerk entered the default on the same day.

On June 4, Rush wrote Ball a letter stating, "We represent Millenium Insurance Company. We accept your 998 offer to compromise."

Kalbak testified at the default hearing about his injuries and damages. The court awarded him $396,616.49. It found Kalbak proved medical specials of $7,296, $14,320.49 for loss of earnings, and general damages in the amount of $375,000.

Chavez filed a motion to set aside default and for entry of judgment based on her acceptance of the 998 offer. It was supported by the declarations of Rush and T. J. Stephens, Chavezs counsel. Stephens summarized a series of communications with Balls office which started on June 18. Rush said, "It was my understanding that we were working towards resolution of this matter through the CCP § 998 Offer to Compromise and so I did not send this case out to defense counsel." The court denied the motion.

Millennium filed a motion to intervene and set aside the default. It said it was the real party in interest because, as Chavezs insurer, it had the legal duty to pay the default judgment. The court denied that motion.

DISCUSSION

I. The Order Denying the Motion to Set Aside the Default

Chavez contends the trial court erred by not setting aside the default. We agree. "A motion seeking relief from default is within the sound discretion of the trial court and its decision will not be disturbed absent an abuse of discretion. [Citation.]" (Scognamillo v. Herrick (2003) 106 Cal.App.4th 1139, 1148.) "Section 473 of the Code of Civil Procedure permits relief [from default] for excusable neglect. The word excusable means just that: inexcusable neglect prevents relief. [Citation.]" (Iott v. Franklin (1988) 206 Cal.App.3d 521, 528.) We draw all reasonable inferences in favor of the trial courts decision. (Turley v. Turley (1967) 254 Cal.App.2d 169, 172.) But "[ w]hen the moving party promptly seeks relief and there is no prejudice to the opposing party, very slight evidence is required to justify relief. [Citation.]" (Rogalski v. Nabers Cadillac (1992) 11 Cal.App.4th 816, 821.)

Chavez contends that the evidence shows that Platinum mistakenly believed that the case would settle and that Kalbak would not request a default. We agree. After Rush received the 998 offer, he informed Ball that Platinum wanted to try to settle the case before it had to file an answer. After receiving Rushs letter, Ball did not advise Rush that he still intended to request a default. The 998 offer indicated Kalbaks desire to settle. Balls firm sent settlement information to Platinum. Ball knew Rush was a non-attorney claims agent who could settle the case, but could not represent Chavez in court. Rush did not transfer the case to an attorney because he believed it would settle.

The entry of the default was a surprise to Rush because it took place prior to the expiration of time Chavez had to accept the 998 offer. Because the parties were trying to arrange a settlement, Rush could reasonably believe that either: 1) Ball would not request a default prior to the 998 offer deadline, or 2) that he would at least warn Rush to transfer the case to an attorney before requesting one. (Cf. Dingwall v. Vangas, Inc. (1963) 218 Cal.App.2d 108, 114 [Court of Appeal judicially noticed the "courtesy-custom among attorneys" to not request defaults without a prior warning].) ". . . The policy of the law . . . looks with disfavor on a party who, regardless of the merits of his cause, attempts to take advantage of the mistake, surprise, inadvertence, or neglect of his adversary. . . ." (Id . at p. 112.)

Rushs mistake did not amount to inexcusable neglect. There is no evidence that he either tried to unreasonably delay the proceedings or that he acted in bad faith. Chavez promptly filed her motion for relief from default. "The only true prejudice to [Kalbak] is that he will now have to go back and try the case on the merits. But since the law strongly favors trial and disposition on the merits, there is no prejudice." (Rogalski v. Nabers Cadillac ,supra, 11 Cal.App.4th at p. 822.) Denying relief to Chavez gives Kalbak a windfall. There is an enormous disparity between Kalbaks 998 offer to accept $15,000 and the $396,616.49 default judgment.

Moreover, notwithstanding Platinums mistake, Chavez, as the insured, should not be deprived of the right to defend the action. She promptly notified her insurance carrier about the lawsuit. There is no evidence of neglect on her part. She had no control over whether her insurer would timely file an answer. Because she reasonably relied on her insurance carrier to defend her, Platinums error should not be imputed to her. (Rogalski v. Nabers Cadillac,supra, 11 Cal.App.4th at p. 821.) As the Court of Appeal in Rogalski stated, "[The insurance company] may well have acted deliberately, indeed reprehensively, in failing to either file a responsive pleading or give [the insured] adequate warning that it would not do so. That does not, however, justify denying relief to this defendant, who was so obviously caught unaware by his insurers actions. In ruling the trial court failed to consider [the insureds] excusable neglect . . . ." (Id. at p. 820.) That is also the case here.

The trial court abused its discretion by denying Chavezs motion to set aside the default. Because we reverse the judgment on this ground, we do not discuss Chavezs contention that Rushs June 4 letter was a valid acceptance of Kalbaks 998 offer.

The judgment is reversed. The trial court shall vacate the default and default judgment. Costs to appellant.

COFFEE, J., PERREN, J. we concur. --------------- Notes: All statutory references are to the Code of Civil Procedure.


Summaries of

Kalbak v. Chavez

Court of Appeals of California, Second District, Division Six.
Nov 4, 2003
2d Civil No. B161988 (Cal. Ct. App. Nov. 4, 2003)
Case details for

Kalbak v. Chavez

Case Details

Full title:SAKO KALBAK, Plaintiff and Respondent, v. ARMIDIA CHAVEZ, Defendant and…

Court:Court of Appeals of California, Second District, Division Six.

Date published: Nov 4, 2003

Citations

2d Civil No. B161988 (Cal. Ct. App. Nov. 4, 2003)