Opinion
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County No. BC309667, David Minning, Judge.
Law Office of Diane B. Carey and Diane B. Carey for Plaintiff and Appellant.
Paul F. Opel for Defendant and Respondent.
MOSK, J.
INTRODUCTION
Plaintiff and appellant Elena Morales (plaintiff) appeals an order of the trial court vacating a default and setting aside a default judgment in the amount of $16,225 against defendant and respondent Rogelio Jiminez (defendant). We conclude that plaintiff has failed to establish that the trial court abused its discretion in granting defendant equitable relief from the judgment. We therefore affirm.
BACKGROUND
Plaintiff commenced this action against defendant and others in January 2004. In her verified complaint, plaintiff alleged that defendant loaned plaintiff money to help her buy a house with the understanding that defendant and his wife would live with plaintiff as rent-paying tenants, and that plaintiff would repay the loan within one year. The living arrangements apparently did not work out. Plaintiff alleged that, immediately after they moved into the home, defendant began physically and emotionally to abuse her. She further alleged that, shortly thereafter, plaintiff discovered that her bank accounts had been tampered with and that title to the home had been transferred to defendant, under the name “Rogelio Giminez,” without her knowledge. Plaintiff brought an action for fraud, to quiet title to the property in her name, and for a constructive trust on any profits realized by defendant from the property.
No judgment was entered against the other defendants, and they are not parties to this appeal.
Defendant, represented by the Law Offices of Gary D. Olive, filed an answer to the complaint in March 2004. The answer was verified by defendant’s attorney, Mr. Olive, rather than by defendant. In his answer, defendant denied plaintiff’s allegations and affirmatively alleged that he and plaintiff had an oral agreement that the property would be purchased in plaintiff’s name because defendant did not qualify for a mortgage, but that the property would belong to him. Defendant alleged that he had made the $10,000 down payment and all of the mortgage payments.
Mr. Olive’s verification failed to comply with Code of Civil Procedure section 446, subdivision (a), because Mr. Olive did not state why defendant was unable to make the verification. Insofar as the record reveals, plaintiff did not move to strike or otherwise object to defendant’s answer. All further statutory references are to the Code of Civil Procedure, unless stated otherwise.
In August 2004, counsel for both parties appeared at a case management conference, at which the trial court referred the case to mediation. In September 2004, the mediator sent notice to the parties’ attorneys that the mediation was scheduled for October 28, 2004. Defendant and his attorney failed to appear for the mediation. Defendant’s attorney then failed to appear for a post-mediation status and trial setting conference on November 30, 2004. The trial court issued an order to show cause (OSC) why defendant should not be sanctioned. Plaintiff gave notice of the OSC to defendant’s attorney.
Defendant was represented at the case management conference by Carl A. Wayne, who apparently was an associate of Mr. Olive. Some subsequent notices or other pleadings were served on Mr. Wayne (rather than Mr. Olive) at the mailing address of Mr. Olive’s firm.
Defendant’s attorney failed to appear for the OSC. The trial court ordered monetary sanctions of $950 against defendant’s attorney and issued an OSC why defendant’s answer should not be stricken and his default entered. Plaintiff again gave notice to defendant’s attorney.
The trial court’s minute order purported to impose the sanctions “against counsel of record for defendants, the Law Offices of Hence & Associates....” This appears to have been an error, as there is no indication that a firm by that name was involved in this case.
Defendant’s attorney again failed to appear for the OSC. The trial court ordered defendant’s answer stricken, entered defendant’s default, and set a default prove-up hearing. Plaintiff was ordered to give notice. There is no indication in the record, however, that plaintiff gave notice to defendant or his attorney.
After taking evidence at the prove-up hearing, the trial court awarded plaintiff $10,800 in compensatory damages, $5,000 in attorney fees, and $425 in costs. The trial court denied plaintiff’s request for punitive damages. The trial court ordered plaintiff to submit a judgment consistent with its rulings and to give notice. Judgment was entered against defendant on March 23, 2005. There is no indication in the record that defendant or his attorney was given notice of the trial court’s rulings at the prove-up hearing or the entry of judgment.
The basis for the attorney fee award was not specified.
Neither the trial court’s minute order nor the judgment addressed plaintiff’s cause of action to quiet title to the property. (Cf. Yeung v. Soos (2004) 119 Cal.App.4th 576, 581.)
In February 2008—nearly three years after judgment was entered—the Superior Court issued an abstract of judgment. In March 2008, defendant received a Notice of Involuntary Lien from the County Registrar, indicating that plaintiff’s attorney had recorded a judgment lien against defendant’s house.
On May 13, 2008, defendant—represented by a new attorney, Paul F. Opel—moved to set aside the default and judgment. Defendant submitted a declaration stating that he had retained attorney Gary D. Olive to represent him in plaintiff’s action. He had paid Mr. Olive $1,500 and had agreed to pay Mr. Olive an additional $3,500. Defendant stated that he had received a copy of his answer from Mr. Olive, and that he had contacted Mr. Olive’s assistant, Carlos, several times over the following year to find out what was going on in the case. Carlos told defendant that everything was fine and not to worry, and that if defendant did not hear from him “that would mean things were going well in the case.” In November or December 2006, defendant called Mr. Olive “to get some paperwork showing the case was over.” Carlos told defendant that he “had already won the case, that everything was settled and not to worry about a thing.” Defendant heard nothing more about the case until, in the last week of March 2008, he received the Notice of Involuntary Lien. He retained Mr. Opel on April 4, 2008.
Mr. Opel also submitted a declaration, stating that defendant had very little documentation relating to the case, requiring Mr. Opel to review the court file to determine why judgment had been entered against defendant. Mr. Opel further declared that he had tried without success over the course of two weeks to obtain the case file and a substitution of attorney from Mr. Olive.
The trial court heard argument on the motion and took it under submission. In a written minute order, without making any express findings of fact or stating its reasons, the trial court granted the motion and vacated both the judgment and the order striking defendant’s answer. Plaintiff timely appealed. (§ 904.1, subd. (a)(2); Baske v. Burke (1981) 125 Cal.App.3d 38, 43.)
DISCUSSION
A. Applicable Principles and Standard of Review
When a motion to vacate a default judgment is made more than six months after the default was entered, the motion is governed not by the court’s statutory authority to grant relief under section 473, but by the court’s inherent equity power to grant relief from a default judgment procured by extrinsic fraud or mistake. (Moghaddam v. Bone (2006) 142 Cal.App.4th 283, 290 (Moghaddam).)
As defendant does not contend the judgment was void, we assume for purposes of this appeal that the default judgment properly was entered.
One form of extrinsic mistake that warrants relief occurs when a party was deprived of a hearing because his or her attorney engaged in neglect amounting to “positive misconduct.” (Aldrich v. San Fernando Valley Lumber Co. (1985) 170 Cal.App.3d 725, 739 (Aldrich).) “Generally, in motions under... the inherent equity power of the court, the plaintiff must plead that the neglect or omission of [the] attorney was excusable, because inexcusable neglect is ordinarily imputed to the client, and [the client’s] redress is an action for malpractice. However, in a case where the client is relatively free from negligence, and the attorney’s neglect is of an extreme degree amounting to positive misconduct, the attorney’s conduct is said to obliterate the existence of the attorney-client relationship. [Citations.] The client in such a case has representation only in a nominal and technical sense. [Citation.]” (Id. at pp. 738-739.) “Positive misconduct is found where there is a total failure on the part of counsel to represent [the] client.” (Id. at p. 739; see also Carroll v. Abbott Laboratories, Inc. (1982) 32 Cal.3d 892, 900.)
“When a default judgment has been obtained, equitable relief may be given only in exceptional circumstances. ‘[W]hen relief under section 473 is available, there is a strong public policy in favor of granting relief and allowing the requesting party his or her day in court. Beyond this period there is a strong public policy in favor of the finality of judgments and only in exceptional circumstances should relief be granted.’ [Citations.]” (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 981-982 (Reppleyea).) Accordingly, “[t]o set aside a judgment based on... extrinsic mistake, the moving party must satisfy three elements: ‘First, the defaulted party must demonstrate that it has a meritorious case. Secondly, the party seeking to set aside the default must articulate a satisfactory excuse for not presenting a defense to the original action. Lastly, the moving party must demonstrate diligence in seeking to set aside the default once it had been discovered.’ [Citations.]” (Moghaddam, supra, 142 Cal.App.4th at pp. 290-291.)
“The moving party carries the burden of proving that he or she is entitled to equitable relief. [Citation.] We review a challenge to the trial court’s [ruling on] a motion to vacate a default on equitable grounds for abuse of discretion. [Citation.]” (Sakaguchi v. Sakaguchi (2009) 173 Cal.App.4th 852, 862; accord, Rappleyea, supra, 8 Cal.4th at p. 981.)
Although the trial court in this case made no express findings, its order granting defendant’s motion implies that it determined that the declarations of defendant and Mr. Opel were credible, and that defendant satisfied each element necessary to obtain equitable relief from his default. “‘[A]n order is presumed correct; all intendments are indulged in to support it on matters as to which the record is silent, and error must be affirmatively shown.’ [Citation.] We must ‘view the record in the light most favorable to the trial court’s ruling and defer to its findings of historical fact, whether express or implied, if they are supported by substantial evidence.’ [Citation.]” (People v. Carpenter (1999) 21 Cal.4th 1016, 1046; see also In re Cordero (1988) 46 Cal.3d 161, 185; Jie v. Liang Tai Knitwear Co. (2001) 89 Cal.App.4th 654, 666-667.) “The trial court, with declarations and supporting affidavits, [is] able to assess credibility and resolve any conflicts in the evidence. Its findings... are entitled to great weight. Even though contrary findings could have been made, an appellate court should defer to the factual determinations made by the trial court when the evidence is in conflict. This is true whether the trial court’s ruling is based on oral testimony or declarations.” (Shamblin v. Brattain (1988) 44 Cal.3d 474, 479; accord, Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1323.)
B. No Abuse of Discretion
1. Meritorious Defense
The record contains a sufficient showing that defendant had a meritorious defense to plaintiff’s claim. “Ordinarily a verified answer to a complaint’s allegations suffices to show merit.” (Rappleyea, supra, 8 Cal.4th at p. 983; accord, Stiles v. Wallis (1983) 147 Cal.App.3d 1143, 1148.) In this case, defendant’s answer was verified, albeit by defendant’s attorney, Mr. Olive. In the answer, defendant both denied plaintiff’s allegations and alleged new matter that, if proved at trial, would establish a defense to plaintiff’s claims. In the verification, Mr. Olive declared under penalty of perjury that the facts stated in the answer were “true.” Moreover, by subscribing the answer, Mr. Olive certified that, to the best of his knowledge, defendant’s denials were “warranted on the evidence or, if specifically so identified, [were] reasonably based on a lack of information or belief,” and that defendant’s factual allegations had “evidentiary support or, if specifically so identified, [were] likely to have evidentiary support after a reasonable opportunity for further investigation or discovery.” (§ 128.7, subd. (b)(3), (4).)
Although the verification by defendant’s attorney did not strictly comply with section 446, subdivision (a) (see fn. 2, ante), plaintiff forfeited the issue by failing to raise it in the trial court. (In re Marriage of Melton (1994) 28 Cal.App.4th 931, 939.) In any event, there is no indication that defendant personally was at fault for or complicit in this violation, or that Mr. Olive’s failure to comply with section 446 was anything other than technical and inadvertent. Mr. Olive declared that he was “authorized to make th[e] verification on [defendant’s] behalf.”
In Rappleyea, supra, 8 Cal.App.4th at p. 983, our Supreme Court concluded that the defendants in that case made a sufficient showing of a meritorious defense by filing an unverified answer denying the plaintiff’s allegations, and submitting an attorney declaration that the defendants had “a very good (and certainly a justiciable) defense.” The court concluded, “On the combined strength of these facts, we believe defendants have sufficiently shown merit.” (Ibid.) Similarly, based on the answer verified by defendant’s attorney and the attorney’s certification pursuant to section 128.7, we conclude that defendant has made a sufficient showing of merit.
2. Satisfactory Excuse for Not Presenting a Defense
The trial court made an implied finding that defendant’s attorney, Mr. Olive, engaged in positive misconduct by abandoning defendant’s case. “What constitutes ‘abandonment’ of the client depends on the facts in the particular action.” (Seacall Development, Ltd. v. Santa Monica Rent Control Bd. (1999) 73 Cal.App.4th 201, 205 (Seacall).) The record contains substantial evidence to support that finding.
The record establishes that, although Mr. Olive was engaged by and agreed upon a fee with defendant to defend plaintiff’s lawsuit, the only action taken by Mr. Olive personally was to file defendant’s answer in March 2004. Thereafter, Mr. Wayne appeared for defendant (apparently on Mr. Olive’s behalf) at case management conferences on July 26, 2004 and August 16, 2004. Both Mr. Olive and Mr. Wayne then appeared to vanish from the case entirely, despite proper notice of a mediation, a further case management conference and two OSCs. Mr. Olive made no attempt to substitute out of the case or to withdraw. There is no indication in the record that defendant knew or should have known that his attorney was failing to represent his interests in the litigation. To the contrary, defendant declared that Mr. Olive’s assistant, Carlos, continued to reassure defendant through 2004, telling him that, if he did not hear from Mr. Olive, things were going well. Indeed, it appears that Mr. Olive’s alleged inappropriate conduct continued years after the default judgment was entered, when he reportedly hindered defendant’s attempts to set aside the judgment by refusing to sign a substitution of attorney and to release defendant’s client file to defendant’s new attorney, Mr. Opel.
Plaintiff contends that evidence of statements by Mr. Olive’s assistant is inadmissible hearsay. Even if we assume that plaintiff adequately objected to such evidence during the trial court hearing, the statements were not hearsay because they were not offered for the truth of the matters asserted, but to establish defendant’s diligence. (Evid. Code, § 1200, subd. (a).)
Appellate courts consistently have held that such total failure by an attorney to represent his or her client’s interests amounted to positive misconduct. (Seacall, supra, 73 Cal.App.4th at p. 206; People v. One Parcel of Land (1991) 235 Cal.App.3d 579, 584; Aldrich, supra, 170 Cal.App.3d at p. 739; Orange Empire National Bank v. Kirk (1968) 259 Cal.App.2d 347, 353-354 (Orange Empire); see also Daley v. County of Butte (1964) 227 Cal.App.2d 380, 391-392 (Daley) [motion under section 473].) In Orange Empire, for example, a bank filed a cross-complaint against cross-defendant Kirk to recover on a guaranty. Kirk promptly delivered the summons and cross-complaint to his attorney, Monroe, and told Monroe that he had never signed the guaranty and that his signature had been forged. Thereafter, Kirk had “numerous conversations” with Monroe about the lawsuit. (Id. at p. 350.) Nevertheless, four months after Kirk was served with the cross-complaint, Monroe still had not answered the cross-complaint or made an appearance on Kirk’s behalf. At the bank’s request, the trial court entered Kirk’s default. (Ibid.)
After several more months had passed, counsel for one of the plaintiffs contacted Kirk directly and told him that trial in the case was imminent, and asked whether Kirk intended to defend the case. Monroe assured Kirk “that he would take care of the trial.” (Orange Empire, supra, 259 Cal.App.2d at p. 350 .) The trial date arrived, but Monroe failed to appear. Judgment was entered against Kirk on the cross-complaint. (Ibid.)
After judgment was entered, counsel for the bank contacted Kirk directly to obtain payment of the judgment; when Kirk referred the bank’s counsel to Monroe, the bank’s counsel said he was having trouble contacting Monroe. (Orange Empire, supra, 259 Cal.App.2d at p. 351 .) After several attempts, Kirk reached Monroe, and Monroe assured Kirk that he would “tak[e] care of the default.” (Id. at p. 352.) Several months later, however, Kirk discovered that Monroe had taken no action with respect to the judgment. Kirk retained new counsel, who moved to vacate the default and set aside the judgment. The trial court denied the motion. (Ibid.)
The appellate court reversed, holding that the trial court had abused its discretion in denying Kirk relief from the judgment. (Orange Empire, supra, 259 Cal.App.2d at p. 356 .) The court stated, “To characterize Monroe’s utter failure to represent his client as ‘inexcusable neglect’ would be charitable but hardly candid. His dereliction of the professional obligations owed Dr. Kirk constituted actual misconduct. [Monroe] was furnished with a copy of the summons and complaint five days after service was accomplished, and agreed to interpose a defense, but failed to file an appearance. His client’s default was not entered until some six weeks had expired. [Monroe] had actual notice of the default entry.... Nevertheless, he wrongfully failed to take any action within the statutory period for the purpose of securing relief from default. Moreover, [Monroe] had advance notice that a trial date had been set in March, and he assured his client that he would handle the defense, but again failed to act. As a consequence of his improper representation, or misrepresentation, a judgment of $50,000 was entered against Kirk. Thereafter, Monroe continued in his reassurances that he would take the action necessary to relieve the client from the sanctions of the judgment, but did nothing to protect the client’s rights. It would be difficult to conceive a set of circumstances where counsel displayed a more flagrant disregard for his client’s best interests.” (Id. at pp. 353-354.)
Based on the declarations of defendant and Mr. Opel, the trial court reasonably could find that Mr. Olive engaged in professional derelictions that were similarly flagrant. Accordingly, the trial court properly found that defendant established a satisfactory excuse for not defending plaintiff’s lawsuit.
3. Defendant’s Diligence
The next issue is whether defendant acted with reasonable diligence in seeking to have the judgment set aside. “One moving in equity to set aside a default judgment must act diligently in making his motion after he learns of the default judgment.” (Orange Empire, supra, 259 Cal.App.2d at p. 354.) The client, however, is not required “to act as a ‘hawklike inquisitor’ of his own counsel, nor perform incessant checking on counsel.” (Aldrich, supra, 170 Cal.App.3d at p. 740.) “More significant than the client’s failure to act before being put on notice of [the default] is the client’s diligence after receiving notice.” (Seacall, supra, 73 Cal.App.4th at p. 206.) “Moreover,... where the aggrieved party makes a strong showing of diligence in seeking relief after discovery of the facts, and the other party is unable to show prejudice from the delay, the original negligence in allowing the default to be taken will be excused on a weak showing.” (Aldrich, supra, 170 Cal.App.3d at p. 740.)
Substantial evidence supported the trial court’s implied finding that defendant acted with reasonable diligence in seeking to set aside the default judgment. There is no evidence that defendant personally was notified of the OSC regarding striking his answer and entering his default. Further, the record contains no evidence that either defendant or his attorney, Mr. Olive, were notified that the trial court had stricken defendant’s answer and entered his default, that a prove-up hearing was held, or that judgment was entered against defendant.
Defendant declared that, in November or December 2006—that is, approximately 20 months after the judgment was entered—Mr. Olive’s assistant, Carlos, told defendant that defendant had won the case. The trial court thus reasonably could conclude that defendant had no reason to inquire further about the case between late 2006 and early 2008.
Defendant declared that he did not learn of the judgment until the last week of March 2008. Plaintiff submitted no contrary evidence. Approximately one week later, defendant retained his new attorney, Mr. Opel. Mr. Opel thereafter pursued the matter diligently, despite being hindered by Mr. Olive’s refusal to cooperate. Mr. Opel obtained and reviewed the court file, and filed the motion to set aside the judgment on May 13, 2008, six or seven weeks after defendant first learned that the judgment had been entered. There was thus substantial evidence that defendant acted with reasonable diligence after learning of the judgment. (See Seacall, supra, 73 Cal.App.4th at pp. 206-207; People v. One Parcel of Land, supra, 235 Cal.App.3d at p. 584; Alrich, supra, 170 Cal.App.3d at p. 740; Orange Empire, supra, 259 Cal.App.2d at pp. 354-355.)
Plaintiff argues that defendant was not diligent because, while the case was pending, he spoke only to Mr. Olive’s assistant, Carlos, rather than to Mr. Olive directly. Plaintiff cites no authority, however, that a client is deemed negligent by relying on representations about the status of a case from an attorney’s staff members. To the contrary, it is the attorney’s responsibility to communicate with his or her client (Spindell v. State Bar (1975) 13 Cal.3d 253, 260) and to supervise his or her staff members to ensure that they perform competently and do not engage in the unauthorized practice of law. (See Vaughn v. State Bar (1972) 6 Cal.3d 847, 857-858; see also Bus. & Prof. Code, §§ 6133, 6450, subds. (a), (b); Rules Prof. Conduct, rule 1-311.) There is no evidence that defendant had any reason to know that Carlos was misrepresenting the status of his case.
Moreover, as noted, when “the [plaintiff] is unable to show prejudice from the delay, the [defendant’s] original negligence in allowing the default to be taken will be excused on a weak showing.” (Aldrich, supra, 170 Cal.App.3d at p. 740.) Plaintiff submitted no evidence in opposition to the motion, and so proffered no “substantial evidence of missing witnesses, evidence destroyed, and the like, to establish prejudice.” (Ibid.) On the other hand, because of the evidence that Mr. Olive’s staff misrepresented the status of defendant’s case, any negligence by defendant in permitting the default to be taken was slight. Accordingly, any negligence by defendant before the default judgment was entered does not necessarily negate his diligence in seeking to have the judgment set aside after he learned of it.
Plaintiff further asserts that the order setting aside the judgment should be reversed because it is contrary to the policy favoring the finality of judgments and divests plaintiff of her property right in the judgment. But the courts have balanced these and other policy concerns—such as the policy favoring resolution of disputes on the merits and the policy that an innocent client should not suffer from an attorney’s gross neglect—in fashioning the three-part test to determine whether equitable relief is warranted. (See Rappleyea, supra, 8 Cal.4th at pp. 981-982; Seacall, supra, 73 Cal.App.4th at p. 205; Aldrich, supra, 170 Cal.App.3d at p. 737.) That test was satisfied in this case.
4. Other Issues
Plaintiff contends that defendant was barred from equitable relief by the doctrine of laches. Laches is based on the principle that those who neglect their rights may be barred from obtaining equitable relief. (Golden Gage Water Ski Club v. County of Contra Costa (2008) 165 Cal.App.4th 249, 263; see Civ. Code, § 3527.) To invoke the doctrine of laches in this case, however, plaintiff was required to demonstrate that defendant’s delay in moving to set aside the judgment caused her prejudice. (See Robert J. v. Catherine D. (2009) 171 Cal.App.4th 1500, 1521; Estate of Molino (2008) 165 Cal.App.4th 913, 925.) As discussed, plaintiff submitted no evidence of prejudice. The doctrine of laches did not apply.
Plaintiff also complains that Mr. Opel could not properly represent defendant in the trial court because he filed no substitution of attorney. As noted, plaintiff tried but could not obtain a substitution signed by Mr. Olive. Even if plaintiff’s assertion is correct (see § 284, subd. (2)), plaintiff fails to explain how or why this constituted reversible error with respect to the order on appeal. “The purpose of these statutes is to have the record of representation clear so the parties may be certain with whom they are authorized to deal.” (McMillan v. Shadow Ridge at Oak Park Homeowner’s Assn. (2008) 165 Cal.App.4th 960, 965.) Under the circumstances, any noncompliance with the statute in this case did not frustrate that purpose. Even if the trial court should not have recognized Mr. Opel as defendant’s attorney without a noticed motion under section 284(2) or notice to plaintiff pursuant to section 285, plaintiff had a full and fair opportunity to brief and argue the motion for relief from the judgment, and there is no indication that plaintiff was deceived or disadvantaged by Mr. Opel’s appearance as counsel for defendant. Any error in this regard was thus harmless for purposes of this appeal.
Plaintiff cites California Rules of Court, rule 8.36(b), which applies only in appellate proceedings. We presume plaintiff intended to rely upon section 284, subdivision (1).
DISPOSITION
The order is affirmed. Defendant is to recover his costs on appeal.
We concur: TURNER, P. J., KRIEGLER, J.