Opinion
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of San Diego County, Super. Ct. No. GIC862328 Jay M. Bloom, Judge.
NARES, Acting P.J.
Roman A. DiMeo asks this court to reverse an order denying his motion to set aside a default and default judgment under Code of Civil Procedure section 473, subdivision (b) (section 473(b)). DiMeo asserts he is entitled to relief from default based upon his excusable neglect and the mitigating circumstances surrounding his failure to answer the complaint. DiMeo also asserts the court erred in disregarding his statute of limitations defense.
All statutory references are to the Code of Civil Procedure unless otherwise specified.
We conclude the court did not abuse its discretion in denying DiMeo's motion for relief under both the mandatory and discretionary provisions of section 473(b). We also conclude the court did not abuse its discretion in not addressing DiMeo's statute of limitations defense. For these reasons, we affirm the court's order denying DiMeo's motion.
FACTUAL AND PROCEDURAL BACKGROUND
The following factual and procedural background is taken from allegations in the complaint, DiMeo's motion to set aside the default and default judgment, and Opprime Investments, Inc.'s opposition to DiMeo's motion. Although there is some discrepancy with regard to the facts underlying the initial lawsuit, the material facts underlying this appeal are not disputed.
A. The Underlying Lawsuit
DiMeo is an attorney licensed to practice law in California. Although DiMeo has resided in Arizona since 1993, he has maintained a mail box drop in Santa Ana, California since 1989 to comply with California State Bar requirements. In its complaint against DiMeo, Opprime Investments, Inc. (Opprime) alleged that, beginning in October 2003, Opprime engaged in negotiations with Jedd Charles, Nader Amirvand and their entity, Safe Holding Ltd. (Safe Holding), to provide investment funds for the procurement of luxury vehicles through the California State Board of Equalization. Opprime was told DiMeo represented Charles, Amirvand and Safe Holding.
DiMeo drafted a Memorandum of Understanding on behalf of Safe Holding, but Opprime was concerned with the agreement's lack of provisions safeguarding its investment. After further negotiations, Opprime and Safe Holding agreed Opprime's funds would be deposited into DiMeo's attorney trust account to ensure the funds would be used only to secure the bond to release the vehicles and pay related expenses. DiMeo provided Opprime with bank wiring coordinates to his attorney trust account, and Opprime wired $300,000 to this account on November 5, 2003.
DiMeo claims that, to his knowledge, the Memorandum of Understanding was never used by Safe Holding or Opprime in any legal capacity.
Opprime alleged that on or after March 7, 2004, it discovered DiMeo, without Opprime's knowledge or consent, transferred the entire $300,000 to Safe Holding and Amirvand in violation of their agreement. Opprime asserted that in spite of repeated demands for return of the funds, Opprime did not receive a refund pursuant to the parties' agreement, nor were the vehicles ever delivered. On September 28, 2005, Opprime's counsel sent a letter to DiMeo's Santa Ana mailing address demanding a refund of the $300,000. In a reply letter dated October 7, 2005, DiMeo denied Opprime's allegations.
DiMeo's letterhead featured DiMeo's Santa Ana address.
DiMeo's version of these facts, as set forth in his motion to set aside the default and default judgment, differ substantially. DiMeo asserts he met with Charles and Amirvand only once in April 2003. During that meeting Charles and Amirvand requested that DiMeo receive funds from Opprime on their behalf, and told DiMeo they would instruct him where to transfer those funds as soon as Safe Holding established a business account. When the funds arrived, Charles and Amirvand gave DiMeo the bank coordinates for Safe Holding, and DiMeo immediately transferred the funds into that account. According to DiMeo, this was all done verbally, and DiMeo does not know what Safe Holding has done with those funds. DiMeo further denies being involved in Charles' and Amirvand's business transactions. We need not decide as to which version of the facts is accurate. For purposes of this appeal, the underlying facts of the initial lawsuit do not affect this court's holding.
B. Entry of Default and Default Judgment
Opprime filed its complaint against DiMeo on March 6, 2006, alleging negligence, breach of fiduciary duty and conversion. On March 20, 2006, the summons and complaint were served on DiMeo by substituted service at DiMeo's Santa Ana address. DiMeo acknowledges he received the complaint sometime in mid-April 2006. Upon receipt, DiMeo contacted Charles, who told DiMeo he would obtain a California attorney to represent him in the matter.
In May 2006 DiMeo was contacted by attorney Dean Hakkak. Although Hakkak initially agreed to represent DiMeo, after many telephone conversations and faxing of documents over a three-week period, Hakkak declined representation. DiMeo was next contacted by attorney Larry Young, a friend of Charles. Approximately two to three weeks later, Young informed DiMeo he was too busy to represent him. Young referred DiMeo to attorney Jeff Davis. Charles and DiMeo then spoke with Davis, who agreed to represent DiMeo. In August 2006 DiMeo contacted Davis to ask whether a responsive pleading had been filed on his behalf; however, Davis told DiMeo he had not filed a responsive pleading because Charles had not paid him the $25,000 retainer he required.
On May 5, 2006, the court entered default against DiMeo, and a copy of the request for entry of default was mailed to him at his Santa Ana address. DiMeo claims he first became aware of the entry of default in early September 2006 when he returned to his office and found a copy of the request for entry of default judgment in his mail stack. DiMeo further claims that he intended to address the issue and file a motion for relief from default immediately upon discovery, but fell ill in September 2006. DiMeo's doctor conducted many tests on DiMeo during the month of September. DiMeo's condition worsened through October and November, and on December 6, 2006, DiMeo was admitted to John C. Lincoln Hospital in Phoenix, Arizona. Though the record does not indicate when DiMeo was released from the hospital, DiMeo claims that testing revealed he was a severe pre-diabetic, and as such, had to undergo further testing through January 2007.
Opprime filed its first request for entry of default judgment on July, 28, 2006. However, it was rejected by the court due to procedural deficiencies. Opprime submitted a second request for entry of default judgment on August 14, 2006. During this time, DiMeo did not contact Opprime's counsel or file any documents with the court.
On August 24, 2006, the court entered default judgment against DiMeo in the amount of $382,876 plus daily damages at the rate of $82.19 per day from August 15, 2006 until paid. Notice of entry of judgment was sent to DiMeo at his Santa Ana address on September 20, 2006.
C. DiMeo's Motion to Set Aside Default and Default Judgment
DiMeo filed a motion to set aside default and default judgment on February 8, 2007. A friend assisted DiMeo with the preparation of the motion. According to DiMeo, this was the first opportunity he had to address the default judgment entered against him.
DiMeo attached only his own affidavit to his motion. In paragraph 3 DiMeo stated, "I make this Affidavit as an attorney and the moving party in the instant Motion to Set Aside Default entered against me on or about May 5, 2006, and entry of Default Judgment on or about August 24, 2006." In paragraph 4 DiMeo declared, "I seek to be relieved of default pursuant to Code of Civil Procedure Section 473, based upon excusable neglect while representing myself in this action." The remainder of DiMeo's affidavit restated the facts in his memorandum of points and authorities.
In his motion DiMeo argued he relied on representations of attorneys who contacted him at Charles' request that a responsive pleading would be filed on his behalf. He stated that since the onset of his illness he had been overwhelmed with his health concerns and with maintaining his business practice. According to DiMeo, his motion was timely filed because he filed it within six months after entry of default judgment, as required under section 473(b). Although DiMeo claimed that "discretionary relief for [his] excusable neglect [was] warranted," he made reference to the mandatory provisions of section 473(b), which require the court to vacate a dismissal upon an attorney's sworn statement of neglect.
DiMeo also asserted Opprime's professional negligence claim was barred by the one-year statute of limitations set forth in section 340.6. According to DiMeo, the one-year statute began to run on March 7, 2004, when Opprime first discovered the funds had been transferred to Safe Holding's account. Because Opprime's action for professional negligence was not filed until March 6, 2006, two years after Opprime discovered DiMeo's allegedly wrongful conduct, Opprime was barred from asserting this claim under section 340.6. According to DiMeo, the running of the statute of limitations was a substantial defense to Opprime's action, and he was entitled to an opportunity to defend himself.
In opposition Opprime argued DiMeo did not satisfy the requirements for mandatory relief, nor did he establish a basis for discretionary relief under section 473(b). With respect to mandatory relief, Opprime argued DiMeo did not submit a proper attorney affidavit of fault, as required under section 473(b), because it "simply [set] forth a series of circumstances which [DiMeo] blames on other individuals, none of whom he established an attorney/client relationship with." Opprime further noted that none of the attorneys DiMeo assumed had undertaken representation of him had filed an attorney affidavit of fault. According to Opprime, if DiMeo intended to move for mandatory relief under section 473(b), he was required to admit fault for not filing a responsive pleading, rather than rest blame on the attorneys who had contacted him at Charles' request.
Opprime also asserted DiMeo was barred from discretionary relief under section 473(b) because he filed more than six months after entry of default. Opprime argued a separate six-month limitation runs from entry of default, rather than default judgment, during which the court may grant discretionary relief under section 473(b). DiMeo did not bring his motion until February 8, 2007, nine months after the entry of default; thus, it was not timely.
Furthermore, Opprime claimed DiMeo could not rely on his illness as a basis for excusable neglect because he was served the complaint and the request for entry of default while he was still in good health. Opprime argued DiMeo's neglect was inexcusable in that he failed to contact Opprime's counsel upon learning of the entry of default judgment and made no effort to contact them until he filed his motion to set aside the default and default judgment in February 2007. Opprime claimed it was inexcusable for DiMeo, an attorney himself, to rely on Charles and a series of lawyers who never agreed to represent him to file a responsive pleading on his behalf. Further, DiMeo's reliance was inexcusable because DiMeo had been informed by Attorney Hakkak in May 2006 that no responsive pleading had been filed.
After hearing the parties' arguments and taking the matter under submission, the court denied DiMeo's motion. The court ruled: "There is no clear attorney affidavit of fault. Discretionary relief is denied because there is no showing of excusable neglect. [Citations.]" The court did not address Opprime's argument that the time limit for bringing a motion for discretionary relief under section 473 had run, nor did the court address DiMeo's argument that the one-year statute of limitations had run on Opprime's professional negligence claim.
DISCUSSION
On appeal DiMeo contends: (1) his delay was reasonable under the circumstances for purposes of section 473(b); and (2) the trial judge erred in disregarding his defense of the running of the statute of limitations on Opprime's professional negligence cause of action. We conclude the court did not abuse its discretion in denying DiMeo's motion to set aside the default and default judgment because DiMeo has not shown excusable neglect in failing to file a responsive pleading and because he was not timely in bringing his motion for discretionary relief under section 473(b). We further conclude the court was not required to address DiMeo's claimed meritorious defense of the running of the statute of limitations on Opprime's professional negligence cause of action because meritorious defenses are not required for relief under section 473(b) and because DiMeo waived this defense when he failed to file a responsive pleading.
I. RELIEF UNDER SECTION 473
A. Standard of Review
"A motion for relief under section 473 is addressed to the sound discretion of the trial court and an appellate court will not interfere unless there is a clear showing of an abuse. [Citation.] The statute is remedial and should be liberally applied to carry out the policy permitting trial on the merits, but the moving party has the burden of showing good cause." (Davis v. Thayer (1980) 113 Cal.App.3d 892, 904.)
B. Discretionary Relief Under Section 473(b)
1. No showing of excusable neglect
DiMeo seeks relief under section 473 based upon excusable neglect while representing himself in this action. His argument appears to be based upon two assertions: (1) that his delay in filing a responsive pleading was reasonable considering his mitigating circumstances; and (2) that he brought his motion to set aside the default and default judgment at the earliest possible opportunity upon learning of the entry of default. DiMeo asserts the same contentions in his opening brief that he asserted in his moving papers in the trial court, namely that he relied on the representations of attorneys that a responsive pleading would be filed on his behalf, and that he was overwhelmed by his health concerns and maintaining his business practice.
Section 473(b) states, "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." "To 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." (Elms v. Elms (1946) 72 Cal.App.2d 508, 513.) Furthermore, "[i]t is the duty of every party desiring to resist an action . . . to take timely and adequate steps to retain counsel or to act in his own person to avoid an undesirable judgment. Unless in arranging for his defense he shows that he has exercised such reasonable diligence as a man of ordinary prudence usually bestows upon important business his motion for relief under section 473 will be denied." (Ibid.) "[T]he mere fact that the client is busy and occupied with other affairs is never held to constitute an excuse for his neglect to answer a summons within time . . . ." (Andrews v. Jacoby (1919) 39 Cal.App. 382, 383-384.) "The law frowns upon setting aside default judgments resulting from inexcusable neglect of the complainant." (Elms v. Elms, supra, at p. 513; Davis v. Thayer, supra, 113 Cal.App.3d at p. 907.)
Applying these rules, we conclude the court did not abuse its discretion in finding DiMeo's neglect inexcusable. DiMeo did not act reasonably in relying "upon the representations of attorneys who contacted him" that a responsive pleading would be filed on his behalf. Attorney Hakkak declined to represent DiMeo after three weeks of correspondence in May 2006. There is no indication Hakkak ever represented to DiMeo that he had filed a responsive pleading on his behalf. Approximately two to three weeks later, Attorney Young told DiMeo that he was too busy to represent DiMeo. Again, DiMeo makes no claim he believed Young had filed a responsive pleading on his behalf. Moreover, in August 2006 Attorney Davis informed DiMeo he had not filed a responsive pleading because Charles had not paid him his required retainer. DiMeo makes no mention in his moving papers, affidavit or opening brief as to what he did upon learning that an answer had not been filed as of August 2006. DiMeo's failure to contact Opprime's counsel or take the necessary steps to ensure the filing of a responsive pleading at this point runs counter to what a reasonably prudent person facing a $300,000 lawsuit would do under the same circumstances. Further, given the "track record" of the attorneys provided by Charles to represent DiMeo in this action, and Charles' alleged failure to pay Davis's retainer, it was equally unreasonable for DiMeo to rely on Charles' representation that he would " 'take care of the problem' " for DiMeo. (See Davis v. Thayer, supra, 113 Cal.App.3d at pp. 909-910 [holding it was inexcusable neglect for a mother to rely on her son to " 'take care of the problem' " by filing an appearance where the son had not even taken action on his own behalf and where the mother had made no inquiry as to whether the son was "really looking out for her"].)
Similarly, DiMeo has not established excusable neglect in failing to address the entry of default judgment upon learning of it in September 2006. In his affidavit, DiMeo stated he found the request for entry of default judgment in early September 2006, upon returning to his office from a business trip. DiMeo stated he "intended to immediately address this issue and file a [m]otion to be relieved from the default, but fell ill in September of 2006." Because DiMeo does not indicate when in September he fell ill, the record is unclear as to how much time DiMeo had to "immediately address the issue" before he was ultimately unable to do so. Furthermore, while DiMeo claims his illness prevented him from addressing the default judgment until February 2007, he does not provide any affidavits from his physicians attesting to his inability to file his motion while undergoing testing. In addition, aside from his declaration that he was diagnosed "a severe pre-diabetic" and was required to undergo extensive testing, DiMeo "[did] not state the severity of the condition or in what manner it limited [his] activity . . . . Was [he] truly so disabled that [he] could do nothing concerning this matter for nearly six months?" (Davis v. Thayer, supra, 113 Cal.App.3d at p. 909.) Because DiMeo has not shown his illness was the actual cause of his failure to address the default and default judgment entered against him, the court did not abuse its discretion in denying his motion. (See Elms v. Elms, supra, 72 Cal.App.2d at p. 513 ["One may not be relieved from his default unless he . . . demonstrates that his excusable neglect was the actual cause of his failure." (Italics added.)]) Likewise, DiMeo cannot assert he was too overwhelmed with maintaining his business practice to address the default judgment entered against him, as being "busy and occupied with other affairs" never constitutes excusable neglect. (Andrews v. Jacoby, supra, 39 Cal.App. at pp. 383-384.)
Although the record is unclear, it can be inferred that the request to which DiMeo refers here was Opprime's first request, which was rejected by the court clerk. This inference is drawn from the fact that Opprime did not serve the final notice of entry of default judgment until September 20, 2006, but DiMeo states he became aware of the entry of default judgment in early September.
2. DiMeo's motion was not timely filed
Even had DiMeo been able to show excusable neglect, his motion was not timely because he failed to file it within six months of entry of default, as required under section 473(b). DiMeo claims that section 473(b) affords him six months upon entry of default judgment to file his motion. He claims that his motion was timely filed because it was filed on February 8, 2007, within six months of August 24, 2006, the date on which the default judgment was entered. DiMeo cites Sugasawara v. Newland (1994) 27 Cal.App.4th 294, 296-297 in support of his contention that the six-month limitation runs from entry of default judgment rather than the entry of default.
"Application for [relief under section 473(b)] . . . shall be made within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken." (§ 473(b).) Under section 473(b), however, separate time limitations apply for filing a motion depending on whether the defendant is seeking mandatory or discretionary relief. (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2007) ¶¶ 5:278-5:279.1, p. 5-67.) Under section 473(b), the statutory period for filing a motion for discretionary relief from default judgment commences upon entry of default, upon which the defendant has 182 days to file. (Davis v. Thayer, supra, 113 Cal.App.3d at pp. 901-902; Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial, supra, ¶ 5:279 at p.5-67.) DiMeo's reliance on Sugasawara is misplaced because that case addresses relief from default under the mandatory provisions of section 473(b). (See Sugasawara v. Newland, supra, 27 Cal.App.4th at p. 296 ["The central question is whether the six-month limitation allowed by section 473 for relief based on attorney's neglect commences at the time default is entered or when the default judgment is rendered." (Italics added.)].)
Here, default was entered on May 5, 2006 and DiMeo's motion was not filed until February 8, 2007. Thus, more than six months elapsed from the date of the entry of default to the filing of the motion. Accordingly, DiMeo was barred from bringing his motion under the discretionary provisions of section 473(b).
C. Mandatory Relief Under Section 473(b)
In his reply brief, DiMeo clarifies that his "[m]otion was addressed to the discretion of the Court," and "that he was seeking discretionary judicial relief." Regardless, we briefly address whether the court abused its discretion in denying DiMeo's motion under the mandatory provisions of section 473(b). In so doing, we acknowledge Opprime's contention that, from DiMeo's moving papers in the trial court and his opening brief, it is unclear as to whether he was seeking relief under the mandatory or discretionary provisions of section 473(b).
Section 473(b) requires the court to relieve a party from default and default judgment resulting from the "mistake, inadvertence, surprise, or neglect" of an attorney representing that party. (§ 473(b).) In order to obtain relief under the mandatory provisions of section 473(b), the application for relief must be "accompanied by an attorney's sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect." (Ibid.; Luri v. Greenwald (2003) 107 Cal.App.4th 1119, 1124.)
DiMeo does not qualify for relief under the mandatory provisions of section 473(b) because his motion to set aside the default and default judgment was not accompanied by a sworn attorney affidavit of fault. If, by virtue of DiMeo's status as an attorney, his affidavit could constitute an attorney's affidavit of fault, nowhere in the affidavit does DiMeo attest to his own mistake, inadvertence, surprise, or neglect regarding his failure to file a responsive pleading. Only at the end of his affidavit does DiMeo declare that his illness prevented him from filing a motion until February 2007. Such an admission does not explain why DiMeo was unable to file a timely responsive pleading. Because DiMeo did not attach a sworn attorney affidavit of fault to his motion, the court properly denied relief under the mandatory provisions of section 473(b).
II. DIMEO'S STATUTE OF LIMITATIONS DEFENSE
DiMeo next contends the court erred in disregarding what he claims is the meritorious defense of the running of the statute of limitations on Opprime's professional negligence cause of action. According to DiMeo, the one-year statute of limitations under section 340.6 began to run on March 7, 2004, when Opprime first discovered the funds had been transferred to Safe Holding's account. DiMeo argues Opprime's complaint is barred because the action for professional negligence was not filed until March 6, 2006, two years after Opprime's discovery of DiMeo's allegedly wrongful conduct. Though it is somewhat unclear from his briefs, DiMeo seems to argue that, because Opprime's other causes of action arise from the same factual basis as Opprime's professional negligence cause of action, the running of the statute of limitations on the professional negligence cause of action necessitates dismissal of Opprime's entire complaint.
Opprime contends it never intended to assert a professional negligence cause of action against DiMeo, only breach of fiduciary duty. Opprime also contends DiMeo cannot claim he was Safe Holding's attorney for purposes of asserting a statute of limitations defense under section 340.6, but, at the same time, maintain he was not Safe Holding's attorney when he held Opprime's funds. For purposes of this analysis and the court's holding, the specific cause of action is not determinative.
DiMeo's arguments regarding the statute of limitations defense are unavailing. In Part V of his opening brief, without any argument, DiMeo quotes an entire section of California Jurisprudence Third, section 297 on the meritorious defense requirement for equitable relief from default judgment. DiMeo's focus is misplaced. A meritorious defense is required where the defendant seeks equitable relief from default judgment, apart from relief under section 473(b). Equitable relief refers to a court's inherent authority to set aside default judgment resulting from extrinsic fraud or mistake. (See Rappleyea v. Campbell (1994) 8 Cal.4th 975, 981.) In order to qualify for equitable relief, the moving party must show: (1) a meritorious defense; (2) a satisfactory excuse for not asserting the defense originally; and (3) diligence in seeking to set aside default upon discovery. (Id. at p. 982; Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial, supra, § 5:435 at pp. 5-102.8 to 5-102.9.)
DiMeo did not raise or otherwise assert grounds for equitable relief from default in the trial court. He only asserted his claimed meritorious statute of limitations defense. Consequently, we will not review this issue on appeal. (See Woodridge Escondido Property Owners Ass'n v. Nielsen (2005) 130 Cal.App.4th 559, 574 ["[I]ssues not raised in the trial court proceedings are waived. [Citation.]"].) Therefore, the claimed meritorious defense of the running of the statute of limitations on Opprime's professional negligence claim is inapplicable.
Moreover, DiMeo cites no authority for the proposition that the court must (or even may) consider an affirmative defense raised for the first time in a motion to set aside the default and default judgment. Rather, a defendant waives the affirmative defense of the running of the statute of limitations by failing to assert it in a responsive pleading. (Minton v. Cavaney (1961) 56 Cal.2d 576, 581.) The purpose of a motion to set aside the default and default judgment is to give the defendant an opportunity to file a responsive pleading, not to assert the affirmative defenses that would ordinarily be included within that responsive pleading. Therefore, the court did not abuse its discretion in disregarding DiMeo's statute of limitations defense.
DISPOSITION
The order is affirmed. Respondent shall recover costs on appeal.
WE CONCUR: AARON, J., IRION, J.