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People v. Homeless & Disabled Veterans Corp.

COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION FOUR
Jan 30, 2012
A132189 (Cal. Ct. App. Jan. 30, 2012)

Opinion

A132189

01-30-2012

THE PEOPLE OF THE STATE OF CALIFORNIA, Plaintiff and Respondent, v. HOMELESS AND DISABLED VETERANS CORP. et al., Defendants and Appellants.


NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(San Mateo County

Super. Ct. No. CIV 484517)

In an action against a charity and its officers for fraudulent solicitation of funds, the trial court denied defendants' motion for relief from default and a default judgment upon finding that defendants' failure to file a proper answer to the complaint after defective answers had been stricken and defendants repeatedly failed to cure the defect was not excusable neglect. (Code Civ. Proc., § 473, subd. (b).) We affirm the order denying relief.

I. FACTS

On May 29, 2009, California's Attorney General, on behalf of the People of the State of California (the State), filed this lawsuit against a charitable corporation, a corporate fundraiser, and officers of the two corporations. The State alleged that defendants solicited and received charitable contributions based on false claims that the donations would benefit homeless and disabled veterans. The State averred multiple causes of action against defendants and sought the involuntary dissolution of defendant Homeless and Disabled Veterans Corporation (HDV). This appeal concerns two defendants: HDV and its founder and chairman, Allen Wilson.

A. First motion to strike the answer

On July 13, 2009, Wilson filed an answer to the State's complaint. Wilson lives in Washington D.C. and is licensed to practice law there. Wilson is not licensed to practice law in California. Despite not being a California attorney, Wilson filed a single answer on behalf of HDV, himself, and two other individual HDV officers, George Dumas and Billy Richardson. The State asked the court to strike the answer. In September 2009, Wilson filed an opposition brief admitting that he was not a California attorney but asking the court to let him represent HDV and Dumas anyway because they did "not have the money to hire a California Attorney." The court granted the motion to strike the defective answer. The court noted in its written order of October 1, 2009 that "[t]he answer on its face indicates that the attorney signing the answer [Wilson] is not licensed to practice law in this State. Further, the answer lacks a verification and therefore fails to comply with Code of Civil Procedure section 446, subdivision (a)" requiring a verified answer when the State files a complaint. The court gave defendants until October 8, 2011 to file their responsive pleadings.

B. Second motion to strike the answer

On October 7, 2009, defendants HDV, Wilson, Dumas, and Richardson again collectively filed one answer to the complaint. The answer was verified but, again, was filed through defendant Wilson as legal counsel for all defendants. The State moved to strike the answer on the ground that Wilson may not represent defendants HDV, Dumas, and Richardson because Wilson is not a California attorney. In November 2009, HDV filed an opposition brief signed by Wilson, Dumas, and Richardson arguing that Wilson, as a board member of HDV, "should be able to represent HDV" and that defendants "must have their day in court[;] this is a Due Process requirement." The court granted the motion to strike. In its order, the court explained the law to defendants: "While the individual Defendants Allen Wilson, Billy Richardson and George Dumas may each file separate Answers in pro per, they cannot be represented by another individual who is not licensed to practice law in the State of California. In addition, a 'corporation cannot represent itself in court, either in propria persona or through an officer or agent who is not an attorney.' (Vann v. Shilleh (1975) 54 Cal.App.3d 192, 199.)" The court ordered HDV, Wilson, Richardson, and Dumas to file responsive pleadings by December 29, 2009 and instructed as follows: "If the individual Defendants, Allen Wilson, Billy Richardson and George Dumas proceed in pro per, they shall each file a separate responsive pleading on their own behalf."

C. Third motion to strike the answer and request for entry of default

Defendant Richardson complied and filed a propria persona answer on December 29, 2009. Defendants Wilson and Dumas did not comply; they did not file an answer or any other responsive pleading. Defendant corporation HDV filed an answer but was again represented by Wilson, who is not a California attorney. The State moved to strike HDV's answer and to find defendants HDV, Wilson, and Dumas in default. On April 7, 2010, the court filed an order granting the motion to strike HDV's defective complaint. The court stated: "Defendant HDV is improperly represented by Allen Wilson who is not a member of the California Bar." The court also entered the default of defendants HDV, Wilson, and Dumas.

D. Default judgment and involuntary dissolution of HDV

A prove-up hearing was held on September 10, 2010, following which the court issued a judgment against HDV, Wilson, and Dumas totaling $446,385.57 in penalties, damages, attorney fees, and costs. The court also ordered involuntary dissolution of HDV. Notice of entry of judgment was mailed to defendants on September 20, 2010, and the notice was filed with the court three days later.

E. Motion to set aside default judgment

On March 14, 2011, almost six months after notice of entry of judgment, defendants HDV and Wilson (through California counsel) filed a motion to set aside the judgment, asserting excusable neglect for their failure to file a responsive pleading. (Code Civ. Proc., § 473, subd. (b).) Defendants claimed that Wilson "became aware [of the] judgment . . . in November 2010" and, "thereafter, . . . attempted to retain California counsel to file a motion to set aside the judgment," finally doing so in March 2011. Defendants did not offer any explanation as to why "aware[ness]" of the judgment was delayed until November 2010, when notice of the judgment had been mailed to them in September 2010. Defendants also failed to explain why the efforts to retain counsel, even if delayed until November 2010, did not succeed until March 2011, or why Wilson—a Washington D.C. attorney—did not immediately appear in propria persona to seek relief. Putting aside the diligence issues, defendants' only argument as to why the court should find their neglect excusable was as follows: "In the present case, defendants have the right to put on a defense and attempt to reduce damages. Defendants' efforts to respond to the complaint were not accepted by the court. Defendants attempted repeatedly to file answers to the complaint and each time they were rejected. Defendants' failure in responding to the complaint was excusable."

The court denied defendants' motion for relief from judgment. The court's order, filed on April 27, 2011, found that the moving papers failed "to offer evidence establishing excusable neglect" for HDV's failure to file "a viable responsive pleading after the Court's prior orders striking the earlier Answers" and for Wilson's failure to file any responsive pleading after prior orders striking earlier answers.

Notice of entry of the order denying relief was served on May 2, 2011. Defendants HDV and Wilson filed a timely notice of appeal from the postjudgment order on June 1, 2011. (Code Civ. Proc., § 904.1, subd. (a)(2); Cal. Rules of Court, rule 8.104(a)(2) & (e).)

In defendants' form notice of appeal, they checked boxes to indicate that they are appealing both the judgment and the postjudgment order denying relief but list only the postjudgment order when specifying the date of any challenged judgment or order. In their brief on appeal, defendants limit their claims to the order denying relief from default. We therefore deem this appeal limited to the postjudgment order denying relief and, further, note that an appeal from the judgment itself would be untimely. (Cal. Rules of Court, rule 8.104(a)(2).)

II. DISCUSSION

"The court may . . . relieve a party . . . from a judgment . . . taken against him or her through his or her . . . excusable neglect." (Code Civ. Proc., § 473, subd. (b).) "The word 'excusable' means just that: inexcusable neglect prevents relief." (Carroll v. Abbott Laboratories, Inc. (1982) 32 Cal.3d 892, 895.) Neglect is generally deemed excusable if " 'a reasonably prudent person under the same or similar circumstances' might have made the same error.' " (Zamora v. Clayborn Contracting Group, Inc. (2002) 28 Cal.4th 249, 258.) "The burden of establishing excusable neglect is upon the party seeking relief who must prove it by a preponderance of the evidence." (Iott v. Franklin (1988) 206 Cal.App.3d 521, 528, fn. omitted.)

A defaulting party "must also be diligent" in seeking relief. (Zamora v. Clayborn Contracting Group, Inc., supra, 28 Cal.4th at p. 258.) A motion for relief must be made "within a reasonable time, in no case exceeding six months, after the judgment . . . was taken." (Code Civ. Proc., § 473, subd. (b).) A "reasonable time" under the circumstances of a particular case may be far shorter than six months. A party must act diligently in seeking relief and thus any substantial delay between discovery of the default and defendant's filing a motion for relief must be explained by the defendant. (Ludka v. Memory Magnetics International (1972) 25 Cal.App.3d 316, 321-322; Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group) \ 5:376.) Delays of three months or more routinely result in denial of relief absent a satisfactory explanation for the delay. (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial, supra, at ¶ 5:377 [collecting cases]).

The disposition of a motion for relief "rests largely in the discretion of the trial court, and its decision will not be disturbed on appeal unless there has been a clear abuse of discretion. Although precise definition is difficult, it is generally accepted that the appropriate test of abuse of discretion is whether or not the trial court exceeded the bounds of reason, all of the circumstances before it being considered." (In re Marriage of Connolly (1979) 23 Cal.3d 590, 597-598.) When reviewing an order on a motion for relief, "all presumptions will be made in favor of the correctness of the order, and the burden of showing abuse is on the appellant." (People ex rel. Lockyer v. Brar (2005) 134 Cal.App.4th 659, 663.)

Defendants here have failed to show an abuse of discretion. As noted above, defendants' only argument in the trial court as to why the court should find their neglect excusable was as follows: "In the present case, defendants have the right to put on a defense and attempt to reduce damages. Defendants' efforts to respond to the complaint were not accepted by the court. Defendants attempted repeatedly to file answers to the complaint and each time they were rejected. Defendants' failure in responding to the complaint was excusable." Essentially, defendants claimed that a defendant who files answers to a complaint—no matter how defective the answers and no matter how many times the answers are ordered corrected—should be excused from default when he abandons further efforts to respond and leaves the complaint unanswered. The claim is untenable, and defendants do not repeat it on appeal.

On appeal, defendants change direction and assert that they made "good faith efforts to comply with the technical rules of filing a responsive pleading." Specifically, defendants argue that their delay in retaining California counsel to represent corporate defendant HDV and Wilson's filing of a collective answer rather than a single propria persona answer was excusable neglect. These arguments were not raised in the trial court, and the State protests on that basis. The protest is well founded. " 'An argument or theory will generally not be considered if it is raised for the first time on appeal.' " (Martinez v. Scott Specialty Gases, Inc. (2000) 83 Cal.App.4th 1236, 1249.) In any event, the argument is unpersuasive.

Neglect may be found excusable if " 'a reasonably prudent person under the same or similar circumstances' might have made the same error.' " (Zamorav. Clayborn Contracting Group, Inc., supra, 28 Cal.4th at p. 258.) A reasonably prudent person would not have made these errors. Defendant HDV had almost a year to retain California counsel—from the filing of the State's complaint in May 2009 until entry of default in April 2010—yet failed to do so. HDV's failure occurred with full knowledge of the need for a corporation to be represented by counsel, as the point was explained by the court to HDV's officers on two separate occasions when striking defective answers. Nor was it excusable neglect for defendant Wilson to file a collective answer for multiple defendants whom he was unqualified to represent and expect the court to accept the answer as a single propria persona answer filed on his behalf alone. The court patiently explained to Wilson, in its January 2010 order striking the second defective answer: "If the individual Defendants, Allen Wilson [and others] proceed in pro per, they shall each file a separate responsive pleading on their own behalf." Wilson never complied with this clear mandate, leading to entry of his default several months later. The trial court did not abuse its discretion in finding that there was no evidence of excusable neglect warranting relief from default.

III. DISPOSITION

The order is affirmed.

_________________________

Sepulveda, J.

We concur:

_________________________

Ruvolo, P. J.

_________________________

Rivera, J.


Summaries of

People v. Homeless & Disabled Veterans Corp.

COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION FOUR
Jan 30, 2012
A132189 (Cal. Ct. App. Jan. 30, 2012)
Case details for

People v. Homeless & Disabled Veterans Corp.

Case Details

Full title:THE PEOPLE OF THE STATE OF CALIFORNIA, Plaintiff and Respondent, v…

Court:COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION FOUR

Date published: Jan 30, 2012

Citations

A132189 (Cal. Ct. App. Jan. 30, 2012)