Opinion
G054603
06-27-2018
SOHELIA SADR, Plaintiff and Appellant, v. NCL (BAHAMAS) LTD. Defendant and Respondent.
Abiri & Szeto, Robert Abiri and Kenneth H. Szeto for Plaintiff and Appellant. Kaye, Rose & Partners, Bradley M. Rose and Frank C. Brucculeri for Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 30-2014-00728605) OPINION Appeal from an order of the Superior Court of Orange County, David R. Chaffee, Judge. Reversed and remanded. Abiri & Szeto, Robert Abiri and Kenneth H. Szeto for Plaintiff and Appellant. Kaye, Rose & Partners, Bradley M. Rose and Frank C. Brucculeri for Defendant and Respondent.
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Plaintiff Sohelia Sadr appeals from an order granting a motion by defendant NCL (Bahamas) Ltd. (Norwegian), for relief from default under Code of Civil Procedure section 473, subdivision (b), the provision for mandatory relief due to attorney fault. Norwegian had a registered agent for service of process in California, William H. Collier, Jr., who was an attorney. Sadr filed a complaint for personal injuries sustained while on Norwegian's cruise ship. She served the complaint on a secretary at Collier's work place, which was proper substitute service under section 415.20, subdivision (a).
All statutory references are to the Code of Civil Procedure unless otherwise stated. --------
Collier immediately received a copy from the secretary, but never forwarded the documents to Norwegian. Sometime later, he was served with various documents, including an application for entry of default and default judgment. He never forwarded those documents to Norwegian either. Eventually, Norwegian's default was taken and a default judgment entered for $142,631.46.
After a first motion for relief from default was denied, Norwegian filed a second motion, this time based, in part, on the mandatory relief provisions of section 473, subdivision (b). For the first time, Collier claimed to be Norwegian's attorney: "At all relevant times herein, I had an ongoing professional relationship with [Norwegian], both as counsel and as agent for service of process in California." He offered no further details on the nature of his "counsel" relationship with Norwegian. He went on to explain that he believed, erroneously, that service was not proper unless he was personally served. Thus he did not pay attention to papers served on secretaries. Indeed, he had no recollection of even seeing the e-mail from a secretary at his firm that contained the summons and complaint. The court credited this testimony, deemed it a legal judgment, and granted relief that it believed was mandatory.
We reverse. Whatever attorney-client relationship existed between Collier and Norwegian—and it is entirely unclear what it was—Collier was not acting as an attorney when receiving a summons and complaint as Norwegian's registered agent. At that moment, he was simply an agent for service of process. His reasons for ignoring e-mails from the secretary, therefore, are irrelevant to the mandatory relief provisions of section 473, subdivision (b).
FACTS
Sadr alleged that in June 2012, she was walking on the deck of a cruise ship owned by Norwegian when she slipped and fell on a puddle of water that had formed on the ship's deck, suffering damages. In June 2014, she filed a complaint for personal injuries against Norwegian. But she did not yet serve it.
In November 2014, Sadr's attorney contacted the passenger claims manager at Norwegian and informed her that an action had been filed against Norwegian. The manager expressed an interest in settling the case and requested a demand letter. Sadr's attorney mailed a demand letter later that month, which Norwegian acknowledged receiving.
The following month Sadr's attorney followed up with a phone call, but Norwegian refused to provide a response to the demand letter, while still expressing interest in settlement. Sadr's attorney threatened to serve the complaint.
Later that month Sadr served the complaint on Norwegian's registered agent for service of process, Collier. The complaint was served on a secretary at Keesal, Young & Logan, the firm where Collier worked. That same day, the secretary e-mailed a copy of the summons and complaint to Collier, but he had no recollection of seeing the e-mail. Collier did not forward the summons and complaint to, nor discuss it with, anyone at Norwegian. Also on the same day, Sadr's attorney contacted Norwegian directly to inform it of an upcoming case management conference, though it appears there was no mention of service in that communication.
On February 26, 2015, Sadr's attorney spoke with the claims manager at Norwegian and informed her that Norwegian had been properly served, and that if Norwegian did not appear at a case management conference on March 3, 2015, Sadr would apply for a default. Sadr's attorney relayed the same message to a claims representative at Norwegian that had been assigned to the claim. The following day, Sadr's attorney faxed a letter to the two individuals at Norwegian with the same information. On March 2, 2015, Sadr served Collier with a copy of the request for entry of default and default prove-up package. Once again, this was served by substitute service on a secretary at Collier's firm. And once again, Collier did not forward the materials on to Norwegian.
Norwegian did not appear at the March 3, 2015 case management conference, and a default was entered against Norwegian. After reviewing Sadr's default prove-up papers, the court requested additional documentation and briefing. Over one year later, in May 2016, the court entered a default judgment in the amount of $142,631.46 (which was approximately one-quarter of what Sadr had requested in damages).
Norwegian subsequently moved to vacate the default and default judgment on three grounds: "(1) the Default and Default Judgment is void [citation] due to [Sadr's] failure to properly serve Summons, (2) based on equitable principles due to plaintiff's fraud on the Court during prove-up, and (3) because service of the Summons did not result in actual notice (CCP § 473.5)." Collier submitted a declaration acknowledging that his office received the summons and complaint, and that a secretary e-mailed him a copy. In that declaration, he did not claim to be Norwegian's attorney. In support of the reply memorandum, Collier submitted a second declaration, but, again, did not claim to be Norwegian's attorney. In that same reply memorandum, for the first time, Norwegian raised attorney fault as a grounds for relief. The court denied the motion without prejudice to Norwegian filing a second motion based on attorney fault.
Norwegian filed that second motion, seeking both mandatory and discretionary relief under section 473, subdivision (b). Collier submitted the declaration we described in the introduction, and the court granted the motion based on the mandatory relief provisions. It found Collier's declaration to be credible and found that Collier's actions as an attorney caused the entry of default. Accordingly, the court vacated the default and default judgment, and ordered Collier to pay Sadr $5,250 in fees and costs. Sadr appealed.
DISCUSSION
We must consider whether an attorney acting solely as a registered agent for service of process qualifies for mandatory relief under section 473, subdivision (b). The relevant facts are undisputed. The only question is whether the mandatory relief provisions apply. Our review is de novo. (Martin Potts & Associates, Inc. v. Corsair, LLC (2016) 244 Cal.App.4th 432, 437.)
The relevant portion of section 473, subdivision (b), provides: "Notwithstanding any other requirements of this section, the court shall, 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."
Acting as a registered agent for service of process is a decidedly nonlegal task. Corporations Code section 2105, subdivision (a)(5), requires all foreign corporations qualified to do business in California to designate "an agent upon whom process directed to the corporation may be served within this state. The designation shall comply with subdivision (b) of Section 1502." In turn, Corporations Code section 1502, subdivision (b), requires the corporation to "designate, as the agent of the corporation for the purpose of service of process, a natural person residing in this state or a corporation that has complied with Section 1505 and whose capacity to act as an agent has not terminated. If a natural person is designated, the statement shall set forth that person's complete business or residence street address." Corporations Code section 1505 permits any domestic or foreign corporation to act as an agent for service of process, provided it has filed a statement containing a California address and the names of individuals authorized to be served. Nowhere in these statutes is there any requirement that the agent be an attorney. To the contrary, corporations cannot be attorneys, yet a corporation can serve as a registered agent.
Nonetheless, it is not uncommon for lawyers to wear multiple hats, and here Collier declared that, in addition to being a registered agent for service of process, he had a professional relationship with Norwegian as counsel. That seems deliberately vague to us, but the court credited it, so we will set aside our doubts. Does that make a difference?
On the facts of this case, no. In cases such as this, where a lawyer is performing both legal and nonlegal functions for a client, whether the benefits of being an attorney apply depends on the predominant purpose of the conduct at issue. For example, in Montebello Rose Co. v. Agricultural Labor Relations Bd. (1981) 119 Cal.App.3d 1, the issue was whether communications between a corporate vice-president and an in-house attorney were privileged. The attorney was acting as the negotiator for the company in a union dispute, and the communications concerned the negotiations. (Id. at pp. 6-7.) The court held the communications were not privileged: "'To make the communication privileged the dominant purpose must be for transmittal to an attorney "in the course of professional employment"' [citations]. The privilege does not apply to communications to an attorney who is transacting business that might have been transacted by another agent who is not an attorney [citation]. [¶] Since [the company's] labor negotiations could have been conducted by a non-attorney, it is self-evident that communications with [the attorney] relating to the conduct of those negotiations were not privileged . . . ." (Id. at p. 32; see Los Angeles County Bd. of Supervisors v. Superior Court (2016) 2 Cal.5th 282, 297 ["In order for a communication to be privileged, it must be made for the purpose of the legal consultation, rather than some unrelated or ancillary purpose."].)
These principles were applied in the context of the mandatory provisions for relief from default in Gutierrez v. G & M Oil Co., Inc. (2010) 184 Cal.App.4th 551. There, a lawyer for the defendant company was also a vice-president and the registered agent for service of process. The company was sued, and the lawyer decided to take on the defense himself without informing anyone else at the company. He appeared for at least two case management conferences, but otherwise neglected the case, and eventually a default and default judgment were entered. (Id. at pp. 555-556.) The principal issue in the case was whether in-house counsel qualified for mandatory relief. The court held they do. (Id. at p. 554.) But in analyzing the issue, the court recognized that not all activity by a corporate lawyer qualifies for relief: "There is a distinction between corporate counsel who provide 'strictly legal services' to a corporation, and corporate counsel who 'step out' of their role as 'legal advisor' and provide services of a 'nonlegal business nature.'" (Id. at p. 555.) The court held that the conduct at issue in that case was legal in nature because the attorney was representing the company in court, a quintessential legal activity. (Id. at p. 564.)
Applying that same framework here, however, we conclude Collier's activity was nonlegal in nature. As we demonstrated above, a registered agent need not be an attorney. As the agent for service of process, Collier had one job: to convey to Norwegian any legal papers served on him. There is no evidence he was retained to make legal judgments about the sufficiency of service, and, indeed, he never communicated any such opinions to Norwegian. Nor is there evidence that he was ever retained in this case, or even in cases of this nature. This action simply fell outside the scope of any legal services he provided to Norwegian. Accordingly, the provisions of section 473, subdivision (b), for mandatory relief from default did not apply.
Norwegian's motion, however, was not solely based on the mandatory relief provisions. It also moved based on the discretionary relief provisions of section 473, subdivision (b). The court, believing relief to be mandatory, never exercised its discretion. Accordingly, we will remand for the court to rule on that issue in the first instance.
DISPOSITION
The order of the court granting relief from default is reversed. The court is directed to rule on Norwegian's request for discretionary relief from the default and default judgment. Sadr shall recover her costs incurred on appeal.
IKOLA, J. WE CONCUR: MOORE, ACTING P. J. ARONSON, J.