Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. NC035471, Patrick T. Madden, Judge.
L.A. Law Group and Christie Kim for Plaintiffs and Appellants.
Abeltin & Migoya, James B. Abeltin and Reza Ghaboosi for Defendant and Respondent.
ZELON, J.
In a lawsuit filed after an automobile-pedestrian accident, plaintiffs and appellants Elizabeth Vargas and her daughter, Samantha Vargas, (“Vargas”) obtained a default judgment against defendant and respondent Ernest Hugo Medina. The trial court granted Medina’s motion to set aside the default under the court’s equitable powers. Vargas appeals, contending that the trial court abused its discretion in finding that Medina had a satisfactory excuse for not defending the original action, in finding that Medina was diligent in moving to set aside the judgment, and in overruling Vargas’s evidentiary objections to declarations submitted by Medina in support of the motion to set aside judgment. Finding no abuse of discretion by the trial court, we affirm.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
The following facts have been taken from the record. On June 12, 2003, Vargas was crossing an intersection in the crosswalk when Medina, driving a Ford Expedition, accelerated from a stop sign and struck Vargas. Medina notified his insurance company which unsuccessfully attempted to settle with Vargas.
A factual dispute remains over whether Medina struck Elizabeth Vargas or the stroller containing Samantha Vargas. This factual distinction is immaterial to our analysis.
On March 24, 2004, Vargas filed suit against Medina, and on April 18, 2004, Vargas served Medina with the summons and complaint. Medina testified in his deposition that he promptly delivered the summons and complaint to the Dasher’s Insurance office of Armando Amador, his insurance agent. At the time, Medina claims, he did not know that Amador was only a broker for Medina’s actual insurer, Sterling Casualty Insurance Company. Medina assumed his insurance company would handle the lawsuit and did nothing further. Sterling asserted that it never received a copy of the complaint from either Medina or Amador. Consequently, no answer was filed, and the court entered a default judgment against Medina on September 13, 2004.
According to his deposition, Medina first became aware of the default when Vargas’s counsel contacted him by phone in April or May of 2005, after Medina had moved out-of-state. This was the second phone conversation Medina had with Vargas’s counsel. He told Vargas’s counsel to contact Sterling but took no other action. Subsequently, Sterling retained Court Search Unlimited to search for any lawsuit filed by Vargas against Medina and, in August 2005, discovered that a lawsuit had been filed. Sterling began attempts to contact Medina at his last known address and eventually made contact about September 13, 2005.
On September 20, 2005, Medina filed a motion to set aside the default and default judgment. The trial court granted this motion on December 20, 2005, exercising its equitable power under Olivera v. Grace (1942) 19 Cal.2d 570, 576. The trial court ruled that Medina satisfied the requirements for vacating the default: 1) a meritorious defense; 2) a satisfactory excuse for the failure to respond; and 3) diligence in bringing the motion. Vargas filed this timely appeal.
DISCUSSION
I. Appealability
An order granting equitable relief from judgment is appealable under Code of Civil Procedure section 904.1(a)(2). (Page v. Insurance Co. of North America (1969) 3 Cal.App.3d 121, 127.)
II. The Trial Court Did Not Abuse Its Discretion in Granting the Motion to Set Aside the Default and Default Judgment
The central issue in this case is whether the trial court abused its discretion when it granted the motion to set aside the default and default judgment. Because Medina did not move to set aside judgment within six months of the default judgment, he did not seek relief under Code of Civil Procedure section 473. Instead, he sought, and the trial court granted, relief on equitable grounds under Olivera v. Grace, supra, 19 Cal.2d at pp. 575-576. Under this theory, a trial judge may properly set aside a default and default judgment in equity when 1) the defaulted party has a meritorious case; 2) the defaulted party has a satisfactory excuse for not defending the original action in a timely manner; and 3) the defaulted party diligently sought to set aside the default once it had been discovered. (Stiles v. Wallis (1983) 147 Cal.App.3d 1143, 1147-1148.)
The trial court’s decision to grant relief from a default is reviewed under an abuse of discretion standard. (Weitz v. Yankosky (1966) 63 Cal.2d 849, 854.) “The appropriate test for abuse of discretion is whether the trial court exceeded the bounds of reason. [Citation.]” (Anastos v. Lee (2004) 118 Cal.App.4th 1314, 1318-1319.) Under this standard, we must “first determine whether substantial evidence supports the factual basis on which the trial court acted, and then determine whether the orders made by the trial court were an abuse of discretion in light of those facts.” (Obregon v. Superior Court (1998) 67 Cal.App.4th 424, 430.) In cases of equitable relief, “there is a strong public policy in favor of the finality of judgments and only in exceptional circumstances should relief be granted.” (In re Marriage of Stevenot (1984) 154 Cal.App.3d 1051, 1071.) However, policy considerations favor a trial on the merits, and appellate courts are therefore more likely to affirm orders granting relief from a default than those denying relief. (Misic v. Segars (1995) 37 Cal.App.4th 1149, 1154.)
A. Substantial evidence supports the trial court’s findings.
Appellant does not assert on appeal that the trial court erred in finding that Medina had a meritorious defense. Accordingly, we address the remaining elements of the ruling.
1. Substantial evidence supports the trial court’s finding that Medina had a satisfactory excuse for not responding to the original lawsuit in a timely manner.
A defendant has a satisfactory excuse for failing to respond to the original lawsuit in a timely manner if there was extrinsic mistake. (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 982-983.) When a defendant’s reliance on his insurer results in a default, “the question is whether the defendant was reasonably justified under the circumstances in his reliance or whether his neglect to attend to the matter was inexcusable.” (Weitz v. Yankosky, supra, 63 Cal.2d at p. 855.)
In Weitz, an auto accident case with facts similar to the instant case, the defendant mailed the summons and complaint to the home office of his insurance company; however, the documents were never received. (Weitz v. Yankosky, supra, 63 Cal.2d at p. 852.) The defendant never contacted his insurance company to follow up but assumed that the matter had been taken care of. (Ibid.) Almost 12 months following service, the plaintiff obtained a default judgment against the defendant. (Ibid.) The defendant did not find out about the default judgment until more than six months later when he received notice that his driver’s license was to be revoked due to an outstanding judgment. (Ibid.) The Supreme Court found that the defendant had “acted reasonably in assuming that [his insurance company] would defend and in following the instructions in his insurance policy to mail any summons and complaint to [the insurance company headquarters], and the trial court could properly conclude that the failure of these documents to arrive was neither defendant’s nor [his insurance company’s] fault.” (Id. at p. 856.)
Here, Medina presented evidence that he personally delivered the summons and complaint to his insurance broker’s office and that he thereafter relied on the insurance company to defend the action.
Vargas implies that Medina’s facts are fabricated in order to parallel the facts in Weitz. This argument fails because the trial court was entitled to believe Medina’s facts. It is not the role of this court to judge the credibility of statements in the record. (Flatley v. Mauro (2006) 39 Cal.4th 299, 326.)
Vargas also contends that Medina had no satisfactory excuse because any mistake involving Dashers was intrinsic rather than extrinsic. Vargas bases this contention on the claim that Dashers and Sterling are the same entity, a supposedly undisputed fact based on webpage printouts purporting to show that a third company H&H Agency, Inc. both owns Sterling and does business as Dasher’s Insurance. As above, this argument fails because the trial court was entitled to discredit the claim that Dashers and Sterling are the same entity for purposes of extrinsic mistake.
Even if the trial court believed Dashers and Sterling to be the same entity, Vargas has not shown a lack of extrinsic mistake. “Mistake is extrinsic when it deprives one of an opportunity to present his case to the court and is said to be intrinsic where the other party has been given proper notice of an action, has not been prevented from full participation therein, and has had an opportunity to present his case in court.” (McCreadie v. Arques (1967) 248 Cal.App.2d 39, 44, fn. 3.) The trial court could reasonably have concluded that Medina’s reliance on Sterling to defend the lawsuit and the apparent loss of the summons and complaint deprived Medina of a full opportunity to present his case in court. Therefore, substantial evidence exists to support the trial court’s finding that Medina had a satisfactory excuse for not defending the original action.
2. Substantial evidence supports the trial court’s finding that Medina was diligent in moving to set aside judgment once he learned of the default judgment.
Vargas contends that Medina admitted to receiving notice of the judgment in October 2004 and that the delay of almost one year in moving to set aside judgment was unreasonable. Vargas’s argument hinges entirely on her conclusion that Medina delayed close to one year, but the record did not require the court to reach this conclusion. Examining the record in the light most favorable to the prevailing party, Medina may have delayed as little as four and a half months between receiving notice of the judgment and filing his motion to set aside the default and default judgment. Medina indicated in his deposition that the first time he became aware of the judgment was when Vargas’s counsel contacted him by phone while he was living on Rifle Crest Avenue in Las Vegas. During the deposition, Medina at first agreed with Vargas’s counsel that this conversation occurred soon after moving to Rifle Crest in October 2004, but he later asserted that the conversation took place soon before moving from Rifle Crest around early May 2005. Under Sanchez-Corea v. Bank of America (1985) 38 Cal.3d 892, 907, we examine the record in the light most favorable to the prevailing party. Given this standard, we must assume on appeal that Medina first learned of the judgment around May 2005. Vargas has not argued, here or before the trial court that a period of four and a half months was unreasonable delay.
The deposition transcript from October 21, 2005 reads:
Even if Vargas had argued that a period of four and a half months was unreasonable delay, substantial evidence still supports the trial court’s finding of diligence. A defendant’s diligence is “inextricably intertwined” with prejudice to the plaintiff, and reduced prejudice weakens a defendant’s burden of proving diligence. (Rappleyea v. Campbell, supra, 8 Cal.4th at p. 983-984.) Generally, “once a default has resulted in a judgment there is a high degree of prejudice to the plaintiff in vacating the default because it entails setting aside the judgment and disturbing the plaintiff's justifiable reliance on the award. Every case, however, must be judged on its peculiar circumstances.” (Falahati v. Kondo (2005) 127 Cal.App.4th 823, 834.)
Vargas did not allege prejudice; therefore, the only prejudice we may assume is that which might arise from setting aside the judgment. Vargas’s claim to prejudice is weakened, however, by her failure to attempt collection of the judgment from Sterling in the year long period following entry of the default judgment. In light of Vargas’s failure to allege that a four and a half month delay was insufficient diligence and her failure to attempt collection of the judgment, there is no basis to find that Medina did not meet his burden under Rappleyea. Therefore, the court below did not abuse its discretion in finding that Medina was diligent in moving to set aside the default and default judgment.
The trial court found that Medina had a meritorious defense, had a satisfactory excuse for not responding to the original action, and was diligent in seeking relief after discovering the default judgment. Those findings are supported by substantial evidence and will not be disturbed on appeal. In light of these findings, the trial court’s decision to allow Medina relief from the default and default judgment was not an abuse of discretion.
IV. The Doctrine of Unclean Hands Did Not Bar Equitable Relief
Vargas argues, for the first time on appeal, that the doctrine of unclean hands bars equitable relief for Medina. “[W]hen we consider that the trial court had no opportunity in the instant case to pass on that defense as it was not pleaded or called to its attention, we must conclude that it is not now available to appellants.” (Watson v. Poor (1941) 18 Cal.2d 302, 311-312.) Even if we were to consider whether the doctrine of unclean hands bars Medina’s relief in equity, the arguments Vargas advances for applying the doctrine go to the issue of credibility rather than the application of law. As previously discussed, it is not the role of this court, on appeal, to decide issues of credibility. (Flatley v. Mauro, supra, 39 Cal.4th at p. 326.)
V. The Trial Court Did Not Abuse Its Discretion in Overruling Vargas’s Objections
Vargas contends on appeal that the trial court erred in overruling evidentiary objections to various portions of Medina’s, Loeper’s, and Snuggs’s declarations submitted in support of the motion to set aside the default and default judgment. We review the trial court’s evidentiary rulings for an abuse of discretion. (Carnes v. Superior Court (2005) 126 Cal.App.4th 688, 694.)
A. The trial court did not abuse its discretion in overruling Vargas’s Evidentiary Objections to Medina’s Declaration .
The trial court overruled Vargas’s objections to paragraphs three and four of Medina’s declaration. Medina had stated in his declaration that he delivered the summons and complaint to his insurance agent, Amador, at Dasher’s Insurance. Vargas objected this statement lacked foundation. The trial court did not err; Medina has personal knowledge of his own actions. (Evid. Code, § 702; People v. Lewis (2001) 26 Cal.4th 334, 356 [“To testify, a witness must have personal knowledge of the subject of the testimony, i.e., ‘a present recollection of an impression derived from the exercise of the witness’ own senses.’ [Citation.]”].) On appeal, Vargas argues credibility issues, but the objection before the court is the basis for our review.
Vargas also objected to paragraph four of Medina’s declaration which states that “[a]fter delivering the Summons and Complaint to Mr. Amador, [Medina] never heard from anyone regarding the lawsuit. [Medina] believed that the matter had been resolved by [his] insurance agent Armando Amador and Dasher’s Insurance, especially in light of the fact that plaintiff Elizabeth Vargas indicated at the scene that the accident was her fault.” Vargas objected on the grounds of lack of foundation, no personal knowledge, assumes facts not in evidence, and conclusory. On appeal, as with the other objection, Vargas argues credibility issues, rather than those pertaining to the actual objections. Medina’s statement of what he did and believed do not lack foundation or personal knowledge. Therefore the trial court did not abuse its discretion in overruling the objections to paragraph four.
B. The trial court did not abuse its discretion in overruling Vargas’s Evidentiary Objections to Loeper’s Declaration .
Next, Vargas argues that the trial court abused its discretion in overruling Vargas’s objections to paragraphs 16 and 17 of Loeper’s declaration. Paragraphs 16 and 17 state: “Throughout my handling of this claim, I was never provided any proof by the plaintiffs’ counsel that the Complaint had been served upon the insured although I requested the same from plaintiffs’ counsel. Sterling never received a copy of the Complaint from Armando Amador or Dasher’s [I]nsurance. [¶] In addition, plaintiffs’ counsel never provided STERLING notice of the default and default judgment although I attempted to contact plaintiffs’ counsel several times about whether a lawsuit was filed.” Vargas argues lack of foundation, no personal knowledge of declarant, and assumes facts not in evidence. Vargas’s argument lacks any merit. Loeper, in paragraph one of his declaration, states that he is handling Medina’s file as an employee of Sterling and that he has personal knowledge of the facts set forth. Therefore, the trial court properly found that Loeper was qualified to testify as to whether and from whom Sterling had received a copy of the complaint or default judgment. Vargas also contends that Loeper’s statement assumes that Dashers and Sterling are not the same entity, contrary to what Vargas claims are undisputed facts. As discussed previously, Vargas has not made a sufficient showing that Dashers and Sterling must be considered the same entity for the purposes of the present lawsuit. The trial court did not abuse its discretion in overruling Vargas’s objections to Loeper’s declaration.
C. The trial court did not abuse its discretion in overruling Vargas’s Evidentiary Objections to Snuggs’s Declaration.
Finally, Vargas contends that portions of the declaration of Carmen Snuggs, Medina’s counsel, constituted hearsay and inadmissible opinion. In her declaration, Snuggs describes a conversation with Medina regarding the lawsuit as well as a conversation with Robert Tomlinson of Dasher’s Insurance regarding Amador’s employment. While Snuggs’s statements about her conversations with Medina and Robert Tomlinson would be hearsay if used to show the truth of the matters asserted, there are valid non-hearsay uses for this testimony. (Evid. Code § 1200.) In any event, with regards to the content of the conversation with Medina, Medina made essentially the same allegations in his declaration and deposition. Therefore, even if the statements were considered only for their truth, the error was not prejudicial. Any error with respect to the conversation with Tomlinson was harmless because Amador’s employment status is immaterial to the motion.
The last paragraph of Snuggs’s declaration states Snuggs’s belief that a valid basis exists to bring the motion to set aside judgment. Vargas attacks this statement as inadmissible opinion. Even accepting this argument, any error would be harmless because Snuggs’s opinion of the validity of the motion was irrelevant.
DISPOSITION
The judgment is affirmed. Respondent is awarded his costs on appeal.
We concur: PERLUSS, P. J. JOHNSON, J.
Q. Okay. And this was – this phone conversation that you are describing right now was sometime right after you moved to Rifle Crest?
A. Yes.
Q. So that by my indication would have been somewhere around a year ago?
A. Basically, yes.
Q. Right around a year ago now?
A. Yes, maybe less, whenever the judgment was, you know, done against me or whatever, that’s when they called me.
Q. Okay. You had – you understood that the judgment was relatively fresh at that time?
A. Yes.
. . .
Q. And th1at was about a year ago?
A. Not actually a year, it was less than that.
Q. Well, you were at Rifle
A. It was – it was right – maybe like a month or a month and a half before I moved over to Lamb.
Since Medina moved to 1492 North Lamb on June 10th, 2005, he may have learned of the default judgment against him as late as early May 2005.