Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Kern County, No. CV260653, Arthur E. Wallace, Judge.
Borton Petrini and Roger A. Parkinson for Defendant and Appellant.
Chain Cohn Stiles and Paul A. Welchans for Plaintiff and Respondent.
DAWSON, Acting P.J.
A corporation failed to appear at trial and an employee obtained a $1.56 million judgment in her personal injury lawsuit against it. After learning of the result, the corporation filed a motion requesting the judgment be set aside pursuant to Code of Civil Procedure section 473. The trial court denied the motion on the grounds that mandatory relief was not available and discretionary relief should not be granted because the corporation’s neglect of its mail over a three-month period was not excusable.
All further unlabeled statutory references are to the Code of Civil Procedure.
The corporation appeals the order denying its motion. We conclude the trial court (1) correctly determined mandatory relief under section 473 was not available and (2) did not abuse its discretion in denying discretionary relief. The judgment will be affirmed.
FACTS AND PROCEEDINGS
Bowlay, Inc. (Corporation) owns the Greenacres Mobile Home Park in Ridgecrest, California. Patty Wood worked for Corporation. On March 24, 2006, Wood left Corporation’s office-a mobilehome unit-through the south door. She opened the door outward, expecting to step onto the landing of the stairs. The stairs had been moved and Wood fell to the ground, landing on her right side. Wood was taken by ambulance to an emergency room and then to another hospital.
The fall shattered the top of Wood’s right tibia, broke her ribs, and collapsed her right lung. Her postsurgery healing was made more difficult when the incision from the surgery became infected. For six months after her release from the hospital, Wood was unable to walk.
In April 2007, Wood filed a complaint for personal injury against Corporation. Wood alleged claims for general negligence and premises liability relating to the removal of the four-foot high steps from the office. She also alleged Corporation was her employer and had failed to maintain workers’ compensation insurance, which allowed her to bring an action for personal injuries.
Philip Bowlay-Williams (Bowlay) is a former correctional officer who founded Corporation. He also is Corporation’s owner and head of operations. At the time of Wood’s accident, the operations of Corporation consisted of operating the mobilehome park it owned and refurbishing used mobilehomes for resale or rental. Corporation stored the used mobilehomes it purchased at its mobilehome park in Ridgecrest. Bowlay maintained the formal corporate address for his corporation at his residence in Covina and acted as its registered agent for service of process.
In November 2007, United States Liability Insurance Group, a Berkshire Hathaway Company, sent Corporation a letter that (1) identified the commercial liability insurance policy issued to Corporation, (2) acknowledged receipt of Wood’s complaint and summons, and (3) informed Corporation that it had assigned the defense of Wood’s complaint to the law firm of Kamel & Maxwell. Later in November, Kamel & Maxwell filed Corporation’s answer to Wood’s complaint.
On May 16, 2008, the insurance company sent Corporation a letter stating that (1) the commercial liability insurance policy it provided included an exclusion for bodily injuries suffered by employees of the insured, (2) Wood’s amended pleading alleged she was an employee of Corporation, (3) it would no longer assume the defense of Corporation in the matter, and (4) it strongly recommended that Corporation retain counsel, at its own expense, to protect its interests in the matter.
On May 20, 2008, Brian Kamel of Kamel & Maxwell spoke with Bowlay by telephone about the insurance company’s letter. Kamel told Bowlay that Corporation had the option of continuing to retain Kamel & Maxwell at its own expense or retaining other counsel. Kamel’s declaration asserted his understanding of the conversation was that Bowlay preferred to retain his personal attorney, John Henrichs, and would confirm it with Kamel the following day. Kamel asserted that Bowlay did not contact him again.
On May 22, 2008, Bowlay moved from his residence in Covina to Corporation’s principal place of business in Ridgecrest to address the business’s plummeting sales and related financial problems. While at Ridgecrest, Bowlay stayed in a mobilehome on the company’s premises. After relocating, Bowlay cut costs by terminating 14 of the 16 employees of Corporation, most of whom had refurbished the mobilehomes the company purchased. Bowlay asserts that he spent an extraordinary amount of time and effort refurbishing mobilehomes himself to bring them to a state suitable for renting.
During the period of May 22, 2008, through August 27, 2008 (the Period), Bowlay remained in Ridgecrest, returning to his residence in Covina only once: from Friday, July 4, 2008, through Sunday, July 6, 2008. Bowlay asserts he “had moved the formal business address of [Corporation] from Covina to Ridgecrest for the entire Period.” During the Period, Bowlay’s neighbors collected the mail that came to his Covina address. Bowlay was unable to collect that mail from his neighbors when he returned to Covina over the 4th of July weekend because they spent the holiday elsewhere.
Bowlay’s declaration does not assert that before or during the Period he filed paperwork with the California Secretary of State to change the address of the corporation’s registered agent for service of process.
Bowlay asserts that on two occasions between May 22, 2008, and June 15, 2008, he phoned the law firm of Kamel & Maxwell to inquire about the status of his case and left voicemail messages for “Yam Lee, ” providing Corporation’s business telephone and address in Ridgecrest where he could be reached. Bowlay asserts he received no return calls from the firm.
Kamel asserts that he had not heard from Bowlay by May 23, 2008, and he left a voicemail message requesting a return call immediately to discuss representation in the action. Kamel also asserts that his associate, Yee Lam, left multiple voicemail messages for Bowlay before the end of the month.
On June 2, 2008, Kamel & Maxwell sent a letter to Corporation at the Covina address confirming the May 20, 2008, telephone conversation, the subsequent unsuccessful attempts to contact Bowlay, and its intention to file a motion to withdraw as counsel.
On June 5, 2008, Kamel & Maxwell filed a notice of motion and motion to be relieved as counsel on the mandatory Judicial Council form MC 051 (rev. Jan. 1, 2007) along with a supporting declaration on the mandatory Judicial Council form MC 052 (rev. Jan. 1, 2007). It appears these papers were accompanied by Judicial Council form MC 053 (rev. Jan. 1, 2007), the form used for the order granting attorney’s motion to be relieved as counsel.
The proofs of service attached to each of the three forms are all dated June 5, 2008. The form of order, however, is file-stamped June 3, 2008.
On July 3, 2008, the trial court held a hearing on the motion to be relieved as counsel. The trial court had the attorneys enter their appearances and then concluded the matter by stating:
“This is a motion to be relieved. There is compliance with Rule 3.1362 and apparently no appearance on behalf of the client for the client. I’ve marked it ready for hearing to determine whether he does appear. He hasn’t. We’ll grant the motion.”
The record on appeal does not contain a copy of the signed order as it was served on Corporation and does not contain a copy of the notice of ruling regarding the motion to be relieved as counsel filed by Kamel on July 7, 2008. The clerk’s transcript that constitutes a part of the appellate record contains a copy of the register of action/docket. The docket reflects the existence of the notice of ruling on the motion to be relieved as counsel.
A mandatory settlement conference was held on July 11, 2008, and the final case management conference was held on August 1, 2008. No one appeared for Corporation at either conference.
On August 11, 2008, a bench trial was held. No one appeared on behalf of Corporation and the trial court stated it would enter the default of Corporation. Counsel for Wood asked the court not to enter a default, but to allow Wood to present evidence sufficient for the court to make findings in her favor, which is the procedure authorized by section 594. At the conclusion of Wood’s evidence and closing comments by her counsel, the court indicated it would review the deposition of her doctors and then render its decision.
The trial court issued its written ruling a few days after the trial. The ruling stated a judgment would be rendered in favor of Wood in the amount of $1,562,752.89 plus costs of suit. Approximately two weeks later, the trial court entered a judgment in favor of Wood that awarded her $121,522.89 for past medical expenses, $210,000 for future medical expenses, $52,200 for lost earnings, $279,000 for the future loss of earnings, and general damages for pain and suffering of $900,000. The damages awarded Wood totaled $1,562,722.89 (not $1,562,752.89).
Later in August, when Bowlay returned to the Covina address, he first discovered the documents concerning the lawsuit that had been mailed to that address, which included correspondence from Kamel & Maxwell, the motion to be relieved as counsel, the order granting the motion, and the judgment.
In January 2009, Corporation filed a motion to set aside the judgment. The trial court held a hearing on the motion on February 23, 2009. Later that month, the trial court filed an order denying Corporation’s motion to set aside the default judgment. Corporation filed a timely appeal from that order.
DISCUSSION
Section 473, subdivision (b) provides for relief from judgments and dismissals in certain circumstances. The statute contains a mandatory relief provision and a discretionary relief provision.
I. Mandatory Relief Under Section 473
A. Statutory Language
A mandatory relief provision was added to section 473, subdivision (b) in 1988 and expanded in 1991 and 1992. (See 8 Witkin, Cal. Procedure (5th ed. 2008) Attack on Judgment in Trial Court, § 192, pp. 792-793.) The mandatory relief provision acts as a “narrow exception to the discretionary relief provision for default judgments and dismissals. [Citation.]” (Zamora v. Clayborn Contracting Group, Inc. (2002) 28 Cal.4th 249, 257.) The mandatory relief provision states in part:
“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.” (§ 473, subd. (b), italics added.)
The purpose of this mandatory relief provision has been identified by the California Supreme Court as alleviating the hardship on parties who lose their day in court due solely to an inexcusable failure to act on the part of their attorneys. (Zamora v. Clayborn Contracting Group, Inc., supra, 28 Cal.4th at p. 257.) More recently, the Court of Appeal has stated the purpose was to relieve the innocent client of the burden of the attorney’s fault, to impose the burden on the erring attorney, and to avoid precipitating more litigation in the form of malpractice suits. (SJP Limited Partnership v. City of Los Angeles (2006) 136 Cal.App.4th 511, 516.)
B. Trial Court’s Reasoning
In this case, the trial court concluded relief was not mandatory. The explanation for this conclusion is contained in the following statement by the court:
“Well, you’re talking about where in essence the legislature in their infinite wisdom has decided to insulate attorneys from malpractice cases for, I suppose, allowing defaults to be entered against their client, but that requires the attorney to in effect throw himself on the sword, if you will, or to admit that it was his responsibility and his problem and, therefore, a basis to set it aside.”
The court’s reference to an attorney throwing himself on the sword and admitting responsibility is an obvious reference to the statutory requirement for a sworn affidavit attesting to the attorney’s mistake, surprise, inadvertence, or neglect. When a complying affidavit is filed, relief is mandatory even if the attorney’s neglect is inexcusable. (SJP Limited Partnership v. City of Los Angeles, supra, 136 Cal.App.4th at pp. 516-517.)
C. Corporation’s Contentions
Corporation contends that, when a client proves that his or her attorney’s negligence caused the default situation, legal symmetry and fairness require granting the motion to set aside the judgment, even though the attorneys have refused to sign an affidavit attesting to their mistake, inadvertence, or neglect. Corporation further argues that this alternative method of proving attorney negligence need not be stated in the statute because “it can just be judicial patina upon C.C.P. §473.”
D. Application of Statute
In this case, no attorney affidavit of fault was filed to support Corporation’s motion under section 473, subdivision (b). As a result, an explicit statutory condition for mandatory relief was not satisfied. Corporation’s argument that the explicit statutory condition is not a necessary condition to obtaining mandatory relief is unconvincing.
We cannot interpret section 473 to mean that relief is mandatory when attorney negligence is proven by means other than an affidavit in which the attorney admits to the error. The rules of statutory construction do not allow that condition to mandatory relief to be read out of the statute and do not allow this court to create an alternative method of satisfying the condition imposed by the Legislature. (§ 1858 [when construing a statute, judge should not include what Legislature has omitted].)
The affidavit of attorney fault is required because, among other things, a court granting mandatory relief must direct the attorney to pay “reasonable compensatory legal fees and costs to opposing counsel or parties.” (§ 473, subd. (b).) Without an admission of fault by the attorney, the imposition of this liability on the attorney would not be appropriate. Instead, when an attorney refuses to admit fault, the attorney’s mistake or neglect must be established in a separate action with the procedural protection that action entails.
Based on the foregoing, we conclude Corporation is not entitled to relief from the judgment under the mandatory relief provision in section 473, subdivision (b).
II. Discretionary Relief Under Section 473
A. Excusable Neglect and Standard of Review
Section 473, subdivision (b) also provides that a “court may, upon any terms as may be just, relieve a party or his or her legal representative from a judgment … or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect.”
It is well established that the statute’s use of the phrase “may, upon any terms as may be just, relieve” grants discretionary authority to the trial court and that appellate courts review the trial court’s order under an abuse of discretion standard. (Zamora v. Clayborn Contracting Group, Inc., supra, 28 Cal.4th at p. 257.)
Generally, the abuse of discretion standard of review is a deferential one. Deference, however, is not appropriate where a superior court exercises its discretion to deny relief from a default under section 473. (Elston v. City of Turlock (1985) 38 Cal.3d 227, 235.) Because of the strong public policy preference for the resolution of disputes on their merits, “[d]oubts are resolved in favor of the application for relief from default [citation], and reversal of an order denying relief results [citation].” (Ibid.) “Unless inexcusable neglect is clear, the policy favoring trial on the merits prevails.” (Ibid.; cf. Zamora v. Clayborn Contracting Group, Inc., supra, 28 Cal.4th at p. 258 [superior court did not abuse discretion in granting relief].)
The critical question under the discretionary relief provision of section 473 is whether an error is excusable. (Solv-All v. Superior Court (2005) 131 Cal.App.4th 1003, 1007.) An error is excusable if a reasonably prudent person placed in the same or similar circumstances might have made the same error. (Ibid.) Courts generally acknowledge that the party moving for relief has the burden of showing that the mistake, inadvertence, surprise, or neglect was excusable. (Zamora v. Clayborn Contracting Group, Inc., supra, 28 Cal.4th at p. 258.) This burden, however, is affected by the strong policy preference for resolution of disputes on their merits. Because of the policy, “any doubts as to that showing must be resolved in favor of the moving party. [Citation.]” (New Albertsons, Inc. v. Superior Court (2008) 168 Cal.App.4th 1403, 1420.)
B. Trial Court’s Reasoning
The trial court addressed discretionary relief under section 473, subdivision (b) at the hearing by stating:
“The other basis is, you know, surprise and inadvertence or mistake under 473. And all you’ve told me is that Mr. Bowlay, who I assume is still the agent for service of process and the principal of Bowlay, Inc., was surprised that his attorney was no longer representing him. And that isn’t going to be the kind of surprise that requires the Court to set aside a judgment that was entered about six months ago in favor of the plaintiff after a full hearing on the matter.”
The trial court also referred to Bowlay’s decision regarding how to handle the mail when he moved to Ridgecrest:
“[D]o I put the blame in effect in ruling on this motion on the attorneys that, as your authorities suggest and your argument certainly suggests, are the real villains in this thing, or do I put the burden on Mr. Bowlay, who for whatever reason, decided to pack up and head to Ridgecrest and not make arrangements to have mail forwarded-corporate mail from the corporate principal office forwarded to him as the agent for service of process and the principal of the corporation and during that entire period when all of this sort of thing happened. Where do I put the blame?”
The trial court then asked whether it would be fair to Wood to put her back on square one and make her put on her case again. At the end of the hearing, the trial court stated it would deny the motion and suggested the fault in the matter would have to be resolved between Corporation and the law firm that used to represent it.
C. Contentions of the Parties
Corporation contends it demonstrated that excusable neglect caused the judgment to be entered against it. Specifically, Corporation contends that the law firm of Kamel & Maxwell was obligated to appear at the trial because the order relieving that firm as counsel was ineffective since (1) neither the order nor the underlying motion had been personally served as required by statute and (2) the order did not state when it became effective. Corporation also contends that Wood’s attorney erred by relying on section 594 at trial without properly serving notice of trial as required by that statute.
In response, Wood argues that, because all of the relevant documents were received by Corporation at the address in Covina, Corporation clearly would have received those documents in Ridgecrest if it had exercised ordinary prudence and arranged with the United States Postal Service to have its mail forwarded. Wood contends that the excuse of the “press of business” is unavailing and provides no basis for discretionary relief.
D. Corporation’s Treatment of Its Mail
It is clear from the record that Corporation neglected its mail during the Period. It allowed that mail to accumulate at the Covina address for approximately three months before obtaining possession and reviewing its contents.
Is it excusable for a corporation’s principal and agent for service of process to neglect the corporation’s mail in this manner? In other words, could a reasonably prudent person placed in the same or similar circumstances have made the same error? (Solv-All v. Superior Court, supra, 131 Cal.App.4th at p. 1007.) We conclude the errors made by Bowlay are not the type of errors that might have been made by a reasonably prudent person and, therefore, the errors are not excusable for purposes of section 473.
The surrounding circumstances relevant to our inquiry include the following facts: (1) Bowlay knew before moving from Covina that the insurance company would no longer pay for defending the Wood lawsuit; (2) Kamel & Maxwell had told Bowlay that Bowlay had to decide whether to continuing paying them to defend Corporation or obtain other counsel; (3) after he moved to Ridgecrest, Bowlay had trouble making contact over the phone with attorneys at Kamel & Maxwell and did not inform an attorney directly of his decision regarding representation in the Wood lawsuit; and (4) despite the difficulties in communicating with Kamel & Maxwell by phone during May and the first three weeks of June, Bowlay (a) did not make arrangements to have the mail (an alternate means of communication) forwarded to him and (b) allowed two more months to elapse before taking possession of the mail.
In short, a reasonably prudent person registered as a corporation’s agent for service of process who knows that problems have arisen in pending litigation would make arrangements to ensure that the mail sent to the corporation at the registered agent’s address would be received, opened and reviewed without a significant delay. (See Lint v. Chisholm (1981) 121 Cal.App.3d 615 [appellate court affirmed denial of defendant’s § 473 motion, concluding defendant’s failure to arrange for mail delivery was not the act of a reasonably prudent person].) In this case, Bowlay failed to take reasonably prudent action to deal with Corporation’s mail. Even if we were to consider the first 30 days to have been a reasonable period for Bowlay to neglect the mail and allow his communication problems with Kamel & Maxwell to continue, we cannot conclude that Bowlay’s error in ignoring the mail accumulating in Covina for the remainder of the Period was excusable.
E. Neglect and Mistakes of Others
Corporation appears to argue that its neglect was excusable because if others-namely, Kamel & Maxwell, Wood’s attorney, and the trial court-had acted properly, Corporation would have been personally served and its imprudent handling of its mail would not have resulted in its failure to appear at trial.
1. Notice of trial
Corporation contends that, if the trial court had fulfilled its gatekeeper role and required Wood’s counsel to prove a notice of trial had been served as required by statute, then both the court and Wood’s counsel likely would have realized the defects in the service of the notice of trial, which accompanied the papers relieving Kamel & Maxwell as Corporation’s counsel.
Corporation cites no cases or other authority for the proposition that mistakes of the court or the opposing party can render its own neglect excusable. The absence of citations is understandable because California courts have taken a contrary view and adopted the following principle:
“Where the error or inadvertence is that of the court or of the court and the opposite party, as distinguished from one chargeable to the party seeking relief therefrom, section 473 … has no application.” (Rodgers v. Horn (1948) 85 Cal.App.2d 339, 343-344.)
Based on this principle, we reject Corporation’s argument that its neglect should be excused because of the alleged errors of the trial court or the opposing party.
2. Errors of Kamel & Maxwell
Corporation contends that the order relieving Kamel & Maxwell as counsel was ineffective because it did not specify when it became effective, and neither the order nor the underlying motion had been personally served as required by statute. Based on the theory that the order was ineffective, Corporation argues that the law firm was obligated to appear at trial, and its failure to do so should be regarded as excusable neglect.
Excusable neglect is determined under a reasonably prudent person standard. (Solv-All v. Superior Court, supra, 131 Cal.App.4th at p. 1007.) Under this standard, “[c]onduct falling below the professional standard of care, such as failure to timely object or to properly advance an argument, is not therefore excusable. To hold otherwise would be to eliminate the express statutory requirement of excusability and effectively eviscerate the concept of attorney malpractice.” (Garcia v. Hejmadi (1997) 58 Cal.App.4th 674, 682.)
Here, the alleged errors of Kamel & Maxwell cannot be regarded as the type of errors that a reasonably prudent person would make. Instead, the errors involved matters peculiar to the legal profession-properly completing and serving documents. Thus, we cannot conclude that the errors qualify as excusable neglect for purposes of section 473, subdivision (b).
F. Prejudice to Plaintiff
Because Corporation failed to establish excusable neglect, we need not address whether the trial court committed error in its analysis of prejudice or unfairness to the plaintiff.
DISPOSITION
The judgment is affirmed. Plaintiff shall recover her costs on appeal.
WE CONCUR: HILL, J., POOCHIGIAN, J.