Case Number: EC066252 Hearing Date: January 12, 2018 Dept: NCD

TENTATIVE RULING

MOTION FOR RELIEF

“Mistake, Inadvertence, Surprise, or Neglect”

(CCP §473)

Calendar: 9

Date: 1/12/18

Case No: EC 066252 Trial Date: None Set

Case Name: ARF Financial, LLC v. Tap House Grill Westmont, Inc., et al.

Moving Party: Plaintiff ARF Financial, LLC, fka Advance Restaurant Finance, LLC

Responding Party: Defendants Tap House Grill Westmont, Inc., Robert Ward, Tap House Grill Oswego, LLC, and Tap House Gill Plainfield, LLC

RULING:

Motion to Set Aside Court Order of July 14, 2017 is denied. There is no showing of “excusable” neglect, and no indication that counsel intends to seek relief under the mandatory provisions of CCP § 473(b). The motion also fails to establish that this motion, filed more than two months after the court’s July 14, 2017 ruling, was brought within a reasonable time.

VACATE OR SET ASIDE:

Court order of July 14, 2017

FACTUAL AND PROCEDURAL BACKGROUND:

Plaintiff ARF Financial, LLC alleges that it is the assignee of Mission Valley Bank, which entered into a Merchant Agreement and Amendment D to the Agreement with defendant Tap House Grill Westmont, Inc., pursuant to which defendant was loaned $200,000, which it agreed to pay in weekly payments. The complaint alleges that defendants Robert Ward, Tap House Grill Plainfield, LLC and Tap House Grill Oswego, LLC executed in writing Guarantees of the subject agreement. Plaintiff alleges that defendant Tap House Grill Westmont has breached its obligations under the agreement by failing to pay the scheduled weekly loan payment when it became due, and the complaint also alleges that under the terms of the guarantees the amount due is payable from the guarantor defendants as well. The complaint alleges causes of action for breach of written agreement, breach of guaranty, money lent, indebtedness, unjust enrichment and account stated.

The file shows that on July 14, 2017, the court heard a motion by specially appearing defendants to quash service of summons on in the alternative stay or dismiss the action for inconvenient forum. The court granted the motion, finding that plaintiff had failed to file opposition to the motion on its merits, so failed to meet its burden to establish the jurisdictional criteria, in the face of uncontroverted evidence submitted by defendants supporting their argument that the jurisdictional criteria were not met.

The court noted that the only apparent response to the motion which had been filed was a declaration stating that the motion was not filed in conformity with state law, because the hearing was set more than thirty days after the filing of the notice, and that at a Case Management Conference and OSC hearing on June 29, 2017, the court had indicated in its minute order that it would not strike the motion to quash, which would be heard and argued on its scheduled hearing date.

ANALYSIS:

Plaintiff brings this motion arguing that although the court indicated in a Case Management Conference on May 4, 2017 that it would rule on the merits of the motion to quash, and plaintiff intended to file a formal opposition by the June 30, 2017 due date, plaintiff’s counsel was out of town from June 28, 2017 to July 7, 2017, and it was discovered there had been a misunderstanding in the office that opposition had been filed when it had not, so that opposition was not filed until July 12, 2017, which the court declined to consider, remarking that plaintiff could file a motion for relief under CCP § 473(b). [Velen Decl., paras. 6, 7].

Relief is sought under the discretionary provision of CCP § 473(b), which provides:

“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. Application for this relief shall be accompanied by a copy of the answer or other pleading proposed to be filed therein, otherwise the application shall not be granted, and shall be made within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken.”

The trial court’s granting or denial of relief under this provision is reviewed for abuse of discretion. State Farm Fire & Casualty Co. v. Pietak (2001) 90 Cal.App.4th 600, 610. It is noted that appellate courts are traditionally “favorably disposed toward such action on the part of the trial courts as will permit, rather than prevent, the adjudication of legal controversies on their merits.” Mercantile Collection Bureau v. Pinheiro (1948) 84 Cal.App.2d 606, 608, citing Benjamin v. Dalmo Mfg. Co. (1947) 31 Cal.2d 523.

It is not clear why the motion does not refer to the mandatory provisions of CCP section 473 (b) where relief is sought based on an attorney’s affidavit of fault, since this relief must be granted even if the neglect is inexcusable.

The court is under no obligation to consider granting relief under the mandatory provisions, as here such relief is not requested in the notice or the motion, which refers only to the discretionary provision. The Second District in Luri v. Greenwald (2003) 107 Cal.App.4th 1119 specifically held:

“A motion under section 473 for discretionary relief accompanied by a declaration of an attorney suggesting attorney fault does not require the trial court to grant relief under the mandatory provisions of section 473.”

Luri, at 1124.

The motion in that case referred only to “excusable” neglect, which is also the only portion of subdivision (b) cited here. The court of appeal reasoned that this would improperly require the court to assume an attorney intended to accept responsibility and be subjected to mandatory sanctions:

“If the trial court considered an affidavit as one of ‘fault’ requiring the imposition of mandatory compensation when the attorney meant only to state facts showing mistake, inadvertence, surprise, or excusable neglect, an attorney could be assessed fees and costs without having intended to accept responsibility with an ‘affidavit of fault.’ Moreover, without notice that relief is sought under the mandatory provision, the opposing party may not have the opportunity to provide information on the ‘reasonable compensatory legal fees and costs’ required to be awarded.”

Luri, at 1125-1126.

Accordingly, even if urged to do so at the hearing, the court may decline to consider this motion as one for mandatory relief. In addition, as pointed out in the opposition, the attorney here does not take responsibility for the error, but appears to rely on some misunderstanding on the part of office staff. There is no “attorney fault“ declaration which would invoke the mandatory provisions of Section 473(b).

This leaves the question of whether discretionary relief should be granted. Attorney conduct has been held not “excusable” under the discretionary provision where the conduct consisted of counsel’s failure to discharge “routine professional duties”, or failure to “properly prepare for the hearing.” Generale Bank Nederland v. Eyes of the Beholder Ltd (1998, 2nd Dist.) 61 Cal.App.4th 1384, 1402. The Second District in Generale Bank reviewed the “reasonably prudent person standard” governing a determination of “excusable neglect” and concluded with respect to attorney conduct:

“Conduct 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.”

Generale Bank, at 1400.

In this case, plaintiff’s counsel’s declaration states that counsel was out of the office during the period when opposition would have been due, “and it was discovered that there had been a misunderstanding in the office, as they were laboring under the impression that an opposition had been filed. However, it was confused with the Declaration and Order filed on April 21, 2017. Realizing this error, an opposition was served on July 11, 2017 and filed on July 12, 2017.” [Velen Decl., para. 6].

Here, the error does not appear to be excusable neglect, but a failure to discharge professional duties, which errors, as argued in the opposition, are ordinarily imputed to the client. Generally a party who seeks relief based on the neglect of counsel must demonstrate that such neglect was excusable “because the negligence of the attorney… is imputed to his client and may not be offered by the latter as a basis for relief.” Buckert v. Briggs (1971) 15 Cal.App.3d 296, 301.

What appears to be happening here is that counsel is not willing to fall on her sword with respect to this matter and request mandatory relief, as there is no “excusable” neglect requirement, but counsel may be trying to avoid mandatory sanctions. Unless counsel agrees that she is seeking relief under the mandatory provisions at the hearing, and will be subject to sanctions, the court will not grant the motion.

In addition, as argued in the opposition, the motion is also denied on the ground the motion fails to establish that the motion was brought within a reasonable time.

Under CCP section 473(b), governing discretionary relief:

“Application for this relief…shall be made within a reasonable time, in no case exceeding six month…”

Under the requirement that application for relief must be made within a “reasonable time” within the six month period, the moving party must show diligence in filing its application after learning of the dismissal. Stafford v. Mach (1998) 64 Cal.App.4th 971 1174 (waiting until the last day of the six month period without reasonable justification is not “reasonable time.”); Caldwell v. Methodist Hospital (1994) 24 Cal.App.4th 1521 (court did not abuse discretion in denying motion for relief filed within 3 months). What is a reasonable time depends upon the circumstances of the case. Baratti v. Baratti (1952) 109 Cal.App.2d 971. The six month limitation is merely a limitation on the power of the court to grant relief, regardless of the merits, after the six month period, but it does not prevent the court, in the exercise of discretion from refusing an application made within the six months but not made within reasonable time after learning of its necessity. Smith v. Pelton Water Wheel Co. (1907) 151 Cal. 394. The court is not permitted to dispense with the “reasonable time” requirement and absent an explanation for the delay in bringing the motion for relief, the court cannot grant it. See Conway v. Municipal Court (1980) 107 Cal.App.3d 1009.

Here, the dispositive motion to quash was granted on July 14, 2017, with counsel in attendance, and notice was waived. This motion was not filed until September 28, 2017, two and a half months later, with no explanation offered by the motion for any delay. The motion is also denied for failure to establish it was brought within a reasonable time.

If counsel should opt to invoke the mandatory provisions, CCP § 473(b) provides:

“The court shall, whenever relief is granted based on an attorney’s affidavit of fault, direct the attorney to pay reasonable compensatory legal fees and costs to opposing counsel or parties.”

In addition, CCP § 473(c)(1) provides generally for discretionary sanctions:

“Whenever the court grants relief from a default, default judgment, or dismissal based on any of the provisions of this section, the court may do any of the following:

(A) Impose a penalty of no greater than one thousand dollars ($1,000) upon an offending attorney or party.

(B) Direct that an offending attorney pay an amount no greater that one thousand dollars ($1,000) to the State Bar Client Security Fund.

(C) Grant other relief as is appropriate.”

In this case, the opposition does not request sanctions, as no mandatory relief is requested. If the court were to be persuaded to grant such relief, some sanction will be awarded for the failure of counsel to timely oppose the motion in connection with the previous hearing, requiring further appearance and briefing by defendants to litigate an “attorney fault” declaration seeking mandatory relief.