Earle & Reimer v. Klimek CASE NO. 112CV230539
DATE: 18 April 2014 TIME: 9:00 LINE NUMBER: 8

This matter will be heard by the Honorable Judge Socrates Peter Manoukian in Department 19 in the Old Courthouse, 2nd Floor, 161 North First Street, San Jose. Any party opposing the tentative ruling must call Department 19 at 408.808.6856 and the opposing party no later than 4:00 PM Thursday 17 April 2014. Please specify the issue to be contested when calling the Court and counsel.

On 18 April 2014, the motion of defendant/cross-complainant John Klimek (“Defendant”) to set aside a prior discovery order under the mandatory relief provision of Code of Civil Procedure section 473, subdivision (b), was argued and submitted. Plaintiffs/Cross-Defendants Earle & Reimer Corporation and Pauline Reimer (collectively “Plaintiffs”) filed a formal opposition to the motion.

Statement of Facts

This action arises from a dispute over unpaid attorneys fees. According to the allegations of the complaint, in May of 2007, Plaintiffs and Defendant entered into an agreement whereby Plaintiffs agreed to represent Defendant in his marital dissolution proceedings. Plaintiffs claim that, after they rendered the agreed upon services, Defendant refused to pay $32,480 in outstanding legal fees. The fee dispute proceeded to arbitration in 2012, and resulted in Defendant being awarded more than $200,000 due to overbilling.

Plaintiffs rejected the arbitrator’s decision and, on 15 August 2012, instituted the present action alleging breach of contract and requesting a trial de novo. On 14 January 2013, Defendant filed a cross-complaint, alleging legal malpractice and breach of fiduciary duty.

Discovery Dispute

On 16 August 2013, the Court granted Plaintiffs’ motion to compel further responses to special interrogatories and ordered Defendant to serve Plaintiffs with further responses to the requests within 20 days of the entry of the order. (Decl. of D. Deckard in Opp. to Def.’s Mot. to Set Aside Discovery Order (“Deckard Decl.”), Ex. 6.)

On 9 October 2013, the Court granted Plaintiffs’ motion to compel further responses to requests for production of documents and ordered Defendant to serve further code-compliant responses to the requests within 20 days of the entry of the order. (Deckard Decl., Ex. 7.)

Based upon Defendant’s failure comply with the Court’s 16 August 2013 order, on 24 October 2013, Plaintiffs moved the Court for an order imposing non-monetary and monetary sanctions. (Deckard Decl., Ex. 10.)

Defendant did not file a formal opposition to the motion for sanctions. However, on 20 November 2013, two days prior to the hearing on the motion for sanctions, defense counsel filed a declaration indicating that Defendant was complying with the Court’s 16 August 2013 order by serving further responses to the interrogatories that same day. Defense counsel argued in his declaration that, “[g]iven that all outstanding discovery has been fully complied with, under the lesser sanctions first standard, evidence, issue, and terminating sanctions would not be appropriate.” (Id., Ex. 11, ¶ 18.)

On 21 November 2013, the Court posted a tentative ruling, indicating its inclination to grant Plaintiffs’ motion for sanctions. (Deckard Decl., Ex. 13.) In the tentative ruling, the Court first noted that Defendant had made no attempt to explain why he failed to file a formal opposition to Plaintiffs’ motion. (Id.) The Court further noted that, after reviewing defense counsel’s declaration, the Court was left with “the impression that Mr. Martinez [defense counsel] wants to relitigate the earlier discovery motions.” (Id.) The Court then set forth a number of observations about the discovery process, such as the observation that the courts frown upon deliberate indifference to discovery obligations (citing Collission & Kaplan v. Hartunian (1994) 21 Cal.App.4th 1611, 1618 [stating that the court has “no time for such antics”]), and indicated that Defendant would be required to respond to such observations at the hearing on the motion. (Deckard Decl., Ex. 13.) Finally, the Court noted that “there is no representation that the previously-ordered sanctions were paid, nor is there any representation about any intent that Defendant may have to pay them . . . [and] [n]o motion for reconsideration of any prior order of this court has been filed.” (Id.)

The hearing on Plaintiffs’ motion for sanctions took place on 22 November 2013. Defense counsel was present at the hearing and presented argument in opposition to Plaintiffs’ motion. (See Transcript of 22 November 2013 Hearing attached to Deckard Decl., Ex. 14.) Following the parties’ arguments, the Court granted the motion from the bench with a written order to follow. The Court informed defense counsel that, “[i]f you want relief from that, Mr. Martinez, you can go by the book and do that. . . . And you may want to talk to Ms. Deckard [plaintiffs’ counsel] about working out a possible arrangement to set this [order] aside and comply with the prior orders to the letter including the payment of sanctions.” (Id., 16:11-12, 16:20-23.)

On 22 November 2013, the Court entered a written order on Plaintiffs’ motion for sanctions (the “November 22 Order”). (Deckard Decl., Ex. 13.) Through the order, the Court dismissed Defendant’s cross-complaint, struck two of Defendant’s affirmative defenses, and imposed certain evidentiary sanctions. As to the evidence sanctions, the Court ordered that the following designated facts be taken as established at trial:

a. All billing by Plaintiff . . . was fair and reasonable;
b.
c. There was no malpractice, negligence or breach of duty of care by Plaintiff . . . in the performance of any services to defendant John Klimek;
d.
e. There was no breach of fiduciary duty . . . ;
f.
g. Defendant John Klimek has not sustained any damage as a result of any billing or the performance of services by Plaintiff . . .;
h.
i. Defendant John Klimek has not sustained any special damages as a result of any billing or the performance of any services by Plaintiff . . . . (Deckard Decl., Ex. 1.)
j.
Following the entry of the November 22 Order, the parties continued to conduct discovery, which once again resulted in Plaintiffs filing a motion to compel and the Court entering an order compelling Defendant to provide responses.

On 4 February 2014, counsel for the parties appeared for a trial setting conference and the case was set for trial to begin on 17 March 2014. Defense counsel was present at the trial setting conference and did not raise any objections to the case proceeding to trial.

On 7 March 2014, Defendant presented the Court with an ex parte application to continue the trial date. In the ex parte application, defense counsel stated that he is “not ready for trial” because he planned to file a motion pursuant to Code of Civil Procedure section 473, subdivision (b), to set aside the November 22 Order. After considering the parties’ papers and argument, the Court (Judge Arand) denied Defendant’s ex parte application.

On 11 March 2014, Defendant presented the Court with another ex parte application to shorten time to file a motion to set aside the November 22 Order under Code of Civil Procedure section 473, subdivision (b). The Court (Judge Manoukian) denied the application.

On 17 March 2014, the case proceeded to trial. Defendant appeared and once again requested that the Court continue the trial date so that he could file a motion to vacate the November 22 Order. After Defendant presented his motion, the Court (Judge Huber) asked the parties to reconvene at 1:30 p.m. so that he could review the parties’ briefs and consider Defendant’s claims under Code of Civil Procedure section 473, subdivision (b). (Transcript of Trial Proceedings on 17 March 2014, attached to Deckard Decl., Ex. 21.) The parties reconvened in the afternoon and the Court allowed the parties to present oral argument on Defendant’s motion. After hearing the parties’ arguments, the Court denied the motion. The Court then found that the November 22 Order was controlling over the issues at trial and found in favor of Plaintiffs in the amount of $32,480. The Court entered a formal judgment in favor of Plaintiffs on 24 March 2014. (Amended Judgment After Trial, attached to Deckard Decl., Ex. 22.)

On 26 March 2014, Defendant filed the instant motion, asking the Court to set aside the November 22 Order under Code of Civil Procedure section 473, subdivision (b). Plaintiffs filed their opposition to the motion on 7 April 2014. Defendant filed his reply on 11 April 2014.

Discussion

Defendant moves the Court for an order setting aside the November 22 Order under Code of Civil Procedure section 473, subdivision (b).

Section 473, subdivision (b), contains two provisions, one discretionary and one mandatory, both of which authorize the court to set aside certain judgments and orders based upon, among other things, the neglect of the defaulting party’s attorney. The discretionary provision provides as follows:

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. (Code Civ. Proc. [“CCP”], § 473, subd. (b).)

Motions brought pursuant to the discretionary provision must be made within “a reasonable time” and “in no case exceeding six months” after the judgment, dismissal, order, or proceeding.

The mandatory provision provides as follows:

[T]he 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 . . . 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. (Id.)

Defendant only relies upon the mandatory provision of section 473, subdivision (b). For the reasons set forth below, the Court’s jurisdiction to entertain Defendant’s motion is questionable and, to the extent that jurisdiction exists, the mandatory relief provision of section 473, subdivision (b), is inapplicable.

It is well-settled that, subject to limited exceptions, the termination of an action through judgment or dismissal deprives the trial court of jurisdiction to enter further orders. (See Hagan Engineering, Inc. v. Mills (2003) 115 Cal.App.4th 1004, 1007-1008 [“Absent a pending lawsuit, a court cannot issue judgments or orders”].) The exceptions to this rule include applications for post-judgment fees and motions to vacate a judgment under section 473, subdivision (b). (Id.; see also Lewis C. Nelson & Sons, Inc. v. Lynx Iron Corp. (2009) 174 Cal.App.4th 67, 75-76; Roski v. Sup. Ct. (1971) 17 Cal.App.3d 841, 845.)

It is undisputed that this case proceeded to trial on 17 March 2014, and judgment was entered in favor of Plaintiffs on 24 March 2014. Accordingly, unless one of the exceptions applies, the Court lacks jurisdiction over the instant matter. Defendant’s motion is brought pursuant to section 473, subdivision (b), which is one of the exceptions to the above rule. However, for the reasons set forth below, the mandatory relief provision of section 473, subdivision (b), is inapplicable in this case.

By its express terms, the mandatory relief provision of section 473, subdivision (b), applies only to defaults, default judgments, and dismissals. (Vandermoon v. Sanwong (2006) 142 Cal.App.4th 315, 320.) A split of authority exists among the districts of the California Court of Appeal as to whether the mandatory provision should be interpreted to reach circumstances other than default judgments and dismissals where the order at issue is procedurally equivalent to a default judgment. (See Huh v. Wang (2007) 158 Cal.App.4th 1406, 1415.)

For example, in cases where a defendant fails to oppose a motion for summary judgment and the court grants summary judgment on that basis, although “summary judgment” is not listed in section 473, some courts have found that the entry of judgment under such circumstances is the procedural equivalent of a default judgment because the case was not decided on the merits. (See e.g., Avila v. Chua (1997) 57 Cal.App.4th 860.) Based upon such reasoning, some courts have allowed a party to challenge orders and judgments under section 473, subdivision (b), that are not technically default judgments or dismissals. (Id.) “The rationale of these cases is that, where there is no hearing on the merits, an attorney’s neglect should not prevent the party from having his or her day in court.” (In re Marriage of Hock & Gordon-Hock (2000) 80 Cal.App.4th 1438, 1443.)

The majority view, however, is that the mandatory provision expressly applies only to default judgments and dismissals and that the statute should not be construed beyond its explicit terms. (English v. IKON Business Solutions, Inc. (2001) 94 Cal.App.4th 130 (“English”)].) In Huh v. Wang (2007) 158 Cal.App.4th 1406, the Sixth Appellate District (the district that reviews this Court’s decisions) adopted the majority view. In that case, the plaintiff failed to respond to requests for admissions and the trial court granted a discovery motion to deem the matters admitted. The defendant then moved for summary judgment and, based upon the discovery order, the court granted the motion and entered judgment in favor of the defendant. The plaintiff appealed and the appellate court held that the mandatory relief provision of section 473, subdivision (b), does not provide an avenue through which the plaintiff could attack the order granting summary judgment. (Id., at p. 1418.)

Having reviewed the applicable cases, the Court finds the reasoning of the majority view—the view established by the decision in English and adopted by the Sixth Appellate District in Huh—more persuasive than the alternative. As the court stated in the English decision: “It is not an appellate court’s task, nor, indeed, its prerogative, when interpreting a statute, to extend the scope of the statute to encompass situations ‘analogous’ to those the statute explicitly addresses. Rather, an appellate court’s task is simply to determine what the Legislature meant by the words it used, relying first and foremost on the words themselves.” (English, supra, 94 Cal.App.4th at p. 144.) The Court agrees that the language of section 473, subdivision (b), is unequivocal and only applies to defaults, default judgments, and dismissals.

Turning to the facts of this case, the Court’s November 22 Order is neither a default nor default judgment. It could be argued, although Defendant has not done so, that the portion of the November 22 Order dismissing Defendant’s cross-claims is a dismissal for the purposes of section 473. Even if that were true, however, the setting aside of that portion of the Court’s discovery order would be of no help to Defendant. Such a ruling would not undo the judgment in favor of Plaintiffs in this case and it would similarly have no effect on the other portions of the November 22 Order, which granted Plaintiffs’ request for evidentiary sanctions.

Moreover, the portion of the November 22 Order dismissing Defendant’s cross-claims does not fall within the scope of section 473, subdivision (b), because defense counsel appeared and opposed Plaintiff’s motion for sanctions. The mandatory provision of section 473, subdivision (b), only applies to dismissals in which the opposing party’s attorney fails to oppose the dismissal motion. (English, supra, 94 Cal.App.4th at p. 141 [if the motion is opposed, relief must be sought under the discretionary, rather than the mandatory, provision of section 473, subdivision (b)].)

Put simply, Defendant had his day in court. Indeed, the Court expressly encouraged Defendant to seek relief from the November 22 Order. Instead of acting on that advice, Defendant waited until the eve of trial before asking the Court for relief.

Based upon the above discussion, the Court finds that the mandatory relief provision of section 473, subdivision (b), is inapplicable to this case. Because Defendant’s motion was improperly brought under that section, and because a judgment has been entered in this case, the Court lacks jurisdiction to entertain the motion. Defendant’s motion to set aside the November 22 Order is therefore DENIED.

Conclusion and Order

Defendant’s motion to set aside the November 22 Order pursuant to the mandatory relief provision contained in Code of Civil Procedure section 473, subdivision (b), is DENIED.