Filed 12/31/19 Tender Care 24/7 Home Health v. Misa CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

TENDER CARE 24/7 HOME HEALTH, INC., et al.,

Plaintiffs and Respondents,

v.

MARIA TERESA MISA,

Defendant and Appellant.

G056981

(Super. Ct. No. 30-2015-00813921)

O P I N I O N

Appeal from a judgment of the Superior Court of Orange County, John C. Gastelum, Judge. Reversed and remanded with directions.

Terran T. Steinhart for Defendant and Appellant.

Marapao Law Offices and Abe D. Marapao for Plaintiffs and Respondents.

* * *

When defendant Maria Teresa Misa (Misa) failed to appear for trial, the court struck her answer and cross-complaint and entered a default judgment against her. The court subsequently denied her motion to set aside the default and the striking of her pleadings and entered a default judgment totaling over $440,000 against her in favor of Tender Care 24/7 Home Health, Inc. (Tender Care) and Perla Neri (Neri) (collectively Tender Care).

Misa raised two arguments in her opening brief: (1) The court abused its discretion in denying her motion to set aside the default under Code of Civil Procedure section 473, subdivision (b) (section 473(b)); and (2) She is entitled to a reversal because the notice of trial she received was mailed less than 15 days prior to trial as required by section 594, subdivision (a). In the trial court and on appeal, the parties argue over what notice Misa did or did not receive regarding the trial date. After briefing was completed, we invited the parties to submit supplemental briefing on whether the trial court acted in excess of its authority by striking Misa’s answer and cross-complaint and entering a default judgment against her when she did not appear at trial, and if the court did exceed its jurisdiction in doing so, whether Misa forfeited the error by failing to raise it either in the trial court or on appeal.

We conclude the default judgment against Misa is void because the trial court lacked the authority to strike her pleadings and enter a default when she failed to appear for trial. (Heidary v. Yadollahi (2002) 99 Cal.App.4th 857, 859, 862-864.) We further conclude the issue is not forfeited. A void judgment may be challenged at any time and is not subject to forfeiture. Accordingly, the order denying the motion to set aside the default is reversed and the matter is remanded with directions to vacate the judgment against Misa and to set the matter for trial.

FACTS

This case concerns a dispute between two corporate officers of Tender Care, a home health services provider. According to the allegations of Tender Care’s complaint, when Tender Care was incorporated in 2012, Misa was its president and chief financial officer and Neri was its secretary. Misa was also listed as the “authorized managing official” while Tender Care was proceeding through the accreditation process to obtain a “provider” number with Medicare, which would permit Tender Care to contract with Medicare for services provided to Medicare patients. Tender Care received its accreditation from the California Department of Public Health in August 2013, and then in January 2014, was assigned a provider number by Medicare retroactive to August 2013. After a disagreement and prior litigation between Neri and Misa, Neri assumed the position of Tender Care’s president in December 2014. Tender Care subsequently lost its Medicare provider number in December 2014. The circumstances under which this occurred are the basis for the current lawsuit but are not germane to this appeal. Instead, the procedural history of this case constitutes the relevant facts upon which our opinion is based.

In a verified complaint filed in October 2015, Tender Care brought claims against Misa for breach of fiduciary duty, intentional interference with prospective economic advantage, and negligent interference with prospective economic advantage. In December 2015, Misa filed a verified answer and a cross-complaint against Tender Care and Neri for fraud, conversion, and defamation.

At a case management conference held on September 15, 2016, the parties were represented by counsel. The court ordered a mandatory settlement conference for June 1, 2017 and a trial date of June 12, 2017. The mandatory settlement conference and trial were later continued to September 15, 2017, and September 25, 2017, respectively, pursuant to a stipulation of the parties.

On September 20, 2017, shortly before the trial date, Misa filed a petition for bankruptcy in the United States Bankruptcy Court, which resulted in an automatic stay of the proceedings in the superior court. (See 11 U.S.C. § 362(a)(1).)

On November 30, 2017, Misa filed a substitution of counsel in the instant matter, indicating she would be proceeding in propria persona.

On December 12, 2017, the bankruptcy court granted Tender Care’s motion for relief from the automatic stay. The parties also tell us that Tender Care filed an adversary complaint in the bankruptcy court to determine whether the debt in this case was dischargeable. On March 19, 2018, the bankruptcy court issued an order discharging Misa’s debts. (11 U.S.C. § 727.)

Three days later, on March 22, 2018, back in the superior court, Tender Care filed a case management statement for a case management conference to be held on March 26, 2018. A proof of service showing the statement was mailed to Misa on March 22, 2018 was attached. The case management conference was held on March 26, 2018. While counsel for Tender Care was present, there was no appearance for Misa. The court ordered a mandatory settlement conference for May 3, 2018 and trial dates of May 14 and 15, 2018.

The mandatory settlement conference was held on May 3, 2018, wherein counsel for Tender Care appeared but Misa did not, again. The court’s May 3 minute order indicated the trial date of May 14, 2018 remained as set. The court clerk mailed a copy of the minute order to Misa on May 3.

Misa did not appear for trial on May 14, 2018. The court’s minute order for May 14, 2018, states at 9:00 a.m. the court ordered Misa’s answer and first amended cross-complaint stricken and default entered. The court scheduled an “Order to Show Cause re: Dismissal re: Default” for August 14, 2018 and indicated the “hearing will be ordered off calendar if a judgment or full dismissal has been filed with the court.” The court clerk was to provide notice to the parties.

The register of actions shows that on May 17, three days after the court entered default as to Misa, Tender Care filed a request for a court default judgment, a declaration in support of default judgment, and a proposed default judgment. Before the court ruled on Tender Care’s request for default judgment, Misa moved on June 8, 2018, for relief from the default against her and to set aside the striking of her answer and cross-complaint. Misa requested relief under section 473(b) on the grounds that her failure to appear at trial was the result of excusable neglect or mistake. Misa declared she never received notice of the case management conference held on March 26, 2018, where the dates were set for the mandatory settlement conference and trial, and therefor she was “unaware of the trial date.” She stated that after receiving the court’s minute order, which indicated the court struck her answer and cross-complaint, on or about May 19, 2018, she searched her “prior received mail” and found the court’s previous minute order indicating that she missed the mandatory settlement conference. She explained she believed the case was moving ahead in the adversary proceedings in bankruptcy court rather than in superior court.

Tender Care opposed Misa’s motion for relief from default, arguing she was not entitled to relief because her neglect and mistake were inexcusable. They disputed her statements that she was not served with a copy of the case management statement and did not receive notice of the mandatory settlement conference and trial. They supported these statements by attaching the documents and their attending proofs of service, showing they were mailed to Misa. Tender Care argued Misa must have received the notices they sent to her but chose to ignore them.

Misa filed a reply, reiterating her denials of receiving either the case management statement or the notice of mandatory settlement conference and trial mailed to her by plaintiffs. She declared she was prepared to defend her case at trial. The hearing on Misa’s request for relief from default was scheduled for August 14, 2018.

The day before the scheduled hearing, Tender Care filed another request for a court default judgment, a proposed default judgment for over $700,000 in damages and costs, and a declaration by Neri concerning damages she incurred. These documents were not served on Misa.

On August 14, 2018, the court denied Misa’s motion to set aside the default and the striking of her pleadings, finding she “failed to demonstrate that her failure to appear at the [mandatory settlement conference] or Trial was a result of excusable neglect” under section 473(b).

On September 24, 2018, more than four months after the court entered Misa’s default, Tender Care proceeded with a “default prove-up hearing on damages.” Neri requested over $700,000 in damages and costs and testified at the hearing. Misa was not present and there is no indication in the appellate record that she was notified of the hearing.

The default judgment was filed on September 27, 2018, awarding Tender Care $440,000 in damages and $1,435 in costs for a total of $441,435. The judgment was on a judicial council form and states it was a judgment by default by the court under section 585, subdivision (b), but a box was also checked indicating it was a judgment for which “defendant did not appear at trial.”

After the judgment was entered, Misa filed a substitution of attorney and appealed from the default judgment.

DISCUSSION

Misa raised two arguments in her opening brief. First, that the trial court abused its discretion by denying her motion to set aside the default under section 473(b). Second, that even if the court properly denied her motion under section 473(b), she was entitled to a reversal nonetheless because she did not receive notice of trial at least 15 days prior to the trial date as required by section 594, subdivision (a).

We invited the parties to submit supplemental briefing on whether the trial court acted in excess of its authority by striking Misa’s answer and cross-complaint and entering a default judgment when she did not appear for trial on May 14, 2018. The parties having filed their supplemental briefs, we now adhere to our opinion in Heidary v. Yadollahi, supra, 99 Cal.App.4th 857. The court had no power to order the entry of Misa’s default when she failed to appear for trial after an answer had been filed. When Misa failed to appear for trial, the court’s only options were to proceed with the trial in her absence under section 594 or to continue the trial. (Heidary, at p. 859.)

Section 594, subdivision (a), provides, “In superior courts either party may bring an issue to trial or to a hearing, and, in the absence of the adverse party, unless the court, for good cause, otherwise directs, may proceed with the case and take a dismissal of the action, or a verdict, or judgment, as the case may require; provided, however, if the issue to be tried is an issue of fact, proof shall first be made to the satisfaction of the court that the adverse party has had 15 days’ notice of such trial . . . . If the adverse party has served notice of trial upon the party seeking the dismissal, verdict, or judgment at least five days prior to the trial, the adverse party shall be deemed to have had notice.”

Our analysis begins with Wilson v. Goldman (1969) 274 Cal.App.2d 573, because it was integral to our decision in Heidary, supra, 99 Cal.App.4th at pages 862-864. In Wilson, the defendant filed an answer to the complaint that placed both liability and damages at issue. (Wilson, at p. 575.) The case was set for trial and defendant’s counsel was properly served with notice of the trial. But neither defendant nor his attorney appeared when the case was called for trial. (Ibid.) The court granted plaintiffs’ motion to enter default against the defendant. (Id. at p. 576.) After plaintiffs’ counsel indicated “‘he would wait to prove up damages at some future date,’” no trial was held, no evidence was taken, and “no continuance was granted.” (Ibid.)

More than three months later, plaintiffs’ counsel filed a memorandum requesting the case be placed on calendar for a hearing to prove up the damages. (Wilson, supra, 274 Cal.App.2d at p. 576.) The clerk set the matter for a hearing. Defendant and his attorney were not served with the memorandum or notice of the hearing. (Ibid.) The hearing was held in the absence of the defendant and his attorney and resulted in a $40,000 default judgment against the defendant. (Ibid.) The judgment was signed by the court the day after the hearing and entered by the clerk the day after that. (Ibid.) Defendant later moved to set aside the default under section 473 based on his counsel’s affidavit explaining that counsel was hospitalized on the trial date having undergone major surgery only days before. (Id. at p. 575.) After the court granted the motion, plaintiffs appealed. (Ibid.)

The Court of Appeal affirmed the order setting aside the entry of default and the default judgment, but not based on the attorney’s affidavit. (Wilson, supra, 274 Cal.App.2d at p. 575.) Instead, the Wilson court concluded the appellate record “conclusively demonstrate[d] both the entry of the default and default judgment are void and in excess of the court’s power and jurisdiction . . . .” (Ibid.) Wilson explained a court does not have authority under section 585 to enter a default where an answer is on file, even if the defendant fails to appear for trial. (Wilson, at p. 576.) “Where the defendant who has answered fails to appear for trial ‘the plaintiff’s sole remedy is to move the court to proceed with the trial and introduce whatever testimony there may be to sustain the plaintiff’s cause of action.’ [Citation.] In such case a plaintiff is entitled to proceed under the provisions of Code of Civil Procedure, section 594, subdivision [a], and he may do so in the absence of the defendant provided the defendant has been given at least [15] days notice of the trial. Section 594 does not authorize the entry of the default in the event the defendant fails to appear, and a hearing held pursuant to that section under such circumstances is uncontested as distinguished from a default hearing. [Citations.] [¶] Where a defendant has filed an answer, neither the clerk nor the court has the power to enter a default based upon the defendant’s failure to appear at trial, and a default entered after the answer has been filed is void [citations], and is subject to expungment [sic] at any time either by motion made pursuant to . . . section 473 or by virtue of the court’s inherent power to vacate a judgment or order void on its face.” (Id. at pp. 576-577.)

Addressing the situation before it, Wilson explained what went wrong and where. The first error occurred when the court granted plaintiffs’ motion to enter defendant’s default, after plaintiffs decided not to proceed to trial on the date set for trial and for which defendant had received notice. (Wilson, supra, 274 Cal.App.2d at p. 577.) The court did not have “the power and authority” to do so because defendant had filed an answer. (Ibid.) Plaintiffs then waited some five months after the trial date to present evidence concerning liability and damages but did not give defendant notice of the hearing. When that trial took place, “defendant was not in default and was entitled to notice of the hearing as provided in [section 594, subdivision (a)].” (Ibid.) The failure to give defendant notice of the hearing which resulted in the default judgment against him was the second error. Wilson explained, “[A] void ‘entry of default’ cannot excuse compliance with Code of Civil Procedure, section 594, subdivision [a]” and “[a] judgment made after a trial held without the notice prescribed by Code of Civil Procedure, section 594, subdivision [a] is not merely error; it is an act in excess of the court’s jurisdiction.” (Ibid.) The court concluded the judgment was subject to attack under section 473 and “subject to collateral attack at any time.” (Id. at p. 578.)

When presented with a similar situation in Heidary, supra, 99 Cal.App.4th 857, a panel of this court relied extensively on Wilson, supra, 274 Cal.App.2d 573. (Heidary, at pp. 862-864.) In Heidary, the cross-defendants answered the cross-complaint but were not provided notice of continuance of the trial date. (Id. at p. 860.) When they failed to appear for trial, the court struck their answers to the cross-complaint and ordered “their defaults entered” for failing to appear at trial. (Ibid.) The court continued the trial date. (Ibid.) The next day, the cross-complainants filed a request for entry of default with the clerk, serving a copy on the cross-defendants by mail. The clerk entered the default that day. (Ibid.) About a month later, an ex parte application for entry of judgment based on the defaults was filed by the cross-complainants, requesting over $900,000 in total damages. (Id. at pp. 860-861.) The cross-defendants were not served with any of the documents supporting the entry of the judgment and it would have made little difference if they had because the judgment was entered the same day the documents were filed for the exact amount requested. (Id. at p. 861.)

More than a year later, the cross-defendants became aware of the judgment entered against them and filed a motion to vacate the judgment, arguing it was void because they had not received notice of the trial and the court therefore lacked the power to enter their defaults. (Heidary, supra, 99 Cal.App.4th at p. 861.) The court denied the motion. (Ibid.) On appeal, we concluded the judgment was void on its face, reversed it, and remanded with directions to vacate the entry of defaults and the default judgment. (Id. at pp. 862, 868.) In reaching this conclusion, we applied the reasoning in Wilson, supra, 274 Cal.App.2d 573. (Heidary, at pp. 862-864.) We explained, as in Wilson, “the court had no power to enter appellants’ default when they failed to appear for trial.” (Heidary, at p. 864.) “[T]he court’s only options when they did not appear were to proceed with the trial in their absence, or to continue the trial.” (Ibid.) Instead, the court entered cross-defendants’ default and continued the matter to allow the cross-complainants to put on proof of damages on a later date. (Ibid.) We explained the cross-defendants’ therefore “were entitled to notice of what amounted to a continued trial date” and because they did not receive such notice, the judgment against them was void. (Ibid.)

These cases guide us to the inescapable conclusion that here, the default was improperly entered when Misa failed to appear because she had filed a valid answer. The judgment entered against Misa indicates it was a court judgment by default under section 585, subdivision (b). “Section 585 is the general statutory authority for default judgments. It provides that ‘[j]udgment may be had, if the defendant fails to answer the complaint, as follows: . . . .’ It then goes on to specify the procedures for obtaining a default in cases where the defendant failed to file an answer or other appropriate response within the time specified in the summons.” (Heidary, supra, 99 Cal.App.4th at p. 863, fn. 4.) But here, Misa had filed an answer. By doing so, she placed in issue both her liability and the amount of damages, and the court had no authority to strike her answer and enter her default when she failed to appear for trial. (Wilson, supra, 274 Cal.App.2d at p. 576.) When she failed to appear for trial, Tender Care’s “sole remedy” was “to move the court to proceed with the trial and introduce whatever testimony there may be to sustain [their] cause of action.” (Ibid.) Or the court could continue the matter. (Heidary, supra, 99 Cal.App.at p. 859.)

Because we have not been provided with a transcript of the May 14, 2018 hearing, wherein the court entered Misa’s default, we do not know if it was entered at Tender Care’s request or on the court’s own motion. Regardless, what we do know is that the trial did not take place on that date. The court’s minute order for May 14, indicates it ordered Misa’s answer and cross-complaint stricken and her default entered and the court scheduled an “Order to Show Cause re: Dismissal re: Default” for August 14, 2008, three months later. The minute order states the order to show cause hearing would be taken off calendar if a judgment or full dismissal was filed with the court prior to that date. The register of actions shows that Tender Care submitted a request for court default judgment three days after the court entered default as to Misa. Before the court ruled on the request for a default judgment, Misa moved under section 473(b) to set aside the default and striking of her pleadings. In the motion, Misa did not argue the court’s entry of the default was in excess of the court’s power and jurisdiction because she had filed an answer. Instead, she argued that her failure to appear for trial was excusable neglect. The court denied Misa’s motion to set aside the default and striking of her pleadings.

The matter continued to veer off course and a “Default Prove-Up Hearing” was scheduled and held on September 24, 2018. A default prove-up hearing was not the appropriate proceeding. It should have been a trial. Tender Care was required to prove not only its damages, but also Misa’s liability. But Misa was not notified of the trial. “A judgment made after trial held without the notice prescribed by . . . section 594, subdivision [a] is not merely error; it is an act in excess of the court’s jurisdiction.” (Wilson, supra, 274 Cal.App.2d at p. 577.)

In their supplemental brief, Tender Care asserts this case is distinguishable from Heidary and Wilson because Misa was given notice of the original trial date. Tender Care overlooks the fact the defendant in Wilson was also properly notified of the original trial but failed to appear. (Wilson, supra, 274 Cal.App.2d at p. 575.) Thus, this is not a distinguishing factor and the case does not turn on whether the defendant had notice of the trial date prior to the default being erroneously entered.

Tender Care next contends this case is distinguishable from Heidary and Wilson because Misa sought to set aside the default before the prove-up hearing and that she must have known Tender Care would proceed with the case after her motion was denied. With this assertion, Tender Care attempts to compensate for the fact it did not serve Misa with its request for judgment nor did it provide her with notice of the prove-up hearing. But these deficiencies are not overcome where, as here, the court was proceeding without authority after erroneously striking Misa’s answer.

We also reject Tender Care’s assertion that the prove-up hearing was actually an uncontested trial where the court inquired into liability and damages. We have reviewed the transcript of the hearing and it was not an uncontested trial; it was treated as a default judgment. At the hearing, Tender Care did not present evidence “to prove all the essential allegations of the complaint controverted by [Misa’s] answer.” (Wilson, supra, 274 Cal.App.2d at p. 577, fn. 1.) The court questioned the amount of Tender Care’s claimed damages and awarded less than requested but both the court and Tender Care proceeded as though liability had been established because of the default.

Nor can we agree with Tender Care that notice of the default prove-up hearing was not required under section 594, subdivision (a), because it was a continued trial date. Had Tender Care chosen to proceed with an uncontested trial on May 14, and presented evidence at that time “to prove all of the essential allegations of the complaint controverted by the answer” (Wilson, supra, 274 Cal.App.2d at p. 577, fn. 1), a judgment in its favor would have been within the court’s power under section 594, subdivision (a) (Wilson, at pp. 576-577). But that did not happen. Plaintiffs did not proceed to trial on that date, nor did it continue the trial. Instead the court struck Misa’s answer and cross-complaint, and entered default against her. The default judgment cannot stand.

The Jurisdictional Issue Has Not Been Forfeited

Having determined the court had no authority to strike Misa’s answer and enter her default when she failed to appear for trial, we turn to the question of whether she forfeited this issue by failing to raise it in the trial court or originally on appeal. The general rule is that an appellant’s failure to raise a contention in the trial court forfeits that claim on appeal. “‘“‘“[I]t is fundamental that a reviewing court will ordinarily not consider claims made for the first time on appeal which could have been but were not presented to the trial court.”’”’” (Quiles v. Parent (2018) 28 Cal.App.5th 1000, 1013.) “‘The rule that contentions not raised in the trial court will not be considered on appeal is founded on considerations of fairness to the court and opposing party, and on the practical need for an orderly and efficient administration of the law.’ [Citations.] Otherwise, opposing parties and trial courts would be deprived of opportunities to correct alleged errors, and parties and appellate courts would be required to deplete costly resources ‘to address purported errors which could have been rectified in the trial court had an objection been made.’” (In re S.C. (2006) 138 Cal.App.4th 396, 406.)

While forfeiture was not addressed in either Heidary or Wilson, they both provide some insight on the issue. In Heidary, the appellants did not argue in the trial court that the court lacked the power to order entry of their default when they failed to appear for trial. Instead, they argued they had not received notice of the trial and the judgment was therefore void. (Heidary, supra, 99 Cal.App.4th at p. 861.) We indicated, however: “[A]ppellants are seeking relief from a void judgment, which the court has authority to set aside at any time. [Citations.] Indeed, section 473 itself contains a separate provision allowing the court to set aside a void judgment without any mention of a time limit.” (Id. at p. 862.) And in Wilson, the appellant likewise did not argue that the court lacked the power to enter a default. Instead, the appellant argued the failure to appear was excusable because of defense counsel’s unexpected hospitalization. (Wilson, supra, 274 Cal.App.2d at p. 575.) In each case, the Court of Appeal raised the issue on its own, without declaring a forfeiture.

“A judgment void on its face because rendered when the court lacked personal or subject matter jurisdiction or exceeded its jurisdiction in granting relief which the court had no power to grant, is subject to collateral attack at any time. [Citations.] An attack on a void judgment may also be direct, since a court has inherent power, apart from statute, to correct its records by vacating a judgment which is void on its face, for such a judgment is a nullity and may be ignored.” (Rochin v. Pat Johnson Manufacturing Co. (1998) 67 Cal.App.4th 1228, 1239, italics added.)

The court clearly exceeded its powers by entering Misa’s default. The entry of default and the subsequent default judgment are thus void and may be challenged at any time. Thus, a challenge to a judgment entered in excess of the court’s jurisdiction may be challenged at any time and is not subject to forfeiture for failing to raise the challenge at the earliest opportunity. We hold the challenge has not been forfeited and, in any event, we exercise our inherent power to declare the judgment void on the face of the judgment roll. Accordingly, it must be vacated.

DISPOSITION

The order denying the motion to set aside the default and the striking of Misa’s pleadings is reversed, and the case is remanded with directions to vacate the default judgment and the entry of default against Misa and to set the matter for trial. Misa is to recover her costs on appeal.

IKOLA, J.

WE CONCUR:

FYBEL, ACTING P. J.

THOMPSON, J.