Case Number: ES016388 Hearing Date: May 23, 2014 Dept: B

Motion to Set Aside Void Judgment

This matter was opened to permit a confession of judgment to be filed. The Plaintiff, DACM Project Management, was the ex-employer of the Defendant, Arthur Cade. In the stipulated judgment, the Defendant admitted that he had improperly obtained $505,000 from the Plaintiff by diverting funds, submitting false expense reports, and improperly using another employee to repair and remodel his personal residence.

The judgment was entered on February 6, 2013.

This hearing concerns the motion of a third party, Sherry Cade, to set aside the judgment on the ground that it is void. Ms. Cade was the wife of the Defendant, Arthur Cade.

Ms. Cade seeks relief under CCP section 473(d), which authorizes the Court, upon motion of either party after notice to the other party, set aside any void judgment or order. Since Ms. Cade is not a party, Ms. Cade cannot seek relief under the express language of CCP section 473(d), which authorizes the Court “upon motion of either party”, to set aside a void judgment.

Further, Ms. Cade has no standing to seek relief in this action because she is not a party and she is not named in the judgment. Ms. Cade attempts to invoke CCP section 371 to argue that she has standing. Section 371 states:

If a husband and wife are sued together, each may defend for his or her own right, but if one spouse neglects to defend, the other spouse may defend for that spouse’s right also.

The express language of the statute does not provide any standing to Ms. Cade because she and her husband were not sued together. Instead, the lawsuit was brought solely against Arthur Cade. Since Arthur Cade and Ms. Cade were not sued together, she cannot use CCP section 371 to file any motion.

Finally, even if Ms. Cade had standing to seek relief under CCP section 473(d), she offers no grounds to set aside the judgment. First, there are no grounds to find that the judgment is void on its face.

The judgment by confession is used when the parties have entered into a settlement, but no lawsuit has been filed. The confession of judgment is a private admission by the defendant to liability for a debt without having a trial. It is essentially a contract in which the defendant agrees to let the plaintiff enter a judgment against him or her. It may only be used when no action has been commenced in court.

The procedures for judgments by confessions are in CCP sections 1132 to 1134. These procedures require the following:

1) an attorney independently representing the defendant must sign a certificate that the attorney has examined the proposed judgment and has advised the defendant with respect to the waiver of rights and defenses under the confession of judgment procedure and has advised the defendant to utilize the confession of judgment procedure;
2) a statement in writing must be made, signed by the defendant, and verified by his oath, to the following effect:

1. It must authorize the entry of judgment for a specified sum;
2. If it be for money due, or to become due, it must state concisely the facts out of which it arose, and show that the sum confessed therefore is justly due, or to become due;
3. If it be for the purpose of securing the plaintiff against a contingent liability, it must state concisely the facts constituting the liability, and show that the sum confessed therefore does not exceed the same.

The statement is filed with the clerk of the Court, who then enters a judgment for the amount confessed.

A review of the confession of judgment filed by the Plaintiff reveals that it complies with these requirements. There is a declaration from Stephen Chazen, who represented the Defendant. Mr. Chazen states that he examined the judgment and advised the Defendant, Arthur Cade, to use of the confession of judgment procedure.

Further, the Defendant submitted a statement in which he confessed that he had breached the trust that his employer placed in him by submitting false expense reports, by diverting funds to a bank account, and by using the services of another employee paid by the Plaintiff to repair and remodel his personal residence. The Defendant stated that he improperly obtained $505,000 from the Plaintiff.

Accordingly, the judgment is not void on its face.

Ms. Cade argues that the judgment by confession was obtained by extortion or fraud. However, there is no declaration from Arthur Cade to support this claim. Instead, the papers filed with the Court indicate that Arthur Cade confessed to conduct that amounts to embezzlement from his employer and that Arthur Cade’s attorney advised him to use the judgment by confession procedure. There is no evidence from Arthur Cade that establishes he was induced to provide the statement of confession by extortion or fraud.

Therefore, the Court denies the motion of Ms. Cade to set aside the judgment entered against Arthur Cade.

In addition, Ms. Cade requested that the Court impose monetary sanctions under CCP section 128.7. Section 128.7 authorizes the Court to impose monetary sanctions on a party or attorney that presents a pleading, petition, motion, or other similar papers for an improper purpose or when the papers include claims that lack merit or evidentiary support.

CCP section 128.7(c) requires a motion seeking sanctions under section 128.7 to be made in a separate motion and for the motion to be served at least 21 days before the motion is filed to provide time for the other side to withdraw the papers that violate section 128.7. Ms. Cade did not comply with these procedural requirements because she did not make the request in a separate motion and she did not serve the motion on the Plaintiff at least 21 days before she filed the motion. Accordingly, Ms. Cade’s request for sanctions under CCP section 128.7 is denied.

The Plaintiff requests an award of $412.50 in sanctions to oppose Ms. Cade’s request for sanctions. Under CCP section 128.7(c) (1), the Court may award to the party prevailing on the motion the reasonable expenses and attorney’s fees incurred in presenting or opposing the motion. Since Ms. Cade’s request for monetary sanctions under section 128.7 is denied, the Plaintiff is the prevailing party and the Court may award it the attorney’s fees incurred to oppose Ms. Cade’s motion. Further, it is warranted to impose monetary sanctions on Ms. Cade because her request for monetary sanctions is without merit and lacks any justification.

The Plaintiff’s attorney, Leslie Grossman, states in paragraphs 6 and 7 that she expects to spend 1.6 hours at $375 to oppose Ms. Cade’s request. The amount requested of $412.50 is reasonable.

Therefore, the Court imposes monetary sanctions of $412.50 on Ms. Cade under CCP section 128.7(c) (1).