Filed 4/15/20 Martinez v. Sidharaju CA5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FIFTH APPELLATE DISTRICT

JOSE LUIS MARTINEZ,

Plaintiff and Appellant,

v.

KRISHNASWAMY SIDHARAJU,

Defendant and Respondent.

F079636

(Super. Ct. No. VCU272900)

OPINION

THE COURT*

APPEAL from an order of the Superior Court of Tulare County. Melinda Myrle Reed, Judge.

Law Office of Amy R. Lovegren-Tipton and Amy R. Lovegren-Tipton for Plaintiff and Appellant.

Christenson Law Firm and Vonn R. Christenson for Defendant and Respondent.

-ooOoo-

Plaintiff appeals from an order setting aside an entry of default and subsequent default judgment pursuant to subdivision (b) of section 473 of the Code of Civil Procedure (section 473(b)). The trial court found (1) the May 2018 entry of default was caused by the defendant’s reasonable mistake; (2) the subsequent failure to obtain relief from the entry of default was caused by the attorney retained after the default was entered; (3) the court would have granted a timely motion for relief from the default under the discretionary provision of section 473(b), which authorizes relief from a default caused by a defendant’s excusable neglect, if the attorney had filed such a motion; and (4) the attorney’s failure to file a timely motion for relief from the default caused a default judgment to be entered in January 2019. A month after the default judgment was entered, the attorney filed a motion to set aside both the default and the default judgment.

This appeal presents a question of statutory interpretation involving section 473(b)’s provision for mandatory relief based on an affidavit of attorney fault. The text of that provision states the court shall vacate the “resulting default” or the “resulting default judgment … unless the court finds that the default or dismissal was not in fact caused by the attorney’s mistake, inadvertence, surprise, or neglect.” (§ 473(b), italics added.) We give the italicized phrase “the default” its plain meaning and conclude it means the default entered by the clerk—it does not mean the default judgment.

Applying this literal interpretation to the facts of this case, we conclude defendant does not qualify for relief under the mandatory relief because the May 2018 default “was not in fact caused by the attorney’s mistake, inadvertence, surprise, or neglect.” (§ 473(b).) The absence of any causal link is established by the undisputed fact that the default was entered before the attorney was retained. The practical effect of this statutory interpretation is that when a default is entered without attorney fault, the period for obtaining relief under section 473(b) cannot be expanded by bootstrapping the six-month period for mandatory relief from an attorney’s error onto the period in which a hypothetical motion for relief from the entry of default could have been filed.

We therefore reverse the order setting aside the default and default judgment and remand with instructions to reinstate the default and the judgment.

FACTS & PROCEEDINGS

On February 23, 2018, plaintiff Jose Luis Martinez (Lender) filed a complaint against defendant Krishnaswamy Sidharaju, an individual doing business as Dina Farms (Borrower), alleging causes of action for fraud, conversion, breach of contract, unjust enrichment, common count and declaratory relief. Lender alleged Borrower owed him $38,853.07 for loans to Borrower and payments for canal water and electricity made on behalf of Borrower. On April 19, the complaint and summons were personally served on Borrower.

On May 22, Lender filed a request for entry of default on mandatory Judicial Council form CIV-100. The clerk entered the default as requested the same day.

On June 15, Borrower retained his present attorney (Attorney) to represent him in this case. While investigating the case, Attorney learned a default had been entered and asked Borrower about it. Borrower informed Attorney he was unaware of the default, he had given the summons and complaint to his former counsel (despite the pending motion to be relieved as counsel), and he believed this former counsel had responded to the complaint in a timely fashion.

On June 25, a case management conference was held and Attorney attended. The minute order states the court “noted default entered as to defendants; therefore, matter is taken off calendar. [¶] Plaintiff directed to proceed to default judgment or other disposition within 45 days from today or show cause why not.”

On June 27, Attorney sent Lender’s counsel a letter explaining the oversight and requesting a stipulation to set aside the default. Additionally, Attorney’s declaration asserts he “instructed my staff to calendar deadlines for setting aside the entry of default. However, my instruction to calendar deadlines for setting aside the entry of default were mistakenly unheeded, as no such calendared deadlines were placed on my calendar.” Attorney had a conversation with Lender’s counsel about the proposed stipulation and Lender’s counsel stated she would discuss it after a discovery dispute in a related case was resolved. Attorney asserts (1) he does not recall hearing anything further about the proposed stipulation, despite the discovery dispute being resolved and (2) he “inadvertently failed to file the Motion to Set Aside the Default earlier due to the mistaken failure to calendar the associated deadlines despite my earlier instructions to do so.”

Lender’s counsel filed a declaration stating that she replied to the proposed stipulation to set aside the default on July 9. Her reply referred to Borrower as a serial litigant who adopted tactics causing unnecessary attorney fees and costs, stated she would speak to her client, and asked for assurances that Borrower “will not continue with games if allowed to answer the complaint.” Lender’s counsel never heard back from Attorney.

In August, the trial court issued an order to show cause why sanctions should not be imposed against Lender for the failure to proceed with the default judgment as directed as the prior case management conference. Lender’s counsel states that at the September hearing on the order to show cause, she was sanctioned $50 for not proceeding toward judgment.

On December 7, Lender filed a request for court judgment, supporting declarations from Lender and his counsel, and a request to dismiss the Doe defendants. On January 3, 2019, the trial court entered a judgment by default using Judicial Council form JUD-100. The judgment for $46,799.91 awarded Lender $38,853.07 in damages, $7,511.84 in prejudgment interest at an annual rate of 10 percent, and costs of $435.00. The judgment also stated that postjudgment interest accrued at a daily rate of $12.82.

On February 8, 2019, Borrower filed a motion to set aside default and default judgment; a memorandum of points and authorities; Borrower’s supporting declaration; Attorney’s supporting declaration; and a proposed order. Lender opposed the motion to set aside and supported his opposition with a declaration from his counsel and a request for judicial notice of declarations from Borrower’s prior counsel in in the other Tulare County case in support of their motion to be relieved as counsel, a minute order granting their motion, and their civil complaint against Borrower for nonpayment of fees in the amount of $29,179. In March 2019, Borrower filed a reply to the opposition.

On March 11, 2019, the trial court held a hearing on the motion to set aside the default and default judgment. The court did not issue a tentative ruling and directed the parties to meet and confer to resolve the motion. After the parties failed to reach an agreement, the court informed them its “tentative ruling is to grant defendant’s motion for relief from entry of default and entry of default judgment.” Explaining its decision, the court stated that, if not for Attorney’s error, Borrower’s (hypothetical) request for relief from the entry of default would have been timely and properly granted under section 473(b) based on Borrower’s reasonable mistaken belief that prior counsel had filed a response to the complaint. Next, the court addressed the default judgment entered on January 3, 2019, and stated Attorney had “sufficiently shown attorney error within six months.” After Lender’s counsel presented her argument and Attorney submitted on the briefs, the court adopted its tentative ruling.

On May 14, 2019, the trial court signed and filed a written order setting aside the default and the default judgment. Lender filed a timely appeal.

DISCUSSION

Section 473(b) provides for relief from defaults and default judgments in certain circumstances. As a general rule, an order granting relief from a default and default judgment pursuant to section 473(b) is reviewed for an abuse of discretion. (Manson, Iver & York v. Black (2009) 176 Cal.App.4th 36, 42 (Manson).) “The abuse of discretion standard is not a unified standard; the deference it calls for varies according to the aspect of a trial court’s ruling under review. The trial court’s findings of fact are reviewed for substantial evidence, its conclusions of law are reviewed de novo, and its application of the law to the facts is reversible only if arbitrary and capricious.” (Haraguchi v. Superior Court (2008) 43 Cal.4th 706, 711–712.) The scope of discretion always resides in the particular law being applied—that is, in the legal principles governing the subject of action. (Katiuzhinsky v. Perry (2007) 152 Cal.App.4th 1288, 1294.) Action that transgresses the confines of the applicable principles of law is outside the scope of discretion and such action is labeled an “abuse” of discretion. (Ibid.) Accordingly, an order based on a misinterpretation of section 473 is an abuse of discretion. (Katiuzhinsky v. Perry, supra, at p. 1294.) Furthermore, the interpretation of a statute such as section 473 is a question of law subject to de novo review. (See County of Kern v. T.C.E.F., Inc. (2016) 246 Cal.App.4th 301, 316 [“issues of statutory construction are questions of law subject to independent review”].)

I. DISCRETIONARY RELIEF UNDER SECTION 473

A. Statutory Text

Section 473(b) contains both discretionary and mandatory relief provisions. The discretionary provision states: “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.” (§ 473, subd. (b).)

B. The Timing Question

Plaintiff contends defendant’s request for relief under the discretionary provision was untimely. Plaintiff argues California law states (1) the six-month period is jurisdictional and (2) the period begins to run from the entry of default, not the filing of the default judgment. Applying this view of the law to the facts of this case, plaintiff asserts defendant’s motion for relief was filed too late to obtain discretionary relief because the entry of default occurred on May 22, 2018 and defendant’s motion was filed eight and a half months later, on February 8, 2019.

C. Interpretation and Application of Discretionary Provision

First, we consider whether the six-month period in section 473(b)’s discretionary relief is jurisdictional. This question is answered by our decision in Manson. There we concluded the six-month time limit for granting discretionary “relief is jurisdictional and the court may not consider a motion for [discretionary] relief made after that period has elapsed.” (Manson, supra, 176 Cal.App.4th at p. 42.)

Second, we consider when the six-month period for discretionary relief starts to run. Again, this question is answered by our decision in Manson. “The six-month period runs from entry of default, not entry of judgment.” (Manson, supra, 176 Cal.App.4th at p. 42.) Consequently, plaintiff’s argument is based on a correct interpretation of section 473(b).

The application of this interpretation of the discretionary relief provision of section 473(b) to the facts of this case is straightforward. Plaintiff’s request for default on mandatory Judicial Council form CIV-100 was “entered as requested” by the clerk on May 22, 2018. Using this entry date as the starting point, the six-month period expired on November 22, 2018. Defendant filed his motion to set aside default and default judgment on February 8, 2019. Consequently, the motion for relief, to the extent it was based on the discretionary provision, was untimely. As a result, the trial court had no jurisdiction to grant relief under section 473(b)’s discretionary provision. (Manson, supra, 176 Cal.App.4th at p. 42.)

II. MANDATORY RELIEF AND ATTORNEY FAULT

A. Statutory Text

Section 473(b)’s mandatory relief provision is based on attorney fault and reads as follows:

“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. 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. However, this section shall not lengthen the time within which an action shall be brought to trial pursuant to Section 583.310.” (§ 473, subd. (b), italics and underlining added.)

The terms “default” and “default judgment” are important to our interpretation of this provision and, consequently, we have italicized the noun “default” and underlined “judgment” and “default judgment.” As background, we note the mandatory relief provision was added to section 473(b) in 1988 and expanded in 1991 and 1992. (Rodriguez v. Brill (2015) 234 Cal.App.4th 715, 723 (Rodriguez); see 8 Witkin, Cal. Procedure (5th ed. 2008) Attack on Judgment in Trial Court, § 192, pp. 792–793.) Our Supreme Court described the mandatory relief provision 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.) Its purpose “ ‘was to alleviate the hardship on parties who lose their day in court due solely to an inexcusable failure to act on the part of their attorneys.’ [Citation.]” (Ibid.) Stated in more detail, the purpose of the mandatory relief provision is 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. (Rodriguez, supra, at p. 723.)

B. Scope of the Motion

Plaintiff contends the order granting relief cannot be affirmed under the provision for mandatory relief because the motion only referred to the discretionary basis for relief and did not invoke the mandatory provision. We reject this argument. The notice of motion stated:

“This motion is made on the grounds that the Default and Default Judgment were entered as a result of mistake, inadvertence, and/or excusable neglect. The motion will be based upon this Notice, the attached Memorandum in support, the Declaration of [Attorney] filed herewith, the Declaration of [Borrower] filed herewith, the file[] and records in this action, the proposed Answer submitted with this Motion, and any further evidence and argument that the Court may receive at or before the hearing.”

This statement does not refer to attorney fault or the mandatory provision as a basis for the motion, but it does refer to the declaration in which Attorney states he “instructed my staff to calendar the deadlines for setting aside the entry of default. However, my instructions to calendar the deadlines for setting aside the entry of default were mistakenly unheeded, as no such calendared deadlines were placed on my calendar.” Furthermore, Borrower’s memorandum of points and authorities quotes (1) some of the text of the mandatory relief provision, (2) the description of its purpose set forth by the Supreme Court in Zamora, and (3) a case stating courts need not be concerned with the reasons for the attorney’s mistake. In the memorandum, defendant argues that “the subsequent failure to file the Request for Relief within 6 months of the entry of Default is addressed in the accompanying attorney declaration, and the relief associated therewith is mandatory under CCP 473(b).”

Based on the contents of Attorney’s declaration and Borrower’s memorandum of points and authorities, we conclude plaintiff was notified that Borrower was seeking relief under both the discretionary and mandatory provisions of section 473(b). Accordingly, the trial court did not abuse its discretion when it addressed whether Borrower qualified for mandatory relief.

C. Timeliness and Scope of the Request for Mandatory Relief

The parties disagree on whether Borrower qualifies for mandatory relief based on attorney fault. They have not cited a published decision that explicitly resolves the narrow legal question raised by the facts of this case.

1. Contentions of the Parties

Defendant relies on Sugasawara v. Newland (1994) 27 Cal.App.4th 294 (Sugasawara), which addressed “whether the six-month limitation allowed by section 473 for relief based on attorney’s neglect commences at the time default is entered or when the default judgment is rendered.” (Id. at p. 296.) The court interpreted the statutory language stating “no more than six months after entry of judgment” as plainly referring to the entry of the default judgment, not the entry of default. (Id. at p. 297.) Based on the fact that the default judgment was filed in January 1993 and the motion to set aside was filed in March 1993, the court concluded the default judgment was properly vacated. (Id. at pp. 296–297.)

Next, the court separately addressed whether “the trial court also properly vacated the underlying clerk’s entry of default against Newland which preceded the default judgment.” (Sugasawara, supra, 27 Cal.App.4th at p. 297.) The court stated that “[a] 1991 amendment to section 473 provides that if the default is caused by the attorney’s mistake, inadvertence, surprise, or neglect, the court shall vacate the ‘default entered by the clerk .…’ ” (Ibid.) The court also stated that “the legislative history indicates that the Legislature intended the court to vacate the underlying default caused by the attorney’s mistake, inadvertence, surprise or neglect upon vacation of a default judgment.” (Ibid., italics added.) Applying this interpretation to the facts presented, the court concluded it was proper to vacate both the default and the default judgment, even though the default was entered more than six months before the motion under section 473(b) was filed.

The present case is similar to Sugasawara in that the default was entered more than six months before the motion for relief was filed. Plaintiff, however, attempts to distinguish Sugasawara on the ground that the attorney in Sugasawara was at fault for both the entry of default and the subsequent default judgment. In this case, the default was entered on May 22, 2018, and defendant’s current attorney was first retained on June 15, 2018. As a result, Attorney’s mistake or inadvertence in calendaring deadlines was not a cause of the entry of default.

2. The Scope of Available Relief

The determinative question of statutory interpretation presented by the facts of this case relates to the scope of relief available under section 473(b)’s provision for mandatory relief. Initially, we consider the text in section 473(b) that states “the court shall … vacate any … resulting default entered by the clerk against” the attorney’s client. The inclusion of the adjective “resulting” in the mandatory provision suggests the default must have resulted from—that is, been caused by—the attorney’s mistake, inadvertence, surprise, or neglect. Under this interpretation, when a default is not caused by the attorney’s error, a court is not authorized by the mandatory provision to vacate the default.

Next, we consider the text of the exception contained in the mandatory relief provision. When the statutory conditions are satisfied, relief is mandatory “unless the court finds that the default … was not in fact caused by the attorney’s mistake, inadvertence, surprise, or neglect.” (§ 473(b), italics added.) The word “default” used in the mandatory provision of section 473(b) has narrow meaning. (Las Vegas Land & Development Co., LLC v. Wilkie Way, LLC (2013) 219 Cal.App.4th 1086, 1091.) It refers only to a default entered by the clerk. (Ibid.)

As to the statutory phrase “in fact caused by,” we adopt its usual meaning and conclude it refers to a “cause in fact (also called direct or actual causation).” (People v. Jones (2010) 187 Cal.App.4th 418, 424.) “ ‘ “An act is a cause in fact if it is a necessary antecedent of an event.” ’ ” (State Dept. of State Hospitals v. Superior Court (2015) 61 Cal.4th 339, 352.) California uses the substantial factor test for cause-in-fact determinations. “[A] cause in fact is something that is a substantial factor in bringing about the injury.” (Rutherford v. Owens-Illinois, Inc. (1997) 16 Cal.4th 953, 968–969; see CACI No. 430 [causation: substantial factor].) Accordingly, the clause “unless the court finds that the default … was not in fact caused by the attorney’s mistake, inadvertence, surprise, or neglect” plainly means that mandatory relief from a default is not available when the attorney’s fault did not cause the default entered by the clerk. (§ 473(b), italics added.)

3. Application of Statutory Text

In this case, the court’s oral statements during the hearing and its written order did not include an explicit finding resolving the question of whether the attorney’s fault was a cause of the May 2018 default. (See Rodriguez, supra, 234 Cal.App.4th at p. 726 [§ 473(b) requires an explicit finding as to causation when relief under the mandatory provision is denied based on the statutory exception].) For purposes of this appeal, we assume an explicit finding is not required when mandatory relief is granted. Before applying the statutory text to the facts of this case, we make three additional assumptions that are favorable to Borrower. First, we assume plaintiffs have the burden of proof on the causation question. Second, we assume the trial court impliedly determined Lender did not carry his burden of proof. Third, we assume the implied failure-of-proof determination is subject to appellate review under the finding-compelled-as-a-matter of law standard. Many decisions have recognized that when a trial court determines the party with the burden of proof failed to carry that burden, “ ‘the question for a reviewing court becomes whether the evidence compels a finding in favor of the appellant as a matter of law.’ ” (Vieira Enterprises, Inc. v. McCoy (2017) 8 Cal.App.5th 1057, 1074.) Under this standard, a finding favorable to plaintiff is required only if his “ ‘evidence was (1) “uncontradicted and unimpeached” and (2) “of such a character and weight as to leave no room for a judicial determination that it was insufficient to support a finding.” [Citation.]’ ” (Dreyer’s Grand Ice Cream, Inc. v. County of Kern (2013) 218 Cal.App.4th 828, 838.)

As described below, this is one of the rare cases in which the record demonstrates a finding was required as a matter of law. (See generally, Bookout v. State of California ex rel. Dept. of Transportation (2010) 186 Cal.App.4th 1478, 1486 [“it is almost impossible for [party with the burden of proof] to prevail on appeal by arguing the evidence compels a judgment in his favor”].) The parties agree the default was entered on May 22, 2018—a fact demonstrated by the filing stamp on the copy of the form CIV-100 contained in the clerk’s transcript. Attorney’s declaration states he was first retained on June 15, 2018. This sequence of events compels a finding that the default was not in fact caused by any mistake, inadvertence, or neglect of defendant’s attorney. To be a cause in fact, an act must precede the event. (State Dept. of State Hospitals v. Superior Court, supra, 61 Cal.4th at p. 352 [a cause in fact is a necessary antecedent of an event].)

Furthermore, the possible mistake, inadvertence or neglect of Borrower’s prior attorney is not relevant to our inquiry. Section 473(b) refers to “the attorney’s” mistake, inadvertence or neglect. When used as a definite article, “the” has a specifying or particularizing function. (Hudec v. Superior Court (2015) 60 Cal.4th 815, 826.) Here, its use specifies the attorney mentioned earlier in the mandatory relief provision—that is, the attorney who gave the “attorney’s sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect.” (§ 473(b).)

Proof of attorney fault by means of an affidavit is an explicit statutory condition for mandatory relief. The affidavit of attorney fault is important 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 a clear admission of fault by an attorney, the imposition of this liability would not be appropriate. Thus, a moving party defendant cannot qualify for mandatory relief based on attorney fault by blaming the entry of default on an attorney who did not submit an affidavit. Here, there is no affidavit of fault from Borrower’s prior counsel. Consequently, the possibility that prior counsel’s omission was a cause of the default being entered does not aid Borrower in demonstrating the conditions for mandatory relief under section 473(b) were satisfied.

In summary, we have given the exception to mandatory relief its plain meaning and concluded the attorney error described in the attorney’s affidavit must be a cause of the default. If this causal connection is missing, the moving party is not entitled to relief from either the default or the default judgment. Applying this interpretation to the facts presented, Borrower does not qualify for relief from either the default entered by the clerk or the default judgment. Accordingly, Borrower’s motion for relief under section 473(b) should have been denied.

DISPOSITION

The order granting the motion to set aside default and default judgment is reversed. The trial court is directed to vacate the order, to enter a new order denying the motion, and to reinstate the default judgment entered on January 3, 2019. Plaintiff shall recover his costs on appeal.