Opinion
A147502
11-02-2017
JAMES J. BENN, Plaintiff and Appellant, v. FAIRMONT HOTEL COMPANY-SAN FRANCISCO L.P., et al., Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (San Francisco City and County Super. Ct. No. CGC-13-535241)
James J. Benn filed a personal injury action, and later amended to add respondents Fairmont Hotel Company-San Francisco L.P. and Fairmont Hotel Management L.P. as defendants (Defendants). He negotiated a tolling agreement with respect to other named defendants and requested their dismissal. Benn's counsel inadvertently submitted another dismissal request that erroneously included Defendants. Benn moved to set aside the dismissal pursuant to Code of Civil Procedure section 473, subdivision (b) (section 473(b)) and the motion was denied. We reverse for abuse of discretion.
Undesignated statutory references are to the Code of Civil Procedure.
I. BACKGROUND
In November 2013, Benn filed a personal injury lawsuit alleging that in November 2011, while he was loading an elevator at the San Francisco Fairmont Hotel, the elevator doors closed on his head and shoulder and injured him. He initially named four business entities associated with the Fairmont hotel chain as defendants, along with Doe defendants. After discussions with defense counsel, Benn amended his complaint to add Defendants. Defense counsel agreed to toll the statute of limitations with respect to the other defendants named in the amended complaint (the Incorrect Defendants) and Benn agreed to dismiss them. Defendants filed answers to the first amended complaint.
The defendants named in the original complaint included Fairmont Raffles Hotels International (U.S.) Inc., Fairmont Hotel Company-San Jose, Fairmont Hotels and Resorts (U.S.) Inc., and The Fairmont San Francisco.
The first amended complaint names seven business entities as defendants: Defendants, two other newly-named entities (Fairmont Raffles Holdings International; FRHI Hotels & Resorts (U.S.) Inc.), and three of the four originally named entities (omitting Fairmont Hotel Company-San Jose). The latter five are hereafter referred to as the Incorrect Defendants.
In a declaration in support of Benn's motion to set aside the dismissal of Defendants in the trial court, Benn's counsel averred that defense counsel had agreed to tolling for the originally named entities and that she prepared a request for dismissal of those entities. In fact, the cited dismissal request named the five Incorrect Defendants identified in the first amended complaint.
On January 12, 2015, Benn's counsel, Ellen Levin, prepared a request for dismissal of the Incorrect Defendants and sent it to defense counsel for signature and filing. On January 21, defense counsel informed her the clerk's office had rejected the request because the defendants' names did not match exactly the names on the amended complaint. On April 30, Levin prepared a second dismissal request that listed the Incorrect Defendants and Defendants, the electronic filing of which was rejected for unknown reasons (hereafter the unfiled dismissal request). Unbeknownst to Levin, the clerk of the court filed the first dismissal request on April 30. Levin filed another dismissal request on August 7 that listed only the Incorrect Defendants.
On September 4, 2015, defense counsel informed Levin: "I just got an order setting the [case management conference] in this case, but according to my records, all defendants have been dismissed. See the attached requests for dismissals we received from your office—we've checked, and they cover all defendants. [¶] If you need me to take the lead in clarifying with the Court, I'm happy to do so." Defense counsel did not mention Levin's August 7 dismissal request listing only the Incorrect Defendants. On September 14, defense counsel again wrote to Levin: "[T]he clerk's office needs a NEW request for dismissal that only identifies particular entities that were previously batched together with others. [Defendants] were included in your [unfiled dismissal request,] . . . but the document apparently cannot be 'processed' because other entities are also listed. [¶] So—the clerk asked us to create a new notice with those two entities only, and this should wrap things up. I had my assistant create one—it's attached here . . . . [¶] Please sign and return . . . and we will file it." The attached request for dismissal named only Defendants, which Levin signed and filed on September 14 (hereafter the final dismissal request).
The attachments included first dismissal request, which was ultimately filed, and the unfiled dismissal request. Defense counsel also attached what appears to be yet another request for dismissal signed by Levin on August 3, listing four of the Incorrect Defendants. This request apparently was not filed and is not discussed by the parties.
On September 28, 2015, Benn filed a case management statement, estimating the case would require a seven-day jury trial. On October 2, however, the court continued the case management conference to December "for [Benn] to dismiss Does 5-50 . . . [as] all answering defendants have been dismissed."
On October 26, 2015, Benn moved to set aside the dismissal of Defendants. In an attached declaration, Levin averred that she had inadvertently included Defendants in the unfiled dismissal request, and she understood defense counsel's September 4 e-mail statement that " 'all defendants have been dismissed['] . . . to mean the [Incorrect Defendants] only." Moreover, "[a]t the time I received [defense counsel's September 14] email, I was out of the office, and believing time was of the essence, and because the names of the entities are so similar, without carefully reviewing the [final dismissal request], I mistakenly instructed my associate attorney to sign . . . and forward it back to [defense counsel] for filing. [¶] . . . It was not until I received notice from the court that the Case Management Conference date had moved to December for the purpose of dismissing the remaining Doe defendants that I realized what had happened. [¶] . . . At no time did [Benn] ever have knowledge of [either dismissal request naming Defendants]."
Benn's notice of motion and opening brief cited section 473(b) as authority for setting aside Defendants' dismissal. Benn argued Defendants were dismissed due to an inadvertent mistake of his attorney, and he repeatedly noted that he had never personally authorized dismissal of Defendants. Benn argued he would be prejudiced by the dismissal because the limitations period on his claims expired in 2013.
In opposition, defense counsel averred the unfiled dismissal request, which was served on her office, led her to believe Benn intended to dismiss all defendants. "Levin did not inform me that she had made a mistake by including [Defendants], nor did she inform me that the request had been rejected for filing. . . . I believed that all defendants had been dismissed, and the case was concluded." Defense counsel attached and implicitly acknowledged the August 7, 2015 dismissal request—which named only the Incorrect Defendants—but did not explicitly address it in her declaration. In their opposition brief, Defendants argued relief was unavailable under section 473(b) because Levin's conduct was not excusable neglect, citing Zamora v. Clayborn Contracting Group, Inc. (2002) 28 Cal.4th 249 (Zamora).
In reply, Benn argued the record clearly demonstrated he did not intend to dismiss Defendants. He represented that "[D]efendants had extended an offer to settle the matter for a nominal $4,000.00. If in fact [Benn] truly wished to dismiss his case, certainly he would have accepted the $4,000.00 offer before any dismissal was filed." Further, "[i]n light of the fact that there were so many communications between counsel concerning which defendants are to remain, and which were to be dismissed, and in light of the fact that a specific Tolling Agreement had been revised several times, and finally executed, it was quite clear to [D]efendants that [Benn] did not wish to dismiss his entire case. . . . A simple telephone call from defense counsel if in fact an error had been made [in the unfiled dismissal request] would have avoided all of the confusion, time and costs." Instead, Benn argued, "[d]efense counsel . . . volunteered to 'take the lead in clarifying with the Court.' [Levin] believed defense counsel was volunteering to explain to the clerk that there was no intention to dismiss all of the defendants, and that there was a mistake." Citing Zamora, supra, 28 Cal.4th 249, Benn argued that Levin's mistake was excusable, he had been diligent in seeking relief, Defendants had not been prejudiced, and defense counsel had taken unfair advantage of Levin's drafting mistake in the unfiled dismissal request. At hearing on the motion, Levin reminded the court that Benn never personally authorized dismissal of Defendants, and argued: "under Romadka v. Hoge (1991) 232 Cal.App.3d 1231 if the attorney was without client authority to dismiss the action, the Court may not refuse to set aside the dismissal." (See Zamora, at p. 260 [citing Romadka for that principle].)
The court denied the motion. "[Levin] has failed to demonstrate that [Benn] is entitled to discretionary relief pursuant to . . . section 473(b). [Benn's] reliance upon Zamora[, supra,] 28 Cal.4th 249 is unavailing. [Levin's] error, in the case at hand, appears to extend beyond excusable neglect based on a clerical mistake. [Levin] knew that she had made errors in the past in identifying the correct defendants in [Benn's] requests for dismissal. [Citation.] Rather than ensure that the defendants were accurately identified, [Levin] instructed her associate to sign the papers submitted by Defendants' counsel without even reviewing the papers. [Citation.] In alleging that Defendants' counsel took advantage of [Benn] in submitting the [final dismissal request], [Benn] does not address the fact that Defendants received notice of the [unfiled] dismissal request, yet were never told that [it] mistakenly included [them]." Benn appeals.
II. DISCUSSION
The discretionary provision of section 473(b) 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 made within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken." Section 473, subdivision (d) (section 473(d)) provides: "The court . . . may, on motion of either party after notice to the other party, set aside any void judgment or order." A. Appealability
Because we conclude the trial court abused its discretion in denying Benn relief under the discretionary provision of section 473(b), we need not address Defendants' arguments regarding the mandatory provision of section 473(b).
Defendants argue the order denying Benn's motion to set aside the dismissal is a nonappealable order. We disagree and in any event conclude we would exercise our discretion to treat the appeal as a writ petition if the order were nonappealable. We independently decide the question of appealability as an issue of law. (Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 800.)
A voluntary dismissal entered by a clerk of the court is not an appealable judgment. (Gray v. Superior Court (1997) 52 Cal.App.4th 165, 170; Mesa Shopping Center-East, LLC v. O Hill (2014) 232 Cal.App.4th 890, 898 (Mesa).) The predominant rationale for this rule is that "the dismissal of the action is a ministerial action of the clerk, not a judicial act." (Gray, at p. 170 [reviewing cases].)
Some courts have held it necessarily follows that an order granting or denying a motion to set aside such a voluntary dismissal is not appealable because it is not an order entered after an appealable judgment (§ 904.1, subd. (a)(2)) and there is no other statutory authority for an appeal. (Gray v. Superior Court, supra, 52 Cal.App.4th at p. 171; H.D. Arnaiz, Ltd. v. County of San Joaquin (2002) 96 Cal.App.4th 1357, 1364-1366; Lavaysse v. Superior Court (1944) 63 Cal.App.2d 223, 227-228.) These courts hold that the order is reviewable only by writ. (Gray, at p. 171; H.D. Arnaiz, at p. 1366; Lavaysse, at p. 228; see Nixon Peabody LLP v. Superior Court (2014) 230 Cal.App.4th 818, 821 [noting without discussion or explanation that an order granting motion to vacate voluntary dismissal was nonappealable, but reviewing the order in a writ proceeding].) But at least one court has disagreed with these cases and held that an order denying a motion to set aside a voluntary dismissal entered by a clerk is appealable because the dismissal and order collectively have the effect of a final judgment, leaving no issue left for future consideration in the trial court. (Mesa, supra, 232 Cal.App.4th at p. 898.)
Other courts have held an order granting or denying a motion to set aside a voluntary dismissal entered by a clerk is appealable, but we do not find them persuasive as they rely on inapposite authority. Romadka v. Hoge, supra, 232 Cal.App.3d at page 1237 (Romadka), cites the predecessor statute to section 904.1, subdivision (a)(2) (authorizing appeals from orders entered after appealable judgments) but does not acknowledge that a voluntary dismissal entered by a clerk is generally nonappealable. Romadka also cites County of Ventura v. Tillett (1982) 133 Cal.App.3d 105, 110, which held that an order denying a motion to set aside a stipulated judgment as void for violating due process was appealable and was later disapproved in County of Los Angeles v. Soto (1984) 35 Cal.3d 483, 492, footnote 4. Basinger v. Rogers & Wells (1990) 220 Cal.App.3d 16, 21, relies on 9 Witkin, Cal. Procedure (3d ed. 1985) Appeal, section 108, page 127, but that part of the treatise set forth only the "general rule" that an order granting a section 473 motion was appealable and did not specifically address the appealability of an order vacating a voluntary dismissal entered by a clerk.
We find Mesa's approach to the issue, which guarantees appellate review for a plaintiff in Benn's circumstances, persuasive, and therefore conclude the trial court's order denying Benn's motion is appealable. However, even if the order were reviewable only by writ petition, we would exercise our discretion to treat the appeal as a petition for writ of mandate. Like the Mesa court, we observe: "The law is confusing. The briefing and record are sufficient to treat this matter as a writ proceeding. There is nothing to suggest the trial court would actually appear as a party if this matter were to be deemed a writ proceeding. And finally, [Benn's] contentions in this case have merit; it would be unjust if relief were to be denied by way of a procedural trap." (Mesa, supra, 232 Cal.App.4th at p. 899.) B. Forfeiture of Section 473(d) Argument
In the trial court, Benn cited section 473(b) as authority for his motion and repeatedly noted that he never personally authorized his attorney to dismiss the action as to Defendants. At hearing on the motion, Benn cited Romadka, supra, 232 Cal.App.3d 1231 and its holding that an attorney may not dismiss a client's claims without the client's consent. On appeal, Benn again argues the dismissal of Defendants must be set aside for lack of client consent, but now argues (as Romadka held) the dismissal is therefore void (see § 473(d)). Defendants argue Benn forfeited any argument that the dismissal should be set aside pursuant to section 473(d) because he failed to make that argument below. We hold there was no forfeiture for two reasons: a party may raise a new legal theory on appeal if it is based on facts considered by the trial court; and case law on setting aside judgments, orders, or dismissals for lack of client consent arises under both section 473(b) and section 473(d).
First, "it is settled that a change in theory is permitted on appeal when 'a question of law only is presented on the facts appearing in the record.' " (Ward v. Taggart (1959) 51 Cal.2d 736, 742.) Here, Benn's section 473(d) argument is premised on the same facts that supported his section 473(b) argument in the trial court: evidence his attorney mistakenly dismissed Defendants without client authorization. Because application of section 473(d) to the same facts is purely a question of law, we may consider the argument for the first time on appeal.
Second, cases that hold voluntary dismissals are properly set aside on the ground of no client authorization arise under both section 473(b)'s "mistake" provision and section 473(d)'s "void" provision. In Robinson v. Hiles (1953) 119 Cal.App.2d 666, the court affirmed an order setting aside a voluntary dismissal that was filed pursuant to a settlement the client never authorized. (Id. at pp. 668-669, 671, 674.) The court observed that the plaintiff, who had filed the motion about three months after the dismissal, had demonstrated due diligence, which was "a prime requisite for relief under section 473 . . . [for] the party claiming injury through mistake, etc." (Id. at p. 673, italics added.) The court did not refer to the dismissal as "void." (Id. at pp. 670-674.) In Bice v. Stevens (1958) 160 Cal.App.2d 222 (Bice), the court reversed an order denying a motion to set aside a voluntary dismissal "with prejudice" and to substitute a dismissal "without prejudice" where the attorney had erred and the client had never authorized a dismissal with prejudice. (Id. at pp. 224-227, 233-234.) The stated grounds for the motion were "mistake, mistake of law, surprise, inadvertence, excusable neglect, and want of any authority from [clients]." (Id. at p. 225.) The court cited Robinson in reversing the trial court and did not refer to the dismissal as "void." (Bice, at pp. 232-234). In Converse v. Joslin (1959) 176 Cal.App.2d 638, the court affirmed an order denying a motion to set aside a voluntary dismissal allegedly entered without client authorization. The court held the motion, although unsuccessful, was "authorized by the fourth paragraph of [former] section 473," (the predecessor of § 473(d)), but also cited Robinson as authority for this proposition. (Converse, at pp. 640-641.) Converse never refers to a "void" or "voidable" judgment or order. (Id. at pp. 641-642.)
Section 473 was not subdivided into its current form until 1996. (Stats. 1996, ch. 60, § 1, p. 261.) However, the statute has included the applicable language of current subdivisions (b) and (d) at all times relevant to the case authority discussed herein. (See Stats. 1933, ch. 744, § 34, p. 1851; Stats. 1961, ch. 722, § 1, p. 1965; Stats. 1981, ch. 122, § 2, p. 862.) In 1992, section 473 was amended to expressly include "dismissal" in the language of current subdivision (b). (Stats. 1992, ch. 876, § 4, p. 4071.)
Converse v. Joslin, supra, 176 Cal.App.2d at p. 641, held the motion was properly denied in part because it was filed outside the six-month time limit in section 473. Although the six-month time limit currently applies only to section 473(b) motions, at the time Converse was decided, the unsubdivided statute arguably applied the six-month time limit to all of its provisions. (Stats. 1933, ch. 744, § 34, p. 1851; see Whittier Union High Sch. Dist. v. Superior Court (1977) 66 Cal.App.3d 504, 506, 508 (Whittier) [implying six-month time limit applied to all motions to vacate brought under former § 473, which was not yet subdivided]; Stats. 1961, ch. 722, § 1, p. 1965.)
In 1977, Whittier, supra, 66 Cal.App.3d 504 held a dismissal pursuant to a settlement entered without client authorization "remained voidable for an indeterminate period," even though a motion to set aside under section 473 would have been untimely, thus clearly implying the dismissal was not set aside under the "void" provision of section 473, but under the court's equitable powers. (Id. at pp. 507-508; see Zamora, supra, 28 Cal.4th at p. 260 [discussing equitable power to set aside judgments and orders].) In Romadka, supra, 232 Cal.App.3d 1231, however, the court cites Whittier for the principle that a dismissal entered without client authorization is voidable any time (Romadka, at p. 1236) and the language of current subdivision (d) as authority to set aside a dismissal order as void. (Id. at p. 1235.) Both Whittier and Romadka cite Robinson and Bice as authority for setting aside a dismissal entered without client authorization. (Whittier, at pp. 508-509; Romadka, at p. 1235.) In Zamora, the Supreme Court cited Robinson and Bice as examples of section 473(b) discretionary relief cases (Zamora, at p. 255, fn. 3), and similarly cited Romadka as a "mistake" case (Zamora, at p. 259). Nixon Peabody LLP v. Superior Court, supra, 230 Cal.App.4th 818, on the other hand, describes Whittier and Romadka as squarely resting on the "void" provision of section 473(d). (Nixon Peabody, at p. 823.)
See footnote 9.
In sum, case authority has often blurred the lines between remedies under sections 473(b) and 473(d). Particularly in light of this lack of clarity, we reject the argument that, because Benn did not specifically cite section 473(d) in the trial court, he forfeited his argument that the dismissal of Defendants should be set aside because it was entered without client authorization. C. Relief under Section 473(b)
" 'A ruling on a motion for discretionary relief under section 473 shall not be disturbed on appeal absent a clear showing of abuse.' " (Zamora, supra, 28 Cal.4th at p. 257.) We begin our analysis with Zamora, the case relied upon by the parties and court below. In Zamora, the plaintiff's counsel mistakenly sent a section 998 settlement offer proposing a judgment " 'against' " rather than " 'in favor of' " his client. The defendant accepted the offer and judgment was entered against the plaintiff. The Supreme Court affirmed an order setting aside the judgment pursuant to section 473(b). (Zamora, at pp. 252-253, 261.) The Supreme Court cited several reasons for its ruling: the mistake was excusable; the plaintiff was diligent in seeking relief; the defendant suffered no prejudice; the defendant took unfair advantage of the plaintiff's mistake; and the client did not authorize the settlement. (Id. at pp. 259-260.) In Benn's case, the trial court only addressed the first of these reasons. In our view, consideration of all factors as well as relevant case law requires reversal of the trial court's order.
1. Excusable Neglect
Zamora first holds: "In determining whether the attorney's mistake or inadvertence was excusable, 'the court inquires whether "a reasonably prudent person under the same or similar circumstances" might have made the same error.' (Bettencourt v. Los Rios Community College Dist. (1986) 42 Cal.3d 270, 276, italics omitted.) In other words, the discretionary relief provision of section 473 only permits relief from attorney error 'fairly imputable to the client, i.e., mistakes anyone could have made.' (Garcia [v. Hejmadi (1997)] 58 Cal.App.4th [674,] 682.) '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.' " (Zamora, supra, 28 Cal.4th at p. 258.) In Zamora, the court held that the attorney's error, which it called "a typo" (Zamora, at p. 252), was excusable neglect (id. at p. 259).
The cases cited in Zamora, supra, 28 Cal.4th at page 258, provide further guidance. In Bettencourt v. Los Rios Community College Dist., supra, 42 Cal.3d 270, which addressed whether a plaintiff should be permitted to file a late government claim pursuant to section 946.6, the attorney had mistakenly filed a government claim with the state, not realizing the community college district defendants were not state employees. (Bettencourt, at pp. 274-275.) The Supreme Court held the error was excusable neglect, even though the attorney had both initially assumed the defendants were state employees and later failed to notice potentially conflicting information on defendants' letterhead, a compound error. (Id. at pp. 276-277, 281.) In contrast, in Garcia v. Hejmadi, supra, 58 Cal.App.4th 674, the plaintiff's attorney moved to set aside a summary judgment on the ground he neglected to make certain arguments in his opposition to the summary judgment motion. (Id. at pp. 679-680.) The appellate court reversed an order granting the motion, holding the attorney's mistake in filing an opposition that was "inadequate in substance" (id. at p. 683) was not excusable neglect but more in the nature of professional negligence (id. at p. 684).
Here, the trial court ruled that Levin's error "appears to extend beyond excusable neglect based on a clerical mistake. [Levin] knew that she had made errors in the past in identifying the correct defendants in [Benn's] requests for dismissal. [Citation.] Rather than ensure that the defendants were accurately identified, [Levin] instructed her associate to sign the papers submitted by Defendants' counsel without even reviewing the papers." In our view, the trial court erroneously focused solely on the multiplicity of Levin's errors: adding Defendants' names to the unfiled dismissal request, failing to discover and inform Defendants of that error when defense counsel wrote the following September that all defendants had been dismissed, and ordering the final dismissal request to be signed and filed without reviewing it. Rather, the trial court should have considered the nature of the errors, i.e., whether the errors were of the sort an ordinary person would make or whether they were negligent exercises of professional judgment.
The trial court did not find, and the record does not support a finding, that Levin intentionally dismissed Benn's claims against the Defendants and later realized doing so was a strategic miscalculation. Instead, the record only supports a finding that Levin erroneously copied all defendant names from the amended complaint onto the unfiled dismissal request due to carelessness, and failed to carefully read defense counsel's September e-mails and the final dismissal request before instructing her associate to sign and file it. These are clerical errors, not errors in the exercise of professional judgment. We do not mean to minimize Levin's negligence. Her conduct may well have amounted to malpractice, but the error in Zamora also would have been malpractice if not remedied. Regardless, Zamora instructs that the test for section 473(b) relief is whether the error was ordinary negligence (albeit compound) or professional negligence. Levin's errors were the former not the latter.
2. Diligence and Prejudice
Zamora further explains: "The party seeking relief under section 473 must also be diligent. (Benjamin [v. Dalmo Mfg. Co. (1948)] 31 Cal.2d [523,] 527-528.) Thus, an application for relief must be made 'within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken.' ([§ 473(b)].) [¶] Where the mistake is excusable and the party seeking relief has been diligent, courts have often granted relief pursuant to the discretionary relief provision of section 473 if no prejudice to the opposing party will ensue. (See, e.g., Robinson v. Hiles, supra, 119 Cal.App.2d at pp. 671-673; Fickeisen v. Peebler (1946) 77 Cal.App.2d 148, 151-152.) In such cases, the law 'looks with [particular] disfavor on a party who, regardless of the merits of his cause, attempts to take advantage of the mistake, surprise, inadvertence, or neglect of his adversary.' " (Zamora, supra, 28 Cal.4th at p. 258.)
Zamora held the plaintiff there—who took action to set aside the section 998 judgment less than two weeks after discovering the error—was diligent, the defendant did not suffer undue prejudice, and the defendant took unfair advantage of the plaintiff's error. (Zamora, supra, 28 Cal.4th at pp. 252, 259.) On the latter point, the court observed, "[w]e find it hard to believe that [the defendant] had no inkling that the section 998 offer was a mistake when the uncontroverted record established that: (1) Zamora's complaint sought over $140,000 in damages; (2) Zamora had never offered to settle for less than $150,000 . . . prior to making the offer; (3) the section 998 offer proposed to settle the matter for almost the same amount ($149,999) as [the defendant's] entire [cross-]claim for damages (approximately $157,000); and (4) [the defendant] knew Zamora was having financial difficulties and had failed to pay approximately $31,000 in tax levies." (Id. at p. 259.)
Here, the trial court did not make any express findings about Benn's diligence or prejudice to Defendants, but observed: "[i]n alleging that Defendants' counsel took advantage of [Benn] in submitting the [final dismissal request], [Benn] does not address the fact that Defendants received notice of the [unfiled] dismissal request, yet were never told that the request mistakenly included [Defendants]." In our view, the record does not support findings of lack of diligence or unfair prejudice to Defendants. Levin moved to set aside the dismissal of Defendants about six weeks after it had been filed and three weeks after the court continued the case management conference to dismiss the Doe defendants. These time frames are not unreasonable. (Compare Fickeisen v. Peebler, supra, 77 Cal.App.2d at pp. 150-151 [diligence shown where motion filed within month of rendition of judgment] with Benjamin v. Dalmo Mfg. Co., supra, 31 Cal.2d at p. 529 [diligence not shown where motion filed three months after full knowledge of default entry and no explanation for delay].) Defendants produced no evidence of unfair prejudice due to the erroneous dismissal and we see none. Specifically, they have not shown their ability to defend the action was hindered or damaged by Levin's mistakes and do not contend they took affirmative action in reliance on the dismissal that will cause them detriment if the dismissal is reversed.
The trial court found that Defendants did not take unfair advantage of Levin's mistakes. Defendants contend they sincerely believed that Benn intended to dismiss the them in April 2015 and their September e-mails were attempts to wrap up loose ends in the still-pending case. But Benn had rejected a settlement offer from Defendants, and he had negotiated a tolling agreement with regard to the Incorrect Defendants but not Defendants. There is no evidence Defendants knew of circumstances that would have caused Benn to abandon his case against them, and the August 7 dismissal request named only the Incorrect Defendants. Nevertheless, we cannot say that the court's finding is unsupported by substantial evidence.
In sum, the record establishes that Benn was diligent in seeking to set aside the dismissal and Defendants suffered no undue prejudice from the erroneous dismissal.
3. Lack of Client Authorization
Finally, in considering the public policy implications of its holding, Zamora states: "[a]lthough the law favors settlements [citation], it only favors authorized settlements. 'An attorney does not, without specific authorization, possess the power or authority to bind his client to a compromise settlement of pending litigation.' (Bice, supra, 160 Cal.App.2d at pp. 231-232, italics added.) Where, as here, an attorney makes a clerical mistake that results in a settlement on terms clearly not authorized by his client, the public policy favoring settlements has no force. (See Romadka, supra, 232 Cal.App.3d at p. 1237.) Rather, the client, in the interests of justice, should be 'given an opportunity to have' his 'respective rights . . . tried and adjudicated.' " (Zamora, supra, 28 Cal.4th at p. 260; cf. Garcia v. Hejmadi, supra, 58 Cal.App.4th at p. 682 [even where attorney error is inexcusable, misconduct amounting to client abandonment merits relief under section 473(b)].)
"The attorney is authorized by virtue of his employment to bind the client in procedural matters arising during the course of the action but he may not impair the client's substantial rights or the cause of action itself." (Linsk v. Linsk (1969) 70 Cal.2d 272, 276.) Courts have applied this rule where an attorney dismissed an action with prejudice pursuant to a settlement agreement the client had not authorized (Robinson v. Hiles, supra, 119 Cal.App.2d at pp. 671-672; Bice, supra, 160 Cal.App.3d at p. 233; Whittier, supra, 66 Cal.App.3d at p. 508); dismissed an action with prejudice by mistake (Romadka, supra, 232 Cal.App.3d at pp. 1235-1237); or settled an action contrary to the client's interests because of a typographical error (Zamora, supra, 28 Cal.4th at p. 260).
Here, despite Benn's repeated insistence that he had not authorized dismissal of Defendants, the trial court made no finding regarding client authorization. It is undisputed in the appellate record that Benn did not authorize the final dismissal request. That is, the record compels a finding that the dismissal of Defendants was entered without client authorization.
Defendants argue Benn cannot establish that Levin's mistake impaired his substantial rights because Levin dismissed them without prejudice. (Bice, supra, 160 Cal.App.2d at p. 232 [" ' "[i]t is clearly within the attorney's authority to dismiss the client's action without prejudice" ' "], quoting Gagnon Co., Inc. v. Nevada Desert Inn (1955) 45 Cal.2d 448, 459.) In some circumstances, of course, a dismissal without prejudice would not impair substantive rights if still-timely dismissed claims could be reasserted in a new action. Where the limitations period has run and no grounds for tolling exist, however, a dismissal without prejudice bars any future action, thus impairing the client's substantive rights. (See Nolan v. Workers' Comp. Appeals Bd. (1977) 70 Cal.App.3d 122, 129; Franklin Capital Corp. v. Wilson (2007) 148 Cal.App.4th 187, 212, fn. 24.) Defendants here do not dispute that the limitations period has run on Benn's claims against them. They argue, however, that the limitations defense might be waived in a later action and there might be grounds for equitable tolling. Significantly, Defendants do not affirmatively offer to waive the statute of limitations defense or propose plausible grounds for tolling. We conclude that Levin did in fact impair Benn's substantive rights by filing the dismissal and that she lacked authority to do so. Whether considered under section 473(b) or section 473(d), reversal is required.
Both cases make this observation in the context of applying the rule that " ' "an attorney ordinarily does not have implied authority to do an act which will effect the surrender or loss of a client's substantial rights." ' " (Bice, supra, 160 Cal.App.2d at p. 232, quoting Gagnon Co., Inc. v. Nevada Desert Inn, supra, 45 Cal.2d at p. 460.) The Bice court found a dismissal with prejudice without client authorization had to be set aside (Bice, at pp. 233-234), and the Gagnon court found no abuse of discretion in the trial court's finding that a client had in fact authorized a dismissal (Gagnon, at p. 461).
Defendants raise these specific arguments in the context of arguing that writ review of the court's order would be inappropriate.
At hearing on the motion, Levin told the trial court she had "spent hours" speaking to defense counsel and a managing partner of the defense firm in an attempt to avoid the section 473(b) motion without success. If true, the suggestion that Defendants would then waive the limitations defense rings somewhat hollow.
4. Conclusion
We hold that the trial court abused its discretion in denying the motion to set aside the dismissal for the following reasons: the attorney mistakes in this case, albeit compound and arguably egregious, did not arise from errors in the exercise of professional judgment; Benn was diligent in seeking to set aside the dismissal; there is no showing Defendants would be unfairly prejudiced by setting aside the dismissal; and Levin impaired Benn's substantive rights without Benn's authorization. D. Penalty, Attorney Fees and Costs
Section 473, subdivision (c) provides: "(1) Whenever the court grants relief from a . . . 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 than one thousand dollars ($1,000) to the State Bar Client Security Fund. [¶] (C) Grant other relief as is appropriate." Section 473(b) provides "[t]he court may, upon any terms as may be just, relieve a party . . . from a . . . dismissal . . . ." (Italics added; see Kodiak Films, Inc. v. Jensen (1991) 230 Cal.App.3d 1260, 1264 [holding "any terms as may be just" may include payment of opposing party's attorney fees and implying § 473, subd. (c)(1)(C) also authorizes fee award].) Another part of section 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 their opposition to Benn's motion in the trial court, Defendants sought a fee award pursuant to this provision.
In light of our direction to enter an order granting the motion to set aside the dismissal, the trial court on remand may consider whether to award Defendants the fees and costs they incurred in the motion proceedings pursuant to section 473(b) or section 473, subdivision (c)(1)(C) and whether to grant other relief under section 473, subdivision (c)(1).
III. DISPOSITION
The order denying the motion to set aside the dismissal is reversed with directions that the trial court enter a new order granting the motion. On remand, the court shall consider whether to grant Defendants' fees and costs incurred in the motion proceedings under sections 473(b) or 473, subdivision (c)(1)(C) and whether to grant other relief under section 473, subdivision (c)(1). We exercise our discretion to deny Benn his costs on appeal.
/s/_________
BRUINIERS, J. WE CONCUR: /s/_________
JONES, P. J. /s/_________
NEEDHAM, J.