Opinion
B228516
11-22-2011
MARC LEVIE VISUALS, Plaintiff and Appellant, v. ECHELON ENTERTAINMENT, et al., Defendants and Respondents.
Miller Entertainment Group, Inc., and Kyndra S. Miller for Plaintiff and Appellant. Law Office of Timothy M. Hoffman, and Timothy M. Hoffman for Defendants and Respondents Ian Jamieson and Supervision Entertainment, Inc.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. BC390464)
APPEAL from a judgment of the Superior Court of Los Angeles County, Ernest Hiroshige, Judge. Affirmed.
Miller Entertainment Group, Inc., and Kyndra S. Miller for Plaintiff and Appellant.
Law Office of Timothy M. Hoffman, and Timothy M. Hoffman for Defendants and Respondents Ian Jamieson and Supervision Entertainment, Inc.
INTRODUCTION
Plaintiff and appellant Marc Levie Visuals obtained a default judgment against defendants and respondents Echelon Studios, Inc., Supervision Entertainment, Inc., Singa Home Entertainment, Inc., Eric Louzil, Rita Rosenthal, and Ian Jamieson. Subsequently, respondents, with the exception of Echelon Studios, Inc., successfully moved for relief from the default judgment under Code of Civil Procedure section 473, subdivision (b). Plaintiff appeals, contending that the court erroneously granted the relief. We find no error and affirm.
All subsequent undesignated references to code sections are to the Code of Civil Procedure.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff filed a complaint against respondents on May 8, 2008, alleging violations of the Uniform Fraudulent Transfer Act (Civ. Code, §§ 3439.04 et seq. (UFTA)), fraud, conspiracy to violate the UFTA, and intentional interference with contractual relations. Respondents Echelon Studios, Inc., Supervision Entertainment, Inc., Singa Home Entertainment, Inc., and Eric Louzil filed an answer on September 11, 2008. While the record on appeal does not contain the answer of remaining respondents Rita Rosenthal and Ian Jamieson, both parties suggest that these individuals filed an answer.
On March 27, 2009, plaintiff moved to compel responses by respondents to interrogatories and document requests. On the May 4, 2009 hearing date, respondents' counsel, Timothy Hoffman, stipulated on behalf of all respondents that they would serve responses by May 14, 2009.
After respondents failed to serve responses, plaintiff filed another motion to compel the responses on July 1, 2009. Respondents did not file an opposition. On July 24, 2009, respondents' counsel failed to appear at a Mandatory Settlement Conference, and the court set an order to show cause (OSC) for August 4, 2009, regarding the imposition of sanctions, striking respondents' answer, and finding them in default for failing to appear. Respondents again failed to appear at the OSC hearing on August 4, 2009. On that date, the trial court granted plaintiff's motions to compel discovery responses and ordered respondents to serve responses within 10 days. The court ordered respondents to pay monetary sanctions in the amount of $1,105, but refused plaintiff's request for sanctions against Hoffman, finding "there is an insufficient showing that counsel advised the Defendants[] [to] misuse . . . the discovery process per CCP § 2023.030(a)." The court also struck the answer of all respondents and ruled that they were in default.
Plaintiff subsequently applied for a default judgment against respondents and the court granted plaintiff's application on January 11, 2010. A default judgment against respondents was entered on January 26, 2010, in the amount of $126,974.
Respondents Eric Louzil, Signa Home Entertainment, Inc., and Rita Rosenthal filed a motion for relief from the default judgment on July 9, 2010. Respondents Supervision Entertainment Inc. and Ian Jamieson separately filed a motion for relief on July 22, 2010. A declaration from attorney Hoffman was submitted in support of each application for relief. In his declaration Hoffman stated that the default judgment was "accomplished and entered through my inadvertence and neglect"; that he "take[s] full responsibility for not effectively representing my clients during the period of April 2009 through January of 2010"; and that "[a]t no time did I inform my clients of my inability to effectively represent their interests." The application also includes a declaration from Eric Louzil stating as follows: "During the period in which Hoffman abandoned our case I called Hoffman on numerous occasions and inquired on the status and progress of our case. On each occasion, Hoffman assured me that everything was going well. I believed Hoffman's representations on each occasion that I called because there were no bases for me [to] doubt him." Respondents also submitted numerous emails from Louzil to Hoffman from August through December 2009 showing that Louzil was unsuccessfully trying to contact Hoffman during this time period.
Although default judgment was also granted against Echelon Studios, Inc., that entity did not move for relief from the judgment.
On September 8, 2010, the court granted both motions for relief from default and, per section 473, subdivision (b), ordered respondents' counsel, Timothy Hoffman, to pay $2,600 as compensation for the attorney fees and costs plaintiff was forced to incur as a result of Hoffman's neglect.
Plaintiff has timely appealed from the order granting the motions for relief from the default judgment.
DISCUSSION
Before considering plaintiff's arguments that relief from the default judgment should not have been granted, we address respondents' contention that plaintiff waived its right to appeal the grant of relief from the default judgment by accepting Hoffman's payment of $2,600 for attorney fees and costs. The trial court ordered Hoffman to pay plaintiff $2,600 pursuant to section 473, subdivision (b), which provides that "[t]he 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." (§ 473, subd. (b).) Thus, when relief from a default is granted under the mandatory relief provision, a plaintiff is entitled to recover reasonable legal fees and costs necessitated by counsel's neglect leading to a defendant's default. (Matera v. McLeod(2006) 145 Cal.App.4th 44, 68 (Matera).) If an order granting relief is reversed, that portion of the order requiring that the neglectful attorney compensate plaintiff for its legal fees and costs would also necessarily be reversed. However, it would be nonsensical for us to find that a plaintiff could never accept payment for its attorney fees suffered as a result of the negligence of opposing counsel without forfeiting its right to appeal the court's decision granting a defendant relief from default. The fact that plaintiff accepted Hoffman's court-ordered payment for its legal fees incurred as a result of Hoffman's neglect does not constitute a waiver of plaintiff's right to appeal from the same order granting relief from the default judgment.
We now turn to the merits of plaintiff's appeal arguing that relief from the default judgment was improperly granted under section 473, subdivision (b). This statute provides for two types of relief for litigants. Under its discretionary relief provision, on a showing of "mistake, inadvertence, surprise, or excusable neglect," the court has discretion to allow relief from a "judgment, dismissal, order, or other proceeding taken against" a party or his or her attorney. Under the mandatory relief provision, "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." (§ 473, subd. (b).) The purpose of the mandatory relief provision is "'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.] Thus, the Legislature created 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 (Zamora).) "The range of attorney conduct for which relief can be granted in the mandatory provision is broader than that in the discretionary provision, and includes inexcusable neglect. But the range of adverse litigation results from which relief can be granted is narrower. Mandatory relief only extends to vacating a default which will result in the entry of a default judgment, a default judgment, or an entered dismissal." (Leader v. Health Industries of America, Inc. (2001) 89 Cal.App.4th 603, 616.)
In this case, respondents rely solely on the mandatory relief provision. "'"If the prerequisites for the application of the mandatory relief provision of section 473, subdivision (b) exist, the trial court does not have discretion to refuse relief."' [Citation.]" (Henderson v. Pacific Gas & Electric Co. (2010) 187 Cal.App.4th 215, 226 (Henderson).)
Plaintiff makes four arguments for reversal of the order granting relief: (1) the mandatory relief provision does not apply, given the procedural posture of the case; (2) respondents' motions for relief from the default judgment were not timely; (3) respondents failed to establish that the default resulted from their attorney's negligence; and (4) plaintiff will suffer extreme prejudice if forced to relitigate the matter. We do find any of the arguments persuasive.
1. Mandatory Relief Provision Is Applicable
Plaintiff argues that mandatory relief from the default judgment is not available here because respondents did not "default" and instead filed an answer to the complaint and initially defended the matter, before the court struck their answer for failure to appear. Whether mandatory relief is available in these circumstances is a question of statutory construction that is subject to de novo review. (Henderson, supra, 187 Cal.App.4th at p. 226.)
We note that plaintiff failed to argue before the trial court that relief under the mandatory provision was not available due to the procedural posture, and thus has forfeited the argument. (Junkin v. Golden West Foreclosure Service, Inc. (2010) 180 Cal.App.4th 1150, 1158.) In any event, plaintiff's argument fails on the merits.
We have previously held that mandatory relief is available to a defendant only where a default or default judgment has been entered against him or her for failure to answer a complaint, and we have rejected the more expansive view adopted by some courts construing the provision to reach circumstances deemed to be the procedural equivalent of defaults, default judgments, or dismissals, such as cases in which a party and its attorney failed to appear at trial or failed to oppose a summary judgment motion. (Hossain v. Hossain (2007) 157 Cal.App.4th 454, 458 (Hossain); see Henderson, supra, 187 Cal.App.4th at p. 226, discussing conflicting cases.) Contrary to plaintiff's suggestion, however, the instant case does not concern the procedural equivalent of a default or default judgment; the trial court here actually entered respondents' defaults and a default judgment after striking their answer as a sanction for failing to appear at a mandatory settlement conference and then failing to appear at the resulting OSC hearing. "A 'failure to answer' includes the situation where an answer is filed and then stricken by the court." (Lorenz v. Commercial Acceptance Ins. Co. (1995) 40 Cal.App.4th 981, 990-991; see also Matera, supra, 145 Cal.App.4th at p. 62 ["The striking of a defendant's answer as a terminating sanction leads inexorably to the entry of default."].) Thus, the mandatory relief provision applies to a default and default judgment entered by the court after a defendant's answer is struck as a sanction for conduct during the litigation. (Matera, supra, 145 Cal.App.4th at pp. 66-68 [finding that defendants were entitled to relief from default and default judgment entered by court after it struck defendant's answer as a sanction for failure to comply with discovery order].)
Accordingly, relief under the mandatory provision is available here, assuming the other requirements of the provision are satisfied.
2. Respondents Timely Applied for Relief from Default Judgment
Plaintiff contends that the trial court erroneously found that respondents timely applied for relief by filing their motion within six months of January 26, 2010, the date the default judgment was entered. Rather, plaintiff argues that respondents were required to file the motion within six months of the entry of default, which was on August 4, 2009. Thus, they contend that the motion for relief by Eric Louzil, Signa Home Entertainment, Inc., and Rita Rosenthal filed on July 9, 2010 and the motion by Supervision Entertainment Inc. and Ian Jamieson, filed on July 22, 2010, were untimely.
We have previously rejected the argument that the six-month statute of limitations for seeking relief under the mandatory relief provision begins to run at the time default is entered as opposed to when the default judgment is entered. In Sugasawara v. Newland (1994) 27 Cal.App.4th 294, we held that, with respect to applications for mandatory relief, "[t]he plain language of section 473 makes it clear that the six-month period starts to run from the entry of judgment." (Id. at p. 295.) Indeed, the mandatory relief provision states in relevant part that "the court shall, whenever an application for relief is made no more than six months after entry of judgment . . . vacate any . . . default judgment or dismissal." (§ 473, subd. (b), italics added.) Thus, plaintiff's interpretation is incorrect.
Plaintiff also contends that even if the limitations period runs from the date of the default judgment, it should run from the date the court initially granted their request for a default judgment - January 11, 2010 - a date more than six months before respondents filed their motions for relief. However, as discussed above, the mandatory relief provision plainly specifies that the entry of the default judgment triggers the six-month statute of limitations. (§ 473, subd. (b).) Thus, the limitations period did not commence until January 26, 2010, the date the default judgment was entered. Respondents' motions for relief from the default judgment were therefore timely.
3. Respondents Made a Sufficient Showing of Attorney Fault
Plaintiff also contends that respondents failed to make the necessary showing under section 473, subdivision (b), that their attorney's mistake, inadvertence, surprise, or neglect caused their default. (§ 473, subd. (b).) "'Attestation that one of these reasons existed is sufficient to obtain relief, unless the trial court finds that the dismissal did not occur because of these reasons. [Citation.]' [Citation.] The only question is whether or not the dismissal was in fact caused by attorney neglect rather than, for example, actions of the client or an intentional strategic decision." (Yeap v. Leake (1997) 60 Cal.App.4th 591, 601 (Yeap), abrogated on other grounds by Hossain, supra, 157 Cal.App.4th 454; see Benedict v. Danner Press (2001) 87 Cal.App.4th 923, 927-928 (Benedict).) We will affirm the trial court's finding on the causation issue so long as it is supported by substantial evidence. (Benedict, supra, 87 Cal.App.4th at pp. 927-928.)
In his declaration Hoffman states that the default judgment was "accomplished and entered through my inadvertence and neglect"; that he "take[s] full responsibility for not effectively representing my clients during the period of April 2009 through January of 2010"; and that "[a]t no time did I inform my clients of my inability to effectively represent their interests." The application also includes a declaration from his client Eric Louzil to the effect that Hoffman repeatedly assured him that the case was proceeding apace, as well as numerous emails from Louzil to Hoffman from August through December 2009 showing that Louzil was unsuccessfully trying to contact Hoffman.
Although stated in very general terms, Hoffman's declaration supplies the "indispensable admission by counsel for the moving party that his error resulted in the entry of a default." (State Farm Fire & Casualty Co. v. Pietak (2001) 90 Cal.App.4th 600, 609.) While plaintiff argues that respondents' failure to provide discovery or to comply with the trial court's orders was a tactical decision made by respondents themselves, this contention is speculative and unsupported by any evidence in the record. To the contrary, the only relevant evidence in the record besides Hoffman's declaration is Louzil's statement in his declaration that he was unaware of Hoffman's conduct and believed the case was proceeding as it should, and Louzil's emails to Hoffman inquiring about the status of the case. Because no admissible evidence demonstrates that respondents, as opposed to their counsel, were responsible for the default, the trial court reasonably determined that Hoffman was at fault and granted relief accordingly. (See Yeap, supra, 60 Cal.App.4th at p. 602 ["The evidence in the record is uncontradicted and can support only one conclusion as a matter of law: that fault is solely attributed to counsel for appellant."]; see also Benedict, supra, 87 Cal.App.4th at p. 931.)
Plaintiff believes it significant that, in refusing to award sanctions against Hoffman (as opposed to respondents) after granting plaintiff's motions to compel discovery responses, the trial court determined that there was an insufficient showing that counsel was responsible for respondents' failures to respond to the discovery. Plaintiff suggests that the court's ruling on the request for sanctions forecloses the court's later determination that Hoffman was responsible for the failings of his clients. We disagree. Because respondents failed to respond to the motions to compel, or to appear at the various hearings, there was no way the trial court could ascertain at that time who was to blame for the litigation conduct. However, when Hoffman later submitted a declaration assuming the blame for the failures, the trial court reasonably concluded that Hoffman's conduct, not that of his clients, led to the default and default judgment.
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4. No "Extreme Prejudice" Exception Applies
Plaintiff's final contention is that respondents should not have been granted relief because plaintiff will be greatly prejudiced if it must litigate the case after such a long delay, particularly given that some of the respondent entities are now revoked corporations and some of the key individual parties and witnesses have relocated.
Although courts considering whether to grant relief under the discretionary relief provision properly consider whether the opposing party will suffer prejudice if relief is granted (Zamora, supra., 28 Cal.4th at p. 258), the mandatory relief provision does not permit courts to weigh the potential prejudice to the non-moving party. The language of the provision is clear that relief must be granted to a defendant so long as the application for relief is timely and in proper form and an attorney submits an affidavit establishing that he or she is at fault. Therefore, the trial court correctly declined to consider plaintiff's argument that it would be prejudiced should relief be granted.
DISPOSITION
The judgment is affirmed. Respondents shall recover their costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
WILLHITE. Acting P. J. We concur: MANELLA. J. SUZUKAWA. J.