Muhammad v. Eden Housing Management

Filed 8/27/09 Muhammad v. Eden Housing Management CA1/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION ONE

This appeal has been taken from an order that granted defendants motion for relief from default. Plaintiff claims that the motion was procedurally defective, and proper grounds to grant relief under Code of Civil Procedure section 473[1] were not presented by defendant. We conclude that adequate notice of the motion was given, and the trial court did not abuse its discretion by granting defendant relief from default. We therefore affirm the judgment.

STATEMENT OF FACTS AND PROCEDURAL HISTORY

On April 9, 2008, plaintiff filed a complaint against defendants[2] for battery, negligence, defamation, elder abuse, and declaratory relief. The action sought damages for harm caused by an incident that occurred at the Eden Housing apartment in Richmond owned and operated by defendant, in which plaintiff was allegedly struck in the head by defendants employee, Toni Cummings. The complaint was served on defendant Eden Housing Management (Eden or defendant) on April 21, 2008.

Pursuant to plaintiffs request, a default was entered against Eden on June 4, 2008. At a hearing on July 9, 2008, plaintiff was directed by the court to submit a proposed default judgment and a declaration of damages under penalty of perjury. Plaintiff filed a written declaration of damages on July 14, 2008, and following a hearing the court entered a default judgment against Eden in the amount of $1,000,000 plus costs on July 29, 2008.

On August 11, 2008, plaintiff filed an application for a debtor examination of Eden, which was scheduled for November 13, 2008. Writs of execution were issued to enforce the judgment in August of 2008.

Defendant filed a motion for relief from default on September 15, 2008, with accompanying declarations, memorandum of points and authorities, and a proposed answer to the complaint. The request for relief asserted that defendants failure to answer the complaint was due to mistake, inadvertence and excusable neglect.

The declarations filed in support of the motion explained that the reason for Edens failure timely to respond to plaintiffs complaint was the mistaken belief that it was being represented by counsel, the law firm of Jackson Lewis, LLP (Jackson Lewis), which was already . . . representing Eden Housing in another matter that arose out of the underlying incident involving James Muhammad and Toni Cummings. Following the incident, Toni Cummings (Cummings) was apparently terminated by Eden, and filed an action against defendant for wrongful termination (the Cummings action) on February 14, 2008. Eden retained Jackson Lewis to defend the wrongful termination case brought by Cummings. When Eden was served with plaintiffs complaint on April 22, 2008, its Chief Financial Officer, Terese McNamee, directed the Human Resources Manager, Tracy Griffin, to forward a copy of the complaint to Jackson Lewis, which subsequently suggested that Eden send the complaint to its insurance carrier. Griffin mistakenly forwarded the complaint in the Cummings action to its insurance carrier, and thereafter Eden was of the mistaken belief that plaintiffs complaint was being handled by Jackson Lewis. The mistake was not discovered until McNamee learned during a telephone conference on August 19, 2008, that the wrong complaint had been forwarded to the insurance carrier and neither the insurance carrier nor Jackson Lewis had filed a response to plaintiffs complaint. On September 2, 2008, Kevin Berreth began representing Eden in the present action brought by plaintiff. Defendants motion for relief from default was filed on September 15, 2008; an Amended Notice of and Application for Relief from Default Judgment was filed by defendant on September 22, 2008, which specified a hearing date of October 28, 2008, but did not include the previously filed supporting documents.

Plaintiff filed written opposition to the motion for relief from default on October 2, 2008, along with a notice of motion to strike the proposed answer. At the conclusion of a hearing on October 28, 2008, at which plaintiff and defendants attorney appeared, the trial court found that defendant established  excusable mistake for failing to respond to the complaint, and granted the application for relief from default. This appeal followed.

DISCUSSION

Plaintiff challenges the trial courts ruling on two grounds: First, that defendants amended notice of and application for relief from default judgment was fatally defective because it failed to carry over the declarations or memorandum of points and authorities set forth in the original application; and second, that defendant did not establish mistake, inadvertence, surprise or excusable neglect as required by section 473.

I. The Claim of Defect in the Notice.

Plaintiffs claim that the notice of the motion for relief from default is defective is unfounded for several reasons. Plaintiff objects to the content of the amended notice of the motion, which advised him only of the hearing date, but he was served with both the notice and the amended notice. Considered together, the notices furnished plaintiff with the grounds upon which the motion was based and the supporting evidence. Defendant thus complied with section 1010, which provides in pertinent part: Notices must be in writing, and the notice of a motion, other than for a new trial, must state when, and the grounds upon which it will be made, and the papers, if any, upon which it is to be based. (See also Deschamps v. Independent Cab Co. (1949) 94 Cal.App.2d 127, 135.) We are satisfied that the notices along with the incorporated declarations and memorandum met the statutory requirements by fairly apprising plaintiff of the issues raised and the grounds asserted. (Tarman v. Sherwin (1961) 189 Cal.App.2d 49, 5152.) Further, plaintiff received both notices, filed appropriate written opposition, and appeared at the hearing to contest the substance of defendants prayer for relief from default. Despite plaintiffs objection to the notice in the trial court, he is precluded from challenging the adequacy of notice in this appeal or claiming that any prejudice to him resulted from the notice procedure. (Reedy v. Bussell (2007) 148 Cal.App.4th 1272, 1288; Carlton v. Quint (2000) 77 Cal.App.4th 690, 697; In re Gilberto M. (1992) 6 Cal.App.4th 1194, 1200; Tate v. Superior Court (1975) 45 Cal.App.3d 925, 930; Estate of Pierce (1938) 28 Cal.App.2d 8, 1112.)

II. The Finding that Defendant is Entitled to Discretionary Relief Pursuant to Section 473.

We turn our attention to a review of the trial courts determination that defendant presented adequate grounds for relief from default under section 473. The pertinent provision of subdivision (b) of section 473 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.  (Generale Bank Nederland v. Eyes of the Beholder Ltd. (1998) 61 Cal.App.4th 1384, 1399; see also Garcia v. Hejmadi (1997) 58 Cal.App.4th 674, 682.) To obtain discretionary relief under section 473, the moving party must show the requisite mistake, inadvertence, or excusable neglect. [Citations.] Section 473 also requires that the party diligently seek relief within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken. ( 473, subd. (b).) (Fasuyi v. Permatex, Inc. (2008) 167 Cal.App.4th 681, 694.)

[A]lthough the party moving for relief under section 473 has the burden to show that the mistake, inadvertence, surprise, or neglect was excusable [citation], any doubts as to that showing must be resolved in favor of the moving party. (New Albertsons, Inc. v. Superior Court (2008) 168 Cal.App.4th 1403, 1420.) Unless inexcusable neglect is clear, the policy favoring trial on the merits prevails. [Citation.] Doubts are resolved in favor of the application for relief from default [citation], and reversal of an order denying relief results [citation]. Reversal is particularly appropriate where relieving the default will not seriously prejudice the opposing party. (Elston v. City of Turlock (1985) 38 Cal.3d 227, 235; see also Scognamillo v. Herrick (2003) 106 Cal.App.4th 1139, 1148.)

It is clearly established that [a] motion for relief under section 473 is addressed to the sound discretion of the trial court and an appellate court will not interfere unless there is a clear showing of an abuse. [Citation.] The discretion conferred upon the trial court, however, is not a   capricious or arbitrary discretion, but an impartial discretion, guided and controlled in its exercise by fixed legal principles. It is not a mental discretion, to be exercised ex gratia, but a legal discretion, to be exercised in conformity with the spirit of the law and in a manner to subserve and not to impede or defeat the ends of substantial justice.  [Citations.] [Citation.] [] It is also the policy of the law to favor, whenever possible, a hearing on the merits. [Citation.] Appellate courts are much more disposed to affirm an order when the result is to compel a trial on the merits than when the default judgment is allowed to stand. [Citation.] These policies favoring relief from default and deference to the trial courts exercise of discretion do not, however, transform appellate courts into mere spectators. [Citation.] However strong the preference for a trial on the merits, there are limits to that preference and however great is trial court discretion, there are bounds to that discretion. [Citation.] (Stafford v. Mach (1998) 64 Cal.App.4th 1174, 11801181.) An exercise of discretion is subject to reversal on appeal where no reasonable basis for the action is shown. (Gamet v. Blanchard (2001) 91 Cal.App.4th 1276, 1283.)

Defendants application for relief from default was premised on mistake. Two related complaints were filed against defendant based on the same incident: the first by an employee, Toni Cummings, who had been terminated as a result of a physical altercation with plaintiff; the second, by plaintiff for harm that was allegedly caused by the altercation and subsequent slanderous reports about him made by Cummings. Plaintiffs complaint was served on defendant on April 22, 2008, and immediately forwarded to the attorney who was already representing defendant in an action initiated by Cummings. Defendants counsel then recommended that defendant forward plaintiffs complaint to its insurance carrier. Defendant sent Cummings complaint to its insurer by mistake, and erroneously believed that representation in plaintiffs action had thereby been effectuated.

We agree with the trial court that defendants mistake was reasonable under the somewhat confusing circumstances.  To determine whether the mistake or neglect was excusable, . . . the court inquires whether a reasonably prudent person under the same or similar circumstances might have made the same error . . . . [Citations.] [Citation.] (Generale Bank Nederland v. Eyes of the Beholder Ltd., supra, 61 Cal.App.4th 1384, 1399.) Defendant promptly attempted to secure representation that would have resulted in a timely response to the complaint, but as a result of the confusion and error associated with the two actions, an answer was not filed. Defendant was wrong to assume that representation in the case had been obtained, but the error was understandable and the steps taken by defendant thereafter demonstrated prudence.

Defendant acted with appropriate assiduousness when the mistake was discovered. [A] threshold requirement for relief is the moving partys diligence. (Huh v. Wang (2007) 158 Cal.App.4th 1406, 1420.) More significant than the partys failure to act before being put on notice of default is the diligence of the party after receiving notice. (Seacall Development, Ltd. v. Santa Monica Rent Control Bd. (1999) 73 Cal.App.4th 201, 206.) Defendant learned by August 26, 2008, that the wrong complaint had been given to its insurance carrier and a default judgment had been entered. By September 15, 2008, counsel was obtained and the application for relief from default was filed, with a proposed answer.[3] We find that defendant exercised reasonable diligence in moving for relief after discovering the mistake. (Russell v. Dopp (1995) 36 Cal.App.4th 765, 776777.)

Finally, we are persuaded that the extreme harm suffered by defendant from the mistake in the nature of a $1,000,000 judgment without the benefit of an opportunity to respond or a trial of the action and the public policy favoring a trial on the merits, far outweigh any prejudice to plaintiff that will ensue from allowing the case to proceed. (Fleming v. Gallegos (1994) 23 Cal.App.4th 68, 7475.) To be sure, plaintiff will be inconvenienced by the relief granted to defendant, but we find nothing in the record to suggest that he will lose evidence or otherwise suffer prejudice to his case from the brief delay. We therefore conclude that the trial court did not abuse its discretion by granting defendants motion to set aside the judgment in favor of plaintiff.

Accordingly, the judgment is affirmed.

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[1] All further statutory references are to the Code of Civil Procedure unless otherwise indicated.

[2] The complaint also named Toni Cummings and Mary Louise Green-King as defendants; they have not been served with the complaint and are not parties to this appeal.

[3] Plaintiff complains that the answer is not itself a verified answer to his verified complaint, but section 473 merely states that a request for relief shall be accompanied by a copy of the answer or other pleading proposed to be filed therein . . . . (Italics added.) The proposed answer need not be verified, as  [t]he objectives of the accompanied by requirement, i.e., a screening determination that the relief is not sought simply to delay the proceedings,  are satisfied by the filing of a copy of a proposed answer that is not itself verified. (Hu v. Fang (2002) 104 Cal.App.4th 61, 65.)

* Retired judge of the Superior Court of Marin County, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.