Ortega v. Lowen

Filed 9/15/06 Ortega v. Lowen CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

APPEAL from a judgment of the Superior Court of Imperial County, Barrett J. Foerster, Judge. Affirmed.

Plaintiff Erik J. Ortega appeals a judgment dismissing his action against defendants Michael T. Lowen, Golden State Station Services, Inc. (GSSS), and unnamed "Doe" defendants (collectively Defendants) based on Ortega's delay in prosecuting that action. On appeal, Ortega contends the trial court abused its discretion by granting Defendants' motion to dismiss.

FACTUAL AND PROCEDURAL BACKGROUND

On March 7, 2002, Ortega filed a complaint alleging seven causes of action against Defendants. The complaint alleged that when Ortega began experiencing financial difficulty in March 2001, Lowen agreed to rent Ortega's house in Calexico and pay Ortega's monthly mortgage payments as rent. The complaint further alleged that in late 2001 Defendants fraudulently obtained and recorded a grant deed signed by Ortega and a quitclaim deed signed by his wife, thereby acquiring legal title to Ortega's house. Ortega was deposed by Defendants in April 2002. Also in April, the parties stipulated that Lowen would timely make the mortgage payments to preclude foreclosure of the loan on the house.

On July 21, 2005, Defendants filed a motion to dismiss the action based on Ortega's delay in prosecuting the action, citing Code of Civil Procedure sections 583.410, subdivision (a) and 583.420, subdivision (a)(2)(A)[1] and California Rules of Court, rules 372 and 373.[2] In support of their motion, Lowen submitted a declaration in which he stated: (1) Ortega had not conducted any discovery in the action; (2) there had been no settlement discussions between the parties; (3) there had been no communication between the parties regarding the action since May 2002; and (4) a lis pendens on the house had precluded him from refinancing the mortgage.

Ortega filed a memorandum opposing Defendants' motion to dismiss and argued he had reasonable excuses for his delay in prosecuting his action against Defendants. In support of his explanation for the delay, Ortega submitted his declaration in which he stated:

"3. I filed a Chapter 7 bankruptcy case on August 29, 2002[,] and subsequently received a discharge on December 19, 2002. I was the debtor in this case until the case closed. After filing and serving the complaint herein back in March, 2002[,] my attorney stipulated with Mr. Lowen's attorney that Mr. Lowen would keep the loan for the home which is the subject of this action current and that he could live in it.

"4. In or about February, 2002[,] my wife, Iscaela Ortega, and I separated and filed for divorce. The divorce was finalized in February, 2003.

"5. In both 2003 and 2004[,] I suffered severe financial problems. The Internal Revenue Service and Employment Development Department filed liens totaling more than $45,000 on the subject home that is the subject of this action and on my lines of credit. On at least two occasions during this period the Internal Revenue Service and the Employment Development Department tried to levy on my personal bank accounts.

"6. From approximately June, 2002 to December, 2003[,] I was diagnosed by Louis Nidorf, Ph[.]D. with depression and took prescription medications for this condition during this period of time.

"7. From approximately June, 2002 to December, 2003[,] I was Assistant Manager in business holdings of my parents, Jose and Martha Ortega[,[ which included three service stations and two cab companies in Calexico. In connection with these businesses[,] I responded to at least twenty complaints with the California Department of Labor to employees and former employees regarding payment of wages, meal breaks and overtime.

"8. From approximately February, 2002 until the present, I have been actively involved in other litigation involving two other lawsuits with my parents against Michael T. Lowen and which [continue] to the present.

"9. I appeared for my deposition in April, 2002 after filing my complaint in this matter. I paid my former attorney, Ann Marie Zimmerman, in this matter for her services but was unable to pay her after that to further pursue this matter. I retained my current attorney, Randy J. Rutten[,] in late July, 2005. He served [Defendants] with Form Interrogatories and Requests for Admissions on July 26, 2005. Mr. Rutten will notice Mr. Lowen's deposition following receipt of his discovery responses. Mr. Rutten informs me that he has discussed settlement with Mr. Lowen's present counsel."

Defendants filed a reply memorandum arguing that Ortega's financial condition and involvement with other business matters were irrelevant to the trial court's determination whether his delay in prosecuting the action was excusable. Defendants asserted Ortega had not shown reasonable, excusable justification for his delay of three years four months in prosecuting his action.[3]

On September 30, 2005, the trial court issued an order granting Defendants' motion to dismiss, stating that:

"1. . . . [T]his Court has the discretion to grant the Defendant[s'] motion either based upon the three year period found in . . . [section] 583.420(a)(2) or the two year period contained in Rule 372.

"2. To be assured of success in opposing a motion to dismiss under . . . [sections] 583.410 and 583.420, a [p]laintiff must make some showing of excusable delay. . . . If no showing is made, the trial court will be justified in dismissing the case without requiring the defendant to establish prejudice caused by the delay. [Citations.] [¶] In the present matter, [Ortega] attempts to justify the delay due to: [¶] 1. [his] financial difficulties; [¶] 2. [his] psychological problems (i.e., depression); [¶] 3. [his] preoccupation with his parent[s'] 'business holdings'; [and] [¶] 4. [his] preoccupation with 'other litigation.'

"[Ortega] has failed to explain how any of these problems or preoccupations prevented him from seeking legal advice that would have assisted him in resolving this matter in a timely fashion. While [Ortega] claims he could not afford the services of his former attorney of record, Ann Marie Zimmerman, he does not state he made any efforts to contact other counsel who might have been able to help. Nor does [Ortega] show a causal relationship between any of these 'problems' and his failure to prosecute the action. From a plain reading of his declaration, it is clear that the only reason [Ortega] did not pursue the instant action to trial in a timely manner was due to his preoccupation with other concerns. [¶] . . . [¶]

"In the instant matter, NO showing has been made by [Ortega] as to what his income has been during the past three years or what cash or other tangible assets he has had available. While [Ortega] may have been depressed, he did not indicate he was so incapacitated that he could not have taken steps to seek legal advice so as to move this case along to trial. He acknowledged he had been prescribed medications, which presumably would have helped alleviate his suffering. Nowhere does he state his involvement with his parents' business kept him from hiring counsel or otherwise acting on this case. [Ortega] did not explain how the 'other litigation' involving Michael Lowen was relevant to this proceeding so as to cause a delay in prosecution. . . . [V]irtually no attempt has been made to buttress [Ortega's] broad claims of difficulties with sufficiently specific facts that clearly show the degree of [his] impairment and how that impairment prevented [him] from proceeding to trial.

"Although [Ortega] states the Internal Revenue Service 'tried to levy' on his personal bank accounts, he does not state the Service was successful in doing so. Nor does he indicate what funds he was able to keep that could have been used towards retaining new counsel. Due to [Ortega's] failure to demonstrate excusable delay, Defendants are not required to show they were prejudiced."

The trial court further found: (1) Ortega had not conducted any discovery prior to the filing of Defendants' motion to dismiss; (2) no settlement discussions had occurred since April 2002, and the parties' April 2002 stipulation was of an interim nature and did not fully or conditionally resolve the action's issues; (3) adequate discovery by Ortega would not have required extensive efforts; (4) neither Defendants' actions nor the trial court's calendar contributed to Ortega's delay; (5) Defendants suffered prejudice from the delay because a lis pendens recorded on the house precluded them from refinancing the mortgage; and (6) it had considered all of the relevant factors set forth in rule 373 and the Code of Civil Procedure and concluded the interests of justice were best served by dismissal of Ortega's action. The court further found Ortega's filing of a Chapter 7 bankruptcy proceeding did not excuse his delay in bringing his action to trial. The trial court concluded: "Based upon all the evidence and documents reviewed, the Court finds that it was not impossible, impractical or futile for [Ortega] to prosecute this case and bring it to trial in a timely manner. [Ortega's] explanations are not credible under all the circumstances."

On October 25, 2005, the trial court entered judgment for Defendants, dismissing Ortega's action against them.

Ortega timely filed a notice of appeal.

DISCUSSION

I

Dismissals for Delay in Prosecution of Actions Generally

"A trial court has discretion to dismiss an action for delay in prosecution (§ 583.410, subd. (a)) when the action is not brought to trial within three years after it is commenced (§ 583.420, subd. (a)(2)(A)), or two years after it is commenced if the Judicial Council adopts rules for such dismissal due to the condition of the court calendar or for other reasons affecting the conduct of litigation or the administration of justice.[[4]] (§ 583.420, subd. (a)(2)(B).) Dismissal pursuant to section 583.410 must be made in accordance with the criteria prescribed in . . . rule 373(e). (§ 583.410, subd. (b).) The factors to be considered under rule 373(e) include: (1) The extent to which the parties engaged in settlement negotiations or discussions; (2) the diligence of the parties in pursuing discovery or other pretrial proceedings, including extraordinary relief; (3) the nature and complexity of the case; (4) the law applicable to the case[, including the pendency of other litigation under a common set of facts or determinative of the legal or factual issues in the case]; (5) the nature of any extensions of time or other delay attributable to either party; (6) [the condition of the court's calendar and] the availability of an earlier trial date if the matter was ready for trial; (7) whether the interests of justice are best served by dismissal or trial; and (8) any other fact or circumstance relevant to a fair determination of the issues."[5] (Wagner v. Rios (1992) 4 Cal.App.4th 608, 611, fn. omitted.)

"Although California has a strong policy in favor of disposing of cases on their merits, this policy prevails only when the plaintiff makes a showing of excusable delay. [Citation.]" (Tustin Plaza Partnership v. Wehage (1994) 27 Cal.App.4th 1557, 1561-1562, fns. omitted.) "[T]o avoid a dismissal for delay in prosecution, the plaintiff must show a reasonable excuse for such delay; once that showing is made, the trial court must consider all pertinent factors, including those under rule 373(e) and any prejudice to the defendant from the delay, before deciding whether to dismiss." (Wagner v. Rios, supra, 4 Cal.App.4th at pp. 611-612.) Alternatively stated, "[w]hen faced with a motion to dismiss it is incumbent upon plaintiff to establish reasonable or excusable delay . . . . If such a showing is not made, the court may dismiss the action in its discretion even if defendant fails to establish actual prejudice." (Hilliard v. Lobley (1989) 216 Cal.App.3d 638, 642.) Therefore, if the trial court "is not satisfied that the plaintiff has successfully fulfilled his [or her] burden [to show reasonable or excusable delay], then the trial court may dismiss the case and do so without any consideration of whether the defendant was prejudiced by the delay. [Citation.]" (Dubois v. Corroon & Black Corp. (1993) 12 Cal.App.4th 1689, 1695.)

"When reviewing a discretionary dismissal . . . , an appellate court must presume that the decision of the trial court is correct. ' "All intendments and presumptions are indulged to support it on matters as to which the record is silent, and error must be affirmatively shown." ' [Citation.]" (Howard v. Thrifty Drug & Discount Stores (1995) 10 Cal.4th 424, 443.) On appeal, "[a] reviewing court will not reverse a trial court's ruling on a dismissal of an action pursuant to . . . section 583.410 unless there has been an abuse of discretion." (Marra v. Mission Foods Corp. (1993) 19 Cal.App.4th 724, 727.) The burden is on the plaintiff to show on appeal that the trial court abused its discretion in dismissing the action. (Ibid.; Howard, supra, at p. 443; Blank v. Kirwan (1985) 39 Cal.3d 311, 331; Denham v. Superior Court (1970) 2 Cal.3d 557, 566.) "The appropriate test for abuse of discretion is whether the trial court exceeded the bounds of reason. When two or more inferences can reasonably be deduced from the facts, the reviewing court has no authority to substitute its decision for that of the trial court. [Citations.]" (Shamblin v. Brattain (1988) 44 Cal.3d 474, 478-479.) Furthermore, "[e]ven though contrary findings could have been made, an appellate court should defer to the factual determinations made by the trial court when the evidence is in conflict. This is true whether the trial court's ruling is based on oral testimony or declarations. [Citation.]" (Id. at p. 479, fn. omitted.)

II

Trial Court's Dismissal of Ortega's Action

Ortega contends the trial court abused its discretion by granting Defendants' motion to dismiss his action for delay in prosecution. He argues he submitted evidence showing the delay in prosecution was reasonable or excusable.

We conclude the trial court did not abuse its discretion by granting Defendants' motion to dismiss. The trial court could reasonably find or infer from the record, including the declarations of Lowen and Ortega, that Ortega's delay of three years four months in prosecuting his action was both unreasonable and inexcusable. (Wagner v. Rios, supra, 4 Cal.App.4th at p. 611; Shamblin v. Brattain, supra, 44 Cal.3d at pp. 478-479 ["When two or more inferences can reasonably be deduced from the facts, the reviewing court has no authority to substitute its decision for that of the trial court."].) Although Ortega's declaration referred to his financial difficulties, including a Chapter 7 bankruptcy proceeding and his purported inability to pay his former attorney (i.e., Zimmerman) to pursue his action against Defendants, the lack of funds to prosecute an action or other financial difficulties generally is not a sufficient reason for delay in prosecution of an action. (Oskooi v. Fountain Valley Regional Hospital (1996) 42 Cal.App.4th 233, 241 ["There is no authority which 'gives even lip service to the concept that lack of economic resources is sufficient excuse for failure to prosecute with diligence.' [Citation.]"]; American Western Banker v. Price Waterhouse (1993) 12 Cal.App.4th 39, 57; Rodde v. Trousdale Constr. Co. (1969) 276 Cal.App.2d 419, 422.) Furthermore, "rule 373(e) does not include a plaintiff's financial condition as a factor to be considered by the trial court." (Oskooi, supra, at p. 242, fn. omitted.)

In any event, assuming a plaintiff's financial condition may be considered as one of the "any other fact[s] or circumstance[s] relevant to a fair determination of the issue" under rule 373(e), Ortega has not shown that his financial condition precluded him from prosecuting his action in a timely manner. He did not provide the trial court with any detailed information regarding his income, expenses or net assets during the three-year, five-month period from the filing of his action until the filing of Defendants' motion to dismiss. Without detailed information, the trial court could reasonably infer that Ortega had at least some ability to retain and pay an attorney to prosecute his action. Although Ortega claimed he was unable to pay Zimmerman to prosecute the action, he does not show he made any effort to retain any other attorney to prosecute his action or that he attempted to, or could not, represent himself in prosecuting his action in propria persona. Furthermore, to the extent Ortega cites his Chapter 7 bankruptcy proceeding as showing he lacked the financial ability to prosecute his action, his declaration shows that proceeding terminated within four months of its initiation when his debts were discharged on December 19, 2002. That brief interruption in his purported financial inability to retain counsel does not explain why Ortega could not, and apparently did not attempt to, retain an attorney to prosecute his action during the subsequent two-year, seven-month period before Defendants filed their motion to dismiss. Also, as the trial court noted, case law does not support a conclusion Ortega (or a bankruptcy trustee) could not continue prosecution of his action during the pendency of his Chapter 7 proceeding. Accordingly, we conclude the trial court reasonably inferred from the record that Ortega's financial condition and problems did not preclude him from prosecuting his action against Defendants and therefore did not constitute a valid excuse for his delay in prosecuting his action.[6]

Similarly, although Ortega's declaration referred to his diagnosis of depression during the period from June 2002 through December 2003, his declaration did not show that his depression precluded him from prosecuting his action either during that period or during the subsequent one-and-one-half-year period before Defendants filed their motion to dismiss. Furthermore, as the trial court noted, Ortega's declaration stated he took prescription medications during his period of depression, which presumably would have helped alleviate his symptoms of depression. We conclude the trial court reasonably inferred from the record that Ortega's depression did not preclude him from retaining an attorney or otherwise prosecuting his action against Defendants and therefore did not constitute a valid excuse for his delay in prosecuting his action.

Similarly, although Ortega's declaration referred to his duties as the assistant manager of his parents' businesses from June 2002 through December 2003, he does not show how those duties precluded him from diligently prosecuting his action against Defendants. Furthermore, his declaration does not provide any excuse for his failure to diligently prosecute his action during the one-and-one-half-year period subsequent to the apparent cessation of those duties. Although Ortega's declaration refers to his involvement in two other lawsuits with his parents against Lowen, he does not show how his involvement in those other lawsuits precluded him from diligently prosecuting his action against Defendants. Accordingly, we conclude the trial court reasonably inferred from the record that Ortega's involvement in his parents' businesses and other lawsuits against Lowen did not preclude him from retaining an attorney or otherwise prosecuting the instant action against Defendants and therefore did not constitute a valid excuse for his delay in prosecuting his action. (Cf. Oskooi v. Fountain Valley Regional Hospital, supra, 42 Cal.App.4th at pp. 242-243 [delay in prosecution was not justified by plaintiff's purported waiting for outcome of other cases].)

Ortega argues that his participation in his deposition by Defendants for three days in April 2002 constituted reasonable diligence in prosecuting his action. However, as the trial court noted, Ortega did not show that he conducted any discovery himself (e.g., service of interrogatories on Defendants or deposition of Lowen) that would have shown he had made an effort to prosecute his action. On the contrary, the record shows Ortega took no affirmative action to prosecute his case during the three-year, five-month period after he filed his action against Defendants. Therefore, the trial court reasonably concluded Ortega's actions in this case did not constitute either reasonable or diligent prosecution of this case.

Although Ortega's declaration refers to the parties' stipulation pursuant to which Lowen agreed to timely make the monthly mortgage payments on the house, that stipulation, as the trial court concluded, cannot be considered to be a "conditional settlement" within the meaning of rule 372.[7] That stipulation provided only for the continuing payment by Lowen of mortgage payments to preclude foreclosure of the house loan, presumably during the period of litigation in the instant action. It did not provide for any conditional or other settlement of the entire action filed by Ortega against Defendants. (See rule 225(c) [regarding conditional settlements].)

Because the trial court expressly considered all of the relevant factors in finding Ortega's delay in prosecuting his action against Defendants was not reasonable or excusable and the trial court reasonably inferred none of those factors applied to excuse Ortega's delay in prosecution, we conclude the trial court did not abuse its discretion by finding the interests of justice would be best served by dismissal of his action. The trial court was not required to address the issue of whether Defendants were prejudiced by his delay in prosecution. Because Ortega did not make the requisite showing that his delay in prosecution was reasonable or excusable, the trial court had no duty to consider any prejudice suffered by Defendants from Ortega's delay. (Dubois v. Corroon & Black Corp., supra, 12 Cal.App.4th at p. 1695 [If the trial court "is not satisfied that the plaintiff has successfully fulfilled his [or her] burden [to show reasonable or excusable delay], then the trial court may dismiss the case and do so without any consideration of whether the defendant was prejudiced by the delay."]; Wagner v. Rios, supra, 4 Cal.App.4th at pp. 611-612; Hilliard v. Lobley, supra, 216 Cal.App.3d at p. 642 ["If such a showing is not made, the court may dismiss the action in its discretion even if defendant fails to establish actual prejudice."].)[8] Accordingly, we conclude the trial court did not abuse its discretion by granting Defendants' motion to dismiss Ortega's action for his unreasonable and inexcusable delay in prosecution. (Marra v. Mission Foods Corp., supra, 19 Cal.App.4th at p. 727; Howard v. Thrifty Drug & Discount Stores, supra, 10 Cal.4th at p. 443; Blank v. Kirwan, supra, 39 Cal.3d at p. 331; Denham v. Superior Court, supra, 2 Cal.3d at p. 566.)

DISPOSITION

The judgment is affirmed. Defendants are entitled to costs on appeal.

McDONALD, J.

WE CONCUR:

NARES, Acting P. J.

McINTYRE, J.

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[1] All statutory references are to the Code of Civil Procedure.

[2] All rule references are to the California Rules of Court.

[3] Thereafter, the parties also filed supplemental briefs that apparently had been requested by the trial court after the initial hearing on Defendants' motion to dismiss.

[4] Effective January 1, 1990, rule 372(a) was adopted by the Judicial Council of California, providing: "The court on its own motion or on motion of the defendant may dismiss an action under [section 583.410 et seq.] for delay in prosecution if the action has not been brought to trial or conditionally settled within two years after the action was commenced against the defendant. . . ."

[5] Section 583.410 provides: "(a) The court may in its discretion dismiss an action for delay in prosecution pursuant to this article on its own motion or on motion of the defendant if to do so appears to the court appropriate under the circumstances of the case. [¶] (b) Dismissal shall be pursuant to the procedure and in accordance with the criteria prescribed by rules adopted by the Judicial Council."

Section 583.420, subdivision (a) provides: "The court may not dismiss an action pursuant to this article for delay in prosecution except after one of the following conditions has occurred: [¶] . . . [¶] (2) The action is not brought to trial within the following times: [¶] (A) Three years after the action is commenced against the defendant unless otherwise prescribed by rule under subparagraph (B). [¶] (B) Two years after the action is commenced against the defendant if the Judicial Council by rule adopted pursuant to Section 583.410 so prescribes for the court because of the condition of the court calendar or for other reasons affecting the conduct of litigation or the administration of justice." As noted ante, in 1990 the Judicial Council adopted a rule (i.e., rule 372) pursuant to section 583.410, subdivision (b), thereby placing in effect the two-year period under section 583.420, subdivision (a)(2)(B).

[6] Also, as the trial court noted, the purported attempts by the Internal Revenue Service and Employment Development Department to levy on Ortega's personal bank accounts did not show either that those government agencies were successful in levying on his bank accounts or, even if they were, that such levies precluded him from diligently prosecuting his action against Defendants.

[7] As noted ante, rule 372(a) provides: "The court on its own motion or on motion of the defendant may dismiss an action under [section 583.410 et seq.] for delay in prosecution if the action has not been brought to trial or conditionally settled within two years after the action was commenced against the defendant. . . ." (Italics added.)

[8] In any event, the trial court found Defendants suffered prejudice from the filing of a lis pendens on the house, which prevented them from refinancing the mortgage.