Shaman v. Monex Credit Co.

























Filed 2/15/13 Shaman v. Monex Credit Co. CA4/3













NOT TO BE PUBLISHED IN OFFICIAL REPORTS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opinion has not been certified for publication or ordered published for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



FOURTH APPELLATE
DISTRICT



DIVISION THREE




>

IHSAN N. SHAMAAN, Plaintiff and Respondent, v. MONEX CREDIT COMPANY et al., Defendants and Appellants.

G046132 (Super. Ct. No. 30-2008-00114986) O P I N I O N

Appeal from an order of the
Superior Court
of href="http://www.adrservices.org/neutrals/frederick-mandabach.php">Orange
County, Franz E. Miller, Judge. Affirmed.

Farella Braun &
Martel, Neil A. Goteiner and Deborah K. Barron for Defendants and Appellants.

The Law Offices of Mark
Joseph Valencia and Mark Joseph Valencia for Plaintiff and Respondent.

*
* *



>Introduction

Defendants
Monex Credit Company (Monex) and Louis E. Carabini (together, Appellants)
appeal from an order granting Ihsan N. Shamaan equitable relief from the
dismissal of his lawsuit.href="#_ftn1"
name="_ftnref1" title="">^[1] The trial court granted the motion on the
ground of extrinsic mistake and specifically found that counsel had abandoned
Shamaan, that Shamaan had diligently sought relief from dismissal, and that
Appellants would suffer no prejudice.

We
affirm. After confirming our
jurisdiction, we conclude the trial court did not abuse its discretion by
granting Shamaan equitable relief from the dismissal. Substantial evidence supported the trial
court’s findings, which satisfied the legal criteria for extrinsic mistake
based on counsel’s misconduct. Because
we affirm on the ground of extrinsic mistake, we do not address the parties’
arguments on extrinsic fraud.

Facts and Procedural History

I.

Shamaan’s Lawsuit and Arbitration Claim

Against Appellants

Shamaan
retained the Law Offices of Fred Rucker to represent him in a lawsuit against
Appellants, Gala, and Patel. We refer to
Appellants, Gala, and Patel collectively as Defendants. In November 2008, Shamaan, with Fred Rucker
as counsel of record, filed a complaint against Defendants, asserting various
causes of action, including breach of oral contract and fraud.

The
complaint alleged Monex is in the business of buying and selling precious
metals, including gold and silver, and Shamaan entered into an agreement with
Defendants by which he would purchase bars of precious metals having a fair
market value of $1.2 million. As part of the agreement, Defendants would
act as the custodian of the bars until Shamaan decided either to sell or to
take physical possession of them.
Defendants breached the agreement by refusing to deliver the bars to
Shamaan and demanding he pay an additional $200,000.

The
complaint alleged that after Shamaan entered into this agreement and purchased
the bars of precious metals, Defendants informed him for the first time that
the bars of precious metals were security for a loan in Shamaan’s favor, and,
as a result, “there were interest charges, commissions and ‘rent’ charges
related to the subject transactions.”
Defendants informed Shamaan he had purchased the bars in a “margin” or
leveraged account, the bars had declined in value, and he would have to pay
Defendants $200,000 to avoid losing his rights to the bars. The complaint alleged Shamaan was unable to
pay the additional money demanded and, as a consequence, Shamaan’s investment
was “wiped‑out.”

In
March 2009, the trial court granted Defendants’ motion to compel arbitration
and stayed the case pending resolution of the arbitration. Shamaan’s arbitration claim was filed with
the Judicial Arbitration and Mediation Service (JAMS) later that month. The parties selected an arbitrator, and the
matter was set for arbitration in January 2010.

Thereafter,
Rucker participated in discovery and, on at least one occasion, accompanied
Shamaan to the offices of Defendants’ counsel to inspect documents. The arbitrator conducted hearings on
discovery disputes on October 29 and November 18, 2009. It is unclear from the record whether Rucker
attended those hearings. In November
2009, Rucker told Shamaan that Defendants wanted to take Shamaan’s deposition. However, from late 2009 to early 2010,
Defendants’ counsel did not hear from Rucker.


At
some point, the arbitration dates were taken off calendar by stipulation of the
parties. JAMS placed an administrative
hold on the arbitration, apparently due to outstanding balances in other cases
in which Rucker had been involved. In
February 2010, JAMS received a request from Defendants’ counsel to set new
hearing dates for the arbitration. A
JAMS case manager contacted Rucker and advised him the case could not be set
for hearing until she received permission from the JAMS finance department, due
to the hold. JAMS later determined it
should not have placed the hold.

>II.

>Dismissal of Shamaan’s Lawsuit and Claim in
Arbitration

The
trial court conducted an alternative dispute resolution (ADR) review hearing on
September 8, 2009. Rucker did not appear. The court continued the hearing to March 1, 2010. When neither Rucker nor Shamaan appeared on
March 1, the court continued the review hearing to April 5, 2010, issued an order to show cause
(OSC) regarding sanctions or dismissal against Shamaan for failure to appear,
and ordered Rucker to appear on April 5.
Rucker failed to appear for the review hearing on that date. As a consequence, the trial court ordered the
complaint dismissed with prejudice.

Rucker
did not inform Shamaan of the dismissal.
From January through December 2010, Shamaan telephoned Rucker about once
a month to ask about the status of the case.
Rucker consistently told him, “we are waiting for the arbitrator” or
“the action is still in arbitration.”

Defendants’
counsel informed the arbitrator of the dismissal of Shamaan’s complaint and,
apparently, sought dismissal of the arbitration. In a letter to the arbitrator, dated December 8, 2010, Rucker argued
that, “as a matter of law,” the dismissal of the complaint “had no effect on
the obligation of the parties to arbitrate this dispute.” Rucker requested a status conference to set
new hearing dates for the arbitration.
In a letter to the arbitrator, dated December 28, 2010, Rucker responded to assertions
made by Appellants and Gala in a letter dated December 16, 2010.

The
arbitrator set a telephonic conference call for February 9, 2011, to
discuss dismissal of the arbitration.
Rucker prepared and sent to the arbitrator a three‑page letter
brief, dated February 18, 2011, “in further response to the ‘motion’ of
[Appellants and Gala] to dismiss the pending arbitration.” Rucker argued the arbitration should not be
dismissed because any delay was caused by JAMS’s error in issuing an
administrative hold.

On
March 9, 2011, the arbitrator issued an order dismissing the claim in
arbitration. The arbitrator
concluded: “A dismissal with prejudice
is generally accepted as a judgment based on the merits of the action. It must be noted that the dismissal ordered
by the Superior Court in the Underlying Action was in the nature of a sanction
for failure to comply with a Court Order.
Such an order preempts any requirement for further consideration of the
merits of the substantive claims made in the Underlying Action. Claimant[’]s remedy under such circumstances
is to seek relief from the Court making the order and not to ignore that order
and its impact on the ability to pursue the claims.”

Rucker
did not inform Shamaan of the dismissal of the claim in arbitration. From February through July 2011, Shamaan
telephoned Rucker approximately 20 times regarding the lawsuit against
Appellants and Gala, but was unable to speak with him. On April 28, 2011, Shamaan sent Rucker
an e‑mail stating: “Please Mr[.]
Rucker call me back I hope you are not abandoning me. I need to know about the Monex case I have
never heard any thing from you about that case.
[T]he case has been filed [for] almost 3 years. [Y]ou have to inform me. As you know this was my life savings for
twenty years, and you know they have fooled me.
[P]lease, please call me back.”
(Some capitalization omitted.) On
May 31, 2011, Shamaan sent Rucker another e‑mail stating: “[T]here is an issue we have to resolve. [T]his is the [M]onex issue. [Y]ou have not told me anything since you
filed the case. [D]id you do anything
without my knowledge. Did you abandon me
without my knowledge. Did you make any
agreement without my knowledge. You have
to come out clean you need to tell me the status with Monex.”

In
October 2010 and June 2011, the State Bar of California filed a total of 22
counts of alleged misconduct against Rucker, including “failure to respond to
client inquiries,” “failure to perform with competence,” “failure to
communicate with client,” and “failure to inform client of significant
developments” (capitalization omitted).
In February 2011, Rucker was deemed “Not Eligible To Practice Law.” In a decision issued in June 2011, the
California State Bar Court recommended that Rucker be suspended from the
practice of law for a period of two years.

>III.

>Shamaan’s Motion for Equitable Relief

from the Dismissal

Shamaan
retained new counsel on July 25, 2011.
On August 5, 2011, just 11 days after being retained, new counsel
filed a “motion to attain equitable relief from dismissal with prejudice”
(capitalization omitted). The motion was
based on “the equitable power of the Court, the presence of extrinsic fraud and
mistake, and significant case authority.”
Appellants and Gala filed opposition to the motion.

On
September 29, 2011, the trial court issued a minute order granting the
motion. In the order, the court
explained its ruling at length: “Usually
mere attorney neglect is insufficient grounds to set aside a dismissal, but in
extreme cases where the attorney conduct amounts to an abandonment of the
client, relief may be granted if the client is relatively free of
negligence. (Seacall Dev., Ltd. v. Santa Monica Rent Control Bd. (1999) 73
Cal.App.4th 201, 205.) Attorney Rucker
effectively abandoned plaintiff by allowing the case to be dismissed via
multiple missed appearances, failing to move to set aside the dismissal, and
telling plaintiff the arbitration was still pending. [¶]
That statement was technically true, but in fact the arbitration was
effectively dead after the dismissal.
When plaintiff learned the true facts, he promptly retained new counsel
and brought this motion. He was not
negligent; he was the victim of the attorney lies. [¶]
The court must also consider prejudice to the defendants. (See Seacall
Dev., Ltd. v. Santa Monica Rent Control Bd., supra, 73 Cal.App.4th at p. 507.) Defendants claim that precious metals have
appreciated substantially since the case should have been adjudicated. But an arbitrator could take that into
account when making an award, if any.”

>Appellate
Jurisdiction

Notice
of entry of the order setting aside the dismissal of Shamaan’s complaint was
served in November 2011. Appellants
timely appealed from the order. As we
have noted, Gala was not identified as an appealing party in the notice of
appeal. “To appeal from a superior court
judgment or an appealable order of a superior court . . . , an
appellant must serve and file a notice of appeal in that superior
court. . . .” (Cal. Rules
of Court, rule 8.100(a)(1).) The
notice of appeal states: “Defendants
MONEX CREDIT COMPANY and LOUIS E. CARABINI appeal from the Order Setting Aside
the Dismissal entered in this case . . . .” Gala therefore is not a party to this appeal.


The
underlying dismissal with prejudice was not signed by the trial court as is
required for judgments of dismissal pursuant to Code of Civil Procedure
section 581d. For that reason, we
issued an order inviting the parties to submit letter briefs addressing the
proper disposition of this matter in light of Powell v. County of Orange (2011) 197 Cal.App.4th 1573, whether the
appeal must be dismissed and whether this court can grant effective appellate
relief. In response, Appellants obtained
from the trial court a signed order of dismissal with prejudice nunc pro tunc
and requested that we take judicial notice of the signed order. We granted the request for judicial
notice. Having considered the nunc pro
tunc order, we conclude it satisfies section 581d and confirm appellate
jurisdiction over this matter.

Standard of Review

We
review an order granting equitable relief from a judgment or order under the
abuse of discretion standard. (>Rappleyea v. Campbell (1994) 8 Cal.4th
975, 981; In re Marriage of Grissom
(1994) 30 Cal.App.4th 40, 46; In re
Marriage of Mansell (1989) 217 Cal.App.3d 219, 225‑226; >Bailey v. Roberts (1969) 271 Cal.App.2d
282, 285‑286; Shields v. Siegel (1966)
246 Cal.App.2d 334, 337‑338.)

The
abuse of discretion standard has been described in these general terms: “The appropriate test for abuse of discretion
is whether the trial court exceeded the bounds of reason.” (Shamblin
v. Brattain (1988) 44 Cal.3d 474, 478.)
A trial court exceeds the bounds of reason when, in light of the
evidence and the applicable law, the court’s decision was not a permissible
option. “The abuse of discretion
standard . . . measures whether, given the established evidence, the
act of the lower tribunal falls within the permissible range of options set
forth by the legal criteria. ‘The scope
of discretion always resides in the particular law being applied, i.e., in the
“legal principles governing the subject of [the] action
. . . .” Action that
transgresses the confines of the applicable principles of law is outside the scope
of discretion and we call such action an “abuse” of discretion.’” (Department
of Parks & Recreation v. State Personnel Bd. (1991) 233 Cal.App.3d 813,
831.)

In
applying the abuse of discretion standard, we determine whether the trial
court’s factual findings are supported by substantial evidence and independently
review its legal conclusions. (>County of San Diego v. Gorham (2010) 186
Cal.App.4th 1215, 1230.) “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.” (Shamblin
v. Brattain, supra, 44 Cal.3d at
pp. 478‑479.)

Discussion

I.

Legal Principles: Equitable
Relief from a Judgment or Dismissal Based on Extrinsic Mistake

Code
of Civil Procedure section 473, subdivision (b) grants a trial court
authority to vacate a judgment or dismissal on the grounds of mistake,
inadvertence, surprise, or excusable neglect if the application for relief is
filed no later than six months after entry of the judgment or dismissal. When statutory
relief is no longer available, a trial court retains inherent equitable
power to set aside a judgment or dismissal on the ground of extrinsic fraud or
mistake. (Olivera v. Grace (1942) 19 Cal.2d 570, 576‑577; >County of San Diego v. Gorham, >supra, 186 Cal.App.4th at p. 1228; >Moghaddam v. Bone (2006) 142 Cal.App.4th
283, 290.)

The
term “extrinsic mistake” has been “broadly applied when circumstances extrinsic
to the litigation have unfairly cost a party a hearing on the merits.” (Rappleyea
v. Campbell, supra, 8 Cal.4th at
p. 981.) “[T]he terms ‘fraud’ and
‘mistake’ have been given a broad meaning by the courts, and tend to encompass
almost any set of extrinsic circumstances which deprive a party of a fair
adversary hearing. [Citation.] The term ‘extrinsic’ refers to matters
outside of the issues framed by the pleadings, or the issues adjudicated. [Citation.]”
(Aldrich v. San Fernando Valley
Lumber Co. (1985) 170 Cal.App.3d 725, 738 (Aldrich).)

Extrinsic
mistake has been found when the attorney’s positive misconduct deprives his or
her client of a hearing. (>Aldrich, supra, 170 Cal.App.3d at pp. 738‑739). “Positive
misconduct is found where there is a total failure on the part of counsel to
represent his client.” (>Id. at p. 739.)

A
client’s redress for inexcusable neglect by counsel is usually an action for
malpractice. (Carroll v. Abbott Laboratories, Inc. (1982) 32 Cal.3d 892, 898 (>Carroll).) In Carroll,
the California Supreme Court recognized an exception to that rule in those
instances in which “‘the attorney’s neglect is of that extreme degree amounting
to positive misconduct, and the
person seeking relief is relatively free from negligence.’” (Ibid.) In that situation, “‘the attorney’s conduct,
in effect, obliterates the existence of
the attorney-client relationship, and
for this reason his negligence should not be imputed to the client.’ (Italics added.) [Citations.]”
(Ibid.)

In
Orange Empire Nat. Bank v. Kirk
(1968) 259 Cal.App.2d 347, 352‑356 (Orange
Empire), the Court of Appeal reversed the trial court’s denial of a motion
for equitable relief from a default judgment where the cross‑defendant’s
attorney failed to file an answer and appear at trial. The cross‑defendant had contacted his
attorney many times, and the attorney assured him he was defending the case and
would take care of the trial. (>Id. at p. 350.) After a substantial judgment was entered
against the cross‑defendant, his attorney failed to seek relief from the
judgment within the statutory period. (>Id. at pp. 350‑352.) The Court of Appeal, holding the trial court
should have granted the cross‑defendant equitable relief from the
judgment, stated: “Although the law
ordinarily charges the client with the inexcusable neglect of his attorney, and
gives him redress against his counsel [citation], there are exceptional cases
in which the client who is relatively free from personal neglect will be
relieved from a default or dismissal attributable to the inaction or
procrastination of his counsel. [Citations.] This is particularly true where the
attorney’s failure to represent the client amounts to positive misconduct. [Citation.]
An attorney’s authority to bind his client does not permit him to impair
or destroy the client’s cause of action or defense. [Citation.]”
(Id. at p. 353.) Relief in that situation is warranted if the
client acted with due diligence in seeking relief after discovery of the
attorney’s neglect, and the opposing party will suffer no prejudice if relief
is granted. (Ibid.)

In
Aldrich, supra, 170 Cal.App.3d at pages 731‑732, the Court of
Appeal held the trial court did not err in granting a plaintiff relief from
dismissal on equitable grounds because the plaintiff’s lawyer failed to respond
to discovery requests, failed to oppose a motion to dismiss for failure to
respond, and was suspended from the practice of law shortly before the
dismissal was granted. The court
explained that although inexcusable neglect is usually imputed to the client,
“in a case where the client is relatively free from negligence, and the
attorney’s neglect is of an extreme degree amounting to positive misconduct,
the attorney’s conduct is said to obliterate the existence of the attorney‑client
relationship.” (Id. at p. 738.)
Equitable relief from the dismissal was warranted, the court concluded,
because “the positive misconduct necessary to absolve a client of
responsibility for his attorney’s inexcusable negligence [was] present.” (Id.
at p. 739.)

In
People v. One Parcel of Land (1991)
235 Cal.App.3d 579, 584, the Court of Appeal affirmed an order granting
equitable relief from a default judgment because the respondent’s attorney
displayed “a total failure to represent his client” by failing to return the
respondent’s telephone calls and to oppose the default judgment motion.

The
trial court in this case relied on Seacall
Development, Ltd. v. Santa Monica Rent Control Bd. (1999) 73 Cal.App.4th
201, 204‑208 (Seacall), in
which the Court of Appeal reversed the trial court’s order denying equitable
relief from dismissal. In >Seacall, the plaintiff’s attorney failed
to prosecute the case and failed to oppose the motion to dismiss. (Id.
at pp. 203‑204, 206.)
Although an attorney’s negligence usually is imputed to the client, and
therefore offers no ground for equitable relief, the Court of Appeal explained
that “[i]mputation of the attorney’s neglect to the client ceases at the point
where ‘abandonment of the client appears.’”
(Id. at pp. 204‑205.) Abandonment requires both the “‘total failure
on the part of counsel to represent the client’” and “an absence of fault and
due diligence on the part of the client.”
(Id. at p. 208.) The evidence showed that the plaintiff’s
attorney “sat on the case and did nothing to represent [the plaintiff].” (Ibid.) The plaintiff had not contacted the attorney
in the two years between filing the action and the dismissal; nonetheless, the
appellate court concluded the plaintiff was justified under the circumstances
in relying on the attorney. (>Id. at p. 206.) A more significant factor was, the court
concluded, the plaintiff’s diligence in retaining new counsel who filed a
motion for relief after learning of the dismissal. (Id.
at pp. 206‑207.)

In
sum, these cases establish that equitable relief from a judgment or dismissal
based on an attorney’s positive conduct may be granted when (1) the
attorney’s positive misconduct amounts to abandonment of or total failure to
represent the client; (2) the client is relatively free of fault and acted
with due diligence in seeking relief after discovery of the attorney’s neglect;
and (3) the party opposing relief will suffer no prejudice if relief is
granted.

>II.

>Application of Standard of Review: The Trial Court Did Not Abuse Its Discretion.

Returning
to the abuse of discretion standard of review, we ask whether, in light of the
evidence and the applicable law, the trial court exceeded its permissible
discretion by granting Shamaan’s motion for equitable relief from the
dismissal. (Shamblin v. Brattain, supra,
44 Cal.3d at p. 479.) The trial
court had inherent equitable authority to relieve Shamaan of the dismissal on
the ground of his trial counsel’s positive misconduct. Carroll,
Orange Empire, Aldrich, Seacall, and
other cases set forth the legal criteria for granting equitable relief based on
counsel misconduct. Did the trial
court’s order granting relief fall within the permissible range of options set
forth by the legal criteria?

A. Substantial
Evidence Supported the Trial Court’s Findings.

The
trial court made a factual finding on each criterion necessary for granting
Shamaan equitable relief. The trial
court found (1) “Attorney Rucker effectively abandoned plaintiff”;
(2) Shamaan “was not negligent,” was “the victim of the attorney lies,”
and “promptly retained new counsel and brought this motion”; and
(3) Appellants would not suffer prejudice if Shamaan were granted relief
from the dismissal.

1. Abandonment
or Total Failure to Represent the Client

Substantial
evidence supported the finding that Rucker totally failed to represent Shamaan
or abandoned him. The evidence before
the trial court established that Rucker failed to appear for the ADR review
hearings on September 8, 2009 and March 1 and April 5, 2010, and
failed to respond to the OSC regarding sanctions or dismissal. In his declaration, Shamaan stated he
contacted Rucker about once a month from January through December 2010, and
Rucker consistently told Shamaan, “we are waiting for the arbitrator” or “the
action is still in arbitration.” Rucker
did not inform Shamaan of the dismissal of this lawsuit and took no action to
seek relief from it. In opposition to
the motion for relief, Appellants’ counsel submitted a declaration confirming
that he did not hear from Rucker between late 2009 and early 2010.

Shamaan
declared that from February 2011 through July 2011, he called Rucker about 20
times but was unable to speak with him.
Shamaan sent Rucker e‑mails on April 28 and May 31,
2011, pleading with him to call back and asking whether Rucker had abandoned
him. From this evidence, the trial court
reasonably could draw the inference that Rucker had abandoned or totally failed
to represent Shamaan.

This
case bears similarities to Seacall, >supra, 73 Cal.App.4th 201, in which the
plaintiff’s attorney failed to prosecute the case and failed to oppose the
motion to dismiss; to Aldrich, >supra, 170 Cal.App.3d 725, in which the
plaintiff’s lawyer failed to respond to discovery requests, failed to oppose a
motion to dismiss for failure to respond, and was suspended from the practice
of law shortly before the dismissal was granted; and to Orange Empire, supra, 259
Cal.App.2d 347, in which the attorney failed to defend but assured the cross‑defendant
he was defending the case and would take care of the trial. In each of those cases, the Court of Appeal
concluded relief from the dismissal was warranted. Here, Rucker ceased prosecuting the case in
late 2009, failed to appear for the ADR review hearings, failed to respond to
the OSC regarding dismissal, assured Shamaan the action was still in
arbitration and failed to inform him of the dismissal, and took no action to
set aside the dismissal.

Appellants
argue the evidence in the record supports a contrary inference. Declarations and exhibits before the trial
court showed that Rucker filed the complaint, opposed the motion to compel
arbitration, filed a claim in arbitration, engaged in discovery early in the
litigation, spoke with a JAMS case manager in February 2010, communicated with
the arbitrator, and filed letter briefs opposing Appellants’ motion to dismiss
the claim in arbitration. This evidence,
Appellants assert, establishes at most that Rucker engaged in excusable
neglect, for which Shamaan’s remedy is a malpractice lawsuit against Rucker.

Assuming
that is a fair deduction from the evidence, the standard of review nonetheless
compels us to accept the trial court’s finding.
When the evidence supports more than one reasonable inference, the
reviewing court accepts the inference drawn by the trial court. (Shamblin
v. Brattain, supra, 44 Cal.3d at
pp. 478‑479.) From the
evidence, the trial court drew the inference that Rucker had abandoned
Shamaan. That inference, though perhaps
not the only one possible, was reasonable.


Appellants
rely on Freedman v. Pacific Gas &
Electric Co. (1987) 196 Cal.App.3d 696 (Freedman)
as supporting a finding that Rucker’s misconduct did not constitute
abandonment. In Freedman, the plaintiffs’ counsel failed to prosecute the case to
trial due, in large part, to his arrest and later conviction of grand theft,
and counsel repeatedly assured the plaintiffs their case was proceeding “‘with
all deliberate speed.’” (>Id. at pp. 701‑702,
707.) The trial court dismissed the case
for delay in bringing the case to trial within three years. (Id. at
p. 703.) Appealing from the
dismissal, the plaintiffs argued they should not have been charged with their
attorney’s delay. (Id. at pp. 702, 704.)
Based on the record, the Court of Appeal upheld the trial court’s
express finding that the performance of the plaintiffs’ counsel did not fall
within the narrow exception defined in Carroll,
supra, 32 Cal.3d 892. (Freedman,
supra, at p. 706.)

In
this case, unlike Freedman, the trial
court expressly found the performance of Shamaan’s counsel fell within the narrow
exception defined in Carroll.> Our
task is, as was that of the appellate court in Freedman, to determine whether the record supports the trial
court’s findings; here, as in Freedman,
we conclude the record supports those findings.
While Freedman might lend
support to an inference from the evidence in this case that Rucker did not
abandon Shamaan, Freedman does not
compel that inference, and we accept the reasonable inference deduced by the
trial court.

2. Lack of
Fault and Diligence

Substantial
evidence supported the trial court’s finding that Shamaan was not negligent and
“promptly retained new counsel and brought this motion.” Shamaan was relatively free of fault for the
dismissal of his lawsuit. The evidence
established that throughout 2010, Shamaan contacted Rucker on a monthly basis,
but he assured Shamaan the case was in arbitration, did not inform him of the
dismissal, and then became incommunicado from February 2011 onward. Shamaan did not learn of the dismissal until
July 2011. It is arguable that Shamaan
could and should have done more, but “a client should not be required to act as
a ‘hawklike inquisitor’ of his own counsel, nor perform incessant checking on
counsel.” (Aldrich, supra, 170
Cal.App.3d at p. 740.) In >Seacall, supra, 73 Cal.App.4th at page 206, the Court of Appeal
concluded the client’s failure to contact counsel during a two-year period was
not sufficient ground to deny relief. In
contrast, Shamaan at least attempted to contact Rucker on a regular basis.

More
significant than the client’s diligence in acting before receiving notice of
the dismissal is the client’s diligence in taking action after receiving
notice. (Seacall, supra, 73
Cal.App.4th at p. 206.) When
Shamaan learned his lawsuit had been dismissed with prejudice, he promptly
hired new counsel, who filed the motion for relief on August 5, 2011—just
11 days after being retained. In >Seacall, supra, 73 Cal.App.4th at pages 206‑207,> the court concluded the plaintiff acted
diligently in moving to set aside the dismissal when new counsel filed the
motion for relief 19 days after the plaintiff learned of the dismissal. In People
v. One Parcel of Land, supra, 235
Cal.App.3d at page 584, the respondent’s new counsel brought a motion to
set aside the default judgment within a month after the respondent discovered
it. Shamaan sought relief from dismissal
within a similar timeframe.

3. Prejudice

Lastly,
the trial court did not err by finding relief from the dismissal would not
cause Appellants to suffer prejudice.
Appellants argue they would suffer prejudice if now forced to litigate
this case “as the result of the dimming memories of potential witnesses who
have knowledge of events that occurred nearly four years ago, and the post‑dismissal
death of one of the named defendants in this action, . . . Patel, a sales
representative for Monex.” (Fn.
omitted.) At oral argument, Appellants’
counsel argued Patel was Appellants’ primary witness and the complaint
mentioned him nine times.

We
granted Appellants’ request for judicial notice of the death certificate for
Patel and, we acknowledge, his passing would deprive Appellants of a potential
witness. Shamaan’s complaint alleged
that in March and September 2008, Patel made several misrepresentations to
Shamaan about the status of his investment with Monex. Patel passed away in November 2010, after
dismissal of Shamaan’s lawsuit but before Shamaan learned of that dismissal and
filed the motion for relief.

Appellants
did not submit a declaration or other evidence to the trial court in support of
their claim of prejudice. The single
declaration submitted by Appellants, that of their counsel, Aaron C. Watts, set
forth no facts relating to prejudice.
“[A]ppellants’ single declaration in opposition to respondent’s motion
did not set forth substantial evidence of missing witnesses, evidence
destroyed, and the like, to establish prejudice.” (Aldrich,
supra, 170 Cal.App.3d at
p. 740.) Appellants submitted to
the trial court no evidence that would show Patel’s role in the transaction with
Shamaan, what the substance and nature of Patel’s testimony would have been,
whether Appellants had alternate sources of evidence, or how Appellants would
suffer prejudice without Patel’s testimony.


B. The
Trial Court Acted Within Its Range of Options.

When
the legal criteria for extrinsic mistake based on misconduct of counsel are
satisfied, the trial court’s range of options includes granting equitable
relief from a judgment or dismissal.
Because substantial evidence
supported the trial court’s findings, the trial court acted within its range of
options by relieving Shamaan of the dismissal.

We
are, as was the Court of Appeal in Seacall,
“aware of the tension between a policy which punishes the innocent client for
the sins of his or her attorney and a policy which, in a sense, rewards the
attorney for his or her incompetence.” (>Seacall, supra, 73 Cal.App.4th at pp. 207‑208.) The California Supreme Court in >Carroll, supra, 32 Cal.3d at page 900, expressed concern over this
tension and resolved it by holding the exception to the rule of imputed
negligence was justified only by a “total failure on the part of counsel to
represent the client,” due diligence by the party seeking relief, and lack of
prejudice to the party opposing relief.
The abandonment exception should be “narrowly applied,” the >Carroll court explained, “lest negligent
attorneys find that the simplest way to gain the twin goals of rescuing clients
from defaults and themselves from malpractice liability, is to rise to ever
greater heights of incompetence and professional irresponsibility while,
nonetheless, maintaining a beatific attorney‑client relationship.” (Ibid.)

Affirming
the order granting equitable relief would not implicate the concerns raised by >Carroll because the trial court made an
express finding on each of the factors identified in that case> for invoking the narrow exception to
the rule of imputed negligence.
Substantial evidence supported those findings. Nothing in the record suggests that Rucker
engaged in positive misconduct or abandoned Shamaan in order to avoid his own
malpractice liability. In granting
equitable relief, the trial court acted within its range of options set forth by
the legal criteria and therefore did not abuse its discretion.

>Disposition

The order granting
equitable relief from dismissal is affirmed.
Shamaan shall recover costs incurred on appeal.

Pursuant to
canon 3D(2) of the California Code of Judicial Ethics, we hereby report
Attorney Fred Rucker, former counsel for plaintiff and respondent Ihsan N.
Shamaan, to the State Bar of California for his misconduct as described in this
opinion. The clerk of this court is
directed to send copies of this opinion to the State Bar of California and to
Mr. Rucker at his address listed by the State Bar.







FYBEL,
J.



WE CONCUR:







O’LEARY, P.
J.







MOORE, J.