Friday, July 31, 2015

No Mulligans in § 473(b) Seppuku

Even Zohar Const. & Remodeling Co. v. Bellaire Townhouses, LLC, No. S210804 (Cal. Jul. 20, 2015)

After Defendants failed to respond, the trial court entered a $1.7 million default judgment in a construction dispute. Defendants sought mandatory relief from default under Code of Civil Procedure § 473(b), which requires their attorney to cop to excusable neglect and, as they say, fall on his sword. But in his declaration
which the trial court described as “fuzzing up the issue”—their attorney mostly threw his office staff on his sword while inflicting only a flesh wound upon himself. The trial court denied the motion.

Then, a month later, Defendants filed a second § 473(b) motion. In it, their counsel told an entirely different story—a lengthy yarn about how he had been unduly occupied with obtaining the return of client files that he been seized by the DA in a criminal investigation. The trial court said that even if the seemingly disparate theories were factually consistent, it did not believe the attorney’s explanation for his failure to include them in the first motion—that he was embarrassed. It thus would have found that the motion was an improper motion for reconsideration under § 1008(b), because the facts it disclosed were available to Defendants at the time of the original motion. The trial judge felt bound, however, by Standard Microsystems Corp. v. Winbond Electronics Corp., 179 Cal. App. 4th 868 (2009), which it read to hold that the § 1008 reconsideration standard didn’t apply to § 473(b) motions. So it granted the motion. The court of appeal, in reversing, criticized Standard Microsystems, thus creating a split of authority. The California Supreme Court granted review.

Justice Werdegar’s opinion, for a unanimous court, holds that there is no conflict between § 473(b) and § 1008 that would require an exception to the reconsideration standard to a motion for relief from default. Section 1008 only has one exception—it does not preclude a trial court from sua sponte reconsidering a prior ruling while it still has jurisdiction to do so. Since that exception wasn’t at issue here—this was a renewed motion—the § 1008 standards applied. So the trial court would have been within its right to deny the motion on the basis that the was no new evidence. 

The court expressly disapproves of Standard Microsystems and a couple other cases, to the extent inconsistent with the opinion.

Court of appeal affirmed.

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