Wednesday, June 28, 2017

Sketchy Default; Sketchy Vacation ...

Grapo v. McMills, No. A147522 (May 23, 2017)

So this case involves a crazy default judgment scenario where an individual was served with a pro se complaint with his name in the caption, but he wasn’t mentioned in the counts. He didn’t respond. His default was taken, but before the default judgment was entered, he died. Plaintiff tried to get a $10 million judgment, which was rejected. Then he amended the complaint and sought $12 million, but the complaint also mentioned $60k in lost property. The trial court ultimately signed off on a $60k judgment.

A few weeks before the deadline on most post-judgment remedies—including the six-month deadline to mover for relief from default under Code of Civil Procedure § 473(b)—had run, plaintiff made a claim on the dead guy’s estate. And almost six months after that, the trustee of the decedent’s estate moved to set aside the default. The trial court granted the motion and pro se appeals.

The court spends a lot of time discussing how the trial court shouldn’t have approved the default in the first place. This is likely true. The complaint was incoherent, failed to state a claim, was not properly amended after the defendant’s death to name his personal representative, and the pro se plaintiff likely didn’t have standing. But “failure of the underlying complaint to state a claim” isn’t really a ground to vacate a final judgment, even a default. 

The opinion then gets kind of confusing, because it upholds the granting of relief from default, but never exactly says why. The trustee had originally moved under Code of Civil Procedure § 663, which was kind of an odd ground to move on. Section 663 is a weird provision that permits a post-judgment, pre-appeal attack on a bench trial judgment that is based on an erroneous legal decision or unsupported by the facts or a judgment on a special verdict that is not supported by the jury’s findings. The opinion isn’t super clear, but it looks like the motion to vacate default was made well after 180 days after the entry of the judgment, which means that the trial court didn’t have the authority to grant relief under § 663.

The trial court instead held, and the Court of Appeal affirms, that relief from default was permitted under § 473(d), which, among other things, permits a court to set aside a void judgment. And that would make sense, were the judgment really void. But the court never actually says that either. Indeed, it looks like there are a bunch of cases that say that when the defendant dies between service and the judgment and no substitution is made, the judgment is voidable, but not void. 

But somehow, the court manages to affirm the vacation of the judgment anyway, mostly by relying on a principal of liberal application of relief from default and the interests in getting to a judgment on the merits.The court, however, seems to be citing a bunch of cases that deal with § 473 generally, not § 473(d), in particular. Which is a little weird, since § 473 is a jumbled mishmash of remedies, but only § 437(d) provides a time-unlimited basis to collaterally attack a final judgment as truly void

There’s a dissent, from Justice Stewart. And it makes a lot of sense. No doubt, Plaintiff seems pretty sketchy. His complaint was clearly deficient. And the trial court probably shouldn’t have entered a default judgment. But once that happened, and the time for the normal grounds of post-judgment direct attack expired (motion for new trial, appeal, § 473(b) motions, etc.) the grounds for collateral attack become extremely narrow. In particular, they largely come down to the judgment being void ab initio, not merely voidable. That only happens when the court lacks subject matter jurisdiction, when the defendant never actually got notice of the proceedings, when the court enters a judgment beyond its power, or when theres very serious fraud on the court. None of these happened here. 

So according to Justice Stewart, in the absence of clear grounds to say the judgment was void under § 473(d), any request to let defendant’s estate out of default was untimely. As I said, while the majority kind of ducked the issue, the case law cited in the dissent seems to pretty squarely stand for the point that although a judgment against a guy who was served while living, but died before judgment might be voidable it is not void. Which means that § 473(d) doesn’t apply. Justice Stewart goes on to note that while there are equitable reasons to vacate a final judgment, like extrinsic fraud or mistake, those can’t apply here either, given that the record is clear that the estate knew about the claim long before the deadline ran to move for relief under §437(b).


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