To Stop the Clock, It Better Be a Full Stay

Gaines v. Fidelity Nat’l Ins. Co., No. S215990 (Cal. Feb. 25, 2016)

This is the Supreme Court’s review of the Gaines case I wrote about back in the tail-end of 2013. The interesting and fundamental point about the nature of the abuse of discretion standard raised by Justice Rubin’s dissent gets shrugged away in footnote 8. But distilled, the issue comes down to the circumstances when Code of Civil Procedure § 583.310’s rule requiring dismissal of any case not brought to trial within five years should be tolled.

Plaintiff raised three grounds for tolling: (1) that the case should have been tolled while the parties engaged in mediation, per § 1775.7; (2) that the case should have been tolled while the action was stayed, per § 583.340(b); and (3) that the case should have been tolled because it was impossible, impractical, or futile to proceed, per § 583.340(c).

The majority (Justice Corrigan, writing, joined by the Chief Justice and Justices Werdegar, Chin and Cuellar) say that the rule doesn’t get tolled for any of these reasons.

First, the mediation-tolling afforded by § 1775.7 applies to court ordered or stipulated mediations that occur or continue past the point of at least four and a half years after the case was filed. Since the mediation in this case occurred only about two years’ in, § 1775.7 didn’t apply.

Second, the order directing mediation also struck the trial date and stayed the case for 120 days, with the exception of requiring the parties to respond to any outstanding written discovery. The question is whether that counts as time during which “[p]rosecution or trial of the action was stayed or enjoined,” which is subject to a mandatory exclusion from the five-year rule. The court first holds that an order striking the trial date does not in itself meet the standard unless it in effect stays the proceedings pending some event outside the control of the parties that will occur in the future. (E.g., an order striking a trial date pending a decision in an accepted interlocutory appeal.) Since the order here was more along the lines of an ordinary continuance, that standard wasn’t met.

So far as the stay itself goes, in Bruns v. E-Commerce Exchange, Inc., 51 Cal. 4th 717, 725 (2011), the Supreme Court previously held that only a complete stay meets the “stay of prosecution” standard for mandatory tolling under § 583.340(b). All “proceedings” must be stayed to invoke the rule. Here, the fact that the parties were to complete discovery responses during the stay prevented it from being complete. As did the fact that the parties were to conduct a mediation. Because a mediation is an effort to settle the existing lawsuit that doesn’t remove any jurisdiction from the trial court (in contrast with, say, a compelled contractual arbitration) it too counts as a proceeding precluding a complete stay. So if the parties under the circumstances of a less than compete stay want to toll the five-year rule, they can and should enter a stipulation to that effect under § 583.330.

Along similar lines, the court also rejects the argument that Defendant should be estopped from denying the tolling of the rule. None of the parties communications regarding the stay reflected any promise or mutual understanding that the rule would be tolled. Indeed, the parties entered a detailed agreement addressed to the circumstances of the mediation. That agreement was silent as to any intended tolling.

Finally, the court rejects the argument that Plaintiff was entitled to discretionary tolling under § 583.340(c) because it was “impossible, impracticable, or futile” to bring the case to trial in the five-year window. For discretionary tolling to count, a delay must have had a significant enough impact on the litigation to elevate it from an ordinary circumstance to a circumstance of impracticability.” Further, the inability to move the case forward must generally result from circumstances beyond the plaintiff’s control. In this case, the trial court was within its sound discretion to decide that the circumstances of the stay did not take prosecution of the case outside of the control of Plaintiff. Plaintiff agreed to the stay, and even after the mediation had failed and the 120 days run, Plaintiff made no significant effort to have a new trial date assigned an proceed with the case. It thus wasn’t an abuse of discretion for the trial court to decline to apply discretionary tolling under § 583.340(c).

Justice Kruger partially dissents, joined by Justice Liu. She frames the court’s opinion as punishing plaintiff for trying to work cooperatively with opposing counsel. She disagrees one two key fronts. First, she says that the “stay” entered by the court should be sufficient to merit the mandatory tolling under § 583.340(b). Unlike in Bruns—relied upon by the majority—this wasn’t a partial stay of some discrete aspect of the case, like a stay of discovery. This was a complete stay with a very minor carve out for pending discovery. 

But even if Bruns states a broader rule requiring a 100-percent stay, Justice Kruger believes that the court abused its discretion in failing to exclude the 120-day window as “impracticable to bring the action to trial.” According to the dissent, this test must be informed by § 583.130’s express statutory policy in favor of resolving cases on the merits. Thus, a stay that “just misses the mark under subdivision (b) ought to pass with flying colors under subdivision (c).”

Moreover, the dissent doesn’t find the court’s justifications for rejecting discretionary tolling very convincing. In particular, Justice Kruger doesn’t agree with the majority’s interpretation that § 583.340(c) applies only to impracticable situations wholly outside plaintiff’s control. That requirement isn’t in the statute. It does however, appear in a parallel statute that requires service within three years, which suggests that the Legislative omission was deliberate. Moreover, it makes sense. Unlike the timing of service, when a case gets to trial isn’t a matter within the general control of the plaintiff. So the fact that plaintiff might have been able to move to lift the stay shouldn’t have been dispositive of whether proceeding to trial was impracticable. 

Affirmed.