If You Move and Don't Tell the Court, It's Your Fault if You Don't Get Mail

Kramer v. Traditional Escrow, Inc., No. G058522 (D4d3 Oct. 20, 2020)

After Defendants’ lawyer in this wage and hour case quit, they stopped participating in the case. They missed depos, ignored correspondence, and got sanctioned for it a couple of times. Eventually they wound up in default. They sought relief. Their excuse was that their principal had moved, but failed to tell the court. Also the principal’s divorce attorney had some confusing back and forth with Plaintiff’s attorney about the status of the case. 

Although that was good enough for the trial court, it’s not good enough for the Court of Appeal. As the Court puts it, “Defendants cannot deliberately neglect this lawsuit and go off-grid, so to speak, and then complain that they lacked notice of the proceedings.” 

Reversed.

Insurers Litigating the '70s Get a Break

Mechling v. Asbestos Defendants, No. A150132 (D1d5 Dec. 11, 2018)

Plaintiffs claim they were exposed to asbestos due to the actions of a long-dead company that stopped operating in 1974. Some of them sent demands to DeadCo’s potential Insurer. Others did not. Insurer was unable to locate any policy providing coverage to DeadCo. 

Plaintiffs sued DeadCo. They did not serve or join Insurer. Unsurprisingly DeadCo didn’t answer—it had long been suspended. So Plaintiffs’ get default judgments. Sometime thereafter, Insurer found some old policies showing that DeadCo was, in fact, their insured. So Insurer moved to intervene and vacate the defaults based on extrinsic mistake. The trial court granted the motion. Plaintiffs appeal.

As the Court of Appeal explains, courts have an inherent equitable power to relieve a party from a judgment that is entered based on extrinsic mistake. That’s a mistake—unrelated to conduct in the litigation itself—that somehow results in a party’s failure to get a fair disposition on the merits of the dispute.
To get relief, the defendant needs to show: “(1) a meritorious case; (2) a satisfactory excuse for not presenting a defense to the original action; and (3) diligence in seeking to set aside the default once the fraud [or mistake] had been discovered.” 

The first prong isn’t as big of a deal as it sounds. “Meritorious” doesn’t mean you need to prove you will win. Just that you have a case that’s worth deciding on the merits. And, affording the trial court the deference it gets on these kinds of discretionary decisions, Insurer made that showing. On these facts, the second and third factors aren’t too hard either. Insurer didn’t know it had policies until after the judgments were entered. We are, after all, talking about coverage for events that happened 44-plus years ago. For some of the litigation, they didn’t even have notice that cases were filed. And once Insurer figured out there was a potential for coverage, it promptly moved to intervene and vacate the defaults.

Affirmed.

Serial Discovery Abuser Gets Terminating Sanctions. And they Stick, for Once!

J.W. v. Watchtower Bible & Tract Society of N.Y., No. E066555 (D4d2 Dec. 10, 2018)

A Girl sued the Watchtower Society—the governing body of the Jehovah’s Witnesses—for its failure to prevent her from being molested by an elder of the Church. In discovery, she requested a copy of all correspondence received by the Church after it sent a letter to its congregations asking them to explain any occasions where persons known to have molested children were promoted to positions of authority with the Church. The Church claimed the documents were subject to the clergy-penitent privilege and that it would be unduly burdensome to search for them. The trial court disagreed and granted Girl’s motion to compel.

Inexcusable Neglect Can Still Merit a Continuance

Levingston v. Kaiser Foundation Health Plan, Inc., No. E066271 (D4d2 Aug 17, 2018)

This is some kind of whistleblower case against Kaiser Permanente. Kaiser moved for summary judgment. Plaintiff opposed. Her opposition included some inadvertently disclosed privileged document that apparently belonged to Kaiser. That got her counsel DQ’ed and her opposition struck. The court ordered former counsel not to discuss the document and continued the SJ hearing for six months to let plaintiff get new counsel.

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.