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Granite Consulting, Inc. v. Hall

California Court of Appeals, Fourth District, Second Division
Jun 22, 2010
No. E048856 (Cal. Ct. App. Jun. 22, 2010)

Opinion

NOT TO BE PUBLISHED

APPEAL from the Superior Court of San Bernardino County No. CIVRS705203, Barry L. Plotkin, Judge.

Law Offices of Stephen R. Wade, Stephen R. Wade and W. Derek May for Defendant and Appellant.

Fingal, Fahrney & Clark and Christopher R. Clark for Plaintiff and Respondent.


OPINION

MILLER, Judge

The trial court denied Robert Hall’s (Hall’s) motion to be relieved from the default judgment entered against him. Hall contends that the trial court erred because relief from the default judgment was mandatory, due to his motion being accompanied by an affidavit from his attorney. (Code Civ. Proc., § 473, subd. (b).) We affirm the judgment.

All further statutory references will be to the Code of Civil Procedure unless otherwise indicated.

FACTUAL AND PROCEDURAL HISTORY

Granite Construction, Inc. (Granite) filed a first amended complaint for breach of contract and fraud against Hall and other parties, on December 7, 2007. In January 2008, Granite served Hall with interrogatories, requests for admissions, and a request for the production of documents. In April 2008, Granite served Hall with a deposition notice. Hall’s trial attorney’s assistant informed Granite’s trial counsel that Hall refused to appear at the deposition.

On June 3, 2008, the trial court granted Granite’s motions to compel (1) Hall’s attendance at a deposition, and (2) Hall’s answers to form and special interrogatories. The trial court also imposed sanctions on Hall, in the amounts of $2,040 for the deposition, and $2,665 for the interrogatories, payable to Granite’s counsel. Hall did not respond to the court orders compelling discovery, and Hall did not pay the sanctions owed to Granite’s trial counsel.

The record does not include copies of Granite’s motions to compel. The trial court’s minute order reflects that “[a]ll responses [were] to be produced without objection.” The minute order does not reflect which defendant was required to produce responses; however, we infer that Hall was the party that was compelled to produce interrogatory responses, because he is the only defendant that appeared at the hearing.

In July 2008, Granite filed a motion for monetary and terminating sanctions against Hall for disobeying the court’s discovery orders. The trial court granted Granite’s motion, imposed sanctions on Hall in the amount of $690, and ordered that Hall’s answer be stricken. On October 3, 2008, the trial court filed a default judgment in favor of Granite. The trial court ordered that Hall and the other defendants were jointly and severally liable for $360,000 in damages; $200,000 in punitive damages; $123,000 in prejudgment interest; $5,395 in sanctions; $18,165 in attorneys’ fees; and $803.10 in costs, for a total judgment of $707,363.10.

On March 13, 2009, Hall moved the trial court to relieve him of the default judgment entered against him. In the motion, Hall asserted that he did not respond to the discovery requests, court orders, and motion for terminating sanctions, because he was planning to file for bankruptcy, “which would have stayed any state court proceedings.” Hall claimed that his bankruptcy and trial attorney, Stephen Wade (Wade), advised him that he did not need to respond to the court’s order compelling discovery, “because the filing of the bankruptcy would stay any state court proceedings resulting in any judgment against him”; however, Wade did not file the bankruptcy action before the default judgment was filed. In short, Hall argued that he should be relieved from the default judgment due to Wade’s neglectful late filing of the bankruptcy case.

In a declaration attached to Hall’s motion for relief, Wade attests that Hall did not respond to Granite’s discovery requests due to Wade’s representations that he would file the bankruptcy case before a default judgment was entered. Wade declared that Hall’s bankruptcy case was more complex than Wade anticipated, and he did not allow himself enough time to prepare and file the bankruptcy action before the default judgment was entered.

Wade filed Hall’s bankruptcy action on October 29, 2008. Granite filed an adversary complaint in Hall’s bankruptcy case, contending that the default judgment could not be discharged due to fraud on the part of Hall.

When ruling on Hall’s motion for relief, the trial court found that “Hall made a strategic and deliberate choice to ignore all the discovery” requests. In other words, the trial court found that Wade’s declaration did not demonstrate neglect, mistake, surprise, or inadvertence. Therefore, the court denied Hall’s request to be relieved from the default judgment.

DISCUSSION

Hall contends that the trial court erred by denying his motion to be relieved of the default judgment entered against him, because Wade declared that Hall’s failures to respond were due to Wade’s negligence in handling Hall’s bankruptcy case-Wade was Hall’s attorney for the bankruptcy case and the instant case. (§ 473, subd. (b).) We disagree with Hall’s contention.

The applicability of the mandatory relief provision does not concern disputed facts. Accordingly, the parties’ dispute presents a pure question of law subject to de novo review. (Leader v. Health Industries of America, Inc. (2001) 89 Cal.App.4th 603, 612.)

Section 473, subdivision (b), provides, in relevant part, “[T]he court shall, whenever an application for relief is made no more than six months after entry of judgment, is in proper form, and is accompanied by an attorney’s sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect, vacate any... resulting default judgment or dismissal entered against his or her client, unless the court finds that the default or dismissal was not in fact caused by the attorney’s mistake, inadvertence, surprise, or neglect.”

In Jerry’s Shell v. Equilon Enterprises, LLC (2005) 134 Cal.App.4th 1058, 1069 (Jerry’s), the reviewing court considered “whether section 473(b) provides relief where counsel chooses not to respond to discovery in a timely fashion or to oppose a motion for terminating sanctions, and the case is dismissed.” In Jerry’s, the appellant ignored discovery requests, and the trial court’s order compelling discovery. (Id. at p. 1073.) The reviewing court explained that if it found the appellant’s trial counsel’s actions were subject to mandatory relief, then it “would be rewarding and encouraging [counsel’s] wholly improper conduct.” (Id. at p. 1074.) The appellate court concluded, “A party cannot justly be permitted to seek relief under section 473(b) from sanctions imposed for deliberate failure to respond to discovery or oppose discovery motions.” (Ibid.) Therefore, the reviewing court affirmed the trial court’s denial of the appellant’s motion for relief. (Ibid.)

Wade’s declaration reflects repeated intentional decisions to ignore Granite’s discovery requests and the trial court’s discovery orders. Wade’s declaration explained that he and Hall chose not to respond to the discovery requests and orders because Wade planned to file Hall’s bankruptcy case, which would stay the state court proceedings. Wade used the same excuse to explain his failure to respond to Granite’s motion for terminating sanctions.

We find the reasoning of Jerry’s to be persuasive, and adopt it herein. Hall cannot be granted mandatory relief when he was informed of the multiple discovery requests and court orders, but deliberately chose not to respond. Accordingly, we conclude that the trial court did not err by denying Hall’s motion for relief, because Wade’s actions did not amount to mistake, inadvertence, surprise, or neglect; rather they reflect a failed strategy to avoid paying filing fees and a possible damage award. (See In re Johns-Manville Corp. (Bankr. N.Y. 1984) 36 B.R. 727, 740-741 [discussing strategically filing for bankruptcy to avoid state court judgments]; see also In re Muskogee Environmental Conservation Co. (Bankr. N.D.Okla. 1999) 236 B.R. 57, 67 [discussing strategically filing for bankruptcy to avoid posting a supersedeas bond].)

Hall relies on this court’s opinion in Solv-All v. Superior Court (2005) 131 Cal.App.4th 1003 (Fourth Dist., Div. Two) (Solv-All), to support his argument that the trial court erred. In Solv-All, Solv-All sought relief from the default judgment entered against it, because its attorney did not file an answer due to his belief that a settlement agreement between the parties was imminent. (Id. at p. 1006.) Solv-All’s trial counsel declared that a miscommunication occurred while finalizing the terms of the parties’ pending settlement agreement. Specifically, while Solve-All’s counsel was awaiting a telephonic response from opposing counsel, the opposing counsel believed that Solve-All would be contacting them. In the meantime, Solve-All’s trial counsel allowed the filing deadline for the answer to pass, because he believed the settlement would be successful and did not want to incur “further costs and fees in preparing a response.” (Ibid.)

This court explained that mandatory relief should be granted when the attorney at issue claims negligence due to gross carelessness or negligence due to bad strategy, because “either way, the client is the one stuck with the judgment resulting from the attorney’s error.” (Solve-All, supra, 131 Cal.App.4th at p. 1010.) This court noted that the record did not reflect that Solv-All was aware of their attorney’s decision to delay filing an answer, or that they suggested or agreed that he should delay filing the answer. Thus, this court concluded that Solv-All did not share the responsibility for the default, and therefore, directed the trial court to vacate its order denying relief from the default judgment. (Id. at pp. 1011, 1013.) In sum, the principle to be taken from Solv-All is that the mandatory relief provision of section 473, subdivision (b), “‘protects only the innocent client [and] provides no relief for the culpable client who participates in [the] conduct which led to the default.’ [Citation.]” (Carmel, Ltd. v. Tavoussi (2009) 175 Cal.App.4th 393, 400.)

We find the instant case distinguishable from Solv-All. Based upon our review of the record, Wade’s and Hall’s actions, or inactions, appear more like the failed strategy in Jerry’s, than the negligence of Solve-All, due to Wade and Hall’s year-long disregard of Granite’s motions and the trial court’s orders. For example, the attorney in Solv-All chose not to file an answer, while Wade and Hall ignored the entire discovery process, i.e., interrogatories, requests for admissions, deposition notices, and court orders compelling discovery. Further, the record reflects that Wade and Hall did not have a mistaken belief about the filing of Hall’s bankruptcy case-they knew that it had not been filed. Wade declared that he misjudged the complexity of the bankruptcy case and the time he would need to file the action. This explanation of neglect offered by Wade is troublesome because Wade declared that he was notified of Hall’s need to file bankruptcy on October 17, 2007, but the default judgment was not filed by the court until October 3, 2008, which gave Wade approximately one year to file the bankruptcy action. In short, Wade’s declaration would likely make the instant case indistinguishable from Solv-All if Wade, by himself, had ignored one filing deadline; however, Wade’s and Hall’s year-long disregard of the entire discovery process make this case more akin to Jerry’s than to Solv-All.

DISPOSITION

The judgment is affirmed. Costs on appeal are awarded to respondent.

We concur: RAMIREZ P. J., RICHLI J.


Summaries of

Granite Consulting, Inc. v. Hall

California Court of Appeals, Fourth District, Second Division
Jun 22, 2010
No. E048856 (Cal. Ct. App. Jun. 22, 2010)
Case details for

Granite Consulting, Inc. v. Hall

Case Details

Full title:GRANITE CONSULTING, INC., Plaintiff and Respondent, v. ROBERT E. HALL…

Court:California Court of Appeals, Fourth District, Second Division

Date published: Jun 22, 2010

Citations

No. E048856 (Cal. Ct. App. Jun. 22, 2010)