FRANKLIN CAPITAL CORPORATION v. WILSON

Filed 2/28/07

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

STORY CONTINUED FROM PART I..

The reference to finality merits comment. The Hartbrodt case left unsaid the fact that dismissals pursuant to terminating sanctions for discovery disobedience are with prejudice and res judicata. (See Kahn v. Kahn (1977) 68 Cal.App.3d 372.) The point of the courts brief comments was obviously this: Having practically invited a discovery dismissal that would have res judicata effect, it was simply repugnant to the courts basic sense of justice that a likely (and that is reading a little between the lines) dismissal with prejudice could not be defeat[ed] by a cheap death-bed dismissal pursuant to section 581, subdivision (b)(1).

Hartbrodt thus would appear to be based on the essential equities of the situation rather than a precise ascertainment of when the statutory cut off right ends. While we agree that looking to the equities is good judicial policy, we are mindful that any consideration of when the statutory right to voluntary dismissal terminates must be rationally connected to the statutory phrase commencement of trial. We must therefore respectfully (very respectfully, given that it articulates good policy in a vacuum) part company with Hartbrodt to the degree that it might be read to stand for the idea that equities alone can justify the termination of the statutory right.

In the same vein, there is a sentence in Tire Distributors, supra, 132 Cal.App.4th at page 544 which, if read out of context, can also be read for the proposition that the core test of when the statutory right to dismiss is simple good faith, untethered to the statutory text.[1] In context, however, one can still find the necessary link to the idea of commencement of trial.

Factually, Tire Distributors was a complex case, the short version is this: There was a good faith settlement of the case about four days prior to the initiation of a summary judgment motion brought by two defendants, one of whom, Gary, was entitled to be dismissed from the case as a result of the settlement. (Gary was the father of the defendant making the settlement agreement and not technically a party to the settlement.) With the summary judgment motion pending, the plaintiff brought a motion to enforce the settlement agreement. The plaintiff failed to file opposition as to Garys motion by the deadline, and a week after missing the deadline the trial court denied the motion to enforce. The plaintiff then made an interesting tactical decision: It went ahead and dismissed Gary without prejudice, and that same day sought writ relief from the trial courts order denying the motion to enforce. (Tire Distributors, supra, 132 Cal.App.4th at pp. 541-542.)

Things got more complicated when the appellate court stayed proceedings and then issued a notice of intent to grant the writ in the first instance. But then Gary sought relief from the stay on the ground that he was not a party to the settlement. The appellate court granted that request. Eventually the appellate court issued a decision granting the plaintiffs writ (i.e., the settlement agreement was indeed enforceable). In the meanwhile, though, Gary sought to have the trial court vacate his dismissal without prejudice and enter an order granting his unopposed summary judgment motion. The trial court granted both.

On appeal, the appellate court found it unthinkable that the rule from the Cravens decision should apply. It ruled that the earlier dismissal was effective, so that the trial court lacked jurisdiction to grant the summary judgment. (Tire Distributors, supra, 132 Cal.App.4th at p. 547.)

It is true that in the process of reversing the order vacating the earlier dismissal, the Tire Distributors court wove the theme of good faith into its rationale. (E.g., The legal principles that have evolved in this area tend to focus on the reasons for the dismissal and whether the plaintiff acted in good faith or merely for tactical reasons designed to prevent a defendant from obtaining an otherwise inevitable summary judgment. (Tire Distributors, supra, 132 Cal.App.4th at p. 544.) After all, given the facts of the case, it would be practically impossible for any court to ignore the actual good faith of the plaintiff in initially dismissing Gary.

But the good faith theme was still tied to the problem of the impending adjudication on the merits posed by Garys summary judgment motion. The court emphasized that it was the settlement that resulted in Garys dismissal. (Tire Distributors, supra, 132 Cal.App.4th at p. 547.) Since the settlement was the undisputed motivation for Garys dismissal (ibid. [there is no substantial evidence that TDIs dismissal of Gary was motivated by anything other than its belief that the dismissal was a term of the settlement]), the Cravens rule -- where the plaintiff had also missed the deadline to file opposition to a summary judgment motion -- was inapplicable.

We need only add by way of a gloss on Tire Distributors that of course the Cravens rule (see also Mary Morgan) was not applicable because the settlement agreement dismissing Gary antedated the filing of the summary judgment motion (by four days), and, as emphasized by the Tire Distributors court, the voluntary dismissal of Gary was a consequence of the settlement, not a consequence of the summary judgment motion. The references to unfairness or good faith in the Tire Distributors opinion were ways of making that precise point. The Tire Distributors opinion should not, divorced from its facts, be read for the idea that unfairness or good faith in a vacuum are all that a court needs to look at in deciding whether a voluntary dismissal is effective. If, by some weird out-of-context exegesis, Tire Distributors were read for that idea,[2] we would be forced to respectfully decline to follow it because unfairness in a vacuum is a test inconsistent with the statutory language of section 581, subdivision (b)(1), not to mention the Supreme Courts decision in Christensen; if the Christensen court had employed some generalized unfairness or good faith test, the case would have gone the other way. As we have seen, all the Supreme Court cases have stayed close to the legislative text, which confers on plaintiffs a right to dismiss prior to commencement of trial.

4. Application of the Mere

Formality Test to the

Case at Hand

The trial court did not specify the basis of its May 6 OSC re dismissal or other sanctions, though it is clear that the OSC did not necessarily contemplate complete dismissal -- otherwise the or sanctions part of the OSC would not have been included. And we dare say that the trial court might very well have exercised its discretion not to dismiss the case if counsel for plaintiff Franklin had shown up to provide some reason for his failure to attend the mandatory settlement conference, or even just to beg for mercy. So, unlike Miller (deemed admissions), M & R (mandatory five-year dismissal), or Cravens (failure to timely file opposition to summary judgment) there was no inevitability of dismissal based on milk that had already been spilled.

Nor was there any public announcement of impending dismissal, tentative or otherwise, which would suggest some substantive confrontation by the court with the legal merits of the case -- a trial of an issue of law as the Wells court put it -- or even that dismissal was procedurally mandated in light of counsels apparent dereliction. (See Groth Bros., supra 97 Cal.App.4th at p. 70 [court concerned that last minute dismissals would undermine the tentative ruling system].)[3]

Nor, of course, had the case experienced anything on the order of an adjudication of the merits in some auxiliary context, like referral to a referee (Gray) or to judicial arbitration (Herbert Hawkins, supra, 140 Cal.App.3d 334, 337 [allowing dismissals after completion of judicial arbitration mocks judicial arbitration statutes].)

In short, the OCS re dismissal or sanctions was miles away from the commencement of trial which is the statutory benchmark for a plaintiffs right to dismiss.

Next we ask this question: Can it be said that Franklins counsels bad faith, including not appearing at a mandatory settlement conference, is sufficient by itself to justify cutting off his clients statutory right to dismiss? We must answer no. As noted above, a good faith-bad faith test might be an excellent judicial policy and indeed we might adopt it ourselves if writing in vacuum. But its not what the Legislature said. The Legislature said commencement of trial and we therefore must conclude the trial courts decision was error.

B. Could the Trial Court

Dismiss the Case (Essentially,

for Lack of Prosecution)

With Prejudice? No.

No doubt one day our high court will revisit the subject, already visited in Goldtree, Wells and Christensen, of the precise moment of cut off and we will know whether we have been correct in rejecting the idea that substantive evidence of dishonest litigation tactics or unfairness is enough, by itself, to cut off plaintiffs statutory right to dismiss. And of course the high court is more than welcome to this case, if the court deems it the appropriate vehicle. (Shades of Henny Youngman: Take this case. Please take this case.)

Assuming, in that regard, that we have been incorrect and plaintiff Franklin lost the right to dismiss by May 18 (or, as Tire Distributors intimates, if the retroactive revocation of that right on May 19 as tested by an abuse of discretion standard were upheld), the question arises as to whether the trial court could properly enter its own dismissal with prejudice, such that the dismissal would have a res judicata effect. Since there are only two possible bases for that dismissal, and neither permits a dismissal with prejudice having res judicata effect, the answer is no.

1. No Dismissal With

Prejudice Pursuant to Local Rules

While the trial court did not mention them, Orange County Superior Court local rules are one possible source of authority to dismiss the case.[4] Orange County Superior Court, like some other large urban courts in the state, has local rules that (a) require attendance at mandatory settlement conferences[5] and (b) allows for dismissals of cases for failure to comply with local rules, even when the fault is solely counsels.[6] Thus, Orange County Superior Court local rules contemplate at least the theoretical possibility that plaintiffs might lose their entire case if their attorneys dont show up at a single mandatory settlement conference.

However, even assuming that the local rules validly contemplate such a draconian possibility (and there is at least a colorable case to be made that they dont[7]), the Legislature has enacted a statute, section 575.2, which sets limits on the ability of trial courts, acting pursuant to local rules, to dismiss cases for violations of local rules. Basically, the restriction is: If its solely the lawyers fault and not the clients, any penalty for violation of local rules must be structured so as not to adversely affect the clients cause of action (or defense).

Section 575.2 is divided into two subdivisions, (a) and (b). While subdivision (a) does indeed allow for local rules to provide for the dismissal of a case for failure to comply with local rules,[8] subdivision (b) cautions that any penalty arising from the dereliction of counsel, as distinct from a client, must be visited only on counsel.[9] The clear implication of subdivision (b) is that in cases where failure to comply with some local rule is not attributable to the client, then dismissal of the clients case is off limits.[10] The court may hit the attorney with penalties, perhaps even severe penalties (see also Bus. & Prof.  6103 [failure of attorney to obey court order is grounds for discipline with state bar]) but, like the devil being allowed to afflict Job but only up to a point, there is one area that is off limits -- the clients cause of action or defense. The clients case may not be adversely affected by malfeasance solely attributable to the attorney.[11] In this regard we need only note that an attorneys failure to pay sanctions to the other side for his not showing up to attend a mandatory settlement conference surely falls into the category of dereliction attributable to the attorney only. The record contains absolutely no indication that Franklin is implicated in any of its trial attorneys failures to attend various court hearings or pay sanctions.

2. No Dismissal With Prejudice

Pursuant to State Statute

a. Improper Notice

The other basic authority, and the one which the trial court itself relied on, is lack of, or delay in, prosecution.[12]

The subject of delay in prosecution is covered in section 583.410 (which is part of chapter 1.5 of title 8 of the Code of Civil Procedure). Section 583.410 gives a trial court discretion to dismiss an action for delay in prosecution,[13] though it confines both the procedure and criteria of any such discretionary dismissal to rules prescribed by the Judicial Council.[14] In response to section 583.410 the Judicial Council adopted rule 373 (now renumbered as 3.1342, hereinafter, rule 373) of the California Rules of Court. Rule 373 prescribes no less than 45 days notice of any motion to dismiss for delay in prosecution.[15] In the present case, the OSC on May 19 that resulted in the dismissal of Franklins cause of action with prejudice was set on May 6. Franklin had less than 14 days notice. Thus even if we deem the trial courts May 6 order setting an OSC for May 19 as the functional equivalent of a section 583.410 motion to dismiss for delay in prosecution, the targeted party did not receive sufficient notice under the terms of section 583.410 (which incorporate rule 373).

b. The Legislature and Supreme Court

Have Said that Dismissals for Lack of Prosecution

Are to be Without Prejudice

On top of that, however, is what we perceive to be an even greater and absolutely dispositive reason to set aside the May 19 order: The fact that the Legislature has made it clear, and Supreme Court case law has recognized, that dismissals for procedural dereliction pursuant to Chapter 1.5 are to be without prejudice.

We will begin with the Legislature has said first. Section 581, subdivision (b)(4) states: An action may be dismissed in any of the following instances: . . . .  (4) By the court, without prejudice, when dismissal is made pursuant to the applicable provisions of Chapter 1.5 (commencing with Section 583.110). (Italics added.) Significantly, Chapter 1.5 includes not only the discretionary provisions of section 583.410 (the two-year rule for discretionary dismissal for lack of prosecution[16]) but also, interestingly enough, sections 583.310 and 583.360, which set forth the more stringent five-year rule.[17] Section 581 thus sets up the general template for dismissals under California law.[18]

The Supreme Court recognized what the Legislature said in Gonsalves v. Bank of America (1940) 16 Cal.2d 169, 172-173: But it is a fundamental rule that a judgment is not res judicata unless it is on the merits, and a dismissal for delay in prosecution is not.

Decisions of the Court of Appeal have followed suit. (See Mattern v. Carberry (1960) 186 Cal.App.2d 570, 572 [collecting authorities holding that a dismissal for want of prosecution is not on the merits and therefore does not operate as res judicata to a subsequent proceeding]; Ashworth v. Memorial Hospital (1988) 206 Cal.App.3d 1046, 1053 [earlier dismissal under five-year statute had no res judicata effect].)[19]

Its pretty hard to argue with a clear statute on point, and clear language from the Supreme Court to boot. You rarely get cases where the governing authority is this dispositive. We are forced then to conclude that even if the trial court had a free hand to validly dismiss Franklins lawsuit on May 19 because the May 6 OSC re dismissal or other sanctions was pending, the trial court had no authority to enter such a dismissal with prejudice.

3. TheSeemingly Inconsistent

Appellate Case Law Isnt

We should note, albeit in passing, that M & R Properties v. Thomson, supra, 11 Cal.App.4th 899 [five-year rule] and Hartbrodt v. Burke, supra, 42 Cal.App.4th 168 [discovery sanctions] contain language that, if read carelessly and taken out of context, might lend support for the idea that a dismissal for lack of prosecution could be with prejudice in the sense of res judicata. That is, each case uses the phrase on the merits in such a way as to possibly imply that the procedurally-based (that is, based on some dereliction of counsel in the conduct of the litigation as distinct from the underlying merits of the plaintiffs case) pending dismissal motions that precipitated the voluntary dismissals in each case would have yielded a dismissal on the merits, i.e., one that would be res judicata.

a. Hartbrodt

Lets take the later-decided case, Hartbrodt, because it is quickly distinguishable. Hartbrodt, as we have noted, involved an impending possible dismissal for violation of a discovery order. But, as we have also noted, at the time Hartbrodt was decided (and to this day) case law had already established that dismissals pursuant to a terminating sanction for violation of discovery orders are indeed res judicata. (See Kahn v. Kahn, supra, 68 Cal.App.3d 372.) Since the present case involves a dismissal for lack of prosecution, not discovery violations, any intimation about the merits of the case being decided in the discovery sanction motion are inapplicable to the case before us now. Further, all three of the reasons the Kahn court gave for making terminating sanctions in discovery res judicata would clearly not apply to dismissals for lack of prosecution.[20]

b. M & R

The earlier case, M & R, is a little more complicated from our point of view, because it involved a strictly procedural dismissal which, unlike Hartbrodt which involved terminating sanctions in the discovery context, did not even indirectly implicate the actions substantive merits.[21] And it was clearly a lack of prosecution case, centering on a motion for mandatory dismissal pursuant to the five-year statute. At several places in the opinion, the phrase on the merits is indeed used.[22]

If M & R is read for the unqualified proposition that a dismissal pursuant to the five-year statute (which is also part of chapter 1.5 as used in section 581 subdivisions (b)(4) & (g)) is on the merits, therefore with prejudice, therefore res judicata, it is simply incorrect. Such a proposition is flatly contrary to what the Supreme Court said in Gonsalves and what the Legislature has said in the very text of section 581.

Rather, however, M & R should be read as standing merely for a more nuanced point: That a dismissal under the five-year statute can have adverse repercussions on the plaintiff even though those repercussions do not extend as far as a dismissal that is res judicata.

The repercussions specifically at issue in M & R were payment of attorney fees under a prevailing party statute (section 1717 of the Civil Code), and one must remember that the issue of whether a litigant is a prevailing party (and therefore entitled to fees) is different from the issue of whether that litigant can use a previous dismissal for lack of prosecution as res judicata in a future action.

That reading is demonstrated by the facts of the M & R case, and the nature of the authorities employed by the M & R court. By letting the five-year deadline run, the plaintiff had, in effect, given the defendant a vested right (our phrase, not M & Rs) to a dismissal pursuant to the five-year statute. So, the defendant filed a motion to dismiss under the five-year statute, and, as the court noted (though perhaps it could have done so a tad more clearly), if that motion had been granted, the defendant, as prevailing party, would have been entitled to its attorney fees. Thus the courts cited authorities in its first reference to on the merits were to all authorities making the point that a defendant who wins on the five-year rule is still a prevailing party entitled to collect attorney fees.[23] Put another way, M & R is part of a group of cases that have considered under what circumstances a prevailing party may collect costs and attorney fees after a voluntary dismissal. (See cases discussed in Parrott v. Mooring Townhomes Ass., Inc. (2003) 112 Cal.App.4th 873 [homeowners who sued homeowners association liable for statutory fees awardable to prevailing party in homeowner association litigation, even after they dismissed complaint without prejudice].)

IV. DISPOSITION

The trial court lost its authority to dismiss the case pursuant to the OSC on May 18, when the plaintiffs validly exercised their right to dismiss voluntarily. On top of that, the trial court had no authority to override that dismissal on May 19 and enter a new dismissal with prejudice. Therefore, the trial court should have granted the plaintiffs motion to vacate its May 19 order. We therefore reverse the order denying that motion, with directions to make a new order, vacating the dismissal of May 19 and leaving the voluntary dismissal of May 18 as the operative document.

In recognition that it was both the derelictions of plaintiffs counsel that got his client into this mess and of the complexity of the law, in the interests of justice each side will bear its own costs on appeal.

One more thing. The Rutter Guide points out that some courts, including Orange County Superior, have local rules which provide that when an action is refiled after dismissal, it must be assigned to the same judge. (See Rutter Guide: Civil Procedure Before Trial, supra, 11.6:3, p. 11-3.) Whether, under section 170.6, subdivision (a)(2), Franklin might yet have a right to make a peremptory challenge to Judge Perk following reversal on appeal of the trial courts decision, is a matter that is not before us, and our opinion is, er, without prejudice to either side on the point in any future proceedings.

However, even if, arguendo, plaintiff Franklin will have such a right, this is a perfect case for application of the local rule that requires assignment to the same judge after dismissal and refiling. The Legislature may have conferred on Franklin the right to dismiss on May 18, but it has not conferred on Franklin the right to judge shop. Absent a valid peremptory challenge, there is no reason Judge Perk shouldnt preside over the balance of the case. (Even assuming a right to make a valid peremptory challenge, if Franklin has such a right, it is going to have to spend it against Judge Perk.)

Accordingly, unless Judge Perk is retired, somehow disqualified pursuant to section 170.6, subdivision (a)(2), or not available as defined by section 661, all future proceedings involving any cause of action by Franklin for breach of contract against Wilson based on the contract at issue in this case shall be heard before Judge Perk, regardless of the trial court panel or department to which he is assigned at the time.

SILLS, P. J.

I CONCUR:

FYBEL, J.

ARONSON, J., Concurring.

I concur in the majoritys conclusion plaintiff properly invoked his statutory right to voluntarily dismiss his lawsuit before the trial court heard the motion to dismiss. Because Code of Civil Procedure section 581, subdivision (b)(1) (section 581), provides that a party may dismiss at any time before the actual commencement of trial, plaintiff was entitled to file a dismissal without prejudice, even if the court had posted a tentative ruling announcing its intention to dismiss plaintiffs case with prejudice.

I write separately to voice my concern that section 581s clear definition of when trial commences has been obscured by a growing thicket of judicial decisions that rely more on the courts own sense of fairness than the Legislatures express mandate. For example, Mary Morgan, Inc. v. Melzark (1996) 49 Cal.App.4th 765, relied upon [l]ogic and fairness and the need to reconcile the competing interests in denying the plaintiff the right to dismiss after the court continued the defendants summary judgment hearing to allow discovery. (Id. at p. 771.) Groth Bros. Oldsmobile, Inc. v. Gallagher (2002) 97 Cal.App.4th 60, invoked policy concerns to prohibit voluntary dismissal after a tentative ruling on a demurrer was posted, fearing a contrary result would undermine the superior courts tentative ruling system. (Id. at p. 70.) In Hartbrodt v. Burke (1996) 42 Cal.App.4th 168 (Hartbrodt), the court concluded the plaintiff could not dismiss before a hearing on defendants motion for terminating sanctions, declaring the plaintiffs reliance on section 581 a mere tactic designed to defeat the trial courts power to enforce its discovery orders. (Id. at pp. 175-176.)

We must presume, however, the policy issues determined in the foregoing cases were considered and rejected by the Legislature when it adopted section 581. Under this section, a party has an absolute right to dismiss an action if done before the actual commencement of trial, even if this places the other party at a disadvantage and gains the plaintiff a tactical respite. What section 581 means by commencement of trial presents no mystery because it is defined in the statute.

My colleagues have deftly attempted to reconcile the leading cases, but even they concede their mere formality test fails to account for all the disparate rationales and results in the case law. For example, my colleagues reject Hartbrodt, supra, 42 Cal.App.4th 168 because it does not fit within their formula. The problem is the mere formality test is not really a test one would apply to reach a legally correct conclusion, but a general description that attempts to reconcile appellate decisions, some of which have strayed too far from the statutory language and Supreme Court precedent interpreting section 581.

The source of the problem may stem from Wells v. Marina City Properties, Inc. (1981) 29 Cal.3d 781, where the Supreme Court interpreted the commencement of trial language in section 581 to include the trial of an issue of law, which occurs when a court rules on a demurrer or summary judgment motion. Courts have relied on Wells to stretch commencement of trial to encompass any procedure that is potentially dispositive, including demurrer or summary judgment tentative rulings, or a pending motion for terminating sanctions. The issue appears ripe for further guidance from the Supreme Court or the Legislature.

ARONSON, J.

Publication Courtesy of San Diego County Legal Resource Directory.

Analysis and review provided by San Diego County Property line attorney.

[1] Specifically, in concluding that the standard of review was abuse of discretion, the court said: As we discuss post, every court to consider this issue has based its holding on the facts and circumstances surrounding the dismissal, evaluating whether allowing the dismissal to stand would be unfair or would endorse dishonest litigation tactics. (Tire Distributors, supra, 132 Cal.App.4th at p. 544.)

[2] At oral argument and in supplemental briefing afterwards, counsel for respondent Wilson commended the Tire Distributors case to our attention precisely because a free floating good faith test provides the most support for the trial courts decision in this case, even though, as it turned out, Tire Distributors is one of those cases upholding a voluntary dismissal. (Cf. footnote 1 above, and the whole problem of the fact that the record doesnt exactly make plaintiffs counsel look good.)

[3] The Groth Bros. point is well taken. While tentative rulings arent usually carved in stone so that oral argument becomes meaningless (at least they are not supposed to be carved in stone, see generally Moles v. Regents of University of California, supra, 32 Cal.3d 867), tentatives do (or should) represent the product of a real judicial confrontation with a given legal task. For that reason, we see nothing inconsistent with the tentative ruling cases such as Groth Bros. or Mary Morgan and the need for any case in this to be faithful to the idea that the right to dismiss exists up to the commencement of trial. As Goldtree and Wells teach us, adjudication of an issue of law can be a trial too, and such an adjudication substantively takes place when there is a tentative ruling.

[4] We also explore the subject because of the standard rule of appellate procedure that trial court judgments are (generally) upheld if the trial court is right for any reason, regardless of the reason it actually relied on. (E.g., Truck Ins. Exchange v. County of Los Angeles (2002) 95 Cal.App.4th 13, 20; 9 Witkin, Cal. Procedure (4th ed. 1997)  34.)

[5] Orange County Superior Court Local Rule 448(A) provides in part: All trial counsel and parties shall attend a mandatory settlement conference set by the trial judge.

[6] Orange County Superior Court Local Rule 454 provides in part: Upon notice and after hearing, if the court finds any counsel . . . has failed to comply with these local court rules or has not proceeded with due diligence in preparing the case for trial, the court, on motion of a party or on its own motion, may 1) strike all or any part of any pleading of that party; 2) dismiss the action or proceeding or any part thereof  . . . .

[7] There is a reasonable argument to be made that Orange Countys local rules should not be read as providing for the dismissal of a case solely on the ground that the plaintiffs attorney fails to show up at a settlement conference. Orange County Superior Court Local Rule 448(E) provides: The failure of any person to prepare reasonably for, appear at, or participate in good faith in a settlement conference as required by this rule, unless good cause is shown for that failure, is an unlawful interference with the proceeding of the court, and the court may order the person at fault to pay the opposing partys reasonable expenses and attorney fees. That provision suggests that, at least for a first offense, payment of the other sides expenses and fees is the presumptive remedy. Also, Orange County Superior Court Local Rule 448(d) provides: At the [mandatory settlement] conference, the attorney who will try the case must be present or represented by someone completely familiar with the case and who has full authority to enter into stipulations. If the court finds plaintiff or cross-complainant has not proceeded with due diligence in preparing the case for trial, the case, as to that party, may be dismissed pursuant to sections 583.410 et seq. [allowing discretionary dismissal for delay in prosecution] or 581(d) [requiring dismissal with prejudice, when upon the trial and before the final submission of the case, the plaintiff abandons it] of the Code of Civil Procedure and/or sanctions imposed pursuant to Rule 454. If the court finds that any defendant or cross-defendant has failed to comply with these rules, the court may impose sanctions pursuant to Rule 454. (Italics added.) This provision essentially incorporates the Code of Civil Procedure sections regarding delay in prosecution or abandonment into the local rules, and no one would ever assert that a trial court acts within those sections if it dismisses a case for a single missed mandatory settlement conference. However, since, as we are about to show, even if the rules were read to provide for such a result they could not be effective to accomplish it (a state statute precludes it), we need not determine the precise boundaries of these local rules in this opinion, and, despite the dicta in this footnote, this opinion should not be read as affecting those rules, one way or the other.

[8] It states: Local rules promulgated pursuant to Section 575.1 may provide that if any counsel, a party represented by counsel, or a party if in pro se, fails to comply with any of the requirements thereof, the court on motion of a party or on its own motion may strike out all or any part of any pleading of that party, or, dismiss the action or proceeding or any part thereof, or enter a judgment by default against that party, or impose other penalties of a lesser nature as otherwise provided by law, and may order that party or his or her counsel to pay to the moving party the reasonable expenses in making the motion, including attorney fees. No penalty may be imposed under this section without prior notice to, and an opportunity to be heard by, the party against whom the penalty is sought to be imposed.

[9] It states: It is the intent of the Legislature that if a failure to comply with these rules is the responsibility of counsel and not of the party, any penalty shall be imposed on counsel and shall not adversely affect the partys cause of action or defense thereto.

[10] Even a dismissal without prejudice might still adversely affect or prejudice the client if the statute of limitations had run.

[11] We perceive that even dismissing an action or defense based exclusively on an attorneys dereliction on the theory that the attorney will ultimately bear the cost in a legal malpractice action contravenes subdivision (b), because it adversely affect[s] the client by imposing on the client the significant costs in time, disruption and uncertainty that the client must inevitably bear even in a successful and collectable malpractice action.

[12] In supplemental briefing on this area, respondent Wilson cites us to Reid v. Balter, supra, 14 Cal.App.4th 1186 as authority for the idea that the trial court had the authority to dismiss the action with prejudice. Reid does indeed resemble the present case in that the trial court dismissed the case for a partys failure to show up at a mandatory conference (in Reid, a mandatory status conference), and in doing so basically relied on the two-year discretionary lack-of-prosecution statute. (See id. at pp. 1189-1190.) Unfortunately for Wilson, the similarities dont end there. The Reid case actually supports our determination that the trial court could not dismiss the case with prejudice for failure to show up at the mandatory settlement conference.

In Reid, the case was ordered to (judicial) arbitration. After the arbitrator made his award, the plaintiffs filed a request for trial de novo. When the plaintiffs failed to appear at a scheduled status conference, the trial court, among other things, dismissed the case under the discretionary dismissal statute ( 583.410) dealing with lack of prosecution. (See Reid, supra, 14 Cal.App.4th at p. 1189-1190.) Fifteen months later the plaintiffs filed a motion for a status conference and trial date -- it turned out that a substitute attorney at an earlier conference forgot to tell the plaintiffs regular attorney about the status conference -- and the trial court vacated its earlier dismissal, which decision was upheld by the appellate court in a subsequent appeal by the defendants after a victory by the plaintiffs in a jury trial. Here is what the appellate court plainly said in rejecting the defendants attempt to keep their earlier procedural win: We do not agree that warning plaintiffs their case could be dismissed if they failed to appear on May 15, 1989 for a trial setting conference is sufficient notice to sustain dismissing the case for failure to appear on October 27,1989, at a status conference. (Reid, supra, 14 Cal.App.4th at p. 1193.) And the trial court in Reid didnt even enter its original dismissal with prejudice -- the reference to the discretionary lack of prosecution statute suggests that it was entered without prejudice.

[13] Section 583.410, subdivision (a) provides: The court may in its discretion dismiss an action for delay in prosecution pursuant to this article on its own motion or on motion of the defendant if to do so appears to the court appropriate under the circumstances of the case.

[14] Section 583.410, subdivision (b) provides: Dismissal shall be pursuant to the procedure and in accordance with the criteria prescribed by rules adopted by the Judicial Council.

[15] Rule 373(a) provided in part: A party seeking dismissal of a case pursuant to article 4 ( 583.410 et seq.) of chapter 1.5 of title 8 of part 2 of the Code of Civil Procedure shall serve and file a notice of motion at least 45 days before the date set for hearing of the motion  . . . . Under the recent renumbering, the rule substitutes Code of Civil Procedure section 583.410-583.430 in place of article 4 ( 583.410 et seq.) of chapter 1.5 of title 8 of part 2 of the Code of Civil Procedure.

[16] Section 583.410, subdivision (a) (the two-year rule) states in pertinent part: The court may in its discretion dismiss an action for delay in prosecution pursuant to this article on its own motion or on motion of the defendant if to do so appears to the court appropriate under the circumstances of the case. While this statute does not make an explicit reference to two-years, the next section, section 583.420 makes it clear that the discretionary provisions of section 583.410 are not triggered unless two years have elapsed since the action was commenced. Section 583.420, subdivision (a)(2)(B) states: The court may not dismiss an action pursuant to this article for delay in prosecution except after one of the following conditions has occurred:  . . . .  [] (2) The action is not brought to trial within the following times:  . . . . [] (B) Two years after the action is commenced against the defendant if the Judicial Council by rule adopted pursuant to Section 583.410 so prescribes for the court because of the condition of the court calendar or for other reasons affecting the conduct of litigation or the administration of justice.

[17] Section 583.310 states in its entirety: An action shall be brought to trial within five years after the action is commenced against the defendant. Section 583.360 states in its entirety: (a) An action shall be dismissed by the court on its own motion or on motion of the defendant, after notice to the parties, if the action is not brought to trial within the time prescribed in this article. [] (b) The requirements of this article are mandatory and are not subject to extension, excuse, or exception except as expressly provided by statute.

[18] But the statute does not purport to set up an exclusive template: Section 581, subdivision (m) is clear that section 581 is not intended to preempt the field. Subdivision (m) states: The provisions of this section shall not be deemed to be an exclusive enumeration of the courts power to dismiss an action or dismiss a complaint as to a defendant.

[19] Both the legislative and Supreme Court rule are to be expected given the fundamentals of res judicata. The very definition of res judicata contemplates a judgment on the merits, and dismissals for lack of prosecution under either the two-year (discretionary) or five-year (mandatory) rules are not on the merits. (See Edmonds v. Glenn-Colusa Irr. Dist. (1933) 217 Cal. 436, 439 [The doctrine of res judicata is stated in a very carefully considered definition in 15 Ruling Case Law, pages 950, 951, in the following language: Briefly stated, this doctrine is that an existing final judgment or decree rendered upon the merits, and without fraud or collusion, by a court of competent jurisdiction, upon a matter within its jurisdiction, is conclusive of the rights of the parties or their privies, in all other actions or suits in the same or any other judicial tribunal of concurrent jurisdiction, on the points and matters in issue in the first suit.].)

Of course, as we shall see in the next part of the opinion, certain kinds of seemingly procedural defects in cases, like statutes of limitations and even terminating sanctions for discovery abuse, can be on the merits for purposes of res judicata.

[20] The Kahn court gave three reasons to conclude that a prior dismissal for failure to comply with discovery rules is indeed res judicata:

-- (1) As a matter of statutory construction, it would defeat the purpose behind the discovery sanction to allow cases to arise phoenixlike in new actions based on the same allegations. (See Kahn, supra, 68 Cal.App.3d at p. 383.) In that regard, the Kahn court reasoned that the power of trial courts to enter dismissals in the first place for discovery violations was rooted in the theory was itself a manifestation of the substantive merits of the case: The ratio decidendi behind such cases appears to be on the theory that a persistent refusal to comply with an order for the production of evidence is tantamount to an admission that the disobedient party really has no meritorious claim or defense to the action. (Id. at p. 382.)

-- (2) Section 582 tells us that, in distinction to the various kinds of dismissals without prejudice under section 581, In all other cases judgment shall be rendered on the merits, and the discovery statutes certainly come within the rubric of all other cases. (See Kahn, supra, 68 Cal.App.3d at pp. 382-383, original italics omitted.)

-- (3) Analogous federal discovery statutes had been interpreted by federal courts to mean that dismissals for discovery noncompliance constituted a final judgment on the merits. (Kahn, supra, 68 Cal.App.3d at p. 384.)

Reason (1) does not apply to dismissals for lack of prosecution because the inference of a failure of a case on the substantive merits that attends when a party violates discovery orders is not present -- even the best cases can fail for lack of prosecution. Reason (2) does not apply because, while section 582 by its terms, applies to the discovery sanction statutes, it does not apply to template of dismissals under section 581, to which it is an exception. And reason (3) does not apply for basically the same reason: Unlike the discovery area where recourse to federal law is instructive, in the context of dismissals for lack of prosecution we dont care what federal law says because our state statute clearly says that such dismissals are without prejudice.

[21] Reason (1) given by the Kahn court (see footnote 34 above) recognized that discovery recalcitrance can be, essentially, a surrogate for the fact that the case is a loser on the merits.

[22] Here they are:

(1) Barely five sentences into the opinion, in the course of laying out the facts, the court wrote: When plaintiffs did not bring the matter to trial within five years, defendants moved for mandatory dismissal of the action, a procedure which would be a determination on the merits entitling defendants to their attorney fees. (Code Civ. Proc., 583.310, 583.360; Civ. Code, 1717; Elms v. Builders Disbursements, Inc. (1991) 232 Cal.App.3d 671, 675.) (M & R, supra, 11 Cal.App.4th at p. 901.)

(2) In the process of setting up the appellants contention to be refuted, the court opened a paragraph with this sentence: It is not true, as plaintiffs claim, that the only decisions which cut off the right to a voluntary dismissal are those which in some way adjudicate the merits of an action. (See M & R, supra, 11 Cal.App.4th at p. 904.)

(3) The court followed (2) with the assertion that the phrase commencement of trial in the voluntary dismissal statute certainly requires no adjudication of the merits. (M & R, supra, 11 Cal.App.4th at p. 904.)

(4) In the context of discussing Wells, M & R noted that in 1947 the Legislature had placed the phrase commencement in front of trial in the statute in response to concerns that a plaintiff might be able to obtain a voluntary dismissal after the parties had engaged in litigation but before the merits had been fully adjudicated. (M & R supra, 11 Cal.App.4th at p. 904, citing Wells, supra, 29 Cal.3d at p. 788.).)

(5) After describing the facts in London v. Morrison (1950) 99 Cal.App.2d 876, the M & R court then derived this rule from the case: The court in London, therefore, held that the plaintiffs right to a voluntary dismissal was cut off once the defendants right to a mandatory dismissal had become fixed, whether or not by an actual ruling of the court, and irrespective of whether that ruling in any way adjudicating the merits of the case. (M & R, supra, 11 Cal.App.4th at p. 905.)

[23] The first two authorities -- the two statutes from the Code of Civil Procedure -- say nothing to about the merits or any res judicata effect -- those are merely the code sections setting forth the five-year rule and the mandatory nature of dismissals under it. The next authority, Civil Code section 1717, is the well-known reciprocal attorney fee provision in California and its focus is on prevailing, not on why a litigant is prevailing. Likewise, the last cited authority, Elms v. Builders Disbursements, Inc. (1991) 232 Cal.App.3d 671, 675, did not involve any voluntary dismissals before a dismissal under the five-year rule. The issue in Elms was whether the defendant was the prevailing party under section 1717, which the court held that they were on the ground that they had obtained all the relief it had requested. There is nothing in the Elms opinion to equate the right of a prevailing party under section 1717 to obtain attorney fees with having prevailed on the merits as distinct from simply having prevailed.