Rothenberger v. Kay

Filed 7/23/07 Rothenberger v. Kay CA3

NOT TO BE PUBLISHED

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

(Sacramento)

Cross-defendant James Kay appeals from an order denying his motion to set aside a judgment entered June 5, 2000, in favor of cross-complainant Floyd Rothenberger and Texas Bar-B-Que, Inc. (collectively Rothenberger). The judgment awarded Rothenberger $245,000 in compensatory damages and $185,000 in punitive damages.

After two years of litigation, Kay gave notice he was proceeding in propria persona and gave his address as a post office box where he could receive service of process. Documents subsequently sent to that address by the court and counsel were returned to the sender as undeliverable. Meanwhile the claims on the underlying complaint were settled and the case on Rothenbergers cross-complaint proceeded to trial in Kays absence after the trial court found sufficient proof Kay had been given notice of the trial date. Four and one-half years after judgment was entered, Rothenbergers assignee, respondent herein, recorded the judgment, which was mailed to Kays home address. A few months later, Kay filed a motion to set aside the judgment for failure to give notice of trial as required by Code of Civil Procedure section 594.^[1]

On appeal, Kay contends the judgment against him must be set aside because he was not served with notice of trial, return of mail by the postal service does not excuse failure to give written notice of trial, the possibility that notice of trial was misfiled does not excuse its absence from the courts file, and a judgment for failure to comply with section 594 is void and can be set aside at any time.

Respondent makes no appearance on appeal. Nevertheless, after considering Kays contentions and reviewing the record, we find the trial court properly denied Kays motion because the judgment was voidable not void, the motion to set aside the judgment was filed five years after entry of judgment, and Kays absence from trial was due to his own inexcusable neglect in failing to provide the court and counsel with an address where he could be reached knowing the matter was nearing a trial date and never once contacted the court or counsel in the following five years to provide a change of address or inquire about the status of the case. We shall therefore affirm the courts order denying Kays motion.

FACTUAL AND PROCEDURAL BACKGROUND^[2]

A. The Underlying Action

This case arose out of a series of transactions to collect payment on a promissory note executed on August 25, 1995, by plaintiff Susan Mellis, who agreed to loan cross-defendants James and Cathy Kay and Kayex Investment Corporation (collectively Kay) $25,000 secured by restaurant equipment (collateral) owned by Kay. When Kay failed to make payment on the note, he sold the collateral to parties who were later declared bankrupt and then resold the collateral to Rothenberger as part of a five-year lease agreement for certain restaurant premises located in Sacramento. A few months after entering into the lease agreement and after Rothenberger had begun operating the restaurant, the restaurant premises were sold at a foreclosure sale and Rothenberger stopped making payments on the collateral.

Mellis filed a complaint against Kay, Rothenberger and several others for conversion and foreclosure of her security interest. Rothenberger filed a cross-complaint against Kay, Mellis, and others seeking damages and rescission on 12 causes of action, including claims for breach of contract, breach of the covenant of good faith and fair dealing, forgery, fraud, and negligent misrepresentation. Kay filed a cross-complaint against Rothenberger for breach of contract and conversion.^[3]

On August 30, 1999, after almost two years of litigation, Kay filed a notice of substitution of counsel, giving notice that he was relieving his attorney of record, Robert Proaps, Jr., and proceeding in propria persona. He listed his address as P.O. Box 660981, Sacramento, California 95866-0981. Although relieved as counsel of record, Proaps filed a letter with the court clerk on September 13 advising that Kay was scheduled to be out of town the week of September 20, 1999, the date of the trial setting conference. Proaps requested that trial be set for the latest date possible to give Kay time to prepare for trial and hire another attorney if he so desired.

The trial setting conference was held as scheduled on September 20, 1999, at which time the settlement conference was set for November 4 and trial was set for December 6. The order states that [a]ll parties necessary to the disposition of the case have been served or have appeared. No proof of service appears in the file however.

On November 15, 1999, the court clerk mailed notice of failure to deposit jury fees, which indicated the case had been set for trial. The proof of service shows that the clerk mailed a copy of the notice to all counsel including Kay.

Although no order appears in the record continuing the settlement conference, the trial setting conference, or the trial date, those dates were vacated and rescheduled. On November 18, the court signed a stipulated order for a temporary judge to conduct the settlement conference that same day. Kay signed the stipulation^[4], and appeared at the settlement conference.

Notice of trial setting conference was rescheduled for March 6, 2000, and sent to the parties and their attorneys of record on December 7, 1999. Proof of service appears at the bottom of the notice where the court clerk certified that she mailed a copy of the notice to all counsel including Kay. An envelope addressed to Kay at the address stated in his notice of substitution bears a mailing date of December 7, 1999, and a postal service stamp stating RETURNED TO SENDER and NOT DELIVERABLE AS ADDRESSED -- UNABLE TO FORWARD.

The trial setting conference was held as rescheduled on March 6, 2000. The order gives notice of a new settlement conference date, May 15, 2000, and a new trial date, May 30, 2000. The order further states that [a]ll parties necessary to the disposition of the case have been served or have appeared. No proof of mailing appears in the file.

Rothenberger appeared on the date scheduled for the settlement conference. Kay failed to appear and no conference was held.

On May 30, 2000, the matter came on for trial on Rothenbergers cross-complaint before Judge Sheldon Grossfeld. Kay was not present. In the statement of decision, Judge Grossfeld found proof was first made to the satisfaction of the Court that Kay had adequate notice of the time and place set for trial of this action as required by section 594. After taking evidence on the question of damages, the court ordered judgment for Rothenberger and awarded him $245,000 on the contract and fraud claims and $185,000 in punitive damages.

Judgment was entered on June 5, 2000, and on June 7th, notice of entry of judgment was served on Kay at his post office box address of record. That notice was returned to counsel as undeliverable.

Rothenberger assigned the judgment to respondent Investment Recovery, Inc. (IRI) four years later on May 10, 2004. On September 9, 2004, IRI filed an application and order directing Kay to appear for examination to enforce the judgment. A hearing was set for October 19, 2004, but the order was not served and Kay did not appear. The court issued the abstract of judgment on November 23, 2004.

B. The Motion to Set Aside the Judgment

On March 11, 2005, Kay moved to set aside the judgment on the cross-complaint on the grounds he did not receive timely notice of trial as required by section 594.

In his supporting declaration Kay states as follows: He never received notice of any trial in this matter nor notice of entry of judgment until he received notice in early December 2004 from the Sacramento County recorder that the judgment was recorded. The recorder served him by mailing the judgment to his home address. At the time he filed the notice of substitution of counsel, he was available to receive mail at the address stated on that document. However, the only notice sent to him at that address was sent by the court clerk and returned by the post office for unknown reasons. Kay further declared that Rothenbergers attorney, James Donald, should have sent notice of trial to that post office address but there is no record of such service in the courts file, the clerks transcript, or the reporters transcript showing that notice was sent to him at that address or any other address.

Kay further declared that he was one of the defendants in the original complaint in this action and there were delays in arranging Rothenbergers deposition. However, Donald advised Kay that Rothenbergers deposition would be taken before trial and that his cross-complaint against Kay would be dismissed if Rothenberger was not ready to give his deposition, or the case would be settled.

After Kay substituted in as his own counsel, counsel sent a letter to the clerk advising the court that Kay would not be available for the trial setting conference and requested the court to set the trial at the latest possible time so Kay could prepare for trial. He had a good defense and a good case for recovery on his own cross-complaint. Donald knew where Kays home was and he knew two attorneys who had or were representing Kay. He could have contacted him through his post office box, at his home, or through his attorneys. If the abstract of judgment had been recorded promptly, he would have made this motion at that time. He believed up to December 2004 that the case was completed without trial and was willing to let the matter rest.

The court denied Kays motion finding that while there was no proof of service of notice of trial in the court file, notice of entry of judgment was mailed to Kays address of record and it was returned as undeliverable. Therefore, even if Kay had not received notice of trial, contrary to Judge Grossfelds findings, any notice of trial sent to the address of record would also have been returned as undeliverable as was the notice of entry of judgment and other documents sent by counsel and the court. In conclusion, the court stated that Kay cannot avoid the consequences of supplying an invalid address as his address of record. Judge Grossfeld was satisfied that notice of trial had been given. The Court has no basis to overturn Judge Grossfelds ruling.

Kay now appeals from the courts order denying his motion.^[5]

DISCUSSION

Kay contends the judgment against him must be set aside because he was not served with notice of the trial date. He argues that under section 594, when a party is not present at trial, the appearing party must satisfy the court by competent evidence that the adverse party was served with notice of the trial date before the court may proceed to hear the case. Kay therefore concludes that because none of the evidentiary requirements of section 594 were satisfied and proof of service does not appear in the courts file, the judgment is void and may be set aside at any time.

We disagree because the judgment entered against Kay is not void, it is merely voidable. Thus, the trial court properly denied Kays motion made five years after entry of judgment, the statement of decision recites that proof of notice of trial was made, and the lack of notice to Kay was due to his own inexcusable neglect.

Section 473 grants the trial court discretion to set aside a judgment under certain circumstances. Under subdivision (d) of that section, the trial court may set aside a void judgment and there is no statutory time limit for doing so. Subdivision (b) on the other hand, states a time limit within which to set aside a judgment. Under that provision, application for relief must be made within a reasonable time, in no case exceeding six months, after judgment . . . was taken. If timely made, the trial court may grant relief if judgment was taken against a party due to his own mistake, inadvertence, surprise, or excusable neglect.

The question as to which of these two provisions applies turns on whether the judgment rendered against Kay is void or voidable. We therefore consider that question. A judgment is void when the trial court lacks fundamental jurisdiction (In re Marriage of Goddard (2004) 33 Cal.4th 49, 56(Goddard)) and is vulnerable to direct or collateral attack at any time. (People v. American Contractors Indemnity Co. (2004) 33 Cal.4th 653, 660.) Fundamental jurisdiction is the courts inherent authority over the subject matter and the parties before it. (Ibid.; Abelleira v. District Court of Appeal (1941) 17 Cal.2d 280, 288.)

By contrast, a court that has fundamental jurisdiction may lack the power to act except in a particular manner, to give certain kinds of relief, or to act without the occurrence of certain procedural prerequisites. Although this lack of power is often referred to as jurisdiction, a court that lacks this latter type of jurisdiction renders a judgment that is merely voidable. (Goddard, supra, 33 Cal.4th at p. 56; Harnedy v. Whitty (2003) 110 Cal.App.4th 1333, 1343-1343.) A voidable judgment may be attacked directly by motion to vacate the judgment or on appeal but is generally not subject to collateral attack once the judgment is final unless unusual circumstances were present which prevented an earlier and more appropriate attack." (People v. American Contractors Indemnity Co., supra, 33 Cal.4th at p. 661.) Thus, it is valid until it is set aside, and a party may be precluded from setting it aside by principles of estoppel, disfavor of collateral attack or res judicata. [Citation.] (Ibid.) Mere errors of procedure, pleading, evidence, and substantive law on the other hand, are reviewable on direct appeal and subject to harmless error review. (Cal. Const., art. VI, 13; Goddard, supra, 33 Cal.4th at p. 56.)

Here, Kay claims the trial court lacked jurisdiction to render a judgment against him because the evidentiary requirements of section 594 were not satisfied. We therefore consider those requirements to determine whether they are jurisdictional and in what sense.

Subdivision (a) of section 594 provides that a party may bring to trial and the court may proceed with the case and render judgment on an issue of fact in the absence of the adverse party if proof is made to the courts satisfaction that 15 days notice of trial was given to the adverse party. This requirement is implemented by subdivision (b) of the same section, which requires that notice be given to the adverse party by mail, served either by the clerk of the court not less than 20 days prior to the trial date or by any party not less than 15 days prior to that date. If notice is served by the clerk, proof may be made by introducing into evidence the clerks certificate pursuant to section 1013a or other competent evidence. If notice is served by a party, proof may be made by introducing into evidence an affidavit or certificate pursuant to section 1013a or other competent evidence.

While compliance with section 594, subdivision (a) is mandatory and jurisdictional, it does not affect the courts fundamental jurisdiction. (Goddard, supra, 33 Cal.4th at pp. 56, 59.) Thus, a court with fundamental jurisdiction that renders a judgment in violation of subdivision (a) acts in excess of its jurisdiction and its judgment is voidable. (Ibid.)

Compliance with subdivision (b) of section 594, on the other hand, is not jurisdictional at all and is subject to attack on appeal by harmless error review. (33 Cal.4th at p. 58.) In Goddard, the court held that compliance with the evidentiary rule of section 594, subdivision (b) is subject to harmless error review when it is clear from the record that notice of the trial date was given consistent with section 594 but was not received into evidence. (Id. at p. 59.)

Kay argues that while the error involves the failure to require evidentiary proof of notice of the trial date, unlike in Goddard, the record here is devoid of any proof Kay received notice of the trial date. He therefore concludes the error is jurisdictional and the judgment void. We disagree for two reasons.

First, Judge Grossfeld found in his statement of decision that proof was made to the satisfaction of the court that Kay had adequate notice as required under section 594. A judgment or order of a lower court is presumed to be correct on appeal, and all intendments and presumptions are indulged in favor of its correctness." (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133.) This principle is particularly applicable here, five years after entry of judgment, when at least one witness, Mr. Donald, is deceased and the testimony of Judge Grossfeld was not proffered. Under these circumstances we will not go behind the statement of decision. Because that statement establishes that Kay was given adequate notice, the alleged error is merely evidentiary (Goddard, supra, 33 Cal.4th at p. 56) and is subject to attack only by a timely appeal of the judgment or by a motion to set aside the judgment pursuant to section 473, subdivision (b). The time for either one of those challenges has long since passed.

Second, even if we assume that Kay did not receive actual notice of the trial date (Goddard, supra, 33 Cal.4th at p. 59) and the trial court lacked nonfundamental jurisdiction, rendering a voidable judgment (People v. American Contractors Indemnity Co., supra, 33 Cal.4th at p. 661), the result is the same because as with evidentiary error, a voidable judgment may only be set aside on direct appeal or by a timely motion pursuant to section 473, subdivision (b). (Goddard, supra, 33 Cal.4th at p. 56.)

Furthermore, Kay failed to establish that the judgment was taken against him under the statutory grounds of mistake, inadvertence, surprise or excusable neglect and under the circumstances of this case, we find Kays absence from trial was due to his own inexcusable neglect.

One may not be relieved from his default unless he makes a showing that he has acted in good faith and demonstrates that his excusable neglect was the actual cause of his failure to attend the trial. . . . To warrant relief under section 473 a litigants neglect must have been such as might have been the act of a reasonably prudent person under the same circumstances. . . . It is the duty of every party desiring to resist an action or to participate in a judicial proceeding to take timely and adequate steps to retain counsel or to act in his own person to avoid an undesirable judgment. . . . Courts neither act as guardians for incompetent parties nor for those who are grossly careless of their own affairs. . . . The only occasion for the application of section 473 is where a party is unexpectedly placed in a situation to his injury without fault or negligence of his own and against which ordinary prudence could not have guarded. (Elms v. Elms (1946) 72 Cal.App.2d 508, 513; see Essig v. Seaman (1928) 89 Cal.App. 295, 298 [inexcusable neglect where defendant, with knowledge of pendency of suit, contents of complaint, and time to answer, failed to attend a hearing to dissolve an attachment, to communicate his whereabouts to his attorney, or to file an answer].)

Here, Kay gave the court an address where he could be reached but court documents sent to that address were returned as undeliverable. Thus, the address he gave was either invalid when given or was valid at the time but Kay failed to inform the court of a change of address despite the fact he was acting in propria persona as a cross-defendant and as a cross-complainant. After two years of litigation, the matter was nearing the time for trial. Nevertheless, he failed to contact the court or counsel when he returned from his travels to inquire about the status of the case.

Instead, Kay did nothing for five years because as he incredulously declared in his motion, he believed up to December 2004, that the case was completed without a trial and was willing to let this matter rest. He does not explain how a case can be settled without the knowledge and consent of the adverse party. Instead, according to Kay, the fault lies with Rothenbergers attorney, who failed to find and serve him and record the abstract of judgment at any earlier date. The law does not require such efforts of counsel. Notice of the trial date may be served by the clerk of the court as well as by counsel ( 594, subd. (b)) and there is no legal requirement that an abstract of money judgment be recorded immediately after entry of judgment.^[6] Nor is there any requirement that counsel track down a defendant who has failed to keep the court and counsel appraised of his current mailing address. We therefore conclude that allowing five years to pass without taking action to prosecute his own case or defend against the cross-complaint, make inquiry of the court or counsel of the status of those two cases, or inform the court and counsel of a change of address constitutes inexcusable neglect. Under these circumstances, we find the trial court properly denied Kays motion.

DISPOSITION

The order denying the motion to set aside the judgment is affirmed. Kay shall pay his own costs on appeal. (Cal. Rules of Court, rule 8.276 (a).)

BLEASE , Acting P. J.

We concur:

RAYE , J.

HULL , J.

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^[1] All further section references are to the Code of Civil Procedure unless otherwise specified.

^[2] The record is devoid of evidentiary proof of the underlying claims because the claims on the complaint were settled prior to trial and the trial court took evidence relating solely to the question of damages. We therefore set forth the facts as gleaned from the pleadings, other documents in the record, and the statement of decision on the cross-complaint.

^[3] The claims on the complaint settled and Mellis dismissed all claims against all defendants with prejudice.

^[4] Kays signature is not dated.

^[5] The transcript on appeal consists of the superior courts file.

^[6] Recording an abstract of money judgment creates a lien on real property. ( 697.310.)