Accrediated Home Lenders v. Nacif

Filed 7/26/07 Accrediated Home Lenders v. Nacif CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

APPEAL from an order of the Superior Court of San Diego County, Linda B. Quinn, Judge. Affirmed in part and reversed in part.

Linda Nacif sued her former boyfriend, J. Ross White-Sorenson, and his corporation (Grupo Americas, Inc. (Grupo)), alleging White-Sorenson failed to repay a $258,000 loan. The trial court entered a default and a default judgment against White-Sorenson and Grupo. In the judgment, the court: (1) awarded Nacif $153,750 plus attorney fees and interest; (2) declared an equitable mortgage on property owned by White-Sorenson (the Sorenson property); (3) declared that all interests on the Sorenson property acquired after Nacif recorded a lis pendens "are forever barred and foreclosed from all equity of redemption"; and (4) ordered the Sorenson property sold in a foreclosure sale.

Six months and one week later, Accredited Home Lenders, Inc. (Accredited), which held deeds of trust on the Sorenson property that were recorded after Nacif recorded her lis pendens but before the judgment was entered, filed a complaint to intervene in the action. Accredited also moved to vacate the default and default judgment and declare Accredited's trust deeds senior to Nacif's equitable mortgage.

The court granted Accredited's motion to intervene under Code of Civil Procedure section 387,^[1] and stated it would resolve the priority issues in the ensuing litigation. The court further granted Accredited's motion to set aside the default and the default judgment as to White-Sorenson and Grupo.

Nacif challenges the court's order setting aside the default and default judgment. We affirm the portion of the order vacating the default judgment. However, we reverse the portion of the order vacating the entry of default as to White-Sorenson and Grupo. There was no legal or factual basis to vacate the entry of default as to these parties. We remand for the court to resolve claims between Nacif and Accredited, and to enter a new default judgment as to White-Sorenson and Grupo after the resolution of those claims.

FACTUAL AND PROCEDURAL SUMMARY^[2]

In April 2004, Nacif filed an action against White-Sorenson, alleging White-Sorenson executed a promissory note promising to pay Nacif $258,000, but White-Sorenson failed to pay the required monthly installments. Nacif alleged this note was secured by the Sorenson property, and sought an order declaring an equitable mortgage on the property and that the mortgage be foreclosed and the property sold. Nacif also named Grupo as a defendant based on Grupo's guarantee of the promissory note.^[3] On the same date, Nacif recorded a lis pendens on the property.

On July 12, 2004, Nacif's attorney notified the court that the case had settled. The court then ordered the case placed on the 45-day dismissal calendar.

In August 2004, Nacif and White-Sorenson entered into a written settlement agreement and stipulation for entry of judgment. ( 664.6.) Pursuant to the settlement agreement, White-Sorenson obtained refinancing loans from Accredited, and on August 16, 2004, he paid Nacif $115,000 from those proceeds in partial payment of his debt. Accredited allegedly made the refinancing loans to White-Sorenson in reliance on Nacif's agreement to remove the lis pendens on the Sorenson property. On September 22, 2004, Accredited recorded two deeds of trust securing the refinancing loans on the Sorenson property.

Eight days later, on October 1, 2004, Nacif's attorney filed an ex parte application requesting that the matter "be reactivated" based on facts showing that White-Sorenson had intentionally misrepresented his financial condition with the intent to compel Nacif to enter into the settlement agreement.

Three days later, the court held a status conference. Nacif's counsel andWhite-Sorenson's counsel appeared and participated at the conference. White-Sorenson's counsel agreed to provide Nacif with documents supporting the validity of the settlement agreement. The court ordered the dismissal date extended to October 29, 2004, and scheduled a status conference for October 18, 2004.

On October 18, Nacif's counsel notified the court the matter had not settled and requested that Nacif be permitted to move forward on her lawsuit. On that date, Nacif's counsel and White-Sorenson's counsel appeared at a status conference. At the conclusion of that conference, the court ordered the case be put back on the civil active list, and set a deadline of December 17, 2004 for White-Sorenson to file his answer.

On November 22, 2004, Nacif filed a first amended complaint against White-Sorenson and Grupo, reasserting her claims seeking to establish an equitable mortgage on the Sorenson property and adding allegations that White-Sorenson committed fraud in obtaining her agreement to the settlement with respect to the original complaint.

On December 2, 2004, White-Sorenson's counsel filed a case management statement and checked the box stating that "All Defendants . . . have been servedbut have not appeared . . . ." (Italics added.) White-Sorenson's counsel also stated that all parties were willing to participate in an early settlement conference, and that White-Sorenson intended to file a motion for entry of judgment under the settlement agreement terms. White-Sorenson's counsel stated he would file a cross-complaint if the motion for entry of judgment was denied.

On December 14, White-Sorenson's counsel sent a letter to Nacif's counsel, stating: "We are in receipt of Ms. Nacif's First Amended Complaint and the Notice and Acknowledgement of Receipt. We are agreeable to accepting service of the summons and First Amended Complaint . . . on behalf of (1) . . . White-Sorenson; and (2) Grupo . . . ."

On December 17, 2004, counsel for Nacif and White-Sorenson appeared at a case management conference. The court ordered the parties to meet and confer regarding mediation "pending Defendant's motion for entry of judgment." On February 10, 2005, both counsel again appeared at a case management conference.

In February 2005, White-Sorenson's counsel (Todd Neal) requested to be relieved as counsel for White-Sorenson and Grupo. In support, he filed a declaration which stated in relevant part: "White-Sorenson has advised that he is losing his heavily encumbered personal residence and his business . . . is closing down. Consequently, Mr. White-Sorenson has advised that he is unable to defend this action and he does not intend to defend this action. I have advised Mr. White-Sorenson of the consequences of a default judgment." On March 15, the court granted counsel's motion.

On May 20, 2005, Nacif filed a request for entry of default. In support, Nacif submitted her counsel's declaration, who stated that when he filed the first amended complaint in November 2004 he mailed a copy to White-Sorenson's attorney Todd Neal, and that Neal "subsequently appeared in this Court on December 17, 2004, and again on February 10, 2005." Nacif's counsel said that at each hearing, Neal "stated on the record[] that he was appearing on behalf of [White-Sorenson and Grupo]. Mr. Neal at no time attempted to limit the scope of his appearance. At the February 10, 2005 hearing, Mr. Neal said words to the effect that neither of his clients intended to respond to the First Amended Complaint and would allow default judgments to be entered." Nacif mailed a copy of the request for entry of default to White-Sorenson at the address identified on White-Sorenson's attorney substitution request. After stating it had "review[ed] the file," the court signed an order stating that it "approves of the entry of default."

Nacif also filed a request for a default judgment against White-Sorenson and Grupo. In support of the default judgment, Nacif submitted evidence supporting her claims that the remaining principal balance owed on the note was $153,750, plus interest of $21,963, court costs of $499, and attorney fees of $31,925, for a total of $208,137.

On June 30, 2005, the court entered a default judgment against White-Sorenson and Grupo in the amount of $209,187. In the judgment, the court imposed an equitable mortgage on the Sorenson property, and ordered the property sold at a foreclosure sale. In the proposed judgment, Nacif's attorney had included language stating that all interests in the property that were recorded "subsequent to the filing of notice of the pendency of this action" would be extinguished after the sale of the property. (Italics added.) The court, crossed out the language italicized above, and substituted the phrase "subsequent to the entry of this Judgment" in the final version of the judgment.

One week later, Nacif's attorney filed a declaration requesting the court to delete the phrase "subsequent to the entry of this Judgment" and replace it with his original language: "subsequent to the filing of notice of the pendency of this action with the county recorder." In his supporting declaration, Nacif attorney stated that "It is critical that the equitable mortgage . . . be effective as of the date of the recording of the Lis Pendens because [White-Sorenson] refinanced the subject property in August 2004, with two new loans, which total almost the full value of the property. Both of these loans are now in foreclosure. [] The lender [Accredited] . . . [was] aware of the Lis Pendens at the time the new loans . . . were recorded."

Based on this declaration, the court agreed to modify the final judgment and entered an amended judgment, which deleted the phrase "subsequent to the entry of this Judgment" and added the phrase "subsequent to the filing of notice of the pendency of this action with the county recorder." (Italics added.)

Two weeks later, on July 22, 2005, Accredited's trustee recorded a Notice of Trustee's Sale on the Sorenson property. Three weeks later, Nacif recorded an Abstract of Judgment, which stated that her judgment lien was superior to Accredited's deeds of trust. Nacif allegedly advised Accredited and/or its agent of her priority lien and asserted a right to proceed with the sale.

On November 9, 2005, Accredited filed a separate lawsuit against Nacif seeking to protect its priority interest in the Sorenson property. The action was assigned to Superior Court Judge Steven Denton.

Two months later, Accredited filed a motion for leave to intervene in this (the Nacif v. White-Sorenson) action. Accredited was represented by the same counsel who had previously represented White-Sorenson (Todd Neal).

In its proposed complaint in intervention, Accredited sought to protect its security interest in the Sorenson property. Accredited claimed it had a lienhold interest totaling $675,000 and the default judgment extinguishing this interest would materially affect its rights. Accredited asserted a right to intervene under section 387 because it was not named in the underlying matter, and therefore it had no opportunity to protect its interests. Accredited requested various remedies, including a judicial determination that its secured equitable interest should be given first priority over Nacif's equitable mortgage. Accredited also asserted a breach of contract claim against Nacif.

Accredited also filed a motion to set aside the default and default judgment. Accredited identified statutory ( 473, 663a, 664.6) and equitable grounds for the motion. Accredited argued that: (1) subordination of Accredited's deeds of trust in the judgment was legally erroneous; (2) the default judgment was void because the court acted in excess of its jurisdiction by entering a judgment that affected Accredited's rights; and (3) the default judgment was void as to White-Sorenson because the court did not have personal jurisdiction over White-Sorenson, Nacif never obtained leave of the court to file her first amended complaint, and the first amended complaint failed to state a fraud cause of action against White-Sorenson.

In opposition, Nacif argued the motion to vacate was untimely under section 663a because it was filed more than 180 days after the entry of judgment. She also argued that Accredited's claims had no merit because she gave notice of entry of the judgment to Accredited's agent and that, under California law, the lis pendens protected her right to a superior lien over Accredited's deeds of trust. (See  405.24.) She further claimed that she was under no obligation to withdraw the lis pendens because Accredited had not fully complied with the conditions of the parties' agreement. Her counsel also filed a declaration describing the facts leading to the entry of the default and default judgment against White-Sorenson.

The court issued a tentative order granting Accredited's motions to intervene and to vacate the entry of default and the default judgment. At the hearing, Nacif's counsel notified the court the Sorenson property had been sold and therefore Accredited's remedies were limited to a breach of contract against Nacif. Nacif's counsel also argued that Accredited's motions should have no effect on White-Sorenson's default.

After the hearing, Accredited filed a supplemental brief, stating that Accredited was not seeking to relitigate Nacif's claims against White-Sorenson, with respect to the "validity of the equitable mortgage" or the "amount awarded"against White-Sorenson. Accredited's counsel stated: "[t]he only issue that [Accredited] seeks to have resolved by the Court is whether the equitable mortgage awarded to [Nacif] should be effective as to the date of the original Default Judgment . . . or should the effective date be the back-dated equitable mortgage date . . . ." (Original underscoring.)

On March 22, 2006, the court entered a final order in Accredited's favor on its motions for intervention and to vacate the entry of default and judgment. The court found Accredited's motion presented "adequate grounds for setting aside the default and the amended default judgment" and stated Accredited's "request to subordinate [the] equitable mortgage may be addressed in [Accredited's] complaint-in-intervention."

On April 4, 2006, Nacif moved for reconsideration of the order. Nacif argued primarily that Accredited's intervention in the action should not affect the entry of default or the default judgment as to White-Sorenson. Nacif additionally presented evidence showing the Sorenson property was sold on February 23, 2006, and that Accredited was put on actual notice of the foreclosure sale more than 90 days before the actual sale. The evidence showed a third party purchased the property at a foreclosure sale for $222,524, and these funds were paid to Nacif pursuant to the writ of execution on the judgment.

In opposition, Accredited argued that Nacif did not submit any new facts, but merely asserted legal arguments that she had raised or could have raised in her original opposition. Accredited also stated it had now changed its position and it intended to align itself with White-Sorenson and litigate the underlying issues of the White-Sorenson/Nacif dispute.

The court denied the reconsideration motion.

The parties thereafter entered into a stipulation that Accredited would dismiss its second lawsuit against Nacif (which was pending before Judge Denton) because all of the claims asserted in this second lawsuit were now contained in Accredited's complaint-in-intervention.

Nacif then filed her notice of appeal. Nacif appeals only from the portion of the court order vacating the default and default judgment, and does not challenge the court's order granting Accredited's motion to intervene in the action.

DISCUSSION

I. Timeliness of the Appeal

On its own motion, this court raised the issue of the timeliness of the appeal, and requested the parties to file briefs on the issue. On our further consideration of the issue, we conclude the appeal was timely.

Generally, the time for filing a notice of appeal from a judgment is the earliest of: (1) 60 days after the party or clerk mails a document entitled "Notice of Entry" of judgment or a file-stamped copy of the judgment, or (2) 180 days after entry of judgment. (Cal. Rules of Court, rule 8.104.)^[4] The court's order was entered on March 22, 2006, and the court clerk mailed a file stamped copy of the order to the parties on that same date. Nacif filed her notice of appeal on June 29, 2006. Thus, the notice of appealfiled more than 60 days after the clerk mailed the noticewas untimely, unless the time was extended by another statutory provision. (Rule 8.104(a)(2).)

To establish a statutory extension, Nacif relies on rule 8.108(d), which governs the time for filing an appeal when a party has moved for reconsideration under section 1008. Under this rule, "If any party serves and files a valid motion to reconsider an appealable order under . . . section 1008, subdivision (a), the time to appeal from that order is extended for all parties until the earliest of: [] (1) 30 days after the superior court clerk mails, or a party serves, an order denying the motion or a notice of entry of that order; [] (2) 90 days after the first motion to reconsider is filed; or [] (3) 180 days after entry of the appealable order."

In this case, Accredited served the order denying the reconsideration motion by mailing it to Nacif's counsel on May 30, 2006. Thus, Nacif's appeal, filed on June 29, 2006 was timely, under rule 8.108(d)(1).

We reject Accredited's argument that rule 8.108 is inapplicable because Nacif did not timely file her reconsideration motion. A party must file a reconsideration motion "within 10 days" after the party is served with written notice of entry of the order. ( 1008, subd. (a).) Where, as here, the service is by mail, the time is extended five days. ( 1013, subd. (a); Forrest v. Department of Corporations (2007) 150 Cal.App.4th 183, 203; see also Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2007) 9:326.1.) In this case, the superior court clerk mailed a copy of the order granting Accredited's motions on March 22, 2006. Nacif filed her motion 13 days later, on April 4. Thus, Nacif's reconsideration motion was timely.

We also reject Accredited's contention that rule 8.108 is inapplicable because Nacif's motion was not supported by "new or different facts or circumstances." Accredited relies on the language in the rule that the extension applies only when a party serves and files a "valid" motion to reconsider. (Rule 8.108.) However, as used in this section, "the word 'valid' . . . does not mean that the motion . . . must . . . be substantively meritorious. . . .  [A] timely motion to reconsider . . . extends the time to appeal from an appealable order for which reconsideration was sought even if the trial court ultimately determines the motion was not 'based upon new or different facts, circumstances, or law . . . .' " (Advisory Com. com., 23 pt. 2 West's Ann. Codes, Court Rules (2006 ed.) foll. rule 8.108, p. 488.)

II. Merits of Appeal

In bringing this appeal, Nacif does not challenge Accredited's fundamental right to intervene in this action to litigate the issue of the relative priorities of Nacif's equitable mortgage and Accredited's trust deeds. But she argues that we should reverse the court's order to the extent it vacated the default and default judgment because: (1) the court did not issue a statement of decision; (2) the motions to vacate the default and default judgment were untimely; and (3) there was no valid basis to reverse the default judgment and entry of default against White-Sorenson and Grupo.

We reject the first two contentions, and conclude the court properly vacated the default judgment against White-Sorenson and Grupo. But we determine the court erred in reversing the entry of default against White-Sorenson and Grupo. Even when construing the record in the light most favorable to respondents, there was no legal or factual basis to vacate the entry of default as to these parties.

A. Statement of Decision

Nacif contends the court committed reversible error by refusing to issue a statement of decision. This contention fails for several reasons.

First, Nacif did not make an adequate request for a statement of decision. Nacif relies on her counsel's inquiry at the conclusion of the hearing on her reconsideration motion as to whether he could have some "clarification on what exactly the Court's ruling is on . . . both motions, both hearings?" This form of a vague, nonspecific request is insufficient to compel a formal statement of decision by the court. (See  632; Conservatorship of Hume (2006) 140 Cal.App.4th 1385, 1393; City of Coachella v. Riverside County Airport Land Use Com. (1989) 210 Cal.App.3d 1277, 1292-1293.)

Additionally, even if Nacif's counsel's inquiry could be construed as a request for a statement of decision, the request was untimely. If the matter is concluded within one day, a request for a statement of decision must be made before submission of the matter for decision. ( 632.) The request was made long after the court ruled on Accredited's motions, and after Nacif had submitted her reconsideration motion for decision.

Moreover, even if the request had been specific and timely, the court would not have erred in refusing to provide a statement of decision. Section 632 requires the trial court to issue a statement of decision only "upon the trial of a question of fact by the court . . . ." Where as here, a court rules on a motion, a statement of decision is "neither required nor available . . . ." (Lavine v. Hospital of the Good Samaritan (1985) 169 Cal.App.3d 1019, 1026; accord Maria P. v. Riles (1987) 43 Cal.3d 1281, 1294; Gruendl v. Oewel Partnership, Inc. (1997) 55 Cal.App.4th 654, 660.) "This is true even if the motion involves extensive evidentiary hearings and the resulting order is appealable." (Gruendl, supra, 55 Cal.App.4th at p. 660.)

A "very limited exception" to this rule applies if the motion "was in the nature of a 'trial' of fact issues." (City of San Diego v. Rancho Penasquitos Partnership (2003) 105 Cal.App.4th 1013, 1044.) This exception is inapplicable here because the court's rulings concerned primarily legal issues relating to the existence of statutory and equitable grounds for permitting the intervention and vacating the default and default judgment.

B. Timeliness of Accredited's Motion to Set Aside Default and Default Judgment

Nacif next contends the court erred in vacating the judgment because Accredited's motion to vacate the judgment was untimely. We disagree.

In asserting that Accredited's motion to vacate was untimely, Nacif focuses on the statutory deadline contained in section 663a, and states that Accredited's motion, filed more than 180 days after the judgment, was beyond this statutory deadline. However, we need not reach this issue because Accredited also brought the motion on equitable grounds.

An order vacating a judgment under equitable principles is proper if the party adversely affected was never provided the opportunity to litigate the claims underlying the judgment. (See Rappleyea v. Campbell (1994) 8 Cal.4th 975, 981-982; Olivera v. Grace (1942) 19 Cal.2d 570, 575; In re Marriage of Baltins (1989) 212 Cal.App.3d 66, 80.) Under these circumstances, the judgment is void and cannot stand. (Ibid.) A third person (who was not a party in the original litigation) may bring the motion and obtain equitable relief if his or her interests were " 'adversely affected' " by the judgment. (Villarruel v. Arreola (1977) 66 Cal.App.3d 309, 318; accord Swallow v. Tungsten Products Co. (1928) 205 Cal. 207, 219; People ex rel. Public Util. Com. v. Ryerson (1966) 241 Cal.App.2d 115, 120; Lieberman v. Aetna Ins. Co. (1967) 249 Cal.App.2d 515, 524; see 8 Witkin, Cal. Procedure (4th ed. 1997) Attack on Judgment in Trial Court,  218.)

There is no strict deadline for bringing a motion for equitable relief from a void judgment; a motion will be considered untimely only if there was unreasonable delay in seeking relief. (Rappleyeav. Campbell, supra, 8 Cal.4th at p. 980; see Falahati v. Kondo (2005) 127 Cal.App.4th 823, 833-834.) Here the court had a sufficient factual basis to conclude there was no unreasonable delay. Accredited denied receiving timely notice of the judgment or of the sale of the property, and the court had a legitimate basis to credit this evidence. Because Accredited was not a party in the case, it had no ability to protect itself against the judgment. To the extent Accredited could have filed its motion earlier, this factor may be relevant in determining the appropriate remedies to which Accredited may be entitled if it proves its case on remand.^[5]

C. Court's Orders to Vacate Judgment and Entry of Default

Nacif next contends the court erred in vacating the judgment and the entry of default as to White-Sorenson and Grupo.Accredited counters that the necessary effect of the court's granting its motion to intervene was to require the court to also vacate the default as to these parties.

We agree with Accredited's argument with respect to the default judgment. Because the judgment against White-Sorenson (the declaration of a debt owed and an imposition of an equitable mortgage with priority over all other liens) directly affected Accredited's rights, the court was necessarily required to vacate the judgment as to White-Sorenson and Grupo to determine the appropriate remedies (if any) as between Accredited and Nacif and to properly resolve the rights of the parties in a consistent manner.

But we disagree with Accredited's argument as it affects the entry of default.

A party is in default if he was served with the complaint or otherwise made a general appearance, and then failed to timely answer the complaint. ( 585.) Upon a plaintiff's application setting forth these facts, the clerk must enter the defendant's default. ( 585, subd. (a).) "Entry of default by the court clerk is a statutory prerequisite [to a] default judgment . . . ." (People v. One 1986 Toyota Pickup (1995) 31 Cal.App.4th 254, 259.) Once a default is entered, the plaintiff presents evidence in support of the allegations of its complaint at a "prove-up" hearing, and the court thereafter enters a default judgment based on that evidence. ( 585.)

Severe consequences attach to the entry of a default. "A default cuts off the defendant from making any further opposition or objection to the relief which plaintiff's complaint shows he is entitled to demand. A defendant against whom a default is entered 'is out of court and is not entitled to take any further steps in the cause affecting plaintiff's right of action.' [Citation.]" (Title Insurance etc. Co. v. King etc. Co. (1912) 162 Cal. 44, 46; see In re Marriage of Askmo (2000) 85 Cal.App.4th 1032, 1037; People v. One 1986 Toyota Pickup, supra, 31 Cal.App.4th at p. 259.) Unless the default is set aside in a proper proceeding, the party may not thereafter file pleadings, move for a new trial, or demand notice of subsequent proceedings.

Under these rules, an entry of default has independent significance and is not void merely because the default judgment is later vacated. "Vacating [a] default judgment has no necessary effect on the underlying default and simply returns the defendant to the default status quo ante. (See, e.g., Howard Greer Custom Originals v. Capritti (1950) 35 Cal.2d 886, 888-889.)" (Ostling v. Loring (1994) 27 Cal.App.4th 1731, 1743.) Thus, if a default judgment is vacated, the entry of default remains unless the basis for vacating the default judgment applies to the entry of default or if there is an independent basis for vacating the default. Absent a specific basis to vacate the entry of default, "[p]reserving the default advances the public interest in the avoidance of unwarranted contested trials of matters in which a default has lawfully been taken after the time to set aside the default has passed." (Id. at p. 1747.)

In this case, the basis for vacating the default judgment was the fact that a third party's rights were affected by the judgment and the court was required to resolve the third party's claims before it could determine the proper remedy against the defaulting parties. This ground for vacating the default judgment does not apply to the entry of default. The fact that White-Sorenson and Grupo did not answer the complaint had no relationship to Accredited's rights to litigate the priority issues.

Apparently recognizing these principles, Accredited attempts to assert several alternate grounds for vacating the entry of default against White-Sorenson. First, Accredited contends that White-Sorenson was never served with the first amended complaint and therefore the entry of default was void. However, the trial court signed an order expressly approving the entry of default and made an express finding that White-Sorenson had made a general appearance in the action. "A general appearance by a party is equivalent to personal service of summons on such party." ( 410.50, subd. (a).) "A general appearance operates as a consent to jurisdiction of the person, dispensing with the requirement of service of process, and curing defects in service." (2 Witkin, Cal. Procedure (4th ed. 1996) Jurisdiction, 190, p. 756.) Thus, "[a] general appearance can make up for a complete failure to serve a summons." (Fireman's Fund Ins. Co. v. Sparks Construction, Inc. (2004) 114 Cal.App.4th 1135, 1145.)

Accredited's challenges to the court's findings of a general appearance are not well taken. First, Accredited has no standing to assert arguments on White-Sorenson's behalf on this issue. White-Sorenson could have timely brought a section 473 motion or sought equitable relief if he believed his counsel never made a general appearance on his behalf. By failing to do so, we must assume there was no basis for the motion.

Additionally, Accredited's arguments are unsupported by the record. Accredited claims that White-Sorenson "only appeared through counsel at ex parte hearings to defend the settlement and status conferences after the action was reinstated until his attorney was granted leave to withdraw." However, the undisputed facts show White-Sorenson's counsel did more than merely appear at hearings seeking ex parte relief. He appeared at hearings during which the litigation was discussed, filed a document affirmatively stating that his clients had been properly served, wrote a letter expressly agreeing to accept service of the first amended complaint on his client's behalf, and stated he intended to bring a motion for judgment pursuant to the settlement agreement. By agreeing to accept service and participating in the litigation, defense counsel recognized the court's general jurisdiction, and did not make a limited special appearance. (See Factor Health Management v. Superior Court (2005) 132 Cal.App.4th 246.)

Accredited's reliance on Nam Tai Electronics, Inc. v. Titzer (2001) 93 Cal.App.4th 1301 is misplaced. In that case, the defense counsel appeared at the status conference to inform the court that his clients had been served but that he was moving to quash the service, and then responded to the court's additional inquires regarding its intentions if jurisdiction was ultimately established. (Id. at p. 1308.) Here, there are no facts showing defense counsel made any statement express or implied that he was challenging the fact that the court had jurisdiction over his clients. To the contrary, the undisputed facts show that counsel made clear to the court that his clients had accepted the court's jurisdiction over them.

Although we are required to construe the record in the light most favorable to the court's order granting Accredited's motion to vacate, the trial court could not properly reach conclusions that are not supported by the factual record. After reviewing the file which contained Nacif's counsel's declaration stating the basis for defendants' general appearance in the matter, the trial court signed an order stating that it "approves of the entry of default." Thereafter, in its judgment, the court reiterated its findings that White-Sorenson had made a general appearance in the action. There was no evidence submitted on Accredited's motion that supports a contrary conclusion.

Accredited's additional contentions attempting to challenge the entry of default against White-Sorenson are unavailing. Accredited argues that because the first amended complaint was actually a "supplemental complaint," it was a "nullity" because Nacif did not receive specific permission to file it. This argument is unpersuasive. It is undisputed that all parties were acting on the amended pleading as if it were the operative complaint. Further, there is no question on the record before us that the court and all parties understood Nacif would be filing this amended (or supplemental) pleading and that the court approved of this action.

We also find unavailing Accredited's arguments that the court's order vacating the default was proper because Nacif committed fraud in refusing to adhere to the terms of her settlement with White-Sorenson. To vacate a prior judgment on the basis of fraud, the fraud must be extrinsic, that is, caused by circumstances that kept the party in ignorance of a proceeding, depriving the party of a fair adversary hearing. (Sporn v. Home Depot USA, Inc. (2005) 126 Cal.App.4th 1294, 1300; In re Marriage of Modnick (1983) 33 Cal.3d 897, 905.) Thus, even assuming Nacif's allegations regarding the settlement agreement were false, these allegations did not prevent White-Sorenson and/or Grupo from rebutting the alleged facts and presenting a defense in court. It was White-Sorenson's and Grupo's failure to answer the complaint, and not the nature of Nacif's allegations in her first amended complaint, that resulted in the entry of default.

We also find unpersuasive Accredited's emphasis on the policy favoring a trial on the merits. First, Accredited has no meaningful basis to assert this policy on behalf of a party who did not appear, and made no effort to seek relief from the default and default judgment. Moreover, although defaults are carefully scrutinized, the rules do not relieve a party from meeting its burden to show a proper basis for vacating the default. Where, as here, the time has passed for a section 473 motion, a court has the authority to vacate an entry of default on equitable grounds only if it is void on its face. There are no facts showing the entry of default was void on its face.^[6]

DISPOSITION

We affirm the court's order vacating the default judgment as to White-Sorenson and Grupo, and permitting Accredited to intervene in the action. We reverse the court's order vacating the entry of default as to White-Sorenson and Grupo. The parties to bear their own costs on appeal.

HALLER, Acting P. J.

WE CONCUR:

McINTYRE, J.

AARON, J.

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^[1] All further statutory references are to the Code of Civil Procedure.

^[2] In summarizing the facts and procedure, we include only those facts relevant to the resolution of this appeal. Because the facts concerning the dispute between Accredited and Nacif have not yet been resolved, we discuss those facts only to the extent they are necessary to an understanding of the appellate issues before us.

^[3] Nacif also named several other business entities, but later dismissed the action as to these defendants.

^[4] All further rule references are to the California Rules of Court.

^[5] In this regard, we decline to speculate on the rights of the parties in light of the sale of the Sorenson property.

^[6] Given our conclusions in this case, we do not reach the substantive issues raised in the parties' appellate briefs, including whether Nacif's lis pendens was a proper basis to subordinate Accredited's trust deeds. Because the parties have yet to litigate these issues before the trial court and it may depend on the resolution of disputed facts, it would be premature for us to address these issues here. Additionally, the court denies Nacif's request to augment the record with the first amended and supplemental complaint-in-intervention filed by Accredited and White-Sorenson on May 24, 2006. This pleading is not relevant to the issues on appeal.