Array Connector Corp. v. Avia-Dynamics Corp.

Filed 10/17/06 Array Connector Corp. v. Avia-Dynamics Corp. CA2/6

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

Array Connector Corporation, a Florida Corporation (Array), appeals from post-judgment orders denying two ex parte motions to set aside a default and default judgment. (Code Civ. Proc., § 473, subds. (b) & (d).)^[1] We reverse the clerk's default judgment because it is void. We direct the trial court to vacate the $136,706 default judgment. (§§ 473, subd. (d); 585, subd. (a).) On the other hand, the order denying Array's motion to set aside the default is affirmed.

Procedural History

On June 30, 2004, Avia-Dynamics Corp. (Avia) sued Array for breach of contract, breach of an implied covenant of good faith, and trade libel. Array was served with the summons and complaint on July 6, 2004.

Array's Florida Attorney, David B. Haber, was granted a 15-day extension to respond to the complaint. On September 8, 2004, Array requested and was granted a second 15-day extension.

Hearing nothing further from Array, Avia entered a default on October 12, 2004. The court clerk entered a $136,706 default judgment on October 28, 2004.

On November 5, 2004, Attorney Haber filed an ex parte motion to appear pro hac vice and set aside the default and default judgment. The motion was defective and taken off calendar.

After Avia registered the judgment in Florida, Array retained a California attorney, William W. Blackwell. Avia offered to set aside the default and default judgment if Array paid attorney fees and costs totaling $7,854.99. Attorney Blackwell said he would to talk to his client but did not return phone calls.

On April 26, 2006, Array filed a motion to set aside the default and default judgment based on attorney fault. (§ 473, subd, (b).) The hearing was calendared for May 27, 2005, and continued to June 14, 2005. The day before the hearing, Array agreed to pay $7,854.99 attorney fees and costs if Avia vacated the default.

Attorney Blackwell appeared June 14, 2005, and was granted a continuance to July 14, 2005 so his client, Array, could finalize payment of the fees and costs. On July 14, 2005, Blackwell requested another continuance. The trial court, over Avia's objection, continued the hearing to July 21, 2005.

Attorney Blackwell told Avia's attorney that he was mailing a check and faxed a copy of the check.

At the July 21, 2005 hearing, the trial court stated that it had received an e-mail from Attorney Blackwell that the matter had been resolved. Avia's attorney advised the court that he had not yet received the check for fees and costs. The trial court denied Array's motion to set aside the default and default judgment. No appeal was taken from the July 21, 2005 order.

Array filed two ex parte motions for relief. They were denied on October 13, 2005 and November 1, 2005.

July 21, 2005 Order

Array argues that the trial court erred in denying the motion to vacate the default and default judgment on July 21, 2005. We are precluded from reviewing the order because the 60 day time period to appeal from that order has expired. (Code Civ. Proc., § 904.1, subd. (a)(2); Generale Bank Nederland v. Eyes of the Beholder Ltd. (1998) 61 Cal.App.4th 1384, 1394 [order denying motion to vacate default judgment appealable].) Although California Rules of court rule 3(d) "extends the time to appeal where appellant has filed a valid motion to reconsider," Array's subsequent motions were untimely and do not extend the appeal period. (See e.g., Conservatorship of Coombs (1998) 67 Cal.App.4th 1395, 1398-1401; Crotty v. Trader (1996) 50 Cal.App.4th 765, 770-771.)

Attorney Neglect or Mistake

Array argues that the trial court erred in not setting aside the default and default judgment based on attorney neglect or mistake. (§ 473, subd. (b).) The six-month time period to seek relief began to run on October 28, 2004, the date the default judgment were entered. (Sugasawara v. Newland (1994) 27 Cal.App.4th 294, 296-297.) Array's ex parte motions were filed almost a year later (October 13, 2005 and October 25, 2005) and are time barred. (Weil & Brown, Cal. Practice Guide, Civil Procedure Before Trial (The Rutter Group 2006) 5:365, p. 5-95; Arambula v. Union Carbide Corp. (2005) 128 Cal.App.4th 333, 344-345.)

The trial court denied the ex parte motions and found that good cause was not shown under section 473 to set aside the default.^[2] It was right for the wrong reason. "The legal basis for that ruling was incorrect, because more than six months had elapsed from the entry of default [judgment], and hence relief under section 473 was unavailable. [Citation.] But we cannot undo the effect of the ruling or the ensuing judgment on the ground that the court may have misapplied section 473 as long as any other correct legal reason exists to sustain either act. [Citation.]" (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 980-981.)

Extrinsic Fraud or Mistake

Array argues that the trial court abused its discretion in not vacating the default judgment based on extrinsic fraud or mistake. (See e.g., Gibble v. Car-Lene Research, Inc.(1998) 67 Cal.App.4th 295, 314.) Where a trial court is asked to exercise its equitable power to set aside a default judgment due to extrinsic fraud or extrinsic mistake, the statutory time limits do not apply. (Rappleyea v. Campbell, supra, 8 Cal.4th at p. 981.) Equitable relief, however, may be given only in exceptional circumstances. (Ibid.) "To the extent that the court's equity power to grant relief differs from its power under section 473, the equity power must be considered narrower, not wider. [Citation.]" (Weitz v. Yankosky (1966) 63 Cal.2d 849, 857.)

Extrinsic fraud arises where a party has been fraudulently prevented from presenting his or her claim or defense or fraudulently prevented from participating in the proceeding. (Sporn v. Home Depot USA, Inc. (2005) 126 Cal.App.4th 1294, 1300.) That did not happen here.

Extrinsic mistake occurs where the excusable neglect of a party results in an unjust judgment without a fair adversary hearing. (Heyman v. Franchise Mortgage Acceptance Corp. (2003) 107 Cal.App.4th 921, 926.) The mistake causes the trial court to do what it never intended. (Rappleyea v. Campbell, supra, 8 Cal.4th at p. 981.) " 'To set aside a judgment based upon extrinsic mistake one must satisfy three elements. First, the defaulted party must demonstrate that it has a meritorious case. Second[], the party seeking to set aside the default must articulate a satisfactory excuse for not presenting a defense to the original action. Last[], the moving party must demonstrate diligence in seeking to set aside the default once . . . discovered.' [Citation.]" (Id., at p. 982.)

Array failed to satisfy all three prongs. The default and default judgment were entered after Array was granted two time extensions and failed to respond to the complaint. Array's ex parte motions and broken promise to pay fees and costs was not an extrinsic mistake. (See fn.2, ante.)

Where the party's attorney knows the facts but mistakenly interprets their legal significance, the mistake is instrinsic and does not warrant equitable relief. (Janetsky v. Azvis (1986) 176 Cal.App.3d 799, 811 [attorney mistake is not ground for relief based on extrinsic fraud]; Estate of Whelan (1969) 1 Cal.App.3d 517, 519-520.) Although the policy of the law is to favor a hearing on the merits of a case, courts are not required to set aside default judgments for defendants who flagrantly ignore the responsibility to present a defense. (Stiles v. Wallis (1983) 147 Cal.App.3d 1143, 1148.)

Void Judgment

Array moved to set aside the default judgment on the alternative ground that the court clerk exceeded its authority in entering a default judgment for a damage amount. (§ 473, subd. (d).) The trial court impliedly denied the motion.

Section 585, subdivision (a) vests the superior court clerk with the authority to enter a default judgment in "an action arising upon contract . . . for the recovery of money or damages only . . . ." "[S]ubdivision [a] of section 585 of the Code of Civil Procedure has been narrowly construed to authorize the clerk to enter judgment only where the contract provides for some definite, fixed amount of damages or where such may be ascertained by computation made by the clerk. If evidence must be taken to establish the amount due under the contract, the clerk may not render judgment. [Citations.]" (Ford v. Superior Court (1973) 34 Cal.App.3d 338, 342; see also Lynch v. Bencini (1941) 17 Cal.2d 521, 525-526; 6 Witkin, Cal. Procedure, Proceedings Without Trial (4th ed. 1997) § 155, p. 571.)

Here the complaint states that Array agreed to sell 10,0000 relay sockets for $13 a piece and warranted that the relay sockets would be "OF MIL-SPEC QUALITY." The complaint alleges that Avia paid $113,672, that it received 9,300 defective relay sockets, and that Array told credit agencies and businesses that Avia was "delinquent in payment of its invoices."

The causes of action for trade libel and breach of an implied covenant of good faith seek damages for an unspecified amount. The first cause of action for breach of contract sounds in rescission and prays for $113,672 damages.^[3] An action to rescind a contract of sale is not an action on a contract for the recovery of money within the meaning of section 585, subdivision (a). (Farrar v. Steenbergh (1916) 173 Cal. 94, 97; Lynch v. Bencini, supra, 17 Cal.2d at pp. 525-526.) Where, as here, "the determination of damages involves the exercise of discretion or the taking of evidence, the clerk has no power to enter the judgment. [Citation.] . . . Such a judgment may be set aside independently of Code of Civil Procedure section 473, with no fixed limit on the time within which it may be made. [Citations]." (Brown v. Superior Court (1966) 242 Cal.App.2d 519, 524; 6 Witkin, Cal. Procedure, Proceedings Without Trial, supra, § 141, p. 557-558.)

We reverse with directions to vacate the October 28, 2004 default judgment for $136,706. The order denying the motion to set aside the default is affirmed. (See e.g., Jonson v. Weinstein (1967) 249 Cal.App.2d 954, 958 [default judgment may be set aside without vitiating defendant's default]; Devlin v. Kearny Mesa AMC/Jeep/Renault, Inc. (1984) 155 Cal.App.3d 381, 385-386 [same].) The parties shall bear their own costs on appeal.

NOT TO BE PUBLISHED.

YEGAN, J.

We concur:

GILBERT, P.J.

PERREN, J.

Henry J. Walsh, Judge

Superior Court County of Ventura

______________________________

Rick D. Navarrette, T. Matthew Hansen; Adorno Yoss Alvarado & Smith, for Appellant.

John R. DaCorsi, Jason L. Rumsey; DaCorsi & Placencio, for Respondent.

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

^[2] The November 1, 2005 minute order states in pertinent part: "This matter has been before this court on virtually the same set of circumstances on several occasions. In an effort to avoid a default circumstance the court continued the matter twice to allow for events to occur which would cure the default. . . . The facts here involve multiple and continuous circumstances of neglect on the part of both the defendant and its attorneys. It is the repeated nature [of] that conduct, which transforms this case into a case of inexcusable neglect, and one where the claim of attorney fault is beyond what, is contemplated in the statute." (Emphasis Added.)

^[3] Avia argues that damages were based on simple multiplication: 9,300 relay sockets x $13/each = $120,900. But the clerk entered judgment for $113,672, the amount Avia allegedly paid Array. The complaint states: "Avia has also incurred consequential and incidental damages in a presently unknown, but ascertainable amount."