Filed 3/2/18 Loving-Spears v. Castro CA4/1
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COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA


RACHEL LOVING-SPEARS,

Plaintiff and Respondent,

v.

FREDY JACIEL MORENO CASTRO,

Defendant and Appellant.
D073006



(Super. Ct. No. CIVDS1403592)


APPEAL from a judgment of the Superior Court of San Bernardino County, Wilfred J. Schneider, Jr. and Pamela P. King, Judges. Affirmed.
Colman Law Group, Jonathan H. Colman and Brad A. Byszewski for Defendant and Appellant.
Law Office of David W. Allor and David W. Allor for Plaintiff and Respondent.
More than six months after defendant Fredy Jaciel Moreno Castro's default was taken in this personal injury action, he moved for relief from the default under Code of Civil Procedure section 473, subdivision (b). The trial court denied his motion, finding it had no power to relieve the default on the grounds of excusable neglect and that equitable relief from the default was not available because Castro had not shown any extrinsic fraud. Thereafter, the trial court denied Castro's motion for reconsideration, conducted a prove-up hearing and entered judgment in Loving-Spears's favor in the amount of $564,000.
On appeal, Castro argues: the trial court had the power under section 473, subdivision (a)(1) to relieve him from the default on the grounds of his excusable neglect; that he should have been provided with equitable relief from the default; and that Loving-Spears's counsel had an ethical obligation to advise employees of Castro's insurer before taking Castro's default. We are not persuaded by any of these arguments and affirm.
FACTUAL AND PROCEDURAL BACKGROUND
1. The Accident
On April 3, 2012, the car Castro was driving was stopped on the left shoulder of Interstate 10 with a flat tire. Loving-Spears was traveling in the far left traffic lane of the freeway and according to Loving-Spears, Castro suddenly moved his car into the left traffic lane in an apparent attempt to get his car to the right shoulder of the freeway. Loving-Spears did not have time to avoid hitting Castro's car. As a result of the accident Loving-Spears sustained traumatic brain injury and herniation of discs at her cervical and lumbar spine. Loving-Spears's brain injury in turn has caused headaches, difficulty concentrating, memory loss, panic and anxiety attacks, depression and insomnia. Her herniated discs are likely to require fusion surgery. Loving-Spears testified these injuries have left her in constant pain and discomfort and have severely damaged her quality of life.
2. Settlement Negotiations
Loving-Spears retained counsel, who in turn contacted Castro's insurer and made a policy limits demand on the insurer. The policy which covered the car Castro was driving provided the statutory minimum of $15,000 in liability insurance per injured person. The initial adjustor handling the claim offered Loving-Spears $9,000 on the claim and in light of the severity of her injuries, Loving-Spears rejected the offer.
Shortly before the one-year statute of limitations was due to expire, Loving-Spears made a second policy limits demand to a second adjustor who had been assigned to her claim; the offer stated that if the insurer did not accept Loving-Spears's demand, she would serve Castro with a complaint. The insurer did not accept the demand.
3. Trial Court Proceedings
On March 28, 2014, Loving-Spears filed a complaint against Castro. Castro was served on May 25, 2014. On July 31, 2014, the clerk of the trial court entered Castro's default. Almost eight months later, on March 27, 2015, Castro filed a motion for relief from the default, which the trial court denied. Castro made a second motion for relief from the default, which the trial court treated as an insufficient motion for reconsideration and denied.
The trial court conducted a prove-up hearing on May 13, 2016. After hearing testimony from a neurosurgeon, Loving-Spears, and her husband, as well as considering extensive medical records and bills, the court found Loving-Spears had suffered $564,593 in damages and entered judgment in that amount, plus costs of $582.80, in her favor.
DISCUSSION
I
We begin with the well-established principles which support the trial court's order denying Castro relief from his default. Section 473, subdivision (b) provides: "The court may, upon terms as may be just, relieve a party or his or her legal representative from a judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect. Application for this relief shall be accompanied by a copy of the answer or other pleading proposed to be filed therein . . . and shall be made within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken."
A default and default judgment entered against a party through that party's "mistake, inadvertence, surprise, or excusable neglect" may be set aside under the discretionary provision of section 473, subdivision (b), but only if the motion is made within six months after entry of the default. (Manson, Iver & York v. Black (2009) 176 Cal.App.4th 36, 42.) Castro moved to set aside the default under section 473, subdivision (b) almost eight months after its entry, with the result that the trial court had no power to give him statutory relief. This is so, irrespective of whether Castro was able to demonstrate mistake, inadvertence, surprise or excusable neglect because the six-month period is jurisdictional. (Manson, Iver & York v. Black, at p. 42; Arambula v. Union Carbide Corp. (2005) 128 Cal.App.4th 333, 344–345 (Arambula) [court has no authority to grant relief when a party fails to comply with statute's time limits].) As the court in Arambula stated: "Specifically, the six-month limit under section 473, subdivision (b) protects the finality of judgments, as does the time limit to file a notice of intention to move for a new trial or to set aside a judgment under section 663. The six-month limit also provides repose to litigants and a more certain end to litigation, just as the time limit to file a notice of intention to move for a new trial or to set aside a judgment under section 663 provides repose to litigants and a statute of limitations provides repose to potential litigants. The six-month limit also ensures that a motion for relief will be made promptly when memories are fresh, just as statutes of limitations and, to an even greater degree, the short time limits under sections 659 and 663a ensure that the proceedings occur promptly. These important interests justify the conclusion that if the Legislature had intended to allow an exception to the six-month limit, it would have expressed that intention in the statute, and that the six-month limit must be strictly enforced." (Id. at
p. 345.)
In light of the very well-established principle that trial courts have no power to relieve a party from a default on the basis of mistake, inadvertence or neglect when application for such relief is made after the six-month period set forth in section 473, subdivision (b) has expired, we are unable to accept Castro's contention such relief is nonetheless available at anytime under section 473, subdivision (a)(1). By its terms, section 473, subdivision (a)(1) gives trial court's the power "upon any terms as may be just" to permit amendment to pleadings and "allow an answer to be made after the time limited by this code." Although this provision, as well as the power to provide relief from a "judgment, order or other proceeding" for mistake, inadvertence of neglect, have been in our law since 1851 (see Stats. 1851, ch. 5, § 68, p. 60), Castro cites no case which suggests that the relief provided by section 473, subdivision (a)(1) may be employed as a means of obtaining discretionary relief from a default. The six-month limit on discretionary relief from a judgment, order or other proceeding was itself added in 1880. (Code Am., 1880, ch. 14, § 3, p. 2.) Plainly, in adding the six-month limit on the power to relieve a party from a judgment, order, or other proceeding in 1880, the Legislature recognized a clear distinction between relief from acts by a court or clerk and relief from a party's pleadings and statutory time limits related to those pleadings, for which no specific time limit was added. Given this statutory history, we are unwilling at this juncture to materially expand the discretionary power to provide relief from a default and effectively repeal the now venerable six-month limit on that power.
II
Where a judgment, order or other proceeding, including a default was taken as a result of extrinsic fraud or mistake, a trial court has the equitable power to relieve the party from the judgment, order or default at any time. (Sporn v. Home Depot USA, Inc. (2005) 126 Cal.App.4th 1294, 1300.) However, this power is limited to instances where the extrinsic fraud or mistake has prevented the defendant, from no real fault of his or her own, from participating in litigation in a timely manner. (Ibid.) " 'Extrinsic fraud occurs when a party is deprived of the opportunity to present his claim or defense to the court; where he was kept ignorant or, other than from his own negligence, fraudulently prevented from fully participating in the proceeding. [Citation.] Examples of extrinsic fraud are: . . . failure to give notice of the action to the other party, and convincing the other party not to obtain counsel because the matter will not proceed (and then it does proceed). [Citation.] The essence of extrinsic fraud is one party's preventing the other from having his day in court.' [Citations.] Extrinsic fraud only arises when one party has in some way fraudulently been prevented from presenting his or her claim or defense. [Citations.]" (Ibid.) " 'Extrinsic mistake involves the excusable neglect of a party. [Citation.] When this neglect results in an unjust judgment, without a fair adversary hearing, and the basis for equitable relief is present, this is extrinsic mistake. [Citation.] Reliance on an attorney who becomes incapacitated, or incompetence of the party without appointment of a guardian ad litem, are examples of extrinsic mistake. [Citation.]' " (Heyman v. Franchise Mortgage Acceptance Corp. (2003) 107 Cal.App.4th 921, 926; accord Moghaddam v. Bone (2006) 142 Cal.App.4th 283.)
Here, the trial court had no basis upon which to employ this equitable power because Castro offered no declaration or affidavit of his own which would establish that some extrinsic fraud or mistake prevented him from either answering the complaint before his default was entered or seeking timely relief under section 473, subdivision (b). In this regard, Castro's reliance on the fact that his insurer, although aware of Loving-Spears's claims, was not later informed that a complaint had been filed, is unavailing. Nothing in the prelitigation correspondence between Loving-Spears's counsel and the insurance adjustors, who did not accept her policy limits demand, suggested that Loving-Spears would provide Castro or the adjustors with any notice other than service of a complaint on Castro. In his final correspondence with the insurer, Loving-Spears's counsel advised the insurer that unless her policy limits demand was accepted within 10 days, he would file a lawsuit which would seek damages without regard to the limits of Castro's policy. The record shows that thereafter Castro was properly served with the complaint. No evidence has been offered with respect to what, if any, action Castro took following service of the complaint; thus, there is no evidence which would show that he was unfairly deprived of an opportunity to respond to Loving-Spears's complaint.
III
Finally, we reject Castro's suggestion that in filing a complaint on Loving-Spears's behalf and taking Castro's default without also giving his insurer separate notice a complaint had been filed, Loving-Spears's counsel somehow breached an ethical obligation to either Castro or his insurer.
We recognize that where plaintiff's counsel is aware a defendant is represented by an attorney, plaintiff's counsel should, as a matter of professional courtesy, alert defendant's counsel of the need to respond to a complaint before taking the defendant's default. (See Fasuyi v. Permatex, Inc. (2008) 167 Cal.App.4th 681, 701–703 (Fasuyi).) Although the obligation to give such notice is not a legal obligation, the absence of such courtesy may have a legal consequence when a defendant is seeking relief under section 473, subdivision (b) and a court is called upon to weigh the nature of the defendant's negligence in failing to respond against any prejudice the plaintiff may suffer by relieving a default. (Fasuyi, at pp. 701–703.) In Fasuyi, the lack of courtesy was relevant in disposing of the defendant's section 473, subdivision (b) motion because there was no showing the plaintiff would suffer any prejudice other than a delay in proceedings. (Fasuyi, at pp. 701–703.)
Here, of course, Castro's insurer and its adjustors never purported to be Castro's attorneys; thus, although the insurer certainly had an obligation to protect Castro's interests as well as its own, the insurer did not obtain counsel for Castro, to whom such professional courtesy would be owed. We are loathe to extend the professional courtesy discussed in Fasuyi to agents or other potential representatives of a defendant if, for no other reason, it would be difficult to define, in a practical way, the type of nonlawyers to whom such notice should be given.
Moreover, unlike the procedural setting considered in Fasuyi, as we have discussed, here the jurisdictional time limit on relief under section 473, subdivision (b) passed. We are aware of no authority which extends the power and policy of liberality provided by section 473, subdivision (b) beyond six months after a default is entered because of a lack of professional courtesy; moreover, we are not aware of any authority which holds that a lack of such courtesy amounts to the extrinsic fraud or mistake which permits equitable relief from a default after relief under section 473, subdivision (b) is no longer available.
In short, we are not convinced that even when a defendant is represented by an attorney, the failure to notify counsel will relieve a defendant with actual notice of a complaint of the time limits set forth in section 473, subdivision (b) or the burden of showing extrinsic fraud or mistake. Thus, we are unwilling to find here that the failure to notify a nonlawyer will provide relief from the temporal limits imposed by section 473 or meet the high bar on a court's equitable powers.
IV
Loving-Spears has moved for sanctions under section 907 and California Rules of Court, rule 8.276(a)(1). She argues Castro's insurer, which is not a party to this appeal, nonetheless has controlled his appeal and that the arguments advanced on Castro's behalf are so lacking in merit that they give rise to an inference that they have been made only as a means of obstructing her ability to prosecute the rights against the insurer which she obtained from Castro. In addition to what she characterizes as the weak arguments made on Castro's behalf, in support of her claim that the appeal is being prosecuted in bad faith, she relies on the fact the insurer did not post an appeal bond on Castro's behalf and was able to obtain a stay of the bad faith litigation she initiated against it. We deny the motion.
First, Loving-Spears makes no contention Castro himself is a party to the bad faith he alleges; rather, she contends his insurer is entirely responsible for the bad faith as a means of hindering her ability to receive compensation for her serious injuries. On this appeal, however we have no jurisdiction over the insurer, but only over Castro and his counsel. Given the absence of jurisdiction over the insurer, we are not inclined to nonetheless punish any subjective bad faith on the part of the insurer by way of imposing sanctions on either Castro or his counsel on appeal.
Second, although we are unpersuaded by the arguments made on Castro's behalf, they are not so entirely devoid of merit that we can say no reasonable attorney would advance them. (See In re Marriage of Flaherty (1981) 31 Cal.3d 637, 648–649.) In this regard, we note that although we have determined that the cases Castro's briefs rely upon do not support any relief on appeal, by the same token there are no cases which have expressly rejected the particular extensions of the law which those briefs advance. Thus, this is an instance in which sanctions could easily have the chilling impact on vigorous advocacy which we must avoid. (Ibid.)
DISPOSITION
The judgment is affirmed. Loving-Spears to recover her costs on appeal.

BENKE, Acting P. J.

WE CONCUR:



O'ROURKE, J.



IRION, J.