Even Zohar Constr. & Remodeling, Inc. v. Bellaire Townhouses, LLC

• Decision Date: 20 July 2015
• Docket Number: No. S210804.,S210804.
• Citation: 352 P.3d 391,61 Cal.4th 830,189 Cal.Rptr.3d 824
• Court: California Supreme Court
• Parties: EVEN ZOHAR CONSTRUCTION & REMODELING, INC., Plaintiff and Appellant, v. BELLAIRE TOWNHOUSES, LLC, et al., Defendants and Respondents.

61 Cal.4th 830

352 P.3d 391

189 Cal.Rptr.3d 824

EVEN ZOHAR CONSTRUCTION & REMODELING, INC., Plaintiff and Appellant

v.BELLAIRE TOWNHOUSES, LLC, et al., Defendants and Respondents.

No. S210804.

Supreme Court of California

July 20, 2015.

Daniel B. Harris ; Crowell & Moring, Ethan P. Schulman and J. Daniel Sharp, San Francisco, for Plaintiff and Appellant.

James S. Link, Pasadena; Reed Smith, Paul D. Fogel, Dennis Peter Maio, San Francisco; Gibalevich & Associates and Daniel Andrew Gibalevich, Los Angeles, for Defendants and Respondents.

Opinion

WERDEGAR, J.

Code of Civil Procedure¹ section 1008 imposes special requirements on renewed applications for orders a court has previously refused. A party filing a renewed application must, among other things, submit an affidavit showing what “new or different facts, circumstances, or law are claimed” (id., subd. (b)) to justify the renewed application, and show diligence with a satisfactory explanation for not presenting the new or different information earlier (California Correctional Peace Officers Assn. v. Virga (2010) 181 Cal.App.4th 30, 45–46, 103 Cal.Rptr.3d 699, & fns. 14–15 ; see Garcia v. Hejmadi (1997) 58 Cal.App.4th 674, 688–690, 68 Cal.Rptr.2d 228 ). Section 1008 by its terms “applies to all applications ... for the renewal of a previous motion” and “specifies the court's jurisdiction with regard to [such] applications.”² (§ 1008, subd. (e).) This case raises the question whether section 1008 governs renewed applications under section 473, subdivision (b) (section 473(b) ), for relief from default based on an attorney's “sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect” (ibid. ). We conclude section 1008 does govern such applications. Because defendants concede their renewed application did not satisfy section 1008, we affirm the Court of Appeal's decision vacating the superior court's order granting relief from default.

I. Background

Plaintiff Even Zohar Construction & Remodeling, Inc., sued defendants Bellaire Townhouses, LLC, Samuel N. Fersht and the Fersht Family Living Trust for breach of contract and related claims arising out of a project to develop a condominium in North Hollywood. Defendants unsuccessfully petitioned to compel arbitration and then failed to file a responsive pleading to the complaint. Thereafter, the clerk entered defendants' default, and the court entered a default judgment in the amount of $1,701,116.70.

Defendants subsequently filed an application under section 473(b) for relief from default. Defendants titled their application one for “mandatory relief,” thereby invoking the aspect of section 473(b) that requires a court to grant relief when the application is “accompanied by an attorney's sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect, ... unless the court finds that the default ... was not in fact [so] caused....” The same provision authorizes discretionary relief when “a judgment, dismissal, order, or other proceeding” is taken against a party or a party's legal representative “through his or her mistake, inadvertence, surprise, or excusable neglect.” (Ibid. )

Accompanying the application was the affidavit of defendants' attorney, Daniel Gibalevich. In that sworn statement, Attorney Gibalevich attributed the default primarily to errors by his staff. He declared that, at the time defendants' responsive pleading was due, he “had to spend substantial amounts of time away from the office” on personal matters. “I believed,” he continued, “that I had sufficient staff to assure competent handling of client files. My associates were instructed to notify me immediately of issues that would require my personal attention. It appears that my staff failed to maintain this file in accordance with this firm's policies and procedures. [¶] Due to my frequent absences, I failed to file and serve the responsive pleading.... It is clear that my mistake and excusable neglect resulted in the entry of defaults and default judgments against the Defendants.” Plaintiff opposed the motion with evidence that its attorney had repeatedly informed Gibalevich, by mail, e-mail and fax, of the impending default. Plaintiff also contended that Gibalevich and defendant Fersht had allowed the default to be taken as part of a practice of avoiding defendants' obligations to contractors by delaying payment and driving up legal fees and costs.

The superior court denied defendants' motion for relief from default, expressly finding Gibalevich's declaration “not credible.” At the hearing on the motion, the court had criticized the declaration as “too vague and conclusory” and as “fuzz[ing] up the issue” of Gibalevich's own responsibility. The court repeated this criticism in its order, describing the declaration as “entirely too general” in light of plaintiff's showing, and as failing to show that “Gibalevich is solely at fault in not filing a timely responsive pleading.” “Moreover,” the court continued, “attorney Gibalevich tries to have it both ways” by speaking vaguely of his own fault while also claiming excusable neglect. “He has not demonstrated excusable neglect.”

Thirty-three days later defendants filed a second “Notice of Motion for Mandatory Relief under [section] 473 to Vacate Defaults and Default [Judgments].” Accompanying the renewed motion was a second affidavit by Gibalevich, in which he offered a different explanation for his failure to file a responsive pleading. That failure, he now asserted, had resulted from preoccupation with efforts to secure the return of other clients' files seized from his office as part of a criminal investigation. “[I]nvestigators with the Los Angeles District Attorney's Office,” Gibalevich declared, had served a search warrant at his office as part of an “investigation focused on medical providers and not on me or my practice.” “[O]ne of my associates, Mr. Savransky, resigned his position right after the search. That left me and Ms. Gina Akselrud as [the] only attorneys shouldering this heavy load.” Gibalevich continued: “In my effort to secure the return of my client files, I engaged Mr. Shkolnikov, a criminal defense attorney. I volunteered to assist him in his research and drafting efforts.” “I spent all of my time on efforts to return my client's files. I researched and wrote many drafts of the motions that were filed. This consumed me. I was working on this most of the day, every day. When I wasn't in front of the computer, I thought of nothing else. [¶] I began to obsess over my reputation and the disclosures that I had to make to Judges and opposing counsel alike.” “I have to confess,” Gibalevich concluded, “that this feeling of embarrassment is the reason why I failed to set out these facts in the declaration previously filed.”

Gibalevich's associate attorney Akselrud submitted a declaration confirming the search, Gibalevich's and her own frequent absences from the office to make court appearances to continue hearings and trials, and Gibalevich's obsession with securing the return of his clients' files. Akselrud did not, however, confirm or mention Gibalevich's earlier sworn statement that his staff had failed to maintain the file in the instant case. Attorney Shkolnikov also submitted an affidavit stating that Gibalevich had devoted “all of his time and effort” to assisting Shkolnikov in recovering the seized files.

The superior court stayed execution of the default judgment to allow time to consider defendants' renewed motion for relief from default. In the hearing on that motion, the court stated: “Mr. Gibalevich, you are presenting an entirely different story with this application than you have presented to the court originally.” “You tried to blame it on a miscalendaring when the evidence is that your office received multiple, multiple notices before the defaults were entered in all different kinds of ways. [¶] And frankly, your story about being obsessed with this search warrant for the entire period of time is just not credible. You originally told the court you had to be out of the office for substantial periods of time. Now you say you're conducting all kinds of research on your computer in your office. [¶] You're not credible, Mr. Gibalevich.” “You could have presented all of that with your original [affidavit]—these are not new facts.” In response, Gibalevich argued that the facts supporting a renewed motion “don't have to be new facts. Under [section] 1008(b), they have to be different facts. They don't have to be new facts.”³

Ruling on defendants' second application under section 473(b), the superior court once again rejected Gibalevich's explanations. “Attorney Gibalevich,” the court observed, “first blamed the default and default judgment entered against defendants ... on the lawyers he employed in his office.” “ When he lost the first motion,” the court continued, “Gibalevich filed another motion. The second motion fails to comply with the requirements of section 1008(b). In this motion, attorney Gibalevich changed his story and blamed the default and default judgment on his having become obsessed with the consequences of a search warrant executed on his office by the Los Angeles County District Attorney. (Neither the search warrant nor its consequences concerned the files of the defendants in this action.)” Moreover, “[t]he associate in Mr. Gibalevich's office did not support the claim in attorney Gibalevich's [first] declaration that she failed to maintain the [defendants'] file or notify Mr. Gibalevich of the entry of default and default judgment against [defendants].”

Even while concluding defendants had not satisfied the requirements of section 1008, the superior court nevertheless granted their renewed application for relief from default. The court explained that it felt “bound to follow” Standard Microsystems Corp. v. Winbond Electronics Corp. (2009) 179 Cal.App.4th 868, 102 Cal.Rptr.3d 140 (Standard Microsystems ), which the court...