Case v. Lazben Financial Co.

• Decision Date: 10 June 2002
• Docket Number: No. B143295.,B143295.
• Citation: 99 Cal.App.4th 172,121 Cal.Rptr.2d 405
• Court: California Court of Appeals Court of Appeals
• Parties: Charleen CASE, Plaintiff and Appellant, v. LAZBEN FINANCIAL COMPANY, et al., Defendants and Respondents.

121 Cal.Rptr.2d 405

99 Cal.App.4th 172

Charleen CASE, Plaintiff and Appellant, v. LAZBEN FINANCIAL COMPANY, et al., Defendants and Respondents.

No. B143295.

Court of Appeal, Second District, Division 3.

June 10, 2002.

Law Offices of F. James Feffer, F. James Feffer, Catherine M. Adams, Sherman Oaks, Melody Heinemann Dosch and Mark C. Calahan, Beverly Hills, for Plaintiff and Appellant.

Law Offices of Debra L. Korduner and Debra L. Korduner, Los Angeles, for Defendants and Respondents.

ALDRICH, J.

The issue squarely presented in this appeal is whether Code of Civil Procedure section 1008¹ restricts a trial court, on its own motion, from reconsidering one of its interim orders. For the reasons set forth herein, we conclude that a trial court can sua sponte reconsider its own interim orders irrespective of section 1008. If interpreted to eliminate a trial court's jurisdiction in this regard, section 1008 would materially impair and defeat a core function of the judiciary, the power to resolve specific controversies between parties, in violation of the separation of powers doctrine. Therefore, section 1008 must be interpreted as restricting only the ability of litigants to bring motions for reconsideration.

Plaintiff and appellant Charleen Case appeals from the trial court's order dismissing her complaint against defendants and respondents Lazben Financial Company, Benjamin Deutsch, and Lawrence Deutsch (hereinafter respondents) for failure to prosecute. The trial court initially denied respondents' motion to dismiss, but sua sponte reconsidered the issue and granted the motion. Case asserts that the trial court exceeded its jurisdiction by reconsidering its order when the prerequisites of section 1008 were not met. We conclude the trial court did not exceed its jurisdiction in reconsidering its order and affirm.

FACTUAL AND PROCEDURAL BACKGROUND

1. Case's action against respondents.

On January 25, 1991, Case filed a 19count complaint against respondents and 13 other defendants, including City Thrift and Loan Association (City Thrift). The complaint included causes of action for fraud, negligent misrepresentation, breach of fiduciary duty, breach of contract, rescission, restitution, and violation of the Racketeer Influenced and Corrupt Organizations Act (RICO) (18 U.S.C. § 1962, subd. (c)), all arising from Case's investments in various real estate and other ventures. Trial was set for August 23, 1993.

On July 9, 1993, the California Commissioner of Corporations closed City Thrift. On July 15, 1993 the Federal Deposit Insurance Corporation (FDIC), as receiver for City Thrift, removed the action to the United States District Court for the Central District of California. On June 15, 1994, the parties stipulated in federal court to dismissal with prejudice of all claims against the FDIC; to dismissal with prejudice of all claims brought against the remaining defendants under RICO; and to remand of the pendent state claims to the Los Angeles County Superior Court. On June 16, 1994, Federal District Judge Manuel L. Real signed and filed the stipulation and order dismissing and remanding the case. The order remanding the case was entered in the federal docket on June 21, 1994; however, apparently due to a clerical error, it was not mailed to the superior court at that time.

According to the representations of Case's counsel in the opposition to respondents' motion to dismiss, in early 1997, Beigel & Sandler, P.C., the law firm representing Case at that time, liquidated. According to Case, in the fall of 1997, a former Beigel & Sandler associate took over representation of Case's claims. He discovered that the federal court's order remanding the matter had never been mailed to the superior court, and requested that it be forwarded to the superior court. On October 30 and December 5, 1997, the federal district court mailed certified copies of the remand order to the superior court.

A status conference was held in Los Angeles County Superior Court on January 20, 2000. Respondents indicated they would file motions to dismiss for failure to prosecute, and requested a March hearing date. At Case's counsel's request, due to family medical concerns, the hearing on the motion to dismiss was set for April 5, 2000. On February 18 and March 9, 2000, respondents filed motions for discretionary and mandatory dismissal pursuant to sections 583.410, 583.420, 583.310, and 583.360. Case did not file oppositions. On the hearing date of April 5, 2000, Case filed an ex parte application requesting a continuance. The trial court granted the continuance to April 28, 2000 and indicated it was inclined to grant the motion to dismiss. Case subsequently filed a consolidated opposition to both motions.

2. Rulings on respondents' motions to dismiss.

On April 28, 2000, the trial court heard and denied respondents' motions to dismiss.² As to the discretionary motion to dismiss (§ 583.410), the court noted that the parties had litigated the matter for two and one-half years prior to the removal to federal court; discovery had been completed, including depositions; a discovery cutoff date had been in effect; and defendants' motions for summary judgment had been pending when the case was removed. The court reasoned, "It's not a kind of case where plaintiff had done nothing from the outset of the action." The court stated it was distressed about the age of the case, but found "[t]here appears to be some failure by [the] judicial system folks here which ... at least primarily [is] not attributable to the parties." The court set a trial date of May 10, 2000, noting that the "five-year-rule" would run on that date. The court expressed concern that trial would commence in 12 days and stated, "[t]his is not a case that makes me real comfortable either way." Respondents' counsel asserted her understanding that the matter was to be tried to the court, rather than a jury. She requested that plaintiffs counsel identify which remaining causes of action would actually be tried.

At a May 3, 2000 conference, Case's counsel estimated a two- to three-week jury trial; stated that he anticipated calling up to 25 witnesses; and indicated that tentatively he intended to proceed on four causes of action. The court stated, "I am actively reconsidering my denial of the motions to dismiss because this case—to slam anybody to trial, on that kind of trial, under these circumstances, underscores the motions that were made and suggests to this court that the ruling was improvident." It explained it was "increasingly uncomfortable" with its denial of respondents' motion and expressed concern that there was insufficient time to prepare for trial. The court indicated it was anxious to minimize prejudice to the defendants.

On May 5, 2000, Case's counsel indicated plaintiff would proceed on seven causes of action; intended to call approximately 20 witnesses; and estimated trial would require 15 days. The court again expressed concern about its denial of the motion to dismiss: "What we have here is because of this court's ruling, unmindful as I was apparently of the consequences thereof, we have put ourselves in the position where we have to do in a week that which most lawyers do in a year, and that is prepare a somewhat sophisticated case for trial." It explained it was "not trying to manufacture a way out." Defense counsel argued that the lapse of time and brief period remaining to prepare for trial had irreversibly prejudiced defendants. The trial court indicated it wished to revisit its denial of the motions and placed them back on calendar on its own motion. It opined, "everything that has transpired today has demonstrated the ... borderline stupidity of what this court did in not recognizing that this case is a textbook on why enough is enough and the case should have been dismissed."

During a May 8, 2000 conference, Case argued that reconsideration was improper because section 1008 deprived the trial court of jurisdiction to reconsider. After hearing argument from both parties, the trial court reconsidered and reversed its prior order and granted respondents' motion to dismiss. The trial court articulated the basis for its grant of the motion in a written order, which explained, among other things, that; the plaintiff was not blameless for the delay in prosecuting the case; the consequences of the trial court's ruling on the motion to dismiss appeared much greater than when the ruling was made; and a "tremendous burden" was being imposed on the defendants, who were being required to prepare for trial on 12 days' notice. The order continued, "this is the [worst] case of a `rush to judgment' that the Court has ever seen and it is clear that justice cannot be done by proceeding in the manner required as a result of the Court's Order of April 28, 2000; ... the Court's Order of April 28, 2000 denying defendants' Motion to Dismiss was wrongly made and the Court believes that it not only has the right, but that it has the duty, to correct it ...." On July 20, 2000, appellant filed her notice of appeal.

DISCUSSION

1. Section 1008 did not deprive the trial court of jurisdiction to sua sponte reconsider its ruling on the motion to dismiss.

Case contends that section 1008, as amended by the Legislature in 1992 and 1998, precluded the trial court from reconsidering its order. She asserts that section 1008 is jurisdictional and prescribes the exclusive procedural vehicle by which a court may reconsider its rulings. Here, she asserts, section 1008's requirements were not met because the trial court's reconsideration of its order was not based upon a change in the law, as required by section 1008, subdivision (c). Thus, she contends, the trial court acted in excess of its jurisdiction. We conclude that the trial court had inherent authority, derived from the California Constitution, to reconsider its earlier ruling, and its jurisdiction was not truncated by section...