Don v. Cruz

• Decision Date: 12 May 1982
• Citation: 182 Cal.Rptr. 581,131 Cal.App.3d 695
• Court: California Court of Appeals Court of Appeals
• Parties: Margaret DON, Plaintiff and Appellant, v. Raymond CRUZ, Defendant and Appellant. Civ. 25464.

Page 581

182 Cal.Rptr. 581

131 Cal.App.3d 695

Margaret DON, Plaintiff and Appellant, v. Raymond CRUZ, Defendant and Appellant.

Civ. 25464.

Court of Appeal, Fourth District, Division 2, California.

May 12, 1982.

Herbert Hafif and Wayne J. Austero, Newport Beach, for plaintiff and appellant.

Moore, Graves & Madory, Horvitz & Greines, Tustin, Ellis J. Horvitz and S. Thomas Todd, Encino, for defendant and appellant.

OPINION

THE COURT. ^*

This appeal raises novel questions about (1) a defendant's right to be relieved from a default taken as a result of the unexcused neglect of the defendant's insurance carrier and (2) the authority of a trial court to entertain a new trial motion after a default judgment.

Plaintiff and defendant were involved in an automobile collision on May 7, 1979. Plaintiff filed her complaint on October 2, 1979, to recover damages for personal injuries sustained in the collision. After unsuccessfully attempting service by mail (see § 415.30), plaintiff succeeded in personally serving defendant with summons, a copy of the complaint, and a statement of damages on March 21, 1980. ¹ No responsive pleading having been filed, defendant's default was entered on May 2, 1980.

Over six months later, on November 13, plaintiff requested a judgment hearing. (§ 585, subd. (b).) On November 20, defendant filed a notice of motion to vacate the default on grounds of extrinsic fraud or mistake.

The judgment hearing was held on November 26 and resulted in a judgment for plaintiff in the amount of $100,000. On December 4, defendant's motion to vacate the default was heard and denied.

On December 19, defendant filed a "notice of motion to vacate and set aside default and judgment thereon," which recited that the motion was made "on the grounds that the default judgment was obtained by misrepresentation and concealment on behalf of plaintiff's counsel, that the amount of the judgment is excessive as a matter of law, and is otherwise contrary to the evidence, that the underlying default was improperly entered and is therefore void, and that the default and judgment thereon were taken against the moving defendant by mistake, surprise, inadvertence and/or excusable neglect of defendant and his counsel." Upon the hearing of this motion, the court set aside the default judgment but without vacating the default. The basis of the ruling is not stated in the minute order.

Defendant filed a notice of appeal from the order of December 4 denying his motion to vacate the default and plaintiff filed a notice of appeal from the order setting aside the default judgment.

On her appeal, plaintiff contends the trial court lacked authority to set aside the default judgment on any basis other than extrinsic fraud or mistake and defendant failed to prove that the default judgment was the result of extrinsic fraud or mistake. On his appeal, defendant contends that the failure to grant relief from default was an abuse of discretion in light of the uncontradicted evidence that he reasonably relied on his insurance carrier to defend the action.

For the reasons stated below, we have concluded that defendant must be charged with the unexcused neglect of his insurance carrier and we have decided to affirm the order setting aside the default judgment as a proper exercise of authority to grant a new trial where the damages awarded are excessive as a matter of law.

I

Defaulting defendant charged with unexcused negligence of insurance carrier which has undertaken representation.

Defendant has filed a notice of appeal from the order denying his motion to vacate the default. The order denying the motion is nonappealable but may be reviewed on appeal from the default judgment. (Uva v. Evans (1978) 83 Cal.App.3d 356, 360, 147 Cal.Rptr. 795.) Although defendant did not mention the default judgment in the notice of appeal, a notice of appeal is liberally construed in favor of its sufficiency (rule 1, subd. (a), Rules of Court), and " 'courts have often upheld mistakenly stated appeals.' " (Call v. Los Angeles County Gen. Hosp. (1978) 77 Cal.App.3d 911, 915, 143 Cal.Rptr. 845, quotingChannell v. Anthony (1976) 58 Cal.App.3d 290, 302, 129 Cal.Rptr. 704.) Thus we may construe the notice of appeal as being taken from the default judgment. Although the judgment itself was vacated, plaintiff's appeal from the order vacating the judgment permits defendant to cross-appeal from the judgment. (Rule 3, subd. (c), Rules of Court.) In such a situation, the appeal from the order vacating the judgment is normally considered first and if affirmed the appeal from the judgment becomes moot and is dismissed. (Milton v. Hudson Sales Corp. (1957) 152 Cal.App.2d 418, 441, 313 P.2d 936.) If an issue raised on the cross-appeal would not be mooted by affirmance of the order vacating judgment, however, the cross-appeal should be considered first. (Ibid.) Such is the case here. The default has not been set aside and the validity of the order denying the motion to vacate the default will not be moot if the order vacating the judgment is affirmed. Accordingly, defendant's appeal is considered first.

Defendant concedes that his motion to vacate the default was not timely as a motion under section 473 and was addressed to the court's equitable powers to vacate a default resulting from extrinsic fraud or mistake. In support of the motion, defendant submitted a declaration in which he stated, in substance, that he had notified his insurance carrier of the accident and of the service of process and had relied upon the carrier to defend the action. Defendant frankly concedes that "the record does not contain any explanation why [the carrier] did not file a timely answer on defendant's behalf," but takes the position that this omission is "not significant."

More particularly, defendant maintains that there are two categories of cases involving reliance by a defendant on a third party. The first category includes cases where the defendant relies upon an attorney retained for the purpose of defending the action. In such cases, the general rule is that the attorney's inexcusable negligence is charged to the client and the client is relegated to an action against the attorney for malpractice. (Conway v. Municipal Court (1980) 107 Cal.App.3d 1009, 1017, 166 Cal.Rptr. 246; Buckert v. Briggs (1971) 15 Cal.App.3d 296, 301, 93 Cal.Rptr. 61; Orange Empire Nat. Bank v. Kirk (1968) 259 Cal.App.2d 347, 353, 66 Cal.Rptr. 240.) The second category includes cases where the defendant relies upon a codefendant or employer to defend the action. In such cases, courts have generally required only a showing that the defendant's reliance was reasonable without inquiring into the conduct of the codefendant or employer. (See Desper v. King (1967) 251 Cal.App.2d 659, 664, 59 Cal.Rptr. 657; Crane v. Kampe (1964) 225 Cal.App.2d 200, 205-208, 37 Cal.Rptr. 220.) Defendant contends that reliance upon an insurance carrier falls within the second category of cases and therefore defendant need not supply any explanation for the carrier's failure to act.

The rule thus proposed, in our opinion, is not a good one and should not be followed in the absence of compelling authority. In a personal injury action the defendant's insurer is, in effect if not in law, the real party in interest (see Lieberman v. Aetna Ins. Co. (1967) 249 Cal.App.2d 515, 524, 57 Cal.Rptr. 453 [carrier has standing to bring motion to vacate judgment against insured] ), yet the proposed rule would permit the insurer to willfully or recklessly ignore filing deadlines with impunity, shielding itself behind the blamelessness of its insured while it makes a shambles of orderly procedure. "When inexcusable neglect is condoned even tacitly by the courts, they themselves unwittingly become instruments undermining the orderly process of the law." (Transit Ads, Inc. v. Tanner (1969) 270 Cal.App.2d 275, 282, 75 Cal.Rptr. 848.)

This precise point is not directly discussed in any of the cases we have consulted. In most cases where relief has been granted on the basis that a defendant reasonably relied on an insurance carrier, the defendant's showing has included an explanation justifying the carrier's failure to act on his behalf. (E.g., Weitz v. Yankosky (1966) 63 Cal.2d 849, 48 Cal.Rptr. 620, 409 P.2d 700 [defendant mailed summons and complaint to carrier but documents never arrived and carrier received no other notice]; Lieberman v. Aetna Ins. Co., supra, 249 Cal.App.2d 515, 57 Cal.Rptr. 453 [carrier's employee mistakenly thought only one of two defendants, both insured by carrier, had been served]; Shields v. Siegel (1966) 246 Cal.App.2d 334, 54 Cal.Rptr. 577 [summons and complaint delivered to carrier but apparently lost or misfiled by clerk]; Pelegrinelli v. McCloud River etc. Co. (1905) 1 Cal.App. 593, 82 P. 695 [carrier never notified of service of summons and complaint]. See also, Annot., 87 A.L.R.2d 870.)

Ramsey Trucking Co. v. Mitchell (1961) 188 Cal.App.2d Supp. 862, 11 Cal.Rptr. 283, does provide some authority for defendant's position. There the defendant relied on his insurance carrier and no explanation appears for the carrier's inaction. On the other hand, in Greenwell v. Caro (1952) 114 Cal.App.2d 35, 249 P.2d 573, the defendants seeking to vacate a default under section 473 submitted an affidavit by an adjuster of their insurance carrier stating that he had been conducting negotiations with plaintiff's attorney and believed an extension of time to answer had been granted. The plaintiff objected that the affidavit was irrelevant because an insurer is not a legal representative of the defendant within the meaning of section 473 which permits a court to grant relief to a "party or his or her legal representative." The court's holding rejecting this contention is authority for the proposition that a defendant's reliance on his or her insurance carrier is legally equivalent to reliance on an attorney.

In summary, we...