Farrar, Herrick & Associates v. Safecare Co.

• Decision Date: 23 January 1981
• Citation: 171 Cal.Rptr. 191,115 Cal.App.3d 123
• Court: California Court of Appeals Court of Appeals
• Parties: FARRAR, HERRICK AND ASSOCIATES, a corporation, Plaintiff and Appellant, v. SAFECARE COMPANY, INC., a corporation, Defendant and Respondent. Civ. 57339.

Page 191

171 Cal.Rptr. 191

115 Cal.App.3d 123

FARRAR, HERRICK AND ASSOCIATES, a corporation, Plaintiff and Appellant, v. SAFECARE COMPANY, INC., a corporation, Defendant and Respondent.

Civ. 57339.

Court of Appeal, Second District, Division 3, California.

Jan. 23, 1981.

Hearing Denied March 18, 1981.

Lewis & Cowett and William O. Lewis, Colton, for plaintiff and appellant

Karns & Karabian and Lawrence Graze, Los Angeles, for defendant and respondent.

KLEIN, Presiding Justice.

Plaintiff and Appellant Farrar, Herrick and Associates (Farrar), a corporation, appeals from an order under Code of Civil Procedure section 583, subdivision (b), ¹ dismissing its action against defendant and respondent Safecare Company, Inc. (Safecare), a corporation, for failure to bring the case to trial within five years.

CONTENTIONS

Farrar contends that the trial court erroneously dismissed the instant case because: (1) the exchange of correspondence between Farrar and Safecare constituted a written stipulation pursuant to section 583, subdivision (b), which stipulation waived the mandatory dismissal provisions of this section; and (2) the doctrine of estoppel should have barred dismissal.

DISPOSITION

The open-ended extension of time to plead constituted a binding agreement between Farrar and Safecare excusing Farrar from diligence in prosecution of the action, and Safecare thereby waived its right to a dismissal.

FACTS

Farrar filed a complaint to recover a balance due on a contract with Safecare and to foreclose a mechanic's lien on July 3, 1973. Safecare filed an acknowledgement of Receipt of Summons on July 18, 1973.

Thereafter, negotiations for resolution of the dispute were conducted between the parties. On July 30, 1973, Safecare requested an extension of time, and a written consent extending the time for Safecare to file a responsive pleading to August 31, 1973, was granted by Farrar.

Settlement negotiations continued and on March 19, 1974, Safecare wrote Farrar as follows:

"I continue to rely on the agreement I have made with you that no further action will be taken by you, including particularly anything like a default judgment, without sufficient notice from you "

On September 1, 1977, Farrar gave written notice to Safecare to file a responsive pleading within 20 days from receipt of the letter.

No responsive pleading from Safecare was forthcoming, so on February 9, 1979, five years and six months after the complaint was filed, Farrar filed a request for entry of default, which motion was granted, and the default judgment was entered by the clerk on February 9, 1979. A default hearing to prove up damages was set for March 30, 1979.

Thereafter, on March 20, 1979, five years and seven months after the filing of the complaint, Safecare filed a notice of motion to dismiss under section 583, subdivision (b), which motion was granted on April 30, 1979.

DISCUSSION

It now seems clear the the correspondence between the parties herein constituted an open-ended extension of time in which to plead granted to Safecare by Farrar, and said extension was the equivalent of a written stipulation within the contemplation of section 583, subdivision (b). The critical issue, however, is whether the extension in the present fact situation excused Farrar from bringing the action to trial within five years after it was filed so as to defeat Safecare's dismissal.

We look for guidance to General Ins. Co. v. Superior Court (1975) 15 Cal.3d 449, 124 Cal.Rptr. 745, 541 P.2d 289, and its predecessors Bank of America etc. v. Superior Court (1937) 22 Cal.App.2d 450, 453, 71 P.2d 296, and others, and its progeny, Meraia v. McCann (1978) 83 Cal.App.3d 239, 147 Cal.Rptr. 756 and Regan Distributors, Inc. v. Yurosek & Son, Inc. (1979) 88 Cal.App.3d 924, 152 Cal.Rptr. 127.

In General, plaintiff granted defendant several specific time extensions to answer which defendant acknowledged by letter, followed eventually by an open extension terminable on ten days' written notice. About three and a half years after the commencement of the action, plaintiff gave defendant such written notice to plead, and defendant moved for a dismissal pursuant to the three-year statute of limitations set forth in section 581a, subdivision (a). ²

The Supreme Court in General denied defendant's petition for a writ of mandate compelling dismissal, holding that the written stipulation amounted to a general appearance by the defendant, that the stipulation extended the time to answer indefinitely subject only to termination by notice and that the stipulation remained in force through the expiration of the statutory periods.

In concluding that " the three provisions (of the diligence statutes) allow extension of time by filed written stipulation, reflecting that the policy of diligence is subordinate to the parties' own interests" (Id., at p. 454, 124 Cal.Rptr. 745, 541 P.2d 289), the court reasoned that "(h)aving by the instant written agreement precluded plaintiff from taking a default judgment prior to expiration of the three-year period, petitioner may not now rely on plaintiff's failure to take default to obtain dismissal of the action. Our conclusion meets the purpose of the statute. Expressly reflecting petitioner's intent to obtain time to answer and by necessary implication precluding default judgment, the agreement establishes the requisite mutual intent allowing each party to excuse the other from diligence both in answering and in taking default " (Original italics; fns. omitted.) (Id., at pp. 455-456, 124 Cal.Rptr. 745, 541 P.2d 289.)

General was followed by Meraia, which dealt with the discretionary two-year period set forth in section 583, subdivision (a). ³ There, plaintiffs granted defendants open-ended extensions of time in which to file responsive pleadings subject to a ten-day written notice. No action was taken until four years later, at which time plaintiffs' attorney requested answers to be filed. However, defendants' motion to dismiss was granted. In reversing, the court concluded "that defendants may not rely upon any lack of diligence on the part of plaintiffs prior to the termination of the open-ended extension of time to plead. No substantial time elapsed from the time such notice was given until the case was dismissed; consequently, it was an abuse of discretion to dismiss the case." (Meraia v. McCann, supra, 83 Cal.App.3d 239, at p. 246, 147 Cal.Rptr. 756.)

Likewise in Regan Distributors, Inc. v. Yurosek & Son, Inc., supra, 88 Cal.App.3d 924, at page 929, 152 Cal.Rptr. 127, the court reversed the dismissal of a four-year-old case, granted pursuant to section 583, subdivision (a), for want of prosecution. Considering itself also bound by General, the court found that defendants' counsel informally, although in writing, granted plaintiffs' counsel an open-ended extension of time for the hearing of demurrers and that the two-year procedural delay could not be charged against the plaintiffs for purposes of upholding the discretionary dismissal.

Although General involved the three-year statute of limitations, the court discussed the specific diligence statute involved in the case at bench, stating that "(a) written stipulation extends section 583's five-year term for bringing the action to trial if it expressly either waives the right to dismissal, or extends the time of trial to a date beyond the five-year period. But merely extending the time of trial to sometime within the five-year term absent a showing the parties intended otherwise will not extend the deadline. (J. C. Penney Co. v. Superior Court (1959) 52 Cal.2d 666, 669, 343 P.2d 919 ) The instant case falls between the two rules set forth in J. C. Penney. Here, the stipulation does not expressly extend time either within or beyond the allotted period. Rather, time is extended indefinitely, subject to termination by notice, and the stipulation remained in force at expiration of the period." (Original italics.) (General Ins. Co. v. Superior Court, supra, 15 Cal.3d 449, at p. 455, 124 Cal.Rptr. 745, 541 P.2d 289.)

Penney upheld the dismissal of plaintiffs' action on a showing of facts vastly different from the state of the record herein. There, plaintiffs filed the action on December 31, 1953, but did not serve the first amended complaint and summons on the defendant until December 31, 1956. Defendant filed its answer on January 21, 1957. On December 5, 1957, nearly four years after the action was commenced, plaintiffs filed a memorandum to set the case for trial. The court set the pretrial conference for March 21, 1958, and the trial for May 15, 1958. However, before the pretrial conference date, plaintiffs and defendant entered into the following agreement: "It is hereby stipulated that the pre-trial conference may be continued to be re-set upon motion of either party to permit the parties to complete discovery " (Penney, supra, at p. 668, 343 P.2d 919.)

Both parties thereafter continued with discovery proceedings actually preparing for trial. The parties had submitted a joint pretrial statement, and the court had filed a pretrial conference order. Nearly two months remained after the discovery proceedings had been completed in which plaintiffs could have brought the case to trial, and the court held the plaintiffs should have done so. Failing in that responsibility, the defendants had the right to prevail on a dismissal motion.

In our case, the stipulation did not expressly waive the right to a dismissal nor extend the time of trial beyond the five-year period. Time was, however, extended indefinitely, subject to termination by notice, but the stipulation did not remain in force at the expiration of the five-year period, and that last fact makes the circumstances before us different from General.

Here, the letter extension-stipulation took effect March 19, 1974, with Safecare indicating it was relying on Farrar not to take a default judgment without "sufficient...