Franklin Capital Corp. v. Wilson, G036152.

CourtCalifornia Court of Appeals
Writing for the CourtSills
Citation148 Cal.App.4th 187,55 Cal.Rptr.3d 424
PartiesFRANKLIN CAPITAL CORPORATION, Plaintiff and Appellant, v. Douglas WILSON et al., Defendants and Respondents.
Docket NumberNo. G036152.,G036152.
Decision Date28 February 2007
55 Cal.Rptr.3d 424
148 Cal.App.4th 187
Douglas WILSON et al., Defendants and Respondents.
No. G036152.
Court of Appeal, Fourth District, Division 3.
February 28, 2007.

[55 Cal.Rptr.3d 425]

Brewer & Brewer, Templeton Briggs and James R. Knoles, Newport Beach, for Plaintiff and Appellant.

Steinberg, Nutter & Brent and Paul M. Brent, Santa Monica, for Defendants and Respondents.




After the attorney for the plaintiff failed to appear for a mandatory settlement conference, the trial court set an order to show cause hearing (OSC) in regard to dismissal or other sanctions. The day before that hearing, the plaintiff voluntarily dismissed its case without prejudice pursuant to section 581, subdivision (b)(1) of the

55 Cal.Rptr.3d 426

Code of Civil Procedure. Nevertheless, the court held the hearing, at which it vacated the voluntary dismissal without prejudice and entered, in its stead, a new dismissal, by the court, with prejudice. This appeal is from the order denying the plaintiffs latter motion to vacate the new dismissal with prejudice.

We must reverse. By its terms, section 581, subdivision (b)(1) confers on plaintiffs the right to dismiss anytime prior to the "commencement of trial." As we explain below, a mandatory settlement conference, or an ensuing OSC dismissal or other sanctions for failure to appear at that mandatory settlement conference, does not in any way implicate the "commencement of trial." The plaintiff had the statutory right to dismiss its case without prejudice, even on the eve of the hearing.

Also, even if the plaintiff did not have the right to dismiss without prejudice, it is clear that the trial court had no right to dismiss the case with prejudice on its own. As we explain below, the dismissal for failure to attend the mandatory case management conference was essentially a dismissal for failure to prosecute, and the statute and Supreme Court authority make clear that a dismissal for failure to prosecute is without prejudice.


In November of 2003, Franklin Capital Corporation filed this garden-variety debt collection action against defendant Douglas Wilson (a complaint for breach of contract regarding default on an outstanding loan balance of some $57,000), but by the Spring of 2004 counsel for Franklin must have been preoccupied with other things, because he basically went inert as far as Franklin's case was concerned.1

To be precise: On March 2, 2004, counsel for Franklin failed to appear at a case management conference. That order was vacated (errant mail service), but counsel had a relapse of his aversion to case management conferences on April 13, prompting the court to issue an OSC contemplating dismissal. Counsel failed to appear at the OSC (this particular OSC was not the OSC that would prompt this appeal), and in fact the case was dismissed. Franklin's counsel managed to have the dismissal set aside in September, albeit with a $900 sanction. Then Franklin actually moved for summary judgment, but, true to form, show up at the hearing on his motion, so it was denied.

In late April defendant Wilson filed a motion to dismiss for delay in prosecution,

55 Cal.Rptr.3d 427

essentially relying on what litigators used to call the "two-year rule" (cf. Code Civ. Proc, § 583.410 [discretionary authority to dismiss for delay in prosecution] with § 583.420, subd. (a)(2)(B) [no authority to dismiss for delay in prosecution prior to two years having gone by from filing without the case having been brought to trial]) arguing that, under factors set out in rule 373 (now 3.1342) of the California Rules of Court, discretionary dismissal was appropriate.2

On May 6, 2005 counsel for Franklin failed to appear at a mandatory settlement conference — ironically, one requested by Franklin — and that day the trial court once again issued an OSC re "Dismissal and/or sanctions," setting the hearing for May 19.

The minute order did not mention any authority on which the trial court's OSC would proceed. However, two days before the hearing, defendant Wilson's attorney filed a "declaration" in support of "dismissal of action" which incorporated the late April motion to dismiss under section 583.410 [lack of prosecution after two years have passed since filing without case having been brought to trial].

The day before the hearing, May 18, Franklin's counsel filed a voluntary dismissal without prejudice with the court clerk.

Counsel didn't show up at the hearing the next day, so the court ordered a dismissal with prejudice. While the court, in its minute order, cited no statutory or case authority for its action, it indicated that the dismissal was for lack of prosecution, though it also alluded to counsel's failure to comply with the previous order to pay sanctions of $900.3 The court entered an unsigned minute order of dismissal with prejudice on May 19 (as distinct from a signed final order of dismissal under section § 581d [all dismissals must be in writing signed by the court]).

In late August, after an aborted attempt to file a new action in July,4 Franklin filed a motion to vacate the dismissal on the grounds of lack of jurisdiction for the trial court to do what it did on May 19. That motion was denied in a hearing on September 23. While the trial court again did not mention any specific statutory or case authority for its decision, it clearly alluded to a body of case law, which we discuss in detail below, which the trial court read as precluding voluntary dismissals in the face of any "dispositive" action.5 The denial of

55 Cal.Rptr.3d 428

the motion to vacate was filed September 26, and the October 3 notice of appeal is timely.6


A. Did the Pending Court-Initiated OSC to Dismiss or Impose Other Sanctions Because of the Failure to Attend the Mandatory Settlement Conference Cut Off Plaintiffs Right to Dismiss Voluntarily? No.

1. The Statute Controls'

While the case law (which we discuss in detail below) is extensive, we must remember that the right of a plaintiff to dismiss its case voluntarily and without prejudice is set forth in a statute, and all permutations of circumstances on the subject flow from that statute. The statute is Code of Civil Procedure, section 581, subdivision (b)(1), which provides: "An action may be dismissed in any of the following instances: [¶] (1) With or without prejudice, upon written request of the plaintiff to the clerk, filed with papers in the case, or by oral or written request to the court at any time before the actual commencement of trial, upon payment of the costs, if any." (Italics added.) In essence, then, all cases which deal with voluntary dismissals are glosses on the words, "commencement of trial."

In terms of the case before us, it would seem obvious that a mandatory settlement conference is not the "commencement of trial" in any sense of the phrase. By definition no adjudication is contemplated at a settlement conference. And it would seem likewise obvious that an ensuing OSC re dismissal or sanctions for failure to appear at such a conference would not implicate the idea of "commencement of trial." Again, nothing like adjudication of the merits happens at an OSC conducted in the wake of a failure to appear at a mandatory settlement conference.

We should also mention at this point that the statute also contains a definition of what constitutes a trial. The definition is found in subdivision (a)(6) of section 581. It reads: "(a) As used in this section: . . . . [¶] (6) `Trial.' A trial shall be deemed to actually commence at the beginning of the opening statement or argument of any party or his or her counsel, or if there is no opening statement, then at the time of the administering of the oath or affirmation to the first witness, or the introduction of any evidence."

55 Cal.Rptr.3d 429

If subdivision (a)(6) set forth the exclusive criteria for the concept of "commencement of trial" we might end this opinion right here. Quite obviously an OSC re failure to appear at a mandatory settlement conference does not fit any of the three specified acts for determining whether trial has actually commenced.

On its face, however, the language in subdivision (a)(6) is not exclusive — it tells you that some things constitute a trial but it doesn't say that those are the only things that constitute a trial — and in any event the issue of its exclusivity was dispositively settled against exclusivity by our Supreme Court in Wells v. Marina City Properties, Inc., supra, 29 Cal.3d 781, 784-788, 176 Cal.Rptr. 104, 632 P.2d 217. As the Wells case shows, the "trial shall be deemed" language had been added to the statute in 1947, though then the language was in the last sentence of subdivision 1 of section 581. The specific question in Wells was whether that language, as well as the addition of the word "commencement" as in "commencement of trial" set up "a new and exclusive test, preserving the right of voluntary dismissal until the occurrence of one of the specific acts deemed by subdivision 1 to constitute `the actual commencement of trial'" such that a voluntary dismissal after a general demurrer had been sustained and the time to amend had expired might be valid. (Wells, supra, 29 Cal.3d at p. 786, 176 Cal.Rptr. 104, 632 P.2d 217.) Answer: No. The court said the 1947 amendment with its "trial shall be deemed" language did not address the question of when "the trial of an issue of law commences." (See id. at pp. 787-788, 176 Cal.Rptr. 104, 632 P.2d 217 ["Accordingly, we are unable to agree with plaintiffs contention that the 1947 amendment erased or diluted the Goldtree rationale. It is reasonable to conclude that the 1947 amendment to section 581, subdivision 1, did not address the issue before us, namely, when does the trial of an issue of law commence?" (All original emphasis.) ].)

In the wake of Wells, a...

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