Highlanders, Inc. v. Olsan
| Decision Date | 15 February 1978 |
| Court | California Court of Appeals Court of Appeals |
| Parties | HIGHLANDERS, INC., a California Corporation, and Emanuel M. Comora, Plaintiffs and Appellants, v. Barbara R. OLSAN, Gerald D. Kleinman and the law firm of Loeb & Loeb, Bernard Shapiro, the law firm of Gendel, Raskoff, Shapiro & Quittner, a partnership, Don Rothman, trustee of the Estate of Highlanders, Inc., Reuben Sklar, Danning& Gill, Curtis B. Danning, and David A. Gill, Defendants and Respondents. Civ. 50002. |
Harlan Arnold and Donald R. Colvin, Beverly Hills, for plaintiffs and appellants.
Loeb & Loeb by Paul L. Hoffman, Los Angeles, for defendants and respondents Barbara R. Olsan, Gerald D. Kleinman and the Law Firm of Loeb & Loeb.
Gendel, Raskoff, Shapiro & Quittner by Richard S. Berger, Los Angeles, for defendants and respondents Bernard Shapiro, the Law Firm of Gendel, Raskoff, Shapiro & Quittner, Don Rothman and Reuben Sklar.
Danning, Gill, Michaelson & Gould, Sherman Oaks, David Gould and Richard K. Diamond, Los Angeles, for defendants and respondents Danning & Gill, Curtis B. Danning and David A. Gill.
In this consolidated appeal, one plaintiff, Highlanders Inc., a California corporation, appeals from an order of dismissal made below on July 19, 1976, in favor of certain defendants named in plaintiff's third amended complaint, and both plaintiffs, Highlanders and Emanuel M. Comora, appeal from an order of dismissal made below on June 10, 1976, in favor of certain other defendants. We affirm as to one order and reverse as to the other order.
This litigation commenced on January 27, 1971, when plaintiffs, Highlanders and Comora, filed a complaint against Barbara Olsan and others, including Does I through XX, alleging a conspiracy by the defendants to force plaintiff corporation, while solvent, into involuntary bankruptcy, for the purpose of obtaining control of its assets. The corporation was adjudicated a bankrupt in 1968, and appeals have been taken from determinations of the bankruptcy court. This litigation, which has been reviewed by this court on a previous occasion in 1975, has yet to leave the pleading stage. We will present the pertinent chronology of procedural events as they materially affect each appeal.
The Appeal from the Order of Dismissal Made Pursuant to Code of Civil Procedure Section 581a, Subdivision (a)
As indicated, the complaint was filed in 1971. Summons was not issued until May 11, 1973, and defendants Olsan and her attorney, Gerald Kleinman, were served on June 16, 1973, Kleinman being served as Doe I. The complaint was amended, and the defendants' demurrers were sustained without leave to amend, as to both plaintiffs. Both plaintiffs appealed on December 27, 1973, from the ensuing order dismissing the complaint. In an unpublished opinion filed July 1, 1975, we reversed the judgment of dismissal as to both plaintiffs. The remittitur was filed in the trial court on September 5, 1975.
On October 3, 1975, the second amended complaint was filed and summons issued against defendants Olsan, Kleinman, Kleinman's law firm of Loeb and Loeb, and a whole new phalanx of Doe defendants, the amended complaint alleging their participation in the conspiracy set forth in the original complaint. For the purpose of clarity here, we will designate some of these defendants as the Shapiro defendants 1 and some as the Danning defendants; 2 while many other individuals and corporations were named defendants, it is these two groups of defendants who are the respondents here on the appeal from the Code of Civil Procedure section 581a, subdivision (a), order of dismissal.
The Shapiro defendants made a general appearance in the action on November 3, 1975, with a demurrer and a motion to strike. The Danning defendants made their general appearance on November 5, 1975, also filing a demurrer and a motion to strike. Summons and return of service of the second amended complaint were filed with the court on November 13, 1975.
On December 18, 1975, the trial court granted the Shapiro-Danning motions to strike the second amended complaint (which asserted similar grounds) because plaintiffs had failed to obtain leave of court before filing the second amended complaint.
On January 26, 1976, plaintiffs filed the third amended complaint, again naming, among others as defendants, the Shapiro and Danning defendants. Summons on the third amended complaint was returned on February 27, 1976. Thereafter, these defendants sought and obtained, as to them, an order of dismissal of the third amended complaint, on the ground that plaintiffs had failed to make a return of service of summons upon them within three years from the commencement of the action, as required by Code of Civil Procedure section 581a, subdivision (a). 3 It is this determination, made June 10, 1976, from which plaintiffs appeal.
The statutory rule requiring the return of service of summons within three years of commencement of the action has been termed mandatory and jurisdictional (Gonsalves v. Bank of America (1940) 16 Cal.2d 169, 105 P.2d 118) and serves the purpose of encouraging prompt prosecution of lawsuits (Elling Corp. v. Superior Court (1975) 48 Cal.App.3d 89, 123 Cal.Rptr. 734).
The three-year period is computed from the time the complaint is filed, despite the fact that there are subsequent amendments (Perati v. Atkinson (1964) 230 Cal.App.2d 251, 40 Cal.Rptr. 835) and defendants by their true names are substituted in the pleadings for Doe defendants at a later time (Watson v. Superior Court (1972) 24 Cal.App.3d 53, 100 Cal.Rptr. 684; Lopa v. Superior Court (1975) 46 Cal.App.3d 382, 120 Cal.Rptr. 445).
Certain exceptions to mandatory application of this statute in addition to those set forth in the statute itself have been judicially recognized. One is the situation where it is impracticable, impossible or futile to comply with the statutory requirements. (Wyoming Pacific Oil Co. v. Preston (1958) 50 Cal.2d 736, 329 P.2d 489.) Another is where a defendant's conduct creates an estoppel which precludes his reliance upon the statute. (Tresway Aero, Inc. v. Superior Court (1971) 5 Cal.3d 431, 96 Cal.Rptr. 571, 487 P.2d 1211.)
Plaintiffs argue here that in computing the three-year period in the instant case, we should not include that period of time the case was on appeal to this court, because it would have been "impracticable, impossible or futile" to proceed against anyone in the trial court in any meaningful way while the appeal was pending. In view of the fact that the judgment from which the appeal was taken in 1973 was one of dismissal as to all parties served at that time, we agree with plaintiffs' position that appeal time should be counted as tolling the statutory period.
However, this does not assist plaintiffs herein, for, as the chronology of events demonstrates, the third amended complaint was served, and the return filed, too late, after taking into account the appeal time involved. The notice of appeal was filed two years and eleven months after the filing of the original complaint on December 27, 1973, leaving plaintiff only one month after the remittitur was returned to the trial court to name the Does and serve them and return proof of service to the court.
The remittitur was filed on September 5, 1975, and plaintiff had until October 5, 1975, to complete his service and return of service. This was not done. The return of service on the second amended complaint was not made until November 13, 1975. Although the Shapiro and Danning defendants made general appearances in the action in November 1975, these appearances were not made within the three-year period, and did not cure the defect. (See Busching v. Superior Court (1974) 12 Cal.3d 44, 115 Cal.Rptr. 241, 524 P.2d 369.)
Obviously, by the time service was returned on the third amended complaint, which is the complaint before us February 27, 1976 the statutory period had long since expired. Plaintiffs offered no legitimate excuse for this tardiness below, nor has any been presented to us. Busching sets forth the principle that even de minimus noncompliance, without adequate excuse, will not preclude application of the statute; there was substantial noncompliance here.
We conclude, therefore, that the trial court properly granted the motion to dismiss made by the respondents, and that the order of dismissal under Code of Civil Procedure section 581a, subdivision (a), must be affirmed.
This is an appeal by plaintiff Highlanders from an order of dismissal made on July 19, 1976, made pursuant to Code of Civil Procedure section 581, subdivision 3, in favor of defendants Olsan, Kleinman, and the law firm of Loeb and Loeb, after their demurrers to the third and fourth amended complaints were sustained without leave to amend. 4
Our standard of review is well established for measuring the validity of a pleading that has not withstood a demurrer. (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713, 63 Cal.Rptr. 724, 737, 433 P.2d 732, 745.) Also, (Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566, 572, 108 Cal.Rptr. 480, 484, 510 P.2d 1032, 1036.)
Another principle which is applicable here is that, in construing the pleading under attack, both the trial court and the appellate court may...
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