Leader v. Health Indus. of AM.

• Decision Date: 29 May 2001
• Court: California Court of Appeals Court of Appeals
• Parties: (Cal.App. 2 Dist. 2001) WILLIAM LEADER et al., Plaintiffs and Appellants, v. HEALTH INDUSTRIES OF AMERICA, INC., et al., Defendants and Respondents. B134874 SECOND APPELLATE DISTRICT DIVISION TWO Filed

107 Cal.Rptr.2d 489 (Cal.App. 2 Dist. 2001)

WILLIAM LEADER et al., Plaintiffs and Appellants, v. HEALTH INDUSTRIES OF AMERICA, INC., et al., Defendants and Respondents.

B134874

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT DIVISION TWO

Filed 5/29/01

(Los Angeles County Super. Ct. No. BC095433)

APPEAL from a judgment of the Superior Court of Los Angeles County. Susan Bryant-Deason, Judge. Affirmed.

Law Offices of Michael McEntee and Michael McEntee for Plaintiffs and Appellants.

Thomas A. Bolan & Associates and Thomas A. Bolan for Defendants and Respondents.

CERTIFIED FOR PUBLICATION

TODD J.

The demurrers of defendants and respondents Health Industries of America, Inc., et al.¹ (defendants) to the third amended complaint of plaintiffs and appellants William Leader and Leader Psychiatric Medical Group (plaintiffs) were sustained with leave to amend. Plaintiffs did not file a fourth amended complaint within the time specified by the court. More than a month later plaintiffs' counsel arrived at a status conference with a proposed fourth amended complaint. The trial court advised counsel plaintiffs would be required to make a motion for leave before the amended complaint would be accepted for filing.

Plaintiffs moved for leave to file the amended pleading, relying on the provision of Code of Civil Procedure section 473, subdivision (b)² that mandates relief for dismissals entered as a result of an attorney's "mistake, inadvertence, surprise or neglect." ( 473, subd. (b).) Counsel declared the amended complaint had not been timely filed because he had misplaced client documents containing information necessary to remedy the pleading deficiencies which led to the sustaining of the demurrers. Counsel considered it "futile" to ask for more time to plead if he could not be sure he would find those materials.

Defendants opposed the motion and simultaneously moved to strike the proposed pleading and dismiss the action for failure to amend within the time allowed after the sustaining of a demurrer. ( 581, subd. (f)(2).) The trial court granted defendants' motions and ordered the action dismissed.

On appeal, plaintiffs contend section 473's mandatory relief provision required that they be allowed to file an amended complaint, and precluded dismissal of the action. We disagree. The mandatory relief provision is not applicable under these circumstances. Accordingly, the judgment will be affirmed.

I. FACTUAL AND PROCEDURAL BACKGROUND

This action is essentially a business dispute between a doctor and a hospital. Plaintiffs filed their original complaint in late 1993. The trial court sustained demurrers to the original, first amended, and second amended complaints. At that point plaintiffs elected not to amend, and "stood" on the allegations of the second amended complaint for purposes of appellate review. In an unpublished decision, a majority of this court concluded the trial court should not have sustained the demurrers without leave to amend.³

Following remand, plaintiffs filed a third amended complaint. Again defendants successfully demurred. The trial court sustained defendants' special demurrer for uncertainty to the first cause of action (breach of contract), finding the allegations of multiple contracts within a single cause of action rendered the pleading uncertain as to the identity of the parties to and the operative terms of the various agreements, and as to whether those agreements were written, verbal or implied in fact or law.⁴ The court also sustained a general demurrer to the second cause of action (tortious interference with prospective business relationships), concluding the third amended complaint was "devoid of factual allegations that establish the prospective business relationships."

The trial court allowed plaintiffs 20 days leave to amend. Shortly before expiration of that period, plaintiffs' counsel obtained defendants' counsel's stipulation to extend the period by several days. The stipulated date passed without an amended pleading being filed. Plaintiffs' counsel did not request a further extension from the court or opposing counsel.

The trial court was alerted to the absence of a timely amended pleading when the parties failed to appear for a scheduled status conference.⁵. The court summoned counsel to a status conference on 24-hour notice. Although the court-imposed amendment deadline had expired more than a month earlier, plaintiffs' counsel arrived at the status conference with a fourth amended complaint, handed a copy to defendants' counsel, and (in the words of the trial court) "just dropped it" on the court. The court instructed plaintiffs' counsel to bring a motion for leave to file the pleading.

A. Plaintiffs' Motion for Leave to File an Amended Complaint.

Plaintiffs then filed a "Motion Under CCP 473 For Order to File Amended Complaint," attaching a copy of the proposed pleading. Plaintiffs asked that the complaint be filed and that they be relieved of "what, if any, default or dismissal, may have been entered in this matter."

The factual basis for plaintiffs' motion was a "Declaration of Counsel in Support of Motion for Relief Under CCP 473." Counsel declared that after demurrers were sustained to the third amended complaint he began looking for client documents he had received years earlier, to ascertain the names of specific patients with whom plaintiffs had an economic relationship, because: "That list was crucial to effectively responding to the court's ruling."

Plaintiffs' counsel sought and received a stipulation from defendants' counsel to a two-week extension, but could not find the documents in his or his clients' offices or offsite storage by the extended April 9, 1999 filing deadline. Counsel concluded: "[i]t would be futile to ask more time from the court to plead the cause of action if I could not be sure that we could find the exhibit files," and did not attempt to timely file an amended pleading.

Counsel declared he continued looking for the documents on occasion and finally found them in a mislabeled box in offsite file storage on May 7, 1999. He could not spend more time searching for the documents because he was taking care of his ailing mother. Counsel claimed the documents were misplaced when he moved his office years earlier: "I simply did not catch the fact that the box of files was placed according to its old marking rather than its new marking. So it was my fault that the files were misplaced. [] . . . Armed with those exhibit files, I was able to then draft the Fourth Amended Complaint. The Complaint meets the requirements of the court. A representative list of those patients is listed in the Cause of Action for the tort of intentional interference with prospective economic relations. [] . . . The fault of being late in filing the Fourth Amended Complaint was entirely my own."

In their one-page memorandum of points and authorities, plaintiffs stated: "[T]he mandatory relief provision of CCP 473 applies because: [] 1. The Plaintiffs were entirely without fault. [] 2. The fault of the delay in filing the Amended Complaint was exclusively due to the error or neglect of Plaintiff's counsel. [] 3. The Plaintiff's counsel diligently tried to find the files and succeeded. [] 4. There was no possible prejudice to defendants or their counsel in the delay. . . . [] 5. Settlement efforts during that time period have moved the parties closer together. It would be a triumph of form over substance to not permit the filing of the Amended Complaint." (Bold in original.)

Defendants opposed the motion, arguing the mandatory relief provision of section 473 was inapplicable, and that the trial court retained discretion to grant or deny plaintiffs' motion for leave to belatedly file the amended complaint, as well as discretion to strike the complaint under section 436 and/or dismiss the action under section 581, subdivision (f)(2). Defendants claimed amending the complaint to add the names of specific patients did not address the pleading deficiencies noted in the third amended complaint, and that counsel's proffered excuse for delay was therefore not "credible."

B. Defendants' Motion to Strike and Dismiss.

In addition to opposing plaintiffs' motion for leave to amend, defendants filed their own motion to be heard the same date, asking the court to strike the amended complaint and dismiss the action. Defendants argued that by failing to amend during the time specified, plaintiffs' "right to do so ceased," rendering the action subject to dismissal under section 581, subdivision (f)(2). Assuming the court determined that plaintiffs, by tendering an amendment before defendants moved to dismiss, became entitled to file the pleading, defendants claimed it should nevertheless be stricken and the action dismissed for a number of reasons, including that the case was nearly six years old; demurrers had repeatedly been sustained with leave to amend; plaintiffs had requested and been granted an extension of time to amend but had failed to meet the deadline; plaintiffs had not asked for any further extension from the court or defendants after the allegedly critical documents could not be found in time; the proposed amendment was over a month late; and the amendment did not adequately address the pleading deficiencies noted in sustaining the latest demurrers.

Plaintiffs opposed defendants' motion on the ground they had sought leave of court to file the amended complaint before defendants filed their motion to dismiss, and that defendants had failed to establish "prejudice." Plaintiffs argued section 581, subdivision (f)(2) did not require dismissal of the action for failure to file a timely amended pleading, and that they were entitled to mandatory relief from the results of their attorney's neglect under section 473, subdivision (b).

The court heard the motions together, stating near the outset: "Now here we are after having gone to ...