Judge: Daniel S. Murphy, Case: 21STCV45587, Date: 2024-04-24 Tentative Ruling

Case Number: 21STCV45587    Hearing Date: April 24, 2024    Dept: 32

BACKGROUND

            On December 14, 2021, Plaintiff Michael Levine filed this action for legal malpractice against Defendants Matthew J. Eandi, William John Fitzpatrick, and Eandi Fitzpatrick LLP. Defendants failed to respond to the complaint, and default was entered on March 25, 2022. On May 11, 2022, Plaintiff filed the operative First Amended Complaint, asserting (1) legal malpractice, (2) breach of fiduciary duty, and (3) fraud. Defendants once again failed to respond to the complaint, and default was entered on August 4, 2022, and judgment was granted against Defendants on February 1, 2023.

            On February 6, 2023, Defendants jointly filed a motion to set aside the default and judgment on the grounds of attorney mistake, specifically a calendaring error by Defendant Eandi. The Court denied this motion on March 10, 2023, finding that mandatory relief did not apply and that Eandi’s neglect was inexcusable for purposes of discretionary relief. The Court additionally found that Defendants unreasonably delayed in seeking relief.

            On March 14, 2024, Defendant Fitzpatrick filed the instant motion to set aside the default. Plaintiff filed his opposition on April 11, 2024. Defendant filed his reply on April 17, 2024.

LEGAL STANDARD

“The court may, upon any terms as may be just, relieve a party or his or her legal representative from a judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect.” (Code Civ. Proc., § 473(b).) An application for relief “shall be made within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken.” (Ibid.)

“After six months from entry of default, a trial court may still vacate a default on equitable grounds even if statutory relief is unavailable.” (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 981.) “To set aside a judgment based upon extrinsic mistake one must satisfy three elements. First, the defaulted party must demonstrate that it has a meritorious case. Second, the party seeking to set aside the default must articulate a satisfactory excuse for not presenting a defense to the original action. Last, the moving party must demonstrate diligence in seeking to set aside the default once discovered.” (Id. at p. 982.) This is a “stringent test” that allows for relief “only in exceptional circumstances” because “there is a strong public policy in favor of the finality of judgments.” (Id. at pp. 981-82.)   

DISCUSSION

            Because it has been over six months after the default judgment, Defendant Fitzpatrick seeks relief under the Court’s equitable power. As stated above, this is a stringent test with three specific requirements. In this case, the Court finds that Defendant cannot demonstrate a satisfactory excuse for failing to defend the action or diligence in seeking relief.  

1. Satisfactory Excuse for Failure to Defend

            Defendant Fitzpatrick claims that he relied on his friend and partner, Eandi, to defend this case. Defendant avers that he has a layman’s understanding of civil procedure. (Fitzpatrick Decl. ¶ 4.) Defendant acknowledges receiving multiple complaints from Plaintiff about Eandi’s mishandling of the underlying action. (Id., ¶¶ 9, 12.) Defendant confirms that he knew Eandi allowed default to be entered against Plaintiff in the underlying action, though Defendant avers that he trusted Eandi’s representations that the default was strategic and believed that Eandi was properly handling the case. (Id., ¶¶ 9-10.)   

            After Plaintiff filed this malpractice action, Eandi assured Defendant that Defendant would be dismissed from the case. (Fitzpatrick Decl. ¶ 14.) However, in March 2022, Plaintiff’s counsel notified Defendant that Plaintiff would be seeking default. (Id., ¶ 16.) Eandi assured Defendant that he would respond to the default request and that the case would be resolved in their favor. (Id., ¶ 17.) Then, after Plaintiff filed the FAC, Defendant received another notice from Plaintiff’s counsel that Plaintiff was seeking default for the FAC. (Id., ¶ 20.) Defendant again relied on Eandi’s assurances that the default would be handled. (Ibid.) Defendant believed Eandi’s claim that every action taken in the litigation thus far was intentional and designed to get Defendant dismissed from the case. (Id., ¶ 21.) Upon periodically checking in with Eandi, Defendant was told that the litigation was progressing and that there was nothing to worry about, which Defendant interpreted to mean the default had been successfully set aside. (Id., ¶ 23.) According to Defendant, it was not until February 11, 2024 that he discovered the true status of the case, upon receiving a voicemail from Plaintiff’s collections attorney. (Fitzpatrick Decl. ¶ 24.)   

“Reliance on a third party constitutes a satisfactory excuse only if it is reasonable.” (Cruz v. Fagor America, Inc. (2007) 146 Cal.App.4th 488, 507.) “The defendant cannot reasonably rely on the third party's continued assurances in light of contrary information showing the third party is providing no defense.” (Ibid.) Here, Defendant’s reliance on Eandi is not reasonable given the repeated confirmed instances of Eandi allowing defaults to occur in both the underlying action and this action. Defendant’s claim that he is unfamiliar with civil procedure is not credible given his experience as a practicing attorney. (See Fitzpatrick Decl. ¶¶ 2-3.) 

These facts distinguish this case from others in which the client was not an attorney and reasonably relied on their attorney’s representations. (See, e.g., Orange Empire Nat’l Bank v. Kirk (1968) 259 Cal.App.2d 347.) Furthermore, “[i]n cases in which courts have found that a defendant's reliance on a third party was reasonable, the defendant received no further information about the status of the litigation after submitting the complaint to the third party.” (Cruz, supra, 146 Cal.App.4th at p. 508.) By contrast, relief is not warranted where a defendant was “repeatedly served” with evidence that the case was not being defended. (Ibid.) Here, Defendant did not merely submit the case to Eandi and receive no further information. Instead, Plaintiff received repeated indications throughout the course of litigation that Eandi was in fact not competently handling the case.

While “[c]lients should not be forced to act as hawklike inquisitors of their own counsel,” this is because laymen are normally unfamiliar with the complexities of litigation. (Aldrich v. San Fernando Valley Lumber Co. (1985) 170 Cal.App.3d 725, 739.) However, as discussed above, Defendant Fitzpatrick is a practicing attorney with over a decade of experience and was in a partnership with Eandi. Furthermore, Defendant did not need to act as a “hawklike inquisitor” because Defendant received multiple notices of Eandi’s dereliction and could have easily discovered the status of the case. This is not a case where “a client is unknowingly deprived of effective representation by counsel.” (Id. at p. 739.) Defendant should reasonably have known that Eandi was not effectively representing him.

In sum, the Court finds that Defendant has not provided a satisfactory excuse for failing to defend the action.

            2. Diligence in Seeking Relief

For similar reasons, the Court finds that Defendant did not exercise diligence in seeking this relief. Defendant waited over a year after judgment was entered to file this motion. As discussed above, Defendant’s sole reliance on Eandi was unreasonable given Defendant’s own legal experience and the multiple notices of default.  

CONCLUSION

            Defendant Fitzpatrick’s motion to set aside default is DENIED.