Judge: Michael Small, Case: 22STCV04481, Date: 2023-11-08 Tentative Ruling

Case Number: 22STCV04481    Hearing Date: November 8, 2023    Dept: 57

Pending before the Court is the motion of  Defendant James Shiau under Code of Civil Procedure Section 473(b) to vacate this Court's order granting summary judgment against Shiau and in favor of Plaintiff Mintaka Financial, LLC ("Mintaka") .  (The Court's summary judgment order also was against co-Defendant American Date Services LLC, which has not joined Shiau's effort to vacate the order.)    The Court is denying Shia's motion to vacate the summary judgment order.

In the lead-up to, and at the hearing on, Mintaka's summary judgment motion, Shiau was represented in this case by attorney Jason Koch.  Shiau's motion to vacate the summary judgment order is based on the proposition that Koch's representation of him was so neglectful that it amounted to "positive misconduct" that essentially deprived Shiau of representation.  In advancing this proposition, Shiau relies on Daley v. County v Butte (1964) 227 App.2d 380.  The general rule is that an attorney's inexcusable (as opposed to excusable) neglect is imputed to the client such that the client is unable to use Section 473(b) to escape an adverse order entered against the client during the course of the attorney's representation.  Daley sets forth the positive misconduct exception to that rule.  The exception applies when the attorney's inexcusable neglect was so bad that it was as if the attorney substituted himself or herself out of the case leaving the client self-represented.   

The positive misconduct exception is very limited, however.  In Carroll v. Abbott Laboratories, Inc. (1982) 32 Cal.3d 892, 900, the California Supreme Court admonished that exception must be applied narrowly "lest negligent attorneys find that the simplest way to gain the twin goals of rescuing clients from defaults and themselves from malpractice liability, is to rise to ever greater heights of incompetence and professional irresponsibility . . . ."   

In this Court's view, Koch's neglectful representation of Shiau did not rise to the level necessary to fall within the positive misconduct exception.  To be sure, as Shiau emphasizes, Koch did not conduct any discovery on Shiau's behalf that might have fended off Mintaka's summary judgment motion.  Nor did Koch file a written  opposition to the summary judgment motion.  On the other hand, Koch communicated with Shiau about a strategy for dealing with Mintaka's summary judgment motion that involved seeking a stay of the hearing on the motion pending Shiau's appeal from an adverse ruling against him in a related case, Hanmi Bank v. American Data Services LLC.  Shiau says that Koch was supposed to have filed a written request for a stay but only made the request orally at the hearing on Mintaka's summary judgment motion..  It may have been malpractice for Koch to implement the stay strategy in that manner while at the same time not opposing the summary judgment motion.   But this was not tantamount to Koch substituting himself out of the case and leaving Shiau as if he were self-represented.   Carroll teaches that under the circumstances, Shiau's remedy lies in a malpractice action against Koch, not in a Section 473(b) motion to overturn the summary judgment order that happened on Koch's watch.