SUPERIOR COURT OF THE STATE OF CALIFORNIA  

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT 

 

 

I. Background 

On August 2, 2023, intervenor State Farm Mutual Automobile Insurance Company (“State Farm”) filed this motion to set aside default entered on March 24, 2020 and default judgment entered on February 24, 2022, against its insured, Defendant Crescencio Polanco (“Polanco”). State Farm makes this motion pursuant to the Court’s equitable authority. Further, State Farm moves for leave to file an Answer to the complaint on behalf of its insured, and to defend the action on the merits.  

Plaintiffs oppose the motion. 

This action arises from an automobile accident that occurred on August 3, 2018.  Plaintiffs filed their Complaint on August 15, 2019.  A proof of service of summons reflects Polanco was served with the summons and complaint on October 15, 2019 by personal service. After Polanco failed to file a responsive pleading, the clerk, at Plaintiffs’ request, entered default against Polanco. Default was initially entered on March 24, 2020. However, the Court voided the March 24, 2020 because Plaintiffs served their Statement of Damages on Defendant after entry of default. (Min. Order Oct. 25, 2021). Thereafter, Plaintiffs obtained a default on January 26, 2022. Plaintiffs then filed a request for default judgment on February 4, 2022, which was granted on February 24, 2022 (Min. Order, Feb. 24, 2022). 

On July 12, 2023, State Farm filed an ex parte application to intervene in this action to set aside default/default judgment.  The Court granted State Farm’s application in part, and State Farm was given leave to intervene on behalf of Polanco and filed its complaint-in-intervention on January 13, 2023.  (Min. Order, July 13, 2023.)  

On August 2, 2023, State Farm filed its complaint-in-intervention, and simultaneously filed the instant motion to set aside default/default judgment against Polanco.  

  

II. Legal Standard 

“Apart from any statute, courts have the inherent authority to vacate a default and default judgment on equitable grounds such as extrinsic fraud or extrinsic mistake.”  (Bae v. T.D. Service Co. of Arizona (2016) 245 Cal.App.4th 89, 97.)  A motion seeking such equitable relief “‘may be brought on such ground even though the statutory period [for relief under Code of Civil Procedure section 473, subdivision (b)] has run.’ [Citation.]”  (Ibid.)  Unlike motions to vacate under section 473, where any doubts in applying section 473 must be resolved in favor of the party seeking relief, “[w]hen a default judgment has been obtained, equitable relief may be given only in exceptional circumstances.”  (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 981.)    

Pertinent to intervening insurers, Western Heritage Insurance Co. v. Superior Court (2011) 199 Cal.App.4th 1196 provides:  

 

[C]ase authority is in agreement that insurers may intervene in third party actions brought against their insureds in order to protect their own interests when their insureds are unable to defend. While no case expressly considers whether the intervening insurers are then entitled to litigate liability and damages issues that their insureds are barred from litigating, this conclusion necessarily follows. Indeed, there would be no purpose in allowing an insurer to intervene in order to protect its own interests but then limit the scope of the insurer's defense to those issues to which its insured, because of the default, is limited to pursuing. (Id. at 1207, emphasis original.) 

 

… 

 

It is therefore apparent that an intervening insurer is not limited to those defenses to which its insured might be restricted due to the procedural default. The entire purpose of the intervention is to permit the insurer to pursue its own interests, which necessarily include the litigation of defenses its insured is procedurally barred from pursuing. (Id. at 1208.) 

 

… 

 

[W]e have concluded that an intervening insurer is not bound by a default taken against its insured. “ ‘It is an established principle of law that admissions implied from the default of one defendant ordinarily are not binding upon a codefendant who, by answering, expressly denies and places in issue the truth of the allegations thus admitted by the absent party.’ ” (Id. at 1211., emphasis original.) 

 

Rappleyea v. Campbell (1994) 8 Cal.4th 975, 982 states, “‘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.’” [citing to Stiles v. Wallis (1983) 147 Cal.App.3d 1143, 1147–1148, italics added.] 

Here, State Farm argues it was never notified of the lawsuit or default until March 8, 2023, when Polanco reported the claim to State Farm. State Farm argues it has a meritorious case because Polanco was not entirely at fault for the incident, and that it was previously unable to retain counsel for Polanco due to its lack of knowledge of the action. After Polanco reported the claim to State Farm on March 8, 2023, State Farm argues it acted diligently by retaining defense counsel to defend Polanco on June 15, 2023. State Farm contends it is prepared to file a responsive pleading on behalf of Polanco, and requests leave to do so.  

Plaintiffs, in opposition, argue State Farm, as an intervenor, is limited to protecting its own interests only and not those of its insured, who must assert his own interests and must seek relief from default judgment on his own circumstances. Further, Plaintiffs contend the possibility that Plaintiffs may have judgment against State Farm, as the intervenor, and a separate judgment against Polanco with credit applied to Polanco’s judgment for satisfaction of amounts paid by State Farm. State Farm did not file any reply to Plaintiffs’ opposition. 

Here, Plaintiffs contend notice of the default and default judgment was mailed to Polanco, but do not directly oppose State Farm’s contention that it was unaware of the action and subsequent defaults until Polanco finally informed State Farm as such on March 8, 2023. There is no indication State Farm had notice of the impending entry of default or default judgment against State Farm such that it could intervene to protect its interests and those of its insured earlier. Even when the showing under section 473 is not strong, when there is doubt about setting aside a default, such doubt should be resolved in favor of relief. (Rosenthal v. Garner (1983) 142 Cal.App.3d 891, 898.) 

The situation here is analogous to Jade K. v. Viguri (1989) 210 Cal.App.3d 1459, wherein the appellate court found denial of the intervenor’s motion to vacate default judgment entered against its insured was an abuse of discretion. In Viguri, intervenor Truck contends its insured did not notify Truck of the lawsuit or request defense under the Truck policy until after entry of default. Once Truck had notice of the action, Truck acted within a reasonable time to assume control and management of the lawsuit by tendering defense to Viguri and bringing its motion to vacate. Truck requested relief under section 473 to vacate default judgment based on “mistake, inadvertence, surprise, or excusable neglect.” The appellate court agreed the trial court should have granted Truck relief under section 473.  

However, an insurer intervening in an action to pursue its own interests after its insured has defaulted is not required to move to vacate the insured's default as to itself; the insured's default simply has no effect on the insurer. (W. Heritage Ins. Co. v. Superior Ct. (2011) 199 Cal. App. 4th 1196, 1211.) 

Based on the foregoing, the January 26, 2022 default against Polanco will stand because State Farm has not shown it has authority to appear or file an Answer on Polanco’s behalf. It is undisputed that Polanco has failed to defend himself in this action, and it is unclear whether defense counsel assigned to Polanco has any contact with Polanco, as Polanco did not move to set aside default/default judgment on his own behalf. State Farm presents no evidence indicating it has been authorized to appear for Polanco, or that an insurer may stand in the shoes of its insured by virtue of its status as the insurer.  

By way of State Farm’s complaint-in-intervention, State Farm may litigate all appropriate defenses that Polanco could have asserted without Polanco needing to be relieved from default. To the extent that issues concerning Polanco’s liability are litigated by State Farm to a decision, such as on summary judgment or after trial, those determinations will be binding on Polanco, and a subsequent default prove-up must take those determinations into account.  

Based on the foregoing, State Farm’s motion is GRANTED IN PART as to setting aside the February 24, 2022 default judgment only. The remaining requests are denied.   

 

Moving party is ordered to give notice. 

 

PLEASE TAKE NOTICE: 

Dated this 3rd day of November 2023