Judge: Peter Wilson, Case: 2016-00878574, Date: 2022-08-11 Tentative Ruling
The motion by defendants Providence Advocates Law Center, APC (PALC) and Jack H. Karpeles’ (Karpeles) (collectively, Defendants) for mandatory dismissal of the action Moore et al. v. Consumer Debt Solutions Law Group et al, Case No. 30-2016-878574, pursuant to CCP § 583.310, is GRANTED.
Since this action was filed on September 29, 2016 (ROA 2), Defendants argue that the 5-year period for bringing an action to trial under CCP § 583.310 expired on March 30, 2022 [including the 6-month extension pursuant to Emergency Rule 10].
An action must be brought to trial within 5 years after it is commenced against the defendant. If not, dismissal is mandatory on motion of any party, or on the court's own motion. (Code Civ. Proc. §§ 583.310, 583.360.)
The 5-year period in which an action must be brought to trial is tolled (extended) by any period of time during which: (1) The court’s jurisdiction to try the action was suspended (Code Civ. Proc. § 583.340(a); or (2) prosecution of the action was stayed or enjoined, including judicial arbitration during the last 6 months of the 5-year period (Code Civ. Proc. § 583.340(b)); or (3) bringing the action to trial, for any other reason, was “impossible, impracticable, or futile” (Code Civ. Proc. § 583.340(c)).
Generally, the lapse of the 5-year period as to one defendant does not mandate dismissal of the action as to all defendants. (Brunzell Const. Co., Inc., of Nevada v. Wagner (1970) 2 Cal.3d 545, 555 [“Each individual is entitled to have his [CCP § 583.340] claim evaluated with respect to his own particular role in the litigation.”) However, as to a defendant either expressly named in the original complaint, or named in the original complaint by a fictitious name, the action commences on the date of the filing of the complaint. (Gray v. Firthe (1987) 194 Cal.App.3d 202, 209; Gaines v. Fidelity National Title Ins. Co. (2013) 165 Cal.Rptr.3d 544, 561.)
These tolling provisions “must be liberally construed consistent with the policy favoring trial on the merits.” (Dowling v. Farmers Ins. Exch. (2012) 208 Cal. App. 4th 685, 693.)
Plaintiff bears the burden of proving impossibility, impracticability or futility. (Alpha Media Resort Investment Cases (2019) 39 Cal.App.5th 1121, 1128.)
Defendants were named as defendants by Doe Amendment. ROA 228 and 229. Therefore, the 5-year period begins when the complaint was filed. Plaintiff Moore does not dispute that, unless tolled, the 5-year period for Defendants expired on March 29, 2022.
Plaintiff Moore argues that Defendants are equitably estopped from availing themselves of the 5-year rule because Karpeles “pretended that he had filed an Answer and could litigate this matter for over a year when his Answer had been rejected by the Court.” Plaintiff Moore also argues that the 5-year statute was tolled and the Court lost jurisdiction to try the action because of the defaults entered against Defendants. Further, Plaintiff Moore argues the 5-year period was tolled by “impossibility, impracticability and futility” because Karpeles Defendants pretended to have filed an Answer allowing them to litigate in this action, the Moore Action could not deprive the Rosales Action of the ability to conduct discovery and Karpeles’ law license was suspended for 60 days. ROA 846, Opp.
Plaintiff Moore provides no legal support for her arguments, and only two of the arguments could possibly (but do not here) toll the 5-year limitations period.
Equitable Estoppel: “Equitable estoppel can be found only when (1) the party to be estopped was aware of the true facts; (2) that party either intended that its act or omission be acted upon, or so acted that the party asserting estoppel has a right to believe it was intended; (3) the party asserting estoppel was unaware of the true facts; and (4) the party asserting estoppel relied on the other party's conduct to its detriment. (Citation omitted.)” (Jordan v. Superstar Sandcars (2010) 182 Cal. App. 4th 1416, 1422–23, 107 Cal. Rptr. 3d 5, 11.)
When words or conduct by defendant reasonably “lulls the plaintiff into a false sense of security” regarding the 5-year statute, resulting in inaction, this may estop defendant from later seeking a dismissal based on the delay. Equitable estoppel is invoked to prevent defendant from profiting by his or her own deception. (Borglund v. Bombardier, Ltd. (1981) 121 Cal.App.3d 276, 280, 175 Cal.Rptr. 150, 152-153 [“If a trial court encounters statements or conduct by a defendant which lulls the plaintiff into a false sense of security resulting in inaction, and there is reasonable reliance, estoppel must be available…”]; compare Jordan v. Superstar Sandcars, supra, 182 Cal.App.4th at 1423 [defense counsel's “notice of unavailability” until date beyond 5-year cut-off did not equitably estop defendant from asserting 5-year statute]; Brookview Condo. Owners' Assn. v. Heltzer Enterprises-Brookview (1990) 218 Cal. App. 3d 502, 511–12, 267 Cal. Rptr. 76, 82 [in cases applying equitable estoppel, defendant had been timely served and engaged in misleading or deceptive acts, such as making false representations about the time period and promising not to seek dismissal after the expiration of the statutory time period, to lull plaintiff into inaction].)
First, this argument only applies to Karpeles. No answer was filed or attempted to be filed on behalf of PALC and default was entered against PALC on April 13, 2021. There is no argument or any evidence of any action or representation by Defendants that lulled Plaintiff into inaction as to PALC.
As for Karpeles, there is insufficient evidence to apply equitable estoppel. The evidence shows Karpeles served his Answer, without any file stamp, on Plaintiff Moore on April 4, 2021. ROA 848, Lind Decl., Ex. A. The Notice of Rejection of Karpeles’ Answer is in the Court docket. ROA 457. The Notice of Rejection was also served on Plaintiff Moore. ROA 856, Reply, Ex. 7. There is no evidence that Karpeles made any other representations or actions regarding the status of his Answer or that Plaintiff Moore made any inquiries regarding the status of the filing of the Answer. As such, Plaintiff Moore knew or should have known that Karpeles’ Answer was not actually filed.
Moreover, the filing or lack of filing the Answer was not the cause of Plaintiff Moore’s failure to bring this action to trial within 5-years. As Plaintiff Moore admits, the parties continued to litigate this case after Karpeles served his Answer. Plaintiff Moore does not point to any action or statement by Karpeles regarding the 5-year statutory period that prevented her from bringing this case to trial within the 5 -year statute.
Entry of Default: There is no legal authority for Plaintiff Moore’s argument that entry of default suspends the Court’s jurisdiction. Instead, this issue is analyzed in terms of impossibility, impracticability and futility.
A default judgment tolls the 5-year statute based on impossibility, impracticability or futility, but an entry of default, by itself, does not. (Howard v. Thrifty Drug & Discount Stores (1995) 10 Cal.4th 424, 438-439, 41 Cal.Rptr.2d 362, 371 [in the context of a default judgment, a reasonable period of time between entry of defendant's default and entry of the default judgment should also be excluded from calculation of the 5-year period; but a gap of three years between default and judgment has been held unreasonable, and does not toll the 5-year statute].)
As explained in Hughes v. Kimble (1992) 5 Cal. App. 4th 59, 69, 6 Cal. Rptr. 2d 616, 623:
A default does not render further prosecution of the case impossible. An exercise of reasonable diligence in prosecuting the case when the defendant is in default consists of reasonable efforts to proceed to a hearing on damages and obtain a default judgment. Where such efforts by a plaintiff do not appear within a reasonable time, no principle of fairness forbids dismissal of the action.
Although the Hughes court recognized that other courts had included the time between entry of default and default judgment to the time for tolling, it declined to require exclusion in all cases and instead concluded:
the time between entry of a default and entry of a default judgment should be excluded from the five-year time to bring a case to trial if and only if the court finds that the plaintiff used due diligence to obtain entry of the judgment, and that in spite of such due diligence, it was impossible, impracticable, or futile to obtain a judgment.
(5 Cal. App. 4th at 71, emphasis added.)
Here, again, there is insufficient evidence to toll the 5-year statute as to PALC. Default was not obtained against PALC despite entry of default in April 2021. Plaintiff Moore could not obtain default judgment because her First Amended Complaint did not plead an amount of damages (ROA 66, FAC) and Plaintiff Moore did not seek to amend the FAC until one year later. ROA 774, 4/22/2022 MO. Plaintiff Moore offers no explanation for the delay.
As for Karpeles, Plaintiff Moore makes the same arguments as with equitable estoppel. For the same reasons as previously discussed, these reasons are not persuasive. Plaintiff Moore has not shown she was reasonably diligent in discovering Karpeles’ Answer was not actually filed or in bringing this case to trial within the 5-year statutory period. There is no evidence that Karpeles’ actions or statement made it impossible, impracticable or futile to bring this action to trial within 5 years. Indeed, as noted by Plaintiff Moore in the Joint Status Conference Report filed April 7, 2022 (ROA 763):
“Defendant Stead Law Group was served on November 23, 2016 (ROA #28) and May 11, 2018 (ROA #452) and defaulted on April 13, 2021. Defendant Christopher T. Stead was served on May 11, 2018 (ROA #452) and defaulted on April 13, 2021. Defendant Providence Advocates Law Center (“PALC”) was served on September 6, 2020 (ROA #259) and defaulted on April 13, 2021. Defendant Jack H. Karpeles (“Karpeles”) was served on September 6, 2020 and defaulted on March 23, 2022 (ROA #742). Plaintiff Moore intends to proceed with default prove up hearing as to all defaulted parties – Stead Law Group, Christopher T. Stead, Providence Advocates Law Center, and Jack H. Karpeles.
Plaintiff Moore provides no legally sufficient explanation or excuse for the delays between service and entries of default, or delays between the entries of default and any effort to seek entry of a default judgment against any of the defendants. And Plaintiff Moore’s election to file a Second Amended Complaint on May 13, 2022 (ROA 782), which was served on Defendants on May 17, 2022 (ROAs 790, 792) opened their defaults, and this motion to dismiss followed.
Defendants are ordered to give notice.
The status conference remains on calendar for the Rosales action.