Garcia v. Gallo

An action for damages arising out of an automobile collision on February 3, 1957, was filed December 30, 1957, against Felix and Braullio C. Gallo. No appearance having been made by them, their default was entered March 3, 1958, and after a hearing, judgment for $2,304.50 was entered against them on April 4,1958. On August 27, 1958, defendants filed notice of motion to set aside default and, in support thereof, two affidavits executed by John L. Richardson, claims attorney for Financial Indemnity Company, and Braullio and Felix Gallo jointly. In opposition, plaintiff filed the affidavit of Martin C. Calaway. It is from the order denying the motion defendants appeal.

Although an order denying a motion to vacate a default judgment will not be reversed in the absence of a clear showing of abuse of discretion by the trial court (Warren v. Warren, 120 Cal.App.2d 396 [ 261 P.2d 309 ]), and the reviewing court must indulge all reasonable presumptions and intendments in favor of a default judgment (Kreling v. McMullen, 158 Cal. 433 [ 111 P. 252 ] ; Paulekas v. Paulekas, 117 Cal.App.2d 73 [ 254 P.2d 941 ]), on the theory that a case should be heard on its merits whenever possible, such an order is more carefully scanned' on appeal than one granting relief (Brill v. Fox, 211 Cal. 739 [ 297 P. 25 ]; Karlein v. Karlein, 103 Cal.App.2d 496 [ 229 P.2d 831 ]). However, in reviewing the evidence submitted to the trial court by way of affidavits, it is well settled that those favoring the position of the respondent establish the facts declared and also such facts as might reasonably have been inferred therefrom (Doah v.

The events leading up to the entry of the default judgment and motion to vacate the same, are herein set forth with these rules in mind. On February 3, 1957, plaintiff’s automobile was struck from the rear by one owned by Braullio and driven by his minor son, Felix. The insurance policy, issued by the Financial Indemnity Company, covering Braullio’s automobile, contained a clause excluding from coverage its use by one under the age of 25, which clause at that time was valid. Braullio reported the accident to the carrier February 13. Six days later, on February 19, the California Supreme Court changed the law relative to such clauses, holding them to be unenforceable. (Wildman v. Government Employees’ Insurance Co., 48 Cal.2d 31 [ 307 P.2d 359 ].) Within a month plaintiff retained Martin C. Calaway to represent her, who immediately wrote to Felix making a claim on her behalf; and on March 7 directed a letter to the insurance company in care of its adjuster advising that he represented plaintiff, that the policy issued by it covered Braullio’s ear, and they would look to defendants and their carrier for damages. In answer, the adjuster, on the letterhead of the company, wrote Calaway on March 12,1957, advising that due to a policy violation (referring to the clause excluding coverage) coverage was being denied Braullio by the Financial Indemnity Company.

On July 26, 1957, Braullio wrote a letter to plaintiff indicating he had contacted Attorney John F. Sheffield to represent him and had been advised to ask her for a financial responsibility release that he might retain his license and plates. Calaway responded on behalf of plaintiff by a letter directed to Sheffield advising him that his client would not execute such a release. Then, on September 4, 1957, Sheffield wrote to Calaway stating that he was attorney for the Gallos (referring

Approximately two weeks thereafter, on April 4, 1958, plaintiff appeared in court and judgment was entered; later, on the same day, Calaway wrote Sheffield advising him that judgment had been entered and requesting a copy of defendants’ insurance policy to determine if proceedings could be had against Financial Indemnity Company under the Insurance Code to obtain payment thereof. On April 21, Sheffield acknowledged receipt of the letter and enclosed a copy of the policy.

Ten days later, on May 1, Sheffield telephoned Calaway’s office to discuss the matter; Calaway was not in but Sheffield left word that he intended to discuss the ease of Wildman v. Government Employees’ Insurance Go., supra, 48 Cal.2d 31 , with officials of the Financial Indemnity Company and advise them that, unless it indemnified his client for the judgment taken against him the company would be reported to the Insurance Commissioner.

Section 473, Code of Civil Procedure, provides that “the court may, upon such terms as may be just, relieve a party or his legal representative from a judgment, order, or other proceeding taken against him through his mistake, inadvertence, surprise or excusable neglect.” Appellants base their claim of an abuse of the trial court’s discretion in denying the motion upon two affidavits executed by them and one Richardson,

Richardson, claims attorney for Financial Indemnity Company, alleged in his affidavit that, upon being notified of the accident by defendants, his predecessor, James V. Daley, interpreted as valid the standard endorsement excluding coverage of the automobile if driven by one under 25 years, determined Felix ’ operation of Braullio’s automobile to be a violation of this provision and refused to entertain coverage and defend the Gallos—both then and when they later delivered the complaint served upon them and demanded the company appear and represent them; that in February of 1957 the case of Wildman v. Government Employees’ Insurance Co., supra, 48 Cal.2d 31 , contrary to the law then in effect, established the unenforcibility of the endorsement in question; and that he, who succeeded Daley, consulted attorneys for the insurance company, Bolton, Groff and Dunne, who advised him of the change in the law as the result of the Wildman decision and the company should defend the insured. Richardson further alleged that he first learned of the default judgment taken against the defendants on May 23, 1958, and immediately retained Attorneys Bolton, Groff and Dunne to file the motion to set aside the judgment; and that by reason of Daley’s death he was pressed with business duties and a caseload which “prevented him from becoming immediately aware and acquainted with the captioned matter aforesaid, and the default and judgment aforesaid.”

The Gallos, in their affidavit, swore that they promptly tendered summons and complaint to the insurance company and demanded a defense; that they had no means or ability to finance an appearance or retain counsel to advise them; that the insurance company denied coverage, they relied upon the company to appear and defend and in reliance thereon permitted default to be entered against them; that they promptly notified the company of the entry of default and judgment; and that they had consulted their attorney, John F. Sheffield, for the purpose of determining their rights in this matter.

The two affidavits filed in support of the motion, and relied upon by appellants, are vague, incomplete as to material dates and other matters, lack chronological continuity and are replete with omissions and inconsistencies, all of which well justified the trial judge in accepting the plaintiff’s version of what occurred, thereby eliminating any ground for relief under section 473. Referring first to the Gallos, the only

The conduct of the Gallos appears to have been intentional and the default occurred as a result of a deliberate failure of the Gallos and their counsel, fully advised in the premises, to act, which does not justify relief under section 473 (Williams v. Reed, 43 Cal.App. 425 [ 185 P. 515 ]). Since the insurance company, even though unjustified, unequivocally refused to defend them, perhaps defendants preferred, rather than appear, to permit the default to be entered and later proceed against it under the Insurance Code to force payment of the judgment. But whatever motivated their failure to defend and subsequently caused their change of mind, relief under section 473 is not now available to them (Elms v. Elms, 72 Cal.App.2d 508 [ 164 P.2d 936 ] ; Wilterdink v. Wilterdink, 81 Cal.App.2d 526 [ 184 P.2d 527 ] ; Baratti v. Baratti, 109 Cal.App.2d 917 [ 242 P.2d 22 ]) ; for under that section the court may not set aside a default judgment regularly entered except on the grounds listed therein. (Redding etc. Co. v. National Surety Co., 18 Cal.App. 488 [ 123 P. 544 ].) We find no abuse of discretion in the implied finding of the lower court that neither the Gallos nor their counsel, John Sheffield, permitted the default to be entered because of “inadvertence, mistake, surprise or excusable neglect.” Two months elapsed from the date of service of the complaint until entry of default and another month from then until judgment was entered, during which time Sheffield was fully advised and once warned in advance of the judgment to be taken against his clients. There was no “surprise” under the circumstances (Paulekas v. Paulekas,

Therefore, if relief is justified it must be for the default of the insurance company lawyers. If their acts and omissions are to be considered, it must be on the theory either —that the Gallos reasonably and in good faith relied upon a promise by them to defend the action (Sofuye v. Pieters-Wheeler Seed Co., 62 Cal.App. 198 [ 216 P. 990 ]; Newton v. DeArmond, 60 Cal.App. 231 [ 212 P. 630 ]) which is not borne out by the record—or that they constitute “a party or his legal representative” under section 473. Surely the carrier is not “a party”; but to deny that its counsel may not be defendants’ 1 ‘legal representative” is to ignore the common and accepted practice of insurance companies under their contracts to provide representation to an insured when sued. It can hardly be argued that had the insurance company submitted to defendants’ demand for representation, they would not have been represented throughout all proceedings by the carrier’s counsel; or had the trial court granted the motion an attorney supplied by the insurance company would not be defending them on a new trial. However, it is interesting to note that on the one hand, Richardson, claims attorney for the insurance company, contends that he (and his predecessor) from the very beginning denied carrier representation to defendants and has never represented them; and, on the other, in effect seeks to establish himself as defendants’ “legal representative” for the present purpose of seeking their relief from his default.

Whether the insurance company’s counsel is the “legal representative” of defendants as to permit our consideration of the merits of their motion is of little consequence at this point, for the affidavits relied upon by them are wholly insufficient to justify any finding of “mistake, inadvertence, surprise or excusable neglect” on his part. The burden of proving grounds for relief under section 473 was upon the defendants in the lower court and they were required to establish their claim by a preponderance of the evidence (Bruskey v. Bruskey, 4 Cal.App.2d 472 [ 41 P.2d 203 ] ; Weinberger v. Manning, 50 Cal.App.2d 494 [ 123 P.2d 531 ]); and the fact that the trial court believed the averments of

Although Eichardson has professed ignorance of the change in the law due to the Wildman decision, John Bolton, defendants’ present legal representative and attorney of record and counsel for Fidelity Indemnity Company, has always been aware of the Wildman case and its effect on the law regulating the duties of the insurance company under the policy. There was no default on his part, nor does he or anyone on his behalf so claim. If it exists, the default must be that of Eichardson—and his own affidavit is not sufficient upon which to base any finding to justify relief under section 473. There is nothing in the record to show that Eichardson and Daley were not competent lawyers; but Eichardson claims that he was “surprised” by the change in the law resulting from the Wildman decision and that Daley’s death so pressed him with additional work he did not become immediately acquainted with the within litigation and the default. That this situation does not fall in that class of eases excusing a “mistake of law” based upon surprise of a change therein is manifest in the record. The Gallos advised the insurance company of the accident on February 13, 1957, at which time the endorsement was valid; but only six days later on February 19, the Supreme Court in the Wildman case held such endorsements unenforceable. On March 7, plaintiff's counsel wrote the insurance company notifying it that its policy covered Braullio’s car and that they were looking to the carrier for damages; and on March 12, almost one month after the change in the law through the Wildman decision and in the face of counsel’s advice that the policy insured Braullio’s automobile, the insurance company advised plaintiff’s counsel that because of the endorsement it was denying coverage. The change in the law due to the Wildman case actually occurred 10 months before suit was instituted against the insured, 12 months before default was entered, 13 months before judgment was rendered, and 18 months before the motion was made. The time element alone appears to render ineffective any claim that the law changed to Eichardson’s “surprise.” In addition, he offered nothing by way of affidavit to the trial court to show why he, a lawyer specializing in insurance law and claims attorney for an insurance com

What is an excusable mistake or ignorance of the law is mainly factual and no reliable test is available. In Security Truck Line v. City of Monterey, 117 Cal.App.2d 441 [ 256 P.2d 366 , 257 P.2d 755 ], where mistake or ignorance of the law was relied upon (it further appearing that plaintiff had warned counsel it would take default), the court pointed out that the legal problem involved was not complex or debatable and a solution was readily ascertainable. Affirming the order denying relief the court stated at page 445: “In the instant case we are not interested in the question as to whether the trial court could have granted relief based on the claimed mistake of law, but, since the trial court denied relief, only in whether such holding was within its discretion. ’ ’ However, the cases demonstrate that the determining factor in the issue of excusable mistake of law is the reasonableness of the misconception. (Garroway v. Jennings, 189 Cal. 97 [ 207 P. 554 ]; Moskowitz v. McGlinchey, 85 Cal.App. 189 [ 259 P. 105 ]; ' Shearman v. Jorgensen, 106 Cal. 483 [ 39 P. 863 ]; Willett v.

Recognizing the realities of office practice, the misfiling of papers (Downing v. Klondike Mining etc. Co., 165 Cal. 786 [ 134 P. 970 ]), erroneous clerical entries (H.G.B. Alexander & Co. v. Martz, 90 Cal.App. 360 [ 265 P. 881 ]), and the like have been excused; but “press of business” standing alone has been considered as an insufficient excuse unless additional special circumstances exist (Soda v. Marriott, 130 Cal. App. 589 [ 20 P.2d 758 ]; Carbondale Mack. Co. v. Eyraud, 94 Cal.App. 356 [ 271 P. 349 ]). However, in the absence of further explanation and more complete and definite information concerning the matter in Richardson’s affidavit that would bring the instant case within the exception, the trial court was fully justified in failing to find this to be a proper situation for relief.

The respondent contends that the six months ’ period mentioned in section 473, Code of Civil Procedure, is jurisdictional (Berilla v. Pope, 94 Cal.App.2d 743 [ 211 P.2d 639 ]) and that the trial court had no power to grant relief because the instant application was not filed within this period. In view of the record before us, we find no merit in this claim. As to when the six months begins to run, the courts have interpreted the clerk’s entry of default as a “proceeding” taken against the party, which marks the beginning of the period, even though the judgment on the default is not entered until later (Monica v. Oliveira, 147 Cal.App.2d 275 [ 305 P.2d 169 ]). Default was entered March 3, 1958, notice of motion was filed August 27, 1958; and the oral motion was made and heard on September 15, 1958. Although our courts in the past have followed the rule that the oral motion (application) had to be made within the six months’ period and relief could not be granted where the notice was served and filed before, although set for hearing after the time had expired (Jones v. Alexander, 101 Cal.App.2d 44 [ 224 P.2d 870 ]), it appears, under section 1005.5, Code of Civil Procedure, wherein notice is now deemed the motion for all purposes, that the strict rule found in Jones v. Alexander, supra, is abrogated and that service and filing within the period is sufficient.

The judgment is affirmed.

Wood, P. J., and Pourt, J., concurred.