Lee v. Wells Fargo Bank

Factual and Procedural Background

The underlying lawsuit involved a 1996 nonjudicial foreclosure and trustee’s sale of Lee’s home by Wells Fargo. In his complaint, Lee sought to set aside the foreclosure and cancel the trustee’s deed upon sale. On May 18, 1999, the trial court entered judgment in favor of Lee, setting aside the sale, and awarded costs of suit to him. On June 18, 1999, notice of entry of judgment was served.

Sixty-one days later, on August 18, 1999, Lee, representing himself in propria persona,^[1] filed a memorandum of costs which listed attorney fees and related litigation expenses of approximately $200,000. On August 20, 1999, 63 days after notice of entry of judgment was served, Lee filed a separate motion for attorney fees. In the moving papers, he stated: “Good cause exists for the hearing on this motion. This was the earliest plaintiff could move for attorneys fees. Prior counsel had personal problems which prevented the prior filing of this motion.”

Wells Fargo opposed the motion for attorney fees and moved to strike the costs memorandum and tax costs on various grounds, including the ground that the costs memorandum and attorney fee motion were untimely under California Rules of Court,^[2] rules 870(a)(1) and 870.2.^[3] With regard to the attorney fee motion, Wells Fargo also argued that no good cause had been

On September 30, 1999, the court denied the motion for attorney fees as untimely, and granted Well Fargo’s motion to strike costs. At the hearing, the court explained: “The result seems harsh since it was only three days late, but the authorities are clear that the extension of time is available only if requested and obtained prior to the expiration of the time [set forth in rules 2 and 870.2].”

On March 23, 2000, just short of six months later, Lee filed a motion for order to vacate and set aside the order of September 30, 1999, under section 473.^[5] He submitted a declaration from his former attorney, dated September 30, 1999, taking responsibility for the lateness of the postjudgment filings, and a declaration of his own reiterating the numerous times the former attorney had avoided communication, gave misinformation about deadlines, and made unfulfilled commitments during the period after judgment was entered. He also attested to his difficulty in retaining counsel to represent him in connection with the section 473 motion due to economic problems caused, in part, by the underlying lawsuit.

On April 25, 2000, the trial court granted Lee’s motion to vacate the prior order “pursuant to CCP sections 473 and 1008.”^[6] The court based its ruling on the belief that the six-month period ran from the date of the court’s order, not from the date of Wells Fargo’s opposition. After further briefing and argument, the court granted attorney fees in the amount of $104,541.25 and

Discussion

Well Fargo argues in its brief that the section 473 motion should have been denied on grounds of untimeliness because it was filed more than six months after September 7, 1999—the date when Wells Fargo served and filed its opposition to the attorney fee motion and its motions to strike the costs memorandum and tax costs.^[7] Wells Fargo contends that under well-established authority, that was the crucial date for purposes of the six-month period referenced in section 473, rather than the date the trial court entered its order denying the fees and costs as untimely. We turn to an examination of the authorities in this area.

Preliminarily, we note that there are two types of relief set forth in section 473, subdivision (b): discretionary and mandatory. Under the discretionary provision, “[t]he 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, subd. (b), italics added.) 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.)

Under the mandatory provision, “ [notwithstanding any other requirements of this section, the court shall, whenever an application for relief is made no more than six months after entry of judgment, is in proper form, and is accompanied by an attorney’s sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect, vacate any (1) resulting default entered by the clerk against his or her client, and which will result in entry of a default judgment, or (2) resulting default judgment or dismissal entered against his or her client, unless the court finds that the default or dismissal was not in fact caused by the attorney’s mistake, inadvertence, surprise, or neglect.” (§ 473, subd. (b), italics added.)

The discretionary provisions of section 473 have been in place since the 1800’s. (See Historical Note, 15 West’s Ann. Code Civ. Proc. (1979 ed.)

Unlike Simmons, Colbom suggested that the significant date for purposes of commencement of the six-month period in section 473 could be either the date the adversary raises the untimeliness issue or the date the trial court enters its order. The court did not resolve which of those two dates should govern because that issue was not before it. In Colborn, a party had failed to serve and file a proposed bill of exceptions within the time provided by statute. It served and filed an untimely proposed bill of exceptions, after which the other party moved to strike. The appellate court essentially deemed the untimely proposed bill of exceptions to be a request under section 473 and the trial court’s order, certifying the bill of exceptions and denying the motion to strike, “the equivalent of relief from default under section 473.” (Colborn Biological Institute v. DeBolt, supra, 6 Cal.2d at p. 634.) Thus, under the court’s analysis, the request for section 473 relief actually predated the opposing parties’ attempt to raise the untimeliness issue and both were heard at the same time.^[8]

These two cases were discussed in the case primarily relied on by Wells Fargo on appeal: Save Our Forest & Ranchlands v. County of San Diego (1996) 50 Cal.App.4th 1757 [ 58 Cal.Rptr.2d 708 ]. In Save Our Forest, a party was seeking statutory attorney fees for enforcing an important right affecting the public interest. Before rule 870.2 was amended effective January 1, 1994, a motion for such fees “could be made at any time so long as it did not unfairly prejudice the party being asked to pay the fees.” (50 Cal.App.4th at p. 1763.) The party entitled to fees filed its motion on August 4, 1994, more than 60 days after the amended version of rule 870.2 went into effect imposing the current 60-day deadline. The appellate court upheld the trial court’s ruling that the motion for attorney fees was untimely due to the amendment to rule 870.2. The court further held, however, that the trial court erred in concluding that a motion for relief from default filed December 9, 1994, was untimely simply because the date of its filing was more than six months after the 60-day deadline had passed. Noting that the opposition to the motion for attorney fees raising rule 870.2 was filed September 28, 1994, and that the trial court’s denial of the attorney fee motion due to untimeliness was entered on November 28, 1994, the court held that even if the

Like the Supreme Court in Colbom, the court in Save Our Forest did not purport to resolve at which of the two points—the date of the opposition or the date of the final order denying the motion—the six months commenced to run. It simply stated that based on its research: “[T]he courts have consistently found that [an] action against a party which may be relieved under the statute occurs, and the six-month period in which a trial court is empowered to act commences to run, when a procedural time limit is raised as an objection by an adversary or is in some manner enforced by the trial court.” (Save Our Forest & Ranchlands v. County of San Diego, supra, 50 Cal.App.4th at p. 1770, italics added.)

Besides Simmons and Colborn, which we have already discussed, the court in Save Our Forest cited two other cases, Branscum v. State Comp. Ins. Fund (1965) 232 Cal.App.2d 352 [ 42 Cal.Rptr. 682 ] and Freeman v. Goldberg (1961) 55 Cal.2d 622 [ 12 Cal.Rptr. 668 , 361 P.2d 244 ]. Neither of these cases supports the proposition that an adversary’s opposition to a motion causes the six-month period in section 473 to commence. In Branscum, an insurance company had failed to oppose a motion for attorney fees and costs because it mistakenly believed the motion had been taken off calendar. It did not find out that an order had been entered granting fees and costs until more than a week later when the moving attorney sent it a check with attorney fees and costs deducted.^[9] A section 473 motion was made less than four months after the court order was entered. The contention was made on appeal that “the time which elapsed was too great” in the sense that it represented unreasonable delay rather than a violation of the six-month deadline. (Branscum v. State Comp. Ins. Fund., supra, 232 Cal.App.2d at p. 355.) The court disagreed, stating “we are not impressed with this contention under the circumstances shown by the record,” without clarifying whether it believed the time ran from the date the order was entered or the later date when the party received notice. (Ibid.)

The decision in Freeman suggests, if anything, that the six-month period runs from the date the order denying a motion as untimely is entered rather than the day the opposition pointing out its untimeliness is served, although, as in the other cases we have discussed, this issue was not squarely before

The court in Russell declined to follow a Second Appellate District case, Gunlock Corp. v. Walk on Water, Inc. (1993) 15 Cal.App.4th 1301 [ 19 Cal.Rptr.2d 197 ], which applied a “spirit of the law” principle to save a similarly defective attorney fee claim where the requested attorney fees initially appeared as an item of cost in the costs memorandum, and were the subject of an attorney declaration in opposition to the adversary’s motion to tax costs. The court in Gunlock concluded that since the time limitations in rule 870 were not jurisdictional, the trial court had broad discretion in allowing relief from a late filing. (15 Cal.App.4th at p. 1304.)

Thus, even before the recent amendment to rule 870.2 impacting the deadline for filing a motion for attorney fees, the appellate courts were split on the question of whether a late-filed attorney fee request could be granted. More significantly, in 1994, the year after Russell was decided, the version of rule 870.2 it purported to interpret was repealed and a newer version of rule 870.2 took its place. (See Historical Notes, 23 pt. 2 West’s Ann. Court Rules (1996 ed.) foil, rule 870.2, pp. 146-147.)^[10] The new rule unbound attorney fees motions from the time limits applicable to other recoverable costs and gave parties “until 60 days after the expiration of the time for filing a notice of appeal” to file such motions. (Rule 870.2(b)(2).) Further, this amendment added the provision placing no limit on the amount of time a court-ordered extension could encompass where the court exercised its discretion for good cause shown. In view of the split in appellate authority interpreting the previous version of rule 870.2 and the changes to the rule which cast doubt on the continuing vitality of the earlier cases on which Wells Fargo relied, it was by no means clear that the deadline raised in Wells Fargo’s opposition to Lee’s motion for attorney fees would prove to be an insurmountable obstacle to a fee award.