In Martin Potts and Associates, Inc. v. Corsair, LLC (No. B263198 – filed January 28, 2016), Division Two of the Second Appellate District ruled that a motion for relief from default under Code of Civil Procedure § 473 (Section 473) could not be denied merely because the attorney submitting a supporting declaration failed to articulate the reasons for his “mistake, inadvertence, surprise or excusable neglect.”
Corsair, the defendant in an action to recover unpaid real estate management fees, failed to respond to the complaint filed by its former management company (Potts). Thereafter, the court entered Corsair’s default and later entered a default judgment for $100,000. Corsair then timely moved to set aside the default under Section 473(b). Its longtime attorney submitted a supporting declaration in which he attested that the sole reason for Corsair’s failure to respond to Potts’ complaint was his failure to take action after receiving the complaint from his client; however, he declined to elaborate on the reasons for his failure to act. The trial court set aside the default and default judgment, finding that Corsair’s attorney’s declaration established the requisite “mistake, inadvertence, surprise or excusable neglect,” ordering Corsair to respond to the complaint within thirty days and ordering the attorney to pay Potts’ attorney’s fees and costs in connection with the Section 473(b) motion. Potts then appealed.
Under Section 473(b), relief from a default or default judgment is mandatory if the court finds that “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” and must then “vacate any (1) resulting default entered by the clerk against his or her client, . . . 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.” Potts argued that relief under Section 473(b) should only be granted when the reasons for the attorney’s “mistake, inadvertence, surprise, or neglect” are clearly articulated.
In upholding the order setting aside the default and default judgment, the appellate court noted that the principal purpose of the attorney’s declaration was to acknowledge that the subject default was the result of his or her actions or inactions, and not that of the client (who is not afforded protection under Section 473(b)). While the appellate court suggested that it may be a “good idea” to include the reasons due to the statute’s causation requirement, it explained that the statute does not require more than the attorney’s acceptance of responsibility. Given the three policies triggered by Section 473(b) motions – (1) “to alleviate the hardship on parties who lose their day in court due solely to an inexcusable failure to act on the part of their attorneys”; (2) “to place the burden on counsel”; and (3) “to discourage additional litigation in the form of malpractice actions by the defaulted client against the errant attorney” – the actual reasons for the attorney’s omissions are typically irrelevant to such considerations. Thus, the lesson here for attorneys is that less is more when it comes to Section 473(b) motions.
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