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Granite Community Bank v. Dominic J. Magliarditi

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT (Placer)


September 19, 2011

GRANITE COMMUNITY BANK, PLAINTIFF AND RESPONDENT,
v.
DOMINIC J. MAGLIARDITI, DEFENDANT AND APPELLANT.

(Super. Ct. No. SCV25580)

The opinion of the court was delivered by: Robie , J.

Granite Community Bank v. Magliarditi

CA3

NOT TO BE PUBLISHED

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

On appeal from the default judgment entered against him, defendant Dominic J. Magliarditi challenges the denial of his motion to set aside his default. Magliarditi contends (implicitly) that the trial court abused its discretion in declining to find his failure to timely answer the complaint during settlement negotiations with plaintiff Granite Community Bank was the result of "mistake" within the meaning of Code of Civil Procedure section 473, subdivision (b) (section 473(b)). Finding no basis to conclude the trial court abused its discretion, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

In August 2009, the bank filed its complaint against Magliarditi for breach of guaranty. The complaint alleged that Magliarditi had agreed in writing to guaranty the indebtedness of a corporation called 181 Exposition, LLC, which had defaulted on a promissory note in favor of the bank in the principal sum of $1.3 million.

Magliarditi was served with the summons and complaint on September 16, 2009; thus, his response to the complaint was to be filed and served on or before October 16, 2009. (See Code Civ. Proc., § 432.10.)

Upon receipt of the complaint, Magliarditi began communicating with the bank and the bank's attorney in an attempt to settle the matter.

On October 14, an attorney claiming to represent Magliarditi contacted the bank's attorney and asked for a two-week extension of time to respond to the complaint. The request was granted; thus, Magliarditi's response was due on or before October 30.

On November 9 -- the last day to do so -- the bank's attorney filed a request for entry of Magliarditi's default.*fn1 (See Cal. Rules of Court, rule 3.110(g) ["If a responsive pleading is not served within the time limits specified in this rule and no extension of time has been granted, the plaintiff must file a request for entry of default within 10 days after the time for service has elapsed"].)

That same day, Magliarditi tried to contact the bank by telephone to inquire about the status of his last settlement offer. When he could not reach the bank by telephone, Magliarditi sent the bank's attorney an e-mail (at 2:33 p.m.) asking for a further extension of time to respond to the complaint pending the completion of settlement discussions.

The bank's attorney responded that "[a] default was entered this morning. Your answer, pursuant to our agreement, was to be filed no later than October 30. Under California State Court Rules of Court, a default had to be entered no later than today, 10 days after the answer was due. Failure to do so subjected my client to sanctions. [¶] This does not prevent further negotiations on a resolution. . . ."

In response to the notice from the bank's attorney that his default had been entered, Magliarditi "respectfully request[ed] that [the bank's attorney] withdraw the default immediately," asserting he had "been in good faith discussions with the bank as [the bank's attorney was] advised by [Magliarditi's] proposed counsel whom [the bank's attorney] talked with and provided the extension."

Magliarditi claims he did not receive a response from the bank's attorney. The bank's attorney did, however, send an e-mail to the attorney to whom he had granted the extension of time, which he copied to Magliarditi, stating as follows: "The entry of default filed against Nick Magliarditi will not be withdrawn. Pursuant to an exchange of e-mails by and between [counsel] on October 14, it was agreed that Mr. Magliarditi would have a two-week extension of time to file an answer, at your request. The answer originally was due on or before October 16. The two-week extension permitted Mr. Magliarditi to answer no later than October 30. Mr. Magliarditi did not file an answer or request a further extension. No further extension of time to file a responsive pleading was granted by my office or the Bank."

On November 20, 2009, acting in pro. per., Magliarditi filed his answer to the complaint. There is no evidence of whether Magliarditi served the answer on the bank's attorney.

Thereafter, on December 7, 2009, the bank's attorney served and filed a case management statement indicating (erroneously) that Magliarditi's default had been entered. A week later, on December 15, Magliarditi served his own case management statement. Magliarditi claims to have filed this case management statement with the court on December 22 -- the date of the scheduled case management conference -- but no "filed" copy of his case management statement appears in the record on appeal.

Whether the case management conference was held on December 22 -- and what happened if it was -- does not appear in the record. The next event the record discloses is a second case management statement filed by the bank's attorney on April 2, 2010, for a case management conference set for April 20. In that statement, the bank's attorney indicated that the court had issued an order to show case, in response to which the bank's attorney directed the court's attention to the request for entry of default that the court had stamped "received" on November 9. The bank's attorney indicated that the bank was "waiting for entry of default in order to request a def[au]lt judgment."

Five days later, on April 7 -- "on its own motion" -- the court reviewed the file in the case and determined that the request for entry of default had not been processed when it was received in November. Finding that Magliarditi's "answer . . . was filed in error because his default should have been entered prior to the time the answer was filed," the court struck Magliarditi's answer and directed the clerk to enter his default. The clerk did so.*fn2 Thereafter, at the case management conference on April 20, the court set a default prove-up hearing for August.

On April 22, Magliarditi moved to set aside his default*fn3 on the ground that "[d]uring the course of settlement discussions [Magliarditi] was provided with extensions to respond to the Complaint" and "[w]ithout prior notice . . . and to [Magliarditi]'s complete surprise during those discussions [the bank] filed its request for entry of default in direct contravention to the agreed upon extensions provided to [him]." In his declaration in support of the motion, Magliarditi stated as follows: "While settlement discussions and negotiations were ongoing I was provided with extensions to respond to the Complaint by counsel for [the bank]. [¶] . . . The last extension . . . was through November 9, 2009. [¶] . . . On the morning of November 9, 2009, I contacted [the bank] by telephone to inquire about the status of my last settlement offer. [The bank] did not answer the telephone and I left . . . a message. [¶] . . . Having not heard back from [the bank], in the afternoon of November 9, I sent an email to counsel for [the bank] requesting a further extension to respond to the Complaint while I awaited a response to the last settlement offer . . . . [¶] . . . To my surprise, counsel for [the bank] responded to my request for an additional extension by advising me that he had entered a default on the very day that the last extension was expiring."

Opposing the motion, counsel for the bank averred that he had received a single request for an extension of time for Magliarditi to respond to the complaint. That sole request was granted, extending Magliarditi's time to respond to October 30. No further extension was requested or given. The bank argued that Magliarditi "provide[d] no factual foundation as to when the purported extension [to November 9] was given, by whom the purported extension was given, or to whom the purported extension was given."

The trial court conducted a hearing on Magliarditi's motion to set aside the default; no reporter's transcript of that proceeding appears in the record on appeal. The trial court found Magliarditi had "not presented any evidence of mistake, inadvertence, surprise or excusable neglect per [section] 473[(b)]. Specifically, [he] ha[d] not presented evidence to support his assertion that he was given an extension until November 9, 2009, in which to answer the complaint. To the contrary, the evidence presented by [the bank] indicates that the only extension expired on October 30."

Thereafter, the court entered a default judgment against Magliarditi, from which he timely appealed.

DISCUSSION

Section 473(b) authorizes the trial court to relieve a party "from a judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect." A motion for relief under the discretionary provision of section 473(b) -- the only provision at issue here -- is addressed to the sound discretion of the trial court. (Carroll v. Abbott Laboratories, Inc. (1982) 32 Cal.3d 892, 897-898.) "The standard by which an appellate court reviews a trial court ruling on a section 473 motion to set aside a default is well established as abuse of discretion. The fate of such a motion '"rests almost entirely in the discretion of the court below, and appellate tribunals will rarely interfere, and never unless it clearly appears that there has been a plain abuse of discretion."'" (Anderson v. Sherman (1981) 125 Cal.App.3d 228, 237.)

On appeal, Magliarditi contends -- at least implicitly -- that the trial court abused its discretion in refusing to set aside his default because the facts here fell within "the classic definition of 'mistake,' where a person understands the facts to be other than they are understood by the other party." In support of this argument, he claims he "understood the extension to respond to the Complaint was ongoing while settlement discussions were continuing," while the "Bank was apparently under a different understanding of what the extension was." In support of this argument, he cites a single case -- Baratti v. Baratti (1952) 109 Cal.App.2d 917 -- apparently for the proposition that "[a] mistake of fact is when a person understands the facts to be other than they are . . . ." (Id. at p. 921.)

If Magliarditi had offered any evidence in the trial court to support his foundational assertion on appeal that he was "under the [impression] that while [settlement] discussions were ongoing [he] would have an extension of time to respond to the Complaint," then Magliarditi's claim of "mistake" under section 473(b) might have held some water. The only evidence Magliarditi offered in support of his set-aside motion, however, was his own declaration, and in that declaration he asserted only that "[w]hile settlement discussions and negotiations were ongoing [he] was provided with extensions to respond to the Complaint by counsel for [the bank]," with "[t]he last extension [running] through November 9, 2009." Thus, at best, Magliarditi's evidence might have supported a finding that he mistakenly believed he had until November 9 to file his answer.

Presumably based on the bank's evidence, the trial court found that "the only extension expired on October 30," and on appeal we are bound by that finding. (See Baratti v. Baratti, supra, 109 Cal.App.2d at p. 922.) The question posed by Magliarditi's argument, however, is not whether he actually had an extension of time until November 9 to file his answer, but whether the trial court should have set aside his default because he mistakenly believed he did.

Even assuming Magliarditi was under that mistaken belief, however, it makes no difference. If Magliarditi, acting on such a mistaken belief, had tried to file his answer on November 9, only to discover that the bank had already filed its request for entry of default because in fact Magliarditi had only until October 30 to answer, it might have been an abuse of discretion for the trial court to refuse to set aside the default on the ground of mistake. (See, e.g., Weck v. Sucher (1929) 96 Cal.App. 422.) But that is not what happened here. Rather than trying to file his answer on November 9 -- the date he supposedly thought it was due -- by his own admission all Magliarditi did was request an additional extension of time -- a request the bank could not have granted without leave of court.*fn4 It was only after the bank did not grant him that further extension of time that Magliarditi delivered his answer to the court, and even then he waited 11 more days beyond November 9 to do so.

Given that (1) the bank extended Magliarditi's time to respond almost as long as it could without leave of court, (2) the bank waited until the last day it could to request the entry of Magliarditi's default, and (3) Magliarditi did not deliver his answer to the court until 11 days after that last day -- 11 days after he supposedly believed it was due -- we cannot find that the trial court abused its discretion -- that is, acted outside the bounds of reason -- in refusing to grant Magliarditi relief from his default. Given the deadlines imposed by the California Rules of Court, Magliarditi had no reason to expect that the bank would or could grant him a further extension of time when he sought that extension on the afternoon of November 9. Thus, even assuming he mistakenly believed he had until that date to file his answer, given that Magliarditi was not actually prepared to file his answer on that date, and made no attempt to do so, it cannot be said that the trial court was bound to find Magliarditi's default was taken against him "through his . . . mistake," as required for relief under section 473(b).

"It is the duty of every party desiring to resist an action or to participate in a judicial proceeding to take timely and adequate steps to retain counsel or to act in his own person to

avoid an undesirable judgment. Unless in arranging for his defense he shows that he has exercised such reasonable diligence as a man of ordinary prudence usually bestows upon important business his motion for relief under section 473 will be denied. [Citation.] Courts neither act as guardians for incompetent parties nor for those who are grossly careless of their own affairs. All must be governed by the rules in force, universally applied according to the showing made. [Citation.] The law frowns upon setting aside default judgments resulting from inexcusable neglect of the complainant. The only occasion for the application of section 473 is where a party is unexpectedly placed in a situation to his injury without fault or negligence of his own and against which ordinary prudence could not have guarded. Neither inadvertence nor neglect will warrant judicial relief unless it may reasonably be classified as of the excusable variety upon a sufficient showing." (Elms v. Elms (1946) 72 Cal.App.2d 508, 513.)

Here, it cannot be said, as a matter of law, that Magliarditi's failure to file his answer to the complaint before the bank filed its request for entry of default was the result of a mistake Magliarditi could not have avoided in the exercise of ordinary prudence. Accordingly, it follows that the trial court did not abuse its discretion in refusing to set aside Magliarditi's default.

DISPOSITION

The judgment is affirmed. The bank shall recover its costs on appeal. (Cal. Rules of Court, rule 8.278(a)(2).)

We concur: HULL , Acting P. J. MAURO , J.


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