California Court of Appeals, Fourth District, Second Division
FOR PARTIAL PUBLICATION[*]
from the Superior Court of Riverside County. No. PSC1300561,
David M. Chapman, Judge.
& Associates and Bruce N. Graham for Plaintiff and
& White, William D. Morrow; Geoffrey A. Kraemer and Jesse
S. Abrams for Defendant and Respondent.
Homes Corporation (Pulte) filed this action against Williams
Mechanical, Inc. (Williams) for defective performance of a
plumbing subcontract. Even before the action was filed,
however, Williams was defunct; first, it was suspended by the
Secretary of State, and thereafter, it dissolved voluntarily.
served Williams by effecting service on an attorney whom
Williams had designated as its agent for service of process.
The attorney, however, did not notify Williams of the action;
he also did not identify or notify Williams’s liability
insurer. Williams, of course, failed to respond to the
complaint, and Pulte obtained a default judgment.
then notified Williams’s liability insurer of the
default judgment. About four and a half months later, the
insurer retained counsel to represent Williams, and
Williams’s counsel filed a motion to set aside the
default judgment. The trial court granted the motion.
Williams lacks the capacity to defend this action because it
has been suspended.
Williams failed to establish that it was entitled to relief
from the default and default judgment.
hold that the trial court abused its discretion by ruling
that Williams was entitled to relief. Accordingly, we need
not decide whether Williams had the capacity to defend.
following facts are taken from the evidence submitted in
connection with the motion to set aside.
February 16, 2011, Williams was suspended by the Secretary of
State. On June 29, 2012, while Williams was still suspended,
its sole director filed a certificate of dissolution.
to the records of the Secretary of State, Williams’s
agent for service of process was Matt H. Morris. Morris was
an attorney. On November 25, 2013, Pulte served a summons and
complaint on Morris by substituted service. Morris admitted
that he received the summons and complaint, but he did not
take any action in response because Williams was dissolved
and because he had no information about Williams’s
liability insurance carrier(s).
Williams’s liability insurer was First Specialty
Insurance Corp. (First). On April 2, 2015, Pulte’s
attorney contacted First and notified it of the litigation.
He provided a copy of the default judgment and a
“cursory case summary.” First’s adjuster
asked him for “copies of all relevant documents
including but not limited to contracts, payment records,
pleadings, defect list, and evidence of damages.” On
April 3, 2015, and on “several” subsequent
occasions, First’s adjuster again requested documents
“pertinent to [First]’s coverage
investigation.” On July 20, 2015, Pulte’s
attorney provided some, though not all, of the requested
to First’s adjuster, between April 2 and July 20, 2015,
she was “led to believe” that the underlying
litigation involved only one home; on July 20, 2015, she
realized for the first time that it involved “up to 26
August 17, 2015, First retained counsel to represent
Williams. On August 21, 2015, Williams’s counsel filed
the motion to set aside.
2013, Pulte filed this action against Williams. In it, Pulte
seeks $69, 576 based on Williams’s allegedly negligent
performance of a subcontract for the installation of plumbing
in two residential construction projects.
failed to file a timely response to the complaint. On January
7, 2014, the trial court entered Williams’s
default. On March 10, 2015, it entered a
default judgment against Williams.
August 21, 2015, Williams filed a motion to set aside the
default and the default judgment. The motion was brought
under Code of Civil Procedure section 473, subdivision (b),
on the ground that Williams’s failure to respond to the
complaint was due to its own mistake, inadvertence, surprise,
or excusable neglect. Alternatively, the motion was also
brought under Code of Civil Procedure section 473.5, on the
ground that Williams had not received actual notice of the
proceedings. Finally, the motion was also brought on the
nonstatutory equitable ground of extrinsic mistake.
opposition, Pulte argued, among other things, that Williams
was a suspended corporation and therefore lacked the capacity
to file the motion.
reply, Williams argued that it was actually a dissolved
corporation, and therefore it had the capacity to file the
motion under Corporations Code section 2010, subdivision (a),
which, as relevant here, provides that a dissolved
corporation “continues to exist for the purpose of
winding up its affairs, [including] prosecuting and
defending actions by or against it....”
trial court granted the motion. In its minute order, it
stated: “Court finds current status is: [d]issolved
[c]orporation.” Thus, it ...