In November 2006, Fannie Marie Gaines filed a complaint alleging causes of action for fraud and related claims arising out of the sale of her home.
According to plaintiff's complaint, Milton and Fannie Marie Gaines owned a property in Los Angeles (the Property) that, prior to February 2006, was encumbered by a first deed of trust loan of $554,000. The loan was held by Countrywide Home Loans, Inc. (Countrywide). The complaint alleged the Gaineses had over $500,000 in equity in the Property. By February 2006, they had fallen two months behind in payments on the Countrywide loan. They received a notice of default and acceleration from Countrywide warning of foreclosure proceedings if they did not cure the default. The Gaineses began investigating refinancing the Countrywide loan.
In March 2006, A.J. Roop contacted the Gaineses. Roop identified herself as a Countrywide employee and informed the Gaineses that they had been preapproved for a refinance loan. In April 2006, the Gaineses again became delinquent in their loan payments. They received a second notice of default and acceleration. As of June 2006, the Property was appraised at $1 million. In June or July 2006, Roop told the Gaineses Countrywide had not approved their loan refinance application. Roop subsequently contacted the Gaineses and suggested her fiancé, Joshua Tornberg, could assist them in obtaining a refinance loan. Roop said Tornberg worked with Craig Johnson and Ray
In June or July 2006, Tornberg, Johnson, and Ray Management (collectively the Tornberg defendants) contacted the Gaineses and offered to help them find a refinance loan. Another appraisal valued the property at $1.25 million. According to the complaint, the Tornberg defendants told the Gaineses not to seek refinancing from any other lenders. In early July 2006, foreclosure proceedings were initiated. The Gaineses were $16,625.34 in arrears. The balance on the Countrywide loan was $554,000. In mid-July 2006, the Tornberg defendants informed the Gaineses they were unable to obtain a refinance loan. The Tornberg defendants proposed that they would purchase the Property for $950,000, including $100,000 to be used for repairs they would oversee. The Tornberg defendants also promised to lease the Property back to the Gaineses. They represented the lease would give the Gaineses an option to repurchase the Property.
The Gaineses agreed to sell the Property to the Tornberg defendants. An escrow was opened at Fidelity National Title Insurance Company (Fidelity) to complete the transaction. In early August 2006, the Gaineses executed a warranty deed to transfer title of the Property to Tornberg. The complaint alleged, however, that the deed recorded was an altered warranty deed, recorded without the Gaineses' permission. The complaint also alleged Fidelity and its employee, Bobbie Jo Rybicki (collectively the Fidelity defendants), improperly released $90,000 to the Tornberg defendants from the escrow account. Further, according to the complaint, after the close of escrow, the Tornberg defendants presented the Gaineses with a revised month-to-month lease that did not include a purchase option. Milton Gaines died in late August 2006.
To purchase the Property, Tornberg took out an $855,000 loan secured by the Property. Tornberg subsequently refinanced the loan with a new $865,000 loan (the Tornberg loan), and procured an additional $150,000 loan secured by a deed of trust encumbering the Property. By June 2007, Tornberg owed $25,000 in delinquent payments for at least one of the loans secured by the Property. Fannie Marie Gaines paid the delinquent amount to avoid foreclosure proceedings. After multiple transfers between various entities, the Tornberg loan was eventually held or serviced by Aurora Loan Services, LLC (Aurora), and Lehman Brothers Holdings Inc. (Lehman).
On November 13, 2006, Fannie Marie Gaines filed a complaint against the Tornberg defendants, Roop, Countrywide, and the Fidelity defendants. The
The mediation was unsuccessful. The case was reassigned to a new judge. At a November 2008 status conference, the court terminated the stay of the proceedings. The court scheduled a trial setting conference for December 2008, and subsequently set an August 2009 trial date. Around that time, Aurora began indicating it did not hold legal title to the Property or have legal rights with respect to the Tornberg loan. The trial date was vacated as a result. In early November 2009, Aurora sought leave to file an amended verified answer. In a declaration accompanying the motion for leave, Aurora's counsel declared he learned in May 2009 that Lehman owned the Tornberg loan, and that Aurora did not have any title to the deed of trust securing the loan. Aurora's counsel further declared he promptly provided this information to plaintiff's counsel. Aurora's counsel also reported that, at plaintiff's counsel's request, he had eventually secured a declaration from a Lehman vice-president, attesting to the ownership of the Tornberg loan. In the amended answer, Aurora denied having an interest in the Property or the Tornberg loan. Lehman had declared bankruptcy in 2008.
On November 29, 2009, Fannie Marie Gaines passed away. Plaintiff had scheduled a motion for leave to file a fifth amended complaint to be heard on December 18, 2009; plaintiff's counsel sought to file an ex parte application on that date to substitute a successor in interest as the plaintiff in the action. The hearing on the motion and application was continued to January 28, 2010, the then scheduled trial date. On January 28, the court granted plaintiff's motion for leave to file a fifth amended complaint, and granted the
In mid-August 2010, Aurora filed an answer to the fifth amended complaint in which it again denied owning the promissory note at issue, or possessing any rights as a beneficiary of the deed of trust securing the Tornberg loan against the Property. Aurora alleged, on information and belief, that Lehman had rights in the loan, and was in bankruptcy.
At a subsequent August 2010 status conference, Aurora's counsel informed the court that Lehman was still in bankruptcy. Plaintiff's counsel suggested that the court continue the matter to allow plaintiff time to "bifurcate" as to Lehman and proceed against the other defendants. The court suggested it would not "look with a great deal of favor on bifurcating things," but also stated: "I'm not saying I'm going to deny your motion, I'm just sending up the yellow flag." The court continued the matter to November 2010.
At the November 2010 status conference, plaintiff's counsel informed the court they were ready to set the matter for trial. Aurora's counsel informed the court that Lehman was still in bankruptcy and plaintiff had not sought relief from the bankruptcy stay. Bankruptcy proceedings were taking place in the United States Bankruptcy Court for the Southern District of New York. Aurora's counsel suggested that without having Lehman as a party, the case would have to be tried twice. The court said it would not do that and asked why plaintiff had not named Lehman as a defendant. Plaintiff's counsel indicated plaintiff did not have proof that Lehman was a titleholder, and a declaration was not sufficient proof of interest in the Property. The court expressed frustration with the parties for the lack of progress on the Lehman issue. It suggested the parties come up with a solution, and set a status conference for mid-December 2010.
At the December status conference, Aurora indicated an assignment document would be recorded the next day, documenting Lehman's ownership interest in the Tornberg loan. Plaintiff's counsel reported plaintiff's next step would be to seek relief from the bankruptcy stay. At the next status conference in February 2011, plaintiff's counsel indicated he had authorization to retain New York counsel to file a petition for relief from the bankruptcy. The court continued the matter to June 20, 2011. In October 25, 2011, the bankruptcy court entered a stipulation, agreement, and order, lifting the bankruptcy stay as to plaintiff's claims.
On November 15, 2011, plaintiff amended her complaint to add Lehman to the action as previously named Doe 31. Lehman answered the complaint in
In May 2012, the Fidelity defendants moved to dismiss plaintiff's complaint under Code of Civil Procedure sections 583.310 and 583.360.
In opposition to the motion, plaintiff argued the action was stayed for seven months three days in 2008 when the court granted the parties' application for a 120-day stay in April 2008, and the court did not lift the stay until November 2008. Plaintiff further argued the two-month period between Fannie Marie Gaines's death and the substitution of a successor should be excluded from the five-year period. Plaintiff additionally contended the five-year period was tolled for the period in which plaintiff sought relief from the bankruptcy stay between June and October 2011, because it was impossible, impracticable, or futile to bring the action to trial while the bankruptcy stay was in effect as to Lehman. Plaintiff's counsel declared it took six months to secure New York counsel.
In reply, the Fidelity defendants argued the 2008 mediation stay did not qualify as a stay under section 583.340, subdivision (b). They also asserted the time it took for plaintiff to secure relief from the bankruptcy stay and add Lehman as a defendant should not be excluded from the five-year period.
In a tentative ruling, the court indicated it would grant the motion to dismiss.
At the hearing on the motion, plaintiff contended that even if the court dismissed the action, it should be dismissed only as to the Fidelity defendants because they were the only parties who moved for dismissal. Plaintiff's counsel argued the failure to move for dismissal constituted a waiver of rights under the dismissal statute. Counsel further asserted plaintiff had been diligent in prosecuting the action, the 2008 stay was negotiated among all parties, and defendants were estopped from arguing the 2008 stay should be included in the five-year period. Although they had not filed or joined a motion to dismiss, counsel for Lehman and Aurora argued at the hearing. All defendants present at the hearing argued the five-year dismissal requirement was "jurisdictional" such that if the court granted the Fidelity defendants' motion, it would have no jurisdiction to hear the case against Lehman alone. On August 1, 2012, the court adopted its tentative order as the final order.
On August 20, 2012, plaintiff filed a motion for reconsideration. Plaintiff asserted the trial court failed to take into account various factors concerning the 2008 stay, such as that it was agreed upon by all parties, and applied to all parties. Plaintiff asserted that because the Fidelity defendants did not explicitly argue the 2008 stay did not toll the five-year period until their reply on the motion to dismiss, she was unable to effectively present arguments on the issue. Further, plaintiff contended she had not been provided notice that the nonmoving defendants would be included in the motion and she was therefore unable to offer evidence specific to those defendants. Plaintiff argued the court failed to consider that the five-year period had not expired as to Lehman.
On August 24, 2012, the trial court entered a judgment of dismissal. On September 6, 2012, Aurora and Lehman served a notice of entry of judgment. On October 22, 2012, the trial court denied the motion for reconsideration. Plaintiff filed a notice of appeal on November 5, 2012.
Under section 583.310, "[a]n action shall be brought to trial within five years after the action is commenced against the defendant." Under section 583.340, "[i]n computing the time within which an action must be brought to trial ... there shall be excluded the time during which any of the following conditions existed: [¶] (a) The jurisdiction of the court to try the action was suspended. [¶] (b) Prosecution or trial of the action was stayed or enjoined. [¶] (c) Bringing the action to trial, for any other reason, was impossible, impracticable, or futile."
To the extent a trial court ruling under section 583.340 is based on an interpretation of the statute, we review the ruling de novo. However, the trial court has discretion to determine whether the section 583.340, subdivision (c) exception applies. We will uphold the ruling unless the plaintiff establishes the trial court abused its discretion. (Bruns v. E-Commerce Exchange, Inc. (2011) 51 Cal.4th 717, 724, 731 [122 Cal.Rptr.3d 331, 248 P.3d 1185] (Bruns).)
Plaintiff filed her original complaint in November 2006. The trial court dismissed the case in August 2012. In calculating the five-year deadline, the trial court excluded a total of 185 days as periods in which it was impossible or impracticable to bring the action to trial. Even with those exclusions, the five-year period expired in May 2012. Plaintiff contends the trial court should have excluded either 120 or 217 additional days from the five-year period because the case was stayed in 2008 within the meaning of section 583.340, subdivision (b), which excludes from the five-year period any time in which "[p]rosecution or trial of the action was stayed or enjoined." We find Bruns controlling on this issue and reject plaintiff's argument.
In this case, the trial court entered a stay in April 2008, at the request of the parties. The court's order took existing trial and hearing dates off calendar, but required the parties to respond to all previously served and outstanding written discovery. Thus some "prosecution" of the action was continuing, even during the stay. Applying the reasoning of Bruns, the 2008 stay did not fall within section 583.340, subdivision (b).
On appeal, plaintiff argues the parties contemplated a complete stay because they agreed to stay everything except responses to outstanding written discovery, and no new discovery was to be served. Plaintiff further asserts defendants have not identified any written discovery responses exchanged during the stay which would support a conclusion that litigation actually continued. These arguments miss the point. As Bruns clarified, a section 583.340, subdivision (b) stay is one that stays all prosecution of the action. The 2008 stay in this case allowed for some discovery to proceed, and was therefore not a complete stay. Whether any party actually served discovery responses during the 2008 stay does not recharacterize the trial court order, which allowed for some discovery to take place during the stay.
Plaintiff further contends that because defendants agreed to the 2008 stay, they are equitably estopped from arguing the stay did not toll the action within the meaning of section 583.340, subdivision (b), or otherwise extend the five-year period. We disagree.
Nothing in the record before us demonstrates or even suggests the parties intended the stay would extend the five-year period under section 583.310. The trial court properly rejected any argument that the parties' agreement, entered into less than two years after the filing of the original complaint, and which did not mention the five-year dismissal statute, could reasonably have lulled plaintiff into believing defendants would agree the 2008 stay tolled the five-year period. This case is not like Tresway Aero, Inc. v. Superior Court (1971) 5 Cal.3d 431 [96 Cal.Rptr. 571, 487 P.2d 1211] (Tresway), upon which plaintiff relies. In Tresway, the plaintiff's service of a summons was invalid, but after receiving the summons and complaint, the defendant's attorney requested a 20-day extension to file an answer. However, instead of filing an answer, the defendant moved to quash service of summons. The defendant also sought dismissal for failure to serve a summons within three years of the filing of the complaint, only days after the statutory period expired. (Id. at p. 434.) The court concluded the defendant was estopped from arguing the dismissal statute applied. The court found the defendant's request for an extension to file an answer lulled the plaintiff into a false sense of security that the defendant would answer instead of challenging service of process. This further prevented the plaintiff from discovering the problems with service of process, and from effecting valid service within the statutory period. (Id. at pp. 441-442.) Plaintiff identifies no analogous conduct on the part of the defendants in this case. The reasoning of Tresway does not apply here.
Woley v. Turkus (1958) 51 Cal.2d 402 [334 P.2d 12] (Woley) is similarly unhelpful to plaintiff. In Woley, the parties entered a written stipulation which, at the defendant's request, continued a plaintiff's motion for summary judgment and trial beyond the five-year statutory period under then section 583. (51 Cal.2d at p. 405.) In the stipulation, the parties expressly acknowledged the five-year deadline. (Ibid.) The defendant subsequently moved to dismiss the action based on the plaintiff's failure to bring the case to trial within five years. The court found the defendant's request to have the trial continued beyond the five-year period estopped it from subsequently seeking dismissal for failure to prosecute.
In contrast, here, neither the parties' agreement as set forth in the correspondence exchanged by counsel, nor the order prepared for the court,
Plaintiff argues that even if the 2008 stay was not automatically excludable under section 583.340, subdivision (b), the 120-day stay rendered it impossible, impracticable, or futile for plaintiff to bring the action to trial within five years. We find no abuse of discretion in the trial court's rejection of this argument. (Bruns, supra, 51 Cal.4th at p. 731.)
The section 583.340, subdivision (c) exception "is recognized because the purpose of the five-year statute is to prevent avoidable delay, and the exception makes allowance for circumstances beyond the plaintiff's control, in which moving the case to trial is impracticable for all practical purposes." (De Santiago v. D & G Plumbing, Inc. (2007) 155 Cal.App.4th 365, 371 [65 Cal.Rptr.3d 882] (De Santiago).)
The question of impracticability and reasonable diligence was not limited to plaintiff's actions during the 2008 stay. Instead, the trial court was to
Moreover, even if plaintiff had satisfied the causal connection requirement, the trial court justifiably concluded she failed to demonstrate she was reasonably diligent in prosecuting the case. Reasonable diligence is required at all stages of the proceedings. (Tamburina, supra, 147 Cal.App.4th at p. 336; Sanchez, supra, 109 Cal.App.4th at p. 1270.) "`"The `reasonable diligence' standard is an appropriate guideline for evaluating whether it was impossible, impracticable, or futile for the plaintiff to comply with [the statutory five-year constraint] due to causes beyond his or her control."' [Citation.]" (Bruns, supra, 51 Cal.4th at p. 731, original italics.)
In this case, even in plaintiff's own timeline, there are multiple lengthy periods for which plaintiff has proffered no argument or evidence to show she was diligently prosecuting the case during that time.
For example, although plaintiff filed her original complaint in November 2006, the next date on her timeline relating to litigation is March 2008, when
In addition, after Aurora first indicated in May 2009 that it had no interest in the Property or the Tornberg loan, and identified Lehman as a relevant party, plaintiff did not hire counsel to seek relief from the bankruptcy stay until June 2011, over two years later. Plaintiff asserts that once Aurora disclaimed an interest in the Tornberg loan, it was reasonable for her to demand proof that this was the case, and reasonable for her to wait until she had received such proof before she took action to pursue Lehman as a defendant. Yet, the court could reasonably conclude plaintiff did not establish she exercised reasonable diligence in overcoming these obstacles. Plaintiff did not indicate, for example, that plaintiff's counsel served any discovery on Aurora to attempt to determine whether Aurora's claims were true, or whether Lehman in fact had an ownership interest in the Tornberg loan. Instead, the only information in the record on this issue suggests that plaintiff "asked" Aurora for proof of its lack of ownership interest, and Lehman's interest, but did not receive it until December 2010. Thus, approximately 16 months passed from the time Aurora first indicated it did not own the
Even after receiving proof that Lehman owned the Tornberg loan, there were substantial indications that plaintiff was not reasonably diligent. She did not secure New York counsel to seek relief from the bankruptcy for six months. (Tamburina, supra, 147 Cal.App.4th at p. 336 [level of diligence required increases as the five-year deadline approaches].) After receiving relief from the stay, plaintiff waited another two weeks before amending her complaint to add Lehman. She had already acquiesced in the setting of a trial date past the nominal five-year deadline. (Jordan, supra, 182 Cal.App.4th at p. 1422.)
The dissent contends the trial court abused its discretion because it did not exclude from the five-year calculation any of the delays caused by Aurora's mistaken admission that it had an ownership interest in the Tornberg loan or the Property. However, plaintiff never asked the trial court to exclude these periods. The dissent identifies an 11-month period of "wasted time" between Aurora's January 2009 answer, and the November 2009 amended answer in which it denied having an interest in the Tornberg loan or the Property. Yet, in opposing the motion to dismiss, plaintiff never identified this period to the trial court as one that should be excluded from the five-year calculation. Nor does plaintiff contend on appeal that the trial court should have excluded this 11-month period.
Similarly, as the trial court noted in its ruling, plaintiff did not argue the court should exclude from the five-year calculation the entire period during which Lehman had been identified but was not yet named as a defendant, or the entire period of Lehman's bankruptcy. Instead, plaintiff contended the court should exclude only the limited period between June and October 2011, after she had retained bankruptcy counsel and actively sought relief from the bankruptcy stay. The court agreed and excluded this limited period. Even on appeal, plaintiff does not contend the trial court should have excluded more time from the five-year calculation based on the Aurora/Lehman confusion. Plaintiff's arguments consistently have been limited to the trial court's failure to exclude the 2008 stay from the five-year period. Her assertions regarding the Aurora/Lehman delays concerned only the question of her diligence in prosecuting the action.
We decline to find the trial court abused its discretion in failing to rule based on legal theories plaintiff did not advance below, or in this court. (Mansell v. Board of Administration (1994) 30 Cal.App.4th 539, 545-546 [35 Cal.Rptr.2d 574].)
Plaintiff asserts the trial court erred in dismissing the action as to all defendants because only the Fidelity defendants filed a motion for dismissal. Plaintiff argues the nonmoving defendants waived their rights by not joining the Fidelity defendants' motion. Plaintiff also contends the five-year period had not expired as to Lehman, thus the court could not dismiss the action against it. Defendants argue the five-year period begins when the plaintiff files the original complaint and the period is not specific to each defendant. We address these issues below.
We disagree with defendants' contention that if the five-year period has elapsed as to one defendant under sections 583.310 and 583.360, the court loses jurisdiction to adjudicate the case against differently situated defendants. In numerous circumstances, courts have acknowledged dismissal may be required as to some, but not all, defendants. (See Larkin v. Superior Court (1916) 171 Cal. 719, 726-727 [154 P. 841]; Dowling v. Superior Court (1932) 122 Cal.App. 443, 445-446 [10 P.2d 197] (Dowling).)
For example, Brunzell Constr. Co. v. Wagner (1970) 2 Cal.3d 545 [86 Cal.Rptr. 297, 468 P.2d 553] (Brunzell) involved multiple defendants. For certain periods of time it was impossible or impracticable for the plaintiff to proceed against one set of defendants. (Id. at p. 548.) However, the trial court dismissed the action under then section 583 as to a different set of defendants for whom the five-year period had arguably expired. Our high court considered whether the fact that causes of action against the defendants seeking mandatory dismissal may have been severable from the causes of action involving other defendants, precluded application of the impracticable and futile exception to the five-year dismissal rule.
This analysis would make little sense if dismissal as to one defendant mandated dismissal of the action as to all defendants. It would be inaccurate, even unfair, to consider a defendant's particular dismissal argument on its own terms if dismissal of that defendant would also result in dismissal of all defendants, even when it was impossible to bring other defendants to trial, or when the other defendants were not even subject to dismissal under section 583.310.
In light of the above, we turn to plaintiff's contention that the court should not have dismissed Lehman because the five-year period had not elapsed. We agree, although not based on plaintiff's calculation of the applicable dates.
In this case, plaintiff added Lehman to the action as a "Doe" defendant. Yet, plaintiff added Lehman as "Doe 31." While the original complaint included fictitiously named defendants identified as Does 1-30, Does 31-50 were not included until the fourth amended complaint, which was filed on January 28, 2008. The five-year period as to Lehman had not expired as of May 2012, when the trial court dismissed the entire action, and would not expire until 2013. The action was not properly dismissed as to Lehman under section 583.310.
Unlike Lehman, other nonmoving defendants — Roop and the Tornberg defendants — were named in the original complaint. We disagree with plaintiff's contention that the nonmoving defendants' failure to file a motion under section 583.310 necessarily precluded a mandatory dismissal. Under section 583.360, subdivision (a), "[a]n action shall be dismissed by the court on its own motion or on motion of the defendant, after notice to the parties, if the action is not brought to trial within the time prescribed in this article." (Italics added.) (See Rio Del Mar etc. Club v. Superior Court (1948) 84 Cal.App.2d 214, 220 [190 P.2d 295] (Rio Del Mar) [under former § 581a requiring service of summons within three years of filing of complaint, "[o]nce the factors necessitating dismissal are brought to the attention of the trial court, it
In their appellate briefing, the parties did not consider the court's ability to act on its own motion under section 583.360, subdivision (a), in addressing any alleged court error in dismissing the action as to the nonmoving parties. We invited the parties to submit supplemental letter briefs on this issue, including whether the court provided sufficient notice under section 583.360, subdivision (a), or whether any defects in notice were waived. In response, plaintiff argued that even if acting on its own motion, the trial court erred because the 2008 stay should have been excluded from the five-year period. Plaintiff further stated the question of sufficient notice would depend on whether the trial court motion could be deemed to have been noticed at the time of the Fidelity defendants' motion, or at the time of the issuance of the tentative ruling. Plaintiff conceded she may have waived any defects in notice by virtue of counsel's arguments at the hearing and in her motion for reconsideration.
There is no dispute that only the Fidelity defendants moved for dismissal under section 583.310.
We recognize there are questions relating to notice, such as how much notice the court was required to give, whether it failed to do so, or whether any such error was waived. (Compare § 583.360, subd. (a) [court or party may move for dismissal "after notice to the parties"] with § 583.410, subds. (a)-(b) and Cal. Rules of Court, rule 3.1340(a)-(b) [requiring 20 days' notice if court intends to dismiss case on its own motion under discretionary dismissal provisions]; Eliceche v. Federal Land Bank Assn. (2002) 103 Cal.App.4th 1349,
Plaintiff addressed the dismissal of all defendants at the beginning of the hearing on the Fidelity defendants' motion. But plaintiff never distinguished the defendants named in the original complaint, or Aurora, from the Fidelity defendants.
Plaintiff contends the trial court erred in denying her motion for reconsideration because she presented new circumstances showing the action should not be dismissed as to any defendants except the Fidelity defendants.
As to Lehman, our conclusion above renders moot the trial court's denial of the motion for reconsideration. As to the remaining defendants, we find no error in the trial court ruling. In the motion for reconsideration, plaintiff asserted the trial court had not considered evidence before it regarding the 2008 stay. Plaintiff also contended she was unable to produce evidence "as to whether" she was reasonably diligent in prosecuting the action against the nonmoving defendants because she had "no reason to anticipate the Court would consider dismissing the action as to all defendants." She did not identify or describe this evidence, except with respect to Lehman. Plaintiff also argued the nonmoving defendants waived their right to move for dismissal.
The judgment dismissing the action as to Lehman is reversed. In all other respects the judgment is affirmed. Each party to bear its own costs on appeal.
Grimes, J., concurred.
I concur in the majority's reversal of the dismissal of appellant's action against Lehman Brothers Holdings Inc. (Lehman Brothers). I write separately to record my disagreement with the majority's affirmance of the dismissal as to the other defendants. In my view, the trial court abused its discretion in that the twists and turns of this case made appellant's ability to bring the case to trial within five years of filing the complaint "impossible, impracticable, or futile." (Code Civ. Proc., § 583.340, subd. (c).)
Before I consider the ruling of the trial court in this case, I discuss the abuse of discretion standard.
As appellate judges we are taught to consider each case in the context of the applicable standard of review which, for the most part, is one or more of
The most common test for determining whether discretion has been abused is to ask whether the trial court's ruling was "arbitrary, capricious or whimsical." A brief review of appellate cases reveals that this standard has been applied countless times in just the last 30 years. Another formulation is "whether [the trial court's ruling] exceeds the bounds of reason" (People v. Jackson (2005) 128 Cal.App.4th 1009, 1018 [27 Cal.Rptr.3d 596]), and still another, is whether the ruling is "patently absurd ... resulting in a manifest miscarriage of justice." (Baltayan v. Estate of Getemyan (2001) 90 Cal.App.4th 1427, 1434 [110 Cal.Rptr.2d 72]; see Blank v. Kirwan (1985) 39 Cal.3d 311, 331 [216 Cal.Rptr. 718, 703 P.2d 58] ["`"miscarriage of justice"'"].)
Our Supreme Court recently used the following description of the standard: "A ruling that constitutes an abuse of discretion has been described as one that is `so irrational or arbitrary that no reasonable person could agree with it.'" (Sargon Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747, 773 [149 Cal.Rptr.3d 614, 288 P.3d 1237], quoting People v. Carmony (2004) 33 Cal.4th 367, 377 [14 Cal.Rptr.3d 880, 92 P.3d 369].) Returning to the whimsy characterization, the Supreme Court also has relied on Witkin's description. "`The discretion of a trial judge is not a whimsical, uncontrolled power, but a legal discretion, which is subject to the limitations of legal principles governing the subject of its action, and to reversal on appeal where no reasonable basis for the action is shown.'" (Sargon, at p. 773, quoting 9 Witkin, Cal. Procedure (5th ed. 2008) Appeal, § 364, p. 420.) Several of these articulations are collected in Justice Richman's thoughtful opinion in People v. Jacobs (2007) 156 Cal.App.4th 728, 736 [67 Cal.Rptr.3d 615].
Aside from the absence of an analytical tool, the various formulations of abuse of discretion also have serious ramifications for the relationship between the appellate and trial courts. The colorful "whimsical, capricious, arbitrary" standard proves the point. I am doubtful that any judge in our state has made a ruling out of whimsy or caprice. Whim, for example, is "a capricious or eccentric and often sudden idea or turn of the mind." (Merriam-Webster Online Dict. <http://www.merriam-webster.com/dictionary/whim> [as of Dec. 12, 2013].) This does not describe judicial decisionmaking. If we are truly engaging in appellate review to weed out the whimsical or capricious decision, I doubt we would ever find abuse of discretion. Labeling a trial judge arbitrary is so pejorative, appellate judges would almost always be adverse to finding abuse of discretion under that standard. Describing a trial court decision "as an act exceeding all bounds of reason" or "patently absurd" is also inherently inflammatory.
As intermediate appellate courts, we are bound to follow California Supreme Court precedent in this area, as in all others. And as the authorities cited above reveal, the various articulations of abuse of discretion are all binding on us. How do we apply any or all of them in a way that is jurisprudentially sound? Justice Wiener has provided some helpful guidance: "Focusing instead on the concept of `discretion,' that term in one sense refers generally to the power to decide. But every court — both trial and appellate — has `discretion' in that sense. Whether the source of the power to decide is constitutional or statutory, the essence of the judicial function is decisionmaking. `Discretion' in the sense of the `abuse of discretion' standard refers instead to the relationship between the trial and appellate decisionmaking processes and, more particularly, to the amount of deference which appellate courts accord to trial court determinations. Discretion in this sense — that is, trial court discretion — is not a sacrosanct concept. Harsh as it may sound, the nature of the relationship between superior and inferior courts dictates that trial courts have discretion only to the extent appellate courts perceive a reason to defer. The breadth of trial court discretion is a function of the degree to which appellate courts exercise deference." (Hurtado, supra, 167 Cal.App.3d at p. 1022.)
Justice Wiener's deference continuum is helpful as an analytical tool because it is based on the accepted truth that in many situations trial courts
In applying the abuse of discretion standard in its various formulations cited earlier, I do so through the analytical framework suggested by Justice Wiener's deference continuum, and mindful of Justice Richman's conclusion that discretion must be exercised "`in conformity with the spirit of the law'" and not "`defeat the ends of substantial justice.'" (People v. Jacobs, supra, 156 Cal.App.4th at p. 741.)
Here the facts underlying the grant of respondents' motion to dismiss for lack of prosecution do not appear to be in dispute. The majority opinion cites the procedural aspects of the case from the filing of the complaint to dismissal without suggesting any controversy as to those facts. Thus as to Justice Wiener's first point, we need not give any particular deference to the trial court as fact finder. As to the second factor — the trial court being in the best position to get a feel for the case — some deference is due. The examples given in Hurtado, supra, 167 Cal.App.3d at page 1022 — continuances, pretrial conferences, many discovery matters, the conduct of counsel, cumulativeness of evidence, the extent of voir dire and the length of the trial day — were surely not intended to be exhaustive. But each of them is concerned with the management of the trial, an area where appellate courts should give the greatest deference to the trial courts. While the issue before us is indeed procedural like many of the examples listed above, it has very
The statutory provision we are required to interpret consists of three words. Of the three, dictionary definitions seem to rule out "impossible" and "futile."
After the filing of the complaint, this case proceeded on a pothole riddled road which made the bringing of the case to trial not impossible but impracticable. Because the availability of section 583.340 relief depends on whether the plaintiff has exercised "reasonable diligence" (Bruns, supra, 51 Cal.4th at p. 731), I start with some of the key events and obstacles presented in this case.
— First, an additional word about the pleadings. The complaint was amended four times during the first 14 months of the litigation. As is common in many of these "financial meltdown" cases, promissory notes are separated from deeds of trust, paperwork is often not complete, and the parade of people and entities appears endless. Apparently the entire process started with an unsolicited phone call from a Countrywide employee who told the Gaineses that Countrywide had approved them for a refinance loan. This was false. Later, the employee suggested that the Gaineses contact her fiancé, Tornberg, who eventually bought the property.
— Other defendants named in amended complaints included Greenpoint Mortgage Funding, Inc., United Mortgage Loan & Investment, LLC, and UM Acquisitions, LLC. Defendants Countrywide, United Mortgage Loan &
— On March 31, 2008, before Aurora notified plaintiffs that it had no interest in the property, the parties agreed to a 120-day partial stay of the litigation — partial because certain outstanding discovery requests could be answered. The intent of the stay was to allow the parties to mediate their dispute. The settlement discussions were unsuccessful, and on November 28, 2008, the trial court vacated the stay.
— On November 29, 2009, Fannie Marie Gaines passed away. (Her husband, Milton Gaines, had died in Aug. 2006, shortly after the Gaineses had agreed to sell the property to the Tornberg defendants and about 10 weeks before the action was filed.) On January 28, 2010, Gaines's son was substituted in as a party plaintiff, an amended complaint was filed, and defendants were given 30 days to file answers.
— The court expressed concern that the delays in bringing Lehman Brothers into the action were becoming excessive. According to Aurora, Lehman Brothers owned the $865,000 loan and deed of trust, and obviously was the subject of the lion's share of plaintiffs' claims. At an August 20, 2010 status conference, counsel for plaintiffs suggested that the solution to the Lehman Brothers situation would be to bifurcate the trial and proceed first against all
These facts show that the litigation course of this controversy went sideways rather than forward for much of the time, often through no fault of plaintiffs or anyone else for that matter. In contrast to many cases in which the trial court found no excuse for a delay beyond five years, this case was also extensively litigated; the parties did not sit on their hands. (Cf. Mitchell v. Frank R. Howard Memorial Hospital (1992) 6 Cal.App.4th 1396, 1404-1406 [8 Cal.Rptr.2d 521] [dismissal of action under five-year rule affirmed when plaintiff filed both federal and state actions and did nothing in the state lawsuit for four years; plaintiff "had long ago abandoned" the state court action; plaintiff's conduct was dilatory and the court would not reward "unreasonable procrastination"]; Ferk v. County of Lake (1988) 205 Cal.App.3d 268, 278 [252 Cal.Rptr. 196] [action "came to a standstill" when plaintiffs substituted themselves in propria persona].)
Turning to the statutory test, there were two stays and two other events that significantly interfered with plaintiffs' ability to get to trial. The first stay arose from the Lehman Brothers's bankruptcy, which the trial court correctly excluded from the five-year calculation. The second stay was the partial stay the parties had agreed to in order to attempt settlement. That stay was either 120 days (the time the parties had agreed to stay) or 217 days (the amount of time before the trial court actually lifted the stay). As a partial stay, under Bruns, supra, 51 Cal.4th at pages 724, 731, the stay did not entitle plaintiffs to the automatic exclusion under section 583.340, subdivision (b). But as Bruns itself makes clear, a partial stay is a factor to be considered under the subdivision (b) impracticability test. The trial court did not exclude any time for the partial stay even though it had the discretion to do so.
If the trial court had exercised its discretion to exclude the 120 days of the parties' stipulated stay or the 217 days of actual stay or any significant part of the Aurora/Lehman Brothers's time, the five years would not have elapsed. Significantly the trial court found that the partial stay did not make it impossible, impracticable or futile to bring the case timely to trial because it did not affect "previously served and outstanding written discovery." The minute order did not describe whether in fact there was any discovery completed in the interim or how the completion of discovery during the time of the stay would have contributed in any meaningful way to the progress of the case. This was not a partial stay against less than all parties which would enable a plaintiff to engage in all pretrial and discovery work against other parties during the "stay." Stated differently, this may have been a partial stay under Bruns but it was barely so.
Furthermore, the trial court made no allowance for the unilateral mistake of Aurora in asserting an ownership interest in the property, which consumed approximately 11 months of the five-year period. Whatever delays were incurred as a result should not be chargeable to appellants. At a minimum, I believe it was error not to exclude some or all of that wasted chunk of time. Presumably if Aurora had not made its error and instead promptly identified Lehman Brothers, the bankruptcy stay would have been lifted 11 months earlier, well within the five-year period. Adding further to the delay, Aurora did not provide proof of Lehman's ownership for another nine months.
Four different trial judges spent considerable time on this case. The complaint was filed on November 13, 2006. The first trial judge initially heard the case on February 20, 2007. The case was transferred to the second judge in approximately April of 2007. The next reassignment was on July 16, 2008. That judge had the case for four years until April 24, 2012 (well beyond the five-year anniversary of the filing of the complaint). The judge
The foregoing discussion demonstrates that plaintiffs prosecuted this case with reasonable diligence. It was a very serious matter, with very experienced and talented trial counsel. I now turn to whether the trial court's exercise of discretion not to exclude the additional time and allow the case to proceed to trial constituted a "`"miscarriage of justice."'" (Blank v. Kirwan, supra, 39 Cal.3d at p. 331.) Or, conversely, as Justice Richman has said, was discretion exercised "`"in conformity with the spirit of the law"'" and not to "`defeat the ends of substantial justice.'" (People v. Jacobs, supra, 156 Cal.App.4th at p. 741.)
This case was one of hundreds, perhaps thousands of lawsuits that grew out of the financial meltdown. This litigation is almost the paradigm case: elderly plaintiffs — homeowners with substantial equity in their house, mortgage payments two months in arrears — are approached by an employee of their lender with an unsolicited offer to refinance the mortgage based on the lender's so-called, but false, "preapproval." This is followed by a bait and switch that sends plaintiffs to the employee's fiancé, who offers to help with a refinance. The fiancé ends up buying the house with a supposed offer to include leaseback and repurchase options which fail to materialize in the final documentation. In comes the line of assignees and transferees, including ultimate noteholder Lehman Brothers, which will not survive the financial crisis. Meanwhile the "assister" pulls out $90,000 in cash from the deal without plaintiffs' approval but with the aid of the escrow/title insurance company. Later he refinances the property and obtains another $150,000, for a tidy $240,000 fee for his "assistance." Remarkably, the loan goes into default because the assister does not pay "his" mortgage, and plaintiffs pay an additional $25,000 to $30,000 to avoid foreclosure. Shortly before the lawsuit is filed, one of the plaintiffs dies. During its pendency, the other dies.
I acknowledge that some of these "facts" are allegations to be decided after trial. We do know that plaintiffs settled with Countrywide for $375,000, of which $200,000 represented lost equity, with the rest designated for noneconomic damages. This suggests that there was some fundamental merit to at least some of plaintiffs' claims, that this was not a sham lawsuit, and this was a lawsuit that demanded the trial court's exercise of discretion under section 583.340, subdivision (b) to avoid a miscarriage of justice. In my view the
I would reverse the trial court's judgment in its entirety.
Given the voluminous record on that issue in Bruns, I assume the factual circumstances were numerous and in many cases disputed. Here we consider a far more circumscribed record that contains certain key undisputed facts.
A secondary definition of impracticable is "impossible" but I exclude that from discussion because "impossible" is an alternative basis for extending the five-year rule under Code of Civil Procedure, section 583.340, subdivision (c), so "impracticable" must mean something else.
