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S.C. Sheds Time Limit for Motions to Set Aside Judgment
Opinion Says Defendants Found in Default Who Seek Relief Under Civil Procedure §473(d) Due to Lack of Proper Service Are Not Bound by Two-Year Limitation Created by Courts of Appeal, Without Direct Statutory Support
By a MetNews Staff Writer
The California Supreme Court held yesterday that a party filing a motion to set aside a judgment under Code of Civil Procedure §473(d), based on extrinsic evidence showing a lack of proper service, is not required to seek relief within two years of the entry of judgment, repudiating a long line of Court of Appeal decisions establishing that time limit.
Finding that the judicially-created two-year rule has “no footing in the statute’s text, has not been adopted by the Legislature, and lacks any sound justification,” the court declined to adopt the limitation.
At issue is §473(d) which provides, in relevant part, that “[t]he court may,…on motion of either party after notice to the other party, set aside any void judgment or order.”
In the absence of an express limitations period, the Court of Appeal for this district announced one in the 1989 case of Rogers v. Silverman.
Acting Presiding Justice Eugene McCloskey (now deceased) authored the opinion which established that the two-year limitation period contained in §473.5—governing motions to set aside valid judgments in cases where there has been proper service but no actual notice—“applies by analogy” to requests under §473(d) to vacate judgments based on extrinsic evidence establishing that the order is void due to invalid service.
Challenging Rogers
Challenging the so-called Rogers rule was Cory Hoehn, who was sued by California Capital Insurance Company, in March 2010, relating to a fire that destroyed an apartment building covered by the insurer. The plaintiff alleged that Hoehn had caused the fire by improperly discarding “smoking materials” on the balcony of his leased unit.
California Capital attempted to serve Hoehn with the complaint and summons but the affidavit supporting the return of service noted that the documents were left with Shannon Smith, who was identified as Hoehn’s “[g]irlfriend” and a “co-occupant” at his residence. A copy of the complaint and summons were also mailed to his address.
The insurer relied on §415.20(b), which permits substitute service at a person’s home to “competent member[s] of the household” if the delivery is followed by a mailing of the relevant pleadings.
In April 2011, after Hoehn failed to appear in the case, California Capital requested and obtained a default judgment against him for $486,528 based on a fire investigator’s declaration that careless smoking habits caused the fire.
Motion to Vacate
Hoehn filed a motion to set aside the judgment in March 2020 after a collection agency obtained a lien on his wages. According to Hoehn, Smith did not live with him in March 2010 and he did “not recall receiving or seeing the Summons or Complaint at any time.”
His motion sought relief on two theories—that the court should exercise its power under §473(d) to vacate the judgment due to improper service and that the judgment was obtained by extrinsic fraud or mistake.
Placer Superior Court Judge Michael W. Jones ruled, following Rogers and its progeny, that relief under §473(d) was time-barred due to the nine-year gap between the entry of the judgment and the filing of the motion. Jones also found that “the fact that the proof of service of summons misidentifies Shannon Smith as a co-occupant” did not “demonstrate that the statement constitutes extrinsic fraud.”
In an opinion by Justice Jonathan Renner, the Third District affirmed.
Justice Martin J. Jenkins authored yesterday’s opinion for a unanimous court reversing the judgment, saying: “We do not lightly part ways with longstanding Court of Appeal precedent. But we conclude that such a step is appropriate in this case. The Rogers rule lacks either a statutory basis or a clear and credible rationale. We hold that a section 473(d) motion to vacate a judgment that is void for lack of proper service is not subject to the judicially imposed two-year limitation.”
Set of Statutes
Jenkins pointed out that California courts have held that a default judgment entered against a defendant who was not served with a summons in the manner prescribed by statute is void and said that “[u]nder an interlocking set of statutes and judicial rules, a party who has not been properly served (constructively or personally), or who has been constructively served but not received actual notice, has multiple avenues of relief from judgment.”
Turning to the statute the Rogers court found to be “analogous” to §473(d), he wrote:
“[S]ection 473.5 has long been understood to specifically address the situation in which a party is constructively served and the judgment is valid—as when a summons is served on a competent member of the defendant’s household pursuant to section 415.20—but the defendant did not receive actual notice.”
Sec. 473(d), on the other hand, “addresses the situation where the judgment is ‘void,’ such as when the defendant has not been properly served.”
He explained:
“As…courts have articulated the rule, a defendant may seek relief from default for improper service more than two years after the default judgment as follows: First, a motion to vacate based on the ground of extrinsic fraud or mistake may be made at any time….Second, [a judgment invalid on the face of the record may be set aside on motion with no time limit]….Third, a judgment or order valid on its face but claimed to be void based on extrinsic evidence may be attacked in an independent equitable action without time limits.”
Saying that there is no dispute that a void judgment may be attacked at any time under these rules, Jenkins commented:
“[T]he question here is a narrower one: whether those in Hoehn’s position may bring a motion in the original action more than two years—in his case almost nine years—after the default judgment’s entry, or whether they must file an independent equitable action.”
Legislative Intent
Looking to the legislative history and intent, the jurist acknowledged that §473 was amended in 1991—after the Rogers decision—but noted that “section 473(d) was left untouched.” Unpersuaded in this instance that legislative silence indicated acquiescence to the rule, he said:
“[A]nother inference from legislative silence, and the one we find the most plausible, is that the Legislature took no position on the rule’s validity….[W]hen the Legislature codified that power in section 473(d), there is no indication that it intended to preclude courts from continuing to exercise their rule-making authority by reconsidering the correctness of time limits judicially imposed on that power.”
He continued: “The question thus arises: Should we uphold the rule that, where extrinsic evidence is relied on to show that a judgment is void for improper service, a section 473(d) motion must be filed within two years of entry of judgment, or else the judgment may be attacked only through an independent equitable action that may be more costly and burdensome for the party seeking relief?”
Jenkins reasoned:
“Rogers was on firm ground in reasoning that a person who received no notice of an action because of defective service should not be in a worse position than a person who received no notice after proper constructive service. But it is unclear why the former should be treated the same as the latter….In the long line of appellate decisions leading up to the present Court of Appeal opinion, no convincing justification has been given for why these fundamentally dissimilar situations should be treated alike.”
Due Process Rights
The justice opined:
“The right of civil defendants to proper service is essential to their basic due process right to notice and to their ability to defend against liability claims that may lead to unwarranted financial hardship….If, as Hoehn asserts in his declaration, he first learned of this lawsuit when his wages were garnished almost nine years after a default judgment had been entered, this case well illustrates the fundamental injustice that results from the lack of notice. Moreover,…requiring the filing of an independent equitable action in order to vacate a default judgment for lack of proper service has the potential for adding additional costs and burdens on defendants….Procedural hurdles that are unnecessary to the fair adjudication of default judgments should not stand in the way of the vindication of a defendant’s due process rights.”
Under these circumstances, Jenkins declared “[b]ecause the rule in Rogers that section 437.5’s two-year time limit applies to section 473(d) motions to vacate is such a hurdle, we abrogate the rule and disapprove of Rogers…and its progeny.”
Noting that the Third District declined to consider Hoehn’s claim of “extrinsic mistake” due to his failure to properly advance the theory in the trial court, he concluded that “Hoehn is free to raise in the Court of Appeal the issue of whether the default judgment at issue here is void due to ‘extrinsic fraud or mistake.’ ”
The case is California Capital Insurance Company v. Hoehn, 2024 S.O.S. 3615.
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