Henschel v. Mortgage Electronic Registration Syst. CA2/5

Filed 6/11/14 Henschel v. Mortgage Electronic Registration Syst. CA2/5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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 This opinion has not been certified for publication
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
EDA HENSCHEL et al., B248487
Plaintiffs and Appellants, (Los Angeles County
Super. Ct. No. EC058763)
v.
MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC. et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of Los Angeles County, Donna
Fields Goldstein, Judge. Affirmed.
Law Office of Nick A. Alden, Nick A. Alden and Aleksey Sirotin for Plaintiffs
and Appellants.
McGuireWoods, Joseph V. Quattrocchi, Jr., Ashley B. Hennessee, Leslie M.
Werlin and Grace B. Kang for Defendants and Respondents.
Plaintiffs Eda Henschel and Afshan Safarian (hereafter “plaintiffs”) appeal the
judgment of dismissal entered in favor of defendants Bank of America, Mortgage
Electronic Registration System (together, “defendants”), and Quality Loan Service Corp.1
in this lawsuit concerning foreclosure proceedings instituted against them. The trial court
ruled that it was required to grant defendants’ motion to strike and motion to dismiss the
complaint, since plaintiffs filed their amended complaint seven days after the 10-day
period the court had granted them when it sustained defendants’ demurrer with leave to
amend. We determine that the court erred in concluding that it had no discretion under
the circumstances of this case, and thus abused its discretion in granting defendants’
motions and dismissing the complaint. We hold, however, that plaintiffs waived their
right to raise this issue on appeal.
PROCEDURAL BACKGROUND
Plaintiffs sued defendants in connection with nonjudicial foreclosure proceedings
concerning their real property. Defendants demurred to the complaint. On December 10,
2012, that demurrer was sustained with ten days’ leave to amend. Due to the fact that the
tenth day fell on a Saturday, the amended complaint was due on Monday, December 24,
2012. Plaintiffs filed their amended complaint seven days later, on December 31, 2012.
On January 12, 2013, defendants filed their motions to strike the late-filed
complaint and to dismiss the action pursuant to section 581, subdivision (f)(2) of the
Code of Civil Procedure.2 Concurrently therewith, defendants demurred to the complaint
as amended. Plaintiffs opposed the motions, stating in a declaration of their counsel of
record that the late filing of the amended complaint was due to counsel’s excusable
neglect caused by his illness. Plaintiffs pointed out that the filing was just one week late,
1
Quality Loan Service Corp. filed a Declaration of Nonmonetary Status pursuant to
Civil Code, § 2924l, subds. (a) and (b). Consequently, it is not participating in this
appeal. (Civ. Code, § 2924l, subds. (c) and (d).)
2
All further code sections referenced in this opinion refer to the Code of Civil
Procedure, unless otherwise indicated.
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and during the Christmas and New Year holidays, and that defendants did not claim to
have suffered any prejudice on account of this very short delay.
Relying on Leader v. Health Industries of America, Inc. (2001) 89 Cal.App.4th
603 (“Leader”), defendants contended that because the amended complaint was filed
seven days after the time allowed by the court had lapsed, the court was required to strike
it and dismiss the action with prejudice. Defendants argued that Leader precluded the
court from accepting the pleading, but instead required plaintiffs to file a noticed motion
for leave of court to file the untimely amendment.
The trial court agreed that, pursuant to Leader, it had no choice but to strike the
amended complaint and dismiss the action. Said the court: “The Court in Leader v.
Health Industries of America, Inc. found that when a plaintiff files an amended complaint
beyond the time authorized after the trial court sustains a demurrer with leave to amend,
the correct procedure for a defendant to follow is to file a motion to strike and a motion to
dismiss. 89 Cal.App.4th at 614 (upholding the trial court’s ordering the dismissal of the
action after striking a complaint without leave to amend). [¶] Here, the Plaintiff’s
Second Amended Complaint is stricken because it was filed without leave of court. In
addition, since the Defendants have moved for dismissal after the Plaintiffs did not
amend within the time allowed by the Court, the Court may dismiss the action under CCP
581(f)(2). . . . Therefore, the Court dismisses the action because the Plaintiffs did not
amend within the time allowed by the Court.”
A judgment of dismissal was then entered on March 15, 2013. Plaintiffs timely
filed a Notice of Appeal.
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STANDARD OF REVIEW
The trial court’s rulings granting both the motion to strike and the motion to
dismiss the entire action are reviewed for an abuse of discretion. (Olsen v. Harbison
(2005)134 Cal.App.4th 278, 285.) The burden is on plaintiffs to establish such an abuse.
(Harding v. Collazo (1986) 177 Cal.App.3d 1044, 1054.)
DISCUSSION
1. The motion to strike
In granting the motion to strike the amended complaint, the trial court held that
since the pleading was filed seven calendar dates later than allowed by the court in its
order sustaining the demurrer with 10 days leave to amend, it could not be filed without a
noticed motion by plaintiffs seeking leave to file an amended complaint. The Court
stated: “You didn’t file it in a timely fashion. You didn’t file a motion for leave to file
an amended complaint. They’ve moved for the court to disregard – disregard it, to strike
it because it was late filed. It’s like filing an answer too late – Oh, no. That’s a little
different. It’s like filing an amended complaint without leave of court. Court has to
strike it. You have to file – because you didn’t file a motion for leave to file.”
In Leader, supra, 89 Cal.App.4th 603, the trial court sustained a demurrer to the
plaintiff’s third amended complaint with 20 days leave to amend. (Id., at p. 608.) Before
that period expired, plaintiff’s counsel obtained a stipulation from defense counsel to
extend the period. (Ibid.) However, plaintiff did not file an amended pleading, or request
a further extension from the court or opposing counsel. Rather, when the parties failed to
appear for a status conference, and the court ordered their appearance on short notice, the
plaintiff’s counsel arrived at the status conference with his proposed fourth amended
complaint, more than a month after his 20-day leave to amend had elapsed. (Ibid.) In
response to the court’s instructions to bring a motion for leave to file the pleading, the
plaintiff filed a motion for mandatory relief under section 473, subdivision (a). That
motion was heard concurrently with the defendant’s motions to strike the amended
pleading and enter a dismissal pursuant to section 581, subdivision (f)(2). The defendant
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argued that section 473 was inapplicable, the trial court had discretion to grant or deny
plaintiff’s motion for leave to file a late amendment as well as discretion to strike the
complaint, and that the court should exercise its discretion to deny the motion because the
amended complaint failed to address the deficiencies of the third amended complaint
which preceded it. (Id., at pp. 608-610.) The trial court denied the plaintiff leave to
amend and granted “the motion to strike the [proposed] late fourth amended complaint,”
and dismissed the action. (Id., at p. 611.)
On appeal, our Division Two colleagues ruled that under these facts, the plaintiffs
were not entitled to invoke the mandatory relief provision of section 473. The court
noted that, “[u]nder section 473, subdivision (a)(1): ‘The court may, in furtherance of
justice, and on any terms as may be proper, . . . in its discretion, after notice to the
adverse party, allow, upon any terms as may be just, an amendment to any pleading or
proceeding . . . .’ (Italics added.) Assuming proper notice, the trial court has wide
discretion in determining whether to allow the amendment, but the appropriate exercise
of that discretion requires the trial court to consider a number of factors: ‘including the
conduct of the moving party and the belated presentation of the amendment.
[Citation.] . . . The law is well settled that a long deferred presentation of the proposed
amendment without a showing of excuse for the delay is itself a significant factor to
uphold the trial court’s denial of the amendment.’ [Citation, italics added.] ‘The law is
also clear that even if a good amendment is proposed in proper form, unwarranted delay
in presenting it may – of itself – be a valid reason for denial.’ (Roemer v. Retail Credit
Co. (1975) 44 Cal.App.3d 926, 939-940.)” (Leader, supra, 89 Cal.App.4th at p. 613.)
Similarly, the appellate court noted that, “‘by virtue of its inherent power to prevent
abuse of its processes’ (italics added), a trial court may strike an amended complaint
‘filed in disregard of established procedural processes’ [or] ‘because no request for
permission to amend was sought.’ (Loser v. E.R. Bacon Co. [(1962)] 201 Cal.App.2d
[387,] 390.)” (Leader, supra, 89 Cal.App.4th at p. 613.)
In the proceedings below, the defendants argued, and the trial court agreed, that
Leader mandated that the trial court strike the late-filed amended complaint because
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plaintiff had not sought the court’s permission to file it after the 10-day amendment
period had expired. While the Leader court’s recitation of certain legal principles could
lead one to argue for this conclusion, it is not the holding of the court, since in that case
the plaintiff did move for leave to file the amended pleading, and the appellate court
affirmed the trial court’s exercise of discretion in denying the plaintiff’s request.
Consequently, in the instant case, the trial court erred in concluding that it had no
discretion but to strike plaintiffs’ amended complaint due to their failure to seek leave of
court to extend the time within which to file the amended pleading. The court thereby
abused its discretion. (Olsen v. Harbison, supra, 134 Cal.App.4th at p. 285 [trial court
abuses its discretion “in acting on a mistaken view about the scope of its discretion”];
Dickson, Carlson & Campillo v. Pole (2000) 83 Cal.App.4th 436, 449 [“The failure to
exercise discretion is an abuse of discretion”].)
Our conclusion is supported by Harlan v. Department of Transportation (2005)
132 Cal.App.4th 868 (“Harlan”). In that case, a demurrer was sustained with 10 days’
leave to amend and the plaintiff filed its amended complaint eight days late. The trial
court denied defendant’s motion to strike the complaint, stating the “the delay in filing
was brief and inconsequential.” (Id. at p. 872.) The defendant appealed, contending that,
after the trial court sustained the demurrer and ordered the plaintiff to amend within 10
days, the court was powerless to alter the filing deadline without a noticed motion by the
plaintiff. The appellate court rejected the argument, stating: “[The defendant] is
mistaken. Code of Civil Procedure section 472a, subdivision (c), provides that ‘[w]hen a
demurrer is sustained, the court may grant leave to amend the pleading upon any terms as
may be just and shall fix the time within which the amendment or amended pleading shall
be filed. Where, as here, leave to amend is granted because the court sustained
defendant’s demurrer, defendant can hardly claim to have been deprived of the ‘notice’
mentioned in Code of Civil Procedure section 473, subdivision (a)(1). It makes no
difference that the [defendant] did not receive additional notice before the court accepted
the filing several days late, effectively fixing a new time for amendment. The court could
have given [the plaintiff] 20 days to amend instead of 10 in the first place, and the
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[defendant] would have had no grounds to object. While the court had discretion to
require a noticed motion before permitting [the plaintiff] to file the second amended
complaint late, we think it also had the discretion under these circumstances to accept the
filing without a noticed motion. . . .” (Id. at p. 873.)
The Harlan court found further authority for its conclusion in the language of
section 581, subdivision (f)(2), on which the defendant’s motion to dismiss was based.
That statute, said the court, “also undermines the [defendant’s] view that a noticed
motion was required before the court could extend [the plaintiff’s] deadline. That statute
provides: ‘The court may dismiss the complaint . . . when: [¶] . . . [¶] . . . after a
demurrer to the complaint is sustained with leave to amend, the plaintiff fails to amend it
within the time allowed by the court and either party moves for dismissal.’ (Italics
added.) The [defendant's] argument is, in effect, that upon the [defendant's] motion the
court must dismiss if [the plaintiff] fails to amend within the time allowed by the court
and never moves for leave to file late. But section 581, subdivision (f)(2), places the
decision within the court’s discretion.” (Harlan, supra, 132 Cal.App.4th at p. 874.)
Finally, the Harlan court noted that, while section 473, subdivision (a)(1) gives
the trial court the discretion to permit amendment of a pleading “only after notice to the
adverse party, the adverse party already received notice when the court sustains a
demurrer with leave to amend pursuant to Code of Civil Procedure section 472a,
subdivision (a).” (Harlan, supra, 132 Cal.App.4th at pp. 874-875.)
In sum, we determine that the trial court abused its discretion by granting the
motion to strike based on its mistaken belief that it had no discretion to permit plaintiffs
to proceed on their amended complaint in the absence of a noticed motion seeking leave
to file the amended pleading.
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2. The motion to dismiss
The trial court granted defendants’ motion to dismiss the action, stating: “Under
CCP section 581(f), the Court may dismiss the complaint after a demurrer is sustained
with leave to amend, [when] the plaintiff fails to amend it within the time allowed by the
Court, and either party moves for dismissal. The Court in Leader[, supra, 89 Cal.App.4th
603,] found that when a plaintiff files an amended complaint beyond the time authorized
after the trial court sustains a demurrer with leave to amend, the correct procedure for a
defendant to follow is to file a motion to strike and a motion to dismiss. (Id., at p. 614
[upholding the trial court’s order that dismissed the action after striking a complaint
without leave to amend].) [¶] Here, the Second Amended Complaint [was] stricken
because it was filed without leave of Court. In addition, since the Defendants have
moved for dismissal after the Plaintiffs did not amend within the time allowed by the
Court, the court may dismiss the action under CCP section 581[f](2). . . . [¶] Therefore,
the Court dismisses the action because the Plaintiffs did not amend within the time
allowed by the Court.”
Section 581, subdivision (f)(2) states: “The court may dismiss as to that defendant
when: [¶] (2) Except where Section 597 applies,3 after a demurrer to a complaint is
sustained with leave to amend, the plaintiff fails to amend it within the time allowed by
the court and either party moves for dismissal.” The decision to grant or deny a party’s
motion to dismiss is within the court’s discretion. The court may deny the motion and
permit the plaintiff to file an amended complaint when the plaintiff shows good cause for
failing to file the amended complaint within the time limitations ordered by the court.
(Contreras v. Blue Cross of California (1988) 199 Cal.App.3d 945, 948.)
In the present case, plaintiffs’ counsel, in opposition to the motion to dismiss,
informed the court that the reason for the one week delay in filing the amended complaint
from December 24, 2012 to December 31, 2012 was due to the illness of counsel. He
pointed out that the defendants made no claim that they suffered any detriment on
3
Section 597 is not applicable in the present case.
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account of the short delay during the holiday period, and in fact were not in any way
prejudiced by the late filing. Neither did defendants challenge plaintiffs’ counsel’s
assertion that his illness was the cause of his untimely filing of the amended pleading.
The trial court did not indicate, however, in either its detailed tentative ruling or at
the hearing on the motion, that it was even considering these factors presented in
opposition to the motion to dismiss. Instead, the court told plaintiffs’ counsel that it
would only consider any such factors if he were to file a motion under section 473,
subdivision (b).4 The court granted defendants’ motion and dismissed the action with
prejudice.
It is clear from the record that, by refusing to consider the reasons plaintiffs
proffered in opposing the motion to dismiss, the trial court failed to exercise its discretion
in ruling on the motion. (See Harlan, supra, 132 Cal.App.4th at p. 874; Contreras v.
Blue Cross of California, supra, 199 Cal.App.3d at p. 948.) As noted above, this
constitutes an abuse of discretion. (Olsen v. Harbison, supra, 134 Cal.App.4th at p. 285;
Dickson, Carlson & Campillo v. Pole (2000) 83 Cal.App.4th 436, 449.)
3. The affect of the post-judgment motion for attorney’s fees.
On April 25, 2013, plaintiffs’ filed a motion for attorney’s fees based upon Civil
Code section 1717. They argued that they had prevailed in the underlying litigation
because they had achieved the purpose for which the lawsuit was filed. Before doing so,
plaintiffs, on April 18, 2013, withdrew their section 473, subdivision (b) motion which
had been calendared for hearing on May 1, 2013. Defendants in their brief on appeal
argue that plaintiffs made a strategic decision to withdraw from the trial court the
question of whether they should be relieved from the dismissal of their action based on
their counsel’s claimed excusable neglect, the very issue that they now seek to argue
4
The mandatory relief provisions of section 473, subd. (b) do not apply to a judge’s
discretionary dismissal when the dismissal was entered after a hearing at which the judge
evaluated the plaintiff’s reasons for failing to meet the deadline. (Leader, supra, 89
Cal.App.4th at pp. 613-621).
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before this Court. Plaintiffs did so because they wanted to seek a fee award and could not
do so before the litigation in the trial court concluded, as stated in Profit Concepts
Management, Inc. v. Griffith (2008) 162 Cal.App.4th 950, 956. “Clearly, because the
trial court later denied their Fees Motion, [plaintiffs] now to seek to reverse course,
disavow that strategy, and go back to attacking the Judgment. [Plaintiffs] should be
estopped to do so, or should be deemed to have waived any claim of error.”
In support of their position defendants cite and quote Van Sickle v. Gilbert (2011)
196 Cal.App.4th 1495, 1528. Van Sickle does not, however, deal with the issue of
waiver. It deals with the issue of invited error, of which there is none in the present case.
There is, however, an issue of waiver.
Waiver is defined as the “intentional relinquishment of a known right after
knowledge of the facts.” (City of Ukiah v. Fones (1966) 64 Cal.2d 104, 107; Harper v.
Kaiser Cement Corp. (1983) 144 Cal.App.3d 616, 619.) Waiver may occur by
intentional relinquishment or by conduct so inconsistent with an intent to enforce the
right as to induce a reasonable belief that such right has been relinquished. (Crest
Catering Co. v. Superior Court (1965) 62 Cal.2d 274, 276; Harper v. Kaiser Cement
Corp., supra, at pp. 619-620.) Waiver precludes any subsequent assertion of the right.
(Los Angeles City School Dist. v. Landier Inv. Co. (1960) 177 Cal.App.2d 744, 752.)
Plaintiffs, by filing their motion for attorney’s fees, sought to benefit from the very
judgment now under attack by them on appeal. Plaintiffs, by taking their section 473,
subdivision (b) motion off calendar, concurrently with their filing of a motion for
attorneys fees based upon the entry of the judgment, waived their right to later complain
on appeal, after their motion for attorney’s fee was denied, that the trial court erred by
striking the Second Amended Complaint, dismissing their case with prejudice, and
entering a judgment in favor of defendants.
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Disposition
The judgment is affirmed. Defendants shall recover their costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
MINK, J.*
We concur:
MOSK, ACTING P. J.
KRIEGLER, J.
*
Retired Judge of the Los Angeles Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.
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