Sugasawara v. Newland

Opinion

EPSTEIN, Acting P. J.

SUGASAWARA V. HAYASHI CORPORATION

This is an appeal from an order vacating an entry of default. The order was made pursuant to section 473 of the Code of Civil Procedure.

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Appellants contend that the motion to vacate came after the six-month period recognized by section 473. They base their argument on the claim that the period runs from the entry of default. We do not agree. The plain language of section 473 makes it clear that the six-month period starts to run from the entry of judgment. In addition, section 473 requires the court to vacate the underlying default upon vacating the default judgment as a result of attorney’s mistake, inadvertence, surprise, or neglect. Finding no judicial error, we shall affirm the order.

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Factual and Procedural Summary

On April 17, 1990, appellants Jim Y. and Chizu Sagasawara filed a complaint against respondents Jeffrey M. Newland and Kenneth S. Hayashi Corporation for fraud, rescission, restitution, and injunction. Newland is a former employee of Hayashi Corporation, a real estate brokerage company which handled the appellants’ real estate transaction. Hayashi Corporation filed for bankruptcy protection in May 1991. After appellants filed their complaint, the company’s president, Kenneth S. Hayashi, instructed Daniel D. White, its general counsel, to represent Newland in this action. Mr. White filed a general denial on behalf of Newland. After Hayashi Corporation filed for bankruptcy, the bankruptcy trustee took over Mr. White’s files including the Newland file. Mr. White neglected to verify that the lawsuit against Newland was removed by the bankruptcy court and left Newland’s matter unattended.

On February 28, 1992, the superior court struck Newland’s answer as a sanction for failure to comply with discovery. Subsequently, appellants obtained a default against Newland and the superior court entered a default judgment in January 19, 1993, for approximately $220,000.

On March 15, 1993, Newland filed a motion to set aside the default and default judgment pursuant to section 473. The motion was supported by an affidavit by Mr. White, in which he acknowledged that he had neglected to independently verify that the action against Newland had been removed by the bankruptcy court proceedings. Mr. White further admitted that he had failed to provide the court or opposing counsel with a new address for receiving notices. After considering the moving and opposition papers, the court granted the motion and reinstated Newland’s answer. Pursuant to section 473, the court ordered Mr. White to pay $700 to the plaintiffs and their legal counsel. Appellants filed a timely appeal from the order vacating the default.