Rivercourt Co. Ltd. v. Dyna-Tel, Inc.

Opinion

HANLON, J.

Rivercourt Company Limited appeals from the trial court’s order setting aside a confession of judgment against respondent Dyna-Tel, Inc., pursuant to Code of Civil Procedure, section 473.

1

Rivercourt contends that the trial court erred in finding that the confession of judgment was fraudulently entered. We conclude that the trial court properly set aside the confession of judgment because the declaration filed pursuant to section 1132, subdivision (b), certifying that Dyna-Tel was advised of the waiver of rights and defenses under the confession of judgment procedure, was not executed by independent counsel.

Factual Background

On September 16, 1994, the superior court issued a statement of tentative decision in the matter of Garcia v. Hejmadi (Super. Ct. S.F. County, 1994, No. 938708). In the decision, the court declared that third party claimant Antonio M. Garcia was the 100 percent owner of Dyna-Tel, and that Vivek Hejmadi, who had been the president of Dyna-Tel, was not an owner of Dyna-Tel and had no rights or claims to its assets. The court further found that Dyna-Tel had one asset—the net proceeds of a judgment obtained in the case of Dyna-Tel v. Lakewood (U.S. Dist. Ct. (N.D.I11.), 1991, No. 86 C 8893) that were being held in the court registry. The court directed that Dyna-Tel be dissolved and that the funds held in the court registry be released to Garcia upon entry of the final judgment. Peter R. Chemik, counsel for Hejmadi, received the tentative decision on September 20, 1994.

2

On September 21, 1994, Hejmadi, acting as president of Dyna-Tel, executed a confession of judgment statement pursuant to section 1133 in favor of Rivercourt, confessing judgment in the amount of $1,113,899 and authorizing entry of judgment against Dyna-Tel in that amount. The underlying

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debt to Rivercourt arose from a loan arranged by Hejmadi under which Rivercourt lent $500,000 to Investment Management International, Inc., with Dyna-Tel guaranteeing the loan. Hejmadi controlled Investment Management International, Inc., Chemik, acting as counsel for Dyna-Tel, executed the requisite declaration in support of the statement confessing judgment (§ 1132, subd. (b)), declaring that he examined the proposed judgment and that he advised Dyna-Tel of the waiver of rights and defenses under the confession of judgment procedure. Rivercourt, although it was aware of the tentative decision, filed the confession of judgment on September 28, 1994.