[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 716 [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 717 OPINION
This court must decide what criteria govern operation of the mandatory dismissal provision of Code of Civil Procedure section581a, under which a summons on a complaint must be served and return made within three years after an action is filed, in view of the implied exceptions to the statute as recognized inWyoming Pacific Oil Co. v. Preston (1958) 50 Cal.2d 736 [329 P.2d 489].
I. A third party cause of action was filed against General Motors Corporation, Paramount Chemical Corporation, Harold Beasley, dba Arco Service Station, and Does I through XXX on August 30, 1976. The complaint alleged that real party in interest (hereinafter plaintiff), Sonya Perez, was injured in an automobile accident in Whittier, California on September 3, 1975, while driving an automobile which was leased by her employer, Georgia-Pacific Corporation. The accident was alleged to have been caused by faulty brakes. Georgia-Pacific subsequently intervened in the lawsuit and sought recovery of sums paid to *Page 718 Ms. Perez as a result of a workers' compensation claim arising out of the accident. Plaintiff alleges that she and Georgia-Pacific cooperated with each other in the prosecution of the lawsuit, although the particular details of that cooperation are not part of the record before this court.
On September 14, 1979, General Motors took the deposition of Robert Ermer, an employee of Georgia-Pacific who usually drove the automobile in which Ms. Perez was injured. He was questioned about the maintenance work on the car and testified that defendant Beasley usually serviced the car but that on one occasion the brakes were checked by petitioner, Serob Hocharian, a Texaco service station owner. Hocharian was deposed in October of 1979 and he was served with a summons as Doe VI on November 5, 1979. This was some nine weeks after the expiration of the three-year summons service period provided for in Code of Civil Procedure section 581a1
There is no question that plaintiff had no knowledge of Hocharian or his possible involvement until the Ermer deposition in September of 1979. Georgia-Pacific was apparently aware of this information in early November of 1975 when it contacted Hocharian and his insurance company seeking to recover for damages to the car. However, Georgia-Pacific never informed Ms. Perez about the potential liability of Hocharian.
After receipt of the summons, Hocharian moved to dismiss the action against him because section 581a, subdivision (a), had not been complied with. Plaintiff countered that there was an implied exception to this section, citing Wyoming Pacific Oil Co. v.Preston, supra, 50 Cal.2d 736, 740-741, and arguing that since the failure was due to plaintiff's inability to learn of petitioner's involvement, it was "impossible" to comply with the statute. The trial court summarily denied *Page 719 Hocharian's motion to dismiss and this petition for writ of mandate followed.
II. The Legislature has mandated that a summons on a complaint must be served and return made within three years after an action is filed or the action must be dismissed. (§ 581a) In WyomingPacific Oil Co. v. Preston, supra, 50 Cal.2d 736, 741, this court examined several of the "implied exceptions" to the "apparently mandatory" language of section 583, a statute which imposes a five-year period within which an action must be brought to trial. Wyoming Pacific held that trial courts have discretion to apply a similar set of exceptions to section 581a (Id., at pp. 740-741.) However, any discretion had to be "`exercised in accordance with the spirit of the law and with a view of subserving, rather than defeating, the ends of substantial justice.'" (Id., at p. 741.) Thereafter, each case was to be "decided on its own particular facts, and no fixed rule [could] be prescribed to guide the court in its exercise of this discretionary power under all circumstances." (Ibid.)
Both sections 581a and 583 impose strict time limits on plaintiffs prosecuting lawsuits. In applying these statutes, the courts recognized that an inflexible interpretation often led to unfair results. Therefore, some courts held that if compliance was impossible for jurisdictional or other reasons, noncompliance would be excused. (See generally Rose v. Knapp (1951)38 Cal.2d 114, 117 [237 P.2d 981]; Christin v. Superior Court (1937) 9 Cal.2d 526, 530 [71 P.2d 205, 112 A.L.R. 1153]; Kinard v. Jordan (1917) 175 Cal. 13, 15-16 [164 P. 894]; Estate ofMorrison (1932) 125 Cal.App. 504, 510-511 [14 P.2d 102].) This "impossibility" exception was later extended to cases in which compliance was either "impracticable" or "futile." (SeeChristin v. Superior Court, supra, 9 Cal.2d at p. 533; see also Rose v. Knapp, supra, 38 Cal.2d at p. 117; City ofPasadena v. City of Alhambra (1949) 33 Cal.2d 908, 916-917 [207 P.2d 17]; Pacific Greyhound Lines v. Superior Court (1946) 28 Cal.2d 61, 67 [168 P.2d 665].)
As early as 1920, the appellate courts recognized that "[t]he object intended to be attained by section 581a of the Code of Civil Procedure is, obviously, to compel reasonable diligence in the prosecution of an action after it has been commenced, and thus afford the party or parties against whom it is brought an opportunity to present such evidential *Page 720 support to any defense he or they may have thereto as may be available at the time the action is instituted, but which may be lost or destroyed through the death of witnesses or otherwise before the action is brought to issue by reason of an unreasonably long delay in serving the defendant or defendants with appropriate legal process notifying him or them of the pendency of the action." (People v. Kings County Dev. Co. (1920) 48 Cal.App. 72, 76 [191 P. 1004], italics added.)
Fifty years later, in Black Bros. Co. v. Superior Court (1968) 265 Cal.App.2d 501, 505,2 this concept was reiterated. "It is the policy of the law, as declared by the courts, that when a plaintiff exercises reasonable diligence in the prosecution of his action, the action should be tried on the merits. This policy is counter-balanced, however, by the policy declared by the Legislature and the courts that when a plaintiff fails to exercise reasonable diligence in the prosecution of his action it may be dismissed by the trial court." (Italics added.)
Thus, the idea of reasonable diligence has been the cornerstone of statutory analysis of section 581a (See CrownCoach Corp. v. Superior Court (1972) 8 Cal.3d 540, 548 [105 Cal.Rptr. 339, 503 P.2d 1347]; Wyoming Pacific Oil Co. v.Preston, supra, 50 Cal.2d at p. 740-741; Ostrus v. Price (1978) 82 Cal.App.3d 518, 521 [146 Cal.Rptr. 922]; Hunot v.Superior Court (1976) 55 Cal.App.3d 660, 664 [127 Cal.Rptr. 703];McKenzie v. City of Thousand Oaks (1973) 36 Cal.App.3d 426, 429 [111 Cal.Rptr. 584]; Watson v. Superior Court (1972) 24 Cal.App.3d 53, 58, 59 [100 Cal.Rptr. 684]; Flamer v. Superior Court (1968) 266 Cal.App.2d 907, 911, 915 [72 Cal.Rptr. 561]; Daley v. County of Butte (1964) 227 Cal.App.2d 380, 390 [38 Cal.Rptr. 693].) Exceptions to the literal language of time-limit statutes were developed in recognition not only of "objective impossibility in the true sense, but also impracticability due to excessive and unreasonable difficulty or expense." (Christin v. Superior Court, supra, 9 Cal.2d at p. 533.) As every litigator knows, the prosecution or defense of a lawsuit involves the difficult problem of balancing the effectiveness of any given tactic or procedure against its cost in terms of time and expense. Even the attorney who utilizes every reasonable and cost-effective discovery procedure must acknowledge the possibility that he or she will fail to *Page 721 discover the identity of a potential defendant within the statutory three-year period.
Certainly the state has an interest in assuring that lawsuits are prosecuted expeditiously. (Schultz v. Schultz (1945)70 Cal.App.2d 293, 297 [161 P.2d 36].) As a result, plaintiffs are required by statutes, such as sections 581a and 583, to use reasonable diligence in bringing lawsuits to trial. However, the Legislature, cognizant of the cost-benefit balancing process inherent in the litigation system, would not have required a plaintiff to be more than reasonably diligent.
(1) (See fn. 3.) In recognition of this fact, the courts have suggested at least three "implied exceptions" to section581a's rule of mandatory dismissal3 — impossibility, impracticability, and futility4 — to be applied in the trial court's discretion. (Crown Coach Corp. v. Superior Court,supra, 8 Cal.3d at pp. 546-547; Tresway Aero, Inc. v.Superior Court, supra, 5 Cal.3d at p. 437; Wyoming Pacific OilCo. v. Preston, supra, 50 Cal.2d at p. 740; Watson v.Superior Court, supra, 24 Cal.App.3d at p. 58.) Notwithstanding the wisdom of the Wyoming Pacific court's admonition against the formulation of "fixed rules" (50 Cal.2d at p. 741; see p. 719) ante, it now appears necessary to articulate some general guidelines for the exercise of this discretion which are consistent with the underlying statutory intent. *Page 722 (2a) In applying any of these exceptions to a given factual situation, the critical question is whether a plaintiff used reasonable diligence in prosecuting his or her case. The particular factual context or cause of the noncompliance should not be determinative;5 rather, the primary concern must be the nature of the plaintiff's conduct.6 (3), (4) (See fn. 7.) The statute sets forth the three-year limitation period which must be complied with unless plaintiff shows that the greater-than-three-year delay was not due to his or her unreasonable conduct. Thus in effect, the statute operates as a rebuttable presumption: if plaintiff fails to serve and return summons on a defendant within three years of the commencement of the action, plaintiff may be presumed to have failed to use reasonable diligence. This presumption may be overcome by plaintiff, who bears the burden of proving that he falls within an implied exception to section 581a7 (Busching v. Superior Court (1974) 12 Cal.3d 44, 53 [115 Cal.Rptr. 241, 524 P.2d 369]; Ostrus v. Price, supra, 82 Cal.App. 3d at p. 521; County of Los Angeles v. Security Ins. Co. (1975) 52 Cal.App.3d 808, 816 [125 Cal.Rptr. 701]; McKenzie v. City of Thousand Oaks, supra, 36 Cal.App.3d at pp. 430-431;Watson v. Superior Court, supra, 24 Cal.App.3d at *Page 723 p. 58.) (2b) In the present case, the trial court denied petitioner's motion to dismiss without any factual finding as to the nature of the plaintiff's conduct. Since the record before this court is inadequate to allow such a finding,8 and in view of the previous lack of any articulated standards to guide the trial court in exercising its discretion, a writ must issue to compel the trial court to hold a hearing on the issue of reasonable diligence.9 *Page 724 (5) Although the decision to issue the writ adequately disposes of this case, it is appropriate to briefly comment on the issue of prejudice, since it may become a factor in the lower court.
The primary purpose of section 581a is to assure reasonable diligence in the prosecution of lawsuits. This concern is motivated, at least in part, by a desire to insure that defendants faced with a lawsuit have a reasonable opportunity to locate evidence and witnesses in preparing a defense. As this court stated in Crown Coach Corp. v. Superior Court, supra, 8 Cal. 3d at page 546: "The dismissal statutes, like statutes of limitation, `promote the trial of cases before evidence is lost, destroyed, or the memory of witnesses becomes dimmed. . . .' (General Motors Corp. v. Superior Court (1966) 65 Cal.2d 88, 91 [52 Cal.Rptr. 460, 416 P.2d 492].)" (See also Ippolito v.Municipal Court, supra, 67 Cal.App.3d at p. 687; Flamer v.Superior Court, supra, 266 Cal.App.2d at p. 915; Black Bros.Co. v. Superior Court, supra, 265 Cal.App.2d at pp. 505-506.) Thus, even in a situation where plaintiff has demonstrated reasonable diligence at every stage of the lawsuit, a delay in serving summons may result in substantial prejudice to a defendant. If this delay exceeds the three-year statutory limit, the court must at least consider the issue of prejudice in deciding whether or not to dismiss the defendant from the lawsuit.
Thus, once a plaintiff has proven his use of reasonable diligence, the trial court still has discretion to dismiss as to the defendant pursuant to section 581a In exercising this discretion, the court must be aware of the fact that it is dealing with two essentially innocent parties — a plaintiff who has demonstrated reasonable diligence and a defendant who has only recently been given notice of the lawsuit. The court must also keep in mind the strong public policy that litigation be disposed of on the merits wherever possible. (Denham v.Superior Court, supra, 2 Cal.3d at p. 566; accord Crown CoachCorp. v. Superior Court, supra, 8 Cal.3d at p. 548; McDonoughPower Equipment Co. v. Superior Court (1972) 8 Cal.3d 527, 538 [105 Cal.Rptr. 330, 503 P.2d 1338] (dis. opn. by Peters, J.).)
The decision whether or not to dismiss must be based on a balancing of the harm to the plaintiff if the motion is granted against the prejudice to the defendant if he is forced to defend the suit.10 As long as the *Page 725 court engages in this balancing process, its decision should not be disturbed on appeal absent an abuse of discretion. (SeeDenham v. Superior Court, supra, 2 Cal.3d at p. 566.)
III. Let a peremptory writ of mandate issue to compel the trial court to hold a hearing in accord with the views expressed herein. Each party shall bear its own costs.
Tobriner, J., Mosk, J., and Newman, J., concurred.
1 Section 581a, subdivision (a) provides: "No action heretofore or hereafter commenced by complaint shall be further prosecuted, and no further proceedings shall be had therein, and all actions heretofore or hereafter commenced shall be dismissed by the court in which the same shall have been commenced, on its own motion, or on the motion of any party interested therein, whether named as a party or not, unless the summons on the complaint is served and return made within three years after the commencement of said action, except where the parties have filed a stipulation in writing that the time may be extended or the party against whom the action is prosecuted has made a general appearance in the action."
All further references are to the Code of Civil Procedure unless otherwise indicated.
2 Disapproved on unrelated grounds in Denham v. SuperiorCourt (1970) 2 Cal.3d 557, 563 [86 Cal.Rptr. 65, 468 P.2d 193], and in Woolfson v. Personal Travel Service, Inc. (1971)3 Cal.3d 909, 911-912 [92 Cal.Rptr. 286, 479 P.2d 646].
3 The Courts of Appeal have for some time struggled with the question as to whether or not section 581a is both mandatory and jurisdictional. (Cf. Flamer v. Superior Court, supra, 266 Cal.App.2d at p. 912 with Semole v. Sansoucie (1972) 28 Cal.App.3d 714, 722 [104 Cal.Rptr. 897]; Bernstein v. SuperiorCourt (1969) 2 Cal.App.3d 700, 704 [82 Cal.Rptr. 775];Highlands Inn, Inc. v. Gurries (1969) 276 Cal.App.2d 694, 697 [81 Cal.Rptr. 273]; Black Bros. Co. v. Superior Court,supra, 265 Cal.App.2d at p. 505; Dresser v. Superior Court (1964) 231 Cal.App.2d 68, 73 [41 Cal.Rptr. 473].) The statute can be termed "mandatory" in the sense that a trial court must dismiss if the plaintiff fails to prove reasonable diligence in attempting to serve and return summons. The court in Flamer,supra, however, was correct when it suggested that in view ofWyoming Pacific, "section 581a can no longer be regarded as jurisdictional." (266 Cal.App.2d at p. 912.)
4 In Tresway Aero, Inc. v. Superior Court (1971) 5 Cal.3d 431 [96 Cal.Rptr. 571, 487 P.2d 1211], this court recognized another implied exception to section 581a in holding that a defendant may be estopped from seeking dismissal if his conduct or assertions induce detrimental reliance on the part of the plaintiff who thereby fails to serve and return summons within the three-year period. On the one hand, the estoppel doctrine is unaffected by today's decision since it is addressed primarily to the conduct of the defendant rather than the plaintiff. On the other hand, the concept of reasonableness is equally applicable since, as noted in Tresway, plaintiff's reliance must be reasonable for the doctrine of estoppel to apply. (Id., at p. 440.)
5 It is somewhat inconsistent to recognize that the implied exceptions to section 581a are not limited to "objective impossibility" (see Christin v. Superior Court, supra, 9 Cal. 2d at p. 533) while at the same time suggesting that application of the exceptions is appropriate only where the cause of the noncompliance is "beyond [the plaintiff's] control." (Crown Coach Corp. v. Superior Court, supra, 8 Cal.3d at p. 546.) Thus, to the extent that the following cases are inconsistent with the opinion in this case, they are disapproved:Crown Coach Corp. v. Superior Court, supra; Ippolito v.Municipal Court (1977) 67 Cal.App.3d 682 [136 Cal.Rptr. 795];Hunot v. Superior Court, supra, 55 Cal.App.3d 660; Watson v. Superior Court, supra, 24 Cal.App.3d 53; Highlands Inn,Inc. v. Gurries, supra, 276 Cal.App.2d 694.
6 Most of the cases have involved situations where the plaintiff has encountered some difficulty in serving a known defendant. (See, e.g., Tresway Aero, Inc. v. Superior Court,supra, 5 Cal.3d 431; Ostrus v. Price, supra, 82 Cal.App.3d 518;Ippolito v. Municipal Court, supra, 67 Cal.App.3d 682;Elling Corp. v. Superior Court (1975) 48 Cal.App.3d 89 [123 Cal.Rptr. 734]; Bernstein v. Superior Court, supra, 2 Cal.App.3d 700;Smith v. Herzer (1969) 270 Cal.App.2d 747 [76 Cal.Rptr. 77]; Hill v. Superior Court (1967) 251 Cal.App.2d 746 [59 Cal.Rptr. 768].) This case, on the other hand, concerns a situation where plaintiff did not learn the identity of the defendant until after the three-year period had expired. (Cf.Watson v. Superior Court, supra, 24 Cal.App.3d 53.) While the specific considerations may be different, the underlying question is the same: whether or not unreasonable conduct on the part of plaintiff gave rise to the noncompliance. Moreover, trial courts, familiar with the balancing process central to negligence determinations, are well equipped to resolve this question.
7 Justice Clark's dissent suggests that the standards enunciated by the court in today's decision remove "all substantive effect from section 581a" (post, p. 728) because they are the same standards as those which apply to discretionary dismissals under section 583, subdivision (a).
In Sanborn v. Chronicle Pub. Co. (1976) 18 Cal.3d 406, 416-417 [134 Cal.Rptr. 402, 556 P.2d 764], this court stated that "[s]ubdivision (a) [of § 583] places no restrictions on the exercise of the trial court's discretion and it will be disturbed only in cases of manifest abuse. [Citation.]" (Accord Denham v.Superior Court, supra, 2 Cal.3d at p. 563.) In contrast to this "unrestricted" discretion accorded trial courts under section583, subdivision (a), the primary purpose of the foregoing discussion of section 581a has been to articulate a consistent set of guidelines for the exercise of the trial court discretion recognized in, but not limited by, Wyoming Pacific, supra.
It is important that the distinction between the two sections be made clear. As was noted earlier in this opinion with respect to section 581a, once a defendant shows a greater-than-three-year delay in the service and return of summons, the burden is on theplaintiff to show that the delay was not due to his own unreasonable conduct, and the trial court must so find or order dismissal of the action. Under section 583, subdivision (a), the trial court may consider a myriad of factors not limited to the reasonableness of the plaintiff's conduct (see Cal. Rules of Court, rule 203.5), and the burden is on the defendant to show that dismissal is warranted. Moreover, as this court held inDenham v. Superior Court, supra, 2 Cal.3d at page 563, section 583, subdivision (a) imposes "no requirement that the motion to dismiss `must' be granted unless opposed by an adequate showing of diligence or excuse for delay." Contrary to the implication in Justice Clark's assertion, this is precisely the requirement which today's decision imposes on trial courts hearing section 581a motions.
8 It is interesting to note that the briefs of petitioner and plaintiff assume opposite conclusions on the reasonable diligence issue without the benefit of a factual finding in the trial court. Petitioner argues that "failure to effectuate timely service upon petitioner was by neglect and lack of diligence on the part of the plaintiff," concluding that "[a] lack of diligence in the prosecution of a lawsuit will preclude the application of [any of the implied exceptions to] C.C.P. §581a(a)." Plaintiff, on the other hand, asserts that her "conduct was not unreasonable" in view of the fact that she was cooperating with intervener Georgia-Pacific in the prosecution of the lawsuit.
Under normal circumstances, failure by the plaintiff through the use of discovery procedures to ascertain the identity of a potential defendant suggests a lack of reasonable diligence on plaintiff's part. Plaintiff in this case, however, argues that Georgia-Pacific's role as a cooperating intervener compels an opposite conclusion. Since the record is inadequate to allow this court to determine whether, under the circumstances, it would be reasonable to expect the plaintiff to have deposed Robert Ermer or other Georgia-Pacific employees with knowledge of petitioner Hocharian's potential involvement at an earlier date, it is necessary to remand to the trial court for further proceedings.
9 It should also be noted that the issue of balancing prejudice to the parties, a discussion of which follows, would in itself require an additional hearing by the trial court.
10 The court may consider such factors as the potential ultimate liability of the defendant vis-a-vis other defendants, the probability of the defendant being found liable, the length of the delay in service, the difficulty in locating witnesses or evidence, and whether the defendant had actual knowledge of the potential claim through other channels. (See generally Anderson v. Air West, Inc. (9th Cir. 1976) 542 F.2d 522, 526; Pearson v. Dennison (9th Cir. 1965) 353 F.2d 24, 28-29.)