California Landmark Cases on Default Judgment
Orders denying relief from default are more carefully scrutinized than orders granting relief from default, due to the preference for a trial on the merits. (Elston v. City of Turlock (1985) 38 Cal.3d 227, 233.)
However, the moving party's evidence must preponderate as to the claimed "'mistake, inadvertence, surprise or excusable neglect.'" ( Luz v. Lopes (1960) 55 Cal.2d 54, 62.) Also, the moving party must show due diligence in seeking discretionary relief after discovering the default. (Ibid.)
Relief from default on the grounds of mistake, inadvertence, surprise or excusable neglect under section 473, subdivision (b) must be sought within a reasonable time, not to exceed six months after the clerk's entry of default. (Rutan v. Summit Sports, Inc. (1985) 173 Cal. App. 3d 965, 970, 219 Cal. Rptr. 381, superseded by statute on another point as recognized in Sugasawara v. Newland (1994) 27 Cal.App.4th 294, 296-297.)
Section 473, subdivision (b) provides in part:
"The court may, upon any terms as may be just, relieve a party or his or her legal representative from a judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect. Application for this relief shall be accompanied by a copy of the answer or other pleading proposed to be filed therein, otherwise the application shall not be granted, and shall be made within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or other proceeding was taken."
Discretionary relief based upon a lack of actual notice under Code of Civil Procedure section 473.5 empowers a court to grant relief from default or default judgment where a valid service of summons has not resulted in actual notice to a party in time to defend the action.
Section 473.5 provides in part: "(a) When service of a summons has not resulted in actual notice to a party in time to defend the action and a default or default judgment has been entered against him or her in the action, he or she may serve and file a notice of motion to set aside the default or default judgment and for leave to defend the action. The notice of motion shall be served and filed within a reasonable time, but in no event exceeding the earlier of: (i) two years after entry of a default judgment against him or her; or (ii) 180 days after service on him or her of a written notice that the default or default judgment has been entered.. . .(c) Upon a finding by the court that the motion was made within the period permitted by subdivision (a) and that his or her lack of actual notice in time to defend the action was not caused by his or her avoidance of service or inexcusable neglect, it may set aside the default or default judgment on whatever terms as may be just and allow the party to defend the action."
A party seeking relief under section 473.5 must show that his or her lack of actual notice in time to defend was not caused by inexcusable neglect or avoidance of service. ( Tunis v. Barrow (1986) 184 Cal. App. 3d 1069, 1077-1078, 229 Cal. Rptr. 389.)
An application for relief from default under section 473.5 must be made with due diligence, i.e., within a reasonable time. And in no event may it exceed the earlier of two years from entry of the default judgment or 180 days after service of written notice that such default or default judgment has been entered. ( 473.5, subd. (a).)
Outside of express statutory authority, the court has inherent discretionary equitable power to set aside a judgment on the grounds of extrinsic fraud or mistake. (Olivera v. Grace (1942) 19 Cal.2d 570, 575-576, 122 P.2d 564.)
Under this theory of relief, a party in default must show a meritorious defense, a satisfactory excuse for not presenting a defense to the original action, and due diligence in seeking to set aside the default once discovered. ( Rappleyea v. Campbell (1994) 8 Cal.4th 975, 982, 884 P.2d 126 (Rappleyea).)
"'Extrinsic fraud is a broad concept that "tends to encompass almost any set of extrinsic circumstances which deprive a party of a fair adversary hearing."'" ( Estate of Sanders (1985) 40 Cal.3d 607, 614, 221 Cal. Rptr. 432, 710 P.2d 232.)
Extrinsic mistake applies to circumstances outside the litigation that has unfairly cost a party a hearing on the merits. ( Rappleyea, supra, 8 Cal.4th at p. 981.) There is a strong public policy for relief from default under section 473 within the statutory period. ( Rappleyea, supra, at p. 982.)
However, beyond the six-month period in which relief can be obtained under section 473, subdivision (b), "'there is a strong public policy in favor of the finality of judgments and only in exceptional cases should relief be granted.'" ( Rappleyea, supra, 8 Cal.4th at p. 982.)