On February 8 and 9, 2005, we discussed what seemed to be the ultimate sanction: a case in which a lawyer (in no particular order): (a) lost the case, (b) lost her job, (c) got reported to the State Bar; (d) received a public reprimand; (e) was ordered to pay $5,000 in fines and (f) was compelled to attend ethics training along with her entire (former) law firm. Ouch.
We do have a contender, though.
Just a few days ago, a California Court of Appeal, sitting in Santa Ana, California, slammed Home Depot and its law firm, Pillsbury Winthrop. (Sporn v. Home Depot USA, Inc.
, Case No. G033775, February 17, 2005; read it here
Plaintiff Alan Sporn sued Home Depot and “John Doe”. The gist of Mr. Sporn's complaint was that "John Doe" used Sporn's identity to obtain credit from Home Depot. He also alleged that the company made monthly credit inquiries of Equifax, a credit reporting agency, and because of these frequent inquiries, he was unable to obtain “the best rates of interest.” As a result of defendant’s conduct, plaintiff claimed he suffered physical and emotional distress, personal and business embarrassment, lost business opportunities, and lost creditworthiness. For each of his five causes of action he prayed for $5,000,000 in general damages and $10,000,000 in punitive damages.
Defendant’s designated agent for service of process was served on August 23. On September 30, Mr. Sporn's lawyer sent a letter to Home Depot, in care of its authorized agent, enclosing a copy of the previously served summons. She wrote that the summons had been served on August 23; although it had been due on September 23, no responsive pleading had been received; and unless such a pleading was received by October 7, she would seek the entry of defendant’s default. No response. On October 10, Mr. Sporn's lawyer filed a request for entry of default, serving a copy on defendant.
The following July 15, the trial court conducted a default prove-up hearing, and after hearing evidence, issued a default judgment in favor of plaintiff for $930,000.
Nearly eight (8) months later, on March 10, after learning of an effort to enforce the judgment, Home Depot made its first appearance by way of an emergency application for a stay. The court denied it. On March 11, defendant filed a motion to set aside the default and default judgment and recall an order to collect the judgment.
Home Depot conceded proper service of the summons and complaint and the request for entry of default, but places the blame for its failure to take any action for well over a year on Mr. Sporn's attorney. Home Depot accused Johnson of extrinsic fraud and fraud on the court.
The motion to set aside the default and the default judgment was denied on March 22. The order denying the motion included the following findings: (1) Home Depot was properly served with the summons and complaint and with the request to enter default; (2) more than six months had elapsed from the date of entry of judgment until defendant filed its motion to vacate the judgment; (3) plaintiff had done nothing to prevent defendant from responding to the complaint; and (4) plaintiff committed no extrinsic fraud “either in connection with defendant’s failure to respond to the complaint or defendant’s failure to timely move for relief from the default.
The Court of Appeal was unimpressed with the appeal. In short, the appellate court noted that defaulted parties may be relieved from a judgment entered against it through its “mistake, inadvertence, surprise or excusable neglect.” (Code Civ. Proc. § 473, subd. (b).) However, a motion under this section must be made within six (6) months
from the entry of the default or the default judgment.
court rejected the appeal, finding that Home Depot "obviously ... cannot avail itself of relief under this statute" because it was outside the maximum period of time. Its motion was well after the six month outer limit.
Moreover, the Court of Appeal rejected Home Depot's attempt "to escape the results of its own carelessness by an offensive characterization of plaintiff’s conduct. We are less than impressed by defendant’s accusations that plaintiff 'obtained [the judgment] by stealth,' was 'laying [sic] in the weeds,' 'obtained the default judgment from the trial court through his and his attorney’s acts and omissions which constituted extrinsic fraud,' concealed facts from the court, and engaged in 'improper tactics.' The record does not support these characterizations. Plaintiff properly served defendant, extended a commendable courtesy by advising defendant of the default and unilaterally extending the time to respond, and, as required, properly notified defendant of the request to enter its default."
In addition to Home Depot's untimeliness, the Sporn court observed, "[a]n obvious gap appears in the evidence submitted in support of the motion to vacate: there is no statement that the papers were lost, stolen, forwarded to the wrong person, or eaten by the dog. Nothing in the record discloses what caused defendant to ignore the summons and complaint, the letter from plaintiff’s lawyer, the request to enter default, and the letter from GE. No excuse, satisfactory or otherwise, was presented."
The hits kept on coming, as follows: "Their apparent belief that they can persuade this court to somehow make up for the consequences of their conduct by the excessive use of noxious characterizations to describe the conduct of plaintiff and his lawyer is mistaken and offensive."
Finally, the coup de grace: the Court of Appeal remanded to the trial court for an award of sanctions for Home Depot's frivolous appeal. "The utter lack of merit renders the appeal frivolous and, combined with the unnecessary attacks directed at plaintiff and his lawyers, calls for an award of sanctions in favor of plaintiff. The matter is remanded to the trial court to determine the reasonable value of fees and expenses incurred by plaintiff in resisting this appeal." Again, ouch.