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Set Aside Default Judgments

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If you could, imagine having a bank account with money in it. Imagine owning a house and having a good job with a flush paycheck. Now, imagine that a judgment creditor takes all the money in your account and starts garnishing your wages without you ever knowing that you had been sued. This happens all the time. It happens, most of time, when a Defendant is sued and isn’t properly served. This starts a chain of events which lead to a default and default judgment then ultimately collection efforts like garnishments and levies. The remedy is to either file bankruptcy, settle the judgment or attach the judgment with a motion to set aside.

What Is Service in California?

The two most popular ways to serve a party are by personal service (California Code of Civil Procedure §415.10) or by substitute service (California Code of Civil Procedure §415.20). Personal service occurs when a copy of the summons and complaint is delivered to the person to be served. Substitute service allows a Plaintiff effectuate service by handing the summons and complaint to a “person who is apparently in charge” or “member of the household” at the “dwelling house, usual place of abode, usual place of business, or usual mailing address” of the person to be served and thereafter mailing a copy of the summons and complaint to that same address. Although there are other ways to serve a party, personal service and substitute service are by far the most common.

How Long Do I Have to Respond to a Lawsuit?

California Code of Civil Procedure §585 allows for a default to be entered if an answer (or another appropriate response) is not filed within the time allotted on the summons. The summons states that “the defendant file with the court a written pleading in response to the complaint within 30 days after the summons is served…” [California Code of Civil Procedure §412.20(3)]. If a defendant does not file an answer or proper responsive pleading within this time period the Plaintiff can take a default and ultimately get a default judgment.

What Do I Do if I Have a Default Judgment in a Case I Didn’t Know About?

A Default Judgment will ultimately be entered if a Defendant is served with the summons and complaint and fails to timely respond. To get out from under a default judgment a Defendant must successfully bring a motion to set aside. There are really two types of motions to set aside.

a. Motions brought within California Code of Civil Procedure §§473 and 473.5

First, “[t]he court may, upon any terms as may be just, relieve a party…from a judgment…taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect.” [California Code of Civil Procedure §473(b)]. Further, a motion to set aside a default judgment “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…or (ii) 180 days after service on him or her of a written notice that the default or default judgment has been entered.” (California Code of Civil Procedure §473.5). This is the best-case scenario for a motion to set aside to prove successful. It is typical for Judgment Creditors to oppose motions to set aside because they are brought is outside the statutory time limits. Judges are hostile to these kinds of motions to begin with and motions outside these time frames are difficult to win.

b. Motions brought using the equitable power of the court

Apart from any statutory authority, the Court has inherent, equitable power to set aside a judgment on the ground of “extrinsic fraud or mistake.” (Olivera v. Grace, (1942) 19 Cal.2d 570, 576; Sporn v. Home Depot USA, Inc., (2005) 126 Cal.App.4th 1294, 1300). To prevail a party must show that a meritorious defense exists, a satisfactory excuse for not presenting a defense to the original action, and diligence in seeking to set aside the default once it was discovered. (Id. at 1301). “The time limit for filing of such a motion … is a reasonable time from discovery of the default judgment irrespective of when it may have been entered.” (Munoz v. Lopez, (1969) 275 Cal.App.2d 178, 181; citing Weitz v. Yankosky, 63 Cal.2d 849; Bennett v. Hibernia Bank, 47 Cal.2d 540; Hayes v. Risk, 255 Cal.App.2d 613; Fidelity Bank v. Kettler, 264 Cal.App.2d 481).

So, to succeed in a motion to set aside outside the statutory period a party must show 1) a defense to the lawsuit and 2) an excuse for not presenting the defense timely. Lack of service is treated as extrinsic fraud and will always fulfill the excuse requirement. (Munoz v. Lopez, (1969) 275 Cal.App.2d 178, 181). That leaves the requirement that the moving party have a defense. In the context of consumer defense this is not an easy thing to show. Notwithstanding it is necessary. Without showing a defense to the lawsuit, a motion to set aside outside the statutory limitations will certainly fail.

But I Thought Courts Should Have to Hear Cases on the Merits!

It is true that “[i]t is the policy of the law to favor, whenever possible, a hearing on the merits.” (Shamblin v. Brattain (1988)44 Cal.3d 474, fn. 1.). However, it is also true that the bench would rather deny a motion to set aside rather than have its calendar of cases increased. In fact, I believe the California Courts have made it a policy to deny motions to set aside whenever possible due to calendar congestion.

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The Bottom Line

Obviously, the law in this area is complicated.  If you have default judgment you need to get in front of it as fast as you can.  You will need a lawyer and a law firm that understands the law and a track record of success.  Here at Fitzgerald & Campbell, APLC we understand the law and we know how to fight cases in and out of Court.  We can provide you with the defense you deserve.

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