AI Case Brief
Generate an AI-powered case brief with:
Estimated cost: $0.001 - $0.003 per brief
Full Opinion
FRANKLIN CAPITAL CORPORATION, Plaintiff and Appellant,
v.
Douglas WILSON et al., Defendants and Respondents.
Court of Appeal of California, Fourth District, Division Three.
*425 Brewer & Brewer, Templeton Briggs and James R. Knoles, Newport Beach, for Plaintiff and Appellant.
Steinberg, Nutter & Brent and Paul M. Brent, Santa Monica, for Defendants and Respondents.
OPINION
SILLS, P.J.
I. INTRODUCTION
After the attorney for the plaintiff failed to appear for a mandatory settlement conference, the trial court set an order to show cause hearing (OSC) in regard to dismissal or other sanctions. The day before that hearing, the plaintiff voluntarily dismissed its case without prejudice pursuant to section 581, subdivision (b)(1) of the *426 Code of Civil Procedure. Nevertheless, the court held the hearing, at which it vacated the voluntary dismissal without prejudice and entered, in its stead, a new dismissal, by the court, with prejudice. This appeal is from the order denying the plaintiffs latter motion to vacate the new dismissal with prejudice.
We must reverse. By its terms, section 581, subdivision (b)(1) confers on plaintiffs the right to dismiss anytime prior to the "commencement of trial." As we explain below, a mandatory settlement conference, or an ensuing OSC dismissal or other sanctions for failure to appear at that mandatory settlement conference, does not in any way implicate the "commencement of trial." The plaintiff had the statutory right to dismiss its case without prejudice, even on the eve of the hearing.
Also, even if the plaintiff did not have the right to dismiss without prejudice, it is clear that the trial court had no right to dismiss the case with prejudice on its own. As we explain below, the dismissal for failure to attend the mandatory case management conference was essentially a dismissal for failure to prosecute, and the statute and Supreme Court authority make clear that a dismissal for failure to prosecute is without prejudice.
II. FACTS
In November of 2003, Franklin Capital Corporation filed this garden-variety debt collection action against defendant Douglas Wilson (a complaint for breach of contract regarding default on an outstanding loan balance of some $57,000), but by the Spring of 2004 counsel for Franklin must have been preoccupied with other things, because he basically went inert as far as Franklin's case was concerned.[1]
To be precise: On March 2, 2004, counsel for Franklin failed to appear at a case management conference. That order was vacated (errant mail service), but counsel had a relapse of his aversion to case management conferences on April 13, prompting the court to issue an OSC contemplating dismissal. Counsel failed to appear at the OSC (this particular OSC was not the OSC that would prompt this appeal), and in fact the case was dismissed. Franklin's counsel managed to have the dismissal set aside in September, albeit with a $900 sanction. Then Franklin actually moved for summary judgment, but, true to form, failed to show up at the hearing on his motion, so it was denied.
In late April defendant Wilson filed a motion to dismiss for delay in prosecution, *427 essentially relying on what litigators used to call the "two-year rule" (cf. Code Civ. Proc, § 583.410 [discretionary authority to dismiss for delay in prosecution] with § 583.420, subd. (a)(2)(B) [no authority to dismiss for delay in prosecution prior to two years having gone by from filing without the case having been brought to trial]) arguing that, under factors set out in rule 373 (now 3.1342) of the California Rules of Court, discretionary dismissal was appropriate.[2]
On May 6, 2005 counsel for Franklin failed to appear at a mandatory settlement conference ironically, one requested by Franklin and that day the trial court once again issued an OSC re "Dismissal and/or sanctions," setting the hearing for May 19.
The minute order did not mention any authority on which the trial court's OSC would proceed. However, two days before the hearing, defendant Wilson's attorney filed a "declaration" in support of "dismissal of action" which incorporated the late April motion to dismiss under section 583.410 [lack of prosecution after two years have passed since filing without case having been brought to trial].
The day before the hearing, May 18, Franklin's counsel filed a voluntary dismissal without prejudice with the court clerk.
Counsel didn't show up at the hearing the next day, so the court ordered a dismissal with prejudice. While the court, in its minute order, cited no statutory or case authority for its action, it indicated that the dismissal was for lack of prosecution, though it also alluded to counsel's failure to comply with the previous order to pay sanctions of $900.[3] The court entered an unsigned minute order of dismissal with prejudice on May 19 (as distinct from a signed final order of dismissal under section § 581d [all dismissals must be in writing signed by the court]).
In late August, after an aborted attempt to file a new action in July,[4] Franklin filed a motion to vacate the dismissal on the grounds of lack of jurisdiction for the trial court to do what it did on May 19. That motion was denied in a hearing on September 23. While the trial court again did not mention any specific statutory or case authority for its decision, it clearly alluded to a body of case law, which we discuss in detail below, which the trial court read as precluding voluntary dismissals in the face of any "dispositive" action.[5] The denial of *428 the motion to vacate was filed September 26, and the October 3 notice of appeal is timely.[6]
III. DISCUSSION
A. Did the Pending Court-Initiated OSC to Dismiss or Impose Other Sanctions Because of the Failure to Attend the Mandatory Settlement Conference Cut Off Plaintiffs Right to Dismiss Voluntarily? No.
1. The Statute Controls'
While the case law (which we discuss in detail below) is extensive, we must remember that the right of a plaintiff to dismiss its case voluntarily and without prejudice is set forth in a statute, and all permutations of circumstances on the subject flow from that statute. The statute is Code of Civil Procedure, section 581, subdivision (b)(1), which provides: "An action may be dismissed in any of the following instances: [¶] (1) With or without prejudice, upon written request of the plaintiff to the clerk, filed with papers in the case, or by oral or written request to the court at any time before the actual commencement of trial, upon payment of the costs, if any." (Italics added.) In essence, then, all cases which deal with voluntary dismissals are glosses on the words, "commencement of trial."
In terms of the case before us, it would seem obvious that a mandatory settlement conference is not the "commencement of trial" in any sense of the phrase. By definition no adjudication is contemplated at a settlement conference. And it would seem likewise obvious that an ensuing OSC re dismissal or sanctions for failure to appear at such a conference would not implicate the idea of "commencement of trial." Again, nothing like adjudication of the merits happens at an OSC conducted in the wake of a failure to appear at a mandatory settlement conference.
We should also mention at this point that the statute also contains a definition of what constitutes a trial. The definition is found in subdivision (a)(6) of section 581. It reads: "(a) As used in this section: . . . . [¶] (6) `Trial.' A trial shall be deemed to actually commence at the beginning of the opening statement or argument of any party or his or her counsel, or if there is no opening statement, then at the time of the administering of the oath or affirmation to the first witness, or the introduction of any evidence."
*429 If subdivision (a)(6) set forth the exclusive criteria for the concept of "commencement of trial" we might end this opinion right here. Quite obviously an OSC re failure to appear at a mandatory settlement conference does not fit any of the three specified acts for determining whether trial has actually commenced.
On its face, however, the language in subdivision (a)(6) is not exclusive it tells you that some things constitute a trial but it doesn't say that those are the only things that constitute a trial and in any event the issue of its exclusivity was dispositively settled against exclusivity by our Supreme Court in Wells v. Marina City Properties, Inc., supra, 29 Cal.3d 781, 784-788, 176 Cal.Rptr. 104, 632 P.2d 217. As the Wells case shows, the "trial shall be deemed" language had been added to the statute in 1947, though then the language was in the last sentence of subdivision 1 of section 581. The specific question in Wells was whether that language, as well as the addition of the word "commencement" as in "commencement of trial" set up "a new and exclusive test, preserving the right of voluntary dismissal until the occurrence of one of the specific acts deemed by subdivision 1 to constitute `the actual commencement of trial'" such that a voluntary dismissal after a general demurrer had been sustained and the time to amend had expired might be valid. (Wells, supra, 29 Cal.3d at p. 786, 176 Cal.Rptr. 104, 632 P.2d 217.) Answer: No. The court said the 1947 amendment with its "trial shall be deemed" language did not address the question of when "the trial of an issue of law commences." (See id. at pp. 787-788, 176 Cal.Rptr. 104, 632 P.2d 217 ["Accordingly, we are unable to agree with plaintiffs contention that the 1947 amendment erased or diluted the Goldtree rationale. It is reasonable to conclude that the 1947 amendment to section 581, subdivision 1, did not address the issue before us, namely, when does the trial of an issue of law commence?" (All original emphasis.) ].)
In the wake of Wells, a substantial and fairly complex body of case law has grown up involving when and when not a plaintiffs statutory right to dismiss pursuant to section 581, subdivision (b)(1) is cut off by the presence of some impending "dispositive" procedure. Indeed, defendant Wilson in this case urges us to affirm the trial court's refusal to vacate its dismissal with prejudice precisely because of the voluntary dismissal while a "dispositive" proceeding (the OCS re dismissal or sanctions) was pending. In order not to run afoul of this case law we are required to map its relevant boundaries.
2. The Supreme Court Cases
Despite the non-exclusivity of subdivision (a)(6), the basic right to voluntarily dismiss remains statutory, with the operative benchmark being the phrase "commencement of trial" in subdivision (b)(1). So we will begin at the beginning, with the first major Supreme Court case limiting the statutory right to dismiss, Goldtree v. Spreckels (1902) 135 Cal. 666, 67 P. 1091. Goldtree, decided when the statute merely said "trial," was essentially a gloss on that word.
In Goldtree, the high court held that a voluntary dismissal without prejudice had no effect on two causes of action that had previously been the subject of a sustained demurrer without subsequent amendment. The court reasoned that the demurrer, challenging the sufficiency of the facts, went "directly to the determination of the rights of the parties," and that was to be "`considered a trial.'" (Goldtree v. Spreckels (1902) 135 Cal. 666, 670-671, 67 P. 1091.)
While most of the Goldtree opinion was an exposition on how the word "trial" as *430 used in the statute encompasses the adjudicatory process of consideration of a demurrer (see Goldtree, supra, 135 Cal. at pp. 669-673, 67 P. 1091), the court alluded to an argument rooted in judicial policy, by quoting a passage from State v. Scott (1888) 22 Neb. 628, 36 N.W. 121, 126, the gravamen of which was: There has to be an end to litigation. However and this point will be important later on when we address some of the Court of Appeal decisions limiting the otherwise "absolute" right to dismiss the high court did not stray from the benchmark of the word "trial" as used in the statute. The connection to the statutory word "trial" was made by linking the common sense idea that litigation must end to the more technical idea that an initial submission of the merits of the case to the trial court terminates the right to dismiss because that submission is a "trial."[7]
The next major Supreme Court case addressing "any limitations on the right to voluntarily dismiss without prejudice was the Wells case, which we have already discussed as regards its dealing with the 1947 amendments to the dismissal statute, both adding the "commencement of phrase and the "shall be deemed" language.
In Wells, there was a demurrer to the plaintiffs second amended complaint, plaintiff was given leave to amend but didn't. The defendant then filed a motion to dismiss the case with prejudice, and the plaintiff then quickly filed a request for dismissal of the action without prejudice. The trial court granted the motion for dismissal with prejudice, then reversed itself and granted plaintiffs motion to set aside the dismissal with prejudice. There was an appeal by the defendant from the last order, and the high court reversed, holding that the case should have been dismissed with prejudice. (See id. at pp. 784-789, 176 Cal.Rptr. 104, 632 P.2d 217.) The court noted that the defendant was entitled to an appealable judgment with prejudice if its demurrer was successful. (See id. at p. 785, 176 Cal.Rptr. 104, 632 P.2d 217.)[8]
The thrust of the Wells opinion is (in addition to the demonstration that the "shall be deemed language" was not exclusive) a demonstration that, as between (1) the apparently "absolute" right to dismiss without prejudice afforded by the controlling statute (and it was the Wells opinion that first put the word "absolute" in quotes), and (2) the countervailing statutory right of a defendant to obtain a dismissal with prejudice after a court has sustained a demurrer with leave to amend and there has been no amendment, the latter takes precedence. The alternative a truly *431 "absolute" right to dismiss even after a demurrer had been sustained without the possibility of cure by amendment made "neither good sense nor good law." (Wells, supra, 29 Cal.3d at p. 788, 176 Cal.Rptr. 104, 632 P.2d 217.) Despite (or consonant with) the fact that Wells court held that the "shall be deemed" language was non-exclusive, the focus of the Wells court was still on the statutory word "trial." (See id. at pp. 785-788, 176 Cal.Rptr. 104, 632 P.2d 217 [demonstrating that two appellate decisions[9] did not undermine the Goldtree definition of trial, despite the 1947 amendment changing "trial" to "commencement of trial"].)
A final Supreme Court case that (judging from subsequent appellate decisions) has not received perhaps quite as much attention as Wells is Christensen v. Dewor Developments (1983) 33 Cal.3d 778, 191 Cal.Rptr. 8, 661 P.2d 1088. The result in Christensen cut in the opposite direction of Goldtree and Wells, holding that the dismissal there was an effective dismissal.
Read alongside Wells, Christensen provides a relatively complete picture of our Supreme Court's essential approach to the subject: Statutory language still controls. That is, courts must look to when "trial" granted, "trial" including trials of issues of law begins.
Christensen arose out of an anomalous strategy (the court's word was "strange," see Christensen, supra, 33 Cal.3d at p. 781, 191 Cal.Rptr. 8, 661 P.2d 1088) by a plaintiff to compel arbitration of a construction dispute by filing a complaint, as distinct from a straightforward petition to compel arbitration. The idea was to obtain the kind of discovery from the defendants of their defenses and position that would not normally be available to a litigant in straight arbitration. (See ibid.) The "novel strategy backfired," however, when the defendants filed a demurrer, and things became "still worse" for the plaintiffs when the trial court sustained the demurrer to all causes of action save one, and that one was struck on the court's own motion. (Ibid.) The plaintiffs then filed a "trimmed-down" amended complaint still asserting that the dispute should be arbitrated and the defendants demurrered again, arguing that the plaintiffs had been too clever by half. The defendants asserted that the plaintiffs had waived their right to insist on arbitration. So, one day before the hearing on this second demurrer, the plaintiffs dismissed their complaint without prejudice. (The defendants did not go through with the hearing on their demurrer.)
Two months later, the plaintiffs filed a petition to compel arbitration. The trial court reasoned that the "bad faith" of the plaintiffs having the ulterior motive of obtaining (otherwise unavailable) discovery effectively waived the right to arbitrate. (Christensen, supra, 33 Cal.3d at p. 781, 191 Cal.Rptr. 8, 661 P.2d 1088.) For their part, the defendants moved to vacate the earlier, nonprejudicial dismissal by the plaintiffs and enter a new dismissal with prejudice. The trial court denied that motion. Both sides appealed, and the case was eventually taken by the Supreme Court.
The first part of the opinion showed that the trial court's conclusion as to the waiver issue was correct the plaintiffs'"procedural gamesmanship" showed that the action indeed had been filed in bad faith and "by doing so" they had waived their right to arbitrate. (See Christensen, supra, 33 Cal.3d at pp. 783-784, 191 Cal.Rptr. 8, 661 P.2d 1088.)
But there was still the question of whether the plaintiffs had "properly dismissed *432 their complaint without prejudice." (Christensen, supra, 33 Cal.3d at p. 784, 191 Cal.Rptr. 8, 661 P.2d 1088.) Moving in for the kill, the defendants asserted that the trial court incorrectly denied their motion to vacate the earlier nonprejudicial dismissal order and substitute a new dismissal with prejudice a result that, as the Christensen court observed, would leave the plaintiffs "without any remedy whatsoever." (Ibid.)
Resolution of the issue centered on an often-quoted[10] pass age from Wells, which we include (as quoted by Christensen) in the margin.[11]Christensen rejected an interpretation proffered by the defendants that the sustained demurrer to the original complaint locked in a result adverse to the plaintiff, so that after a "demurrer to a new, amended complaint is filed, as here, plaintiff can no longer voluntarily dismiss." (Christensen, supra, 33 Cal.3d at p. 785, 191 Cal.Rptr. 8, 661 P.2d 1088.)[12] For the Christensen court, the absence of an actual ruling on the still viable amended complaint was dispositive. In effect, the Christensen court elevated what it called an intimation from Wells about the freedom to dismiss prior to a "decision" into a straight proposition of law.[13] The plaintiffs in Christensen had the "the right to dismiss" before "any decision" on the amended complaint.
2. Consistent Appellate Decisions
In the wake of Wells, a number of appellate decisions have applied the Goldtree-Wells *433 approach to "trial" to voluntary dismissals in the shadow of impending demurrers or summary judgment motions even though there was no actual ruling or decision on the impending motion. (The word "shadow" is ours; at this point in the opinion we deliberately use an imprecise metaphor.) What there was, however, in each of these cases, was some objective indicia, e.g., by way of publicly announced tentative ruling or a failure to file opposition by the deadline, that the plaintiffs case was inherently defective on the merits. In short, as a matter of law, the case was a loser: See Mary Morgan, Inc. v. Melzark (1996) 49 Cal.App.4th 765, 57 Cal. Rptr.2d 4 [plaintiff not permitted to dismiss without prejudice where adverse tentative summary judgment ruling had been announced and the hearing had been continued to allow plaintiff opportunity to obtain evidence to defeat motion]; Cravens v. State Bd. of Equalization (1997) 52 Cal. App.4th 253, 60 Cal.Rptr.2d 436 [plaintiff not permitted to dismiss one day prior to hearing on summary judgment motion where plaintiff had failed to file any opposition to summary judgment motion]; Groth Bros. Oldsmobile, Inc. v. Gallagher (2002) 97 Cal.App.4th 60, 118 Cal.Rptr.2d 405 [no voluntary dismissal without prejudice where trial court had announced a tentative ruling to sustain a demurrer without leave to amend].
On the other hand, a number of cases going in the opposite direction rested on the point that the voluntary dismissal could not be construed as a concession, implicit or otherwise, that the case lacked substantive merit as a matter of law: Mossanen v. Monfared (2000) 77 Cal.App.4th 1402, 1410, 92 Cal.Rptr.2d 459 [where trial court allowed attorney for plaintiff guardian ad litem to withdraw from medical malpractice action, dismissal by guardian ad litem in the face of summary judgment motion filed by defendants was proper because guardian ad litem had no other "means to resist the motion"; court also noted that summary judgment motion was substantively defensible because new counsel "would have been in a position to assert triable issues of material fact"]; Zapanta v. Universal Care, Inc. (2003) 107 Cal. App.4th 1167, 1173-1174, 132 Cal.Rptr.2d 842 [dismissal one day prior to the day opposition to summary judgment motion was due was effective because case had not yet reached stage where disposition was "mere formality"]; Tire Distributors, supra, 132 Cal.App.4th 538, 33 Cal.Rptr.3d 761 [dismissal of particular defendant one day before continued hearing date of that defendant's summary judgment motion was effective because of evidence that the plaintiff believed it had already settled out with that defendant].
3. Can the Appellate Decisions Be Harmonized? Yes.
(Well, Mostly Yes.)
a. The "Mere Formality" Test As a Way to Ascertain the "Commencement of Trial"
The cases we have reviewed so far suggest this test as the accepted judicial gloss on the voluntary dismissal statute:
When the dismissal could be said to have been taken
(a) in the light of a public and formal indication by the trial court of the legal merits of the case, or
(b) in the light of some procedural dereliction by the dismissing plaintiff that made dismissal otherwise inevitable, then the voluntary dismissal is ineffective.
This two-part test readily harmonizes the results in the Court of Appeal's decisions in Mary Morgan, Cravens, Groth Bros., Mossanen, Zapanta and Tire Distributors.
*434 In the three cases of the six just mentioned where the dismissal had been held to be ineffective, either the trial court had already publicly indicated that the impending motion would result in a substantive dismissal of the action (Mary Morgan and Groth Bros.), or the plaintiff was in a position to deduce that there was nothing to be done to prevent the substantive dismissal of the action-the dice had already been thrown (Cravens).
In the other three cases where the dismissal was effective, there was
(a) no reason at all to believe that the case was inherently a loser as a matter of law (Mossanen, where the court in fact pointed out that the case would have survived a summary judgment motion in the hands of a competent attorney), or
(b) affirmative reason to believe that the case had at least enough merit to warrant settlement (Tire Distributors), or
(c) a complete absence of any reason to conclude that an adverse result on an impending motion was a foregone conclusion (Zapanta).
Our distilled test is also consistent with the three Supreme Court cases we have already examined as well: In Goldtree and Wells there was the; truly "formal" indication of actual decisions on pending demurrers on the substantive merits. By contrast in Christensen there was no formal indication by the trial court on the merits as to the pending demurrer on the amended complaint.
A test of formal indication by the court, or the legal inevitability of dismissal based on dispositive procedural inaction by the plaintiff (like not filing opposition to a summary judgment motion or not bringing the case to trial in five years) also harmonizes almost all the rest of the appellate cases that have dealt with the issue:
It explains Kyle v. Carman (1999) 71 Cal.App.4th 901, 84 Cal.Rptr.2d 303, where an effective dismissal occurred after an apparently contested hearing on an anti-SLAPP motion but while the matter was under submission to the trial court.
It explains M & R Properties v. Thomson (1992) 11 Cal.App.4th 899, 14 Cal. Rptr.2d 579, where a dismissal was not effective given that the plaintiff had not brought the case to trial in five years, where the defendant had filed a dismissal motion on that basis, and where a tentative ruling had even become the actual ruling of the court prior to dismissal.
The test even reconciles Datner v. Mann Theatres Corp. (1983) 145 Cal. App.3d 768, 193 Cal.Rptr. 676 to Groth Bros., though the two cases are sometimes perceived to be in conflict as to whether a plaintiff can dismiss "even after learning of an adverse tentative ruling." (See Rutter Group Guide Civil Procedure Before Trial, supra, ¶¶ 11.25.2-11-12.3, p. 11-12 [noting policy rationales support Groth Bros, position].) In Datner, there was a dismissal one day prior to a hearing on an apparently contested demurrer, based on statement by the judge in an unreported chambers conference that the demurrer was meritorious. Datner is, in fact, like Kyle, where the plaintiff might have subjectively picked up on signals from the trial judge in oral argument that the case would be lost, but there had been no formal indication, by the court, to that effect. The Datner court had not yet gone "public" with a tentative ruling. By contrast, in Groth Bros, there was a formally posted tentative for the world to see.
The test we have derived from these cases is basically the one proposed by the Zapanta court, which employed the more elegant shorthand, "mere formality," (see Zapanta, supra, 107 Cal.App.4th at pp. 1173-1174, 132 Cal.Rptr.2d 842) though *435 perhaps a slight qualification is necessary as regards the tentative ruling cases, Groth Bros, and Mary Morgan. It is stretching things a wee bit to say that a trial court's tentative ruling means that an adverse judgment is a "mere formality" which must inevitably ensue: Such a reading of tentative rulings suggests a rather excessive confidence in the infallibility of judges and an unseemly despair over the possibilities that oral argument might change things. (See Moles v. Regents of University of California (1982) 32 Cal.3d 867, 874, 187 Cal.Rptr. 557, 654 P.2d 740 [one different judge hearing appellate court oral argument might have made a difference in the outcome]).
That said, if we qualify Zapanta's "mere formality" test to extend it to public and formal judicial expressions of the merits of a case in the context of a substantively dispositive proceeding and we stress that any test to be faithful to the Supreme Court cases must retain a link to the idea of "trial" as exposited in Goldtree, Wells, and Christensen it is remarkable how consistent the cases are in this area.
b. A compendium of the cases
Let's see how the Zapanta "mere formality" test works when we apply it to a wider range of cases. With the explosive growth of case precedent, of course, the ability to exhaust the applicable legal authorities is becoming more difficult with each passing day. That said, here is a reasonably complete compendium of California case law to date (January 2007) on the issue of precisely when an impending motion of some kind cuts off a plaintiffs statutory right to voluntarily dismiss a case without prejudice:
i. where right to dismiss was cut off:
Goldtree, supra, 135 Cal. 666, 67 P. 1091 dismissal after demurrers to certain causes of action were long sustained and time to amend had long run.
London v. Morrison (1950) 99 Cal. App.2d 876, 222 P.2d 941 dismissal after one-year had expired since case was ordered transferred and transfer fees had not been paid, precluding trial court, under statute, from taking any other action than dismissal.
Wells, supra, 29 Cal.3d 781, 176 Cal. Rptr. 104, 632 P.2d 217 dismissal after demurrer to second amended complaint sustained and time to amend had run and specifically one day before motion to dismiss with prejudice.
Herbert Hawkins Realtors, Inc. v. Milheiser (1983) 140 Cal.App.3d 334, 189 Cal. Rptr. 450 dismissal after adverse result in judicial arbitration and after plaintiff requested trial de novo.
Miller v. Marina Mercy Hospital (1984) 157 Cal.App.3d 765, 204 Cal.Rptr. 62 dismissal one week prior to hearing on summary judgment motion based on failure to respond to dispositive admissions, later deemed admitted.