SALES AND CONTRACT DISPUTES

California Court of Appeals (2008) Double recovery not allowed

 

Bonfield v. Figlieno

Double recovery not allowed

 

Bonfield v. Figlieno  

California Court of Appeals

2008 WL 4060992 (Cal.App. 5 Dist.)

Sept. 3, 2008

 

Summary of the Case

 

This case arises from the losing party’s attempt to avoid a judgment.  Following a contract dispute between Sharon Bonfield and Amy Salak over the breeding of three mares, Salak attempted to avoid paying a judgment by transferring horses and other assets to Figlieno and Coffey.  Bonfield obtained a judgment against Salak, Figlieno , and Coffey for the fraudulent transfer that authorized her to levy execution against eight horses transferred to Salak to Transferees, and also stated that Transferees were jointly and severally liable to Bonfield for $300k.  The appellate court found the judgment void as a matter of law because stating that the lower court had granted double relief by granting the return of the horses as well as a money judgment.

 

Text of the Case

 

Court of Appeal, Fifth District, California.

Sharon BONFIELD, Plaintiff and Respondent,

v.

Carol FIGLIENO et al., Defendants and Appellants.

No. F053701.

(Super.Ct.No. CV258035).

 

Sept. 3, 2008.

 

APPEAL from a judgment of the Superior Court of Kern County. Sidney P. Chapin, Judge.

 

Malcolm G. Ellis for Defendants and Appellants.

Noriega & Bradshaw and Donald C. Oldaker for Plaintiff and Respondent.

 

OPINION

 

DAWSON, J.

In March 2005, respondent Sharon Bonfield obtained a $260,000 judgment against Amy Salak. Bonfield subsequently filed this fraudulent transfer lawsuit, alleging that Salak attempted to avoid paying the judgment by transferring horses and other assets to appellants Carol Figlieno, Jerry L. Coffey, and Keystone Farms, LLC (collectively, Transferees). Bonfield alleged that Transferees did not give Salak a reasonable equivalent value in exchange.

 

Bonfield obtained a default judgment against the Transferees. The default judgment (1) authorized Bonfield to levy execution against eight horses transferred by Salak to Transferees and (2) stated Transferees were jointly and severally liable to Bonfield for $300,213.42, plus interest and costs. Transferees attempted to set aside the default judgment pursuant to Code of Civil Procedure section 473.^FN1The superior court denied relief as well as Transferees' subsequent motion to reconsider. Transferees appeal from those orders.

 

FN1. Further statutory references are to the Code of Civil Procedure unless indicated.

 

We conclude that the judgment is void as a matter of law because the rendering court granted relief it had no authority to grant. The judgment should not have granted Bonfield a double recovery in the form of (1) the right to levy execution on the fraudulently transferred assets and (2) a money judgment of over $300,000. Accordingly, the judgment will be modified to eliminate the double remedy. The judgment as modified will be affirmed.

 

FACTS AND PROCEEDINGS

 

Salak Litigation

 

In November 2003, Bonfield filed a breach of contract action against Salak, Sharon Bonfield v. Amy Salak et al., Kern Superior Court No. S-1500-CV-251717, that requested specific performance of a contract that would give her ownership of a horse named Junebug (Salak action). Later, Bonfield amended her complaint against Salak to include a cause of action for abuse of process.

 

The Salak action was tried to a jury during February 2005. The jury awarded Bonfield $260,000, including $20,000 in punitive damages, and possession of Junebug. The superior court entered judgment in the Salak action on March 9, 2005. Salak filed an appeal from the judgment on June 8, 2005.^FN2

 

FN2. The judgment in the Salak action was affirmed by this court. (Sharon Bonfield v. Amy Salak (Sept. 3, 2008, F048246) [nonpub. opn.].)

 

Less than a week after Salak filed her notice of appeal, she filed a voluntary petition for a chapter 7 bankruptcy. In November 2005, Bonfield filed an adversarial proceeding against Salak, Coffey and Figlieno in the bankruptcy court. Bonfield's complaint in the adversarial proceeding asserted, among other things, that while the Salak action was pending, Salak fraudulently transferred horses to Coffey and Figlieno. Transferees' opening appellate brief asserts that the complaint against them in the adversarial proceeding was dismissed by the bankruptcy court.^FN3

 

FN3. This factual assertion is not supported by a citation to the record as required by California Rules of Court, rule 8.204(a)(1)(C). Further, our review of the appendices filed by the parties did not reveal any such dismissal.

 

All further references to rules are to the California Rules of Court, unless indicated otherwise

 

Fraudulent Transfer Action

 

On May 2, 2006, Bonfield filed her complaint against Transferees in Kern Superior Court, case No. S-1500-CV-258035.The next day, the superior court issued a temporary restraining order and order to show cause why a preliminary injunction should not issue. The temporary restraining order prohibited Transferees from removing or relocating any livestock or horses claimed to be owned by Transferees from an address at Steinhoff Road, Frazier Park, California, which it described as the present address of the horses.^FN4

 

FN4. The address appears to be Coffey's. It appears under his name on a check that he made payable to Salak and dated June 12, 2006.

 

The complaint, temporary restraining order, and order to show cause were served on Transferees and proofs of service were filed with the superior court within a few days.

 

On May 18, 2006, Transferees submitted objections to the preliminary injunction to the superior court. The superior court filed the objections but indicated that a filing fee of $960 was required for the three first appearances. On May 23, 2006, the objections and other papers submitted by Transferees were rejected by the superior court for failure to pay filing fees.

 

On May 23, 2006, the clerk of the superior court sent Keystone Farms, LLC a rejection notice and returned a notice and request for stay of proceedings. The rejection notice indicated Transferees were required to pay first appearance fees and Keystone Farms, LLC needed to be represented by an attorney.

 

Transferees' opening appellate brief asserted that they “filed answers to the complaint twice. The first answers were filed on June 19, 2006 but not rejected by the clerk until June 28, 2006. (AA 10-11)” Transferees also asserted that the “second answer was filed, paid for, and accepted by the clerk on December 13, 2006, (AA 9) just before the entry of the default....”

 

Appellants' appendix contains a copy of an answer to complaint that is dated June 5, 2006, and is signed by the Transferees. The copy is not stamped by the clerk of the superior court and it is not mentioned in the docket included by the parties in their appendices. Transferees' assertion that the answer was rejected on June 28, 2006, is not supported by the docket entry for that date. That entry states that a rejection or correction note was sent “[t]o Jerry Coffey in pro per. Returning Cross Complaint. A first appearance fee required of $320.00. An answer usually accompanies a cross complaint.”

 

The docket indicates that (1) an answer was filed by Figlieno on December 14, 2006, (2) the answer was stricken on August 29, 2007, (3) the first appearance fee was ordered refunded to Figlieno, and (4) the fee had been “received from Amy Salak on January 10, 2007, evidence by Receipt # 288577.”A copy of Amy Salak's check No. 304 payable to the Kern County Superior Court in the amount of $320 is included in the record. The check is dated December 13, 2006, and the bank processing information placed on the back of the check indicates the check was deposited to the county's bank account on January 12, 2007. The receipt issued by the clerk of court upon receiving the check is not part of the appellate record.

 

On June 9, 2006, the superior court granted Bonfield's request for a preliminary injunction.

 

On June 22, 2006, the clerk of court entered the defaults of Transferees.

 

On June 28, 2006, Coffey filed a notice of automatic stay that notified the superior court of Salak's bankruptcy case and the adversary proceeding that Bonfield had initiated in the bankruptcy court. The notice also asserted that the assets alleged to have been fraudulently transferred were subject to the jurisdiction of the bankruptcy court, and the automatic stay prevented further proceedings in this case.

 

Less than two weeks later, the superior court filed a minute order stating that the papers filed by Coffey did not support a stay of the action.

 

At a case management conference held on October 30, 2006, the court set the matter for an order to show cause regarding the dismissal of the case and stated the hearing would be vacated if a default judgment was entered earlier.

 

Bonfield submitted a request for judgment on December 13, 2006, and the superior court signed the judgment the same day.

 

Paragraph 2 of the judgment included a finding that on or about January 15, 2005, Salak transferred five horses to Figlieno without receiving reasonably equivalent value in exchange. The horses, with the value assigned to them in the judgment, are: Rococo ($80,000), Godspeede ($60,000), Boomer Slew ($75,000), Carmen ($20,000) and Juno (no value stated). Paragraph 3 of the judgment included a similar finding with respect to Coffey and three horses: Puddle-Up ($100,000), Unchained Melody ($3,500) and Liberty Belle ($3,500). The values assigned to the seven horses (Juno had no value assigned) totaled $342,000.^FN5

 

FN5. Transferees argue that Bonfield greatly inflated these values. They support their argument with a March 8, 2005, appraisal Bonfield submitted in the Salak action. That appraisal gave price ranges of (1) $5,000 to $10,000 for Boomer Slew compared to the $75,000 value listed in the default judgment, (2) $15,000 to $30,000 for Rococo compared to the $80,000 value listed in the default judgment, and (3) $2,500 to $5,000 for Puddle-Up compared to the $100,000 value listed in the default judgment.

 

Paragraph 6 of the judgment stated that Bonfield “may levy execution against the [eight horses] in satisfaction of the judgment entered in [the Salak action.]”

 

In addition, paragraph 7 of the judgment stated that Bonfield “shall also have and recover judgment in the total sum of $300,213.42 jointly and severally against [Transferees].” (Boldface and underlining omitted.) Paragraph 8 awarded Bonfield over $18,400 in prejudgment interest. Paragraph 9 authorized Bonfield to recover costs in the amount of $1,044.63.

 

On February 28, 2007, the superior court issued an order authorizing the Kern County Sheriff, as levying officer, to enter the private premises at an address on Steinhoff Road in Frazier Park and seize the eight horses listed in the judgment.

 

In April 2007, Transferees filed an ex parte application to restrain or quash the writ of execution or to stop the sheriff's sale. The application was denied. The application is not part of the appellate record. Papers filed by Bonfield in the superior court describe the application as follows: “On April 19, 2007 Carol Figlieno, Keystone Farm, LLC and Jerry Coffey unsuccessfully applied ex parte for an order stopping the Sheriff's Sale scheduled to take place that day. (See Oldaker Decl. at ¶¶ 58-59.)”

 

On May 21, 2007, Transferees filed an ex parte motion and motion shortening time to set aside the default. The ex parte application was denied without prejudice.

 

On May 25, 2007, Coffey and Figlieno filed another ex parte application for order shortening time for hearing on motion to set aside default. The application was granted and a hearing was set for June 13, 2007.

 

The motion asserted that a declaration of the Transferees' previous attorney, Phillip W. Gillet, Jr., admitted that the failure to answer was his fault and that Gillett was too busy to do the work that he had been paid to do even though he told his clients that everything was okay.

 

On June 13, 2007, the superior court filed a minute order denying the motion to set aside the default. The minute order stated that the moving parties had failed to establish that either the default or the default judgment was entered through their mistake, inadvertence, surprise or excusable neglect or through their attorney's fault and, therefore, the moving parties' burden under section 473, subdivision (b) had not been met.

 

The minute order was confirmed in a written order prepared by counsel for Bonfield that the superior court signed and filed on July 5, 2007.

 

On June 25, 2007, Coffey and Figlieno filed a motion for reconsideration to set aside the default judgment.

 

On August 29, 2007, the superior court denied the motion for reconsideration and ordered the answer filed by Figlieno on December 14, 2006, stricken “as having been improperly filed after entry of default and judgment....” The superior court also ordered the clerk of the court to refund Figlieno's first appearance fee of $320.

 

Transferees' filed a notice of appeal in August 2007. The notice of appeal stated that Transferees appealed “from the Judgment entered on June 13, 2007, in Department 4 of the above-entitled court. [¶] Notice of Entry of Judgment was served by Plaintiff and Respondent Sharon Bonfield on July 10, 2007.”^FN6

 

FN6. The notice of appeal contains errors. First, the judgment was filed on December 13, 2006, not June 13, 2007. The June 13, 2007, date is when the superior court issued a minute order denying the motion to set aside the default. Second, no notice of entry of a judgment was filed on July 10, 2007. On that date, Bonfield filed a notice of entry of the July 5, 2007, order denying the motion to set aside the default.

 

DISCUSSION

 

I. Direct Appeal of the Judgment

 

A. Contentions of the Parties

 

Transferees' opening appellate brief contains a section with the heading “The Judgment Itself.” That section appears to argue that the judgment violated section 585, subdivision (b) because the amount of the judgment awarded was not based on the allegations stated in Bonfield's complaint.^FN7Transferees assert that Bonfield's original complaint did not give an exact amount of damages, but “allege[d] damages in collecting the assets transferred, not the entire judgment against Salak.”

 

FN7. Section 580, subdivision (a) provides that when no answer is filed, “[t]he relief granted to the plaintiff ... cannot exceed that demanded in the complaint....” Section 585, subdivision (b) contains a similar limitation. (See Becker v. S.P.V. Construction Co. (1980) 27 Cal.3d 489, 494 [when no specific amount of damages is demanded, the complaint does not provide adequate notice and does not pass muster under § 580].)

 

Bonfield contends that Transferees' discussion of the judgment itself should be disregarded because (1) Transferees never appealed from the judgment and (2) Transferees' time to appeal from the December 13, 2006, judgment had expired before they filed their notice of appeal.

 

B. Analysis

 

1. Interpretation of notice of appeal

 

In civil appeals, “[t]he notice of appeal must be liberally construed.”(Rule 8.100(a)(2).) For example, describing an order as a judgment or vice versa, will not invalidate a notice of appeal. (Holden v. California Emp. etc. Com. (1950) 101 Cal.App.2d 427, 430-431.)

 

For purposes of this appeal, we will assume that the Transferees' notice of appeal, which mentions a judgment, can be interpreted liberally to include the only judgment entered in this case even though the date given in the notice of appeal for the judgment was not correct.

 

2. Failure to provide proper support

 

Transferees' factual assertions regarding the contents of Bonfield's complaint are not supported by citations to the appellate record as required by rule 8.204(a)(1)(C). Moreover, Transferees did not include the complaint in their appellants' appendix and it does not appear elsewhere in the appellate record. As a result, we cannot confirm the accuracy of Transferees' factual assertions regarding the contents of the complaint. Therefore, Transferees have failed to affirmatively show reversible error on the ground that the judgment violated section 585, subdivision (b). (See Denham v. Superior Court (1970) 2 Cal.3d 557, 564 [general principle of appellate practice is that error must be shown affirmatively by appellant].)

 

3. Timeliness

 

Transferees' appeal cannot be regarded as a timely direct appeal from the December 13, 2006, judgment because the August 2007 notice of appeal was not filed within 180 days of the entry of the judgment. (Rule 8.104(a)(3).) Furthermore, Transferees' motion to set aside the default did not extend the 180-day period. (Rule 8.108(c)(3).)

 

Therefore, we conclude that Transferees' appeal is limited to the postjudgment orders denying the motion to set aside the default and the default judgment.

 

II. Mandatory Relief Under Section 473

 

A. Statutory Language

 

A mandatory relief provision was added to section 473, subdivision (b) in 1988 and expanded in 1991 and 1992. (See 8 Witkin, Cal. Procedure (4th ed. 1997) Attack on Judgment in Trial Court, § 195, pp. 701-702.) The mandatory relief provision states:

 

“Notwithstanding any other requirements of this section, the court shall, whenever an application for relief is made no more than six months after entry of judgment, is in proper form, and is accompanied by an attorney's sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect, vacate any (1) resulting default entered by the clerk against his or her client, and which will result in entry of a default judgment, or (2) resulting default judgment or dismissal entered against his or her client, unless the court finds that the default or dismissal was not in fact caused by the attorney's mistake, inadvertence, surprise, or neglect.”(§ 473, subd. (b), italics added.)

 

B. Superior Court's Reasoning

 

The superior court's minute order stated that Transferees' burden under section 473, subdivision (b) had not been met. It also stated that the moving party Transferees had failed to establish that either the default or the default judgment was entered through their attorney's fault. The written minute order is explained further by statements made by the superior court during the hearing on June 13, 2007:

 

“[I]t isn't an issue of Gillet's diligence in bringing a motion within six months of the judgment so far as mandatory relief goes, but it doesn't support mandatory relief. His declaration doesn't support it. There is just no evidence to support it presented by his claimed affidavit of fault because none of what he says goes to, either, the entry of default or the entry of the default judgment. It simply goes to his timing of a motion to set aside one or the other.”

 

The superior court identified the cause of the entry of default as follows: “There is simply a demonstration of various decisions made by the clients over time, as they did not comply with the various time limits.”Expanding on this statement and the fact that the default was entered before any answer was filed, the superior court said: “And there was plenty of notice to all the parties as to the entry of default about, which they chose to do, virtually, nothing at all except to rely on somebody's discussions concerning Sal[a]k's Chapter 13 proceeding.”More bluntly, the superior court stated: “It's all client neglect.”

 

The court also noted that Gillet was not an attorney of record until January 2007, after the default judgment had been entered, and his declaration did not indicate that he was participating in the case when the default was entered.

 

C. Analysis

 

1. Requisite finding of fact

 

The first issue raised by the parties is whether the superior court made the finding referenced in the exception to the mandatory relief provision. Under that exception, the mandatory relief provision does not apply when “the court finds that the default or dismissal was not in fact caused by the attorney's mistake, inadvertence, surprise, or neglect.”(§ 473, subd. (b).)

 

We conclude that the superior court made the finding referenced in the exception. First, the written minute order stated that the moving party Transferees had failed to establish that either the default or the default judgment was entered through their attorney's fault. Second, the superior court's statement during the June 13, 2007, hearing that “[i]t's all client neglect” necessarily implies that attorney fault was not a partial cause of the default or default judgment. Therefore, Transferees have not demonstrated the superior court committed reversible error by failing to make a finding of fact required by statute.

 

2. Attorney affidavit

 

The next issue concerns whether Transferees submitted an attorney's sworn affidavit that complies with the mandatory relief provision in section 473, subdivision (b).

 

Transferees' papers on appeal are deficient in two ways. First, Transferees' opening appellate brief describes statements purportedly made by Gillet in a declaration, but does not support these references with a citation to the record as required by rule 8 .204(a)(1)(C). Second, Transferees' appellants' appendix does not contain a copy of a declaration by Gillet. As a result, Transferees have failed to demonstrate the existence of an attorney's affidavit that satisfies the requirements of the mandatory provisions of section 473, subdivision (b). It necessarily follows that Transferees have failed to show that the superior court improperly applied the law to such an affidavit.

 

The respondent's appendix contains a declaration of Gillet dated May 18, 2007, that was submitted in support of an ex parte application to shorten the time for hearing Transferees' motion to set aside the default. In that declaration, Gillet stated that (1) he was aware of the six-month time limitation in section 473 for setting aside default judgments, (2) he had intended to file such a motion in early April 2007, (3) he did not file the motion as planned because he was busy with other work, and (4) he took responsibility for the delay in filing the motion to set aside the default judgment. The declaration also contained Gillet's legal opinion “that the default taken in this case concerning property of the bankruptcy estate and/or co-debtors under 11 U.S.C. section 1301 while the chapter 13 bankruptcy case was pending is void.”

 

The superior court correctly interpreted Gillet's declaration when it said that the declaration did not go to the entry of default or entry of the default judgment, but simply went to the timing of the motion to set aside the default or default judgment. As such, for purposes of section 473, the declaration is not “an attorney's sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect” that resulted in a default or default judgment. Accordingly, the May 18, 2007, declaration is not a satisfactory attorney sworn affidavit for purposes of the mandatory relief provision in section 473, subdivision (b).

 

Transferees also attempt to show Gillet's fault based on information contained in their own declarations and e-mails exchanged with Gillet. This attempt must fail because the statute requires a sworn attorney's affidavit to demonstrate that the attorney's mistake, inadvertence, surprise, or neglect resulted in the default or default judgment. Section 473, subdivision (b) does not provide for mandatory relief when an attorney's fault is demonstrated by other means. Accordingly, we need not analyze the various factual assertions made by Transferees in support of their claim for mandatory relief.

 

In summary, Transferees failed to present the superior court with an attorney's sworn affidavit sufficient to demonstrate that they were entitled to mandatory relief under section 473.

 

III. Discretionary Relief Under Section 473

 

A. Statutory Language

 

Section 473, subdivision (b) also provides that a “court may, upon any terms as may be just, relieve a party or his or her legal representative from a judgment ... or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect.”The procedures for obtaining such relief are set forth in the second sentence of that subdivision, which provides:

 

“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 ... or proceeding was taken.”(Ibid.)

 

The six-month time limitation of section 473 is jurisdictional; the court has no power to grant relief under section 473 once the time has lapsed. (Rutan v. Summit Sports, Inc. (1985) 173 Cal.App.3d 965, 970(Rutan ).) The period begins to run when the clerk enters the default, not from the time the judgment is entered, unless the defendant merely wants relief from the default judgment, not entry of default. (Ibid.)

 

“The reason for the rule is that vacation of the judgment alone ordinarily would constitute an idle act; if the judgment were vacated the default would remain intact and permit immediate entry of another judgment giving the plaintiff the relief to which his complaint entitles him. [Citations.] [¶] Nonetheless, the ‘default and default judgment are separate procedures.’[Citation.] The latter does not necessarily have any bearing on, and may be set aside without disturbing, the former.”(Ibid.; see Sugasawara v. Newland (1994) 27 Cal.App.4th 294 [Rutan states rule for discretionary relief provision, not the mandatory relief provision added to § 473 after

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