Filed 1/27/14 Syelsky v. Edwards CA2/7

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

LISA SYELSKY and VLADIMIR 

SYELSKY,

Plaintiffs and Appellants,

v.

JEFFREY EDWARDS,

Defendant and Respondent.

 B247866

 (Los Angeles County

 Super. Ct. No. SC115235)

APPEAL, from a judgment of the Superior Court of Los Angeles County, Bobbi 

Tillmon, Judge. Reversed with directions.

Law Offices of Ronald N. Richard and Nicholas A. Bravo for Plaintiffs and 

Appellants.

Ezra Brutzkus Gubner, David Seror, Michael W. Davis for Defendant and 

Respondent.

________________________
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Appellants Vladimir and Lisa Syelsky sued Jeffrey Edwards, alleging breach of a 

promissory note, breach of fiduciary duty, and fraud. After Edwards failed to answer the 

complaint, the Syelskys obtained entry of default and, subsequently, a default judgment. 

Edwards moved to set aside both the default and the default judgment. Over the 

Syelskys’s objections, the trial court did so. We reverse, and remand for further 

proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

The Syelskys filed a complaint on December 14, 2011 alleging that they had hired 

Edwards in 2006 as a loan broker to obtain a line of credit on their residence. In the 

course of that relationship, they agreed to loan money to him, for which he executed a 

note, and later a deed of trust. Edwards failed to pay the sums owing, and the property 

subject to the deed of trust was foreclosed on by the senior beneficiary. The complaint 

alleged three causes of action for breach of the note, breach of Edwards’s fiduciary duty 

as a broker, and fraud. The Syelskys’s attorney personally served the complaint on 

Edwards on December 16, 2011. 

Edwards failed to answer the complaint and on January 23, 2012, only 38 days 

after service, the Syleskys served and filed a request for entry of default; the court entered 

the default that same day. On May 1, 2012, the Syelskys sought judgment by default; the

court entered the judgment on May 11, 2012. 

On November 9, 2012, Edwards moved to set aside the default judgment pursuant 

to Code of Civil Procedure section 473(b).1 Edwards included a proposed answer, 

generally denying the allegations of the complaint, with his pleadings. Edwards asserted 

that his failure to file an answer was based, in part, on a conversation with the Sylelskys’s 

attorney at the time of service. Edwards stated in his declaration that the attorney had 

represented that it would be to Edwards’s benefit to allow the matter to proceed to 

judgment, because the complaint was a technicality to allow the Syelskys to collect 

 

1 All further statutory references, unless otherwise noted, are to the Code of Civil 

Procedure.
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damages against Edwards’s former employer, which would then offset the amounts 

Edwards owed on the loans.

The Syelskys opposed the motion, arguing both that the motion was untimely and 

that Edwards had failed to make the necessary statutory showing. In Edwards’s reply, he 

urged the court to consider both the statutory and equitable authority that permitted the 

relief he sought.

The court heard the matter on March 20, 2013, and granted the motion on March 

25, 2013, setting aside the default and the judgment, and ordering the proposed answer 

deemed filed and served on that date. In its minute order, the court concluded that 

Edwards had sufficiently demonstrated mistake, inadvertence, and/or excusable neglect 

to warrant discretionary relief under section 473(b), and that the motion had been timely 

filed. The Syelskys filed a timely appeal.

DISCUSSION

A. Mechanisms for Relief From Default

California law favors the resolution of cases on their merits, rather than by default. 

(See Rappleyea v. Campbell (1994) 8 Cal.4th 975, 980.) The Legislature has provided a 

statutory mechanism for relief from default in section 473, which provides, in relevant 

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 proceeding was taken.”

We review the trial court’s determinations under the statute for abuse of 

discretion, keeping in mind that “Code of Civil Procedure, section 473 . . . , is remedial in 

its nature and is to be liberally construed. [Citation.] The policy of the law is to have 

every litigated cause tried on its merits; and it looks with disfavor on a party who, 
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regardless of the merits of his cause, attempts to take advantage of the mistake, surprise, 

inadvertence, or neglect [the statute uses the term “excusable neglect”] of his adversary. 

(14 Cal.Jur. 1075, § 116.) Reviewing courts have always looked with favor on orders 

excusing defaults and permitting controversies to be heard on their merits. Such orders 

are rarely reversed, and never unless it clearly appears that there has been a plain abuse of 

discretion. [Citation.] Even in a case where the showing under section 473 of the Code 

of Civil Procedure is not strong, or where there is any doubt as to the setting aside of a 

default, such doubt should be resolved in favor of the application. [Citation.] All 

presumptions will be indulged in favor of the correctness of the order, and the burden is 

on the appellant to show that the court’s discretion was abused.” (Emphasis added.)

Andres v. Armstrong (1959) 168 Cal.App.2d 344, 347, quoting Hover v. MacKenzie

(1954) 122 Cal.App.2d 852, 856.

The statutory scheme imposes on a party the obligation to file a motion for relief 

in a timely manner, and in any event within six months of the judgment, dismissal, order 

or proceeding. (See, e.g., Huh v. Wang (2008) 158 Cal.App.4th 1406, 1418-1419

[motion for relief must be procedurally proper, and within time limits].) Because relief 

from a default judgment, without relief from the default itself, would be illusory relief, 

allowing another default judgment to be entered, the time generally runs from the entry of 

the default, rather than from the time of the judgment. Rutan v. Summit Sports, Inc.

(1985) 173 Cal.App.3d 965, 970 (overruled by statute on other grounds, see Sugasawara 

v. Newland (1994) 27 Cal.App.4th 294, 296-297.)

A trial court may also grant relief from default on equitable grounds, even where 

the statutory requirements have not been met, by finding extrinsic fraud or mistake. “A 

judgment against a party may be set aside in equity when it is obtained by extrinsic fraud 

or mistake. (See 8 Witkin, Cal. Procedure (4th ed. 1997) Attack on Judgment in Trial 

Court, § 223, pp. 727-728; id., § 231, pp. 741-742.) The ‘essential characteristic’ of 

extrinsic fraud ‘is that it has the effect of preventing a fair adversary hearing, the 

aggrieved party being deliberately kept in ignorance of the action or proceeding, or in 

some other way fraudulently prevented from presenting his claim or defense.”’
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(8 Witkin, supra, § 223, p. 727.) Extrinsic mistake is ‘a term broadly applied when 

circumstances extrinsic to the litigation have unfairly cost a party a hearing on the merits. 

[Citations.]”’ (Rappleyea v. Campbell, supra, 8 Cal.4th at p. 981.) ‘“Relief is denied, 

however, if a party has been given notice of an action and has not been prevented from 

participating therein.”’ (Kulchar v. Kulchar (1969) 1 Cal.3d 467, 472.) (Parage v. 

Coudel (1997) 60 Cal.App.4th 1037, 1044.)

In this case, Edwards has presented evidence that he was affirmatively misled by 

the Syelskys’s lawyer in an attempt to prevent him from challenging the complaint. He 

asserts the doctrine of extrinsic fraud applies, and argues that doctrine includes efforts to 

convince a party not to obtain counsel. (See Heymann v. Franchise Mortgage 

Acceptance Corp. (2003) 107 Cal.App.4th 921, 926.) The question is whether the party 

claiming the relief was “fraudulently prevented from fully participating in the 

proceeding.” (Id.) This determination is within the discretion of the trial court.

B. The Relief Granted Exceeded the Statutory Provision On Which the Court

 Relied

Here, the motion was filed within six months of the judgment, but almost nine 

months after the entry of the default. As the trial court had discretion to view the separate 

procedures as separate events, it would not have abused its discretion by finding the 

motion to set aside the default judgment was timely, and addressing the default itself 

separately. (Rutan v. Summit Sports, Inc., supra, 173 Cal.App.3d at pp. 965, 970

[because the default and the default judgment are separate procedures, one may be set 

aside without the other under appropriate circumstances].)

The trial court did not do so, however, finding the motion timely without 

distinguishing between the two events. The court also did not expressly consider whether 

there were equitable grounds for relief. Although Edwards asserts on appeal that the trial 

court’s determination should be affirmed on equitable grounds, the Syelskys assert that 

argument was waived. We do not agree with either position.
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Edwards directed the trial court to Rappleyea, supra, in which the Supreme Court 

recognized that a motion, not timely under the statute, could nonetheless be granted on 

equitable grounds. “After six months from entry of default, a trial court may still vacate a 

default on equitable grounds even if statutory relief is unavailable. [Citations.]” 8 Cal. 

4th 975, 981. Where, as here, a default judgment has been entered, however, the trial 

court must find exceptional circumstances to grant equitable relief. (Id.) In such a 

circumstance, the Rappelyea court noted, courts have applied a three-part test to 

determine whether equitable relief may be granted: first, the party seeking relief must 

show a meritorious defense; second, that party must identify an excuse which the court 

finds to be satisfactory for the failure to present the defense; and, finally, that party must 

have acted diligently to set aside the default. (Id., 8 Cal.4th 975, 982, citing Stiles v. 

Wallace (1983) 147 Cal.App.3d 1143, 1147-1148 and In re Marriage of Stevenot (1984)

154 Cal.App.3d 1051, 1071.)

The trial court did not, however, make this determination, which necessarily rests 

on issues of fact. We decline to substitute our judgment for that of the trial court, but 

instead remand to permit the trial court to consider the evidence and weigh the equities in 

the first instance. (See Rutan v. Summit Sports, Inc., supra, 173 Cal. App.3d 965 at 

p. 974.)
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DISPOSITION

We reverse the order setting aside the default and the default judgment, and 

remand for the trial court to consider the factual showings of each party and to determine 

whether to exercise its discretion to grant equitable relief. Each party is to bear its own 

costs on appeal.

ZELON, J.

We concur:

PERLUSS, P. J.

WOODS, J.