Filed 7/26/23 Antich v. Capital Accounts CA2/1

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on 

opinions not certified for publication or ordered published, except as specified by rule 

8.1115(b). This opinion has not been certified for publication or ordered published for 

purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

NELLY ANTICH,

Plaintiff and Appellant,

v.

CAPITAL ACCOUNTS, LLC,

Defendant and 

 Respondent.

 B313167

 (Los Angeles County

 Super. Ct. No. 19STCV18665)

APPEAL from an order of the Superior Court of Los 

Angeles County. Dennis J. Landin, Judge. Affirmed.

Golden & Cardona-Loya, Cory M. Teed, for Plaintiff and 

Appellant.

Carlson & Messer, David J. Kaminski, Martin Schannong, 

for Defendant and Respondent. 

___________________________________
2

Pursuant to its inherent authority to vacate a default 

judgment on equitable grounds, the trial court granted a motion 

by defendant Capital Accounts LLC (Capital) to vacate a default 

judgment obtained against it by plaintiff Nelly Antich. Antich 

contends this was an abuse of discretion. We disagree and 

therefore affirm.

BACKGROUND

Antich incurred a debt to a health care provider for medical 

services. In March 2016, the debt was placed with Capital, a 

Tennessee-based collection agency. 

On May 29, 2019, Antich sued Capital in Los Angeles 

Superior Court for alleged violations of the Fair Debt Collection 

Practices Act, 15 United States Code section 1692, et seq. 

(FDCPA), which prohibits unlawful debt collection, and the 

California Consumer Credit Reporting Agencies Act, Civil Code 

section 1785.1 et seq. (CCRAA), which prohibits unlawful credit 

reporting.

Antich alleged that she informed Capital and provided 

documentation that the medical debt had been paid in full, and 

Capital confirmed that the balance was zero but nevertheless 

reported to credit agencies that the account had a past due 

balance of $1,520. Antich complained to both Capital and the 

credit agencies about this but Capital failed to conduct a 

reasonable investigation and furnished information to the 

agencies that it knew or should have known was inaccurate. 

Antich sought “statutory penalties of $120,000 pursuant to Civ. 

Code § 1785.31, subd. (a)(2)(B), which permits recovery of a 

penalty of up to $5,000 for each violation (24 months of 

reporting).”

Antich served Capital with the complaint in June 2019.
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Capital failed to respond, and Antich obtained a default on 

August 16, 2019, and a default judgment on January 9, 2020. 

A year later, on January 19, 2021, Capital filed a motion to 

set aside the default judgment on the grounds of extrinsic 

mistake. 

In support of the motion, Gregory Nowicki, Capital’s owner 

and principal, declared the Antich matter was ostensibly being 

handled by Jason Coleman, Capital’s now-former in-house 

counsel, who worked for Capital from October 2015 to May 2020. 

However, unbeknownst to Capital, Coleman failed to handle the 

matter properly and by May 11, 2020, had effectively abandoned 

his employment with Capital and left the company without 

having reported any default issues regarding this or other 

lawsuits. His departure occurred during the early chaos of the 

Covid-19 pandemic, which crippled Capital’s operations.

Nowicki declared that Coleman left Capital’s legal affairs 

in disarray, with multiple defaults and other significant legal 

problems, including loss of a collection license. Capital engaged 

emergency legal counsel from Georgia to search for any pending 

legal matters. Emergency counsel explored the breadth of 

Coleman’s nonfeasance and in June 2020 discovered the Antich 

default. Capital was unable to retain new in-house counsel until 

late September 2020, after which it retained a California 

attorney to handle the instant default. 

Nowicki further declared that Capital maintained 

procedures to avoid credit reporting a debt that had already been 

paid. To ensure Capital did not actively report a zero-balance 

account to credit agencies, it had a procedure to delete the 

account once it learned the debt was paid or settled. Its credit 

reporting system screened out any account having a zero balance, 
4

and any such account that had already been reported triggered

Capital’s system to send a “DA” (delete account) code to all 

consumer credit reporting agencies to ensure the account was 

deleted. 

Coleman, Capital’s former in-house counsel, declared he 

initially failed to calendar any response to the Antich default 

because Antich’s counsel told him the parties to the debt were 

involved in settlement negotiations, but in any event he was “sick 

during [his] time at Capital,” missed substantial time from work 

from May to August 2019 due to personal health issues and 

serious and stressful family matters, and was “overwhelmed with 

urgent family matters for months on end.”

On March 9, 2021, the trial court granted Capital’s motion 

to vacate the default judgment. 

DISCUSSION

Antich contends the trial court abused its discretion by 

granting Capital relief from the default judgment. We disagree.

A. Background on the Trial Court’s Power to Vacate 

Default Judgments and the Standard of Review

There are two means by which a trial court may grant 

relief from a default judgment. The first, under Code of Civil 

Procedure section 473, subdivision (b) (section 473), requires a

party to apply “within a reasonable time, in no case exceeding six 

months, after the judgment, dismissal, order, or proceeding was 

taken.” The time limit is jurisdictional, and after six months 

have passed, the court lacks power “to grant any relief, regardless 

of any question either as to the merits of the application, or as to 

whether or not the application was made within what might be 

held to be a reasonable time under the circumstances.” (Smith v. 

Pelton Water Wheel Co. (1907) 151 Cal. 394, 397.)
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Here, Capital filed its motion on January 19, 2021, more 

than a year after the default. Because Capital failed to meet the 

six-month deadline, relief was available only under the second, 

more burdensome method—by means of the court’s “inherent 

authority to vacate a default and default judgment on equitable 

grounds such as extrinsic fraud or extrinsic mistake.” (Bae v. 

T.D. Service Co. of Arizona (2016) 245 Cal.App.4th 89, 97.) 

As our Supreme Court has explained, equitable relief from 

a default judgment “may be given only in exceptional 

circumstances. ‘[W]hen relief under section 473 is available, 

there is a strong public policy in favor of granting relief and 

allowing the requesting party his or her day in court. Beyond 

this period there is a strong public policy in favor of the finality of 

judgments.’ ” (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 981-

982.) “A party seeking relief under the court’s equitable powers 

must satisfy the elements of a ‘stringent three-pronged test’: (1) 

a satisfactory excuse for not presenting a defense, (2) a 

meritorious defense, and (3) diligence in seeking to set aside the 

default.” (Kramer v. Traditional Escrow, Inc. (2020) 56 

Cal.App.5th 13, 29 (Kramer).)

An order vacating a default judgment is appealable as an 

order made after final judgment. (Code Civ. Proc., § 904.1, subd. 

(a)(2); Moghaddam v. Bone (2006) 142 Cal.App.4th 283, 287.)

“We review the court’s [ruling on] a motion for equitable relief to 

vacate a default judgment or order for an abuse of discretion, 

determining whether that decision exceeded the bounds of reason 

in light of the circumstances before the court. [Citation.] In 

doing so, we determine whether the trial court’s factual findings 

are supported by substantial evidence [citation] and 

independently review its statutory interpretations and legal 
6

conclusions.” (County of San Diego v. Gorham (2010) 186 

Cal.App.4th 1215, 1230.)

B. The Trial Court Did Not Abuse Its Discretion by 

Granting Equitable Relief from the Default 

Judgment

1. Satisfactory Excuse

“ ‘ “Although the policy of the law is to favor a hearing on 

the merits of a case, courts are not required to set aside default 

judgments for defendants who flagrantly ignore the responsibility 

to present a defense. . . . The defendant must . . . demonstrate a 

satisfactory excuse for not responding to the original action in a 

timely manner.” ’ [Citation.] A defendant has a satisfactory 

excuse if it shows that an extrinsic fraud or extrinsic mistake 

occurred.” (Kramer, supra, 56 Cal.App.5th at p. 29.)

“In this context the terms ‘fraud’ and ‘mistake’ have been 

given a broad meaning by the courts, and tend to encompass 

almost any set of extrinsic circumstances which deprive a party 

of a fair adversary hearing. [Citation.] The term ‘extrinsic’ refers 

to matters outside of the issues framed by the pleadings, or the 

issues adjudicated.” (Aldrich v. San Fernando Valley Lumber Co. 

(1985) 170 Cal.App.3d 725, 738 (Aldrich).) “Mistake has been 

defined as ‘ “. . . the doing of an act under an erroneous 

conviction, which act, but for such conviction, would not have 

been done.” ’ [Citation.] The same reasoning logically applies to 

a failure to act,—an omission.” (Ibid.)

Here, Capital explained that it made no response to the 

complaint and default because it had been effectively abandoned 

by the positive misconduct of its attorney—complete 

abandonment—and thus did not know about them.
7

“[W]here the client is relatively free from negligence, and 

the attorney’s neglect is of an extreme degree amounting to 

positive misconduct, the attorney’s conduct is said to obliterate 

the existence of the attorney-client relationship. [Citations.] The 

client in such a case has representation only in a nominal and 

technical sense.” (Aldrich, supra, 170 Cal.App.3d at pp. 738-739.) 

“Clients should not be forced to act as hawk-like inquisitors of 

their own counsel, suspicious of every step and quick to switch 

lawyers. The legal profession knows no worse headache than the 

client who mistrusts his attorney.” (Daley v. Butte County (1964) 

227 Cal.App.2d 380, 392.) “Positive misconduct is found where 

there is a total failure on the part of counsel to represent his 

client.” (Aldrich, at p. 739; see also People v. One Parcel of Land

(1991) 235 Cal.App.3d 579, 584 [defense attorney’s “absolute 

failure to oppose the default judgment motion, as well as his 

apparent failure to return any of [the client’s] telephone calls, 

suggests positive misconduct through a total failure to represent 

his client”].)

Coleman, Capital’s former in-house counsel, declared that 

he effectively abandoned his client due to personal health and 

family issues.

This constitutes substantial evidence on which the trial 

court could reasonably find extrinsic mistake sufficient to absolve 

Capital of responsibility for Coleman’s inexcusable neglect.

Antich argues that Coleman “claims he only missed work 

between May 2019 and August 2019 but provides no explanation 

as to why he could not attend to this matter in the subsequent 

seventeen months.” That is not the record. Coleman declared he 

was “sick during [his] time at Capital” and was “overwhelmed 

with urgent family matters for months on end.” It is undisputed 
8

that when he left Capital in May 2020, the firm’s legal affairs 

were in substantial disarray. From this record the court could 

reasonably conclude that Coleman’s disability extended all the 

way to the time he left Capital.

Antich argues her attorney gave Coleman every 

opportunity to respond to her complaint and seek to vacate the 

default but he simply declined to do so, which constitutes 

negligence, not mistake. This is conceded. But the question is 

whether Coleman’s total failure to provide adequate legal 

services constituted an abandonment sufficient to absolve Capital 

of responsibility for Coleman’s inexcusable neglect. 

This was a factual matter for the trial court to decide. “We 

do not substitute our judgment for that of the trial court” in 

resolving factual disputes. (In re Marriage of de Guigne (2002) 97 

Cal.App.4th 1353, 1360.) Instead, as noted above, we review the 

trial court’s factual findings only for substantial evidence. 

(County of San Diego v. Gorham, supra, 186 Cal.App.4th at p. 

1230.) “ ‘In applying this standard of review, we “view the 

evidence in the light most favorable to the prevailing party, 

giving it the benefit of every reasonable inference and resolving 

all conflicts in its favor.” ’ ” (Pope v. Babick (2014) 229 

Cal.App.4th 1238, 1245.) We are not a second trier of fact.

We conclude that substantial evidence supported the trial 

court’s finding that Capital had a satisfactory excuse for not 

responding to the original action in a timely manner.

2. Meritorious Defense

The second requirement for equitable relief from a default 

judgment is to establish a meritorious case. To meet this 

requirement, “only a minimal showing is necessary. [Citation.] 

The moving party does not have to guarantee success, or 
9

‘demonstrate with certainty that a different result would 

obtain. . . . Rather, [it] must show facts indicating a sufficiently 

meritorious claim to entitle [it] to a fair adversary hearing.’ ” 

(Mechling v. Asbestos Defendants (2018) 29 Cal.App.5th 1241, 

1246; see also Gruber v. Gruber (2020) 48 Cal.App.5th 529, 532 

[court analyzes the merit of a claim by accepting the claimant’s 

evidence as true and evaluating whether the claim is legally and 

factually tenable].)

Here, Antich asserts claims under the FDCPA and CCRAA, 

alleging she paid her debt to the original creditor before it was 

referred to Capital for collection, and Capital should not have 

reported a past due amount to consumer reporting agencies.

However, both the FDCPA and CCRAA preclude liability 

due to a defendant’s “bona fide error” if the defendant maintained

reasonable procedures designed to avoid alleged errors. The 

FDCPA provides: “A debt collector may not be held liable in any 

action brought under this title if the debt collector shows by a 

preponderance of evidence that the violation was not intentional 

and resulted from a bona fide error notwithstanding the 

maintenance of procedures reasonably adapted to avoid any such 

error.” (15 U.S.C. § 1692k(c).) Similarly, the CCRAA provides: 

“A person who furnishes information to a consumer credit 

reporting agency is liable for failure to comply with this section, 

unless the furnisher establishes by a preponderance of the 

evidence that, at the time of the failure to comply with this 

section, the furnisher maintained reasonable procedures to 

comply with those provisions.” (Civ. Code, § 1785.25, subd. (g).)

This is known as the “bona fide error defense,” an 

“affirmative defense, for which the debt collector has the burden 

of proof.” (Reichert v. National Credit Systems, Inc. (9th Cir. 
10

2008) 531 F.3d 1002, 1006.) A debt collector meets its burden 

under the defense by producing “evidence of ‘reasonable 

preventive procedures’ aimed at avoiding the errors.” (Ibid.) The 

defendant debt collector must also show by a preponderance of 

evidence that the violation was unintentional. (15 U.S.C. §

1692k(c).)

In support of its motion to set aside the default judgment, 

Nowicki declared that Capital (1) maintained a credit reporting 

system that screens out any account that has a zero balance, (2) 

maintained procedures to avoid credit reporting a debt that had

already been paid, (3) had a procedure to delete an account if 

Capital was informed that the debt has been paid or settled, and 

(4) maintained a system wherein any zero-balance account that 

was previously credit reported triggered a “DA” (delete account) 

code to be sent to all consumer credit reporting agencies.

Accepting this evidence as true, it supports a legally and 

factually tenable bona fide error defense under the FDCPA and 

CCRAA. Thus, even if Antich’s allegation was correct that 

Capital improperly credit reported her medical debt, Capital had

a colorable statutory defense.

This constitutes substantial evidence from which the trial 

court could reasonably conclude Capital possessed a sufficiently 

meritorious defense to entitle it to a fair adversary hearing.

Antich argues that Capital furnished information to Ms. 

Antich’s credit reports that it knew or should have known was 

inaccurate. But at this point that is merely an allegation, not a 

fact, and its truth and import would be matters for the trier of 

fact to determine. Capital’s only burden in moving to vacate the 

default judgment was to show it possessed an equally viable 

defense.
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3. Diligence

“The final prong of the stringent three-part test . . . is 

whether defendants diligently tried to set aside the default once 

discovered.” (Rappleyea v. Campbell, supra, 8 Cal.4th at p. 983.)

Nowicki declared that Capital first learned of the default 

and default judgment in June 2020, and spent the next couple of 

months trying to retain new in-house counsel to correct the 

various legal problems discovered by emergency counsel. Capital 

was unable until September 2020 to retain new in-house counsel 

to address the issues looming because of Mr. Coleman’s

nonfeasance, and was only then able to retain a California firm to 

respond to the default. All of this occurred within the first year 

of the Covid-19 pandemic, which was characterized by lockdowns, 

closures and delays that affected both the Los Angeles Superior 

Court and law firms alike.

This constitutes substantial evidence from which the trial 

court could reasonably conclude Capital diligently tried to set 

aside the default once discovered.

Antich argues that the seven months between Capital’s 

discovery of the default judgment and its motion to set aside the 

default was unreasonable. But that was a factual matter for the 

trial court to decide in light of the relevant circumstances. 

Although courts have held that a defendant failed to act 

diligently by filing a motion several months after learning of a 

default judgment (e.g., Kramer, supra, 56 Cal.App.5th at p. 39 

[eight months]; Pulte Homes Corp. v. Williams Mechanical, Inc. 

(2016) 2 Cal.App.5th 267, 270, 277-278 [four and a half months]; 

Cruz v. Fagor America, Inc. (2007) 146 Cal.App.4th 488 [nine 

months]), here, the trial court could reasonably conclude that 

between Coleman’s illness and family problems, the scope and 
12

complexity of the legal entanglements he left behind, and the 

advent of the Covid pandemic, it was reasonable for Capital to 

take seven months to hire emergency counsel to examine the 

problem, retain new in-house counsel to ascertain the legal 

remedies available and proper procedures for obtaining relief, 

hire California counsel, and file its motion. (See Orange Empire 

National Bank v. Kirk (1968) 259 Cal.App.2d 347, 355 [almost six 

months between the time of discovery of the judgment and the 

filing of the motion to vacate].)

Antich relies on Sporn v. Home Depot USA, Inc. (2005) 126 

Cal.App.4th 1294, where a defendant unsuccessfully sought 

equitable relief from a default judgment, claiming the plaintiff 

and his counsel “obtained the judgment by stealth,” were “laying 

in the weeds,” engaged in “improper tactics” and obtained the 

default judgment through “acts and omissions which constituted 

extrinsic fraud.” (Id. at p. 1300.) But that case involved 

allegations of extrinsic fraud which the defendant was unable to 

substantiate. Capital asserts only extrinsic mistake and, as 

discussed, was able to substantiate its claim.

DISPOSITION

The order is affirmed. Respondent is to recover its costs on 

appeal. 

NOT TO BE PUBLISHED

CHANEY, J.

We concur:

BENDIX, Acting P. J. WEINGART, J.