Court Opinion

ID: 3180517
Source: CourtListenerOpinion
Date Created: 2016-02-25 21:14:54.735642+00
Date Added: 2024-06-11T07:38:56.992288
License: Public Domain

Filed 2/25/16
                            CERTIFIED FOR PUBLICATION

          IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                             SECOND APPELLATE DISTRICT

                                      DIVISION FOUR

                                               B262921
JAMES BAE,                                     (Los Angeles County
                                               Super. Ct. No. BC450163)
                 Plaintiff and Appellant,

v.

T.D. SERVICE COMPANY,

                Defendant and Respondent.

        APPEAL from an order of the Superior Court of Los Angeles County,
Malcolm Mackey, Judge. Affirmed.
        Law Offices of Deborah R. Bronner and Deborah R. Bronner for Plaintiff
and Appellant.
        The Dreyfuss Firm and Lawrence J. Dreyfuss for Defendant and
Respondent.
      In the underlying action, appellant James Bae and a corporation related to
him asserted claims arising from a foreclosure sale against several defendants,
including respondent T.D. Service Company of Arizona. Respondent filed an
unchallenged declaration of nonmonetary status under Civil Code section 2941l,
asserting that it had been named as a defendant solely in its capacity as trustee
under the pertinent deed of trust, and not due to any wrongful conduct in its
performance as trustee. After respondent filed no answer in the action, the clerk
entered respondent’s default, and the trial court issued a default judgment against
respondent awarding appellant $3,000,000 in damages. Respondent filed a motion
for relief from the default and default judgment, which the trial court granted.
Appellant contends the court erred in setting aside the default and default
judgment. We reject his challenges to that ruling and affirm.

       RELEVANT FACTUAL AND PROCEDURAL BACKGROUND
      In November 2010, appellant initiated the underlying action. The original
complaint identified the plaintiff as “James Bae dba C & H Natural Food,” and
named as defendants Center Bank and respondent.1 The complaint alleged the
following facts: Center Bank provided appellant with a mortgage secured by real
property located in Glen Ivy, and respondent acted as the trustee company for
Center Bank. In August 2010, an involuntary chapter 7 bankruptcy petition was
filed regarding the property (11 U.S.C. § 701 et seq.). In September 2010, despite

1     Ordinarily, the designation “d.b.a.” in connection with an individual
indicates that the individual operates a business and is liable for its obligations.
(See Providence Washington Ins. Co. v. Valley Forge Ins. Co. (1996) 42
Cal.App.4th 1194, 1200; Pinkerton’s, Inc. v. Superior Court (1996) 49
Cal.App.4th 1342, 1348-1349 and the cases cited therein.)

                                           2
knowledge of the bankruptcy proceeding, the defendants issued a notice of a
foreclosure sale without seeking relief from the bankruptcy stay. Center Bank
bought the property at the foreclosure sale, which occurred in November 2010.
The complaint asserted claims for wrongful foreclosure, violation of a bankruptcy
stay, failure to provide notice of default on a mortgage (Civ. Code, § 2923.5), and
tortious infliction of emotional distress.
      On January 27, 2011, respondent filed a “declaration of nonmonetary
status” pursuant to Civil Code section 2924l, which sets forth a procedure by
which the trustee to a deed of trust may avoid liability for monetary awards
relating to a nonjudicial foreclosure. (Kachlon v. Markowitz (2008) 168
Cal.App.4th 316, 350-351 (Kachlon).) To invoke the procedure, “[t]he trustee
must file a declaration of nonmonetary status stating that it reasonably believes it
was named as a defendant solely in its capacity as trustee, and not for misconduct
in its duties. If no party timely objects, ‘the trustee shall not be required to
participate any further in the action or proceeding, [and] shall not be subject to any
monetary awards as and for damages, attorneys’ fees or costs.’” (Id. at p. 351,
quoting Civ. Code, § 2924l, subd. (d), italics omitted.)
      Respondent’s declaration under Civil Code section 2924l disclaimed any
financial interest in the underlying promissory note and real property, and asserted
respondent’s “reasonable belief” that it had been named as a defendant solely
because “it was the trustee or agent of the trustee . . . on the subject [d]eed of
[t]rust . . . .” The declaration was executed under penalty of perjury by attorney
Richard S. Stone, respondent’s counsel. Appellant filed no objection to the
declaration, and never attempted to challenge or attack it in subsequent
proceedings.

                                             3
      In March 2011, a first amended complaint was filed. The complaint
identified the plaintiff as “C & H Natural Food, a Nevada Corporation” (C & H),
and asserted claims for conversion, negligence, and civil conspiracy against
respondent, Center Bank, and LWL Investment Group, LLC (LWL). The
complaint alleged that in 2007, FX Global, Inc., also known as SG Global, Inc.
(SG) bought the Glen Ivy property. In order to do so, SG obtained a $5 million
loan from Center Bank secured by a promissory note and trust deed. Later, in
2009, appellant provided SG with a $5 million loan secured by a promissory note
and second deed of trust on the property. In October 2010, shortly after a chapter
7 bankruptcy petition was filed regarding SG, Center Bank assigned its deed of
trust to LWL, and respondent was hired as the trustee company for Center Bank
and LWL. According to the complaint, in November 2010, notwithstanding the
bankruptcy proceedings and stay, LWL and respondent “forced” a foreclosure
sale, at which LWL bought the property.
      In July 2011, C & H filed two requests for the entry of respondent’s default
by the superior court clerk. The requests were mailed to respondent, but no copy
was mailed to respondent’s counsel. On July 21, 2011, the clerk entered
respondent’s default.2
      In August 2012, C & H requested a default judgment, seeking damages
totaling $3,000,000. Accompanying C & H’s showing in support of the default
judgment was a declaration from appellant, who identified himself as “the
principal” of C & H. Also accompanying the showing was a declaration from C &
H’s counsel, notwithstanding respondent’s filing of its statement of nonmonetary

2     The clerk declined to enter respondent’s default pursuant to C & H’s initial
request, which was filed on July 15, 2011.

                                          4
interest, declared that: “To date, [respondent] has not appeared in this action.” No
declaration was filed stating that C & H’s request for default judgment had been
mailed to respondent or its counsel. On August 3, 2012, the trial court entered a
default judgment in favor of C & H and against respondent awarding C & H
$3,000,000 in damages and $460 in costs. Nothing in the record suggests the
judgment was served on respondent or its counsel.
          On November 20, 2014, respondent filed a motion to set aside the default
and default judgment on the basis of Code of Civil Procedure section 128,
subdivision (a)(8), which authorizes the superior court “[t]o amend and control its
. . . orders so as to make them conform to law and justice.”3 Respondent
contended its unchallenged declaration under Civil Code section 2924l excused it
from participation in the action and shielded it from liability for damages.
Respondent further maintained that C & H’s service of the first amended
complaint was defective, and that neither C & H’s request for entry of default nor
its request for a default judgment nor the default judgment itself were mailed to
respondent’s counsel of record.
          Supporting the motion was a declaration from respondent’s attorney Stone,
who stated: “I first learned of the default and the default judgment against
respondent on November 3, 2014, when I received notice that [C & H] had levied
on [respondent’s] accounts . . . . Even though I was identified as [respondent’s]
counsel of record on the [Civil Code] section 2924l declaration . . . , I did not
receive any of the documents filed with the [c]ourt after that declaration . . . was
filed.”

3     Respondent’s motion incorrectly identified that provision as Code of Civil
Procedure section 128.5, subdivision (a)(8).

                                           5
      In opposing the motion, C & H maintained that subdivision (a)(8) of Code
of Civil Procedure section 128 afforded no basis for relief from the default and
default judgment. C & H further argued that the motion was untimely under
section 473, subdivision (b), and section 473.5 of the Code of Civil Procedure, and
that respondent could demonstrate no basis for relief on equitable grounds.
      On January 23, 2015, following a hearing, the trial court granted
respondent’s motion, and set aside the default and default judgment. This appeal
followed.

                                   DISCUSSION
      Appellant contends the trial court erred in granting relief from the default
and default judgment. We disagree.

      A. Relief from a Default and Default Judgment
      “Although a trial court has discretion to vacate the entry of a default or
subsequent judgment, this discretion may be exercised only after the party seeking
relief has shown that there is a proper ground for relief, and that the party has
raised that ground in a procedurally proper manner, within any applicable time
limits.” (Cruz v. Fagor America, Inc. (2007) 146 Cal.App.4th 488, 495 (Cruz).)
Code of Civil Procedure section 473 and 473.5 authorize challenges to defaults
and default judgments on various grounds within certain periods.
      Under Code of Civil Procedure section 473, subdivision (b), a party may
seek relief on the grounds of “mistake, inadvertence, surprise, or excusable
neglect” within “a reasonable time,” but not more than six months after the entry
of the default or default judgment. Code of Civil Procedure section 473.5 permits
the court to set aside a default or default judgment if the defendant, “through no

                                          6
inexcusable fault of his own, [received] no actual notice” of the action, provided
that relief is requested within a reasonable time, but not more two years after the
entry of the default judgment. (Judicial Council of Cal., com., reprinted at 15
West’s Ann. Code Civ., Proc. (1979 ed.) foll. § 473.5, pp. 398-399.) In addition,
under subdivision (d) of Code of Civil Procedure section 473, the court may set
aside orders and judgments that are “‘void,’” including orders and judgments void
for want of fundamental jurisdiction or personal jurisdiction. (Strathvale Holdings
v. E.B.H. (2005) 126 Cal.App.4th 1241, 1249.) In some instances, that relief is
subject to the time period specified in Code of Civil Procedure section 473.5, for
example, when the party seeking relief maintains that the judgment, although
facially valid, is void due to lack of proper service of process. (Gibble v. Car-
Lene Research, Inc. (1998) 67 Cal.App.4th 295, 301, fn. 3.)
      Apart from any statute, courts have the inherent authority to vacate a default
and default judgment on equitable grounds such as extrinsic fraud or extrinsic
mistake. (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 981 (Rappleyea); Olivera
v. Grace (1942) 19 Cal.2d 570, 575.) “Extrinsic fraud usually arises when a party
is denied a fair adversary hearing because he has been ‘deliberately kept in
ignorance of the action or proceeding, or in some other way fraudulently
prevented from presenting his claim or defense.’” (Kulchar v. Kulchar (1969) 1
Cal.3d 467, 471 (Kulchar); see 8 Witkin, Cal. Procedure (5th ed. 2008) Attack on
Judgment in Trial Court, § 225, p. 832.) In contrast, the term “extrinsic mistake”
is “broadly applied when circumstances extrinsic to the litigation have unfairly
cost a party a hearing on the merits. [Citations.] ‘Extrinsic mistake is found when
[among other things] . . . a mistake led a court to do what it never intended . . . .’”
(Rappleyea, supra, 8 Cal.4th at p. 981, quoting Kulchar, supra, 1 Cal.3d at
pp. 471-472.)

                                           7
      A party may seek equitable relief from a default and default judgment by
filing a motion in the pertinent action or initiating an independent action.
(Rappleyea, supra, 8 Cal.4th at p. 981; County of San Diego v. Gorham (2010)
186 Cal.App.4th 1215, 1228-1229.) “[A] motion brought to do so may be made
on such ground even though the statutory period [for relief under Code of Civil
Procedure section 473, subdivision (b)] has run.” (Gorham, supra, 186
Cal.App.4th at p. 1229.) Because a motion for equitable relief is “direct,” rather
than “collateral,” extrinsic fraud or mistake may be demonstrated by evidence not
included in the judgment roll or record relating to the judgment.4 (Munoz v. Lopez
(1969) 275 Cal.App.2d 178, 183-184.)
      Here, our focus is on the equitable doctrine of extrinsic mistake. As
respondent filed its motion to set aside the default and default judgment more than
two years after the entry of the default judgment, the trial court could not order
relief under Code of Civil Procedure section 473, subdivision (b), or 473.5.
Although the record does not disclose why the court set aside the default and
default judgment, we are obliged to uphold that discretionary ruling, “if . . . correct
on any basis, regardless of whether such basis was actually invoked.” (In re
Marriage of Burgess (1996) 13 Cal.4th 25, 32.) As explained below (see pt. B. of
the Discussion, post), the ruling was proper on the basis of equitable mistake.5

4     “The judgment roll consists of the pleadings and certain other formal papers
filed with the clerk of the trial court.” (9 Witkin, Cal. Procedure (5th ed. 2008)
Appeal, § 667, p. 738.)
5      We recognize that respondent’s motion did not refer to the doctrine of
equitable mistake, and instead incorrectly relied on subdivision (a)(8) of Code of
Civil Procedure section 128, which provides no basis for relief from the default
and default judgment (see Bloniarz v. Roloson (1969) 70 Cal.2d 143, 148).
However, an appellate court may permit the assertion of a new theory of the case
(Fn. is continued on next page.)

                                          8
      Under the doctrine of extrinsic mistake, relief from a default and default
judgment is potentially available when the clerk or trial court erred in entering
them. The procedure for obtaining a default judgment ordinarily applicable in all
actions -- other than those for the recovery of a determinate amount of money
based on a contract or judgment -- is set forth in subdivision (b) of Code of Civil
Procedure section 585, as well as sections 580 and 587 of that code. (Ferraro v.
Camarlinghi (2008) 161 Cal.App.4th 509, 533 (Ferraro); Ely v. Gray (1990) 224
Cal.App.3d 1257, 1260.) Under that procedure, the plaintiff may request that the
clerk enter the defendant’s default when the defendant fails to answer, demur, or
give notice of certain specified motions. (Code Civ. Proc., § 585, subd. (b); Ely,
supra, 224 Cal.App.3d at p. 1260.) In applying for the default, the plaintiff is
obliged to file an affidavit stating that a copy of the application has been mailed to
the defendant’s attorney of record (if any). (Code Civ. Proc., § 587; In re
Marriage of Harris (1977) 74 Cal.App.3d 98, 100 (Harris).) Following the
clerk’s entry of default, upon the plaintiff’s application, the trial court may enter a
default judgment after a suitable evidentiary showing by the plaintiff. (Code Civ.
Proc., §§ 580, 585, subd. (b); Ely, supra, 224 Cal.App.3d at p. 1260.)

on appeal when “the facts were clearly put at issue at trial and are undisputed on
appeal.” (Richmond v. Dart Industries, Inc. (1987) 196 Cal.App.3d 869, 879.)
       Those conditions are satisfied here. Before the trial court, appellant argued
that although equitable relief was potentially available on theories of extrinsic
fraud and mistake, respondent could demonstrate no basis for equitable relief. On
appeal, the parties have discussed the propriety of affirming the trial court’s ruling
on the basis of extrinsic mistake, and appellant has not suggested that he was
denied an opportunity to present relevant evidence. As explained below (see pt.
C. of the Discussion, post), the facts material to the application of the doctrine of
extrinsic mistake are undisputed.

                                           9
      Defaults and default judgments are vulnerable to attack when the clerk or
trial court errs in the course of the procedure described above. The clerk’s
authority to enter a default is limited by the applicable statutes (Westpost Oil Co.
v. Garrison (1971) 19 Cal.App.3d 974, 977-978), which impose a ministerial duty
on the clerk (Bristol Convalescent Hospital v. Stone (1968) 258 Cal.App.2d 848,
862 (Bristol Convalescent Hospital)).6 Similarly, the statutes limit the trial court’s
authority to enter a default judgment. (Heidary v. Yadollahi (2002) 99
Cal.App.4th 857, 862-864.) Thus, some errors by the clerk or trial court render
defaults and default judgments void -- rather than merely voidable -- and subject
to attack as such.7 (Baird v. Smith (1932) 216 Cal. 408, 412-413; Burnett v. King
(1949) 33 Cal.2d 805, 808; Dhawan v. Biring (2015) 241 Cal.App.4th 963, 973.)
Errors by the clerk or trial court may also open the default and default judgment to
challenge on the basis of equitable mistake. (Rappleyea, supra, 8 Cal.4th at
pp. 981-982; Baske v. Burke (1981) 125 Cal.App.3d 38, 43-47 (Baske).)

6      As explained in Ferraro, supra, 161 Cal.App.4th at page 534: “A clerk’s
entry of default . . . is not a judicial act. It reflects the clerk’s performance of a
series of quintessentially clerical tasks: ascertaining that the request for default
appears in order, confirming that the defendant’s time to plead has elapsed, noting
the absence of a responsive pleading by him, and signifying these facts by entering
the default.”
7      When a clerk manifestly acts beyond his or her statutorily-conferred powers
in entering a default, that action is void, as is any default judgment predicated on
it. (Schwab v. Southern California Gas Co. (2004) 114 Cal.App.4th 1308, 1320;
Bristol Convalescent Hospital, supra, 258 Cal.App.2d 848.) Similarly, when the
trial court’s action in entering a default judgment is manifestly beyond its statutory
powers, the judgment is void. (Heidary v. Yadollahi, supra, 99 Cal.App.4th at
pp. 862-864.)

                                          10
      Under the circumstances present here, relief under the doctrine of extrinsic
mistake is subject to a “stringent three-part formula.”8 (Rappleyea, supra, 8
Cal.4th at pp. 981-982.) As explained in Rappleyea, “‘[t]o set aside a [default]
judgment based upon extrinsic mistake one must satisfy three elements. First, the
defaulted party must demonstrate that it has a meritorious case. Second[ ], the
party seeking to set aside the default must articulate a satisfactory excuse for not
presenting a defense to the original action. Last[ ], the moving party must
demonstrate diligence in seeking to set aside the default once . . . discovered.’”
(Id. at p. 982, quoting Stiles v. Wallis (1983) 147 Cal.App.3d 1143, 1147-1148,
italics omitted.)
      In Rappleyea, the plaintiff arranged for personal service of the complaint
and summons on the two defendants, who were Arizona residents. (Rappleyea,
supra, 8 Cal.4th at p. 978.) The defendants chose to proceed in propria persona,
but were assisted by an attorney, who phoned the court clerk to determine the fee
for filing an answer. (Ibid.) The clerk misadvised the attorney that the required
fee was $89 (the payment for filing an answer by a single defendant), rather than
$159 (the payment for filing an answer by two defendants). (Ibid.) Upon
receiving the defendants’ answer and a check for $89, the clerk rejected them.
(Ibid.) In December 1990, before the defendants sent back their answer with the
correct payment, the plaintiff successfully applied for the entry of their default.

8      Because respondent’s motion to set aside the default and default judgment
was filed after the six-month period specified in subdivision (b) of Code of Civil
Procedure section 473, equitable relief was proper only upon a showing of
“exceptional circumstances,” as public policy favors the finality of default
judgments when the opportunity for such a statutory challenge has passed.
(Rappleyea, supra, 8 Cal.4th at p. 982.)

                                          11
(Id. at pp. 978-979.) Although the plaintiffs’ counsel warned the defendants that
they were potentially subject to a default judgment, he misadvised them that no
relief from the default was available under subdivision (b) of Code of Civil
Procedure section 473. (Rappleyea, supra, at p. 979.) Later, they filed an
untimely motion for relief under that provision, which was denied. (Id. at p. 980.)
In January 1992, after one unsuccessful attempt to prove damages, the plaintiff
secured the entry of a default judgment awarding him approximately $200,000.
(Ibid.)
          Our Supreme Court concluded that the record mandated relief from the
default and default judgment on the basis of equitable mistake. (Rappleyea, supra,
8 Cal.4th at pp. 980-985.) The court determined that the defendants had
demonstrated the existence of a meritorious defense, as their answer contained
appropriate denials of the complaint’s allegations, and they submitted a
declaration from an attorney stating that they had a “very good” defense. (Id. at
p. 983.) The court further determined that the defendants had a satisfactory excuse
for failing to file a timely answer, in view of the clerk’s “ministerial” mistake
regarding the filing fee for the answer. (Id. at pp. 982-983.) The court also found
that the defendants had acted diligently in seeking to set aside the default,
observing that the plaintiff misled them regarding their right to relief from the
default, that they acted promptly to set aside the default after they recognizing its
consequences, and that the plaintiff’s dilatory conduct in seeking a default
judgment weakened any claim he might have had that relief from the judgment
was prejudicial to him. (Id. at pp. 983-984.)
          In holding that relief was proper, the court noted with approval the
discussion of equitable mistake in Baske. (Rappleyea, supra, 8 Cal.4th at p. 983.)
There, the defendant was an elderly woman proceeding in propria persona.

                                            12
(Baske, supra, 125 Cal.App.3d at pp. 40-41.) After being served with the
complaint, she asked the clerk to file certain responsive documents she
characterized as “‘“a pleading for [her] rights,”’” but the clerk did not do so, and
entered a default at the plaintiff’s request. (Id. at p. 42.) Following the issuance
of a default judgment, the defendant secured assistance of counsel. (Ibid.) Almost
a year and a half after entry of the clerk’s default, she filed a motion to set aside
the default judgment, which the trial court granted. (Ibid.) In affirming that ruling
under the doctrine of equitable mistake, the appellate court concluded that the
defendant’s responsive documents set forth a meritorious defense, that the clerk
erred in failing to recognize them as an answer, and that the “passage of time”
between the entry of default and the motion to set aside the default judgment did
not bar equitable relief. (Id. at p. 46.)

      B. Statutory Framework Regarding Nonjudicial Foreclosure Sales
      As the application of the doctrine of extrinsic mistake here implicates the
statutes specifying respondent’s potential liability, as the trustee of a trust deed,
for the conduct of a nonjudicial foreclosure sale, we describe those statutes.
Generally, Civil Code section 2924 through 2924k set forth a “‘comprehensive
scheme’” governing such sales “pursuant to a power of sale contained in a deed of
trust.” (Biancalana v. T.D. Service Co. (2013) 56 Cal.4th 807, 813-814.) To
initiate the nonjudicial foreclosure process, the ‘trustee, mortgagee, or beneficiary,
or any of their authorized agents,’ must record a notice of default and election to
sell. ([Civ. Code,] § 2924, subd. (a)(1).)” (Jenkins v. JPMorgan Chase Bank, N.A.
(2013) 216 Cal.App.4th 497, 509, disapproved on another ground in Yvanova v.
New Century Mortgage Corp. (Feb. 18, 2016, S218973) __ Cal.4th __, __ [2016

                                            13
Cal. LEXIS 956, at *37, fn. 13].) The scheme further specifies the trustee’s
conduct of the sale and the notices that must be given in connection with it. 9
      Under the statutory scheme, “[t]he trustee [of a deed of trust] is not a true
trustee with fiduciary duties, but rather a common agent for [pertinent parties]. . . .
The scope and nature of the trustee’s duties are exclusively defined by the deed of
trust and the governing statutes. No other common law duties exist.” (Kachlon,
supra, 168 Cal.App.4th at p. 335, citation omitted.)
      In 1995, the Legislature supplemented the statutory scheme with Civil Code
section 2924l, which establishes a “limited procedure” by which a trustee may
avoid liability for damages or attorney fees in actions relating to nonjudicial
foreclosure sale. (Kachlon, supra, 168 Cal.App.4th at p. 351.) Under that statute,
when named as a defendant in such an action, a trustee may “at any time . . . file a
declaration of nonmonetary status.” (Civ. Code, § 2924l, subd. (a).) The
declaration must state, inter alia, the trustee’s “reasonable belief that it is named as
a defendant . . . solely in its capacity as trustee and not due to its acts or
omissions.” (Kachlon, supra, 168 Cal.App.4th at p. 350; Civ. Code, § 2924l,
subd. (b).)10 Unless another party objects within 15 days, “[t]he trustee may

9      “After the notice of default is recorded, the trustee must wait three calendar
months before proceeding with the sale. [Citations.] After the 3-month period has
elapsed, a notice of sale must be published, posted and mailed 20 days before the
sale and recorded 14 days before the sale. [Citations.] The trustee may postpone
the sale at any time before the sale is completed. [Citations.] If the sale is
postponed, the requisite notices must be given. [Citations.] . . . The property must
be sold at public auction to the highest bidder. [Citations.]” (Moeller v. Lien
(1994) 25 Cal.App.4th 822, 830.)
10     Subdivision (b) of Civil Code section 2924l states: “The declaration of
nonmonetary status shall set forth the status of the trustee as trustee under the deed
of trust that is the subject of the action or proceeding, that the trustee knows or
(Fn. is continued on next page.)

                                            14
thereby avoid participation in the lawsuit . . . , and also avoid liability for damages
and attorney fees.” (Kachlon, supra, at p. 350; Civ. Code, § 2924l, subds. (c), (d),
(e).)11 If no party timely objects to the declaration, the trustee may not be required
to participate in the action absent a successful motion attacking the declaration
under Code of Civil Procedure section 473. (Civ. Code, § 2924l, subd. (e).)12

maintains a reasonable belief that it has been named as a defendant in the
proceeding solely in its capacity as a trustee under the deed of trust, its reasonable
belief that it has not been named as a defendant due to any acts or omissions on its
part in the performance of its duties as trustee, the basis for that knowledge or
reasonable belief, and that it agrees to be bound by whatever order or judgment is
issued by the court regarding the subject deed of trust.”
11     Subdivisions (c), (d), and (e) of Civil Code section 2924l provide in
pertinent part: “(c) The parties who have appeared in the action or proceeding
shall have 15 days from the service of the declaration by the trustee in which to
object to the nonmonetary judgment status of the trustee. Any objection shall set
forth the factual basis on which the objection is based and shall be served on the
trustee. [¶] (d) In the event that no objection is served within the 15-day objection
period, the trustee shall not be required to participate any further in the action or
proceeding, shall not be subject to any monetary awards . . . for damages,
attorneys’ fees or costs, shall be required to respond to any discovery requests as a
nonparty, and shall be bound by any court order relating to the subject deed of
trust that is the subject of the action or proceeding. [¶] (e) In the event of a timely
objection to the declaration of nonmonetary status, the trustee shall thereafter be
required to participate in the action or proceeding.”
12     Subdivision (e) of Civil Code section 2924l provides in pertinent part: “[I]n
the event that the parties elect not to, or fail to, timely object to the declaration of
nonmonetary status, but later through discovery, or otherwise, determine that the
trustee should participate in the action because of the performance of its duties as
a trustee, the parties may file and serve on all parties and the trustee a motion
pursuant to Section 473 of the Code of Civil Procedure that specifies the factual
basis for the demand. Upon the court’s granting of the motion, the trustee shall
thereafter be required to participate in the action or proceeding[.]”

                                          15
      C. Analysis
      We find no error in the trial court’s decision to set aside the default and
default judgment. As explained below, the record supports relief on the basis of
extrinsic mistake under the three-part test set forth in Rappleyea.

             1. Meritorious Defense
      We conclude that respondent demonstrated a meritorious defense to the
claims asserted in the complaints, which asserted claims based on alleged
irregularities relating to the foreclosure sale of the Glen Ivy property. The original
complaint alleges that “without giving the proper notices,” respondent and Center
Bank “improperly foreclosed” on the property, notwithstanding the existence of a
bankruptcy stay. The first amended complaint similarly alleges that respondent
and the other defendants “caused a foreclosure on the . . . [p]roperty while SG was
in bankruptcy, thereby violating the automatic stay,” but omits any reference to
lack of proper notices.
      Respondent’s declaration of nonmonetary status under Civil Code section
2924l, coupled with the evidence supporting its motion to set aside the default and
default judgment, suffice to show a meritorious defense regarding the alleged
misconduct. The declaration of nonmonetary status, executed under penalty of
perjury by attorney Stone, asserted respondent’s “reasonable belief” that the
original complaint alleged no specific wrongful act by it. In view of that assertion,
the declaration effectively denied that respondent, as trustee, had engaged in any
of the alleged improper conduct regarding the foreclosure sale, including the
failure to provide required notices. Furthermore, in seeking relief from the default
and default judgment, respondent submitted evidence that contrary to the

                                         16
allegations in the complaints, the foreclosure sale occurred after the bankruptcy
proceeding had been dismissed.13
      In addition, respondent’s unchallenged declaration of nonmonetary interest
established a meritorious defense to the relief sought in appellant’s application for
a default judgment, which requested $3,000,000 in damages plus pre-judgment
interest. As discussed above (see pt. B. of the Discussion, ante), the declaration of
nonmonetary interest shielded respondent from liability for damages to appellant.

             2. Satisfactory Excuse For Not Presenting Defense
      Like the defendants in Rappleyea and Baske, respondent demonstrated a
satisfactory excuse for not presenting its defense, namely, the mistaken entry of a
default and default judgment. For the reasons discussed below, respondent’s
unchallenged declaration for nonmonetary interest shielded it from the default and
default judgment, notwithstanding respondent’s failure to file any pleading or
motion ordinarily required to avoid the entry of default, as specified in Code of
Civil Procedure section 585, subdivision (b).
      Generally, “a specific statutory provision relating to a particular subject
controls over a more general provision.” (Hughes Electronics Corp. v. Citibank
Delaware (2004) 120 Cal.App.4th 251, 270.) The procedures for securing entry of
default and a default judgment, as set forth in Code of Civil Procedure section
580, 585, and 587, are thus displaced in some circumstances by more specific
statutes. (See Harbour Vista, LLC v. HSBC Mortage Services Inc. (2011) 201

13    Respondent also presented evidence that C & H, as a Nevada corporation,
lacked standing to maintain an action because it was not certified to transact
business in California (Corp. Code, §§ 2105, subd. (a), 2203, subd. (c)).

                                         17
Cal.App.4th 1496, 1502-1506 [concluding that Code of Civil Procedure section
764.010, which governs quiet title actions, bars default judgment against
defendant in default due to failure to answer complaint, and obliges court to
receive evidence offered by that defendant before rendering judgment].) That is
the case here.
      Civil Code section 2924l, by its plain language, excuses a trustee from
participation in an action after an unchallenged declaration of nonmonetary
interest has been filed, subject to limited qualifications, and shields that trustee
from liability for monetary damages. Subdivision (d) of Civil Code section 2924l
provides that after the filing of such a declaration, a trustee “shall not be required
to participate any further in the action or proceeding,” and “shall not be subject to
any monetary awards . . . for damages . . . .” (Italics added.) An unchallenged
declaration thus renders the trustee a nominal defendant not subject to a judgment
for damages. Because the filing of an unchallenged declaration in response to the
complaint exempts the trustee from participation in the action, it cannot be
required to file an answer or other responsive pleading to the complaint in order to
avoid a default and a default judgment awarding monetary damages. Accordingly,
the clerk erred in entering respondent’s default, as the court’s records then
disclosed respondent’s declaration, coupled with the absence of a timely objection
or order setting aside the declaration under Code of Civil Procedure section 473.
(See Ferraro, supra, 161 Cal.App.4th at pp. 535-539 [in probate action, clerk
erred in entering default of party -- though nominally designated as a defendant --
aligned with plaintiff and against whom no proper ground for a judgment had been

                                           18
established].) For similar reasons, the trial court erred in entering the default
judgment against respondent.14

             3. Diligence In Seeking to Set Aside Default and Default Judgment
      Respondent also established that it acted diligently to set aside the default
and default judgment after discovering them. Courts have found equitable relief
from a default and default judgment warranted when the defendant’s failure to
participate in the action stemmed from a reasonable belief that a third party would
assert an adequate defense. (Weitz v. Yankosky (1966) 63 Cal.2d 849, 855-856.)
In such cases, the court assesses the defendant’s diligence in light of whether “‘the
defendant was reasonably justified under the circumstances in [such] reliance.’”
(Roussey v. Ernest W. Hahn, Inc. (1967) 251 Cal.App.2d 251, 255-258, quoting
Weitz v. Yankovsky, supra, 63 Cal.2d at p. 855.) Here, respondent was entitled to
rely on its statement of nonmonetary interest -- to which appellant did not object --
as a complete defense to any attempt to secure a monetary judgment, by default or
otherwise. Moreover, as set forth below, appellant’s failure to serve respondent’s
counsel with the request for entry of default, the request for entry of default
judgment or the judgment itself left counsel unaware of the need to seek relief.

14    Before the trial court, appellant maintained that under Code of Civil
Procedure section 2924l, respondent was required to submit a new declaration of
nonmonetary interest after the filing of the first amended complaint. That
representation was incorrect, as the statute expressly states that an unchallenged
declaration exempts the trustee from further participation in the “action or
proceeding,” and obliges other parties to seek relief regarding the declaration
under Code of Civil Procedure section 473. (Civ. Code § 2924l, subds. (d), (e).)
On appeal, appellant has abandoned the contention.

                                          19
      Respondent submitted unchallenged evidence that after the declaration of
nonmonetary status was filed, its counsel was unaware of the default proceedings.
Code of Civil Procedure section 587 provides that “[a]n application by a plaintiff
for entry of default under subdivision . . . (b) . . . of [Code of Civil Procedure]
section 585 . . . shall include an affidavit stating that a copy of the application has
been mailed to the defendant’s attorney of record . . . .” As explained in Slusher v.
Durrer (1977) 69 Cal.App.3d 747, 755, the statute was enacted “to prevent the
taking of a default against an unwary litigant.” Furthermore, a party applying for a
default judgment is required to use a form document that includes a declaration
that the completed form has been mailed to the defendant’s counsel of record.
(Cal. Rules of Court, rule 3.1800(a); Judicial Council Form No. CIV-100; 6
Witkin, Cal. Procedure (5th ed. 2008) Proceedings Without Trial, § 164, p. 605.)
      Although the record shows that appellant mailed respondent a copy of its
application for entry of default by the clerk, there is no evidence that it served
respondent’s counsel. Appellant’s applications for entry of default lack the
affidavit attesting that they had been mailed to respondent’s attorney, as does his
completed form application for entry of a default judgment. Furthermore, in
support of the motion to set aside the default and default judgment, respondent’s
counsel stated in a declaration that he first learned of the default proceedings when
appellant attempted to levy on respondent’s bank accounts. On appeal, appellant
does not challenge that showing or suggest that it provided notice of the default
proceedings to respondent’s counsel.
      In view of the undisputed facts, we conclude that respondent, upon
receiving the request for entry of default, was entitled to rely on its declaration of
nonmonetary status to shield it from a default and default judgment. For the
reasons discussed above (see pt. C.2. of the Discussion, ante), that declaration

                                           20
mandated the denial of the request for entry of default. Furthermore, the fact that
respondent’s counsel lacked knowledge of appellant’s applications for entry of
default and default judgment necessarily prevented him from providing legal
advice to respondent regarding the potential for errors in the default proceedings.
As respondent’s counsel first learned of the default proceedings when appellant
tried to enforce the judgment, the record discloses no lack of diligence by
respondent foreclosing equitable relief.
      Appellant contends that neither the failure to comply with Code of Civil
Procedure section 587 nor the ignorance of respondent’s counsel regarding the
default proceedings supports equitable relief, as respondent received notice of the
application for entry of default by the clerk. We disagree, as the noncompliance
with the affidavit requirement and the related ignorance of respondent’s counsel
were prejudicial.
      Code of Civil Procedure section 587 states in pertinent part: “No default
under subdivision . . . (b) . . . of [Code of Civil Procedure s]ection 585 . . . shall be
entered, unless the affidavit is filed. The nonreceipt of the notice shall not
invalidate or constitute ground for setting aside any judgment.” In view of that
provision, the affidavit requirement, though “mandatory,” is not “jurisdictional,”
that is, “failure to comply with [that] . . . requirement . . . does not deprive the
court of jurisdiction to render judgment.” (Harris, supra, 74 Cal.App.3d at
p. 102.) For that reason, noncompliance with the affidavit requirement does not
support setting aside a default or default judgment absent a suitable showing of
prejudice. (Ibid.; Rodriguez v. Henard (2009) 174 Cal.App.4th 529, 534-538.)
      Here, the requisite prejudice was shown, as despite its receipt of the request
for entry of default by the clerk, respondent was entitled -- as a matter of law -- to
believe that no default or default judgment could be entered against it. As noted

                                           21
above, appellant’s failure to serve respondent’s counsel prevented him from taking
precautions against the erroneous entry of a default or default judgment.
      The decisions upon which appellant relies are distinguishable, as they
involved defendants who were aware of default proceedings and -- unlike
respondent -- had no legal basis to believe a default judgment could not be entered
regardless of whether they responded to the proceedings. In two of the cases, the
appellate court held that equitable relief was unavailable to a defendant who knew
that a default had been entered, and placed unreasonable reliance on another
person or entity to set the default aside. (McCreadie v. Arques (1967) 248
Cal.App.2d 39, 45-48 [trial court did not abuse its discretion in finding defendant
failed to demonstrate diligence where he waited over a year after being personally
notified of the entry of default judgment to seek relief]; Cruz, supra, 146
Cal.App.4th at pp. 506-507 & fn. 8 [diligence in attacking default judgment not
shown where defendant was served with requests for default and default judgment,
“received additional notices regarding the progression of the action . . . yet did
nothing about them,” and had repeated indications its insurer was taking no action
to set aside default].) In the remaining cases, the appellate court concluded that
noncompliance with the affidavit requirement in Code of Civil Procedure section
587 was insufficient to support relief from a default judgment because the
defendant had adequate notice of the default proceedings. (Taylor v. Varga (1995)
37 Cal.App.4th 750, 753-755, 760 [any deficiency in affidavit not prejudicial
where defendants’ insurer -- which defendants had asked to provide defense in
action -- “had actual notice of all the relevant proceedings”]; Rodriguez, supra,
174 Cal.App.4th at pp. 536-537 [noncompliance with affidavit requirement not
prejudicial where defendants and their counsel were informed of default
proceedings].) In contrast, respondent was fully entitled to believe that no default

                                          22
could be entered against it, and respondent’s counsel lacked knowledge of the
default proceedings. In sum, the trial court did not err in setting aside the default
and default judgment.15

15      In a related contention, appellant argues that it was not obliged to comply
with Code of Civil Procedure section 587 in seeking a default judgment, noting
that a defendant ordinarily is not entitled to notice of proceedings after entry of
default (Code Civ. Proc, § 1010). We observe that appellate courts and treatises
have interpreted the phrase “application . . . for entry of default” in Code of Civil
Procedure section 587 to include applications for entry of a default judgment.
(Rodriguez, supra, 174 Cal.App.4th at pp. 535-538 [discussing cases]; see Harris,
supra, 74 Cal.App.3d at p.100 [“The statute provides that no application for
default judgment shall be heard, and no default entered, unless such an affidavit
has been filed”]; Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial
(The Rutter Group 2015) ¶ 5:187, p. 5-48 [“As in all defaults,” an affidavit
complying with Code of Civil Procedure section 587 must be filed with the
application for default judgment]; 6 Witkin, Cal. Procedure, supra, Proceedings
Without Trial, §§ 162, 164, pp. 603-605 [“A copy of the application for entry of
default or for judgment on the default must be mailed to the defendant’s attorney
of record . . . .” )
        In any event, apart from any legal requirement regarding notice of default
proceedings, the failure to notify defense counsel of those proceedings may justify
relief from a default judgment. (6 Witkin, Cal. Procedure, supra, Proceedings
Without Trial, § 162, p. 603.) Here, appellant’s failure to comply with Code of
Civil Procedure section 587 in connection with the request for entry of default,
coupled with his failure to inform respondent and its counsel of the later default
proceedings, supported relief on the basis of extrinsic mistake, regardless of any
legal requirement of notice relating to those proceedings. (Turner v. Allen (1961)
189 Cal.App.2d 753, 758 [lack of adequate notice of default proceedings to
defendant and defendant’s counsel amounted to extrinsic mistake, notwithstanding
absence of legal requirement of notice to counsel].)

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                               DISPOSITION
     The judgment is affirmed. Respondent is awarded its costs on appeal.

     CERTIFIED FOR PUBLICATION

                                           MANELLA, J.

We concur:

WILLHITE, Acting P. J.

COLLINS, J.

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