JAMES DOUGLAS CARROLL, a Minor, etc., Plaintiff and Respondent, v. ABBOTT LABORATORIES, INC., Defendant and Appellant, 32 Cal. 3d 892

Opinion KAUS, J. I Appeal from orders made pursuant to

section 473 of the Code of Civil Procedure, vacating and setting aside a judgment of dismissal. (Code Civ. Proc., § 904.1, subd. (b).) This is the problem:

Section 473 of the Code of Civil Procedure permits relief for “excusable” neglect. The word “excusable” means just that: inexcusable neglect prevents relief. (Luz v. Lopes (1960) 55 Cal.2d 54, 65 [10 Cal.Rptr. 161, 358 P.2d 289]; Benjamin v. Dalmo Mfg. Co. (1948) 31 Cal.2d 523, 528-533 [190 P.2d 593].) Further, as a general rule an attorney’s inexcusable neglect is chargeable to the client. (Benjamin v. Dalmo Mfg. Co., supra, at p. 532.) Yet, starting with Daley v.

County of Butte (1964) 227 Cal.App.2d 380, 388-395 [38 Cal.Rptr. 693], there has developed a line of cases which has prompted one noted commentator to protest that “the more gross and inexcusable the neglect of the attorney, the more certain is the party of getting relief.” (5 Witkin, Cal.

Procedure (2d ed. 1971) Attack on Judgment in Trial Court, § 147, p. 3721.) This opinion attempts to solve the apparent paradox. n Involved in the proceedings we are about to discuss are Monica Denise Carroll, the mother and guardian ad litem of the minor plaintiff James Douglas Carroll, plaintiff’s legal representative (counsel) and defendant Abbott Laboratories, Inc. (Abbott). On December 11, 1975, counsel, on behalf of James, filed a complaint against Abbott. It alleged that James, a minor, suffered brain damage when Monica, while pregnant with James, ingested Nembutal, a drug manufactured by Abbott.

In preparation for trial, Abbott served on counsel a notice requesting production of three sets of documents: (1) medical records concerning James’ treatment at the Seventh Day Adventist Hospital in Saigon, Vietnam; (2) medical records concerning James’ treatment at a military hospital in Vietnam; and (3) a “baby book” kept by Monica that detailed James’ first eight years. The basis for the request was Monica’s deposition testimony indicating that these documents were in her possession.

Following service of the notice on February 26, 1979, counsel requested and was granted four extensions of time, but by November 7 the documents had still not been produced. Abbott then filed a motion to compel production. That motion was granted—counsel had not appeared at the hearing—and notice of the court’s ruling was served on him. When counsel failed to comply with the court order, Abbott went to court a second time, seeking a dismissal of the case for failure to comply with the court order or, alternatively, a second order compelling production.

On January 11, 1980, the court granted a second motion to compel production and continued the motion to dismiss. Production was still not made, however, and on January 24, at a hearing at which there was again no appearance for plaintiff, the court dismissed James’ action as to Abbott. On January 29, counsel filed a motion for relief from the dismissal under Code of Civil Procedure

section 473. In his declaration, he asserted that none of the requested documents were in his or Monica’s possession. He also admitted that he had not been in touch with his client since July 23, 1979. Counsel did appear at a February 14 hearing and urged his own motion. The trial court granted the motion to vacate the dismissal on condition that counsel and Monica file declarations stating that they did not know the whereabouts of the requested documents. When they failed to fulfill that condition, the motion to vacate the dismissal was taken off calendar. Counsel filed a second motion for relief under

section 473 on April 3, 1980. In his newest declaration, he asserted that on February 15 he had been informed by Monica that she did, after all, possess the requested documents. In fact, Monica told counsel that at one point between July and August 1979, she had actually turned the documents over to him.

Counsel asserted, however, that some time thereafter his office returned the documents to Monica, though he himself had “no recollection of this rather disturbing event.” Counsel’s declaration in support of the motion also contains certain allegations which, if believed, might have supported a finding that the January 24 dismissal had been the result of a mistake induced by certain representations of Abbott’s attorney. The allegations were denied by the latter. This second motion for relief was submitted, and on May 23, 1980, the trial court indicated it would grant it. The minute order of May 23 is quoted below.

Two features of that ruling should be noted: first, the court found, without any ifs or huts, that counsel had been “grossly negligent in the representation of plaintiffs interests”; second, the court set the dismissal aside only because it felt that that penalty had been inappropriately harsh. In any event, a month later, on June 25, the court found that counsel had substantially complied with the court order. It then granted the motion to be relieved from the judgment of dismissal. III It is well established that “ ‘a motion for relief under [Code of Civil Procedure]

section 473 is addressed to the sound discretion of the trial court and in the absence of a clear showing of abuse thereof the exercise of that discretion will not be disturbed on appeal.’” (Martin v. Cook (1977) 68 Cal.App.3d 799, 807 [137 Cal.Rptr. 434]; Coyne v. Krempels (1950) 36 Cal.2d 257, 263 [223 P.2d 244].) That discretion, however, “ ‘is not a capricious or arbitrary discretion, but an impartial discretion, guided and controlled in its exercise by fixed legal principles.

It is not a mental discretion, to be exercised ex gratia, but a legal discretion, to be exercised in conformity with the spirit of the law and in a manner to subserve and not to impede or defeat the ends of substantial justice.’ ” (Benjamin v. Dalmo Mfg. Co. (1948) 31 Cal.2d 523, 526 [190 P.2d 593]; Bailey v. Taaffe (1866) 29 Cal. 423, 424.) In general, a party who seeks relief under

section 473 on the basis of mistake or inadvertence of counsel must demonstrate that such mistake, inadvertence, or general neglect was excusable “because the negligence of the attorney ... is imputed to his client and may not be offered by the latter as a basis for relief.” (Buckert v. Briggs (1971) 15 Cal.App.3d 296, 301 [93 Cal.Rptr. 61].) The client’s redress for inexcusable neglect by counsel is, of course, an action for malpractice. (Martin v. Cook (1977) 68 Cal.App.3d 799, 809 [137 Cal.Rptr. 434]; Orange Empire Nat. Bank v.

Kirk (1968) 259 Cal.App.2d 347, 353 [66 Cal.Rptr. 240] ,) However, an exception to this general rule has developed. “[E]xcepted from the rule are those instances where the attorney’s neglect is of that extreme degree amounting to positive misconduct, and the person seeking relief is relatively free from negligence. [Citations omitted.] The exception is premised upon the concept the attorney’s conduct, in effect, obliterates the existence of the attorney-client relationship, and for this reason his negligence should not be imputed to the client. ” (Italics added.) (Buckert v.

Briggs, supra, at p. 301; see also, Orange Empire Nat. Bank v. Kirk, supra, at p. 353; Daley v. County of Butte (1964) 227 Cal.App.2d 380, 391 [38 Cal.Rptr. 693].) Courts applying that exception have emphasized that “[a]n attorney’s authority to bind his client does not permit him to impair or destroy the client’s cause of action or defense.” (Orange Empire Nat. Bank, supra, 259 Cal.App.2d at p. 353; Daley v.

County of Butte, supra, 221 Cal.App.2d at p. 391.) In spite of half-hearted attempts to argue that his counsel’s neglect was excusable, plaintiff appears to appreciate that his best hope for an affirmance lies in resort to the Daley line of cases; he is, after all, saddled with an amply supported if not compelled trial court finding that counsel’s neglect was “gross.” The issue, therefore, becomes whether counsel’s conduct amounted to “positive misconduct” by which plaintiff was “effectually and unknowingly deprived of representation.” (Daley v.

County of Butte, supra, 227 Cal.App.2d at p. 391.) A brief look at the factual circumstances in the cases that fall within the “positive misconduct” exception will make it clear that plaintiffs hopes are misplaced. In Daley, plaintiffs attorney failed to serve plaintiff’s son in order to join him as a party, which resulted in repeated postponement of trial. He failed to appear at successive pretrial conferences and failed to communicate with court, client or other counsel.

Worst of all, he did not sign a substitution of attorney for more than five months, apparently refusing either to get out of the case or to proceed with it. Given all these circumstances, the court concluded that plaintiff “had legal representation only in a nominal and technical sense.” (Daley v. County of Butte, supra, 227 Cal.App.2d at p. 392.) In Orange Empire the attorney, whose client was sued on a guaranty, repeatedly assured the client that he would interpose the defense that the client’s signature on the guaranty was a forgery.

The attorney failed to file an appearance in the case, and despite advance notice of the trial date, he failed to appear for trial which resulted in a substantial judgment. Throughout this period, the attorney had been contacted many times by his client and had continued to assure him that he was taking care of the case and would take care of the trial. The court focused also on the attorney’s failure to file for relief from the judgment within the statutory period, despite his continuing assurances to the client that remedial action would be taken.

The client finally sought other counsel after he learned, from his own inquiries, that his original attorney had failed to take any action with respect to the judgment. Finally, in Buckert, the attorney in question failed to notify plaintiffs regarding a new trial date, despite specific promises that he would do so, and did not himself appear at the trial on behalf of plaintiffs. When one of the plaintiffs learned that the trial had taken place, he immediately contacted the attorney who said he thought plaintiffs had lost interest in the case. (None of the plaintiffs had so indicated.

In fact, they had requested that the matter be tried as soon as possible.) The attorney told the plaintiff he would seek to have the judgment set aside, and would keep plaintiffs informed of his progress. The attorney did neither and in fact never contacted plaintiffs again. One of the plaintiffs finally wrote to the presiding judge in the case, who informed him of the possibility of relief under

section 473. Plaintiffs then obtained the services of another attorney to seek such relief on their behalf.

The court concluded that the evidence demonstrated the original attorney was in fact not representing plaintiffs, and indicated that the “[attorney] regarded the attorney-client relationship ... to be nonexistent and [that the attorney had a] preconceived intention not to act on their behalf.” (Buckert, supra, 15 Cal.App.3d at p. 301.) What Daley, Orange Empire and Buckert have in common is a total failure on the part of counsel to represent the client: each attorney had de facto substituted himself out of the case.

Under such circumstances it would have been unconscionable to apply the general rule charging the client with the attorney’s neglect. The case before us is, however, quite different. Though counsel grossly mishandled a routine discovery matter, no abandonment of the client appears. The record and counsel’s own declaration reveal quite the opposite: after filing the complaint in 1975, he attended Monica’s deposition in August 1976, propounded interrogatories to a physician-codefendant and answered four sets of interrogatories by that defendant with whom he eventually settled.

In July 1978 he propounded 40 interrogatories and 22 requests for admission to Abbott. When Abbott, in turn, served its request for production of documents, counsel did not ignore them—he did, as noted, obtain four extensions of time, and somehow caused Monica to deliver some or all of the documents requested to his office, though he inexplicably returned them to her. Finally, after the action was dismissed, he started a rescue operation which resulted in the favorable judgment from which Abbott appeals.

In brief, though in connection with the production of documents he obviously failed to give effective representation, he did not, in the words of the Buckert court, “obliterate the existence of the attorney-client relationship.” (Id., at p. 301.) “The policy that the law favors trying all cases and controversies upon their merits should not be prostituted to permit the slovenly practice of law or to relieve courts of the duty of scrutinizing carefully the affidavits or declarations filed in support of motions for relief to ascertain whether they set forth, with adequate particularity, grounds for relief. [Fn. omitted.] When inexcusable neglect is condoned even tacitly by the courts, they themselves unwittingly become instruments undermining the orderly process of the law.” (Transit Ads, Inc. v.

Tanner Motor Livery, Ltd. (1969) 270 Cal.App.2d 275, 282 [75 Cal.Rptr. 848].) Given this concern, the Daley exception should be narrowly applied, lest negligent attorneys find that the simplest way to gain the twin goals of rescuing clients from defaults and themselves from malpractice liability, is to rise to ever greater heights of incompetence and professional irresponsibility while, nonetheless, maintaining a beatific attorney-client relationship. Finally, plaintiff claims that Abbott was not prejudiced by the delay in furnishing the requested documents. We assume for the purpose of argument that this is so.

We have, however, found no case which permits the setting aside of a judgment in spite of inexcusable neglect, simply because the other side has not been prejudiced. (See generally In re Marriage of Park (1980) 27 Cal.3d 337, 345 [165 Cal.Rptr. 792, 612 P.2d 882]; Weitz v. Yankosky (1966) 63 Cal.2d 849, 857 [48 Cal.Rptr. 620, 409 P.2d 700]; Benjamin v. Dalmo Mfg. Co., supra, 31 Cal.3d at pp. 531-532.) In sum, since the record fails to show the kind of de facto severance of the attorney-client relationship which is necessary to bring the Daley doctrine into play, the

section 473 relief should not have been granted. Reversed. Mosk, J., Richardson, J., Newman, J., Broussard, J., and Reynoso, J., concurred.

Section 473 provides in pertinent part: “The court may, upon such terms as may be just, relieve a party or his legal representative from a judgment, order, or other proceeding taken against him through his mistake, inadvertence, surprise or excusable neglect. . . .” Abbott also sought to compel answers to certain interrogatories. However, since both the later dismissal and vacation of dismissal involved only the production of the documents, our discussion focuses solely on that aspect of Abbott’s efforts at discovery.

The court’s eventual finding that counsel had been grossly negligent implies that the factual conflict was resolved against plaintiff. “The matter having been submitted and, after due consideration of the plaintiff’s declarations in support of its motion to be relieved from a judgment of dismissal, the court finds and rules as follows: The court finds that the plaintiff’s counsel has been grossly negligent in his representation of the plaintiffs interests and accepts as true that the plaintiff was not contacted at relevant times. “The sanctions imposed under Code of Civil Procedure,

Section 2034, Subdivisions (

b) and (

d) must be appropriate to the dereliction and must be just. “The purpose of the discovery statutes is to enable a party to obtain evidence under the control of his adversary in order to further the efficient and economical disposition of a lawsuit. (Caryl Richards, Inc. vs. Superior Court, supra, 188 Cal.App.2d 300.) Where a motion to compel has been granted, and discovery has been delayed or denied, the court must make orders in regard to the refusal as are just. (Code Civ.

Proc., § 2034, subd. (b)(2).) “The penalty should be appropriate to the dereliction, and should not exceed that which is required to protect the interests of the party entitled to but denied discovery. Where a motion to compel has previously been granted, the sanction should not operate in such a fashion as to put the prevailing party in a better position than he would have had if he had obtained the discovery sought and it had been completely favorable to his cause. (Stein v. Hassen, supra, 34 Cal.App.3d 294, 301-303.

See Thompson, Sanctions in California Civil Discovery (1968) 8 Santa Clara Law. 173, 185-186.) “The motion is granted on condition that: “1. Plaintiff’s counsel pay defendant’s counsel additional fees in the sum of $750.00 within 20 days of service of order. This sum is in addition to the $500.00 ordered on February 14, 1980. The latter sum is likewise to be paid within 20 days for a total payment of $1350.00. “2. That plaintiff file verified answers to interrogatories within 20 days. “3. That plaintiff produce documents as requested within 20 days. “4.

Plaintiff’s counsel shall file with the court a declaration stating that there has been compliance with the terms of this order within 25 days of the order. “5. The plaintiff shall make no motion to set for trial until compliance with the order is made. “6. The order of February 14, 1980, is vacated only so far as it limits the plaintiff’s production of evidence per CCP 2034 (B)(2)(h). “7. The matter is set for compliance review in Department 84 on June 25, 1980. Compliance may be established by plaintiff’s declaration.” While this may be sound discovery law, its application was ill-timed. A motion under

section 473 of the Code of Civil Procedure “was never intended as a substitute for an appeal.” (Hagan v. Mund’s Boilers, Inc. (1950) 96 Cal.App.2d 101, 106 [214 P.2d 575].) Thus, while the January 24 order to dismiss may have been judicial error, it had never been appealed and was final as of May 23. (See also Stevens v. Superior Court (1936) 7 Cal.2d 110, 112-113 [59 P.2d 988]; Russell v. Superior Court (1967) 252 Cal.App.2d 1, 7 [59 Cal.Rptr. 891] Ferrara v. La Sala (1960) 186 Cal.App.2d 263, 274 [9 Cal.Rptr. 179].) On May 23, the only issue before the court was the one cognizable under

section 473: had counsel been excusably negligent? That issue was, of course, decisively resolved against plaintiff. The record reveals considerable controversy on the question whether plaintiff had really complied with the conditions of the May 23 order. It is a fact that Monica never did produce the records of the Seventh Day Adventist Hospital. The trial court found—too charitably, perhaps—that she had produced all the records that were “in existence.” From the client’s point of view relief under

section 473 is, of course, much faster than a malpractice judgment several years down the road. Realistically, however, the mere threat of malpractice liability brings another purse into the settlement negotiations and may thus actually further a speedy disposition. Weitz also disposes of the dissent’s suggestion that even if counsel’s inexcusable neglect bars relief under

section 473, the order should nonetheless be upheld as a proper exercise of the court’s inherent equitable power. “To the extent that the court’s equity power to grant relief differs from its power under

section 473, the equity power must be considered narrower, not wider. (See Wattson v. Dillon, 6 Cal.2d 33, 42 [56 P.2d 220].)” (Italics added.) (63 Cal.2d at p. 857.) In Wattson, the court held that a party who seeks to have a default judgment set aside under a court’s equity power must make a stronger showing of the excusable nature of his neglect than is necessary to obtain relief under

section 473. Thus, in granting equitable relief in both Hallett v. Slaughter (1943) 22 Cal.2d 552 [140 P.2d 3] and Higley v. Bank of Downey (1968) 260 Cal.App.2d 640 [67 Cal.Rptr. 365], the courts made clear that counsel in those cases had not been guilty of inexcusable neglect. (22 Cal.2d at p. 556; 260 Cal.App.2d at p. 644.) Reprinted due to erratum. See 33 Cal.3d 301.