WHAT DO I DO IF . . .
. . . I find out there is a judgment against me, and I was never served with the complaint?
. . . my attorney or I missed a deadline and allowed a judgment to be taken against me?
. . . my attorney or I missed a deadline and lost my case?
Our primary website is here, but we posted this information for clients or attorneys who may be searching for information on how to deal with default judgments.
How do default judgments happen?
A default judgment is a judgment that is entered against a defendant (or cross-defendant) due to some mistake or failure during litigation. A party can end up with a default judgment in a number of ways. Most often, a default judgment is entered when a defendant fails to file an answer to a complaint on time. Litigation starts with a complaint, which is then served on the defendant. After service, the defendant usually has from 5 to 30 days to file a document with the court called the "answer" (or certain other qualifying motions). If the defendant fails to answer on time, the plaintiff can then file a request for entry of default, a very simple form.
In most instances, so long as the answer is filed before the request for entry of default is filed, it is considered timely. Even if they are both filed on the same day, the court clerk is supposed to reject the request for entry of default and accept the answer. Thus, if you were served with a complaint and realize you did not answer on time, you might still be okay if the plaintiff has not yet filed a request for entry of default.
Default judgments can also occur when a party fails to properly participate in the litigation process. If the other side serves you with a demand for documents, for example, and you fail to turn over your documents, the court can strike your answer and allow a default to be entered.
After the plaintiff files the request for entry of default, the court clerk takes a day or two to confirm that a proof of service was filed, showing that the defendant received the complaint, and then enters the default. The plaintiff then files more documentation to "prove-up" the claim for damages, or in some instances the court holds a short ten minute prove-up hearing with live testimony. If there was a default, the defendant, even if he is now aware of the action and wants to tell his side of the story, will not be permitted to appear at the hearing or file other documents in opposition to the prove-up papers.
After the prove-up, whether by live testimony or on documents, the court then enters judgment in favor of the plaintiff. Theoretically, a judge can hear the testimony or read the papers and decide there is no basis for a judgment. This is rare however, because the defendant is not there to offer any evidence to the contrary. With no contrary evidence, the plaintiff can say whatever he wants. For example, in one instance a plaintiff was suing to collect $35,000 he had loaned to someone, but because the defendant failed to answer, the plaintiff was able to obtain a $2 million default judgment after claiming he would have invested that $35,000 in a lucrative real estate deal. (We successfully moved to vacate that judgment.)
The failure to recognize the inevitablity of a default judgment is why so many defendants fall into the trap. For example, let's say your name is Joe Johnson, and a credit card company comes after you for $25,000 owed by a different Joe Johnson. After you are served with the complaint, you send documentation to the collection agency showing you are not the Joe Johnson in question, and assume that will be the end of it. Then you receive notice of the default judgment for $40,000, representing the $25,000 plus interest and attorney fees.
"How is this possible?" you scream, "didn't the judge look at the documentation?" What documentation? The judge saw only what the plaintiff chose to show him or her. Without you there to explain the facts, the judge never heard your side of the story.
"Well, can I explain now that I'm not the right Joe Johnson?", you ask. No you can't. You must bring a motion to vacate the judgment, and the ONLY relevant evidence for that motion is whether your failure to act was the result of "mistate, inadvertence, surprise or excusable neglect." At this point, the merits of your defense are inadmissible for purposes of the motion. Your claim that you are the wrong Joe Johnson will be utterly ignored by the court, and the only relevant evidence is why you failed to answer on time. You will explain that you provided information to the collection agency that you were not the right party, and that is why you thought you did not need to answer, and the judge may or may not decide that is a good enough excuse. If the judge decides that your excuse is not good enough, then you will be on the hook for $40,000 for a debt you never incurred.
A default judgment is a terrible result, and one of the most inequitable under the law. It denies the defendant of his day in court, and results in a judgment that is often far in excess of any amount the plaintiff would have recovered at trial, assuming he would have recovered anything at all. Making matters worse, default judgments are often the result of a fraud on the court. It's easy to win when the other side isn't there to defend the case, so unscrupulous plaintiffs file proofs of service, falsely claiming the defendant was served with the complaint.
On the other hand, default judgments are to some extent a necessary evil, because the courts must be able to manage their dockets. A default judgment is in a sense a form of punishment designed to discourage defendants from failing to participate in the process. If you find yourself with a default judgment against you, a motion to vacate is the most common remedy.
"What does a motion to vacate entail?
As you can see, a lot can be riding on a motion to vacate. The process involves collecting all the evidence in support of the motion, and filing the moving papers supported by that evidence. A motion to vacate is a noticed motion, meaning that the plaintiff must be given notice of the motion about 16 court days (about 24 calendar days) before the hearing (depending on how it is served). The plaintiff then files an opposition to your motion nine court days before the hearing, and the defendant may then serve a reply to the opposition. As you can also see, a defendant with a default judgment hanging over is head is made to suffer for quite some time until the court decides whether to grant the motion.
In some instances, the plaintiff's attorney may read the defendant's papers and decide that there was a reasonable basis for defendant's failure to answer the complaint. In our Joe Johnson hypothetical for example, maybe you sent your documentation to the collection agency and the attorney never knew about it. Under this circumstance, an ethical attorney will persuade his or her client to stipulate to vacate the default judgment.
Understand that in most all instances, winning on the motion to vacate simply means that your answer is accepted and the matter is placed back on the trial calendar. A motion to vacate a default judgment has nothing to do with the merits of the case, it is designed only to put the defendant back into the litigation so that he may defend against the case. In that regard, the most common mistake made amoung defendants and their attorneys is failing to attach the proposed answer to the motion to vacate. The court can only grant relief if you have provided the answer you are asking to file. If you fail to do so, most courts will deny the motion outright without ever reading it. Some more compassionate judges may give you a couple of days to file the answer.
"Shall" vs. "May"
At one time, the law was that since an attorney acted as the agent of the client, any mistakes by the attorney were deemed to also be the mistakes of the client. Ten years or so ago, the California Legislature changed that, and gave clients extra protections against mistakes made by their attorneys. Now, under section 473 (click the resources tab to the left to read 473), if you are representing yourself and miss a deadline, the court "may" grant relief if you can show that your mistake was the result of, say, excusable neglect. But if your attorney misses that same deadline, and files a declaration admitting his or her mistake, then the court "shall" grant relief.
Here is how that plays out in the real world. You are properly served with a complaint, but you don't take the time to read the summons to see that you have 30 days to respond. Instead, you read the Notice of Case Management Conference that says you need to appear in court in four months. You do nothing, thinking you have four months, but two months later you get notice that a default judgment for $250,000 was taken against you because you did not file your answer within 30 days. Now you are on the hook for $250,000, because you did not read the papers carefully enough.
You bring a motion to vacate the judgment, arguing to the court under section 473 that your failure to answer in time was the result of "mistake, inadvertence, surprise or excusable neglect." Under the facts as stated, you probably have a 50-50 chance of prevailing. Many defendants make this mistake, so the judge might take pity and vacate the judgment. Just as likely, however, the judge may conclude that someone being served with legal documents should take the time to read them, and since the summons states clearly, in bold text, that you have only 30 days to answer, he cannot in find your failure to be the result of mistake, inadvertence, surprise or excusable neglect. If the motion is denied, you will be stuck with that large judgment, doubling in value every ten years (good for up to 20 years) until you pay it or discharge it in bankruptcy (if that is an option).
Now, consider the same fact pattern, but this time you hired an attorney to answer the complaint. He failed to calendar the deadline, and by the time he caught the error, the $250,000 judgment had been entered against you. If he files what is called a mea culpa declaration, admitting to the error, the court is then required to grant the relief (assuming the judge follows the law). However, to make sure clients and their attorneys do not abuse this mandatory relief, the judge can condition the relief as he or she sees fit. In many cases, the attorney and/or client will be ordered to pay the attorney fees incurred by the other side in obtaining the default judgment, since all that work will now be for naught.
As you might expect, attorneys are not eager to provide declarations stating that they made a mistake, because it exposes them to the fees I just mentioned, and could result in a claim of malpractice. But in our hypothetical, the attorney would be far better off admitting to the mistake and paying a couple of thousand dollars in fees to the other side as a condition to granting the motion to vacate, than paying the $250,000 judgment if it is shown it was caused by his malpractice (which is not an automatic conclusion -- what if you had no defense to the claim anyway?).
Let Morris & Stone save the day.
Morris & Stone has developed a specialized practice area, to help defendants who have suffered a default judgment or fallen prey to some other mistake during litigation. Although every situation is unique and turns on its own special facts, we have been very successful with motions to vacate.
The time to bring a motion to vacate is limited, and the opportunity can be lost if you wait too long to bring the motion after entry of the judgment. Indeed, one of the criteria the judge uses in deciding whether to grant or deny a motion to vacate is how quickly you sought relief after finding out about the judgment. Call us at your earliest convenience at (714) 954-0700 for a free telephone consultation. We do most motions to vacate on a flat fee basis, so you will know exactly what it will cost.
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