Pulte Homes Corp. v. Williams Mechanical, Inc.
206 Cal. Rptr. 3d 244
Cal. Ct. App.2016Background
- Pulte sued Williams Mechanical for defective plumbing work; Williams failed to respond and a default and default judgment were entered.
- Before suit, Williams had been suspended by the Secretary of State and later dissolved; its designated agent for service of process was attorney Matt H. Morris.
- Pulte served Morris; Morris admitted receiving the summons and complaint but did not notify Williams or its insurer (First Specialty Insurance).
- Pulte obtained default judgment (March 10, 2015). Pulte later notified First of the judgment (April 2, 2015); First requested documents, received some on July 20, retained counsel August 17, and counsel moved August 21 to set aside the default and judgment.
- The trial court granted the motion to set aside; Pulte appealed. The Court of Appeal reversed and ordered reinstatement of the default and judgment.
Issues
| Issue | Pulte's Argument | Williams's Argument | Held |
|---|---|---|---|
| Whether a corporation that was suspended then dissolved may defend actions (capacity to litigate) | Suspension bars a corporation from defending; Williams remains barred despite dissolution | Corporations Code §2010 allows dissolved entities to prosecute/defend while winding up, so dissolution restores defense power | Court avoided resolving; left open as question of first impression and resolved appeal on other grounds |
| Whether relief from default could be granted under CCP §473(b) (mistake/excusable neglect) | Delay from default entry to motion exceeds six-month limit for setting aside default under §473(b) | Motion timely as to default judgment (filed within six months) and equitable considerations support relief | Denied: cannot set aside the default under §473(b) because motion was filed more than six months after entry of default; thus §473(b) relief unavailable |
| Whether relief could be granted under CCP §473.5 (lack of actual notice) | Service on agent gave actual notice; Williams had notice so §473.5 inapplicable | Service on agent (Morris) did not give actual notice to dissolved/defunct corporation; insurer should count as the actual-notice recipient | Denied: service on designated agent for service of process constituted actual notice to this defunct corporation; §473.5 relief unavailable |
| Whether equitable (extrinsic mistake) relief to vacate default judgment was appropriate | Agent’s passive receipt and failure to notify is not an excusable excuse; insurer/agent delays show lack of diligence | Failure to notify was extrinsic mistake; insurer’s late receipt and investigation justify equitable relief | Denied: Williams failed two equitable criteria — no satisfactory excuse (agent made no effort to notify) and no diligence (insurer delayed and gave insufficient justification). Trial court abused discretion in granting relief; appellate court reversed |
Key Cases Cited
- Boyle v. Lakeview Creamery Co., 9 Cal.2d 16 (1937) (suspended corporation case; predecessor to dissolved-corporation authority not applicable to suspension alone)
- Rosenthal v. Garner, 142 Cal.App.3d 891 (1983) (actual notice means the party’s actual knowledge; attorney notice not imputed to individual defendant)
- Melendrez v. Superior Court, 215 Cal.App.4th 1343 (2013) (when a dissolved corporation is wound up, insurer can hold certain corporate interests such as privilege if insurer is effectively the remaining asset-holder)
- Howard Greer Custom Originals v. Capritti, 35 Cal.2d 886 (1950) (a default cannot be set aside under §473(b) if the motion is made after the six-month period for setting aside the default itself)
- Scognamillo v. Herrick, 106 Cal.App.4th 1139 (2003) (insured may be denied relief from default based on its insurer’s inexcusable neglect)