When a Court of Appeal found untimely a motion to vacate a nine-year-old default judgment for improper service, it concluded that, although the applicable statute (Code of Civ. Proc. section 473, subd. (d)) doesn’t state a time limit for moving to set aside a void judgment that is valid on its face, “case law does.” Well, case law doesn’t anymore, not after today’s Supreme Court decision in California Capital Insurance Company v. Hoehn. The decision is an apparent win in particular for defendants in debt collection actions.
The court’s unanimous opinion by Justice Martin Jenkins holds that the “judicially created rule” established by a line of Court of Appeal decisions “finds no footing in the statute’s text, has not been adopted by the Legislature, and lacks any sound justification.” The rule limited a defendant’s remedy to filing an independent equitable action. The court doesn’t decide whether, although abrogating the rule which applied a two-year period found in a statute governing other motions to vacate, defendants must act with reasonable diligence after learning of the void judgment.
Before explaining why the rule is wrong, the court describes “the backdrop against which [it] consider[s] [the] request to repudiate that rule.”
The court relies on amici curiae — nonprofit organizations representing low- and moderate-income consumers defending against debt collection claims — in recognizing the importance of allowing a motion in an existing lawsuit instead of requiring an independent equitable action. The latter “is a more time- and resource-intensive endeavor than” the former and can “make[ ] the filing of separate actions effectively impossible for most people facing debt collection claims.” The court also says that a high rate of default judgments in debt case “is likely attributable in part to inadequate and even fraudulent service” and that “communities of color are significantly more likely to be impacted by the questionable debt collection practices of companies that specialize in buying and collecting debts.”
The court reverses the Third District Court of Appeal’s unpublished opinion. It also disapproves the Second District, Division Four, decision in Rogers v. Silverman (1989) 216 Cal.App.3d 1114 “and its progeny.” The “progeny” mentioned includes the Third District’s Trackman v. Kenney (2010) 187 Cal.App.4th 175. There was no petition for review in Rogers or Trackman.