Friday, March 8, 2002
Federal Relief From Default Available for Lawyer’s Gross Negligence, Appeals Court Rules
By ROBERT GREENE, Staff Writer
A party can win relief from default judgment in federal court when the default was caused by lawyer mistakes that were so egregious as to be considered gross negligence, the Ninth U.S. Circuit Court of Appeals ruled yesterday.
Although the panel left intact the rule that a lawyer’s mere negligence by itself is insufficient for relief from default under Rule 60(b)(6) of the Federal Rules of Civil Procedure, the court for the first time ruled that gross negligence satisfies the rule’s “extraordinary circumstances” requirement.
The gross negligence in this case was committed by Los Angeles attorney Eugene Salmonsen, who represented a San Diego dentist trying to fend off a trademark infringement action brought by the purported owner of the name “SmileCare.”
Judge Stephen Reinhardt said Salmonson failed to file either a stipulation to a 10-day extension for filing an answer or the answer itself. When he finally did file the answer, Reinhardt said, he failed to serve it on the plaintiff despite a court order to do so.
There also were failures to contact the plaintiff regarding preliminary settlement discussions, to oppose a motion to strike the answer, and to attend various hearings.
“Such failures and actions cannot be characterized as simple attorney error or mere neglect,” Reinhardt said. “Rather, conduct on behalf of a client’s alleged representative that results in the client’s receiving practically no representation at all clearly constitutes gross negligence, and vitiating the agency relationship that underlies our general policy of attributing to the client the acts of his attorney.”
The dentist, Stuart Tani, retained a new lawyer after learning of the entry of default and filed for relief under Rule 60(b)(6).
Other circuits are divided on whether the rule’s requirement of “extraordinary circumstances” covers gross negligence by the lawyer. The Ninth Circuit ruling follows similar holdings in the Third, Sixth and Federal Circuits. The Seventh and Eighth Circuits have ruled the other way in what Reinhardt in a footnote described as the “harsh and inequitable minority view.”
In dissent, Judge Richard C. Tallman said the majority had improperly expanded the scope of Rule 60(b)(6) and criticized the ruling for carving out an exception to the general rule that a client is bound by the actions of the chosen agent.
“Negligence and wilful misconduct constitute two ends of the spectrum of attorney error,” Tallman said. “[B]oth an attorney’s negligence and his willful misconduct are attributed to his client. Why then, should gross negligence, which falls somewhere in the middle of the two extremes of the spectrum, be treated any differently?”
The proper remedy for a client like Tani who has his case dismissed because of his lawyer’s conduct is to sue the lawyer for malpractice, Tallman said.
But Reinhardt said that when a lawyer is grossly negligent, “the judicial system loses credibility as well as the appearance of fairness, if the result is that an innocent party is forced to suffer drastic consequences.”
Reinhardt was joined by Senior Judge James R. Browning.
Salmonson said yesterday he had not yet read the opinion, but told the MetNews that many of the assertions made against him in the motion for relief from default were incorrect.
Tani, he said, had been a client long before the trademark suit and in fact was represented by him “as recently as this year.”
He said Tani convinced him to open an office in San Diego, where Tani’s dental practice was located.
“He got sued on a trademark,” Salmonson said. “It’s not my area. I answered as an accommodation to him.”
In moving his practice to San Diego, Salmonson said, “some things fell through the cracks that probably shouldn’t have.”
But Salmonson claimed the judge “invited” him to make a motion to set aside the default. He said Tani’s new counsel instead waited until the judgment was final before seeking relief.
The case is Community Dental Services v. Tani, 00-56450.
Copyright 2002, Metropolitan News Company