Gutierrez v. G&M Oil Co., 2010 WL 1818904 (Cal. Ct. App. 2010)

Maria Gutierrez filed a wage-and-hour class action lawsuit against G&M Oil Company, an operator of a chain of gas stations throughout California. Michael Gray was G&M’s vice president and general counsel and its registered agent for service of process. Gray agreed to accept service of the complaint from Gutierrez’s attorney and decided to handle the defense of the case himself. Gray did not send a copy of the pleadings to anyone else at G&M and kept the existence of the lawsuit to himself. Over the course of the next 12 months, there were no fewer than three separate requests for default, based on a lack of response to the operative complaint. Finally, a default judgment of $4 million was obtained against G&M. After Gray was removed from his position and outside counsel was retained to defend G&M, the company filed a motion to vacate the default judgment, relying upon Code Civ. Proc. § 473 (relieving a party from a default based upon an attorney’s “mistake, inadvertence, surprise or neglect”). The trial court granted G&M’s motion to vacate the default, holding that Section 473 applies to in-house counsel such as Gray as well as outside counsel. The Court of Appeal affirmed even though Gray was not only G&M’s general counsel but also one of its corporate officers.