If a default judgement has been made against the partnership, the general partner and me personally, which, as mentioned above is in violation to the partnership agreement (i.e. the court doesn't have jurisdiction), how can I have the default judgement vacated and the matter dismissed. The investor (and their counsel) knows of this stipulation, so they have essentially fraudulently pursued this in court, wasting the court's (and my) time. Looking online I have seen CCP 437 (d) to void the default judgement (no jurisdiction) and there is also Civil section 60 (d) for fraud -- does that apply in California? Thanks.
Procedurally, you would have to first file a motion to set aside default and vacate default judgment pursuant to either California Code of Civil Procedure §473(b) (for relief from mistake, inadvertence, surprise, or excusable neglect) or California Code of Civil Procedure §473.5 (if you were never properly served with the summons and complaint).
Then you would file a motion to compel arbitration if the partnership agreement requires disputes to be arbitrated. (The case won't just be dismissed, it would be stayed pending an outcome from the arbitration).
Frank W. Chen is licensed to practice law in the State of California. The information presented here is general in nature and is not intended, nor should be construed, as legal advice. This posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, consult your own attorney.
The information that is missing from your question is why the default was entered. Mr. Chen's advice is good if you were not served or if you were served and did not understand how to respond, etc.
But if you were served and blew off responding because you believed that the court has no jurisdiction, that was a different kind of mistake. The fact is that the court acquired jurisdiction when the complaint was filed. An arbitration clause, while generally enforceable, does not deprive the court of jurisdiction, and parties to arbitration agreements can waive their right to arbitrate by filing in court. It happens every day.
If that was the reason for the default, you may still win a motion to set aside the default (no guarantee, though), and then you can file a motion to compel arbitration if you wish to do so. But arbitration often means giving up substantive rights that you would have in court, and requires you to pay your share of the arbitrators fees, at least initially. There are many pros and cons to arbitration. I suggest that you consult with a good business litigator to sort out your options and decide on a strategy.
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I'm not admitted in California, but if you never objected to being in court in the first place, there may well be a valid argument for your waiver of the arbitration agreement. However, there may well be some authority out there that supports the fact that the judgment to be obtained isn't valid at all given the want of jurisdiction of the court.
This sort of stuff isn't for the faint of heart. You really, really need counsel on this one to represent your interests so that a judgment is not entered.
The foregoing is not legal advice nor is it in any manner whatsoever meant to create or impute an attorney/client relationship.
You need to file a motion to vacate the judgment pursuant to CCP 473 and then once that it granted you need to have a second motion to stay the lawsuit and compel arbitration heard by the court. Contact an attorney as this work is too complicated to do without a lawyer.
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