Speiser, Krause & Madole P.C., D/B/A Speiser, Krause, Madole & Cook v. Rudy A. Ortiz Rudy A. Ortiz & Opinion Associates P.C.

271 F.3d 884, 2001 Cal. Daily Op. Serv. 9812, 51 Fed. R. Serv. 3d 728, 2001 Daily Journal DAR 12267, 2001 U.S. App. LEXIS 24944, 2001 WL 1472915

• Court: Court of Appeals for the Ninth Circuit
• Decided: November 21, 2001
• Docket: 00-55195
• Status: Published

Opinions

FERNANDEZ, Circuit Judge:

Rudy A. Ortiz and Rudy A. Ortiz & Associates, P.C., a Virginia corporation,¹ appeal the district court’s order denying their motion to set aside the entry of default and to enlarge time to answer. We affirm.

BACKGROUND

Speiser, Krause & Madole, P.C., a California law firm, entered into an agreement with Ortiz, an attorney, for the purpose of dividing the legal representation responsibilities arising out of an airline crash case. After the case was concluded, a dispute arose between the attorneys regarding the division of the attorneys’ fees.

As a result, on January 7, 1999, Speiser Krause filed a complaint in the Superior Court of the State of California, County of Orange, and on April 28, 1999, Speiser Krause sent a letter by certified mail to Ortiz indicating its intent to seek an entry of default in the event it did not receive a timely answer to the complaint.

Without having filed an answer in state court, Ortiz removed the case to the United States District Court for the Central District of California. Pursuant to Rule 81(c) of the Federal Rules of Civil Procedure, Ortiz was required to file an answer to the complaint by May 6,1999.

Ortiz, however, did not bother reading Rule 81(c) carefully enough to understand it and, therefore, did not bother answering the complaint. He admits as much. He later also' said that the district court’s issuance of an order to show cause regarding jurisdiction somehow perplexed and excused him because, he thought, perhaps the case might not have actually been removed. Thus, on July 16, 1999, Speiser Krause requested an entry of default as to Ortiz. Default was entered that same day. Soon thereafter Speiser Krause notified Ortiz that it intended to seek a default judgment.

Ortiz then made a motion to set aside the default and to enlarge the time to answer on the basis that his neglect was excusable. The district court denied the motion and ordered the entry of the default judgment. Ortiz then appealed.

STANDARD OF REVIEW

We review for an abuse of discretion the district court’s decision to enter a default judgment. Haw. Carpenters’ Trust Funds v. Stone, 794 F.2d 508, 511-12 (9th Cir.1986). That standard of review “necessarily encompasses the entry of default,” because entry of default alone does not constitute an appealable final order. Id.; see also Savarese v. Edrick Transfer & Storage, Inc., 513 F.2d 140, 146 (9th Cir.1975); Madsen v. Bumb, 419 F.2d 4, 6 (9th Cir.1969).

DISCUSSION

The district court’s determination in this case was well within the boundaries of its discretion. Ortiz argues that his neglect to read and understand the pellucid command of Rule 81(c) regarding the time to answer the complaint² was excusable neglect. See Fed.R.Civ.P. 60(b)(1).

While an attorney’s egregious failure to read and follow clear and unambiguous rules might sometimes be excusable neglect, “mistakes construing the rules do not usually constitute ‘excusable’ neglect.” Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S. 380, 392, 113 S.Ct. 1489, 1496, 123 L.Ed.2d 74 (1993). As we have said in a similar situation, “counsel has not presented a persuasive justification for his misconstruction of nonambiguous rules. Accordingly, there is no basis for deviating from the general rule that a mistake of law does not constitute excusable neglect.” Kyle v. Campbell Soup Co., 28 F.3d 928, 931-32 (9th Cir.1994); see also Comm. for Idaho’s High Desert, Inc. v. Yost, 92 F.3d 814, 825 (9th Cir.1996). Again, Rule 81(c) is just that clear, and as we once said about an attorney who did not follow it, “[w]e see no reason for the federal courts to excuse such professional neglect.” Savarese, 513 F.2d at 147.

Interestingly enough, Ortiz tries to avoid the effect of his neglect by asserting that he fell into a state of confusion when the district court issued an order to show cause. He thought that, perhaps, the case which he had removed had not really been removed. He thus tries to excuse one failure to read a plain provision of the law by resting upon his failure to read still another equally plain provision. In other words, he seeks solace in his neglecting to observe that a case is automatically removed when the removal papers are served and filed, as they were here. See 28 U.S.C. § 1446(d); Resolution Trust Corp. v. Bayside Developers, 43 F.3d 1230, 1238 (9th Cir.1994); Okot v. Callahan, 788 F.2d 631, 633 (9th Cir.1986). However, his neglect of one clear rule is no anodyne for the damage caused by neglect of another one. As we said in Savarese, 513 F.2d at 147: “We feel, as did the district judge, that parties who remove cases to the federal courts should become acquainted with and comply with the Federal Rules of Civil Procedure.”³

Ortiz also briefly alludes to the good cause standard regarding defaults. See Fed.R.Civ.P. 55(c). That standard is less rigorous than excusable neglect. See Haw. Carpenters’ Trust Funds, 794 F.2d at 513. The distinction, however, is one of degree, which might make a difference at the margin. But the failure of this lawyer, who was the removing party, to properly read the clear language of Rule 81(c) does not amount to good cause either. See id.; Savarese, 513 F.2d at 146.

CONCLUSION

Appellate judges are often tempted to mention the abuse of discretion standard and then treat that as a mere formalistic incantation preparatory to their deciding what they would have done had they been the district judge. But as we see it, the standard means that within substantial margins the district court could be upheld had it determined the issue one way or the other.

Here the district court would not necessarily have erred had it decided that excusable neglect (or good cause) was shown. But it decided that neither was. That conclusion certainly was not error. Indeed, it was much closer to being rhadam-anthine than the opposite conclusion would have been.

AFFIRMED.

1 . Hereafter, for convenience, this opinion will refer only to Ortiz, but the analysis as to him applies with equal force to the corporation.

2 . Rule 81(c) reads in pertinent part: “In a removed action in which the defendant has not answered, the defendant shall answer ... within 20 days after the receipt through service or otherwise of a copy of the initial pleading setting forth the claim for relief upon which the action or proceeding is based, or within 20 days after the service of the summons upon such initial pleading, then filed, or within 5 days after the filing of the petition for removal, whichever period is longest.’’

3 . We do not overlook Briones v. Riviera Hotel & Casino, 116 F.3d 379 (9th Cir.1997). But, as we said, the error in that case did not result “only from a failure to read and at-tempi to follow court rules.” Id. at 382. The same is true of Bateman v. United States Postal Service, 231 F.3d 1220, 1222-23 (9th Cir.2000).