Pursuant to Code of Civil Procedure section 116.710, a liability insurer has a right to appeal a default judgment entered against its insured in a small claims action. (Pacific Pioneer Ins. Co. v. Superior Court (2020) — Cal.App.5th —)
Facts
Following an auto accident, Vanessa Gonzalez filed a small claims against Jonathan Johnson. Johnson did not show up for the small claims hearing, and the small claims court thus entered a default judgment against Johnson for $10,000, plus $140 in costs.
Johnson’s auto insurer, Pacific Pioneer Insurance Company, filed a timely notice of appeal to the superior court. However, the superior court struck Pacific Pioneer’s notice of appeal, reasoning that Code of Civil Procedure section 116.710 precludes a non-appearing “defendant” from appealing a small claims judgment.
Pacific Pioneer sought relief in the California Court of Appeal, arguing that while Code of Civil Procedure section 116.710 precludes a non-appearing defendant from appealing a small claims judgment, the statute nevertheless gives the defendant’s insurer the right to appeal. Pacific Pioneer thus asked the appellate court to issue an order requiring the superior court to reinstate Pacific Pioneer’s notice of appeal.
Holding
The appellate court held that Pacific Pioneer was entitled to appeal the default judgment entered against Johnson in the small claims court. In so holding, the appellate court relied on Code of Civil Procedure section 116.710, which governs appeals in small claims actions. Subdivision (c) expressly gives “the insurer of the defendant” the right to appeal any small claims judgment over $2,500, while subdivision (d) precludes “a defendant” who does not appear at the hearing from appealing the judgment. Thus, pursuant to the clear statutory language, “the defendant” who fails to appear at the smalls claims hearing gives up the right to appeal (subdivision (d)), but “the insurer of the defendant” still has a right to appeal (subdivision (c)). Accordingly, the appellate court issued an order requiring the superior court to reinstate Pacific Pioneer’s appeal of the small claims default judgment against Johnson.
Comment
The purpose of Code of Civil Procedure section 116.710 is to protect an insurer in situations where the insured is either unable or unmotivated to defend against a small claims action. Allowing the insurer to appeal assures that someone will scrutinize the plaintiff’s damage claim and diminishes the likelihood that the plaintiff and defendant will act in collusion.