Reed

After commencement of trial in this case, the court granted plaintiff J.A.T. Entertainment, Inc.’s motion pursuant to Code of Civil Procedure section 581, subdivision (e), to dismiss without prejudice its complaint against Donald L. Reed. The court thereafter denied Reed’s motion to set aside the dismissal.

Reed contends that the trial court erred in refusing to grant relief under the “mandatory provisions” of section 473, subdivision (b), and abused its discretion in denying him relief under that section’s “discretionary” provisions. For reasons we shall explain, Reed’s first contention has merit. We shall reverse the dismissal without prejudice and remand for further proceedings.

Facts and Procedural Background

The underlying dispute, the details of which are not material to this appeal, involves the purchase and sale of a video business in Turlock known as “Mr. Video." For the purposes of this analysis, we need only recite that in one of the resulting actions, J.A.T. Enterprises, Inc. (J.A.T.) sued D.L.R., Inc., and Reed for breach of contract based on a $70,000 promissory note executed by D.L.R., Inc. J.A.T. alleged in its third cause of action that Reed was…