What is the legal test for dismissing an action on procedural grounds?

We recognize that "[i]t is the policy of the law to dispose of litigation on its merits rather than on procedural grounds." (Dick v. Superior Court, supra, 185 Cal.App.3d 1159, 1168, 230 Cal.Rptr. 297.) Further, section 583.130 provides in part that "the policy favoring trial or other disposition of an action on the merits [is] generally to be preferred over the policy that requires dismissal for failure" to prosecute an action with reasonable diligence.

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