Judge Alison Mackenzie, Case Number: 20STCV12973, Date: 2024-03-21 Tentative Ruling

Judge: Alison Mackenzie, Case: 20STCV12973, Date: 2024-03-21 Tentative Ruling

Case Number: 20STCV12973 Hearing Date: March 21, 2024 Dept: 55

NATURE OF PROCEEDINGS: Motion of Defendant Roof Supply G&F San Diego to Set Aside Default and Related Orders; Motion of Defendant Angel Garcia to Vacate Default.

BACKGROUND

In this case, Plaintiffs Magnolia Apartments, Inc., Balboa Pointe Apts., Inc., 2175 S. Mallul Drive, LLC, and Hacienda Garden Apartments, Inc. (collectively, “Plaintiffs”) seek damages from Defendants Altura Roofing Corp., Angel Garcia (“Defendant Garcia”), and Roof Supply G&F San Diego (“Defendant Roof Supply”) related to a roof construction project. Defendant Roof Supply filed a First Amended Cross-Complaint (“FACC”) against some of the Plaintiffs as well as Defendants Altura and Garcia.

Defendant Garcia has filed a motion to set aside entry of default. Plaintiffs have not opposed the motion. Separately, Defendant Roof Supply has filed a motion to set aside entry of default, which included an order dismissing Defendant Roof Supply’s FACC. Plaintiffs oppose Defendant Roof Supply’s motion. The Court’s tentative pertains to both motions.

LEGAL STANDARD

A court may relieve a party from a default due to “mistake, inadvertence, surprise, or excusable neglect” if the party seeking relief files a motion within six months from the date default is entered. CCP § 473(b); Kramer v. Traditional Escrow, Inc. (2020) 56 Cal.App.5th 13, 28.

Excusable neglect supporting relief from default exists where the party acted as a reasonably prudent person would under the circumstances. Hearn v. Howard (2009) 177 Cal.App.4th 1193, 1206. Orders denying relief under Code of Civil Procedure Section 473 are scrutinized on appeal more carefully than orders granting and enabling a resolution on the merits. E.g., Henderson v. Pacific Gas and Elec. Co. (2010) 187 Cal.App.4th 215, 230.

In addition to the statutory grounds set forth in CCP § 473, at any time “courts have the inherent authority to vacate a default and default judgment on equitable grounds such as extrinsic fraud or extrinsic mistake.” Kramer, 56 Cal.App.5th at 29 (internal quotes omitted). “One ground for equitable relief is extrinsic mistake—a term broadly applied when circumstances extrinsic to the litigation have unfairly cost a party a hearing on the merits.” Rappleyea v. Campbell (1994) 8 Cal.4th 975, 981. “Extrinsic mistake is found when [among other things] ... a mistake led a court to do what it never intended.” County of San Diego v. Gorham (2010) 186 Cal.App.4th 1215, 1229 (internal quotation omitted).

ANALYSIS

Defendant Garcia

The Court entered default against Defendant Garcia on 7/20/2020. Defendant Garcia filed his answer to the Complaint on 7/31/2020 and the Court accepted the Answer for filing even though default had been entered days beforehand. Nearly four years later, Defendant Garcia seeks relief from the entry of default under the Court’s inherent authority.

The entry of default “cuts off the defendant’s right to take further affirmative steps such as filing a pleading or motion, and the defendant is not entitled to notices or service of pleadings or papers.’" Sporn v. Home Depot USA, Inc. (2005) 126 Cal. App. 4th 1294, 1301. As explained in the declaration of Defendant Garcia’s counsel, he was unaware that Defendant Garcia’s default had been taken because the Court accepted the Answer for filing and continued to accept filings from Defendant Garcia over the next several years. Plaintiffs’ counsel never challenged Defendant Garcia’s participation in the lawsuit.

These circumstances establish that a mistake occurred when the Court both entered default and accepted Defendant Garcia’s Answer. This mistake was compounded when Plaintiffs failed to raise the issue at any time during the proceeding four years of litigation. Defendant Garcia should be relieved from entry of default due to this mistake on the part of the Court. Indeed, Plaintiffs do not oppose the motion though they refused to stipulate to set aside the default. The Court therefore grants Defendant Garcia’s motion. Given that Defendant Garcia has already filed an Answer in this case, no further action is necessary on the part of Defendant Garcia.

Defendant Roof Supply

On 11/28/23, the Court issued an order striking Defendant Roof Supply’s Answer, entering its default, and dismissing its FACC. The Court took this action after finding that it had granted an order in 2/23 relieving Defendant Roof Supply’s former counsel, that Defendant Roof Supply had no counsel of record in the case as of 11/28/23, and Defendant Roof Supply did not appear at the 11/28/23 hearing.

Defendant Roof Supply, which has retained counsel, timely sought relief under Section 473(b) based on surprise and/or excusable neglect. (It also seeks relief under Section 473(d), but the Court does not need to reach that argument.) The Court finds that Defendant Roof Supply has adequately demonstrated surprise and/or excusable neglect for failing to obtain counsel and appear at the 11/28/23 hearing. Defendant Roof Supply has demonstrated in its supporting declarations that it reasonably thought settlement was imminent and so did not obtain new counsel after prior counsel left the case in early 2023. The documentary evidence provided by Defendant Roof Supply shows the parties were actively engaged in settlement discussions throughout 2023. Defendant Roof Supply correctly notes that Plaintiffs never filed any notice showing that they gave Defendant Roof Supply notice of the 11/28/23 hearing, a fact Plaintiffs do not dispute in their opposition.

Plaintiffs contend that relieving Defendant Roof Supply from this Court’s 11/28/23 order would prejudice Plaintiffs, who have obtained “a sense of closure” from the entry of default four months ago. That Plaintiffs may be deprived of their “sense of closure” does not constitute prejudice to them.

The reality is that the parties have litigated this case for years. Unbeknownst to this Court, Plaintiffs and Defendant Roof Supply actively engaged in settlement discussions throughout much of 2023. This Court, new to the case, inadvertently failed to notice that Plaintiffs had failed to give notice of the 11/28/23 hearing to Defendant Roof Supply. Under these circumstances, the Court exercises its discretion to vacate its 11/28/23 order and set aside the entry of default against Defendant Roof Supply and reinstate the Answer and FACC.

CONCLUSION

Both motions are granted.

The Court vacates and sets aside the default entered 7/20/20 against Defendant Garcia. His Answer, filed 7/30/20, is deemed filed as of that date.

The Court vacates and sets aside the order regarding default entered 11/28/23, as to Defendant Roof Supply. The Court reinstates Defendant Roof Supply’s Answer and its FACC.