Judge Barbara M. Scheper, Case 22STCV16870 2022-10-27 Tentative Ruling

Judge: Barbara M. Scheper, Case: 22STCV16870, Date: 2022-10-27 Tentative Ruling

Case Number: 22STCV16870 Hearing Date: October 27, 2022 Dept: 30

Dept. 30

Calendar No.

Creditors Adjustment Bureau, Inc. vs. Indie Source, Inc., et. al., Case No. 22STCV16870

Tentative Ruling re: Defendant’s Motion to Set Aside Default

Defendant Indie Source, Inc. (Defendant) moves for an order setting aside the default entered against it on September 7, 2022. The motion is granted. Defendant is ordered to answer within ten (10) days of today’s date.

Under Code of Civil Procedure section 473, subdivision (b): “the court may, upon any terms as may be just, relieve a party or his or her legal representative from a judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect. Application for this relief shall be accompanied by a copy of the answer or other pleading proposed to be filed therein, otherwise the application shall not be granted, and shall be made within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken.” To obtain discretionary relief under section 473, subdivision (b), the party moving for relief on the basis of “mistake, inadvertence, surprise, or excusable neglect” must show specific facts demonstrating that one of these conditions was met. (Hopkins & Carley v. Gens (2011) 200 Cal.App.4th 1401, 1410.)

“Notwithstanding any other requirements of this section, the court shall, whenever an application for relief is made no more than six months after entry of judgment, is in proper form, and is accompanied by an attorney’s sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect, vacate any (1) resulting default entered by the clerk against his or her client, and which will result in entry of a default judgment, or (2) resulting default judgment or dismissal entered against his or her client, unless the court finds that the default or dismissal was not in fact caused by the attorney’s mistake, inadvertence, surprise, or neglect.” (Code Civ. Proc. § 473, subd. (b).)

“Section 473 is often applied liberally where the party in default moves promptly to seek relief, and the party opposing the motion will not suffer prejudice if relief is granted. [Citations.] In such situations ‘very slight evidence will be required to justify a court in setting aside the default.’ [Citations.] [¶] Moreover, because the law strongly favors trial and disposition on the merits, any doubts in applying section 473 must be resolved in favor of the party seeking relief from default.” (Fasuyi v. Permatex, Inc. (2008) 167 Cal.App.4th 681, 695.)

Plaintiff Creditors Adjustment Bureau, Inc. (Plaintiff) served its summons and complaint on Defendant on July 13, 2022. The summons and complaint were received by Jesse Dombrowiak, the Chief Operations Officer for Defendant. (Dombrowiak Decl. ¶ 2.) Dombrowiak mistakenly believed that Defendant was only required to attend the hearing for the Case Management Conference on October 20, 2022. (Dombrowiak Decl. ¶ 3.)

In late August 2022, Defendant’s current counsel had a telephone conversation with Dombrowiak regarding a separate arbitration matter in which counsel was representing Defendant. Dombrowiak mentioned the current lawsuit to counsel. (Frost Decl. ¶ 2.) Counsel did not follow up with Dombrowiak after that call. (Frost Decl. ¶ 4.)

After receiving the Request for Entry of Default on September 12, 2022, Dombrowiak realized that Defendant may have missed a deadline for response. Defendant retained its current counsel two days later. (Dombrowiak Decl. ¶¶ 5-6.)

The Court finds that the evidence is sufficient to justify mandatory relief under section 473. Defense counsel states, “given that my firm was providing Defendant in other pending, ongoing arbitration matter, I assumed responsibility for handling this new matter,” and that due to his failure to follow up with Defendant, no response was filed. (Frost Decl. ¶ 7.) While the entry of default was not wholly caused by defense counsel’s mistake, section 473 “merely requires that the attorney's conduct be a cause in fact of the entry of default, but it does not indicate that it must be the only cause.” (SJP Limited Partnership v. City of Los Angeles (2006) 136 Cal.App.4th 511, 519.) Defense counsel’s failure to properly advise Defendant regarding this suit constitutes “mistake, inadvertence, surprise, or neglect” resulting in default, and so relief is mandatory.

Accordingly, the motion to set aside default is granted.

“The court shall, whenever relief is granted based on an attorney's affidavit of fault, direct the attorney to pay reasonable compensatory legal fees and costs to opposing counsel or parties.” (Code Civ. Proc. § 473, subd. (b).) Additionally, “[w]henever the court grants relief from a default, default judgment, or dismissal” pursuant to section 473, the court may: “(A) Impose a penalty of no greater than one thousand dollars ($1,000) upon an offending attorney or party. (B) Direct that an offending attorney pay an amount no greater than one thousand dollars ($1,000) to the State Bar Client Security Fund.

In addition to a penalty of $1,000 against Defendant’s counsel pursuant to section 473(c)(1)(A), Plaintiff requests an award of monetary sanctions for reasonable attorney’s fees in the amount of $2,600, based on an hourly rate of $500, for 5.2 hours to draft the opposition, review the reply, and appear at the hearing. (Anderson Decl. ¶ 4.)

In light of the well-established policy of liberality in granting relief from default, it appears to the Court that a stipulation to set aside the default should have been accepted by Plaintiff thus obviating the need for the opposition to this motion. Accordingly, the request for sanctions is denied.