Judge: Blaine K. Bowman, Case: 37-2023-00020670-CU-BC-NC, Date: 2023-12-08 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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SOUTH BUILDING TENTATIVE RULINGS - December 07, 2023

12/08/2023  10:00:00 AM  N-31 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Blaine K. Bowman

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Civil - Unlimited  Breach of Contract/Warranty Motion Hearing (Civil) 37-2023-00020670-CU-BC-NC MID-CENTURY INSURANCE COMPANY VS. DEVELOSCAPES LANDSCAPE LLC CAUSAL DOCUMENT/DATE FILED: Ex Parte Application for Order to Set Aside Judgment by Court,

11/15/2023 The Motion to Set Aside and Vacate Default Judgment brought by defendants Fernando Morales (Mr.

Morales) and his company, Develoscapes Landscape LLC (Develoscapes) is DENIED without prejudice.

The Objections to Evidence brought by plaintiff Mid-Century Insurance Company (Plaintiff) are disposed as follows: Objection No. 1: Sustained as to the client's 'financial issues,' but otherwise overruled Objection No. 2: Sustained Background This is a lawsuit to collect unpaid premiums on a workers' compensation insurance policy. Default was entered against Mr. Morales and Developscapes (collectively, Defendants) on September 29, 2023.

(ROA 14.) Thereafter, default judgment was entered against Defendants on November 3, 2023. (ROA 26.) Shortly thereafter, on November 15, 2023, Defendants filed an ex parte application seeking to set aside the default judgment. Instead of granting that request on an ex parte basis, this Court set this matter for hearing as a formal law and motion matter and set a briefing schedule. The insurance company that issued the workers' compensation policy, plaintiff Mid-Century Insurance Company (Plaintiff), has opposed.

The standard for prevailing on a request to set aside is very liberal.

Policy favoring relief: However, doubtful cases are usually resolved in favor of granting relief: '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.' (Weil and Brown, California Practice Guide: Civil Procedure Before Trial (The Rutter Group, 2023) ¶ 5:402, quoting Elston v. City of Turlock (1985) 38 Cal.3d 227, 233 (superseded by statute on other grounds), also citing Fasuyi v. Permatex, Inc. (2008) 167 Cal.App.4th 681, 696.) Indeed, 'very slight evidence' is sufficient to support a trial court order setting aside a default when reviewed on appeal. (Weil and Brown, California Practice Guide: Civil Procedure Before Trial (The Rutter Group, 2023) ¶ 5:415, quoting Shamblin v. Brattain (1988) 44 Cal.3d 474, 478, also citing Misc v. Segars (1995) 37 Cal.App.4th 1149, 1154, also citing Purdum v. Holmes (2010) 187 Cal.App.4th 916, 922.) Calendar No.: Event ID:  TENTATIVE RULINGS

3052959 CASE NUMBER: CASE TITLE:  MID-CENTURY INSURANCE COMPANY VS. DEVELOSCAPES  37-2023-00020670-CU-BC-NC Despite this highly favorable standard, the record before this Court requires a closer analysis. In opposition, Plaintiff argues that Defendants have not provided evidence that establishes 'mistake' or 'excusable neglect' as required by the statute under which they are seeking relief – Code of Civil Procedure § 473(b). In the first instance, Plaintiffs argue that this is because the declaration in support of the motion is provided by Defendants' counsel – not by Defendants themselves. Defense counsel does not have firsthand knowledge of facts such as: (1) that there was a death in Mr. Morales' family, or (2) that there were 'financial issues' that 'delayed' Mr. Morales from seeking an attorney. Vague as the phrase 'financial issues' is, and without any supporting evidence – such as that defense counsel had access to certain financial statements or something of that nature – Plaintiff's evidentiary objection to the declaration provided by counsel appears to be meritorious.

More troublingly, there is a complete dearth of information as to when Defendants actually learned of the lawsuit. As provided by Plaintiff, there is some authority for the proposition that silence, or the failure to produce evidence that a forthright litigant would produce when seeking the relief in question, can be interpreted as inexcusable neglect. (Opposition, citing Ray Kizere Construction Co. v. Young (1968) 257 Cal.App.2d 766, 768-769, also citing Witkin, California Evidence (2d ed., 1966), p. 1044, quoting Shapiro v. Equitable Life Assur. Soc. (1946) 76 Cal.App.2d 75, 94.) Then again, most of these authorities predate the highly liberal standard set forth in Elston v. City of Turlock (1985) 38 Cal.3d 227 (superseded by statute on other grounds).

The facts here describe a default judgment against Defendants who moved very quickly to seek to set aside – but the key emphasis needs to be on the fact that that is only as to the default judgment. The actual default in this case was entered about a month before the default judgment, and thus about a month-and-a-half from the filing of the instant motion.

The evidence provided by the party seeking relief, which is in the form of a declaration by counsel, indicates as follows: 1. On October 17, 2023, I received a text from my client with an image of a case management statement for this matter. Mr. Morales claimed he did not know what this document was about. I immediately contacted Plaintiff's counsel and explained that my firm would be representing the Defendants in this matter and requested a good time for a phone call. (ROA 29, ¶ 1.) But other evidence indicates that Defendants were served with the summons and complaint – albeit via substituted service – on July 7, 2023. (ROAs 8 and 9.) There is no recitation that Defendants did not receive that service. There is no clear statement was to when Defendants did learn of the lawsuit.

Even in that dearth of evidence, given the 'very slight' standard and the fact that Defendants moved pretty quickly (within two weeks of the default judgment being entered), this Court would be inclined to grant the requested relief. However, that dearth of evidence creates at least the impression that Defendants may have deliberately delayed – perhaps preferring to negotiate rather than to begin paying filing fees to participate in the litigation. Without clear evidence, speculation as to the precise reasons for the delay would be folly. What is not speculative is the fact that Defendants' present motion does not actually resolve the entire issue. Specifically, there has been both entry of default and entry of a default judgment against Defendants in this case, and the present motion seeks to set aside only the default judgment. If granted as requested, the entry of default will remain.

This status somewhat conflicts with the relief requested, as Defendants have submitted a proposed General Denial. (ROA 28, Ex. 1.) Defendants cannot file a General Denial while they remain in technical default.

While mindful of the favorable standard for setting aside a default judgment on grounds of inadvertence or excusable neglect, the request presently made by Defendants falls short, both in terms of providing sufficient evidence and in terms of actually getting the litigation moving. Moreover, given that the default Calendar No.: Event ID:  TENTATIVE RULINGS

3052959 CASE NUMBER: CASE TITLE:  MID-CENTURY INSURANCE COMPANY VS. DEVELOSCAPES  37-2023-00020670-CU-BC-NC was entered on September 29, 2023, there is still time for Defendants to file another motion for relief from default correcting and addressing these failures without running afoul of the six-month time frame set forth in Code of Civil Procedure § 473(b). As such, in a careful exercise of discretion, the Court denies the present motion without prejudice as it presently does not provide sufficient evidence or resolve the full legal issue, but it appears that both of those deficiencies can be corrected.

As a final note, the Court reminds both parties that, as set forth above, motions to set aside are routinely granted. While there are some deficiencies that exist in the present motion, and given that there is still time for them to be resolved without running afoul of the timeline (such that a manifest injustice will not result from denying the present motion without prejudice), California law still has a strong preference for trial on the merits such that, if Defendants are able to adequately address the deficiencies herein, a stipulation of the parties to get this case at issue would be an appropriate and expedient way to move forward with reaching the merits of the case.

On the other hand, to the extent that the briefing seems to suggest that Defendants have delayed due to 'financial issues,' financial difficulties are no excuse for creating artificial delays when it comes to reaching the merits of a lawsuit.

Unless the ruling(s) above indicate that an appearance is necessary, parties who wish to submit, who are satisfied with the above tentative ruling(s), and/or who do not otherwise wish to argue the motion(s) are encouraged to give notice to the Court and each other of their intention not to appear.

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