Judge Bruce G. Iwasaki, Case Number: 22STCV01714, Date: 2024-11-08 Tentative Ruling

Tentative Ruling: The Motion to Vacate and Set Aside Default is denied.

This is a breach of contract and fraud action in which landlord Plaintiffs Chaehoon Song and Booyean Song (Plaintiffs) allege that tenant Defendants Lonnie Wall, W2K Properties, LLC and Leslie Wall (Defendants) improperly used the real property located at 1452 and 1454 E. 23^rd Street, Los Angeles, CA (Property) as transitional housing and failed to pay rent.

After granting a motion for terminating sanctions, this Court struck all Defendants’ Answers and entered default on January 5, 2023.

Thereafter, Plaintiffs moved for entry of default judgment. Following three attempts, the Court entered default judgment on July 14, 2023.

On January 10, 2024, Defendants Lonnie Wall, W2K Properties, LLC and Leslie Wall moved to set aside the entry of default judgment. Plaintiffs opposed the motion. No reply was filed. On February 21, 2024, after hearing oral argument, the Court granted Defendants’ motion to set aside default judgment. (02/21/24 Minute Order.) The Court, however, ordered Defendants’ counsel to pay attorneys’ fees and costs in the sum of $6,500.00 to Plaintiffs on or before March 1, 2024. (02/21/24 Minute Order at p. 5.) The Court vacated the default and default judgment entered against Defendants. (02/21/24 Minute Order at p. 6.)

On April 5, 2024, Plaintiffs filed and served a Motion for Terminating Sanctions, or in the Alternative, Motion to Compel Discovery and Request for Sanctions. Plaintiffs again requested an order striking the answers of Defendants, an order reinstating the defaults against all Defendants and reinstatement of the previously entered judgment against all Defendants, and an order imposing sanctions against Defendants and their counsel in the amount of $13,000.00, representing $6,500.00 unpaid from the prior order and $6,500.00 for the instant motion. Defendants filed no opposition to the motion for terminating sanctions. Notice of the motion was served on their attorney.

The Court granted Plaintiffs’ request for terminating sanctions and struck Defendants’ answers and entered default against Defendants. Plaintiffs’ request for monetary sanctions was granted in the reduced amount of $9,500.00 to be paid to Law Offices of Alexander Geiman, by Defendants and their counsel of record, Gary Saunders, jointly and severally, no later than June 21, 2024.

Then, on October 15, 2024, Defendants Lonnie Wall, W2K Properties, LLC and Leslie Wall moved to set aside the entry of default and default judgment. Plaintiffs filed an opposition. No reply was filed.

The motion to set aside and vacate the entry of default and default judgment is denied.

Code of Civil Procedure section 473, subdivision (b) provides for either discretionary or mandatory relief from certain prior actions or proceedings in the trial court. (Luri¿v. Greenwald¿(2003) 107 Cal.App.4th 1119, 1124.)¿¿

“ ‘Under the discretionary relief provision, on a showing of “mistake, inadvertence, surprise, or excusable neglect,”¿the court has discretion to allow relief from a “judgment, dismissal, order, or other proceeding taken against”¿a party or his or her attorney.¿¿Under the mandatory relief provision, on the other hand, upon a showing by attorney declaration of “mistake, inadvertence, surprise, or neglect,”¿the court shall vacate any “resulting default judgment or dismissal entered.” ’ [Citation.] Applications seeking relief under the mandatory provision of section 473 must be ‘accompanied by an attorney’s sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect.’ The mandatory provision¿further adds that ‘whenever relief¿is granted based on an attorney’s affidavit of fault [the court shall] direct the attorney to pay reasonable compensatory legal fees and costs¿to opposing counsel or parties.’¿” (Ibid.; Code Civ. Proc., § 473, subd. (b).)¿¿

Defendants seek relief pursuant to the mandatory provision of Code of Civil Procedure section 473, subdivision (b), and based on the Court’s inherent equitable powers.

Plaintiffs’ counsel filed a motion for terminating sanctions, alleging that Defendants had not complied with the order of payment and had not responded to a second set of discovery. Defendants’ motion argues that Plaintiffs committed a “fraud” upon the court by representing that no discovery responses had been served on his office, and the $6,500.00 in sanctions had not been paid. (Saunders Decl., ¶ 8.) The issue, though is whether Defendants failed to pay the entire monetary sanction the Court ordered; there is no dispute that Defendants did not pay $3,000 of the total order.

It is true that “[a] judgment, whether obtained by litigation or by consent, may be attacked where extrinsic fraud was employed to secure it. Extrinsic fraud is present where a party to a lawsuit has been denied a fair adversary hearing on the merits of the case through no fault of his own.” (Civic Western Corp. v. Zila Industries, Inc. (1977) 66 Cal.App.3d 1, 19.)

However, Defendants’ evidence fails to show any extrinsic fraud, that they were denied a fair hearing, or that Defendants were without “fault” in the Court’s determination to – again—grant Plaintiffs’ motion for terminating sanctions.

That is, Defendants’ own evidence confirms that Defendants did not timely comply with the Court ordered monetary sanctions and the motion is silent as to when discovery responses were served.[1] Therefore, Defendants own evidence confirms that no fraudulent or false statements were made by Plaintiffs’ counsel.

Moreover, even assuming Plaintiffs’ counsel representations to the Court on the May 21, 2024 hearing were inconsistent with his “duty of candor,” these representations did not deprive Defendants of a fair hearing. In fact, Defendants were represented at the hearing for the Motion for Terminating Sanctions and were given the opportunity to be heard.

Defendants also seek relief based on attorney neglect under the mandatory provision of Section 473. However, Defendants’ declaration in support of relief under this mandatory provision is inadequate.

Here, Defendants’ counsel’s evidence states, in a conclusory manner, that he missed filing an opposition to the motion for terminating sanctions “because of the absence of my primary paralegal for the last five years who left the office during the second week of March, 2024.” (Saunders Decl., ¶ 12.) Defendants’ counsel’s then goes on to reference the opposition to the motion for terminating sanctions wherein he provides an excuse for the failure to comply with discovery obligations, court orders and submitting a timely opposition. (5/20/24 Saunders Decl., ¶¶ 3-8.)

While the bar for mandatory relief under Section 473 is not high, it does require “indispensable admission by counsel ... that his error resulted in the entry of default or dismissal” (State Farm Fire & Casualty Co. v. Pietak (2001) 90 Cal.App.4th 600, 609.) Here, the declaration appears deliberately vague and fails to take clear responsibility for the defects that resulted in the Court’s granting the motion for terminating sanctions. (Saunders Decl., ¶¶ 2-12.)

In the absence of adequate evidence, Defendants are not entitled to relief under the mandatory provision. (Henderson v. Pacific Gas & Electric Co. (2010) 187 Cal.App.4th 215, 226 [“The defaulting party “must submit sufficient evidence that the default was actually caused by the attorney's error. [Citation.]’ ”].)

Unlike the prior motion to set aside, the problem is not only Defendants’ failure to provide a timely opposition to the discovery motion. Importantly, the evidence also shows late responses to a second set of discovery and failure to timely comply with court ordered monetary sanctions. It was these actions that in the aggregate formed the basis for the Court’s decision to grant the motion for terminating sanctions and these actions to which Defendants’ counsel has failed to clearly demonstrate attorney error.

Plaintiffs also request sanctions pursuant to Code of Civil Procedure section 128.7. This request for sanctions, made in the opposition papers, fails to comply with the procedural requirements of this statute. (Transcon Financial, Inc. v. Reid & Hellyer, APC (2022) 81 Cal.App.5th 547, 550.)

The opposition also cites Code of Civil Procedure section 128.5, although no legal analysis or argument was specifically made with respect to this statute. However, unlike Section 128.7, this statute does not require a separate motion. As such, the Court will consider the request for sanctions under this statute.

Section 128.5's requirements are demanding. For example, it explicitly requires that “[a]n order imposing [sanctions] shall be in writing and shall recite in detail the action or tactic or circumstances justifying the order.” (Code Civ. Proc., § 128.5, subd. (c).) Most relevant here, Section 128.5 specifies its sanctions must be based on “expenses ... incurred ... as a result of actions or tactics, made in bad faith, that are frivolous or solely intended to cause unnecessary delay” (§ 128.5, subd. (a)), with “ ‘[f]rivolous’ ” defined as “mean[ing] totally and completely without merit or for the sole purpose of harassing an opposing party” (Code Civ. Proc., § 128.5, subd. (b)(2)).

Here, the evidence does not show that Defendants’ motion to set aside was made in bad faith. That is, while the motion has ultimately been found lacking, it cannot be said to be frivolous. Nor does the evidence show that the motion was intended as a delay tactic, either.

Defendants’ motion to set aside the entry of default and default judgment is denied. Plaintiff’s request for sanctions is denied.

[1] The Opposition to the motion for sanctions, which the Court declined to consider because it was so late, claimed service of discovery responses one day before the May 21, 2024 hearing.