Judge Cherol J. Nellon, Case Number: 23STCV18939, Date: 2024-06-05 Tentative Ruling

Judge: Cherol J. Nellon, Case: 23STCV18939, Date: 2024-06-05 Tentative Ruling

Case Number: 23STCV18939 Hearing Date: June 5, 2024 Dept: 14

Creditors Adjustment Bureau Inc. v. Deluxe Lifecote

Case Background

Plaintiff Creditors Adjustment Bureau, Inc. (“Plaintiff”) alleges that Defendant Deluxe Lifecote (“Defendant”) failed to pay for the installation, rental and removal of scaffolding. Plaintiff is a collection agency representing Pacific Scaffold Co., Inc. (“PSC”).

On August 9, 2023, Plaintiff filed a Complaint for (1) Open Book Account, (2) Account Stated, (3) Reasonable Value, and (4) Breach of Contract against Defendant and Does 1-10.

On November 15, 2023, the Court entered default of Defendant.

Defendant filed the instant motion on May 3, 2024.

No trial date has yet been set.

Instant Motion

Defendant now moves this court, per Code of Civil Procedure § 473(b), for an order setting aside its default and permitting it to file a responsive pleading.

Decision

The motion is GRANTED.

Governing Statute

Code of Civil Procedure § 473(b) provides in relevant part as follows: “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.…”

Discussion

The parties dispute whether service was proper, and whether the conduct of Defendant’s CEO constitutes neglect that is excusable.

Defendant was served by substituted service on October 2, 2023 at 20735 Superior St, Ste. D-5238 in Chatsworth, CA. (11/3/23 Proof of Service.) The process server left the documents with a certain Laisha Ortega, described as the “person in charge”, after informing her of the general nature of the papers. (Id.) The process server thereafter mailed the documents to the same address for the attention of Sagi Steven Adirim (“Adirim”). (Id.)

Adirim is the CEO and President of Defendant Deluxe Lifecote. (Adirim Decl., ¶ 1.) Adirim contends the address where Defendant was allegedly served is the address of a different company, albeit one that Adirim is affiliated with and where Defendant has a physical desk. Adirim contends that Defendant should have been served through its agent for service of process, who at the time was located in Diamond Bar, CA. (Id., ¶¶ 5-6; Exh. A.) Adirim contends that he learned about this lawsuit on March 13, 2024, when he visited the physical desk. (Id., ¶ 7.) Defendant retained counsel and discovered that it in suspended status with the CA Secretary of State and could not defend the suit. (Id., ¶ 8; Exh. B.) Adirim discovered that the suspension was the result of a mistake on behalf of the Franchise Tax Board. (Id., ¶ 9; Exh. C.) Defendant eventually regained good standing on April 22, 2024. (Id.)

Plaintiff vehemently opposes Defendant’s motion. Plaintiff contends, rightfully, that there is no requirement under CCP § 416.10 that service must first be attempted on the registered agent for a corporate defendant. Section 416.10 expressly states that service may be effected by service on a CEO. Plaintiff also attacks Defendant’s evidentiary bases for this motion, including the credibility of Adirim’s testimony and the conspicuous absence of a declaration from the receptionist who accepted substitute service. Plaintiff contends that Adirim’s conduct constitutes inexcusable gross negligence.

Nonetheless, the Court chooses to set this default aside in light of the strong public policy in favor of trying cases on their merits. Defendant raised meritorious defenses to the underlying claims. Defendant alleges that PCS, the scaffolding company that Plaintiff represents, refused to remove its scaffolding at Defendant’s construction site after being asked to remove them. Accordingly, Defendant argues, Plaintiff has no right to charge Defendant for the period during which the scaffolding was left on site when it was not needed. (Adirim Decl., ¶ 14.) Defendant’s motion is accompanied by a copy of the answer proposed to be filed in accordance with CCP § 473(b), and the motion is timely under sec 473(b).

Conclusion

Defendant complied with CCP § 473(b) and the policy of the law is that cases should be tried on their merits. Defendant is entitled to its day in court. Therefore, the motion is GRANTED. Answer to be filed within 10 days.