Judge: Daniel S. Murphy, Case: 22STCV11898, Date: 2022-08-12 Tentative Ruling

Case Number: 22STCV11898    Hearing Date: August 12, 2022    Dept: 32

BACKGROUND

            On April 7, 2022, Plaintiff Tekzenmusic, Inc. filed this action against Defendants JRC Entertainment, LLC and Scott Samuel Braun, alleging (1) breach of contract, (2) promissory estoppel, and (3) intentional interference with contract. The action arises out of allegedly unpaid work that Plaintiff performed on singer Justin Bieber’s album.

            According to a proof of service filed with the Court on May 9, 2022, Plaintiff served Defendant Braun by substitute service at a business address located in Santa Monica. Defendant did not answer the complaint, and the clerk entered a default against Defendant on June 9, 2022. On July 8, 2022, Defendant filed the instant motion to set aside the default on the grounds that service was improper and he did not receive actual notice of the lawsuit.

LEGAL STANDARD

            “When service of a summons has not resulted in actual notice to a party in time to defend the action and a default or default judgment has been entered against him or her in the action, he or she may serve and file a notice of motion to set aside the default or default judgment and for leave to defend the action.” (Code Civ. Proc., § 473.5, subd. (a).) The motion must be made within a reasonable time, but in no event exceeding the earlier of: (i) two years after entry of default; or (ii) 180 days after written notice of the default judgment. (Ibid.) The motion must “be accompanied by an affidavit showing under oath that the party’s lack of actual notice in time to defend the action was not caused by his or her avoidance of service or inexcusable neglect.” (Id., § 473.5, subd. (b).)  

DISCUSSION

            Defendant avers that the Santa Monica address houses two businesses which he sold in April 2021, Scooter Braun Projects LLC and Ithaca Holdings. (Braun Decl. ¶ 2.) Defendant avers that he has not regularly worked at the Santa Monica office since the start of the pandemic and rarely visits the location. (Id., ¶ 3.) Defendant denies receiving notice that he had been named in a lawsuit or that there was any effort to serve him at the Santa Monica address or any other location. (Id., ¶¶ 4-5.) Defendant avers that he first learned of the lawsuit when he was forwarded an email from the agent for service of process for the other defendant, JRC Entertainment. (Id., ¶ 6.)

            Defendant argues that service was improper because substitute service is only available where the “summons and complaint cannot with reasonable diligence be personally delivered” to the defendant. (Code Civ. Proc., § 415.20, subd. (b).) Defendant points out that there was no effort to locate him at another address, even after the process server was told twice at the Santa Monica address that Defendant was not there and rarely is. (See May 9, 2022 Proof of Service, p. 3.) Additionally, Defendant argues that substitute service must be effectuated at a person’s “dwelling house, usual place of abode, [or] usual place of business . . . .” (Code Civ. Proc., § 415.20, subd. (b).) Defendant argues that the Santa Monica address is not his usual place of business because he has not regularly worked there for two years. (See Braun Decl. ¶ 3.)

            Plaintiff’s evidence in opposition does not establish that the Santa Monica address is Defendant’s regular place of business or that Defendant received actual notice of the lawsuit, especially in light of Defendant’s sworn declaration to the contrary. (See Lasalle v. Vogel (2019) 36 Cal.App.5th 127, 140 [“where there would have been no real prejudice had the set-aside motion been granted, the rule is that a party's negligence in allowing a default to be taken in the first place will be excused on a weak showing”].)

            Plaintiff first cites to an email its counsel sent on March 28, 2022 in which Defendant appears to be one of the recipients. (Lifschitz Decl., Ex. 1.) Attached to the email was a letter threatening to initiate litigation if the parties were unable to settle the matter informally. Attached to the letter was a draft complaint mirroring the one filed on April 7, 2022. Assuming Defendant received and read this email, it does not mean that Defendant was aware of the lawsuit actually being filed. This email does not negate Defendant’s declaration that he did not know he had been actually named in a lawsuit and never received service. (See Braun Decl. ¶ 4.)

            Plaintiff also relies on an online article about the lawsuit which contains statements from Defendant’s representative denying the allegations. (Lifschitz Decl., Ex. 2.) Plaintiff argues that the article represents Defendant responding to the substantive merits of the suit and thus demonstrates his actual knowledge of the action. However, a purported statement about the lawsuit by Defendant’s representative, appearing in an online article, is not evidence that Defendant himself had actual knowledge of the suit. Again, Defendant denies having actual knowledge. (See Braun Decl. ¶ 4.)

            Plaintiff next cites to other online articles mentioning Defendant’s connection to the companies SB Projects and Ithaca Holdings, and a corporate Statement of Information listing the address for Ithaca Holdings as the Santa Monica address. (Lifschitz Decl., Ex. 3-5.) These unverified articles are not reliable evidence that Defendant regularly operates out of the Santa Monica address, especially in light of Defendant’s sworn declaration to the contrary. Nothing in the documents verifies that Defendant is the current owner or a top executive at either company, as Plaintiff claims. SB Projects’ website mentioning Defendant as its founder similarly says nothing about Defendant’s current affiliation with the companies. (See Lifschitz Decl., Ex. 6.)

            Lastly, the texts and missed calls between Plaintiff’s CEO and Defendant do not mention any dispute or lawsuit and show nothing about Defendant’s knowledge of the present action. (See O’Ryan Decl., Ex. 1-2.)  

            In light of these circumstances, the Court finds that Defendant lacked actual notice of the action and that such failure was not caused by avoidance or inexcusable neglect. (See Code Civ. Proc., § 473.5, subd. (c).) “The law favors judgments based on the merits, not procedural missteps. Our Supreme Court has repeatedly reminded us that in this area doubts must be resolved in favor of relief, with an order denying relief scrutinized more carefully than an order granting it.” (Lasalle, supra, 36 Cal.App.5th at p. 134, emphasis in original.)

CONCLUSION

            Defendant Scott Samuel Braun’s motion to set aside default is GRANTED.