Judge Deirdre Hill, Case 19TRCV00981 2023-02-08 Tentative Ruling

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Motion to Vacate and Set Aside Order Granting Motion to Deem Request for Admissions Admitted and for Sanctions

On November 1, 2019, Alcott Enterprises, LLC filed a complaint against Marakata, LLC for (1) breach of contract, and (2) common count: services rendered.

On October 20, 2020, the court granted Alcott Enterprises’ motion to deem the truth of the matters in the request for admissions admitted against Markata, LLC.

On January 14, 2021, the court denied plaintiff’s motion for summary judgment.

On August 9, 2022, the court granted plaintiff’s motions to deem requests for admissions admitted against defendants Hartley and Archie.

Under CCP §2033.300, (a) A party may withdraw or amend an admission made in response to a request for admission only on leave of court granted after notice to all parties.

(b) The court may permit withdrawal or amendment of an admission only if it determines that the admission was the result of mistake, inadvertence, or excusable neglect, and that the party who obtained the admission will not be substantially prejudiced in maintaining that party’s action or defense on the merits.

(c) The court may impose conditions on the granting of the motion that are just, including, but not limited to, the following:

(1) An order that the party who obtained the admission be permitted to pursue additional discovery related to the matter involved in the withdrawn or amended admission.

(2) An order that the costs of any additional discovery be borne in whole or in part by the party withdrawing or amending the admission.”

Defendants Marakata, LLC, David A. Hartley, and Alex Archie request that the court vacate and set aside the court’s orders dated October 2, 2020 and August 9, 2022 granting plaintiff’s motions to deem requests for admissions admitted and awarding sanctions under the mandatory provision of CCP §473(b) based on an attorney’s affidavit of fault. Defendants also cite to CCP §473(d) and CCP §2033.280.

As to defendant Marakata, LLC, on October 2, 2020, the court granted plaintiff’s motion to deem request for admissions admitted and awarded plaintiff sanctions in the amount of $560.00. There was no opposition to the motion and no appearance by defense counsel Robert McKernan.

As to defendants Hartley and Archie, on August 9, 2022, the court granted plaintiff’s motions to deem request for admissions admitted and awarded plaintiff sanctions in the amount of $310 from each defendant. There was no opposition to the motion and no appearance by defense counsel McKernan or defendants.

Defendants filed notices of substitution on November 21, 2022, substituting Robert Spitz for Robert McKernan.

According to former attorney McKernan’s declaration, on February 3, 2020, plaintiff served his office with the Request for Admissions, Set One as to Marakata, LLC and his office “inadvertently” failed to prepare and serve responses. The motion was served on September 3, 2020, but his office failed to prepare, serve, and file an opposition. His office failed to appear at the hearing. He states that defendant relied on his office as its attorney to handle every aspect of its defense in this action and to timely communicate “every aspect of this action” to defendant and that his office failed to adequately represent defendant. He states that the court order resulted from the negligence and fault of his office.

Further, according to attorney McKernan’s declaration, on April 11, 2022, plaintiff served his office with Requests for Admissions, Set One as to defendants Hartley and Archie. His office inadvertently failed to prepare and serve responses. His office also failed to prepare, serve, and file an opposition to the motions. His office failed to appear at the hearing. He states that the court orders resulted from the negligence and fault of his office. He requests that the court set aside the court orders due to his excusable neglect and inadvertence.

According to the declaration of defendant Archie, attorney McKernan never contacted him or Hartley in relation to the request for admissions served on February 3, 2020. He states that they did not know that discovery had been served, that a motion had been served, that a hearing was held, or of the court’s October 2, 2020 order. He states that McKernan failed to communicate with them.

According to defense counsel Robert Spitz, upon being retained, he prepared and served plaintiff with responses to the requests for admissions.

In opposition, plaintiff argues that Marakata cannot bring the motion as it is a suspended company. Further, plaintiff argues that former defense counsel’s declaration is “devoid of any facts” supporting the motion and does not show excusable neglect or inadvertence. Plaintiff asserts that defendant Archie’s declaration does not address the August 9, 2022 order as to him. Plaintiff also argues that it will be substantially prejudiced if the court grants the motion as it will continue to incur attorney’s fees and costs.

In reply, defendants reiterate that they are moving under the mandatory provision under CCP §473(b) and deny that the attorney’s declaration must show excusable neglect.

The court rules as follows: Although not cited by defendants, CCP §2033.300 is the applicable statute as the requests for admission have already been deemed admitted by the court and defendants are seeking to withdraw the “deemed admissions” with leave to court. After a “deemed admitted order” has been entered, the party in default may seek relief from waiver by filing a motion to withdraw or amend the “deemed admission” under section 2033.300. Wilcox v. Birtwhistle (1999) 21 Cal. 4th 973, 979 (applying former 2033(m)); Stover v. Bruntz (2017) 12 Cal.App.5th 19, 31 (applying the above to the current statutory scheme). “The trial court’s discretion in ruling on a motion to withdraw or amend an admission is not unlimited, but must be exercised in conformity with the spirit of the law and in a manner that serves the interests of justice. Because the law strongly favors trial and disposition on the merits, any doubts in applying section 2033.300 must be resolved in favor of the party seeking relief. Accordingly, the court’s discretion to deny a motion under the statute is limited to circumstances where it is clear that the mistake, inadvertence, or neglect was inexcusable, or where it is clear that the withdrawal or amendment would substantially prejudice the party who obtained the admission in maintaining that party’s action or defense on the merits.” New Albertson’s Inc. v. Superior Court (2008) 168 Cal. App. 4th 1403, 1420. The court notes that CCP §473(b) is inapplicable although “the legislative history of former section 2033, subdivision (m), the predecessor of section 2033.300 suggests that the Legislature intended ‘mistake, inadvertence, or excusable neglect’ to have the same meaning in the statute as those terms have in section 473, subdivision (b).” Id. at 1419. See also St. Paul Fire & Marine Ins. Co. v. Superior Court (1992) 2 Cal. App. 4^th 843, 852 (“[Former] Section 2033 supersedes section 473 as the avenue to obtain default relief in a situation of failure to respond to admissions requests.”) (disapproved on other grounds). Further, the mandatory relief provision based on an attorney’s affidavit of fault under CCP §473(b) only applies to a “resulting default” or “resulting default judgment or dismissal entered against his or her client.”

The court notes that CCP §2033.280 is not applicable as it relates to waiver of objections. CCP §473(d) is also not applicable as the orders were not “void.”

The court finds that as to defendant Marakata, LLC and the October 2, 2020 order, it may not defend itself in this action at this time as it is suspended. See Carey Melton decl., Exh. 7. “Revenue and Taxation Code section 23301 provides that ‘the corporate powers, rights and privileges of a domestic taxpayer may be suspended’ if it fails to pay ‘any tax, penalty, or interest . . . that is due and payable’ to the Franchise Tax Board. Except for filing an application for tax-exempt status or amending the articles of incorporation to establish a new corporate name, ‘a suspended corporation is disqualified from exercising any right, power or privilege.’” Cal-Western Business Services, Inc. v. Corning Capital Group (2013) 221 Cal. App. 4th 304, 310 (citing to Timberline, Inc. v. Jaisinghani (1997) 54 Cal. App. 4th 1361, 1365). “During the period that a corporation is suspended for failure to pay taxes, it may not prosecute or defend an action, appeal from an adverse judgment, seek a writ of mandate, or renew a judgment obtained prior to suspension. The purpose of Revenue and Taxation Code section 23301 is to ‘prohibit the delinquent corporation from enjoying the ordinary privileges of a going concern’, and to pressure it to pay its taxes.” Grell v. Laci Le Beau Corp. (1999) 73 Cal. App. 4th 1300, 1306 (citations omitted).

Further, former attorney Robert McKernan’s declaration in support of the motion to “vacate” the October 2, 2020 order is insufficient to show excusable neglect or inadvertence as discussed below.

As to the August 9, 2022 orders as to defendants Hartley and Archie, defendants present the declaration of former attorney McKernan. According to the case file, he was attorney of record until the substitutions of attorney were filed in November 2022, despite plaintiff’s argument that defense counsel had been substituted out in April 2022. Those purported substitutions were not filed and thus not effective. When the discovery was served and the motions were heard, attorney McKernan was still attorney of record. Thus, whether Hartley filed a declaration or Archie’s declaration failed to mention the August 9, 2022 order is immaterial, even though they were served with the motions and the notice of ruling.

Thus, the issue is whether former attorney McKernan’s declaration shows excusable neglect or inadvertence, as is required under CCP §2033.300(b). “In examining the mistake or neglect, the court inquires whether ‘a reasonably prudent person under the same or similar circumstances’ might have made the same error.” Bettencourt v. Los Rios Community College Dist. (1986) 42 Cal.3d 270, 276. “In determining whether an attorney’s error constitutes excusable neglect, the courts also consider the attorney’s overall diligence or lack thereof in addition to examining the attorney’s error.” Id. at 278. “’Conduct falling below the professional standard of care, such as failure to timely object or to properly advance an argument, is not therefore excusable. To hold otherwise would be to eliminate the express statutory requirement of excusability and effectively eviscerate the concept of attorney malpractice.’” Zamora v. Clayborn Contracting Group, Inc. (2002) 28 Cal. 4^th 249, 258 (citation omitted).

The court finds that former attorney McKernan’s declaration is insufficient to show excusable neglect or inadvertence. The declaration is conclusory and only states that his “office inadvertently failed to prepare and serve” responses; his office failed to prepare, serve, and file an opposition; his office failed to appear at the hearing; and his office failed to adequately represent defendants. He admits to “negligence and fault.” Failing to timely respond to discovery and failing to oppose the motions to deem request for admissions admitted are not excusable acts or omissions. He does not provide any reasonable explanation or excuse; thus, it is clear that his neglect was inexcusable.