Judge: Donald F. Gaffney, Case: "Creditors Adjustment Bureau, Inc. v. Powertec Company, Inc.", Date: 2022-12-21 Tentative Ruling

TENTATIVE RULING: 

For the reasons set forth below, Defendants Powertec Company, Inc. and Adame Communications Inc.’s Motion to Set Aside Default and Default Judgment is GRANTED.

“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.” (Code Civ. Proc., § 473, subd. (b).)

The court has wide discretion to grant relief under the statute authorizing relief from a proceeding taken against a party through his or her mistake, inadvertence, surprise, or excusable neglect. (Toho-Towa Co., Ltd. v. Morgan Creek Productions, Inc. (2013) 217 Cal.App.4th 1096, 1111.) “‘A motion seeking such relief lies within the sound discretion of the trial court, and the trial court’s decision will not be overturned absent an abuse of discretion…. Section 473 is often applied liberally where the party in default moves promptly to seek relief, and the party opposing the motion will not suffer prejudice if relief is granted. [Citations.] In such situations, “very slight evidence will be required to justify a court in setting aside the default.” [Citations.] [¶] Moreover, 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. [Citations.] Therefore, a trial court order denying relief is scrutinized more carefully than an order permitting trial on the merits. [Citations.]’” (McCormick v. Board of Supervisors (1988) 198 Cal.App.3d 352, 359-360, superseded by statute, on other grounds, as discussed in Torrey Hills Community Coalition v. City of San Diego (2010) 186 Cal.App.4th 429, 441-442; New Albertsons, Inc. v. Superior Court (2008) 168 Cal.App.4th 1403, 1419-1420; accord, Behm v. Clear View Technologies (2015) 241 Cal.App.4th 1, 8.)

“[T]he trial court’s discretion to deny a motion for relief under section 473 based on the failure to establish excusable neglect is limited to circumstances where ‘inexcusable neglect is clear….’” (New Albertsons, supra, 168 Cal.App.4th at pp. 1419-1420.) “Stated another way, the policy of the law is to have every litigated case tried upon its merits, and it looks with disfavor upon a party who, regardless of the merits of the case, attempts to take advantage of the mistake, surprise, inadvertence, or neglect of his adversary. [Citations.]” (Weitz v. Yankosky (1966) 63 Cal.2d 849, 854-855; Fasuyi v. Permatex, Inc. (2008) 167 Cal.App.4th 681, 696.)

“‘A ruling on a motion for discretionary relief under section 473 shall not be disturbed on appeal absent a clear showing of abuse.’ [Citation.] “Excusable neglect” is generally defined as an error ‘“‘a reasonably prudent person under the same or similar circumstances might have made.’”’ [Citation.]” (Ambrose v. Michelin North America, Inc. (2005) 134 Cal.App.4th 1350, 1354; accord, Austin v. Los Angeles Unified School Dist. (2016) 244 Cal.App.4th 918, 929.)

Defendants have presented the “slight evidence” to warrant relief. Specifically, their principal, Jesus Adame, states he “mistakenly believed that the debt described in the lawsuit had been discharged in a bankruptcy proceeding in my name …. When I discovered that was not the case, I sought legal counsel but learned the default of my companies had already been entered.” (Declaration of Jesus Adame, ¶ 2.)

Contrary to Plaintiff’s attempts to discredit Mr. Adame’s declaration, this mistake was reasonable, as the bankruptcy court’s June 13, 2022, Order of Discharge indicated the discharge applied to “Jesus M. Adame aka Jesus Murguia Adama, aka Jesse Adame, aw Powertec Company, Inc.,” as well as “all names used by each debtor, including trade names, within the 8 years prior to the filing of the petition.”

Even then, Adame Communications Inc. attempted to file an Answer on July 15, 2022, and was then advised its default had already been taken. In addition, the evidence supports a finding that Defendants were not aware of the default judgments until September 1, 2022, and they filed the subject motion on September 30, 2022, which supports a determination that they acted diligently, and they filed their motion “within a reasonable time” under section 473, subdivision (b) of the Code of Civil Procedure.

Moving party to give notice.