Judge: Edward B. Moreton, Jr, Case: 23SMCV03296, Date: 2024-08-23 Tentative Ruling

Case Number: 23SMCV03296    Hearing Date: August 23, 2024    Dept: 205

Superior Court of California 

County of Los Angeles – West District  

Beverly Hills Courthouse / Department 205 

BACKGROUND 

Plaintiff Kaveh Kevin Jebeli entered into a contract with Defendants Jewish Educational Movement (“JEM”) and Hertzel Illulian (“Illulian”) for warehouse/storage space.  Jebeli used the space to store over $1,396,136 worth of computer and computer-related equipment, inventory, fixtures and tools he used for his business.  Jebeli was also storing boxes of men’s clothing for his father-in-law valued at approximately $100,000. 

Defendants rented the space next to Jebeli’s to a CBD oil manufacturer who used the premises to manufacture CBD oil, a highly flammable substance.  The unit in fact caught fire, burning all of Jebeli’s belongings.  Jebeli was only able to recover $380,000 from his insurance.  

On July 19, 2023, Plaintiff filed a Complaint against Defendants.  The Complaint alleges claims for gross negligence, breach of written contract and declaratory relief.  Jebeli claims damages in the amount of $1,122,136.      

Plaintiff filed a proof of service showing Defendant Hertzel Illulian was personally served on October 25, 2023 and Defendant JEM was substitute served on November 3, 2023.   

This hearing is on Defendants’ motion to set aside entry of default.  Defendants argue (1) the default as to JEM was entered prematurely by the Clerk on December 6, 2023 in violation of Code Civ. Proc. §415.20, which renders the default void, (2) the defaults are void because Plaintiff failed to serve Defendants with a Statement of Damages prior to the entry of Default in violation of Code Civ. Proc. §425.11(c); (3) the defaults were the result of Defendants’ mistake, inadvertence or excusable neglect in believing that they were improperly served, and (4) the defaults were the result of defense counsel’s mistake, inadvertence and excusable neglect in advising Defendants that service was not lawful.   

LEGAL STANDARD 

Pursuant to Code Civ. Proc. §473(b), both discretionary and mandatory relief are available to parties when a case is dismissed.  Discretionary relief is available under the statute as “the court may, upon any terms as may be just, relieve a party or his or her legal representative from judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect.”  (Code of Civ. Proc. § 473(b).)  

Alternatively, mandatory relief is available when “accompanied by an attorney’s sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect.”  (Id.)  The purpose of the attorney affidavit provision is to “relieve the innocent client of the burden of the attorney’s fault, to impose the burden on the erring attorney, and to avoid precipitating more litigation in the form of malpractice suits.”  (Hu v. Fang (2002) 104 Cal.App.4^th 61, 64.)  Mandatory relief is available even if counsel’s neglect was inexcusable.  (SJP Limited Partnership v. City of Los Angeles (2006) 136 Cal.App.4th 511, 516–517.)   

An application for discretionary or mandatory relief must be made no more than six months after entry of the judgment, dismissal, order, or other proceeding from which relief is sought.  (Code Civ. Proc., § 473(b); English v. IKON Business Solutions (2001) 94 Cal.App.4th 130, 143.) 

“[W]hen relief under section 473¿is¿available, there is a strong¿public¿policy¿in¿favor¿of granting relief and allowing the requesting party his or her day in court[.]” (Rappleyea v. Campbell¿(1994) 8 Cal. 4th 975, 981-82.)  Any doubt in applying section 473, subdivision (b), must be resolved in favor of the party seeking relief.  (Bonzer v. City of Huntington Park (1993) 20 Cal. App. 4th 1474,¿1477-1478.)   

Where relief is promptly sought and no prejudice would be done to the opposing party, only very slight evidence is required to justify the setting¿aside of a default.  For this reason, orders denying relief under section 473 are carefully scrutinized on appeal. (¿Rappleyea v. Campbell¿(1994) 8 Cal..4th 975, 980;¿Elston v. City of Turlock¿(1985) 38 Cal.3d 227, 233.)   

DISCUSSION 

The Court concludes that default should be vacated because of defense counsel’s declaration of fault.  Defense counsel attests that to the extent service was proper, he was mistaken in advising Defendants that service was unlawful and they did not need to respond to the Complaint.  (Corby Decl. ¶¶ 9, 12.)  Relief is mandatory when a motion to vacate is accompanied by an attorney-at-fault declaration.  (SJP Limited Partnership, 136 Cal.App.4th at 516–517.)        

Standard Microsystems Corp. v. Winbond Electronics Corp., 179 Cal. App. 4th 868, 896-97, 900 (2009) is instructive.  There, copies of the summons and complaint were sent by registered mail, return receipt requested, addressed to the overseas corporations’ respective headquarters.  Their attorney advised them that the service by mail had not been effective to confer jurisdiction and that they were not required to answer the complaint.  Their attorney did not advise them of the possibility of moving to quash service.  Defaults were taken against the overseas corporations, and the trial court denied their motions to set aside the default and quash service of process on the ground of defective service.  The overseas corporations then retained new counsel and sought mandatory relief under¿Code Civ. Proc., § 473, subd. (b), supported by a declaration of fault from their previous attorney.  The court concluded: “So far as this record shows, defendants’ attorney in fact believed, quite mistakenly, that his clients were not obligated to respond to the complaint as served on them, and incurred no great risks in failing to do so.  He was grossly mistaken on both points. The resulting default and default judgment were unquestionably the product of attorney fault, and defendants were entitled to relief under the mandatory provisions of section 473(a).”   

Here, similar to the defendant in Standard Microsytems, Defendants were advised by counsel that service was improper, and Defendants did not have a legal obligation to file a responsive pleading.  To the extent counsel was mistaken, his mistake mandates relief from the entry of default.  Given this ruling, the Court declines to consider other arguments raised by Defendants for vacating default.   

The Court next considers Plaintiff’s request that the granting of Defendants’ motion be conditioned on the imposition of sanctions on Plaintiff’s counsel, Travis Corby.  Pursuant to 473(b), the court “shall, whenever relief is granted based on an attorney’s affidavit of fault, direct the attorney to pay reasonable compensatory legal fees and costs to opposing counsel or parties.”  Plaintiff attests he has incurred fees and costs in the estimated amount of $25,000 to serve Defendants (15 attempts each), oppose the prior motion to set aside default, oppose the motion for reconsideration, and oppose the instant motion and appear for same.  Plaintiff’s declaration does not specify the hourly rate of counsel or the amount of hours expended for each task, and accordingly, the Court cannot conclude whether either is reasonable.  The Court denies Plaintiff’s request for sanctions without prejudice to Plaintiff renewing the request with a more specific declaration.   

CONCLUSION 

Based on the foregoing, the Court GRANTS Defendants’ motion to vacate and set aside default.  Defendants’ are ordered to file their answer within five days from the date of this order.  A case management conference is set on October 1, 2024 at 9:00 a.m.

IT IS SO ORDERED. 

DATED: August 23, 2024                                                   ___________________________ 

Edward B. Moreton, Jr. 

Judge of the Superior Court