Judge: Frank M. Tavelman, Case: 19BBCV00549, Date: 2024-02-09 Tentative Ruling

REQUESTING ORAL ARGUMENT PER CRC 3.1308

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Court will indicate in the Tentative Ruling whether the Court is requesting oral argument.  For cases where the Court is not requesting argument, then pursuant to
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may be given either by email at BurDeptA@LACourt.org or by telephone at (818)
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Notice of the ruling must be served as indicated in the tentative.  Remote appearances are permitted for all law and motion unless otherwise indicated by the Court.  

Case Number: 19BBCV00549    Hearing Date: February 9, 2024    Dept: A

LOS ANGELES SUPERIOR COURT

NORTH CENTRAL DISTRICT - BURBANK

DEPARTMENT A

MOTION TO VACATE DEFAULT JUDGMENT

NOTICE:

The Court is not requesting oral argument on this matter.  Pursuant to California Rules of Court, Rule 3.1308(a)(1) notice of intent to appear is required.  Unless the Court directs argument in the Tentative Ruling, no argument will be permitted unless a “party notifies all other parties and the court by 4:00 p.m. on the court day before the hearing of the party’s intention to appear and argue.  The tentative ruling will become the ruling of the court if no notice of intent to appear is received.”  

Notice may be given either by email at BurDeptA@LACourt.org or by telephone at (818) 260-8412.

ALLEGATIONS: 

On June 24, 2019, Navy Federal Credit Union (Plaintiff) brought this action against Hripsik Hovhannisyan (Defendant). Plaintiff sought to recover a loan balance of $43,674.15 allegedly owed by Defendant. On September 9, 2019, default judgment was entered against Defendant. The case file reveals no activity occurred until a writ of execution was filed on July 20, 2023. As a result of this writ, a Citibank account belonging to Defendant’s daughter was frozen.

On December 5, 2023, Plaintiff’s proposed answer was filed. Plaintiff subsequently filed an Ex Parte application seeking to have the default judgment vacated. On December 15, 2023, the parties appeared at an Ex Parte hearing. (See Dec. 15, 2023 Nunc Pro Tunc Order.) The Ex Parte application was denied, as the Court noted the motion to vacate default should be a noticed motion. (Id.) The parties were ordered to meet and confer regarding the execution of a garnishment and the account seized was ordered frozen pending resolution of an issue with account ownership. (Id.)

In support of their default petition, Plaintiff submitted the affidavit of registered process server Jose Felix Nava. The proof of service shows that service was made on July 7, 2019, by substitute service on co-occupant “Houhannes Doe”. The address for the service was 430 E. Valencia Ave., Apt. C Burbank, CA 91501.

Defendant now moves to vacate the judgment on grounds that she never received notice of the lawsuit. Defendant’s motion is filed several years after the entry of the judgment and is thus outside the purview of relief offered by C.C.P. § 473(b), which require a party to file either within 2 years of the entry of judgment or 180 days after service of written notice of the entry of that judgment. Defendant motion is thus governed by C.C.P. § 473(d) which permits the Court to set aside judgments, in its discretion, if the judgment is found facially void.

ANALYSIS: 

I.                    LEGAL STANDARD 

Where a party moves under C.C.P. 473(d) to set aside a judgment that, though valid on its face, is void for lack of proper service, the courts have adopted by analogy the statutory period for relief from a default judgment provided by C.C.P. § 473.5, that is, 2 years after entry of default. (Rogers v. Silverman (1989) 216 Cal. App. 3d 1114, 1120-1124; Schenkel v. Resnik (1994) 27 Cal. App. 4th Supp. 1, 3-4; Gibble v. Car-Lene Research, Inc. (1998) 67 Cal. App. 4th 295, 301, fn. 3; Trackman v. Kenney (2010) 187 Cal. App. 4th 175, 180.)

However, relief may still be granted under C.C.P. § 473(d) where a default judgment was obtained by means of extrinsic fraud or mistake. “Extrinsic fraud occurs when a party is deprived of the opportunity to present his claim or defense to the court; where he was kept ignorant or, other than from his own negligence, fraudulently prevented from fully participating in the proceeding.” (Spom v. Home Depot USA, Inc. (2005) 126 Cal.App.4th 1294, 1300.) “While the grounds for an equitable action to set aside a default judgment are commonly stated as being those of extrinsic fraud or mistake, the terms are given a very broad meaning which tends to encompass all circumstances that deprive an adversary of fair notice of hearing whether or not those circumstances would qualify as fraudulent or mistaken in the strict sense.” (Munoz v. Lopez (1969) 275 Cal.App.2d 178, 181.)

Extrinsic fraud is a broad concept that “tend[s] to encompass almost any set of extrinsic circumstances which deprive a party of a fair adversary hearing.” (Marriage of Park (1980) 27 Cal.3d 337, 342; County of San Diego v. Gorham (2010) 186 Cal.App.4th 1215, 1229 [default judgment obtained by false proof of service constitutes extrinsic fraud].) But extrinsic fraud is not a basis for relief when a defendant’s own negligence “permitted the fraud to be practiced” or where there is no “causation between the misrepresentation and a defendant’s failure to present a defense.” (Kramer v. Traditional Escrow, Inc., (2020) 56 Cal.App.5th 13, 36 [internal quotes omitted].)

II.                 MERITS

The Court finds that Defendant has sufficiently demonstrated the default judgment was obtained through extrinsic fraud. Defendant submits ample documentation supporting her claim that she did not live at the Valencia Ave address at the time of service and that the opening of the credit card was the result of identity fraud. 

Defendant states that she has not lived at the address where service was effected since late 2013. (Hovhannisyan Decl. ¶ 3.) Defendant states that at the time of service she lived at 201 Verdugo Avenue #41, Burbank, CA. (Hovhannisyan Decl. ¶ 4.) As evidence, Defendant attaches copies of her US Department of Housing and Urban Development Lease Agreements bearing that address. (Hovhannisyan Decl. Exh. B.)  Defendant states that she first learned about the default when her daughter’s Citibank Account was frozen on November 28, 2023. (Hovhannisyan Decl. ¶ 8.)

Further, Defendant states under penalty of perjury that she never opened any credit cards with defendant. (Hovhannisyan Decl. ¶ 5, Exh. C.) Defendant states that after her daughter’s bank account was frozen, she checked her credit and discovered a number of other fraudulently opened accounts. (Hovhannisyan Decl. ¶ 11.) Defendant states that at the time the account was open, she was living on social security in publicly subsidized housing and likely would never have been approved for such a card. (Hovhannisyan Decl. ¶ 9.)

In opposition, Plaintiff argues that Defendant must prove all the elements of fraud to justify setting aside the default judgment. As previously stated, extrinsic fraud in the context of this motion is differently conceived than upon an active claim of fraud. Defendant need not show all the factors of fraud as if she was maintaining an action against Plaintiff, she need only show she was denied a fair hearing as the result of extrinsic circumstances. (See Gorham supra, 186 Cal.App.4th 1215, 1229.)

The Court finds Plaintiff’s argument that Defendant did not diligently seek to set aside the judgment upon discovery to be unpersuasive. Defendant attests under penalty of perjury that she first learned of this judgment on November 28, 2023. Defendant subsequently sought to vacate this motion, albeit improperly, via Ex Parte application on December 15, 2023. The Court finds this effort indicates diligence in seeking to set aside the default.

The Court finds the evidence submitted by Plaintiff in contravention of Defendant’s complaints to be insufficient to rebut the showing of extrinsic fraud. Plaintiff submits that they had no other reason to believe Defendant resided at a different address than that on the loan application. (Stelmach Decl. ¶ 5, Exh. B.) Plaintiff also argues they exercised due diligence in conducting a skip trace on Defendant which showed the Valencia Avenue address. (Stelmach Del. ¶ 6, Exh C.) Plaintiff argues the skip trace shows that the Valencia Avenue address was listed on Defendant’s “Identification Card” on October 25, 2018. The Court does not find the exhibit shows was Plaintiff purports it does. Exhibit C is a one-page report from an unidentified source. It contains no actual copy of the “Identification Card”, only a brief summary of its contents. In addition, there is no other identifying information in this report. This report does not serve to negate Defendant’s provision of actual documents which show she lived elsewhere at the time of service.

Defendant has adequately demonstrated that extrinsic circumstances existed which prevented her from a fair hearing in this case. Defendant has shown that she resided at an entirely different address at the time of the hearing and that this credit card was obtained by means of identity theft and that she is entitled to have this case heard upon its merits.

As a last matter, the Court addresses Plaintiff’s request for attorneys’ fees associated with preparing the default, drafting this opposition, and other work performed on the file. Plaintiff argues that Defendant should be required to compensate Plaintiff for this work, citing C.C.P. § 473(a). C.C.P. § 473(a) grants the Court the power to condition relief on any terms as the Court deems just. The Court does not deem it just to require Defendant to pay attorney’s fees on an action for which she never received notice by no fault of her own. As such, Plaintiff’s requests are denied.

Accordingly, Defendant’s motion to vacate the default judgment is GRANTED.

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RULING:

In the event the parties submit on this tentative ruling, or a party requests a signed order or the court in its discretion elects to sign a formal order, the following form will be either electronically signed or signed in hard copy and entered into the court’s records. 

ORDER 

Hripsik Hovhannisyan’s Motion to Vacate Default Judgment came on regularly for hearing on February 9, 2024, with appearances/submissions as noted in the minute order for said hearing, and the court, being fully advised in the premises, did then and there rule as follows: 

THE MOTION TO VACATE DEFAULT JUDGMENT IS GRANTED.

DEFENDANT’S ANSWER, FILED DECEMBER 5, 2023, IS DEEMED OPERATIVE.  

A CASE MANAGEMENT CONFERENCE IS SET FOR MAY 21, 2024 AT 9:00 A.M.

UNLESS ALL PARTIES WAIVE NOTICE PLAINTIFF TO GIVE NOTICE.

IT IS SO ORDERED. 

DATE:  February 9, 2024                            _______________________________ 

                                                                        F.M. TAVELMAN, Judge 

Superior Court of California 

County of Los Angeles