Judge: Frank M. Tavelman, Case: 22BBCV00852, Date: 2024-02-02 Tentative Ruling

Case Number: 22BBCV00852    Hearing Date: February 2, 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: 

Abdulaziz, Grossman, & Rudman (Plaintiff) bring this action against Minako America Corporation (Minako) and Mina Refaat (Refaat) (collectively Defendants). Plaintiff alleges that Defendants failed to pay for legal services rendered. Plaintiff seeks damages in the amount of $50,876.24.

On October 26, 2023, Plaintiff filed the Complaint in this action. The proof of service attests to Defendants’ personal service upon Refaat November 8, 2022 at 522 East Airline Way Gardena, California.

On March 21, 2023, the Court entered default against Defendants. Despite the default, on March 22, 2203, the Court held a case management conference. Refaat appeared at the case management conference on behalf of himself. The Court informed Refaat that he could not represent Minako in this action, as corporations must be represented by an attorney in the State of California. The Court’s minute order reflects that the parties stipulated to continue the case management conference to July 31, 2023 and Plaintiff’s counsel was ordered to give notice.

Plaintiff thereafter requested the entry of a Default Judgment which was initially rejected, but then on July 12, 2023, the Default Judgment was ultimately entered. On July 20, 2023, a writ of execution was issued.

Defendants now move the Court to vacate the Default Judgment entered against them. Defendants first state that the judgment should be set aside on grounds of extrinsic fraud. Alternatively, Defendants suggest the Court exercise its discretion in setting aside the judgment due to Defendants’ mistake/neglect. Plaintiff opposed the motion, arguing that no extrinsic fraud occurred, and that Defendants were properly served in the motion.

OBJECTIONS:

Plaintiff’s objections to the declaration of Kimberly Manning are SUSTAINED as to Nos. 1 & 2 and OVERRULED as to No. 3.

ANALYSIS: 

I.                    LEGAL STANDARD 

After a default judgment is entered, a defendant has three basic avenues for relief: (1) the party can obtain relief under C.C.P. §473 and §473.5; (2) the party can show that extrinsic fraud or mistake exists; or (3) the party can show that the default judgment was facially void.  (Trackman v. Kenney (2010) 187 Cal.App.4th 175, 181.)

Extrinsic Fraud

“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.)

“To set aside a judgment based upon extrinsic mistake one must satisfy three elements. First, the defaulted party must demonstrate that it has a meritorious case. Second, the party seeking to set aside the default must articulate a satisfactory excuse for not presenting a defense to the original action. Last, the moving party must demonstrate diligence in seeking to set aside the default once ... discovered.” (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 982 [internal citations and quotations omitted].)

C.C.P. § 473(b)

C.C.P. § 473(b) has both a discretionary relief provision and a mandatory relief provision. The discretionary provision of C.C.P. § 473(b), in pertinent part, reads as follows:

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…

The mandatory provision of C.C.P. § 473(b) reads, in pertinent part, as follows:

Notwithstanding any other requirements of this section, the court shall, whenever an application for relief is made no more than six months after entry of judgment, is in proper form, and is accompanied by an attorney’s sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect, vacate any (1) resulting default entered by the clerk against his or her client, and which will result in entry of a default judgment, or (2) resulting default judgment or dismissal entered against his or her client, unless the court finds that the default or dismissal was not in fact caused by the attorney’s mistake, inadvertence, surprise, or neglect. 

The general underlying purpose of C.C.P. § 473(b) is to promote the determination of actions on their merits. (Even Zohar Construction & Remodeling, Inc. v. Bellaire Townhouses, LLC (2015) 61 Cal.4th 830.) Under this statute, an application for relief must be made no more than six months after entry of the judgment, dismissal, order, or other proceeding from which relief is sought and must be accompanied by an affidavit of fault attesting to the mistake, inadvertence, surprise or neglect of the moving party or its attorney. (C.C.P., § 473(b); English v. IKON Business Solutions (2001) 94 Cal.App.4th 130, 143.)

II.                 MERITS

Extrinsic Fraud

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].)

Here, Defendants allege a myriad of misrepresentations of which only some are relevant to the failure to provide a defense. As a preliminary matter, Defendants allegations that funds were taken from an incorrect account after the writ of execution issued are irrelevant to any determination of extrinsic fraud in obtaining the default judgment. (See Refaat Decl. Exh. D, Manning Decl. ¶ 4.) 

The substance of Defendants’ motion begins by arguing that Plaintiff agreed not to pursue default during settlement discussions. (See Mot. p. 5.) As support for this claim the motion cites to the declaration of Defendants’ counsel Kimberly Manning (Manning). A review of the Manning declaration reveals no reference to any settlement negotiations or an agreement by Plaintiffs to not pursue default. All the Manning declaration shows is that Manning requested Plaintiff stipulate to set aside the default and Plaintiff refused this request. (Manning Decl. ¶ 5.)

The record is clear that Defendants had notice of this lawsuit by virtue of Refaat’s appearance at the March 22, 2023 case management conference. This case management conference was held a day after default was entered and the default was discussed at the case management conference. (See Goodman Decl. ¶ 4.) The Court specifically informed Refaat of the circumstances of the case and advised him to seek counsel to represent Minako. (Id.) Refaat states only that the case management conference was continued and that no one from Plaintiff would speak to him. (Refaat Decl. ¶ 4.)

Further, the Court finds Defendants’ argument that Plaintiff lied about service to be unavailing. Plaintiffs submit the sworn affidavit of a process served that Refaat was personally served with process. This affidavit creates a rebuttable presumption that service was valid. (American Express Centurion Bank v. Zara (2011) 199¿Cal.App.4th 383, 390 [internal citation omitted]; Evid. Code § 647.) Refaat’s self-serving declaration that he was out of town at the time of service, unaccompanied by any evidentiary showing to that effect, is not sufficient to rebut the presumption created by the proof of service. (See Refaat Decl. ¶ 3.)

Nowhere in Defendants motion do they state facts amounting to a fraud perpetrated by Plaintiffs. Plaintiffs have proceeded with default in the usual course of litigation and have provided notice to Defendants of their intent to do so. The fact that Refaat may not have understood fully the circumstances at the case management conference does not speak to an extrinsic fraud on Plaintiff’s behalf.

C.C.P. § 473

The Court first notes that Defendants’ motion is within the time frame for discretionary relief under C.C.P. § 473(b). Defendants had six months from the entry of default judgment to bring a motion to vacate that judgment. Default judgment was entered on July 12, 2023, giving Defendants until January 12, 2023 to file this motion. Defendants’ motion was filed on November 20, 2023. The same cannot be said for the entry of default, which occurred some months earlier. Regardless, Defendants’ motion does not seek to set aside the default, only the default judgment.

The Court declines to exercise its discretion to vacate the judgment. As previously discussed, Defendants only argument on this front is that Refaat was confused about the meaning of the March 22, 2023 case management conference. Refaat’s statement regarding the case management conference is as follows:

Through my prior counsel I got an email of a Case Management Conference earlier in March of this year that there was a hearing. I went myself and the judge continued it. I tried to speak to my prior attorneys but no one would speak to me and no one told me that I needed independent counsel for my corporation to avoid default. Of course, I had no idea that I would be personally at risk as I had no fee agreement as an individual with my "trusted" attorneys, nor did my innocent wife.

(Refaat Decl. ¶ 4.)

This statement indicates that Refaat was aware of this case, aware of the fact that a default was entered, and aware that he needed to obtain counsel to represent Minako. Furthermore, the Court advised Refaat of the status, and the need for the legal entity to have counsel.  Refaat still did not promptly act.  The only relief under C.C.P. § 473(b) with which this statement could comport is excusable neglect. Excusable neglect exists when reasonably prudent person in similar circumstances might have made same error. (County of San Bernardino v. Mancini (2022) 83 Cal.App.5th 1095, 1103.) The Court does not view the circumstances of this case as the result of an error by a reasonably prudent person. The facts before the Court indicate that Refaat was served with notice of this action and did not file a responsive pleading. The facts similarly indicate that Refaat was aware of the default and the need to hire counsel to represent Minako, yet he did not do so until after default judgment was entered.

In their reply, Defendants argue for the first time that notice of the continued case management conference was never received. (See Reply. p. 4.) Defendants argue they were waiting for notice of the continued hearing and believed they would have a chance to dispute the default at that hearing. (Id.) Defendants submit no declarations to this effect. If notice was not received of the continuance, why does neither the Refaat nor Manning declaration state as much? As it currently stands, the Court has no statement from Refaat regarding the nature of his mistake or neglect, only the arguments of his counsel in reply.

In short, the Court finds the showings of Defendants do not indicate that default judgment was entered as the result of mistake or excusable neglect. Nor do Defendants submit a declaration of attorney mistake which would entitle them to mandatory relief.

Accordingly, the motion to vacate default judgment is DENIED.

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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 

Minako America Corporation and Mina Refaat’s Motion to Vacate Default Judgment came on regularly for hearing on February 2, 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 SET ASIDE AND VACATE DEFAULT IS DENIED.  

UNLESS ALL PARTIES WAIVE NOTICE, PLAINTIFF TO GIVE NOTICE.

IT IS SO ORDERED. 

DATE:  February 2, 2024                            _______________________________ 

                                                                        F.M. TAVELMAN, Judge 

Superior Court of California 

County of Los Angeles