Judge: Frank M. Tavelman, Case: 22GDCV00627, Date: 2023-04-24 Tentative Ruling

SUBMITTING
ON THE TENTATIVE

The Court tries to post tentative rulings prior to any
hearing on many matters, but not all.  If
the parties wish to submit on the tentative ruling and avoid a court
appearance, all counsel must confer and agree to do so.   Each counsel must contact the court and
advise they are submitting on the matter, that they have spoken to opposing
counsel who has indicated they too are submitting and will be calling the
court. All submitting counsel must call Dept A by 9:00 a.m. on the day of the
hearing and state that all parties will submit on the tentative ruling or in lieu
may indicate the party is submitting during calendar check-in and notice of the
ruling must be served as indicated in the tentative. If any party declines to
submit on the tentative ruling, then no telephone call is necessary, and all
parties should appear at the hearing in person or remotely.

Case Number: 22GDCV00627    Hearing Date: April 24, 2023    Dept: A

LOS ANGELES SUPERIOR COURT

NORTH CENTRAL DISTRICT - BURBANK

DEPARTMENT A

MOTION TO SET ASIDE DEFAULT JUDGMENT

ALLEGATIONS: 

On September 26, 2022 Creditor’s Adjustment Bureau (“Plaintiff”) filed suit against HT Builders (“Defendant”) in connection with an alleged collections account. The Complaint contains causes of action for (1) Breach Of Contract, (2) Open Book Account, (3) Account Stated, and (4) Reasonable Value. The amount sought is $105,868.00.

On November 14, 2022, default was entered against Defendant. On February 2, 2023, default judgment was entered against Defendant. Plaintiff now moves to set aside the default judgment pursuant to Code of Civil Procedure § 473(b).

HISTORY: 

On February 23, 2023, Defendant filed this motion to set aside default judgment. On March 3, 2023, Plaintiff filed its opposition. On April 4, 2023, Defendant filed its reply.

On April 14, 2023, the Court issued a tentative ruling denying the request because the motion was not code compliant, to with no proposed answer had been filed.   During argument the moving party identified where the proposed answer was located and the Court advised it would reconsider the ruling.   The Court now rules as follows:

ANALYSIS: 

I.                LEGAL STANDARD 

Plaintiff seeks relief pursuant to Code of Civil Procedure § 473(b). Code of Civil Procedure § 473(b) has both a discretionary relief provision and a mandatory relief provision. (Jackson supra, 32 Cal. App. 5th 166, at 173.)  The discretionary provision of Code of Civil Procedure § 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 Code of Civil Procedure § 473 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 Code of Civil Procedure § 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

Defendant argues that the default judgment against them should be set aside on grounds of mistake pursuant to Code of Civil Procedure § 473(b). On October 7, 2022, notice of this action was personally served on Defendant’s agent for service LegalZoom.com, Inc. (“LegalZoom”). Defendant argues that on or about October 7, 2022, LegalZoom forwarded this notice to them via email, but the email went unnoticed because it was directed to the spam folder by Defendant’s email service. (Knight Decl. ¶ 4.) Defendant argues it was not aware of the action until it received a postcard from LegalZoom informing them as much in the latter part of November 2022. (Id. ¶ 3.)

At some point after Defendant retained counsel Laurie R. Harrold (“Harrold”), though none of Defendants submissions aver as to the date. Defendant states Harrold communicated with Plaintiff’s counsel, Joseph Jyoo (“Jyoo”), in the last two weeks of November but does not provide a specific date. (Harrold Decl. ¶ 2.) Defendant claims during these communications Harrold informed Jyoo of the LegalZoom situation and that Defendant was unaware of the action until after the default had been entered. (Harrold Decl. ¶¶ 2,3.)

The first documented communication between Harrold and Jyoo is a November 29, 2022 email from Jyoo to Harrold. (Harrold Decl. Exh. A.) In this email Jyoo informed Harrold that his client will not stipulate to vacate the default. (Id.) Harrold responded with a settlement offer. (Id.)  It is clear from this email that Harrold and Jyoo had previously communicated, but neither party attached their initial contact. On December 7, 2022, Harrold emailed to request a discussion over the phone with Jyoo. (Harrold Decl. ¶ 6.) Jyoo replied “As discussed over the phone, I should be available at 10am on Tuesday, December 13, 2022 to discuss this matter.” (Harrold Decl. Exh. A.)

Defendant argues Jyoo filed a request for court judgment on December 9, 2019, before Harrold and Jyoo had a chance to speak. (Harrold Decl. ¶ 8.) Defendant claims Harrold and Jyoo spoke on the phone on December 13, 2022 (Id. at ¶ 9.) Thereafter, Jyoo emailed Harrold to inform her his client would not stipulate to vacate default. (Id. at ¶ 10.)

Defendant argues Jyoo never informed Harrold of his intention to enter default judgment. (Id. at 11.) Defendant further argues Jyoo never served copies of the filings to Harrold’s office. (Id. at 12.) Defendant argues they only learned of the default judgment after it was entered, at which time Plaintiff hired new counsel Katherine Windler (“Windler”). In her declaration, Windler claims that she has requested copies of the proof of service from Plaintiff’s counsel several times but has never received them. (Windler Decl. ¶¶ 3,5,6.)

Defendant primarily relies on Lasalle v. Vogel (2019) 36 Cal.App.5th 127, 134 (“Lasalle”). In Lasalle, defendant was an attorney in a legal malpractice action who had not served responsive pleadings within 35 days of service. (Lasalle supra, 36 Cal.App.5th 127, at 131.) Plaintiff’s counsel emailed defendant and threatened to enter default unless a responsive pleading was filed by end of day, but defendant did not respond. (Id.) Plaintiff filed a request for entry of default and emailed a copy to defendant a few days later. (Id.) Defendant then hired an attorney and filed a motion to set aside the default a week later (Id.) The trial court denied defendant’s motion, but the Court of Appeals reversed. The Court of Appeals held Code of Civil Procedure § 583.130 imposed a legal, not simply ethical, duty on plaintiffs’ counsel to cooperate with defense counsel. (Id. at 137.) The Court of Appeals further found that notice of entry of default by email and rapid proceeding with entry of judgment violated this legal duty. (Id.)

The Court finds Lasalle to be inapposite to this case in one crucial aspect. In Lasalle there was no “falling on the sword” affidavit of fault that might have triggered the mandatory provisions of Code of Civil Procedure § 473(b). Here, Defendant has submitted a declaration specifically attesting to its attorney’s mistake or neglect. This is critical because the mandatory provisions of Code of Civil Procedure § 473(b) do not require the attorney’s neglect or mistake be “excusable”.

Harrold’s declaration states that she was under the impression Jyoo would not file a motion for default without first informing her and that the parties would not be able to reach an informal resolution. (Harrold Decl. ¶¶ 6,12,13.) As such, Harold did not file responsive documents to Plaintiff’s motion for default. Knight’s declaration states she believed Harrold would have the opportunity to respond to the default judgment papers. (Knight Decl. ¶9.) Plaintiffs argue Defendant’s failure to file represents neglect which is not excusable. (Oppo., pg. 7.) Even if the failure to respond to the default judgment was an act of neglect, the neglect would be attributable to Harrold as Defendant’s counsel.

An analysis under Lasalle is not necessary because the default in this case resulted from attorney mistake or, at the very least, neglect. Neither of these requires a showing of reasonable excuse. The Court finds mandatory relief under Code of Civil Procedure §473(b) applies. As such, the 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 

HT Builders’ Motion to Set Aside and Vacate Default Judgment came on regularly for hearing on April 14, 2023, with appearances as noted in the minute order for said hearing, and the court, being fully advised in the premises, rules as follows: 

THE MOTION TO SET ASIDE AND VACATE DEFAULT JUDGMENT IS GRANTED.   DEFENDANT HAS 20 DAYS TO FILE THE ANSWER FROM MAILING OF NOTICE AS THE PROPOSED ANSWER ATTACHED TO A DECLARATION IS UNABLE TO BE PROCESSED AS THE ANSWER.

THE COURT SETS A CASE MANAGEMENT CONFERENCE FOR JULY 31, 2023, AT 9:00 A.M.

CLERK TO GIVE NOTICE.

IT IS SO ORDERED. 

DATE:  APRIL 21, 2023                            _______________________________ 

                                                                        F.M. TAVELMAN, Judge 

Superior Court of California 

County of Los Angeles