Judge: Frank M. Tavelman, Case: 22GDCV00627, Date: 2023-05-18 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: May 18, 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.  

The motion was continued to April 24, 2023. On April 24, 2023, the Court, having heard arguments, ordered Defendant to issue an amended notice of motion and that both parties submit additional briefing. The matter now comes on for hearing and the Court 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(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 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

Background

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. (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.)

Initial Hearing and Supplemental Arguments

The Court’s initial tentative found Defendant had adequately shown attorney mistake for purposes of relief from default judgment under Code of Civil Procedure § 473(b). However, the initial motion papers did not clearly address the issue of excusable neglect with respect to the entry of default itself. The parties were asked to submit supplemental briefing on this issue.

Plaintiff argues in supplemental briefing that Defendant may only seek relief on mandatory grounds. Plaintiff argues Defendant abandoned claims for discretionary relief in their amended notice. A simple review of the amended notice reveals the following grounds are stated:

1)     Inadvertence, surprise, mistake, or excusable neglect under C.C.P. § 473(b) and failure to adhere to Code Civ. Proc. § 583.130 as written and as interpreted by Lasalle v. Vogel (2019) 36 Cal.App.5th 127 with respect to both entry of default and entry of default judgment; and

2)     Entry of default judgment was caused by an attorney's mistake, inadvertence, surprise, or neglect under C.C.P. § 473(b) as set forth in the sworn affidavit of Laurie Harrold filed on February 23, 2023. The maximum imposition of attorney’s fees cannot exceed 1 hour as set forth in ¶ 5 of the declaration of Kenneth Freed, Esq. filed on April 3, 2023. Rogalski v. Nabers Cadillac (1992) 11 Cal.App.4th 816 at 822-823 [defendant “cannot be asked to bear the entire economic burden of prosecuting a [meritorious] motion which should have been granted” so § 473(b) recovery is limited to attorney’s fees and costs “incurred in obtaining the defaults only”].

C.C.P. § 473(b) encompasses both mandatory and discretionary relief. Plaintiff has pled both grounds in their notice. The grounds pled in Defendant’s additional notice do not constitute an abandonment of discretionary relief.

The Court finds Plaintiff’s supplemental briefing conflates the standards for relief from default and default judgment. It is clear Defendant argues relief from default judgment on grounds of attorney mistake and relief from default on grounds of excusable neglect by Defendant. These are two separate showings with two separate standards. The Court will address each in turn.

Default Judgment

Defendant argues the default judgment against them should be set aside on grounds of attorney mistake or neglect pursuant to Code of Civil Procedure § 473(b). This argument triggers the mandatory relief provision. To this end Defendant submits the declarations of Harrold and Windler.

Defendant’s motion discusses Lasalle v. Vogel (2019) 36 Cal.App.5th 127, 134 (“Lasalle”) at length. 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 summary judgment without first informing her and that the parties would 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 the default judgment papers. (Knight Decl. ¶9.) Plaintiffs argue Defendant’s failure to file represents neglect which is not excusable. (Oppo., pg. 7.) 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.

On supplemental briefing Plaintiff describes the declarations of Windler and Harrold as fallacious and misleading. The Court does not find this to be the case. Harrold’s declaration may not identify the exact date on which she first communicated with Jyoo, but her declaration is clearly indicative of attorney mistake. Harrold contacted Jyoo after the default was entered and attempted to resolve the matter. In doing so, Harrold failed to file responsive documents to Plaintiff’s motion for default judgment. Harrold states she failed to respond because she did not believe Jyoo would file the motion without notifying her. This is, at the very least, attorney neglect and permissible grounds for relief from default judgment.

As such, the motion to vacate default judgment is GRANTED.

Default

Defendant argues the default judgment against them should be set aside on grounds of Defendant’s excusable mistake pursuant to Code of Civil Procedure § 473(b). This argument triggers the discretionary relief provision. To this end Defendant submits the declaration of Jade Knight.

Much of Plaintiff’s supplemental briefing proceeds on the incorrect notion that Plaintiff must show attorney mistake in allowing the entry of actual default. To this end Plaintiff briefs Cisneros v. Vueve (1995) 37 Cal.App.4th 906, which it argues is “directly on point and controlling…not distinguishable…end of story.” (Supp Decl. pg. ii)

The Court, having reviewed Cisneros, notes that court’s analysis begins:

At the outset, it is important to note that we are not concerned with the “traditional” discretionary relief provisions of section 473 which allow the trial court to set aside a default caused by a party's “mistake, inadvertence, surprise, or excusable neglect.” Defendants' position is that the trial court had a duty to set aside both default and default judgment under the recent mandatory provision of section 473.

(Cisneros supra, 37 Cal.App.4th 906, at 909.)

Here, Plaintiff has pled for relief from default on discretionary grounds. As such, Cisneros is instantly and plainly distinguishable. Plaintiff’s argument that the default, as opposed to the default judgment, in this case was not caused by attorney fault is therefore irrelevant. Plaintiff’s reliance on Cowan v. Krayzman (2011) 196 Cal.App.4th 907 is similarly misplaced, as plaintiff in that case also explicitly abandoned relief on discretionary grounds. (Cowan supra, 196 Cal.App.4th 907, at 915.)

Here, the default itself was caused by the excusable neglect of the Defendant. Plaintiff argues at length about the unreliable nature of the Knight declaration. Plaintiff primarily contends it is impossible that six weeks passed between the email being sent and the receipt of the post card. The Court does not view this as impossible or even improbable. Further, once Knight received notice via the postcard, he immediately hired counsel to represent him. The Knight declaration attests to a mistake, an email being ignored because it was sent to a spam inbox. The Court declines to ascribe to the Knight declaration the insidiousness Plaintiff suggests.

As such, the motion to set aside the default is GRANTED.

--- 

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 May 18, 2023, 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 JUDGMENT IS GRANTED. 

THE DEFENDANT HAS TEN CALENDAR DAYS TO FILE THEIR ANSWER.

DEFENDANT TO GIVE NOTICE.

IT IS SO ORDERED. 

DATE: May 18, 2023                            _______________________________ 

                                                                        F.M. TAVELMAN, Judge 

Superior Court of California 

County of Los Angeles