Judge Gail Killefer, Case 21STCV36539 2022-08-01 Tentative Ruling

TENTATIVE: Defendants’ unopposed motion is granted, and the court orders the default entered against Defendants to be vacated and set aside. Defendants are to give notice.

Background

This action arises in connection with a family dispute regarding the conservatorship of Ruby M. Eubanks. This is a breach of fiduciary duty and fraud action. Terry Eubanks and Hallie Eubanks (collectively “Plaintiffs”) allege that Rochelle Eubanks and Hayward Eubanks (collectively “Defendants”), while acting in their capacity as co-conservators for the person and estate of Ruby M. Eubanks, conspired and breached their fiduciary duties by eliminating the original will and replacing the original will with a falsified and forged version. Defendants also allegedly fraudulently named themselves in the will as executors of the estate, along with Gary Eubanks.

On October 5, 2021, Plaintiffs filed a complaint against Defendants for (1) breach of fiduciary duty, (2) breach of fiduciary duty, and (3) fraud.

On December 30, 2021, default was entered against Defendants by the court. On January 28, 2022, Plaintiffs filed a First Amended Complaint (“FAC”) alleging identical causes of action.

Defendants request judicial notice of the following in support of their demurrer:

1. Demurrer to the Complaint filed by Defendants on December 23rd, 2021 (Exh. 1);

2. Plaintiff’s First Amended Complaint, filed in this matter by Plaintiffs, on January 28, 2022 (Exh. 2);

3. Proof of Service of Amended Complaint by Mail filed by Plaintiffs in this matter on March 23, 2022 (Exh. 3);

4. Demurrer to the First Amended Complaint filed by Defendants on April 8, 2022 (Exh. 4);

5. Request for Entry of Default filed by Plaintiffs in this matter on December 30, 2021 (Exh. 5).

Defendants’ request is granted. The existence and legal significance of these documents are proper matters for judicial notice. (Evidence Code § 452(c), (d), (h).)

Courts generally view default judgments with disfavor. (Nicholson v. Rose¿(1980) 106 Cal.App.3d 457, 462-463.)¿ “It is also well established that it is the policy of the law to bring about a trial on the merits whenever possible, so that any doubts which may exist should be resolved in favor of the application, to the end of securing to a litigant his day in court and a trial upon the merits.”¿ (Frank E. Beckett Co. v. Bobbitt¿(1960) 180 Cal.App.2d Supp. 921, 928.)¿

CCP § 473.5(a) provides: “When service of a summons has not resulted in actual notice to a party in time to defend the action and a default … has been entered against him or her in the action, he or she may serve and file a notice of motion to set aside the default … and for leave to defend the action.”

Section 473(b)¿provides for two distinct types of relief—commonly differentiated as “discretionary” and “mandatory”—from certain prior actions or proceedings in the trial court.¿ (Luri¿v. Greenwald¿(2003) 107 Cal.App.4th 1119, 1124 (Luri).)¿¿“Under the discretionary relief provision, on a showing of ‘mistake, inadvertence, surprise, or excusable neglect,’¿the court has discretion to allow relief from a ‘judgment, dismissal, order, or other proceeding taken against’¿a party or his or her attorney.¿¿Under the mandatory relief provision, on the other hand, upon a showing by attorney declaration of ‘mistake, inadvertence, surprise, or neglect,’¿the court shall vacate any¿‘resulting default judgment or dismissal entered.’¿”¿ (Ibid., internal citations and quotation marks omitted, quoting CCP § 473(b).)¿¿“Applications seeking relief under the mandatory provision of section 473 must be ‘accompanied by an attorney’s sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect.’¿¿(§ 473(b).)¿¿The mandatory provision¿further adds that ‘whenever relief¿is granted based on an attorney’s affidavit of fault [the court shall] direct the attorney to pay reasonable compensatory legal fees and costs¿to opposing counsel or parties.’¿ [Citations.]”¿ (Luri,¿ibid.)

“‘[A] trial court may ... vacate a default on equitable grounds even if statutory relief is unavailable.’ [Citation.]” (Sakaguchi v. Sakaguchi (2009) 173 Cal.App.4th 852, 862.) “The moving party carries the burden of proving that he or she is entitled to equitable relief.” (Ibid.) Equitable relief may be based on “extrinsic fraud,” or “extrinsic mistake.” Extrinsic fraud occurs when, “the unsuccessful party has been prevented from exhibiting fully his case, by fraud or deception practiced on him by his opponent, … or where the defendant never had knowledge of the suit, being kept in ignorance by the acts of the plaintiff.” (Luxury Asset Lending, LLC v. Philadelphia Television Network, Inc. (2020) 56 Cal.App.5th 894, 911, internal quotation marks removed.) On the other hand, extrinsic mistake involves the excusable neglect of a party. (Ibid.) “‘To set aside a judgment based on extrinsic fraud or extrinsic mistake, the moving party must satisfy three elements: ‘“First, … demonstrate that it has a meritorious case. Secondly, … articulate a satisfactory excuse for not presenting a defense to the original action. Lastly, … demonstrate diligence in seeking to set aside the default once it had been discovered.” [Citations.]’ [Citation.]” (Ibid.)

Defendants move to set aside the default under CCP § 473 and on equitable grounds, contending the default entered against Defendants on December 30, 2021 was in error. (Motion, 5-7.) Specifically, counsel for Defendants, Rikisha D. Thomas (“Thomas”), attests that after being retained on December 7, 2021, by Defendants, Thomas made several attempts to confer with Plaintiffs to request a ten-day extension to file an Answer. (Motion, 1-2.) Thomas further attests that on December 22, 2021, Plaintiffs sought to schedule a telephone call with Thomas on December 28 or 29, 2021, but later responded to Thomas on December 22nd that they would not provide an extension. (Id.) Thomas attests that on December 23, 2021, after checking the case summary and determining “no default had been taken, [she] immediately caused a Demurrer to Complaint to be filed.” (Motion, 3.) Thomas further attests Plaintiffs filed an amended complaint on January 28, 2022, and Defendants filed another Demurrer to the First Amended Complaint on April 8, 2022. (Id.) Thomas then contends “I believe this default was taken through extrinsic fraud and mistake, as I was contacting Plaintiff Terry Eubanks at the time and requesting an extension of time, which they in bad faith denied after they had allegedly filed a request for entry of default.” (Id.) Thomas then points to CCP § 472 and asserts that the time to respond must be calculated after service of the amended complaint. (Id.) Thomas contends, therefore, that the demurrer filed on April 8, 2022, was timely filed. (Id.)

Defendants point out that a Demurrer to the initial Complaint was filed on December 23, 2021, before a Default was entered against them on December 30, 2021. (Motion, 6-7; RJN. Exh. 5.) Defendants again correctly assert that CCP § 472(a) provides that Defendants’ time to respond was renewed after the filing of the First Amended Complaint. (Id.) Defendants claim that their counsel was in communication with Plaintiffs before a default was entered, and Plaintiffs continued with the default proceedings in spite of such communication. (Motion, 5-7; RJN. Exh. 4.) Defendants then reiterate the law’s favoring of disposition on the merits of matters, and in light of such policies, request this court to exercise its equitable powers to vacate and set aside the default entered against Defendants.

The court agrees with Defendants. Thomas’ declaration and exhibits establish that she communicated with Plaintiffs before a Default was entered against Defendants. Further, a Demurrer was filed against the initial Complaint before a default was entered against them. Lastly, after a default was entered against Defendants, Plaintiffs then filed a First Amended Complaint, which renewed Defendants’ time to file responsive pleadings. Thus, there exist several equitable grounds to grant Defendants’ requested relief and, in light of the disfavored nature of default judgments, this court finds setting aside the default will allow for a disposition of this case on the merits. Thus, Defendants’ motion is granted, and the court orders the default entered against Defendants to be vacated and set aside.

Defendants’ motion is granted, and the court orders the default entered against Defendants to be vacated and set aside. Defendants are to give notice.