Judge: Gary I. Micon, Case: 23CHCV03777, Date: 2025-01-22 Tentative Ruling

Case Number: 23CHCV03777    Hearing Date: January 22, 2025    Dept: F43

Dept. F43

Date: 01-22-25

Case # 23CHCV03777, Mann v. Ani Tsaghikyan

Trial Date: None set.

MOTION TO SET ASIDE/VACATE DEFAULT JUDGMENT

MOVING PARTY: Defendant Ani Tsaghikyan

RESPONDING PARTY: Plaintiff Michelle Mann

RELIEF REQUESTED

Order setting aside the Default entered on September 13, 2024, and the default judgment entered on November 18, 2024, and leave to file an answer to the complaint.

RULING: Motion is denied.

SUMMARY OF ACTION

On December 16, 2021, plaintiff Michelle Mann (Plaintiff), defendant Ani A. Tsaghikyan (Defendant), and several other individuals were involved in a multi-vehicle collision which resulted in Plaintiff suffering injuries and damages.  Plaintiff alleges Defendant’s auto insurance company, State Farm, accepted liability but has been unable to settle the case outside of court.  Plaintiff filed this action on December 12, 2023 alleging causes of action for general negligence and motor vehicle, and personally served Defendant on April 14, 2024.  On April 15, 2024, Defendant took the complaint to her insurance carrier, State Farm, who advised Defendant that State Farm would retain an attorney to handle the complaint.  Based on this, Defendant did not take further action.

After receiving no response from Defendant, default was entered against Defendant on May 20, 2024, and the Court granted default judgment against Defendant on November 18, 2024.

On November 26, 2024, Defendant filed this motion to set aside and vacate the default and default judgment.  Plaintiff filed an opposition on January 9, 2025.  Defendant filed a reply on January 14, 2025.

SUMMARY OF ARGUMENTS

Defendant argues that her failure to appear in this action is due to mistake and excusable neglect, based on the representations of her insurance carrier.  Defendant did not file a responsive pleading because she was under the impression that her insurance company would respond to Plaintiff’s complaint.  The day after Defendant was served with the complaint, Defendant took the complaint to her insurance carrier, State Farm, who advised her that State Farm would retain an attorney to handle the complaint.  Based on this, Defendant believed she did not need to take further action.  After learning about the entry of default on September 16, 2024, Defendant retained counsel.  That same day defense counsel reached out to Plaintiff’s counsel to seek a stipulation to set aside the default, but Plaintiff refused.  Defense counsel sent several follow-up emails to Plaintiff’s counsel.  On November 20, 2024, Plaintiff’s counsel advised that a request for entry of default judgment was filed and a stipulation could not be reached unless Defendant and State Farm admitted to liability.

Plaintiff opposes arguing that ignorance of legal procedures or reliance on third parties, such as an insurance carrier, does not amount to mistake or inadvertence.  Defendant had ample opportunities over the five months from service of the complaint to entry of default judgment to verify the status of this case.  Plaintiff will be prejudiced if the Court grants this motion because Plaintiff has expended significant time and resources prosecuting this case and related cases, obtaining default judgment, and attempting to enforce the judgment.  Plaintiff has also experienced delayed justice, constant badgering from medical creditors inquiring about the outcome of this case, and continued emotional distress from non-stop delays.  Further, Defendant failed to comply with section 473, subdivision (b)’s procedural requirements because Defendant did not include a proposed answer or responsive pleading with her motion. 

Defendant replies that beginning September 16, 2024, Defendant’s counsel attempted to meet and confer with Plaintiff’s counsel to set aside the dismissal.  Plaintiff agreed to set aside if Defendant and State Farm would admit to their liability and agree to settle.  Defendant sent Plaintiff proposed stipulations, and Plaintiff provided revisions on October 1, 2024.  Then Plaintiff filed for default judgment.  Plaintiff’s counsel admitted in emails that he had been in settlement negotiations with State Farm and was aware of their existence as Defendant’s insurance company when filing the complaint.  The proposed answer was inadvertently not attached to the moving papers, but Defendant attached it to the reply brief. 

ANALYSIS

The court may, upon any terms as may be just, relieve a party . . . 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.  (Code Civ. Proc., § 473, subd. (b).)  The law favors hearings on the merits, so any doubts as to the application of section 473 should be resolved in favor of the party seeking relief from default.  (See Shapiro v. Clark (2008) 164 Cal.App.4th 1128, 1139-1140.)  Defendant has six months after judgment is entered to file a motion to set aside the judgment.  (Code Civ. Proc., § 473, subd. (b).)

As an initial matter, Defendant failed to attach her proposed responsive pleading to her motion but did attach it to her reply.

When a default results from an attorney’s inexcusable neglect, such as failing to timely respond to the complaint, the attorney’s conduct is not imputed to the client unless the court finds that the attorney is simply covering for the client.  (See Rogalski v. Nabers Cadillac (1992) 11 Cal.App.4th 816, 821 [applying this concept to insurance carriers.)

However, “a defendant seeking to vacate a default, either under section 473 or by appeal to the court’s equitable powers, who alleges reasonable reliance on an insurance carrier must . . . establish justification for the inaction of the carrier.”  (Don v. Cruz (1982) 131 Cal.App.3d 695, 702; see also Scognamillo v. Herrick (2003) 106 Cal.App.4th 1139, 1149-1150 [“ There is no indication that the Legislature intended that insureds who reasonably rely on their insurance carriers should not be charged with the inexcusable negligence of their carriers.”].)  To establish the justification for inaction, the moving party must present evidence such as declarations from the insurance carrier explaining why the carrier failed to take action despite knowing about the pending lawsuit.  (But see Rogalski, supra, 11 Cal.App.4th at p. 821 [noting insurance carrier repeatedly led defendant to believe it would response to the complaint before abandoning plaintiff].) 

Defendant presents no evidence from State Farm explaining why State Farm failed to respond to the complaint.  Defendant states that she took the complaint to State Farm the day after Plaintiff served her.  Defendant did not file any responsive pleadings because State Farm told her it would handle responding to the complaint, and Defendant believed that State Farm and Plaintiff were in settlement negotiations.  Further, Defendant mentions no other attempts by her to communicate with State Farm about the complaint prior to the entry of default or that State Farm “repeatedly” told her that it would respond to the complaint.

Defendant argues that once she learned about entry of default, she was diligent in securing counsel and attempting to seek relief from the default.  Plaintiff argues Defendant did not diligently seek relief from default after learning of the entry of default because Defendant unnecessarily delayed filing this motion.  “[W]here the aggrieved party makes a strong showing of diligence in seeking relief after discovery of the facts, and the other party is unable to show prejudice from the delay, the original negligence in allowing the default to be taken will be excused on a weak showing.”  (Aldrich v. San Fernando Valley Lumber Co. (1985) 170 Cal.App.3d 725, 740.)

Plaintiff contends that Defendant has an independent duty to defend and monitor the process of the case, including not simply passing legal documents along to an insurance carrier to absolve them of responsibility.[1]  Aldrich discusses positive misconduct—an attorney’s failure to represent his client—and whether a client can be held responsible for his attorney’s inexcusable neglect.  (Aldrich, supra, 170 Cal.App.3d at p. 739.)  In Aldrich, the Court of Appeal held that although a client is not responsible for his attorney’s inexcusable neglect in representation, once the client discovers facts of the attorney’s misconduct the client must subsequently demonstrate sufficient diligence in seeking relief from the misconduct’s fruits including an entry of default or default judgment.  (Aldrich, supra, 170 Cal.App.3d at p. 740.)  Once the Aldrich defendant learned his case had been dismissed due to his attorney’s misconduct, he secured a new attorney who filed a motion to set aside the dismissal 21 days later.  (Ibid.)  And although the plaintiff argued it suffered prejudice due to the delay, the Court found that plaintiff’s single declaration did not set forth substantial evidence of prejudice such as “missing witnesses [and] evidence destroyed.”  (Ibid.)  The Court of Appeal ultimately affirmed the trial court’s order setting plaintiff’s dismissal of the case aside.

Defendant promptly secured counsel upon learning of the default and began a meet and confer process with Plaintiff’s counsel.  However, Defendant delayed filing this motion to vacate because the parties were in the process of negotiating a stipulation.  Plaintiff’s counsel ceased communications with defense counsel after September 25, 2024, and Defense counsel sent two follow-up emails on October 1 and 22, 2024 asking for Plaintiff’s confirmation on the stipulation.  Plaintiff’s counsel did not communicate again until informing defense counsel of her request for entry of default judgment on November 20, 2024.  Unlike the Don v. Cruz and Rogalski defendants who filed their motions to vacate while attempting to seek stipulations, Defendant waited until Plaintiff informed her of the entry of default judgment.

Plaintiff claims that she will be prejudiced if her default and default judgment is set aside because she has expended significant time and resources prosecuting this case and obtaining and enforcing this judgment.  She has two other cases against the other individuals involved in the vehicle collision, and the delay in this cause has resulted in constant badgering from medical creditors inquiring about the outcome of this case and continued emotional distress from non-stop delays.  Plaintiff’s health care providers continue to grow impatient over the delay in Plaintiff’s payment of her healthcare debts.

The Court finds that Defendant fails to make sufficient showings of State Farm’s justification for not responding and diligence and that Plaintiff establishes how she will suffer prejudice in her finances and other cases if the default and default judgment is set aside.

Accordingly, Defendant’s motion to set aside and vacate entry of default and default judgment is denied.

Defendant to give notice.