Judge: H. Jay Ford, III, Case: SC129393, Date: 2022-09-22 Tentative Ruling

Case Number: SC129393    Hearing Date: September 22, 2022    Dept: O

  Case Name:  Copeland v. Lion Interior Design, Inc. et al.

SUBJECT:                MOTION TO SET ASIDE/VACATE DEFAULT  

MOVING PARTY:   Judgment Debtors/Defendants Andreas Elsenhans and Sam Branco

RESP. PARTY:         Judgment Creditor/Plaintiff Courtney Copeland

TENTATIVE RULING

            Judgment Debtors/Defendants Andreas Elsenhans and Sam Branco’s Motion to Set Aside/Vacate Default is DENIED.

            Judgment Debtors’ Motion to Set Aside/Vacate Default pursuant to CCP §473(b) is DENIED as untimely.  The judgment was entered on 7-26-21.  The motion was not filed until 6-17-22, almost a year later.  CCP §473(b) imposes a mandatory deadline of six months (“within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken”).  “A party seeking relief under section 473(b) must file the motion within a reasonable time but not longer than six months after the judgment or dismissal has been entered. This six-month time limitation is jurisdictional; the court has no power to grant relief under section 473 once the time has lapsed.”  Austin v. Los Angeles Unified School Dist. (2016) 244 Cal.App.4th 918, 928.

            The motion was filed more than six months after entry of judgment on 7-26-21.  The Court has no jurisdiction to grant relief from the judgment based on CCP §473(b).

            Judgment Debtors' Motion based on CCP §473.5 is DENIED.  CCP §473.5 provides relief from a default or default judgment “when service of a summons has not resulted actual notice to a party in time to defend the action.”  CCP §473.5(a). 

            Judgment debtors claim they did not have actual notice of their attorney’s withdrawal, because he failed to serve them at the proper address.  Judgment debtors also claim they did not have actual notice of the continued trial date, because the Court and Plaintiff failed to serve them with notice at the property address.  Judgment debtors do not claim that service of the summons did not result in actual notice of this action in time defend, as required under CCP §473.5.  Judgment debtors filed a timely answer in response to service of summons.

            Judgment debtors fail to cite any authority applying CCP §473.5 to the facts presented here.  Judgment debtors cite Avila v. Chua (1997) 57 Cal.App.4^th 860 and In re Marriage of Hock & Gordon-Hock (2000) 80 Cal.App.4^th 1438.  However, neither case involved CCP §473.5  and only addressed relief under CCP §473(b) based on failure to appear at trial and failure to oppose a motion for summary judgment, which were both deemed the equivalents of a default and default judgment and therefore subject to mandatory relief. 

            On reply, for the first time, Judgment Debtors reference extrinsic relief based on extrinsic fraud or mistake.  “Where, as in the case at bench, the motion is made more than six months after entry of default, the motion is not directed to the court's statutory power under section 473 to grant relief for mistake or excusable neglect but rather is directed to the court's inherent equity power under which it may grant relief from a default judgment where there has been extrinsic fraud or mistake.”  Aldrich v. San Fernando Valley Lumber Co. (1985) 170 Cal.App.3d 725, 737.

            “During the period when relief under section 473 is available, there is a strong public policy in favor of granting relief and allowing the requesting party his or her day in court. Beyond this period there is a strong public policy in favor of the finality of judgments and only in exceptional circumstances should relief be granted.”  Gibble v. Car-Lene Research, Inc. (1998) 67 Cal.App.4th 295, 315.  “A party who seeks to have his default vacated under the court's equity power must make a stronger showing than is necessary to obtain relief under section 473.”  Gibble v. Car-Lene Research, Inc. (1998) 67 Cal.App.4th 295, 314–315.

            Judgment Debtors argue equitable relief based on extrinsic mistake.  For purposes of extrinsic mistake or fraud, the party seeking relief must satisfy three elements.  “First, the defaulted party must demonstrate that it has a meritorious case. Second, 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.”  See Rappleyea v. Campbell (1994) 8 Cal.4th 975, 982.

            “In some cases the ground of relief is not so much the fraud or other misconduct of the defendant as it is the excusable neglect of the plaintiff to appear and present his claim or defense. If such neglect results in an unjust judgment, without a fair adversary hearing, the basis for equitable relief is present, and is often called 'extrinsic mistake.”  Kulchar v. Kulchar (1969) 1 Cal.3d 467, 471. 

            Judgment debtors fail to make a strong showing that it has a meritorious case.  Judgment Debtors admit that they used Judgment creditor’s paintings to decorate their rental units, but they argue there was never an oral agreement.  See Motion, Dec. of A. Elsenhans, ¶¶2-3.  Judgment Debtors admit that they also paid her occasionally for the paintings but such payments were a “complementary fee” to demonstrate “gratitude.”  Id. at ¶2.  Judgment debtors admit use of the paintings and payment for the paintings, though there is some disagreement as to whether they agreed to pay and how much.  Judgment debtors also admit that they “assumed” Judgment creditor had abandoned her artwork and donated the artwork to charity.  Id. at ¶4. 

            Judgment debtor Bronco also admits that he had actual knowledge of Clark Hill, LLP’s withdrawal as counsel of record for himself and Elsenhans.  See Motion, Dec. of S. Branco, ¶3.  Branco admits that he never informed Elsenhans of the status of the lawsuit.  Id. at ¶4. 

            Judgment debtor Elsenhans claims he did not receive notices of the withdrawal, the trial date or the continued trial date.  Judgment debtor claims the notices were all sent to the Stanley Hills address, which was admittedly listed on his real estate license but contrary to the Court’s Order Granting the Motion to Withdraw.  See Motion, Dec. of A. Elsenhans, ¶9.  Judgment debtor Elsenhans claims he relied entirely on Bronco’s representation that the matter was resolved. 

            Judgment Debtor Elsenhaus claims he did not realize there was a judgment against him in this case until his real estate agency informed him of the order.  However, Elsenhaus fails to state exactly when he discovered the judgment. 

            More importantly, after discovering the assignment order against him, Elsenhaus did not immediately move for relief.  Instead, he entered into a Stipulation to Modify Assignment Order with Judgment Creditor.  See Stipulation and Order filed on 6-1-22.  Elsenhaus agreed to a payment schedule to satisfy the judgment in full.  Id.  Elsenhaus fails to address the Stipulation in his motion. 

            Elsenhaus’s decision to enter into the Stipulation once he discovered the judgment rather than immediately moving to set aside the judgment indicates a lack of diligence in seeking relief.  Moreover, the Stipulation itself acknowledged the validity of the judgment, and Elsenhaus arguably waived any right to equitable relief from the judgment. 

            Judgment Debtors fail to establish that they have a meritorious defense.  They admit that they used Judgment Creditor’s paintings as décor for their rental units and that they disposed of the paintings because they “assumed” Judgment Creditor had abandoned them.  Judgment Debtors’ admissions would support a claim for unjust enrichment and conversion, at the very least.

            Judgment Debtors also fail to establish that they acted diligently in seeking relief from the judgment. Bronco offers no details as to how he found out about the judgment, when he found out about it or what he did upon learning of the judgment.   Elsenhans’s execution of the Stipulation upon discovery the assignment order and judgment goes against a finding of diligence and supports a finding of waiver of the right to challenge the judgment. 

            Judgment Debtors fail to demonstrate grounds for equitable relief from the judgment based on extrinsic mistake.  Judgment Debtors’ motion for relief from the judgment based on extrinsic mistake is DENIED.