Judge: Holly J. Fujie, Case: 20STCV17972, Date: 2022-08-09 Tentative Ruling

DEPARTMENT 56 JUDGE HOLLY J. FUJIE, LAW AND MOTION RULINGS. The court makes every effort to post tentative rulings by 5.00 pm of the court day before the hearing. The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)], and are also available in the courtroom on the day of the hearing [see CRC 3.1308(b)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) call Dept 56 by 8:30 a.m. on the day of the hearing (213/633-0656) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. 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 by Court Call. Court reporters are not provided, and parties who want a record of motions and other proceedings must hire a privately retained certified court reporter.

Case Number: 20STCV17972    Hearing Date: August 9, 2022    Dept: 56

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

MOVING PARTY: Defendant Arizona Townhomes Association (“Moving Defendant”)

RESONDING PARTY: Plaintiff

            The Court has considered the moving, opposition and reply papers. 

BACKGROUND

            This action involves a dispute with a Homeowners Association.  Plaintiff filed the currently operative first amended complaint (the “FAC”) on September 10, 2021.  On November 8, 2021, default was taken against Moving Defendant.  On February 22, 2022, Plaintiff filed an application for default judgment against Moving Defendant.  On March 23, 2022, an attorney representing Moving Defendant’s insurance company filed a declaration with the Court indicating that Moving Defendant was a suspended corporation that was seeking to be reinstated.  On March 30, 2022, the Court denied Plaintiff’s application for default judgment and ordered that Moving Defendant file evidence of reinstatement and a proposed responsive pleading at least five court days before a June 3, 2022 OSC.  Moving Defendant did not file any documents before June 3, 2022 but filed a Notice of Reinstatement on June 8, 2022 and a brief regarding its reinstatement and representation on June 13, 2022.  Moving Defendant filed a further declaration regarding its suspension and reinstatement on June 27, 2022.  During a July 11, 2022 OSC regarding Moving Defendant’s representation, the Court ordered Moving Defendant to seek relief from default by August 11, 2022.  On July 19, 2022, Moving Defendant filed a motion to set aside default (the “Motion”) to CCP section 473, subdivision (b) (the “Motion”).

REQUEST FOR JUDICIAL NOTICE

            Plaintiff’s Request for Judicial Notice is GRANTED.

DISCUSSION

The court is empowered to relieve a party or their legal representative from a judgment, dismissal, order, or other proceeding taken against them through their mistake, inadvertence, surprise or excusable neglect.  (CCP § 473, subd. (b).)  A request for relief pursuant to CCP section 473, subdivision (b) must be accompanied by a copy of the answer or other pleading proposed to be filed therein.  (Id.)  A party must diligently seek relief within a reasonable time, in no case exceeding six months, after the judgment was taken.  (Id.)

The law favors a trial on the merits and courts therefore liberally construe section 473.  (Bonzer v. City of Huntington Park (1993) 20 Cal.App.4th 1474, 1477.)  Doubts in applying section 473 are resolved in favor of the party seeking relief from default; if that party has moved promptly for relief, only slight evidence is required to justify an order granting such relief.  (Id. at 1478.)  The party seeking relief has the burden of establishing mistake, inadvertence, surprise or excusable neglect and must prove it by a preponderance of the evidence.  (Id.)  Discretion is abused in granting relief from default if the moving party’s supporting affidavit or declaration fails to set forth facts sufficient to constitute grounds for relief.  (Transit Ads, Inc. v. Tanner Motor Livery, Limited (1969) 270 Cal.App.2d 275, 280.)  The mistake, inadvertence or surprise which justifies a court in setting aside a default must be reasonable.  (Cyrus v. Haveson (1976) 65 Cal.App.3d 306, 315.)  

The six-month time limit for granting statutory relief is jurisdictional and the court may not consider a motion for relief made after that period has elapsed.  (Manson, Iver & York v. Black (2009) 176 Cal.App.4th 36, 42.) Courts have no authority under section 473, subdivision (b), to excuse a party's noncompliance with the six-month time limit.  (Arambula v. Union Carbide Corp. (2005) 128 Cal.App.4th 222, 345.)  There is no indication in the language of section 473, subdivision (b), that the Legislature intended to authorize a court to relieve a party from the failure to timely apply for relief.  (Id.)  The statute states that an application for discretionary relief “shall be made within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken,” and that that an application for mandatory relief must be made “no more than six months after entry of judgment.”  (Id.)  This language does not suggest that an exception should exist based on mistake, inadvertence, surprise, or excusable neglect or an attorney's affidavit of fault.  (Id.)

            In support of the Motion, Moving Defendant provides evidence that due to an oversight or mistake, an updated Statement of Information was never filed with the Secretary of State and as a result, the FAC was served on the former agent for service of process, William Whitt (“Whitt”).  (See Declaration of Joseph McCabe (“McCabe Decl.”).)  Plaintiff’s request for entry of default was also mailed to Whitt.  (Declaration of William Whitt (“Whitt Decl.”) ¶¶ 3, 5.)   Plaintiff sought the entry of default despite being informed by Whitt that he was erroneously listed as the agent for service of process.  (Whitt Decl. ¶¶ 4-5.)  Whitt’s attorney contacted officers of Moving Defendant on November 24, 2021 notifying them of Plaintiff’s lawsuit.  (Whitt Decl. ¶ 5, Exhibit B.)[1]  McCabe, who is the president and CEO of Moving Defendant’s community management company, did not learn of this action until approximately November 29, 2021.  (McCabe Decl. ¶ 6.)  Moving Defendant was reinstated by the Secretary of State on May 6, 2022.  (See RJN, Exhibit 3.)

            Plaintiff argues that the Court lacks the discretion to grant relief under CCP section 473, subdivision (b) because the Motion was filed over six months after the entry of default.  Plaintiff’s argument is well-taken.  The mandatory filing deadline was May 9, 2022.  Because Moving Defendant’s corporate status was reinstated on May 6, 2022, it was legally capable of seeking relief by that time.  Moving Defendant’s argument in its reply brief (the “Reply”) regarding the lack of time between its reinstatement and the deadline to seek relief from default constituting excusable mistake or neglect on the part of its counsel is unavailing for two reasons.  First, Moving Defendant has not submitted any evidence that the time constraints prevented its counsel from filing a timely motion for relief.[2]  Furthermore, the language of CCP section 473 applies to the mistakes or excusable neglect that led to the default but does not provide a pathway for seeking relief after the mandatory deadline due to an attorney’s error.  (See Arambula v. Union Carbide Corp. (2005) 128 Cal.App.4th 222, 345.) 

Equitable Relief

After six months from entry of default, a trial court may still vacate a default on equitable grounds, including extrinsic fraud and mistake, even if statutory relief is unavailable.  (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 981.)  To qualify for equitable relief on the ground of extrinsic fraud or mistake, the moving party must demonstrate diligence in seeking to set aside the default once it was discovered.  (Id. at 982.)  Extrinsic fraud occurs when a party is deprived of the opportunity to present his claim or defense to the court; where he was kept ignorant or, other than from his own negligence, fraudulently prevented from fully participating in the proceeding.  (Kramer v. Traditional Escrow, Inc. (2020) 56 Cal.App.5th 13, 36.)  Extrinsic mistake occurs when circumstances extrinsic to the litigation have unfairly cost a party a hearing on the merits.  (Id. at 30.)  In contrast with extrinsic fraud, extrinsic mistake exists when the ground of relief is not so much the fraud or other misconduct of one of the parties as it is the excusable neglect of the defaulting party to appear and present his claim or defense.  (Id.)  If that neglect results in an unjust judgment, without a fair adversary hearing, the basis for equitable relief on the ground of extrinsic mistake is present.  (Id.)  Relief will be denied, however, if the complaining party's negligence permitted the fraud to be practiced or the mistake to occur.  (Id.)

            Moving Defendant has not presented sufficient evidence to warrant equitable relief from default.  While Plaintiff may have known individuals connected with Moving Defendant who she could have contacted regarding the identity of the designated agent for service of process or Moving Defendant’s counsel after being informed by Whitt that he was improperly designated as the agent for receipt of service of process, Plaintiff’s argument that Moving Defendant was not entitled to have legal representation due to its suspension as a corporate entity is well-taken, particularly since McCabe was aware of the default on around November 29, 2021.  Although Moving Defendant was precluded from seeking relief from default until it was reinstated on May 8, 2022, Moving Defendant has not presented evidence that its suspension was not due to its own negligence.[3]  Nor does the Motion indicate when Moving Defendant learned of its suspension.  In addition, McCabe had notice of this action in late November 2021 and the Motion does not provide details of Moving Defendant’s efforts to become reinstated prior to March 23, 2022, when its insurance company’s attorney filed a declaration.  Moreover, the Court notes that Moving Defendant filed several declarations prior to the Motion regarding its reinstatement, none of which make note of its ability (or lack thereof) to timely seek relief from default.

            The Court therefore DENIES the Motion.  The Court sets a non-appearance case review regarding Plaintiff’s pending application for default judgment on August 30, 2022 at 10:30 a.m.

            Moving party is ordered to give notice of this ruling.

In consideration of the current COVID-19 pandemic situation, the Court¿strongly¿encourages that appearances on all proceedings, including this one, be made by LACourtConnect if the parties do not submit on the tentative.¿¿If you instead intend to make an appearance in person at Court on this matter, you must send an email by 2 p.m. on the last Court day before the scheduled date of the hearing to¿SMC_DEPT56@lacourt.org¿stating your intention to appear in person.¿ The Court will then inform you by close of business that day of the time your hearing will be held. The time set for the hearing may be at any time during that scheduled hearing day, or it may be necessary to schedule the hearing for another date if the Court is unable to accommodate all personal appearances set on that date.¿ This rule is necessary to ensure that adequate precautions can be taken for proper social distancing.

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org.  If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

    Dated this 9th day of August 2022