Department 30, Spring Street Courthouse

January 12, 2023

20STCV10667

Motion to Set Aside Default  filed by American Curvet Investment LLC

The motion is granted.

The answer filed on July 29, 2022 is accepted.

Moving party to provide notice.

This is an action for negligent hiring, respondeat superior, assault, battery, and loss of consortium arising from an altercation which occurred on October 18, 2019. Plaintiffs Michael and Kendra Slocum filed their Complaint against Defendants Celebrity Casinos, Inc., and American Curvet Investment, LLC on March 16, 2020.

Default was entered against American Curvet Investment LLC (“ACI”) on February 20, 2022.

On July 29, 2022, ACI filed the instant motion to set aside default.

On December 6, 2022, the Court continued the hearing on this matter to allow the parties to file additional briefing.

Plaintiff’s briefing 

Plaintiffs argue that ACI failed to articulate a satisfactory excuse as to why it could not discover this lawsuit between June 2021 and April 2022 other than the excuse that it had a turnover in staff. Plaintiffs argue that Cruz v. Fagor provides that a party seeking to set aside default must articulate a satisfactory excuse for not presenting a defense to the original action.

ACI’s briefing

ACI argues that Cruz v. Fagor is inapplicable to this case because it rested on Code Civ. Proc., section 473(d), not 473(b). ACI argues its motion to set aside default should be granted because the effectiveness of service is only a factor to be considered in the motion. 

 

Per Code of Civil Procedure, section 473, subdivision (b), a court may relieve a party or his counsel from a dismissal against him because of his “mistake, inadvertence, or excusable neglect.” The application must be made “no more than six months after entry of judgment, is in proper form, and is accompanied by a proposed answer or other pleading. (Id.) And when such relief is available, “there is a strong public policy in favor of granting relief and allowing the requesting party his or her day in court.” (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 981-982, internal quotations omitted.)

Merely setting aside a default and default judgment absent a motion to quash service of summons does not resolve issues with jurisdiction. (Marriage of Smith (1982) 135 CA3d 543, 554–555.)

ACI seeks to set aside default on the grounds that its excusable neglect caused it to discover the lawsuit in April 2022, after default had already been entered. 

ACI supports its motion with a declaration from Feiyu Wang, the ACI’s President, who testifies that ACI’s offices were closed due to the COVID-19 pandemic and only resumed operations in June 2021. (Wang Decl., ¶3.) ACI had major turnover in its staff and new staff members sorted through a significant number of letters and correspondence received during the shut-down period. (Id.) It was not until the end of April 2022 that ACI discovered the lawsuit. (Id.) ACI discovered that Plaintiffs left the Complaint on February 26, 2021 with an unknown male who was Caucasian and between 36-40 years of age with brown hair, hazel eyes, and who weighed between 201-220 pounds. (Id., ¶4.) ACI did not employ such a person and no other personnel other than security were present at the time Plaintiffs allegedly served the Complaint. (Id.) 

Plaintiffs argue that it is doubtful that ACI did not know about the lawsuit because Defendant Celebrity Casinos, which shares an address with ACI, has been actively litigating this case. However, Plaintiffs supply no evidence that ACI knew of the lawsuit. 

The parties also dispute whether service was proper. However, ACI makes this motion under Code Civ. Proc., section 473(b), not section 473.5, and does not move to quash service of summons. ACI’s evidence shows that it was unaware of the lawsuit because its offices were shut down and its staff neglected to discover the lawsuit until April 2022 due to staff turnover and the large amount of correspondence to be reviewed as a result of the shut down. The Court finds that ACI failed to file a responsive pleading due to excusable neglect. 

The parties submitted additional briefing on Cruz v. Fagor America, Inc. (2007) 146 Cal.App.4th 488, 503. The court in Cruz v. Fagor reversed a trial court’s decision to grant a motion to set aside under Code Civ. Proc., section 473(d) on the grounds that the judgment was void on its face because service was improper. The court then turned to equitable relief outside of Code Civ. Proc., section 473 because the motion to set aside was filed after the six-month deadline specified in Code Civ. Proc., section 473(b) had passed. Statutory relief under Code Civ. Proc., section 473(b) was no longer available and the defendant there sought equitable relief on the basis of extrinsic mistake. Setting aside a judgment on the ground of equitable mistake requires that the defaulted party show (1) that it has a meritorious case, (2) the party seeking to set aside the default must articulate a satisfactory excuse for not presenting a defense to the original action, and (3) the moving party must demonstrate diligence in seeking to set aside once default is discovered. (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 981.) The defendant in Cruz v. Fagor failed to explain why it did not present a defense to the original action despite knowing of the entry of default in advance of the six-month deadline.

Here, unlike in Cruz v. Fagor, ACI filed its motion five months after default was entered. Its motion is timely and statutory relief under Code Civ. Proc., section 473(b) is still available. Unlike equitable relief under a doctrine of extrinsic mistake, 473(b) does not require the defaulted defendant to show why it did not present a defense to the original action. Rather, a showing that the default was entered due to mistake, inadvertence, surprise, or neglect is sufficient. Moreover, “any doubts in applying section 473 must be resolved in favor of the party seeking relief from default.” (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 981. (quoting Elston v. City of Turlock (1985) 38 Cal.3d 227, 233.))

Here, ACI’s evidence is sufficient to show that it neglected to discover the lawsuit because of its office closure and staff turnover. Given the unprecedented circumstances of the pandemic, the Court finds this neglect to be excusable. Thus, relief under Code Civ. Proc., section 473(b) is granted.