Judge: Joel L. Lofton, Case: 23AHCV01961, Date: 2024-08-26 Tentative Ruling

Case Number: 23AHCV01961    Hearing Date: August 26, 2024    Dept: X

   Tentative Ruling

Judge Joel L. Lofton, Department X

HEARING DATE:     August 26, 2024                                              TRIAL DATE:  No date set.

CASE:                         RIDERWOOD USA INC., a California corporation, Plaintiff, vs. JL Investment Group, Inc., a California corporation dba Baja Cali Fish & Tacos; Bibigo International LLC, a California limited liability company; CJ America, Inc., a New York corporation; and DOES 1 through 10, inclusive.  

CASE NO.:                 23AHCV01961

MOTION TO SET ASIDE DEFAULT

MOVING PARTY:               Defendant JL Investment Group, Inc. (“JLIG”)

RESPONDING PARTY:      Riderwood USA Inc.

SERVICE:                             Filed July 9, 2024

OPPOSITION:                     Filed August 9, 2024

REPLY:                                 Filed August 19, 2024

RELIEF REQUESTED

            Defendant JLIG moves to set aside the default entered on October 26, 2023 based on improper service (Code Civ. Proc. § 473(d)) and attorney mistake, inadvertence, surprise, and neglect of JLIG’s general counsel Tricia Wilson (Code Civ. Proc. § 473(b).)

BACKGROUND

Defendant was the final tenant of a commercial space.

The complaint alleges Plaintiff’s predecessor-in-interest, as landlord, and the original tenant, Bibigo International, entered a lease on or about April 7, 2016. On October 16, 2019, the landlord and tenants entered an assignment, assumption and consent agreement where the lease was assigned from Bibigo International to JLIG. CJ America guaranteed the lease. Plaintiff currently is the landlord under the lease and guaranty, and alleged all Defendants failed and refused to make the rent payments under the lease. Attached to the complaint is the lease as Exhibit A and the guaranty as Exhibit B.

Plaintiff brought this action for breach of lease and breach of guaranty.

TENTATIVE RULING

            JL Investment Group, Inc.’s motion to set aside the default is DENIED.

LEGAL STANDARD

“The court may . . . on motion of either party after notice to the other party, set aside any void judgment or order.”  (Code Civ. Proc. § 473(d).)  Generally, defendants have six months from entry of judgment to move to vacate.  (Code Civ. Proc §473(b).)  But, if “the judgment is void on its face, then the six month limit set by section 473 to make other motions to vacate a judgment does not apply.” (National Diversified Services, Inc. v. Bernstein (1985) 168 Cal.App.3d 410, 414.)

Code of Civil Procedure section 473(b) allows the court to set aside a judgment, dismissal, order, or other proceeding against the moving party based on that party’s mistake, inadvertence, surprise, or excusable neglect. (Code Civ. Proc. § 473(b).) The motion to set aside must be accompanied by a copy of the proposed pleading to be filed therein. (Ibid.)

The discretionary relief provision allows the trial court to set aside a default or a default judgment caused by a party's "mistake, inadvertence, surprise, or excusable neglect." (Code Civ. Proc. § 473(b).) The application for such relief must "be made within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken." (Ibid.)

DISCUSSION

On October 26, 2023, Plaintiff requested, and the court entered, default against Defendant. Plaintiff has not submitted an application for entry of default judgment, so default judgment has not yet been entered in this matter. Defendant now seeks an order setting aside the default under Code Civ. Proc. §§ 473(d) and (b). Defendant contends it is entitled to relief for three reasons. First, under section 473(d) because service was improper. Second, under section 473(b) because of attorney mistake, inadvertence, surprise, and neglect. Third, because public policy favors setting aside default and allowing Defendant to answer. The court addresses each argument in turn.

First, the Court finds that Defendant has not demonstrated entitlement to the requested relief under section 473(d). Section 473(d) provides, in relevant part, that “[t]he court may . . . on motion of either party after notice to the other party, set aside any void judgment or order.” (Code Civ. Proc. § 473(d).) Defendant is correct that the court has the power to set aside entry of a default which is valid on its face yet void as a matter of law owing to improper service. See Hearn v. Howard (2009) 177 Cal. App. 4th 1193, 1199; Ellard v. Conway (2001) 94 Cal. App. 4th 540, 544. In this case, however, the Court finds that Defendant has failed to demonstrate that Plaintiff did not effectuate proper substitute service of the summons and Complaint.

“It is the policy of the law to favor, whenever possible, a hearing on the merits. Appellate courts are much more disposed to affirm an order when the result is to compel a trial on the merits than when the default judgment is allowed to stand. [Citation.] Therefore, when a party in default moves promptly to seek relief, very slight evidence is required to justify a trial court’s order setting aside a default.” (Shamblin v. Brattain (1988) 44 Cal.3d 474, 478.) “ ‘ “Even in a case where the showing … is not strong, or where there is any doubt as to setting aside of a default, such doubt should be resolved in favor of the application.” ’ ” (Rosenthal v. Garner (1983) 142 Cal.App.3d 891, 898.)

In this case, Defendant claims it was not properly served with Plaintiff’s summons and complaint. Plaintiff filed a proof of service on October 18, 2023. According to the proof of service, registered process server J. Martinez served JLIG by substitute service. Substitute service is authorized both for individual defendants and for entity defendants (corporations, partnerships, public entities, etc.). (Code Civ. Proc. § 415.20(a)-(b).) However, the big difference in using substitute service for individual, as opposed to entity, defendants is that a good faith effort at personal service must first be attempted (i.e., there must be a showing that the summons “cannot with reasonable diligence be personally delivered” to the individual defendant). (Code Civ. Proc. § 415.20(b).) Section 415.20(b) provides:

“If a copy of the summons and complaint cannot with reasonable diligence be personally delivered to the person to be served, as specified in Section 416.60, 416.70, 416.80, or 416.90, a summons may be served by leaving a copy of the summons and complaint at the person’s dwelling house, usual place of abode, usual place of business, or usual mailing address other than a United States Postal Service post office box, in the presence of a competent member of the household or a person apparently in charge of his or her office, place of business, or usual mailing address other than a United States Postal Service post office box, at least 18 years of age, who shall be informed of the contents thereof, and by thereafter mailing a copy of the summons and of the complaint by first-class mail, postage prepaid to the person to be served at the place where a copy of the summons and complaint were left. Service of a summons in this manner is deemed complete on the 10th day after the mailing.”

Section 415.20 allows substitute service on a business to be served on the first attempt by leaving a copy with anyone apparently in charge of the business or at a mailing address; and thereafter mailing additional copies to the defendant within 10 days.

            The Court finds Defendant’s motion for improper service is untimely. Here, the Proof of Service indicates substitute service was performed on September 15, 2023 at 12:09 pm at 2001 W. Valley Blvd., Alhambra, California. On the same day, the process server mailed copies of the documents to Defendant at the place where the copies were left. Although Defendant argue that the person substitute served, Mariah, was just a cashier and not able to accept anything from the process server, the Court finds that she was a person apparently in charge of Defendant at Defendant’s place of business. (Code Civ. Proc. § 415.20(b).) Therefore, substitute service was properly completed and Defendant cannot seek relief under section 473(d).

            Second, the Court finds that Defendant has not demonstrated entitlement to the requested relief under section 473(b). Section 473(b) provides, in relevant part, that “[t]he court may, upon any terms as may be just, relieve a party or his or her legal representative 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 made within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken.” (Code Civ. Proc. § 473(b).)

Here, the Court finds that Defendant has not met her burden of demonstrating that her failure to file an answer or otherwise plead to the complaint was a result of mistake, inadvertence, surprise, or excusable neglect. The evidence shows that Plaintiff effectuated proper substitute service upon Defendant on September 15, 2023. While Plaintiff commenced this action on August 25, 2023 and Defendant’s general counsel, Tricia Wilson, did not become aware of this lawsuit until after JLIG received the clerk’s entry of default in the mail (the Wilson Declaration does not specify what date she became aware of the action). (Wilson Decl. ¶ 3.) Wilson did not believe she needed to respond to the complaint because she was working with Plaintiff to settle the matter. (Wilson Decl. ¶ 4.) After several attempts to settle, it is apparent to JLIG that an early settlement is no longer feasible. (Ibid.) Due to Wilson’s mistaken belief that the case could be settled quickly, JLIG did not move to quash service of summons or request to set aside the default until now. (Ibid.)

In opposition, Plaintiff’s counsel David Cohen declares that he attempted to discuss settlement with the defendants in mid-August 2023 which led nowhere. (Cohen Decl. ¶ 3.) On August 28, 2023, three days after the complaint was filed, Cohen asked Wilson if she was authorized to accept service of process and Wilson called him the following day to indicate she was not authorized. (Cohen Decl. ¶ 4.) Cohen declares that he told Wilson that he already filed the complaint. (Ibid.) The Cohen Declaration attaches an email from Wilson on September 11, 2023, stating “I have forwarded all our correspondences to Mr. Alvarez. He has given me the authority to let you know that they are not in a financial position to defend this lawsuit at the moment, but plan to be in touch with you.” (Cohen Decl. ¶ 5, Exh. B.)

Plaintiff’s counsel has successfully established that Defendant’s counsel Wilson was aware of the suit by including a true and correct copy of Wilson’s September 11 email message. Wilson’s declaration does not demonstrate that she nor JLIG diligently attempted to settle the dispute. Wilson states she “first became aware of this action and lawsuit only after Defendant JLIG received the clerk’s entry of default in the mail” which would have been after the process server’s mailing date of September 15, 2023– but this declaration is disproven by her September 11, 2023 email which admits she was knowledgeable about the lawsuit. The Court finds there was no attorney mistake, inadvertence, surprise, or neglect here and Defendant cannot seek relief under section 473(b).

Third, Defendant argues public policy favors setting aside default and allowing Defendant to answer. Defendant’s motion, and the Welch Declaration, state that a copy of JLIG’s proposed answer to Plaintiff’s complaint is attached as Exhibit 3 to the Welch Declaration. The Court sees there is no such attachment of the proposed answer in the Welch Declaration, nor on file with the Court at all. Further, the motion is untimely. Defendant’s reply argues the motion is timely because it is seeking mandatory relief, not discretionary relief. When a complying affidavit is filed, relief is mandatory, even if the attorney’s neglect was inexcusable.  Rodrigues v. Superior Court (2005) 127 Cal.App.4th 1027, 1033. However, relief may be denied if the court finds the default was not in fact the attorney’s fault, e.g., when the attorney is simply covering up for the client’s neglect. Rogalski v. Nabers Cadillac (1992) 11 Cal.App.4th 816, 821. Similarly, where a party inexcusably allows default to be entered and then afterwards hires an attorney, the provision does not apply because the default must in fact be caused by the attorney’s mistake. Cisneros v. Vueve (1995) 37 Cal.App.4th 906, 908, 910–912.

Here, the Court observes that it was undisputed that default was entered against JLIG on October 26, 2023. However, the Wilson Declaration’s only attempt at explaining attorney mistake, inadvertence, surprise, or neglect is that she first became aware of the action and suit after JLIG received the entry of default in the mail (Wilson Decl. ¶ 3), and she believed the lawsuit could be resolved through early settlement and her mistaken belief is why JLIG did not move to quash summons or request to set aside default until now. (Wilson Decl. ¶ 4.) Although the Court has already determined that Wilson’s email message establishes her knowledge of the suit before the default—assuming arguendo that her declaration is true and she was not aware of the suit until she received the clerk’s entry of default in the mail, then attorney error could not possibly have caused the default in this case. Thus, the Court determines that mandatory relief is unavailable to JLIG.

Based on the above, Defendant has not demonstrated entitlement to the requested relief. Therefore, the motion is DENIED.

CONCLUSION

            JL Investment Group, Inc.’s motion to set aside the default is DENIED.

Moving Party to provide notice.

Dated:   August 26, 2024                                ___________________________________

                                                                                    Joel L. Lofton

                                                                                    Judge of the Superior Court