Judge John J. Kralik, Case Number: 21BBCV00311, Date: 2023-12-15 Tentative Ruling

Plaintiff Deep Green Housing and Community Development (“Plaintiff”) alleges that on November 9, 2018, Plaintiff and Defendant Plumbers on Demand (“Defendant”) entered into an oral agreement pursuant to which Defendant agreed that it would perform plumbing services for various properties under Plaintiff’s management and control. (Compl., ¶6.) Pursuant to the oral agreement, Defendant completed and ceased providing its plumbing services on July 2, 2020. (Id., ¶7.) Plaintiff alleges that the work Defendant provided required it to be properly licensed as a contractor at all times during the performance of its work. Plaintiff believes Defendant was not properly licensed. (Id., ¶¶8-9.) Plaintiff alleges that it paid Defendant $207,377.84 based on Defendant’s billing and thus Plaintiff seeks to recover $207,377.84 against Defendant pursuant to Business & Professions Code, § 7031(b). (Id., ¶¶10-12.)

The complaint, filed on March 30, 2021, alleges a single cause of action for disgorgement of money paid to unlicensed contractor (violation of Business & Professions Code, § 7031(b)).

On October 5, 2023, Defendant filed a motion to set aside the entry of default and default judgment.

On November 4, 2022, counsel Michael D. Kolodzi, Esq. was relieved as counsel for Defendant.[1] The Court set an OSC re: Status of Representation of Defendant (a corporate entity) for January 10, 2023.

On January 10, 2023, Defendant did not appear and there was no indication that it was represented by counsel. As such, the Court struck the answer of Defendant and Plaintiff represented it would proceed by default.

On July 15, 2023, the default judgment of Defendant was entered in the amount of $207,893.39.

On October 5, 2023, Defendant filed a Substitution of Attorney, stating that Defendant is now being represented by Mr. Kolodzi.

Defendant moves to set aside entry of default and default judgment pursuant to CCP § 473(b)’s discretionary prong.

In support of the motion, Zohrab Sarkisyan, president of Defendant, submitted his declaration arguing that it supports a showing of “excusable neglect.” Mr. Sarkisyan states that beginning in March 2022, as a result of marital and business stress, he began to experience severe anxiety attacks and so he tried to avoid anything that would trigger anxiety, including this lawsuit. (Sarkisyan Decl., ¶2.) He states that he actively avoided or neglected any types of issues concerned with it, including his failure to respond to Mr. Kolodzi’s communications, which ultimately resulted in Mr. Kolodzi’s withdrawal. (Id.) He states that as a result of the severe anxiety attacks, he sought treatment with Spasoje M. Neskovic, MD, AAFP, in June 2022, who diagnosed him with severe anxiety disorder with severe stress syndrome and was prescribed Clonazepam (Rivotril) for his attacks, which he takes to this day. (Id., ¶3; Ex. A [Dr. Neskovic’s current treatment letter].) He states that as a result of his mental illness and impairments, he did not pursue a replacement attorney or appear to the OSC, which resulted in Defendant’s default. (Id., ¶4.) He states that he realizes his avoidance of the lawsuit and communications from Mr. Kolodzi, the court, and Plaintiff’s counsel was a mistake, but that he had avoided the lawsuit to avoid triggers and additional panic attacks. (Id.) He states that on September 12, 2023, he reached out to Mr. Kolodzi regarding the status of the case and he re-retained Mr. Kolodzi on behalf of Defendant for the purpose of this motion. (Id., ¶5.) He states that on September 22, 2023, clinical psychologist Hayk Jernazian further diagnosed him with F41.1 Generalized Anxiety Disorder, which was “significantly exacerbated for the past 9-12 months due to significant stressful life changes.” (Id., ¶6, Ex. B [Dr. Jernazian’s current treatment letter].)

In opposition, Plaintiff argues that Defendant has not presented any facts justifying relief on behalf of Defendant. Plaintiff argues that the parties had been communicating with timing and continuing matters, but that during Plaintiff’s communications with Mr. Kolodzi (prior to his withdrawal), there had been no mention of any mental infirmity of a party representative. Plaintiff argues that Defendant improperly bases its motion on the mistaken belief that a personal issue experienced by an individual connected with a corporate defendant is sufficient to set aside a default/default judgment based on mistake, inadvertence, surprise, or excusable neglect. Plaintiff argues that Defendant has corporate officers other than Mr. Sarkisyan, which includes Piruza Kazryan and Arthur Davtian (according to the Statement of Information), such that Defendant had other corporate officers who were capable of retaining counsel to represent the corporation’s interests. (Mot., Ex. 1 [8/16/19 Statement of Information].)

Here, the circumstances of the default and default judgment are unconventional, yet the Court finds that there is substantive merit to granting the motion. The motion was timely brought within 6 months of the default and default judgment. Defendant is once again represented by counsel and the reasons its counsel initially withdrew and Defendant’s present was inactive in this case for the past several months have been explained. Defendant also argues that the 2019 Statement of Decision is not sufficient to show that the motion should be denied as Plaintiff did not provide a more recent copy of the Statement of Decision.[2] Finally, the policy of the law is to have a hearing on the merits wherever possible and appellate courts are much more disposed to affirm an order when the result is to compel a trial on the merit than it is when the judgment by default is allowed to stand, and it appears that a substantial defense could be made. (Thompson v. Sutton (1942) 50 Cal.App.2d 272, 276.) These factors and considerations weigh in favor of granting the motion to set aside the default and default judgment.

Defendant Plumbers on Demand’s motion to set aside the default and default judgment is granted. Defendant is to pay $1,000 in penalties to Plaintiff and Plaintiff’s counsel.

A Case Management Conference is set for May 15, 2024 at 8:30 a.m. in this Department B.

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[1] According to the Court’s written order on the motion to be relieved as counsel, Mr. Kolodzi sought to be relieved as counsel because: “(1) since August 2, 2022, Defendant and its principal Zohrab Sakrisyan failed to respond to Counsel’s request for payment of attorney’s fees; (2) since August 2, 2022, Defendant failed to respond to Counsel’s emails regarding the case; and (3) since September 14, 2022, Defendant failed to respond to Counsel’s request for a tendered substitution of attorney, thus necessitating this motion. (MC-052, §2.)” (11/4/22 Order at p.1.)

[2] The Court notes that Defendant does not provide any documents with the reply brief regarding updated Statement of Information pages. (Reply at p.5.) Instead, Defendant argues that Plaintiff’s evidence in opposition is insufficient to show that the motion should be denied. Defendant also argues that the CSLB License pages show that Sarkisyan is the only officer. Finally, Defendant argues that the information provided by Mr. Sarkisyan and his medical letters show that there was a valid excuse for his failure to timely respond or act on behalf of Defendant.

Superior Court of California

County of Los Angeles

Department B