Judge: John J. Kralik, Case: 23BBCV00098, Date: 2023-10-27 Tentative Ruling

Case Number: 23BBCV00098    Hearing Date: December 1, 2023    Dept: NCB

Superior Court of California

County of Los Angeles

North Central District

Department B

BACKGROUND

A.    Allegations

Plaintiff X Alexander (“Plaintiff”) alleges that he manages the real property located at 11365 Ventura Blvd., Studio City, CA 91604 (“Plaintiff’s Property”).  He alleges that Defendant Beacon Management, Inc. (“Beacon”) is a property management company which managed, maintained, and controlled the real property located at 11331-11337 Ventura Blvd., Studio City, CA 91604 (“Subject Property”).  Plaintiff alleges that Defendant Alpha Structural, Inc. (“Alpha”) is a construction contractor that was contracted by Beacon to perform work at the Subject Property, including drilling a hole in a pedestrian pathway that was four feet deep and three feet wide.  Defendant Larry Goldberg (“Goldberg”) is alleged to be the owner of the Subject Property. 

Plaintiff alleges that he was an invitee of the Subject Property on February 15, 2022 and that he was escorted by Goldberg on an inspection regarding a sub-grade water intrusion issue affecting the Subject Property.  Plaintiff alleges that the pathway Goldberg was escorting Plaintiff through was only wide enough for people to walk single-file and that he was at the head of the line, walked on the pathway, and fell into the condition, suffering severe injuries.  Plaintiff alleges that the condition was created, left unattended and unmarked (without any warning signs), and covered up by a sheet of black tar paper. 

The complaint, filed January 17, 2023, alleges a single cause of action for negligence (premises liability). 

On May 15, 2023, Plaintiff filed an Amendment to the Complaint naming 11331-11337 Ventura Blvd., LLC as Doe 2. 

B.     Relevant Background and Motions on Calendar

On March 14, 2023, the default of Beacon Management, Inc. was entered. 

On March 14, 2023, the default of Larry Goldberg was entered.  On May 3, 2023, the Court signed the Order regarding Plaintiff and Goldberg Stipulation to vacate the default judgment against Goldberg only. 

On May 25, 2023, Beacon filed a motion to set aside/vacate the entry of default and for leave to defend the action.  On October 16, 2023, Plaintiff filed an opposition brief. 

On May 25, 2023, Beacon filed a motion to strike portions of the complaint.  The Court is not in receipt of an opposition brief. 

The matter initially came for hearing on October 27, 2023.  The Court heard oral argument and continued the hearing to December 1, 2023.  The Court ordered Defendant Beacon to file a supplemental declaration of Beacon’s agent regarding their mistake, inadvertence, surprise, or excusable neglect by November 26, 2023. 

On November 13, 2023, Beacon filed the declarations of Larry Goldberg and Christy Maxey.  On November 14, 2023, Beacon filed another declaration of Mr. Goldberg, which included an Exhibit A.

DISCUSSION RE MOTION TO VACATE DEFAULT

A.    Request for Judicial Notice

Plaintiff requests judicial notice of: (1) the Corporate Statement of Information for Beacon filed with the California Secretary of State; and (2) the Complaint.  The request is granted.  (Evid. Code, § 452(c)-(d); Rodas v. Spiegel (2001) 87 Cal.App.4th 513, 518 [stating that courts are allowed to take judicial notice of the official records of the California Secretary of State, an executive department of this state].) 

B.     Discussion of Merits

Beacon moves to set aside the default entered on March 14, 2023 and be given leave to defend itself in the lawsuit.  Beacon moves pursuant to CCP §§ 473(b) and 473.5, as well as upon equitable grounds for extrinsic mistake.  Beacon attaches a copy of the motion to strike as the proposed responsive pleading.  (Mot., Ex. A.) 

On January 31, 2023, Plaintiff filed the Proof of Service of Summons regarding Beacon.  The proof of service identifies Lawrence Goldberg as the agent for service of process.  Service was effectuated by substituted service on January 27, 2023 at 11:00 a.m. on “THELMA GALANG – BOOKKEEPER” at the business address 6025 Scott Way, Commerce, CA 90040. The documents were thereafter mailed on January 30, 2023.  Service was performed by Eric Wilkins, a registered California process server. 

Beacon provides the declaration of Eric L. Anderson, its attorney of record, in support of the motion.  Mr. Anderson states that despite Plaintiff knowing where Beacon could be found (directly next door to Plaintiff’s place of employment), Plaintiff chose not to personally serve Beacon but instead chose to serve Beacon’s bookkeeper via substituted service.  (Anderson Decl., ¶7.)  He states that there were delays in reporting the suit and filing and answer on behalf of Beacon because Beacon’s agent who was served via substituted service never sent the summons and complaint to Beacon’s insurer.  (Id., ¶8.)  Counsel states that he first became aware of the case on April 14, 2023 when it was assigned to him and he conducted an investigation into why a responsive pleading had not been filed in a timely fashion.  (Id., ¶9.)  He states that default had been entered on March 14, 2023 and that on April 13, 2023, Goldberg inquired to his business’s insurer about the defense in this matter as it related to Beacon; however, it became apparent that no responsive pleading had been filed because there was no record that Beacon had been named in the suit.  (Id., ¶10.)  Mr. Anderson states that he emailed Plaintiff’s counsel on May 4, 2023 and May 11, 2023, requesting that the default be set aside, but Plaintiff’s counsel refused to set aside the default unless Beacon paid them $1,500.  (Id., ¶11.)  He states that Plaintiff will not suffer any prejudice by granting this motion, as Plaintiff was willing to stipulate to withdraw the entry of default upon the payment of $1,500.  (Id., ¶14.) 

Larry Goldberg, the principal of Beacon, also provides his declaration in support of the motion.  Mr. Goldberg states that he is the owner of 11331-11337 Ventura Blvd, LLC.  (Goldberg Decl., ¶3.)  He states that he is the agent for service of process for Beacon and that though Plaintiff was aware of his whereabouts, he was not personally served with the summons and complaint and instead the documents were served by substituted service.  (Id., ¶6.)  He states that the summons and complaint were served on his bookkeeper.  (Id.)  Mr. Goldberg states that when he became aware of the lawsuit 3 days after service, he immediately contacted his insurance agent Sergio O’Campo on January 31, 2023 and Mr. O’Campo initiated a claim with Liberty on February 21, 2023.  (Id., ¶¶7-8.)  However, he states that a copy of the summons and complaint was not forwarded nor requested at that time.  (Id., ¶8, Ex. A. [2/21/23 Email].)  Mr. Goldberg states that he mistakenly believed that Mr. O’Campo had forwarded the summons and complaint to WAIC, but he did not forward the documents and instead electronically submitted a claim on behalf of Beacon on February 21, 2023.  (Id., ¶¶9-10.)  He states that he was not aware of the entry of default until April 12, 2023, at which time he contacted WAIC and spoke with Christy Maxey.  (Id., ¶10.)  He states that he learned that WAIC did not receive a copy of the summons and complaint, which contributed to Beacon’s inadvertent failure to file a timely responsive pleading and he mistakenly believed WAIC received the summons and complaint in time to file a responsive pleading since the claim was made with ample time to do so.  (Id., ¶12.) 

Beacon also provides the declaration of Christy Maxey, who is the Senior Claims Resolution Specialist with Liberty Mutual Insurance Company (“Liberty”), of which West American Insurance Company (“WAIC”) is a subsidiary.  (Maxey Decl., ¶¶1-2.)  She states that on February 21, 2023, Liberty received a claim notification for insured Beacon and that she was the adjuster assigned to the handle the claim when submitted.  (Id., ¶¶3-4.)  She states that on that same day, she spoke with Larry Goldberg about the case and was informed that his agent would forward the summons and complaint to WAIC.  (Id., ¶5.)  She states that she inadvertently failed to follow up with Mr. Goldberg when she did not receive a copy of the summons and complaint to be forwarded for legal representation and that this mistake resulted in Beacon’s failure to file a timely responsive pleading.  (Id., ¶¶6-7.)  She states that she followed up with Mr. Goldberg on April 12, 2023 for a copy of the summons and complaint and became aware of the default (entered on March 14, 2023) on April 13, 2023 when he forwarded a copy of the pleadings to WAIC.  (Id., ¶¶8-10.)  She states that when she became aware of the default, she immediately forwarded the claim for legal representation and the claim was assigned to attorney Eric Anderson.  (Id., ¶¶11-12.) 

With respect to relief pursuant to CCP § 473.5, the Court declines to grant the motion on this basis.  Beacon has not provided “an affidavit showing under oath that the party's lack of actual notice in time to defend the action was not caused by his or her avoidance of service or inexcusable neglect.”  (CCP § 473.5(b).)   CCP § 473.5 may be invoked “[w]hen service of a summons has not resulted in actual notice to a party in time to defend the action and a default or default judgment has been entered against him or her in the action….”  (CCP § 473.5(a).)  Here, it does not appear that Beacon is disputing that the substituted service was proper; rather, it argues that its agent for service of process failed to forward the documents to it in a timely manner.  According to Plaintiff’s Exhibit 1 in the request for judicial notice (in support of the opposition brief), Beacon’s business and mailing address are listed as 6025 Scott Way and this is the same address that is provided for Goldberg as the officer, director, and agent for service of process.  (Pl.’s RJN, Ex. 1.)  Thus, while Plaintiff’s Property at 11365 Ventura Blvd. in Studio City may be next door to the Subject Property (owned by Goldberg and managed by Beacon), this does not mean that Plaintiff must serve Beacon at the Subject Property.  Rather, service at the address designated by Beacon (and Goldberg) on the California Secretary of Statement website was proper and was the address advertised by Beacon to provide it notice of documents.  The motion will not be granted pursuant to CCP § 473.5. 

Next, Beacon argues that relief is proper under CCP § 473(b).  Beacon argues that it did not intend to disregard or avoid Plaintiff’s complaint, but that its failure to respond to the complaint was a result of a mistake and/or reliance on its broker to timely inform Beacon’s insurer regarding service of the complaint.  Beacon argues that once it discovered the lawsuit, it immediately took action to meet and confer to set aside the default and defend against the lawsuit. 

The Court grants the motion based on CCP § 473(b).  The declaration of Mr. Anderson establishes that the default entered against Beacon was a result or inadvertence based on the office staff’s failure to forward the documents to the appropriate persons so that responsive pleading could be timely filed.  In addition, the declarations of Mr. Goldberg and Ms. Maxey show that Mr. Goldberg timely submitted his claim to Liberty/WAIC and a claim was initiated on his companies’ behalf, but the summons and complaint documents were not properly forwarded to legal representation.  Further, based on the steps taken once the lawsuit and default were discovered, defense counsel quickly sought to remedy the issues, showing that Beacon intended to defend against the action.  Finally, the policy of the law strongly favors a hearing on the merits, which supports granting this motion.  (Thompson v. Sutton (1942) 50 Cal.App.2d 272, 276.) 

The Court will impose a penalty of against Beacon pursuant to CCP § 473(c).  Subsection (c)(1) states:

(c)(1) Whenever the court grants relief from a default, default judgment, or dismissal based on any of the provisions of this section, the court may do any of the following:

(A) Impose a penalty of no greater than one thousand dollars ($1,000) upon an offending attorney or party.

(B) Direct that an offending attorney pay an amount no greater than one thousand dollars ($1,000) to the State Bar Client Security Fund.

(C) Grant other relief as is appropriate.

(CCP § 473(c)(1).)  Pursuant to CCP § 473(c)(1)(C), Beacon is directed to pay $1,000 to Plaintiff for Beacon’s neglect and delay in this action.

DISCUSSION RE MOTION TO STRIKE

            Concurrently with the motion to vacate the default, Beacon filed a motion to strike as its proposed responsive pleading (as Exhibit A to the motion to vacate) as well as a separately filed document and motion. 

Whether the motion to strike would go forward was dependent on whether the motion to set aside the default would be granted.  At this time, the motion to strike is not opposed.  As the motion to strike should have been lodged only as a proposed responsive pleading with the motion to vacate the default, the Court continues the hearing on the motion to strike so that there is sufficient opportunity for Plaintiff to file an opposition brief. 

The motion to strike is continued. 

CONCLUSION AND ORDER

            Defendant Beacon Management, Inc.’s motion to set aside the default is granted.  Defendant is directed to pay $1,000 to Plaintiff within 20 days of this order pursuant to CCP § 473(c)(1)(C). 

            Defendant Beacon Management, Inc.’s motion to strike portions of the complaint is continued to January 5, 2024 at 8:30 a.m.  If Plaintiff intends to file an opposition and Defendant intends to file a reply brief, the opposition and reply briefs shall be filed pursuant to code.  Defendant shall provide notice of this order.

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