Judge: Katherine Chilton, Case: 18STCV10177, Date: 2022-09-19 Tentative Ruling

Case Number: 18STCV10177    Hearing Date: September 19, 2022    Dept: 25

PROCEEDINGS:      MOTION TO SET ASIDE ENTRY OF DEFAULT/JUDGMENT AND REQUEST DISMISSAL OF INDIVIDUAL DEFENDANT PAUL P. CHENG

MOVING PARTY:   Defendant Paul P. Cheng

RESP. PARTY:         Plaintiff Young Chow Dai, in pro per

                                    MOTION TO SET ASIDE ENTRY OF DEFAULT/JUDGMENT AND REQUEST DISMISSAL OF INDIVIDUAL DEFENDANT PAUL P. CHENG

(CCP §§ 583.210 et seq.; 473(b); inherent powers)

TENTATIVE RULING:

Defendant Cheng’s Motion to Set Aside Entry of Default/Judgment and Request Dismissal of Individual Defendant Cheng is GRANTED IN PART.  The default entered against Defendant Paul P. Cheng, as an individual, is hereby VACATED.  Defendant Cheng’s Request for Dismissal is DENIED.  Defendant Cheng is ordered to file a responsive pleading within ten (10) days of notice of this order

SERVICE: 

[X] Proof of Service Timely Filed (CRC, rule 3.1300)                 OK

[X] Correct Address (CCP §§ 1013, 1013a)                                                 OK

[X] 16/21 Court Days Lapsed (CCP §§ 12c, 1005(b))                     OK

OPPOSITION:          Filed on September 2, 2022                                    [   ] Late                      [   ] None

REPLY:                     None filed as of September 16,2022                       [   ] Late                      [X] None

ANALYSIS:

I.                Background

On December 31, 2018, Plaintiff Young Chow Dai (“Plaintiff”), in pro per, filed an action for breach of contract against Defendants Paul P. Cheng (“Cheng”) – although the caption states the defendant to be Paul P. Cheng & Associates (“Cheng & Associates”) but the Complaint lists Cheng – and Marsha S. Mao (“Mao”). The Summons, however, lists Cheng & Associates and Mao. 

On April 8, 2019, Plaintiff filed a First Amended Complaint (“FAC”), naming Mao and listing Cheng as a party in the caption, but then naming Paul P. Cheng Associates as a defendant.  The Summons, however, lists Mao and Cheng, and not Cheng & Associates, but then Plaintiff filed Proofs of Service for the FAC as to all three (5/3/19, 5/31/19 Proofs of Service).

After a demurrer to the FAC by Defendant Mao, the Court granted leave to amend (8/21/19 Order) and Plaintiff filed a Second Amended Complaint (“SAC”) on October 4, 2019 against Cheng & Associates, Mao and Cheng.

On June 13, 2019, Plaintiff dismissed Defendant Cheng & Associates from this action with prejudice. (6/13/19 Request for Dismissal.)  On June 2, 2022, Defendant Mao was dismissed from the case pursuant to a motion to dismiss for lack of prosecution.  On June 22, 2022, the Court dismissed Cheng & Associates pursuant to CCP Section 583.420 (even though it previously was dismissed with prejudice).  (6/22/22 Order).

On September 30, 2021, the Court entered a default against Defendant Cheng, citing the SAC filed on October 4, 2019.  There is, however, no Proof of Service for Defendant Cheng in the Court file, showing that he was served with the SAC.  The only Proof of Service for the SAC shows that it was emailed to Cheng & Associates.  The Amended Declaration Regarding Order Proof of Service filed by Plaintiff on July 11, 2022 fails to attach any Proof of Service for the SAC.

II.             Discussion

On August 23, 2022, Defendant Cheng filed the instant Motion to Set Aside Entry of Default/Judgment and Request Dismissal of Individual Defendant Cheng (the “Motion”). Plaintiff filed an opposition on September 2, 2022.  No reply was filed.   

Defendant Cheng argues that the SAC was never served on him and, regardless, a summons was never issued, and leave of court is required when adding new parties. 

Defendant further contends that the Court may correct any judgment or Court Order pursuant to CCP Section 437(d) and issue a dismissal under CCP § 583.210 et seq.

Finally, Defendant argues that the Court may set aside entry of default pursuant to CCP § 473(b) or pursuant to its inherent equitable powers.

With regard to Cheng’s first argument, he argues that he was not a named party in either the original complaint or the FAC.  However, while this case has been complicated by Plaintiff’s inconsistent naming of the defendants, in the summons for the FAC, Plaintiff has listed Cheng and Mao and served them both (as well as Cheng & Associates).  Accordingly, upon filing the SAC, Plaintiff did not need to obtain a new summons or file a Doe amendment. 

With regard to the SAC, Cheng argues that it was not served on him.  The only Proof of Service for the SAC is attached to the SAC, showing that it was served by email on “Law Offices of Paul P Cheng & Associates.” Plaintiff contends that she served the SAC on Cheng twice, on “10/3/0000 and 10/4/0000.” (Opp. Para. 1). In addition to the fact that those are uncertain dates, the Court was unable to locate Proofs of Service showing that the SAC was served on Defendant Cheng, and Plaintiff did not submit admissible evidence to show that she properly served him.  In addition, Plaintiff mailed the Request for Entry of Default to “The Law Office of Paul P. Cheng” instead of to Defendant Cheng.  While the parties may have the same address, the Request for Default must be properly addressed.  Accordingly, the default must be set aside. 

With regard to Cheng’s argument that leave of court was required to add him as a defendant, the Court finds that he was named as a defendant in the FAC and/or the Summons, and was served with the FAC.  Accordingly, leave of court was not required when Plaintiff filed the SAC after Mao’s demurrer was sustained with leave to amend.

Defendant contends that the Court may set aside the default on equitable grounds such as extrinsic fraud or extrinsic mistake. Rappleyea v. Campbell (1994) 8 Cal. 4^th 975, 981; Bae v. T.D. Service Co. or Arizona (2016) 245 Cal. App. 4^th 89, 97.  Extrinsic fraud “usually arises when a party is denied a fair adversary hearing because he has been ‘deliberately kept in ignorance of the action or proceeding, or in some other way fraudulently prevented from presenting his claim or defense.’”  Kulchar v. Kulchar (1969) 1 Cal. 3d 467, 471. 

Extrinsic mistake is “a term broadly applied when circumstances extrinsic to the litigation have unfairly cost a party a hearing on the merits” and is found when “a mistake led a court to do what it never intended.”  Id. at 471-72

Cheng’s counsel states that he was shocked when he received the minute order because he did not understand that there was ever service against Cheng, especially because Cheng & Associates was dismissed, and the court of appeal ruled against plaintiff.  (Motion, Lizaso Decl. ¶ 26). As noted above, Cheng was not served with the SAC nor the default.  Cheng’s counsel provided evidence to meet the requirements to set aside the default:  (1) that Cheng was not served with the SAC so therefore did not present a defense; (2) that Cheng has a meritorious defense that Plaintiff entered into a settlement agreement with Cheng & Associates that should release Cheng as well as the law firm, and (3) that Cheng took diligent action once he learned of the default.  (Id. at ¶¶29-31).

Plaintiff argued in response that Defendant Cheng failed to prove extrinsic fraud or extrinsic mistake but does not state how he failed to do so.

The Court finds that it would be equitable to set aside the default.  In addition to the fact that Defendant Cheng was not served with the SAC and the default, and the fact that the parties listed in Plaintiff’s complaints and summons did not always match up, there are other instances of parties not being properly served in this case.  For example, the filing on August 17, 2021, entitled “Request Default Judgment for Paul P. Cheng  . . .,” was not served on Defendant Cheng even though he was the intended party. The Court finds that Defendant Cheng was kept in the dark with regard to the SAC and the default, thereby preventing him from presenting his defense.  Accordingly, the Court hereby vacates the default pursuant to the Court’s equitable powers. 

The Court does not address the other arguments set forth in Defendant Cheng’s Motion.

III.            Conclusion & Order

For the foregoing reasons, Defendant Cheng’s Motion to Set Aside Entry of Default/Judgment and Request Dismissal of Individual Defendant Cheng is GRANTED IN PART.  The default entered against Defendant Paul P. Cheng, as an individual, is hereby VACATED.  Defendant Cheng’s Request for Dismissal is DENIED.  Defendant Cheng is ordered to file a responsive pleading within ten (10) days of notice of this order. 

Moving party is ordered to give notice.