Judge Katherine Chilton, Case 21STLC02721 2022-10-10 Tentative Ruling

Judge: Katherine Chilton, Case: 21STLC02721, Date: 2022-10-10 Tentative Ruling

Case Number: 21STLC02721 Hearing Date: October 10, 2022 Dept: 25

PROCEEDINGS: MOTION TO SET ASIDE DEFAULT JUDGMENT

MOVING PARTY: Defendant Kathy Kovesdi

RESP. PARTY: Plaintiff AG Arcadia, LLC

MOTION TO SET ASIDE DEFAULT JUDGMENT

(CCP § 473)

TENTATIVE RULING:

Defendant Kathy Kovesdi’s Motion to Set Aside Default Judgment is GRANTED. The Court, on its own motion, also sets aside default against Defendant, entered on January 12, 2022. Defendant is ordered to file the proposed Answer.

SERVICE:

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

[ ] Correct Address (CCP §§ 1013, 1013a) YES

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

OPPOSITION: Filed on August 23, 2022. [ ] Late [ ] None

REPLY: Filed on August 29, 2022. [ ] Late [ ] None

ANALYSIS:

I. Background

On April 6, 2021, Plaintiff AG Arcadia, LLC, dba Huntington Drive Health and Rehabilitation Center (“Plaintiff”) filed a complaint against Defendant Kathy Kovesdi (“Defendant”) for breach of contract, common counts, and quantum meruit.

On July 26, 2021, Plaintiff filed two Declarations of Due Diligence demonstrating inability to serve Defendant. Subsequently, Plaintiff applied to serve Defendant by publication and the Court granted Plaintiff’s request on October 26, 2021. On November 30, 2021, Plaintiff filed Proof of Publication in the Los Angeles Daily Journal.

Defendant did not file any responsive pleadings, so on January 12, 2022, based on Plaintiff’s request, the Court entered default against Defendant. (1-12-22 Request for Entry of Default/Judgment.) Subsequently on April 8, 2022, default judgment was entered against Defendant in the amount of $23,817.82. (4-8-22 Default Judgment.)

On July 26, 2022, Defendant Kathy Kovesdi filed the instant Motion to Set Aside Default Judgment (the “Motion”). Plaintiff filed an Opposition to the Motion (“Opposition”) on August 23, 2022, and Defendant filed a Reply to the Opposition (“Reply”) on August 29, 2022.

On September 7, 2022, the Court continued the hearing on the Motion due to a defective Notice of Motion. (9-7-22 Minute Order.) On September 12, 2022, Defendant filed and served an Amended Notice.

II. Legal Standard

Pursuant to Code of Civil Procedure §473(b), both discretionary and mandatory relief is available to parties from a judgment, dismissal, order, or other proceeding. Discretionary relief is available under the statute as “the court may, upon any terms as may be just, relieve a party or his or her legal representative from judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect. (Code of Civ. Proc. § 473(b).) Alternatively, mandatory relief is available when “accompanied by an attorney’s sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect.” (Ibid.) Under this statute, an application for discretionary or mandatory relief must be made no more than six months after entry of the judgment, dismissal, order, or other proceeding from which relief is sought. (Code Civ. Proc., § 473(b); English v. IKON Business Solutions (2001) 94 Cal.App.4th 130, 143.)

“‘[W]hen relief under section 473¿is¿available, there is a strong¿public¿policy¿in¿favor¿of granting relief and allowing the requesting party his or her day in court…[Citation.]” (Rappleyea v. Campbell¿(1994) 8 Cal. 4th 975, 981-82.)

III. Discussion

On September 7, 2022, the Court noted that Defendant’s Notice of Motion was defective as it did not contain the address or name of the courthouse where the hearing on the Motion was to be held. (9-7-22 Minute Order.) The Court continued the hearing on the Motion and ordered Defendant to serve and file a Notice of Motion in compliance with California Rules of Court, rule 3.1110(b). On September 12, 2022, Defendant filed and served a corrected Notice of Motion.

Defendant seeks to set aside default judgment based on “mistake, inadvertence, surprise, and excusable mistake.” (Mot. p. 2.)

Defendant states that on October 15, 2019, she fell at the Westfield Mall in Arcadia and sustained injuries that required hospitalization and surgeries. (Mot. p. 3; Kovesdi Decl. ¶¶ 1-3.) As a result of these injuries, Defendant was a patient at Plaintiff’s rehabilitation facility from October 28, 2019, to January 5, 2020. (Mot. p. 3; Kovesdi Decl. ¶ 4.) Following discharge, Defendant “was inundated with hospital and medical bills and paperwork associated with her injuries” and “[a]s a severely traumatized elderly woman living alone, unable to ambulate well and in pain, she became overwhelmed and confused with all the of [sic] paperwork.” (Mot. p. 3; Kovesdi Decl. ¶¶ 5, 9.) Defendant states that contrary to the Declaration of Due Diligence, filed by Plaintiff, she did not hear or see anyone at her front door in and around June 2021. (Mot. p. 4; Kovesdi Decl. ¶¶ 6-8.) Furthermore, the description of the woman in the Declaration of Due Diligence does not match that of Defendant, as demonstrated by the attached driver’s license. (Ibid. at pp. 4, 5; Kovesdi Decl. ¶ 10, Ex. A.)

Defendant argues that “the existence of some degree of mental confusion or illness of the party moving to set aside an order supports granting the motion.” (Ibid. at p. 5.) Specifically, Defendant “has been laboring under the emotional, mental and physical toll of a permanent and disabling injury requiring surgery and lengthy hospitalization…was in incapacitated and spent almost 2 1/2 months in a medical facility.” (Ibid. at p. 6.) Following her release from Plaintiff’s facility, “she has been in constant pain” and “this injury and post-acute care has taken its toll on Ms. Kovesdi's ability to function.” (Ibid.) Defendant has attached a copy of the proposed Answer. (Leib Decl. ¶ 3; Ex. B.)

In Opposition, Plaintiff argues that Defendant was properly served, had actual notice, and failed to timely respond to the Summons and Complaint. (Oppos. p. 2.) Thus, the Court properly entered default and default judgment against Defendant. (Ibid.) Plaintiff states that there is no dispute regarding Defendant’s home address and a third-party process server attempted to serve Defendant several times. (Ibid. at pp. 2-3.) Defendant was also served by mail, which was not returned to sender. (Ibid. at p. 3; Salamoff Decl. ¶ 9, Ex. E.) Defendant acknowledges that she received mail from a law firm. (Mot. p. 3.) Following failed attempts to serve Defendant at her home and obtaining a court order, Plaintiff served Defendant by publication. (Ibid. at pp. 3-4.) Defendant did not file any responsive pleadings and Defendant properly filed Request for Default on January 12, 2022, and served it on Defendant by mail. (Ibid. at p. 4.) Subsequently, default judgment was entered on April 8, 2022. (Ibid.) Defendant was on notice and “proceeded to do nothing and ignore both documents.” (Ibid.) Plaintiff also sent Defendant letters regarding this debt prior to filing the Complaint on September 23, 2020, and February 9, 2021. (Salamoff Decl. ¶¶ 8-9, Exs. C-D.)

Plaintiff argues that Defendant’s lack of action does not constitute “mistake, inadvertence, surprise, or excusable neglect” as she has not submitted any evidence demonstrating that “she lacked the mental capacity to understand the nature of the proceedings against her.” (Ibid.) During phone conversations with Defendant, she did not dispute the debt or mention difficulty understanding issues against her. (Ibid. at pp. 4-5; Salamoff Decl. ¶¶ 2-5.) Plaintiff refers to California Probate Code § 810, sections (a) and (b), which state that “there shall exist a rebuttable presumption affecting the burden of proof that all persons have the capacity to make decisions and to be responsible for their acts or decisions” and “[a] person who has a mental or physical disorder may still be capable of contracting, conveying, marrying, making medical decisions, executing wills or trusts, and performing other actions.” (Oppos. p. 5.) Defendant “has not presented sufficient evidence to the court to support a finding of lack of capacity on her part, or that any alleged inadvertence or neglect was excusable,” other than “vague ‘mental confusion.’” (Ibid. at pp. 5-6.)

Furthermore, Plaintiff argues that six (6) months have passed since default was entered against Defendant, so even if the Court sets default judgment aside, it does not have jurisdiction to set aside default, entered on January 12, 2022. (Ibid. at pp. 3, 7.) It would be pointless to set aside the default judgment, as Plaintiff would simply re-submit the default judgment package. (Ibid. at p. 7.)

In her Reply, Defendant argues that on February 6, 2020, Plaintiff was put on notice that Defendant was represented by counsel in the action for her fall against Westfield Mall. (Reply p. 2; Leib Decl. ¶ 2, Ex. A.) Plaintiff, thus, forwarded the medical records and bills to counsel’s office. (Ibid., Leib Decl. ¶. 3; Ex. B.) Nonetheless, Plaintiff’s counsel had phone conversations with Defendant regarding the debt, thus violating Rule of Professional Conduct, rule 2-100. (Reply pp. 2-3.) Defendant requests the Court to disregard Plaintiff’s counsel’s statements about these conversations because they violate rules of professional conduct, constitute hearsay, and are inadmissible. (Ibid. at p. 3.) Defendant also argues that Plaintiff’s Counsel’s declaration does not rebut Defendant’s declaration and therefore, should be disregarded by the Court. (Ibid. at pp. 3-4.)

Furthermore, Defendant argues that “[a]ny doubt as to Ms. Kovesdi's mental acuity must be resolved in her favor” and “[g]iven the severity of her injuries and the fact that she was in Plaintiffs facility for over 2 months plaintiff is in a unique position to know the mental and emotional impact that a severe injury has on an elderly person who lives alone.” (Ibid. at p. 4.) In Defendant’s case, “existence of some degree of mental confusion or illness certainly qualifies as "excusable mistake" under CCP 473.” (Ibid.)

Defendant reiterates that she never heard anyone outside her door and that the description in the Declaration of Due Diligence does not match her physical characteristics, as shown by the driver’s license attached to the Motion. She also states that the Court has inherent equitable power to set aside judgments based on extrinsic fraud or mistake and here, Defendant was “deprived a fair adversarial hearing based on faulty service of process leading to the entry of default.” (Ibid. at p. 5.)

The Court notes that Defendant seeks to set aside the default and default judgment based on “mistake, inadvertence, surprise, and excusable mistake” pursuant to § 473(b). (Mot. p. 2.) Thus, the Court’s analysis will focus on that issue.

At issue is whether Defendant’s purported mental state qualifies as “mistake, inadvertence, surprise, and excusable mistake.” Excusable neglect is an ‘"act or omission which might have been committed by a reasonably prudent person under the same circumstances.’ [Citation.]” (Beeman v. Burling, (1990) 216 Cal.App.3d 1586, 1602-1603.)

Defendant cites to Karlein v. Karlein (1951) 103 Cal. App. 2d 496, for the contention that a defendant’s failure to respond to proceedings due to mental condition constituted excusable neglect. In Karlein, defendant was taken into custody on a psychopathic warrant. (103 Cal. App. 2d at 497.) The Court stated that “[n]either party should be deprived of a hearing except when guilty of inexcusable neglect, and doubts should be resolved in favor of an application to set aside a default judgment.” (Ibid. at 498, referring to Bodin v. Webb (1936) 17 Cal. App. 2d 422.) The Court also pointed to the California Supreme Court’s analysis in Brill v. Fox that “[i]t is also well settled that it is the policy of the law to bring about a trial on the merits wherever possible, so that any doubts which may exist should be resolved in favor of the application, to the end of securing a trial upon the merits.” (Brill v. Fox (1931) 211 Cal. 739, 743.) Thus, in Karlein, Court found that due to defendant’s mental state that led to the entry of default judgment, he should be given an opportunity to defend himself on the merits.

Defendant also cites to In re Marriage of Kerry (1984) 158 Cal.App.3d 456. In this case, the Court found that “existence of some degree of mental confusion or illness of the party moving to set aside an order supports granting the motion, and the court may infer the existence of such problems from the whole record before it.” (158 Cal.App.3d at 466.) In Kerry, the Court also points to Stone v. McWilliams (1919) 43 Cal.App. 490, in which a defendant, who was “old, totally blind, illiterate, and unfamiliar with court proceedings,” was allowed to set aside a default judgment against him and litigate the case based on the merits.

As precedent demonstrates, courts have found that a defendant’s mental condition that has resulted in inability to respond to a lawsuit may constitute excusable neglect and be considered sufficient to set aside default and default judgment pursuant to Code of Civil Procedure § 473(b). Here, the Court in reviewing the record, finds that Defendant’s mental state following the surgeries and hospitalization may have contributed to her inability to respond to the lawsuit. As Defendant has filed the instant Motion within six months of entry of default judgment, the Court has discretion to set aside the default judgment pursuant to § 473(b).

“Even where relief is no longer available under statutory provisions, a trial court generally retains the inherent power to vacate a default judgment…where a party establishes that the judgment or order was void for lack of due process or resulted from extrinsic fraud or mistake.” (County of San Diego v. Gorham (2010) 186 Cal.App.4th 1215, 1228; Bacon v. Bacon (1907) 150 Cal. 477, 491-92; Olivera v. Grace, 122 P.2d 564, 567-68; Stiles v. Wallis (1983) 147 Cal.App.3d 1143, 1147 (“There are four grounds which a court, utilizing its equity capacity may rely upon to provide relief from default. Those areas are (1) void judgment, (2) extrinsic fraud, (3) constructive service, and (4) extrinsic mistake.”) In limited civil cases, grounds for equitable relief also include “inadvertence or excusable neglect.” (Code of Civ. Proc. § 86(b)(3).)

As this is a limited case, the Court can also set aside the default entered against Defendant, on February 23, 2022, based on Defendant’s excusable neglect.

For these reasons, Defendant Kathy Kovesdi’s Motion to Set Aside Default Judgment is GRANTED. The Court, on its own motion, also sets aside default against Defendant, entered on January 12, 2022. Defendant is ordered to file the proposed Answer.

IV. Conclusion & Order

For the foregoing reasons,

Moving party to give notice.