Judge Katherine Chilton, Case 22NWLC17527 2023-05-15 Tentative Ruling

Judge: Katherine Chilton, Case: 22NWLC17527, Date: 2023-05-15 Tentative Ruling

Case Number: 22NWLC17527 Hearing Date: May 15, 2023 Dept: 25

PROCEEDINGS: MOTION TO SET ASIDE/VACATE DEFAULT

MOVING PARTY: Defendant Visionary Image, Inc.

RESP. PARTY: Plaintiff Creditors Adjustment Bureau, Inc.

MOTION TO SET ASIDE/VACATE DEFAULT

(CCP § 473(b))

TENTATIVE RULING:

The hearing on Defendant Visionary Image, Inc.’s Motion for Relief from Default is CONTINUED to JUNE 15, 2023 at 10:00 a.m. in Department 25 at the SPRING STREET COURTHOUSE. At least 16 court days before the next scheduled hearing, Defendant must file and serve supplemental papers addressing the errors discussed herein. Failure to do so may result in the Motion being placed off calendar or denied.

SERVICE:

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

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

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

OPPOSITION: Filed on February 6, 2023. [ ] Late [ ] None

REPLY: Filed on February 14, 2023. [ ] Late [ ] None

ANALYSIS:

I. Background

On July 28, 2022, Plaintiff Creditors Adjustment Bureau, Inc. (“Plaintiff”) filed an action against Defendant Visionary Image, Inc. aka Visionary Image Inc. dba AAMCO Transmission – Harbor City adba AAMCO Transmissions (“Defendant”) for breach of contract, open book account, account stated, and reasonable value. Plaintiff filed a First Amended Complaint (“FAC”) on August 23, 2022.

On November 7, 2022, based on Plaintiff’s request, the Court entered default against Defendant for failure to respond to the First Amended Complaint. (11-7-22 Request for Entry of Default.) Judgment was entered against Defendant and for Plaintiff in the amount of $19,102.04 on November 10, 2022. (11-10-22 Judgment.)

On January 24, 2023, Defendant filed the instant Motion for Relief from Default (“Motion”). Plaintiff filed an Opposition on February 6, 2023, and Defendant filed a Reply on February 14, 2023.

On February 21, 2023, the Court determined that the case is not a “collection hub” case and ordered the case transferred to Department One for re-assignment. (2-21-23 Minute Order.) On March 14, 2023, the case was assigned to Judge Katherine Chilton in Department 25 at the Spring Street Courthouse. (3-14-23 Minute Order.)

On April 13, 2023, Defendant filed a Notice of Rescheduling Motion.

II. Legal Standard

Pursuant to Code of Civil Procedure §473(b), both discretionary and mandatory relief is available to parties from “judgment, dismissal, order, or other proceeding taken against him or her.” 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.)

Furthermore, “[a]pplication for this relief shall be accompanied by a copy of the answer or other pleading proposed to be filed therein.” (Code of Civil Procedure § 473(b).)

III. Discussion

Defendant moves for relief from default and default judgment and for an order “to return any of Defendant's funds obtained by Plaintiff pursuant to the default judgment in this matter.” (Mot. pp. 1-2.)

Defendant argues that its failure to respond to the FAC was due to “mistake, surprise, inadvertence, and/or excusable neglect” and “[u]pon learning of the default judgment, Defendant immediately retained counsel” to appear in the action. (Ibid. at pp. 2-3.) Due to counsel’s calendaring error, the hearing on the Motion was continued to February 21, 2023. (Ibid.) Defendant also argues that it has a reasonable defense to the action and has filed a proposed Answer to the Complaint. (Ibid.; 1-23-23 Notice of Lodgment.)

Alfonso Martinez, owner of Visionary Image, Inc. has submitted his declaration in support of the Motion. He states that around September 21, 2022, when he was served with the Summons and First Amended Complaint, he called his insurance company and forwarded a copy of the FAC to them. (Martinez Decl. ¶ 2.) He was told that the insurance company would retain an attorney to represent him and thus, he assumed that the matter would be handled. (Ibid. at ¶¶ 2-3.) Around October 26, 2022, he received a Request for Entry of Default from Plaintiff’s counsel and began searching for an attorney to represent Defendant Visionary Image, Inc. (Ibid. at ¶¶ 3-4.) Martinez retained Richard J. Foster to represent him in November 2022 and was told that Counsel Foster reserved a hearing to set aside the default for January 31, 2023, the first available date on the Court’s calendar. (Ibid. at ¶ 6.) Martinez also requests default and judgment to be set aside as there is merit to his case. (Ibid. at ¶ 7.)

In his declaration, Counsel Richard J. Foster explains that he was retained to represent Defendant in early November 2022. (Foster Decl. ¶ 2.) Counsel Foster sought to obtain a stipulation from Plaintiff’s counsel to set aside the default but was not successful in doing so. (Ibid. at ¶ 3.) Counsel proceeded in making a reservation for a motion to set aside default and default judgment on January 31, 2023; however, his office “miscalculated the last date to file the Motion” and thus, the hearing had to be rescheduled to February 21, 2023, the first available date to reschedule the hearing. (Ibid. at ¶¶ 4-5, Ex. 1.)

Plaintiff opposes the Motion, arguing that “Defendant’s excuse is insufficient to establish any justification for setting aside the Default or the Judgment.” (Oppos. p. 2.) Plaintiff states that Martinez’s declaration “contains so few details as to render his credibility suspect” including failing to include the name of the insurance company to which he forwarded the FAC and the manner by which it was forwarded. (Ibid. at p. 3.) There is no proof of communication with this insurance company or showing that Defendant took actions to follow up and confirm that the insurer retained counsel on his behalf. (Ibid.) Plaintiff cites to Don v. Cruz (1982) 131 Cal.App.3d 695 and Scognamillo v. Herrick (2003) 106 Cal.App. 4th 1139, for the assertion that Defendant must show that the insurer’s neglect was also justified and excusable in order to obtain relief from default. (Ibid. at pp. 3-4.) Here, Defendant has not presented any evidence showing that the insurance carrier’s inaction was due to excusable neglect. (Ibid. at p. 4.)

Furthermore, Plaintiff argues that a “reasonably prudent person would have, at a minimum, followed up with the insurance carrier to make sure that an attorney would be provided or that a responsive pleading would be filed.” (Ibid. at p. 5.) Here, Defendant does not indicate that he took any steps to follow up with the insurer regarding defending against the lawsuit. (Ibid. at p. 5.) Thus, Defendant has not established that it is entitled to relief from default and default judgment. (Ibid.)

In its Reply, Defendant argues that the cases cited by Plaintiff “are not dispositive of this case” and it is better to follow “the basic rule that cases should be tried on the merits.” (Reply p. 1.) Defendant argues that Martinez has sworn under penalty of perjury that he contacted his insurance company and spoke to Shelly Appling. (Ibid. at pp. 2-3.) Defendant has attached a supplemental declaration of Martinez with additional details about his communication with the insurance carrier. (Ibid.; see Martinez Supp. Decl.)

Moreover, “the case law relied on by Plaintiff is easily distinguishable, and has been contradicted by numerous cases.” (Ibid. at pp. 2-4.) Defendant cites to Fasuyi v. Permatex, Inc. (2008) 167 Cal.App.4th 681and other cases in support of its Reply. Here, in particular, defense counsel immediately contacted Plaintiff’s counsel to stipulate to vacate the default. (Ibid.) “[V]ery slight evidence is required to set aside the default” and Defendant has provided that evidence and done so promptly. (Ibid.) Finally, Plaintiff has not shown that it would suffer prejudice if the Court granted Defendant’s Motion. (Ibid. at p. 5.)

Having reviewed the case law cited by the parties, the Court finds that the facts of Fasuyi v. Permatex, Inc. are most relevant to the instant case. In Fasuyi, Defendant’s paralegal forwarded the summons and complaint to the company’s insurance broker, which acknowledged receipt but failed to respond to the complaint. (Fasuyi, 167 Cal.App.4th 681, 685.) Subsequently default and default judgment were entered. (Ibid.) Once Defendant learned of the default and judgment, it quickly retained counsel and moved to set aside the default and default judgment. (Ibid.) The Court analyzed the totality of circumstances and concluded that Defendant had reasonably relied on the insurance broker to respond to the complaint and was entitled to relief under Code of Civil Procedure § 473(b). (Ibid. at 703.) The Court also distinguished the facts of the case from the facts of the cases cited by the Plaintiff in this case, Don v. Cruz (1982) 131 Cal.App.3d 695, and Scognamillo v. Herrick (2003) 106 Cal.App. 4th 1139. (Ibid. at 699-700.) The Court stated that in Scognamillo, plaintiff’s counsel had several conversations with defendant before the request for default was filed and urged him on different occasions to follow up with the insurer when no responsive pleadings were filed. (Ibid.) Moreover, in Don, the insurance company refused to respond the complaint. (Ibid.) Unlike Scognamillo and Don, the Court in Fasuyi notes that there is “[n]o lack of cooperation from the defense side…No deception. No duplicitousness. No stonewalling. No evasion. And no disregard of any warning. In fact, no warning.” (Ibid. at 701.)

Here, the Court finds that Defendant’s Motion is timely. Moreover, the facts of the instant case are comparable to those of Fasuyi. Defendant forwarded the Summons and Complaint to the insurer and relied on the insurer’s representation that the matter would be handled. Immediately after learning that the insurer did not respond to the Complaint and default would be entered, Defendant retained counsel to litigate the case.

Accordingly, the Court is inclined to grant Defendant’s Motion. However, the Court continues the hearing on the Motion because the Notice of Rescheduling, filed on April 13, 2022, does not contain the name or address of the courthouse where the hearing on the Motion will take place. Given that the Notice is defective, the Court continues the hearing and provided Defendant an opportunity to correct it.

IV. Conclusion & Order

For the foregoing reasons,

Moving party is to give notice.