Judge Latrice A. G. Byrdsong, Case Number: 22STLC08369, Date: 2023-10-31 Tentative Ruling

Judge: Latrice A. G. Byrdsong, Case: 22STLC08369, Date: 2023-10-31 Tentative Ruling

Case Number: 22STLC08369 Hearing Date: February 7, 2024 Dept: 25

Hearing Date: Wednesday, February 07, 2024

Case Name: CREDITORS ADJUSTMENT BUREAU, INC. v. PRECISE ROOFING COMPANY, INC. AKA PRECISE ROOFING COMPANY; CHARLES ROY DOUGLAS AKA CHARLES R DOUGLAS AKA CHARLES DOUGLAS AKA CHUCK R DOUGLAS AKA CHUCK DOUGLAS DBA PRECISE ROOFING ADBA PRECISE ROOFING COMPANY; and DOES 1 through 10, Inclusive,.

Case No.: 22STLC08369

Motion: Motion to Renew Defendant’s Prior Motion to Set Aside Default; Plaintiff’s Motion for Sanctions

Moving Party: Defendants Precise Roofing Company, Inc. and Charles Douglas; Plaintiff Creditors Adjustment Bureau

Responding Party: Plaintiff Creditors Adjustment Bureau;

Defendants Precise Roofing Company, Inc. and Charles Douglas

Notice: OK

Tentative Ruling: Defendants’ Motion to Renew Defendants’ Prior Motion to Set Aside Default is DENIED in so far as the Court lacks jurisdiction.

Plaintiff Creditors Adjustment Bureau’s Motion for Sanctions under CCP § 128.7 is GRANTED in the amount of $1,893.50.

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 as of January 2, 2024 [ ] Late [X] None

REPLY: Filed as of January 31, 2024 [ ] Late [X] None

BACKGROUND

On December 16, 2022, Plaintiff Creditors Adjustment Bureau, Inc. (“Plaintiff”) filed a complaint against Defendants Precise Roofing Company, Inc., and Charles Douglas (“Defendants”) for a breach of contract dispute.

On March 7, 2023, Plaintiff filed its proofs of service showing Defendants were served by substituted service with a copy of the summons and complaint on February 16, 2023. On June 23, 2023, Plaintiff filed an amended proof of service as to Defendant Charles Douglas. Defendants did not timely file a responsive pleading to Plaintiff’s complaint.

On August 29, 2023, Plaintiff sought, and the Court entered its Request for Entry of Default as to the Defendants. The same day, Plaintiff submitted its default judgment package to the Court as to both Defendants.

On September 12, 2023, the Court entered default judgment against Defendants.

On September 25, 2023, Defendants filed a motion to vacate default judgment. On October 31, 2023, the Court denied Defendants’ motion to vacate default, finding that Defendant Douglas failed to make a showing of excusable neglect or that service was improperly rendered.

On November 17, 2023, Defendants filed the instant Motion to Renew Defendants’ Prior Motion for an Order to Set Aside Default Judgment. Plaintiff filed in opposition on January 02, 2024. Defendants filed in reply.

On January 02, 2024, Plaintiff filed the instant Motion for Sanctions. Defendants filed opposition papers on January 25, 2024. Plaintiff files in reply.

On January 09, 2024, the Court on its own motion continued the hearing on both motions to February 07, 2024.

MOVING PARTY POSITION

As to the Motion to Renew, Defendants pray for an order granting renewal, under CCP § 1008(b), of Defendants’ prior motion for an order to set aside the default judgment entered against them on September 12, 2023. Defendants argue that they meet the requirements under CCP §1008(b) because Defendant Douglas did not realize that the fact that he was semi-retired and splitting his time between California and Idaho was relevant to the prior motion and, therefore, did not divulge them to his attorney.

As to the Motion for Sanctions, Plaintiff prays for the court to issue sanctions because Defendants, by and through their counsel of record, have violated CCP § 1008 by filing a frivolous Motion to Renew Defendant’s Prior Motion to Set Aside Default. Plaintiff argues that Defendant has not set forth any new or different facts, circumstances, or law as required under CCP § 1008. Plaintiff request sanctions in the amount of $7,053.50 be awarded in their favor.

OPPOSITION

In opposition to Defendant’s Motion to Renew, Plaintiff argues that Defendants have not set forth any new or different facts, circumstances, or law to meet the requirements under CCP § 1008(b). Plaintiff points out that Defendants’ motion falls short of providing a satisfactory explanation for failing to offer this additional evidence at the initial hearing on the motion to vacate default judgment. Moreover, even if the Court found the existence of a “new” fact, there is nothing that suggests that the Court’s initial ruling was erroneous. Finally, Plaintiff argues that even if the Court were to find that the alleged additional facts satisfy all the legal prerequisites, Defendant’s additional facts would be irrelevant given Defendants’ express and unequivocal admission that they consciously did not retain counsel and sat on their hands while the action was ongoing.

In opposition to Plaintiff’s Motion for Sanctions, Defendants argue that sanctions are not warranted as Defendants have complied with the procedural and substantive requirements of CCP § 1008. Defendants assert that Plaintiff misrepresents Defendants position and actions explicitly pointing out that Plaintiff repeatedly claims that Defendant Douglas chose to do nothing when, in fact, he forgot about the lawsuit papers after putting them aside. Defendants continue to assert that their new evidence supports a court ruling that sets aside the default and that the motion was not filed for an improper purpose and is warranted by existing law. Finally, Defendants argue that Plaintiff’s cited authority is irrelevant to the instant case as Plaintiff’s authorities involve information available to the movant. Yet, the movant failed to provide the information to the court and could not provide an adequate excuse for not showing the new information.

REPLY

In reply to Plaintiff’s opposition to the Motion to Renew, Defendants reargue that their motion does satisfy the requirements under CCP § 1008(b) because the attorney-client miscommunication between Defendants and counsel is a valid reason to set aside the default judgment. Defendants argue that Plaintiff misrepresents Defendants’ argument by misrepresenting Defendants’ submissions to the Court. Further, Defendants argue that the Court can reconsider, on its own motion, without any new evidence because the Court did not consider whether service was rendered correctly under CCP § 416.10.

In reply to Defendant’s opposition to the Motion for Sanctions, Plaintiff argues that Defendants failed to establish that Defendant’s Motion was not legally and factually frivolous because Defendants have failed to identify a single “new” or different fact that could not with reasonable diligence have been brought to the Court’s attention at the initial hearing.

ANALYSIS

I. Legal Standard

A. Motion to Renew

Code of Civil Procedure section 1008, subdivision (b) relates to a “renewed motion” whereby a party seeks the same relief that was previously denied. (California Correctional Peace Officers Ass'n v. Virga (2010) 181 Cal.App.4th 30, 43, fn. 11; see also Tate v. Wilburn (2010) 184 Cal.App.4th 150, 156-157.) When a motion has been denied in whole or in part, the moving party may apply again for the same relief at a later time only upon “new or different facts, circumstances or law.” (Code Civ. Proc., § 1008, subd. (b); see Graham v. Hansen (1982) 128 Cal.App.3d 965, 969-970.) The motion must be supported by a declaration showing the previous order, by which judge it was made, and what new or different facts, circumstances or law are claimed to exist. (Code Civ. Proc., § 1008, subd. (b).) There is no time limit under section 1008 for the renewal of a previous motion. (See Code Civ. Proc., § 1008, subds. (b), (e); Stephen v. Enterprise Rent-A-Car of San Francisco (1991) 235 Cal.App.3d 806, 816.)

The Court lacks the jurisdiction to reconsider a prior ruling on motion of a party, where the motion does not comply with the requirements of Code of Civil Procedure section 1008. (Code Civ. Proc., § 1008, subd. (e); Le Francois v. Goel (2005) 35 Cal.4th 1094, 1106.) The purpose of this jurisdictional bar is to protect the Court from repetitive motions. (Id.)

B. Motion for Sanctions

An attorney or unrepresented party who presents a motion to the court makes an implied certification as to its legal and factual merit, which is subject to sanctions for violation of this certification under Code of Civil Procedure § 128.7. (Murphy v. Yale Materials Handling Corp. (1997) 54 Cal.App.4th 619, 623.) The Court may impose sanctions for conduct that violates any one of the requirements set forth in Code of Civil Procedure § 128.7(b). (Eichenbaum v. Alon (2003) 106 Cal.App.4th 967, 976.)

Code of Civil Procedure § 128.7(b) provides:

(b) By presenting to the court, whether by signing, filing, submitting, or later advocating, a pleading, petition, written notice of motion, or other similar paper, an attorney or unrepresented party is certifying that to the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, all of the following conditions are met:

1. It is not being presented primarily for an improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.

2. The claims, defenses, and other legal contentions therein are warranted by existing law or by a non-frivolous argument for the extension, modification, or reversal of existing law or the establishment of new law.

3. The allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery.

4. The denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on a lack of information or belief.

Only “an attorney or unrepresented party may be sanctioned” under the statute. (In re Marriage of Reese & Guy (1999) 73 Cal.App.4th 1214, 1221.)

“Under section 128.7, a court may impose sanctions if it concludes a pleading was filed for an improper purpose or was indisputably without merit, either legally or factually. [Citation.]” (Bucur v. Ahmad (2016) 244 Cal.App.4th 175, 189.) “A claim is factually frivolous if it is ‘not well grounded in fact’ and is legally frivolous if it is ‘not warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law.’ [Citation.] In either case, to obtain sanctions, the moving party must show the party's conduct in asserting the claim was objectively unreasonable. [Citation.] A claim is objectively unreasonable if ‘any reasonable attorney would agree that [it] is totally and completely without merit.’ [Citations.]” (Id.) No showing of bad faith is required. (In re Marriage of Reese & Guy, supra, 73 Cal.App.4th at p. 1221.)

“The California Legislature essentially sought to replicate rule 11 [of the Federal Rules of Civil Procedure] when it enacted section 128.7.” (Musaelian v. Adams (2009) 45 Cal.4th 512, 518, fn. 2.) As a result, federal case law construing rule 11 is persuasive authority on the meaning of Code of Civil Procedure § 128.7. (Guillemin v. Stein (2002) 104 Cal.App.4th 156, 167.) Under rule 11, even though an action may not be frivolous when it is filed, it may become so if later-acquired evidence refutes the findings of a prefiling investigation and the attorney continues to file papers supporting the client's claims. (See Childs v. State Farm Mutual Automobile Insurance Company (5th Cir. 1994) 29 F.3d 1018, 1024-1026.) As a result, a plaintiff's attorney cannot “just cling tenaciously to the investigation he had done at the outset of the litigation and bury his head in the sand.” (Ibid. at 1025.)

In addition, Code of Civil Procedure § 128.7 “contains a safe harbor provision. It requires the party seeking sanctions to serve on the opposing party, without filing or presenting it to the court, a notice of motion specifically describing the sanctionable conduct. Service of the motion initiates a 21-day ‘hold’ or ‘safe harbor’ period. [Citations.] During this time, the offending document may be corrected or withdrawn without penalty. If that occurs, the motion for sanctions ‘‘shall not’’ be filed. [Citations.] By mandating a 21-day safe harbor period to allow correction or withdrawal of an offending document, section 128.7 is designed to be remedial, not punitive. [Citation.]” (Li v. Majestic Industry Hills, LLC (2009) 177 Cal.App.4th 585, 590-591.) (Emphasis added.)

II. Discussion

A. Motion to Renew.

Defendants move for the Court to issue an order renewing its initial motion to set aside a default judgment under CCP §473(b). Defendants argue that they meet the requirements under CCP §1008(b) because Defendant Douglas did not realize that the fact that he was semi-retired and splitting his time between California and Idaho was relevant to the prior motion and, therefore, did not divulge them to his attorney.

In opposition, Plaintiff argues that Defendants have not provided any new or different facts, circumstances, or law to meet the requirements under CCP § 1008(b). Additionally, Plaintiff points out that Defendants’ motion falls short of providing a satisfactory explanation for failing to provide additional evidence at the initial hearing on the motion to set aside. Finally, Plaintiff argues that even if the Court were to find that the alleged additional facts satisfy all the legal prerequisites, Defendant’s additional facts would be irrelevant given Defendants’ express and unequivocal admission that they consciously did not retain counsel and sat on their hands while the action was ongoing.

In reply, Defendants continue their position that their motion does satisfy the requirements under CCP § 1008(b) because the attorney-client miscommunication between Defendants and counsel is a valid reason to set aside the default judgment. Defendants argue that the Plaintiff misrepresents Defendants’ argument by misrepresenting Defendants’ submissions to the Court. Further, Defendants argue that the Court can reconsider its own motion without any new evidence because the Court did not consider whether service was rendered correctly under CCP § 416.10.

The Court finds that Defendants' renewed motion fails to comply with Code of Civil Procedure section 1008 requirements because Defendants have not demonstrated new facts or circumstances that warrant renewal of the Motion to Set Aside Default Judgment. Here, Defendants provide the Court with the declaration of their counsel, who states,

Since the above ruling, new and different facts have been discovered. These new facts are that Defendant Charles Douglas: (a) is semi-retired; (b) did not learn of the instant action until approximately April 2023; (c) forgot about the lawsuit because he spends much of his time in Idaho and is in the process of winding down the business of Precise Roofing Company, Inc.; and (d) did not receive any default papers until approximately September 13, 2023.

(Abraham L. Niman Decl. ¶ 3.) Counsel states that these “new” facts were not included in Defendant’s prior motion due to a miscommunication between counsel and his client. Specifically, counsel avers that he misunderstood his client and thought that Defendant Douglas first saw the Summons and Complaint in March 2023, but his client did not receive a copy until sometime in April 2023. (Id. ¶ 4.) This would not be considered new or different facts or circumstances for the purpose of CCP § 1008.

In the Court’s prior order, the Court noted, “A defendant who has “no confidence in his ability to decipher legal jargon” in a summons knows that he should consult a lawyer. (Goodson v. Bogerts, Inc. (1967) 252 Cal.App.2d 32, 40.) If he neglects to do so, he cannot plead ignorance of the contents of the summons. (Id.)” (10/31/23 Minute Order.) Defendant Douglas’s retirement status, forgetfulness of the action, or lack of notice of the default does not provide the Court with new facts or circumstances that would warrant a renewal as these facts do not differ from those similarly considered in the Court’s October 31, 2023, minute order.

Moreover, Defendants do not provide sufficient evidence to dispute the Process Server’s declaration. The Court notes that Defendants argue that the Court did not consider how service would be improper under CCP § 416.10. Yet, Defendants neglect that CCP § 415.20(a) provides an alternative means of service of summons and complaint instead of the specified procedure provided under CCP § 416.10.

(Code Civ. Proc. §415.20.) CCP § 415.20(a) states that summons may be served by,

leaving a copy of the summons and complaint during usual office hours in his or her office or, if no physical address is known, at his or her usual mailing address, other than a United States Postal Service post office box, with the person who is apparently in charge thereof, and by thereafter mailing a copy of the summons and complaint by first-class mail, postage prepaid to the person to be served at the place where a copy of the summons and complaint were left. When service is effected by leaving a copy of the summons and complaint at a mailing address, it shall be left with a person at least 18 years of age, who shall be informed of the contents thereof. Service of a summons in this manner is deemed complete on the 10th day after the mailing.

(Id.) Based on the Proof of Service by Substituted Service filed on June 23, 2023, Process server was able to serve Tammy Choi who was person in charge and subsequently mailed summons and complaint by first class, postage prepaid. Thus, the Court therefore finds that Defendant was properly served under CCP § 416.10(a) and thus did have actual notice of the action.

Moreover, the Court finds Defendants’ reliance on Sweet v. McGlynn to be misplaced. The Sweet court reversed the trial court’s decision denying defendant’s motion to set aside, reasoning that defendant made a sufficient showing that defendant did not intend to let default be entered against him. (Sweet v. McGlynn (Cal., Apr. 28, 1873) 1 Cal.Unrep. 773, 774.) The Sweet court pointed out that the defendant immediately sought counsel after summons and attachment were served but did not provide his attorney with the summons thus resulting in his attorney’s mistaken belief that it had not been served. In this case, Plaintiff correctly points out that Defendant Douglas did not obtain counsel until nearly six months after being served with the summons and complaint. Defendants’ contention of not receiving any notice of default until around September 13, 2023, would additionally not be considered new facts that would support a motion to renew because, as mentioned before, they are similar facts to those considered by the Court in its October 31, 2023, minute order.

Accordingly, the Court DENIES Defendants’ Motion to Renew.

B. Motion for Sanctions.

Here, Plaintiff served its Motion on Defendants on December 05, 2023, by mail and via email, and filed with the Court on January 02, 2024. Thus, Plaintiff has complied with the 21-day safe-harbor requirements.

Plaintiff argues that sanctions are warranted as Defendants and counsel have failed to comply with the most basic requirements under CCP § 1008(b) by not presenting any “new and different facts, circumstances or law” that could have been presented at the time the Court initially ruled on Defendant’s motion to set aside. (Mot. p.10:6-9.) Plaintiff’s counsel correctly states in his declaration, the Court specifically found, in its initial determination on the motion to set aside that “service was proper for both defendants' and that defendants’ belief, ‘that there was nothing he needed to do respond to the lawsuit other than show up at trial" did not constitute excusable neglect.’” (Mot. Kenneth J. Freed Decl. ¶ 2.; Exh. 1.)

In opposition, Defendants argue that sanctions are not warranted as Defendants have complied with the procedural and substantive requirements of CCP § 1008. Defendants assert that Plaintiff misrepresents Defendants position and actions explicitly pointing out that Plaintiff repeatedly claims that Defendant Douglas chose to do nothing when, in fact, he forgot about the lawsuit papers after putting them aside. Defendants continue to assert that their new evidence supports a court ruling that sets aside the default and that the motion was not filed for an improper purpose and is warranted by existing law. Finally, Defendants argue that Plaintiff’s cited authority is irrelevant to the instant case as Plaintiff’s authorities involve information available to the movant. Yet, the movant in each case failed to provide the information to the court and could not provide an adequate excuse for not showing the new information. Moreover, Defendants’ counsel swears that Defendants’ Motion to Renew was not filed for an improper purpose, such as to harass or to cause unnecessary delay or needlessly increase the cost of litigation. (Abraham L. Niman Decl. ¶ 3.) Counsel further states that he believed “in good faith that the arguments set forth in the Motion to Renew are warranted by existing law.” (Id. ¶ 4.) However, counsel later states that he has “not been able to find an authority directly on point stating that a combination of ignorance and miscommunication with counsel is sufficient explanation for why the new or different evidence was not previously presented” (Id.)

Based on the above, the Court finds Defendants’ Renewal Motion to be legally and factually frivolous because the motion does not lay out any new and different facts, circumstances or law” nor an excusable explanation for why such new information could not be provided earlier under CCP § 1008(b). Despite being given appropriate notice before this Motion was filed, Defendants did not withdraw their motion.

Plaintiff requests $7,053.50 in attorney’s fees and cost for the following: 7.3 hours researching and drafting opposition to Defendants’ Renewal Motion, 2.4 hours on the instant motion for sanctions, and an anticipated 2 hours for the appearance to argue the motion all at a rate of $600.00 per hour plus $93.50 in court fees. (Freed Decl. ¶ 4.) The Court finds these fees excessive considering the motion and counsel’s breath of experience in these types of matters. The Court notes that sanctions as provided under CCP § 128.7(b) “shall be limited to what is sufficient to deter repetition of this conduct or comparable conduct by others similarly situated.” As such, the Court is inclined to award sanctions in the amount of $1,893.50 for the following: 1 hour for drafting the instant motion, 1 hour for drafting opposition for the renewal motion, 1 hour in appearance fees all at the rate of $600 per hour plus $93.50 in court fees. (Code Civ. Proc. § 128.7(d).) Therefore, the Court awards Plaintiff sanctions in the amount of $1,893.50.

Accordingly, the Court GRANTS Plaintiff’s Motion for Sanctions under CCP § 128.7 and awards Plaintiff sanctions in the amount of $1,893.50.

III. Conclusion

Defendants’ Motion to Renew Defendants’ Prior Motion to Set Aside Default is DENIED in so far as the Court lacks jurisdiction.

Plaintiff Creditor Adjustment Bureau’s Motion for Sanctions under CCP § 128.7 is GRANTED.

Moving party is ordered to give notice.